1
EXHIBIT 10.32
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XXXXX INSTRUMENTS CORP.
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AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
DATED: AS OF May 27, 1998
$20,000,000
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FLEET CAPITAL CORPORATION
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TABLE OF CONTENTS
Page
SECTION 1. CREDIT FACILITY................................................................ 1
1.1 Revolving Credit Loans...................................................... 1
(a) Loans.............................................................. 1
(b) Use of Proceeds.................................................... 1
1.2 CapEx Loans................................................................. 2
(a) CapEx Loans........................................................ 2
(b) [Intentionally omitted]............................................ 2
1.3 Letters of Credit; LC Guaranties............................................ 2
SECTION 2. INTEREST, FEES AND CHARGES..................................................... 2
2.1 Interest.................................................................... 2
(a) Rates of Interest.................................................. 2
(b) Default Rate of Interest........................................... 3
(c) Maximum Interest................................................... 3
2.2 Computation of Interest and Fees............................................ 3
2.3 Rate Elections.............................................................. 4
2.4 LIBOR Option................................................................ 4
2.5 Letter of Credit and LC Guaranty Fees....................................... 5
2.6 Intentionally omitted]...................................................... 6
2.7 [intentionally omitted]..................................................... 6
2.8 Audit and Appraisal Fees.................................................... 6
2.9 Reimbursement of Expenses................................................... 6
2.10 Bank Charges................................................................ 7
SECTION 3. LOAN ADMINISTRATION............................................................ 7
3.1 Manner of Borrowing Revolving Credit Loans.................................. 7
(a) Loan Requests...................................................... 7
(b) Disbursement....................................................... 7
(c) Authorization...................................................... 8
3.2 Payments.................................................................... 8
(a) Principal.......................................................... 8
(b) Interest........................................................... 8
(c) Costs, Fees and Charges............................................ 9
(d) Other Obligations.................................................. 9
3.3 Mandatory Prepayments....................................................... 9
(a) Proceeds of Sale, Loss, Destruction, or Condemnation of Collateral. 9
(b) [intentionally omitted]............................................ 10
3.4 Application of Payments and Collections..................................... 10
i.
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3.5 All Loans to Constitute One Obligation...................................... 10
3.6 Loan Account................................................................ 10
3.7 Statements of Account....................................................... 10
SECTION 4. TERM AND TERMINATION........................................................... 10
4.1 Term of Agreement........................................................... 10
4.2 Termination................................................................. 11
(a) Termination by Lender.............................................. 11
(b) Termination by Borrower............................................ 11
(c) Termination Charges................................................ 11
(d) Effect of Termination.............................................. 11
SECTION 5. SECURITY INTERESTS............................................................. 12
5.1 Security Interest in Collateral............................................. 12
5.2 Lien Perfection; Further Assurances......................................... 12
5.3 [Intentionally omitted]..................................................... 13
SECTION 6. COLLATERAL ADMINISTRATION...................................................... 13
6.1 General..................................................................... 13
(a) Location of Collateral............................................. 13
(b) Insurance of Collateral............................................ 13
(c) Protection of Collateral........................................... 14
6.2 Administration of Accounts.................................................. 14
(a) Records of Accounts................................................ 14
(b) [Intentionally omitted]............................................ 14
(c) [Intentionally omitted]............................................ 14
(d) [Intentionally omitted]............................................ 14
(e) [Intentionally omitted]............................................ 14
(f) [Intentionally omitted]............................................ 14
6.3 Administration of Inventory................................................. 14
(a) Records and Reports of Inventory................................... 14
(b) [Intentionally omitted]............................................ 14
6.4 Administration of Equipment................................................. 14
(a) Records and Schedules of Equipment................................. 14
(b) Dispositions of Equipment.......................................... 15
6.5 Payment of Charges.......................................................... 15
6.6 Intentionally omitted....................................................... 15
SECTION 7. REPRESENTATIONS AND WARRANTIES................................................. 15
7.1 General Representations and Warranties...................................... 15
(a) Organization and Qualification..................................... 15
(b) Corporate Power and Authority...................................... 15
(c) Legally Enforceable Agreement...................................... 16
(d) Capital Structure.................................................. 16
ii.
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(e) Corporate Names.................................................... 16
(f) Business Locations; Agent for Process.............................. 16
(g) Title to Properties; Priority of Liens............................. 17
(h) Accounts........................................................... 17
(i) Equipment.......................................................... 18
(j) Financial Statements; Fiscal Year.................................. 18
(k) Full Disclosure.................................................... 18
(l) Solvent Financial Condition........................................ 19
(m) Surety Obligations................................................. 19
(n) Taxes.............................................................. 19
(o) Brokers............................................................ 19
(p) Patents, Trademarks, Copyrights, and Licenses...................... 19
(q) Governmental Consents.............................................. 19
(r) Compliance with Laws............................................... 19
(s) Restrictions....................................................... 20
(t) Litigation......................................................... 20
(u) No Defaults........................................................ 20
(v) Leases............................................................. 20
(w) Pension Plans...................................................... 20
(x) Trade Relations.................................................... 21
(y) Labor Relations.................................................... 21
(z) Inventory.......................................................... 21
(aa) ESOP Qualification................................................. 21
(ab) ESOP Loan.......................................................... 21
(ac) ESOP Trustee and Independent Financial Advisor..................... 21
7.2 Continuous Nature of Representations and Warranties......................... 21
7.3 Survival of Representations and Warranties.................................. 22
SECTION 8. COVENANTS AND CONTINUING AGREEMENTS............................................ 22
8.1 Affirmative Covenants....................................................... 22
(a) Visits and Inspections............................................. 22
(b) Notices............................................................ 22
(c) Financial Statements............................................... 22
(d) Landlord and Storage Agreements.................................... 23
(e) [Intentionally omitted]............................................ 24
(f) Projections........................................................ 24
8.2 Negative Covenants.......................................................... 24
(a) Mergers; Consolidations; Acquisitions.............................. 24
(b) Loans.............................................................. 24
(c) Total Indebtedness................................................. 24
(d) Affiliate Transactions............................................. 25
(e) Limitation on Liens................................................ 25
(f) Distributions...................................................... 26
(g) Capital Expenditures............................................... 26
iii.
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(h) Disposition of Assets.............................................. 26
(i) [Intentionally omitted]............................................ 26
(j) Xxxx-and-Hold Sales, Etc........................................... 26
(k) Restricted Investment.............................................. 26
(l) Leases............................................................. 27
(m) Tax Consolidation.................................................. 27
8.3 Specific Financial Covenants................................................ 27
(a) [intentionally omitted]............................................ 27
(b) Profitability...................................................... 27
(c) Total Senior Debt Coverage Ratio................................... 28
(d) [intentionally omitted]............................................ 28
(e) [intentionally omitted]............................................ 28
(f) [intentionally omitted]............................................ 28
(g) [intentionally omitted]............................................ 28
(h) [intentionally omitted]............................................ 28
SECTION 9. CONDITIONS PRECEDENT TO INITIAL CREDITS........................................ 28
9.1 Documentation............................................................... 29
9.2 Other Loan Documents. Each of the conditions precedent set forth in the other
Loan Documents shall have been satisfied.
9.3 Approvals and Consents...................................................... 29
9.4 Interim Financial Statements................................................ 29
9.5 Certified Documents of Borrower............................................. 29
9.6 Opinion of Counsel.......................................................... 30
9.7 Projections................................................................. 30
SECTION 9-A. CONDITIONS PRECEDENT TO ALL LOANS........................................... 30
9-A.1 No Default.................................................................. 30
9-A.2 Representations and Warranties.............................................. 30
9-A.3 No Litigation............................................................... 30
SECTION 10. EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT............................. 30
10.1 Events of Default........................................................... 30
(a) Payment of Note.................................................... 31
(b) Payment of Other Obligations....................................... 31
(c) Misrepresentations................................................. 31
(d) Breach of Specific Covenants....................................... 31
(e) Breach of Other Covenants.......................................... 31
(f) Default Under Security Documents/Other Agreements/ ESOP Transactions
Documents.......................................................... 31
(g) Other Defaults..................................................... 31
(h) Uninsured Losses................................................... 32
(i) Adverse Changes.................................................... 32
iv.
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(j) Insolvency and Related Proceedings................................. 32
(k) Business Disruption................................................ 32
(l) Change of Ownership................................................ 32
(m) ERISA.............................................................. 32
(n) Challenge to Agreement............................................. 33
(o) [Intentionally omitted]............................................ 33
(p) Criminal Forfeiture................................................ 33
(q) Judgments.......................................................... 33
(r) ESOP Loan.......................................................... 33
10.2 Acceleration of the Obligations............................................. 33
10.3 Other Remedies.............................................................. 33
10.4 Remedies Cumulative; No Waiver.............................................. 35
SECTION 11. MISCELLANEOUS................................................................. 35
11.1 Power of Attorney........................................................... 35
11.2 Indemnity................................................................... 36
11.3 Modification of Agreement; Sale of Interest................................. 36
11.4 Severability................................................................ 37
11.5 Successors and Assigns...................................................... 37
11.6 Cumulative Effect; Conflict of Terms........................................ 37
11.7 Execution in Counterparts................................................... 37
11.8 Notice...................................................................... 38
11.9 Lender's Consent............................................................ 39
11.10 Credit Inquiries............................................................ 39
11.11 Time of Essence............................................................. 39
11.12 Entire Agreement............................................................ 39
11.13 Interpretation.............................................................. 39
11.14 GOVERNING LAW; CONSENT TO FORUM............................................. 39
11.15 WAIVERS BY BORROWER......................................................... 40
11.16 Confidentiality............................................................. 41
v.
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AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
THIS AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT is made as of May
27, 1998, by and between FLEET CAPITAL CORPORATION ("Lender"), a Connecticut
corporation, with an office at 00000 Xxxxxxx Xxxxxxxxx, Xxxxx 0000, Xxxxxxx
Xxxx, Xxxxxxxxxx 00000 and XXXXX INSTRUMENTS CORP. ("Borrower"), a Delaware
corporation, with its chief executive office and principal place of business at
0000 Xxx Xxxxxx, Xxxxxx, Xxxxxxxxxx 00000. Capitalized terms used in this
Agreement have the meanings assigned to them in Appendix A, General Definitions.
Accounting terms not otherwise specifically defined herein shall be construed in
accordance with GAAP consistently applied.
WHEREAS, Borrower and Lender are parties to the Existing Loan
Agreement; and
WHEREAS, Borrower has requested and Lender has agreed to amend and
restate the provisions of the Existing Loan Agreement as set forth herein.
NOW THEREFORE, the parties agree as follows:
SECTION 1. CREDIT FACILITY
Subject to the terms and conditions of, and in reliance upon the
representations and warranties made in, this Agreement and the other Loan
Documents, Lender agrees to make a Total Credit Facility of up to Twenty Million
Dollars ($20,000,000) available upon Borrower's request therefor, as follows:
1.1 Revolving Credit Loans.
(a) Loans. Lender agrees, for so long as no Default or Event of
Default exists and subject to the satisfaction of the applicable conditions
precedent set forth in Sections 9 and 9A, to make Revolving Credit Loans to
Borrower from time to time, as requested by Borrower in the manner set forth in
subsection 3.1(a) hereof, up to a maximum principal amount at any time
outstanding equal to the Maximum Revolving Amount at such time minus the LC
Amount.
(b) Use of Proceeds. The Loans shall be used solely for: (1) the
refinancing of Borrower's obligations owing under the Existing Loan Agreement,
and (2) Borrower's general operating capital needs, in a manner consistent with
the provisions of this Agreement and all applicable laws.
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1.2 CapEx Loans.
(a) CapEx Loans. Lender agrees, for so long as no Default or
Event of Default exists, to make Loans ("CapEx Loans") to Borrower from time to
time from and after the Closing Date through the date that is 60 days prior to
the Original Term (or the applicable Renewal Term) to finance Borrower's making
of Capital Expenditures for use in its business. Each CapEx Loan shall be in a
principal amount of $500,000, or more, shall be secured by all of the Collateral
and shall be evidenced by a CapEx Note, which CapEx Note shall specify the rate
of interest and the repayment terms applicable to such CapEx Loan. The principal
amount of CapEx Loans to be made by Lender hereunder shall not exceed, in the
aggregate, $5,000,000.
(b) [Intentionally omitted]
1.3 Letters of Credit; LC Guaranties. Lender agrees, for so long
as no Default or Event of Default exists and subject to the satisfaction of the
applicable conditions precedent set forth in Sections 9 and 9A, and if requested
by Borrower, to (a) issue its, or cause to be issued its Affiliate's,
documentary Letters of Credit for the account of Borrower or (b) execute LC
Guaranties by which Lender shall guaranty the payment or performance by Borrower
of its reimbursement obligations with respect to documentary letters of credit
issued for Borrower's account by other Persons, provided that the LC Amount at
any time shall not exceed the lesser of (a) Three Million Dollars ($3,000,000),
and (b) the Maximum Revolving Amount minus the then aggregate outstanding
principal amount of Revolving Credit Loans. The parties agree that any Letters
of Credit or LC Guaranties outstanding under the Existing Loan Agreement
automatically shall be deemed to be outstanding under this Agreement as of the
Closing Date. No Letter of Credit or LC Guarantee may have an expiration date
that is after the last day of the Original Term or the then applicable Renewal
Term. Any amounts paid by Lender under any LC Guaranty or in connection with any
Letter of Credit shall be treated as Revolving Credit Loans, shall be secured by
all of the Collateral, and shall bear interest and be payable at the same rate
and in the same manner as Revolving Credit Loans.
SECTION 2. INTEREST, FEES AND CHARGES
2.1 Interest.
(a) Rates of Interest.
(a) CapEx Loans. Interest shall accrue on the CapEx Loans
in accordance with the terms of the CapEx Notes.
(b) Revolving Credit Loans. During all times that a Base
Rate Election is in effect, interest shall accrue on the
principal amount of the Base Rate Revolving Credit Portion
outstanding at the end of each day at a fluctuating rate per
annum equal to the Base Rate. The
2.
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rate of interest shall increase or decrease by an amount equal to
any increase or decrease in the Base Rate, effective as of the
opening of business on the day that any such change in the Base
Rate occurs. During all times that a LIBOR Rate Election is in
effect, interest shall accrue on the principal amount of the
LIBOR Revolving Credit Portions outstanding at the end of each
day at a rate per annum equal to one and three-quarters percent
(1-3/4%) plus the LIBOR Rate applicable to the relevant LIBOR
Revolving Credit Portion for the corresponding LIBOR Period;
provided, however, that the foregoing rate of interest shall be
decreased (such decrease to occur permanentally, but only once)
by one-quarter of one percent (1/4%) if no Default or Event of
Default exists and if Borrower's annual audited financial
statements for any fiscal year ended after the date hereof and
delivered to Lender pursuant to subsection 8.1(c)(i) indicate
that Borrower achieved $8,000,000, or more, of EBITDA for the
fiscal year for which such statements were issued.
(b) Default Rate of Interest. Upon and after the occurrence of an
Event of Default, and during the continuation thereof, the principal amount of
all Loans shall bear interest at a rate per annum equal to two percent (2%)
above the interest rate otherwise applicable thereto (the "Default Rate").
(c) Maximum Interest. In no event whatsoever shall the aggregate
of all amounts deemed interest hereunder or under the CapEx Notes and charged or
collected pursuant to the terms of this Agreement or pursuant to the CapEx Notes
exceed the highest rate permissible under any law which a court of competent
jurisdiction shall, in a final determination, deem applicable hereto. If any
provisions of this Agreement or the CapEx Notes are in contravention of any such
law, such provisions shall be deemed amended to conform thereto.
2.2 Computation of Interest and Fees. Interest, Letter of Credit
and LC Guaranty fees hereunder shall be calculated daily and shall be computed
on the actual number of days elapsed over a year of three hundred sixty (360)
days. For the purpose of computing interest hereunder, all items of payment
received by Lender shall be deemed applied by Lender on account of the
Obligations (subject to final payment of such items) on the first Business Day
after receipt by Lender of such items in Lender's account located at Xxxxxx Bank
in Chicago, Illinois or such other account as Lender may designate by written
notice to Borrower.
2.3 Rate Elections. Unless a LIBOR Rate Election is in effect,
Borrower shall be deemed to have made an effective Base Rate Election.
2.4 LIBOR Option.
3.
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(a) Upon the conditions that: (i) Lender shall have
received a LIBOR Request from Borrower at least 3 Business Days
prior to the first day of the LIBOR Period requested, (ii) there
shall have occurred no change in applicable law which would make
it unlawful for Lender to obtain deposits of U.S. dollars in the
London interbank foreign currency deposits market, (iii) as of
the date of the LIBOR Request and the first day of the LIBOR
Period, there shall exist no Default or Event of Default, (iv)
Lender is able to determine the LIBOR Rate in respect of the
requested LIBOR Period or Lender is able to obtain deposits of
U.S. dollars in the London interbank foreign currency deposits
market in the applicable amounts and for the requested LIBOR
Period, and (v) as of the first date of the LIBOR Period, there
are no more than 6 outstanding LIBOR Portions, including the
LIBOR Portion being requested; then interest on the LIBOR
Revolving Credit Portion and/or the LIBOR CapEx Portion requested
during the LIBOR Period requested will be based on the applicable
LIBOR Rate.
(b) Each LIBOR Request shall be irrevocable and binding on
Borrower. Borrower shall indemnify Lender for any loss, penalty,
or expense incurred by Lender due to failure on the part of
Borrower to fulfill, on or before the date specified in any LIBOR
Request, the applicable conditions set forth in this Agreement or
due to the prepayment of the applicable LIBOR Revolving Credit
Portion or LIBOR CapEx Portion prior to the last day of the
applicable LIBOR Period, including, without limitation, any loss
(including loss of anticipated profits) or expense incurred by
reason of the liquidation or redeployment of deposits or other
funds acquired by Lender to fund or maintain the requested LIBOR
Revolving Credit Portion and/or LIBOR CapEx Portion.
(c) If any Legal Requirement shall (i) make it unlawful for
Lender to fund through the purchase of U.S. dollar deposits any
LIBOR Revolving Credit Portion or LIBOR CapEx Portion, or
otherwise give effect to its obligations as contemplated under
this subsection 2.4, or (ii) shall impose on Lender any costs
based on or measured by the excess above a specified level of the
amount of a category of deposits or other liabilities of Lender
which includes deposits by reference to which the LIBOR Rate is
determined as provided herein or a category of extensions of
credit or other assets of Lender which includes any LIBOR
Revolving Credit Portion or LIBOR CapEx Portion, or (iii) shall
impose on Lender any restrictions on the amount of such a
category of liabilities or assets which Lender may hold, then, in
each such case, Lender may, by notice thereof to Borrower,
terminate the
4.
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LIBOR Election. Any LIBOR Revolving Credit Portion and/or any
LIBOR CapEx Portion subject thereto shall immediately bear
interest thereafter at the rate and in the manner provided for
Base Rate Portions pursuant hereto. Borrower shall indemnify
Lender against any loss, penalty, or expense incurred by Lender
due to liquidation or redeployment of deposits or other funds
acquired by Lender to fund or maintain any LIBOR Revolving Credit
Portion and/or LIBOR CapEx Portion that is terminated hereunder.
(d) Lender shall receive payments of amounts of principal
and interest (i) on the Revolving Credit Loans with respect to
the LIBOR Revolving Credit Portions, and (ii) on the CapEx Notes
with respect to the LIBOR CapEx Portions, in each case, free and
clear of, and without deduction for, any Taxes. If (y) Lender
shall be subject to any Tax in respect of any LIBOR Revolving
Credit Portion or LIBOR CapEx Portion, or any part thereof or,
(z) Borrower shall be required to withhold or deduct any Tax from
any such amount, the LIBOR Rate applicable to such LIBOR
Revolving Credit Portion or LIBOR CapEx Portion shall be adjusted
by Lender to reflect all additional costs incurred by Lender in
connection with the payment by Lender or the withholding by
Borrower of such Tax and Borrower shall provide Lender with a
statement detailing the amount of any such Tax actually paid by
Borrower. Determination by Lender of the amount of such costs
shall, in the absence of manifest error, be conclusive. If after
any such adjustment any part of any Tax paid by Lender is
subsequently recovered by Lender, Lender shall reimburse Borrower
to the extent of the amount so recovered. A certificate of an
officer of Lender setting forth the amount of such recovery and
the basis therefore shall, in the absence of manifest error, be
conclusive.
2.5 Letter of Credit and LC Guaranty Fees. Borrower shall pay to
Lender:
(a) [Intentionally omitted]
(b) for documentary Letters of Credit and LC Guaranties of
documentary Letters of Credit, a fee equal to one-half of one
percent (0.50%) per annum of the face amount of each such Letter
of Credit or LC Guaranty, payable in arrears on the first day of
each month based on the amount available for drawing under such
Letter of Credit or LC Guaranty plus the normal and customary
charges associated with the issuance and administration of each
such Letter of Credit or LC Guaranty (which charges shall be
fully earned upon issuance, renewal or extension (as the case may
be) of each such Letter of Credit or LC Guaranty).
5.
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2.6 [Intentionally omitted].
2.7 [Intentionally omitted].
2.8 Audit and Appraisal Fees. Borrower shall pay to Lender all
reasonable out-of-pocket costs and expenses incurred by Lender in connection
with audits and appraisals of Borrower's books and records of or relating to the
Collateral, plus all fees and expenses incurred by Lender in connection with any
appraisals of the Collateral commissioned by Lender and performed by third party
appraisers. All such fees, costs, and expenses shall be payable on the first day
of the month following the date of issuance by Lender of a request for payment
thereof to Borrower.
2.9 Reimbursement of Expenses. If, at any time or times
regardless of whether or not an Event of Default then exists, Lender incurs
legal or accounting expenses or any other costs or out-of-pocket expenses in
connection with (a) the negotiation and preparation of this Agreement or any of
the other Loan Documents, any amendment of or modification of this Agreement or
any of the other Loan Documents; (b) the administration of this Agreement or any
of the other Loan Documents and the transactions contemplated hereby and
thereby; (c) any litigation, contest, dispute, suit, proceeding or action
(whether instituted by Lender, Borrower or any other Person) in any way relating
to the Collateral, this Agreement or any of the other Loan Documents or
Borrower's affairs; (d) any attempt to enforce any rights of Lender against
Borrower or any other Person which may be obligated to Lender by virtue of this
Agreement or any of the other Loan Documents, including, without limitation, the
Account Debtors; or (e) any attempt to inspect, verify, protect, preserve,
restore, collect, sell, liquidate or otherwise dispose of or realize upon the
Collateral; then all such reasonable legal and accounting expenses, other costs
and out of pocket expenses of Lender shall be charged to Borrower. All amounts
chargeable to Borrower under this subsection 2.9 shall be Obligations secured by
all of the Collateral, shall be payable on demand to Lender, and shall bear
interest from the date such demand is made until paid in full at the rate
applicable to Revolving Credit Loans from time to time. Borrower also shall
reimburse Lender for expenses incurred by Lender in its administration of the
Collateral to the extent and in the manner provided in Section 6 hereof.
2.10 Bank Charges. Borrower shall pay to Lender, on demand, any
and all fees, costs or expenses which Lender pays to a bank or other similar
institution arising out of or in connection with (a) the forwarding by Lender to
Borrower or any other Person on behalf of Borrower of proceeds of loans made by
Lender to Borrower pursuant to this Agreement and (b) the depositing by Lender
for collection of any check or item of payment received by or delivered to
Lender on account of the Obligations.
6.
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SECTION 3. LOAN ADMINISTRATION
3.1 Manner of Borrowing Revolving Credit Loans. Borrowings under
the credit facility established pursuant to Section 1 hereof shall be as
follows:
(a) Loan Requests. A request for a Revolving Credit Loan shall be
made, or shall be deemed to be made, in the following manner: (i) Borrower may
give Lender notice of its intention to borrow, in which notice Borrower shall
specify the amount of the proposed borrowing and the proposed borrowing date, no
later than 11:00 a.m. (Los Angeles time) on the proposed borrowing date,
provided, however, that no such request may be made at a time when the
conditions precedent set forth in Section 9A are not satisfied; and (ii) the
becoming due of any amount required to be paid under this Agreement or the CapEx
Notes, whether as interest or for any other Obligation, shall be deemed
irrevocably to be a request for a Revolving Credit Loan on the due date in the
amount required to pay such interest or other Obligation. As an accommodation to
Borrower, Lender may permit telephonic requests for loans and electronic
transmittal of instructions, authorizations, agreements or reports to Lender by
Borrower. Unless Borrower specifically directs Lender in writing not to accept
or act upon telephonic or electronic communications from Borrower, Lender shall
have no liability to Borrower for any loss or damage suffered by Borrower as a
result of Lender's honoring of any requests, execution of any instructions,
authorizations or agreements, or reliance on any reports communicated to it
telephonically or electronically and believed in good faith by Lender to have
been sent to Lender by Borrower, and Lender shall have no duty to verify the
origin of any such communication or the authority of the person sending it
(other than the employment of any standard verification methods used in the
ordinary course of business by Lender).
(b) Disbursement. Borrower hereby irrevocably authorizes Lender
to disburse the proceeds of each Revolving Credit Loan requested, or deemed to
be requested, pursuant to this subsection 3.1 as follows: (a) the proceeds of
each Revolving Credit Loan requested under subsection 3.1(a)(i) shall be
disbursed by Lender in lawful money of the United States of America in
immediately available funds, in the case of the initial borrowing, in accordance
with the terms of the written disbursement letter from Borrower, and in the case
of each subsequent borrowing, by wire transfer to such bank account as may be
agreed upon by Borrower and Lender from time to time or elsewhere if pursuant to
a written direction from Borrower; and (b) the proceeds of each Revolving Credit
Loan requested under subsection 3.1(a)(ii) shall be disbursed by Lender by way
of direct payment of the relevant interest or other Obligation.
(c) Authorization. Borrower hereby irrevocably authorizes Lender,
in Lender's sole discretion, to advance to Borrower, and to charge to Borrower's
Loan Account hereunder as a Revolving Credit Loan, a sum sufficient to pay all
interest accrued on the Obligations during the immediately preceding month and
to pay all costs, fees, and expenses at any time owed by Borrower to Lender
hereunder.
7.
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3.2 Payments. Except where evidenced by notes or other
instruments issued or made by Borrower to Lender (and accepted by Lender)
specifically containing payment provisions which are in conflict with this
subsection 3.2 (in which event the conflicting provisions of said notes or other
instruments shall govern and control), the Obligations shall be payable as
follows:
(a) Principal. Principal payable on account of Revolving Credit
Loans shall be payable by Borrower to Lender immediately upon the earliest of:
(i) the occurrence of an Event of Default in consequence of which Lender elects
to accelerate the maturity and payment of the Obligations; and (ii) termination
of this Agreement pursuant to Section 4 hereof; provided, however, that if an
Overadvance shall exist at any time, Borrower shall, on demand, repay the
Overadvance.
(b) Interest.
(i) Base Rate Revolving Credit Portion. Interest accrued on
Base Rate Revolving Credit Portions shall be due and payable on
the earliest of (A) the first calendar day of each month (for the
immediately preceding month), computed through the last calendar
day of the preceding month, (B) the occurrence of an Event of
Default in consequence of which Lender elects to accelerate the
maturity and payment of the Obligations, or (C) termination of
this Agreement pursuant to Section 4 hereof.
(ii) LIBOR Revolving Credit Portion. Interest accrued on
each LIBOR Revolving Credit Portion shall be due and payable on
the earliest of (i) the first calendar day of each month (for the
immediately preceding month), computed through the last calendar
day of the preceding month, (ii) the last day of the LIBOR Period
applicable to such LIBOR Revolving Credit Portion, (iii) the
occurrence of an Event of Default in consequence of which Lender
elects to accelerate the maturity and payment of the Obligations,
or (iv) termination of this Agreement pursuant to Section 4
hereof.
(c) Costs, Fees and Charges. Costs, fees and charges payable
pursuant to this Agreement shall be payable by Borrower as and when provided in
Section 2 hereof, to Lender or to any other Person designated by Lender in
writing.
(d) Other Obligations. The balance of the Obligations requiring
the payment of money, if any, shall be payable by Borrower to Lender as and when
provided in this Agreement, the Other Agreements or the Security Documents, or,
if not so specified, shall be charged to Borrower's Loan Account hereunder as a
Revolving Credit Loan.
8.
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3.3 Mandatory Prepayments.
(a) Proceeds of Sale, Loss, Destruction, or Condemnation of
Collateral. Except as provided in subsection 6.4(b) hereof or except as provided
in the paragraph immediately following this paragraph, if Borrower sells any of
the Equipment, or if any of the Collateral is lost or destroyed or taken by
condemnation, Borrower shall pay to Lender, unless otherwise agreed by Lender,
as and when received by Borrower and as a mandatory prepayment of the CapEx
Loans, a sum equal to the proceeds (including insurance payments) received by
Borrower from such sale, loss, destruction, or condemnation.
If Borrower so elects, it may cause Lender to disburse any monies
actually received by Lender pursuant to the foregoing paragraph, but Lender only
shall be obligated to disburse such money for the repair, replacement, or
restoration of the Equipment or other Collateral that has been damaged, if all
of the following conditions are satisfied: (a) no Event of Default has occurred
and is continuing or would result from the disbursement or application of such
monies; (b) Borrower has cash, cash equivalents (items (iv) through (ix) of
Restricted Investments), unused Revolving Credit Loan availability, and/or
business interruption insurance proceeds in amounts sufficient, in Lender's
reasonable judgment, to ensure that Borrower will be able to make payment as and
when due of each of its direct Obligations that will be payable during the
period of such repair, replacement, or restoration; (c) Lender is reasonably
satisfied that the amount of such cash, cash equivalents, Revolving Credit Loan
availability, and/or insurance proceeds will be sufficient fully to repair,
replace, or restore the subject Equipment or other Collateral; (d) all
construction and completion of the repair, replacement, or restoration shall be
effected with reasonable promptness and shall be of a value (the "Replaced
Value") (i) at least equal to the value (the "Destroyed Value") of such items of
Property destroyed or condemned prior to such destruction or condemnation, or
(ii) of a value less than the Destroyed Value, so long as the difference between
the Destroyed Value and the Replaced Value is applied to the repayment of the
Obligations in such order as Lender shall deem appropriate; and (e) all monies
paid by Borrower to Lender may be commingled with other funds of Lender and will
not bear interest pending disbursement hereunder.
(b) [intentionally omitted].
3.4 Application of Payments and Collections. Borrower does hereby
irrevocably agree that, subject to subsection 3.2(a)(i), after the occurrence
and during the continuation of an Event of Default, Lender shall have the
continuing exclusive right to apply and reapply any and all such payments and
collections received at any time or times hereafter by Lender or its agent
against the Obligations, in such manner as Lender may deem advisable,
notwithstanding any entry by Lender upon any of its books and records. If, as
the result of collections of Accounts as authorized by subsection 6.2(f) hereof,
a credit balance exists in the Loan Account, such credit balance shall not
accrue interest in favor of Borrower, but shall be available to Borrower at any
time or times for so long as no Default or Event of Default exists. Such credit
balance shall not be applied or be deemed to have
9.
16
been applied as a prepayment of the CapEx Loans, except that Lender may, at its
option, offset such credit balance against any of the Obligations upon and after
the occurrence of an Event of Default.
3.5 All Loans to Constitue One Obligation. The Loans shall
constitute one general Obligation of Borrower, and shall be secured by Lender's
Lien upon all of the Collateral.
3.6 Loan Account. Lender shall enter all Loans as debits to the
Loan Account and also shall record in the Loan Account all payments made by
Borrower on any Obligations and all proceeds of Collateral which are finally
paid to Lender, and may record therein, in accordance with customary accounting
practices, other debits and credits, including interest and all charges and
expenses properly chargeable to Borrower.
3.7 Statements of Account. Lender will account to Borrower
monthly with a statement of Loans, charges, and payments made pursuant to this
Agreement, and such account rendered by Lender shall be deemed final, binding
and conclusive upon Borrower unless Lender is notified by Borrower in writing to
the contrary within thirty (30) days of the date each accounting is mailed to
Borrower. Such notice only shall be deemed an objection to those items
specifically objected to therein.
SECTION 4. TERM AND TERMINATION
4.1 Term of Agreement. Subject to Lender's right to cease making
Loans to Borrower upon or after the occurrence of any Default or Event of
Default, this Agreement shall be in effect for a period from the date hereof
through and including April 23, 2001 (the "Original Term"), and this Agreement
automatically shall renew itself for one-year periods thereafter (the "Renewal
Terms"), unless terminated as provided in subsection 4.2 hereof.
4.2 Termination.
(a) Termination by Lender. Upon at least sixty (60) days prior
written notice to Borrower, Lender may terminate this Agreement as of the last
day of the Original Term or the then current Renewal Term, and Lender may
terminate this Agreement without notice upon or after the occurrence of an Event
of Default.
(b) Termination by Borrower. Upon at least sixty (60) days prior
written notice to Lender, Borrower may, at its option, terminate this Agreement;
provided, however, no such termination shall be effective until Borrower has
paid all of the Obligations in immediately available funds and all Letters of
Credit and LC Guaranties have expired or have been cash collateralized to
Lender's satisfaction. Any notice of termination given by Borrower shall be
irrevocable unless Lender otherwise agrees in writing, and Lender shall have no
obligation to make any Loans or issue or procure any Letters of Credit or LC
10.
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Guaranties on or after the termination date stated in such notice. Borrower may
elect to terminate this Agreement in its entirety only. Unless otherwise agreed
to by Lender, no section of this Agreement or type of Loan available hereunder
may be terminated singly.
(c) Termination Charges. At the effective date of termination of
this Agreement for any reason, Borrower shall pay to Lender (in addition to the
then outstanding principal, accrued interest, and other charges owing under the
terms of this Agreement and any of the other Loan Documents) as liquidated
damages for the loss of the bargain and not as a penalty, an amount ("Early
Termination Charge") equal to: (i) 1% of the Total Credit Facility if
termination occurs up to and including April 23, 1998; (ii) 1/2% of the Total
Credit Facility if termination occurs during on or after April 24, 1998 and up
to and including April 23, 1999; and (c) -0- if thereafter; provided, however,
that, if such termination occurs as a proximate result of: (y) the application
of the proceeds from a public offering of equity securities by Borrower, so long
as thereafter Lender continues to be the primary senior secured lender to
Borrower, or (z) a prepayment required under subsection 3.3(b) hereof, the Early
Termination Charge shall be zero (-0-). If termination occurs at any time after
April 24, 1999, no termination charge shall be payable.
(d) Effect of Termination. All of the Obligations shall be
immediately due and payable upon the termination date stated in any notice of
termination of this Agreement. All undertakings, agreements, covenants,
warranties and representations of Borrower contained in the Loan Documents shall
survive any such termination and Lender shall retain its Liens in the Collateral
and all of its rights and remedies under the Loan Documents notwithstanding such
termination until Borrower has paid the Obligations to Lender, in full, in
immediately available funds, together with the applicable Early Termination
Charge, if any. Notwithstanding the payment in full of the Obligations, Lender
shall not be required to terminate its security interests in the Collateral
unless, with respect to any loss or damage Lender may incur as a result of
dishonored checks or other items of payment received by Lender from Borrower or
any Account Debtor and applied to the Obligations, Lender shall, at its option,
(i) have received a written agreement, executed by Borrower and by any Person
whose loans or other advances to Borrower are used in whole or in part to
satisfy the Obligations, indemnifying Lender from any such loss or damage; or
(ii) have retained such monetary reserves and Liens on the Collateral for such
period of time as Lender, in its reasonable discretion, may deem necessary to
protect Lender from any such loss or damage.
SECTION 5. SECURITY INTERESTS
5.1 Security Interest in Collateral. To secure the prompt payment
and performance to Lender of the Obligations, Borrower hereby grants to Lender a
continuing Lien upon all of Borrower's assets, including all of the following
Property and interests in Property of Borrower, whether now owned or existing or
hereafter created, acquired or arising and wheresoever located:
11.
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(a) Accounts;
(b) Inventory;
(c) Equipment;
(d) General Intangibles;
(e) All monies and other Property of any kind now or at any
time or times hereafter in the possession or under the control of
Lender or a bailee or Affiliate of Lender;
(f) All accessions to, substitutions for and all
replacements, products and cash and non-cash proceeds of (a)
through (e) above, including, without limitation, proceeds of and
unearned premiums with respect to insurance policies insuring any
of the Collateral; and
(g) All books and records (including, without limitation,
customer lists, credit files, computer programs, print-outs, and
other computer materials and records) of Borrower pertaining to
any of (a) through (f) above.
5.2 Lien Perfection; Further Assurances. Borrower shall execute
such UCC-1 financing statements as are required by the Code and such other
instruments, assignments or documents as are necessary to perfect Lender's Lien
upon any of the Collateral and shall take such other action as may be required
to perfect or to continue the perfection of Lender's Lien upon the Collateral.
Unless prohibited by applicable law, Borrower hereby authorizes Lender to
execute and file any such financing statement on Borrower's behalf. The parties
agree that a carbon, photographic, or other reproduction of this Agreement shall
be sufficient as a financing statement and may be filed in any appropriate
office in lieu thereof. At Lender's request, Borrower also shall promptly
execute or cause to be executed and shall deliver to Lender any and all
documents, instruments, and agreements deemed necessary by Lender to give effect
to or carry out the terms or intent of the Loan Documents.
5.3 [Intentionally omitted]
SECTION 6. COLLATERAL ADMINISTRATION
6.1 General.
(a) Location of Collateral. All Collateral, other than Inventory
in transit and motor vehicles, will at all times be kept by Borrower at one or
more of the business locations set forth in Exhibit 6.1.1 hereto and shall not,
without the prior written
12.
19
approval of Lender, be moved therefrom except, prior to an Event of Default and
Lender's acceleration of the maturity of the Obligations in consequence thereof,
for (i) sales of Inventory in the ordinary course of business; and (ii) removals
in connection with dispositions of Equipment that are authorized by subsection
6.4(b) hereof.
(b) Insurance of Collateral. Borrower shall maintain and pay for
insurance upon all Collateral wherever located and with respect to Borrower's
business, covering casualty, hazard, public liability, and such other risks in
such amounts and with such insurance companies as are reasonably satisfactory to
Lender. Borrower shall deliver the originals of such policies to Lender with 438
BFU lender's loss payable endorsements or other satisfactory lender's loss
payable endorsements, naming Lender as sole loss payee and additional insured,
as appropriate. Each policy of insurance or endorsement shall contain a clause
requiring the insurer to give not less than thirty (30) days prior written
notice to Lender in the event of cancellation of the policy for any reason
whatsoever and a clause specifying that the interest of Lender shall not be
impaired or invalidated by any act or neglect of Borrower or the owner of the
Property or by the occupation of the premises for purposes more hazardous than
are permitted by said policy. If Borrower fails to provide and pay for such
insurance, Lender may, at its option, but shall not be required to, procure the
same and charge Borrower therefor. Borrower agrees to deliver to Lender,
promptly as rendered, true copies of all reports made in any reporting forms to
insurance companies.
(c) Protection of Collateral. All expenses of protecting,
storing, warehousing, insuring, handling, maintaining, and shipping the
Collateral, any and all excise, property, sales, and use taxes imposed by any
state, federal, or local authority on any of the Collateral or in respect of the
sale thereof shall be borne and paid by Borrower. If Borrower fails to promptly
pay any portion thereof when due, Lender may, at its option, but shall not be
required to, pay the same and charge Borrower therefor. Lender shall not be
liable or responsible in any way for the safekeeping of any of the Collateral or
for any loss or damage thereto (except for reasonable care in the custody
thereof while any Collateral is in Lender's actual possession) or for any
diminution in the value thereof, or for any act or default of any warehouseman,
carrier, forwarding agency, or other person whomsoever, but the same shall be at
Borrower's sole risk.
6.2 Administration of Accounts.
(a) Records of Accounts. Borrower shall keep accurate and
complete records of its Accounts and all payments and collections thereon.
(b) [Intentionally omitted].
(c) [Intentionally omitted]
(d) [Intentionally omitted]
13.
20
(e) [Intentionally omitted].
(f) [Intentionally omitted].
6.3 Administration of Inventory.
(a) Records and Reports of Inventory. Borrower shall keep
accurate and complete records of its Inventory.
(b) [Intentionally omitted].
6.4 Administration of Equipment.
(a) Records and Schedules of Equipment. Borrower shall keep
accurate records itemizing and describing the kind, type, quality, quantity, and
value of its Equipment and all dispositions made in accordance with subsection
6.4(b) hereof, and shall furnish Lender with a current schedule containing the
foregoing information if requested by Lender. Immediately on request therefor by
Lender, Borrower shall deliver to Lender any and all certificates of title with
respect to that portion of the Equipment that is subject to certificates of
title.
(b) Dispositions of Equipment. Borrower will not sell, lease, or
otherwise dispose of or transfer any of the Equipment or any part thereof
without the prior written consent of Lender; provided, however, that the
foregoing restriction shall not apply, for so long as no Default or Event of
Default exists, to (i) dispositions of Equipment which, in the aggregate during
any consecutive twelve-month period, has a fair market value or book value,
whichever is less, of $200,000, or less, or (ii) dispositions of Equipment that
is substantially worn, damaged, or obsolete and that is replaced with Equipment
of like kind, function, and value, provided that the replacement Equipment shall
be purchased or ordered within thirty (30) days of any disposition of the
Equipment that is to be replaced, the replacement Equipment shall be free and
clear of Liens other than Permitted Liens, and Borrower shall have given Lender
prior written notice of such disposition.
6.5 Payment of Charges. All amounts chargeable to Borrower under
Section 6 hereof shall be Obligations secured by all of the Collateral, shall be
payable on demand, and shall bear interest from the date such advance was made
until paid in full at the rate applicable to Revolving Credit Loans from time to
time.
6.6 [Intentionally omitted].
SECTION 7. REPRESENTATIONS AND WARRANTIES
7.1 General Representations and Warranties. To induce Lender to
enter into this Agreement and to make Loans or issue Letters of Credit or LC
Guaranties
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hereunder, Borrower warrants and represents to Lender that:
(a) Organization and Qualification. Borrower is a corporation
duly organized, validly existing, and in good standing under the laws of the
jurisdiction of its incorporation. Borrower is duly qualified and is authorized
to do business and is in good standing as a foreign corporation in each state or
jurisdiction listed on Exhibit 7.1.1 hereto and in all other states and
jurisdictions in which the failure of Borrower to be so qualified would have a
material adverse effect on the financial condition, business or Properties of
Borrower.
(b) Corporate Power and Authority. Borrower is duly authorized
and empowered to enter into, execute, deliver, and perform this Agreement and
each of the other Loan Documents to which it is a party. The execution,
delivery, and performance of this Agreement and each of the other Loan Documents
and the ESOP Transaction Documents have been duly authorized by all necessary
corporate action and do not and will not (i) require any consent or approval of
the stockholders of Borrower; (ii) contravene Borrower's charter, articles, or
certificate of incorporation or by-laws; (iii) violate, or cause Borrower to be
in default under, any provision of any law, rule, regulation, order, writ,
judgment, injunction, decree, determination, or award in effect having
applicability to Borrower; (iv) result in a breach of or constitute a default
under any indenture or loan or credit agreement or any other material agreement,
lease, or instrument to which Borrower is a party or by which it or its
Properties may be bound or affected; or (v) result in, or require, the creation
or imposition of any Lien (other than Permitted Liens) upon or with respect to
any of the Properties now owned or hereafter acquired by Borrower.
(c) Legally Enforceable Agreement. This Agreement is, and each of
the other Loan Documents when delivered under this Agreement will be, a legal,
valid, and binding obligation of Borrower enforceable against it in accordance
with its respective terms, except to the extent that (i) such enforceability is
limited by bankruptcy, insolvency, reorganization, moratorium, or other laws
relating to or affecting generally the enforcement of creditors' rights and (ii)
the availability of the remedy of specific performance or injunctive or other
equitable relief is subject to the discretion of the court before which any
proceeding therefor may be brought.
(d) Capital Structure. Exhibit 7.1.4 hereto states (i) the
correct name of each of the Subsidiaries of Borrower (if any), its jurisdiction
of incorporation, and the percentage of its Voting Stock owned by Borrower, (ii)
the name of each of Borrower's corporate or joint venture Affiliates and the
nature of the affiliation, (iii) the number, nature, and holder of all
outstanding Securities of Borrower and of each Subsidiary of Borrower (if any),
and (iv) the number of authorized, issued, and treasury shares of Borrower and
of each Subsidiary of Borrower (if any). Borrower has good title to all of the
shares it purports to own of the stock of each of its Subsidiaries (if any),
free and clear in each case of any Lien other than Permitted Liens. All such
shares have been duly issued and are fully paid and non-assessable. Except as
identified on Exhibit 7.1.4, there are no outstanding options to
15.
22
purchase, or any rights or warrants to subscribe for, or any commitments or
agreements to issue or sell, or any Securities or obligations convertible into,
or any powers of attorney relating to, shares of the capital stock of Borrower
or any of its Subsidiaries (if any). Except as identified on Exhibit 7.1.4, to
the knowledge of Borrower, there are no outstanding agreements or instruments
binding upon any of Borrower's stockholders relating to the ownership of its
shares of capital stock.
(e) Corporate Names. Borrower has not been known as or used any
corporate, fictitious, or trade names except those listed on Exhibit 7.1.5
hereto. Except as set forth on Exhibit 7.1.5, Borrower has not been the
surviving corporation of a merger or consolidation or acquired all or
substantially all of the assets of any Person.
(f) Business Locations; Agent for Process. Borrower's chief
executive office and other places of business are as listed on Exhibit 6.1.1
hereto. During the preceding one-year period, Borrower has not had an office,
place of business, or agent for service of process other than as listed on
Exhibit 6.1.1. Except as shown on Exhibit 6.1.1, no inventory is stored with a
bailee, warehouseman, or similar party that has not entered into a Collateral
Access Agreement with Lender, nor is any Inventory consigned to any Person.
(g) Title to Properties; Priority of Liens. Borrower has good
title to all of the Collateral and all of its other Property, in each case, free
and clear of all Liens except Permitted Liens. Borrower has paid or discharged
all known lawful claims which, if unpaid, might become a Lien against any of
Borrower's Properties that is not a Permitted Lien. The Liens granted to Lender
under Section 5 hereof are first priority Liens, subject only to Permitted
Liens.
(h) Accounts. Unless otherwise indicated in writing to Lender,
with respect to each Account:
(i) It is genuine and in all respects what it purports to
be, and it is not evidenced by a judgment;
(ii) It arises out of a completed, bona fide sale and
delivery of goods or rendition of services by Borrower in the
ordinary course of its business and in accordance with the terms
and conditions of all purchase orders, contracts, or other
documents relating thereto and forming a part of the contract
between Borrower and the Account Debtor;
(iii) It is for a liquidated amount maturing as stated in
the duplicate invoice covering such sale or rendition of
services, a copy of which has been furnished or is available to
Lender;
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(iv) Such Account, and Lender's security interest therein,
is not, and will not (by voluntary act or omission of Borrower)
be in the future, subject to any offset, Lien, deduction,
defense, dispute, counterclaim, or any other adverse condition
except for disputes resulting in returned goods where the amount
in controversy is deemed by Borrower to be immaterial, and each
such Account is absolutely owing to Borrower and is not
contingent in any respect or for any reason;
(v) At the time of creation, Borrower made no agreement
with any Account Debtor thereunder for any extension, compromise,
settlement, or modification of any such Account or any deduction
therefrom, except discounts or allowances which are granted by
Borrower in the ordinary course of its business for prompt
payment;
(vi) At the time of creation, there are no known and
unreported facts, events or occurrences which in any way impair
the validity or enforceability of any Accounts or tend to reduce
the amount payable thereunder from the face amount of the invoice
and statements delivered to Lender with respect thereto;
(vii) To the knowledge of Borrower, the Account Debtor
thereunder (i) had the capacity to contract at the time any
contract or other document giving rise to the Account was
executed and (ii) at the time of creation, such Account Debtor
was Solvent; and
(viii) To the knowledge of Borrower, at the time of
creation, there were no proceedings or actions which were
threatened or pending against any Account Debtor thereunder which
might result in any material adverse change in such Account
Debtor's financial condition or the collectibility of such
Account.
(i) Equipment. The Equipment is in good operating condition and
repair, and all necessary replacements of and repairs thereto shall be made so
that the value and operating efficiency of the Equipment shall be maintained and
preserved, reasonable wear and tear excepted. Borrower will not permit any of
the Equipment to become affixed to any real property leased to Borrower so that
an interest arises therein under the real estate laws of the applicable
jurisdiction unless the landlord of such real property has executed a Collateral
Access Agreement in favor of and in form acceptable to Lender, and Borrower will
not permit any of the Equipment to become an accession to any personal Property
other than Equipment that is subject to first priority (except for Permitted
Liens) Liens in favor of Lender.
(j) Financial Statements; Fiscal Year. The balance sheets of
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24
Borrower as of February 28, 1997, and the related statements of income, changes
in stockholder's equity, and changes in financial position for the periods ended
on such date, have been prepared in accordance with GAAP, and present fairly the
financial position of Borrower at such date and the results of Borrower's
operations for such periods. Except for the changes relative to Borrower's
financial condition as a result of its initial public offering effective on
April 14, 1997, since February 28, 1997 there has been no material change in the
condition, financial or otherwise, of Borrower and no change in the aggregate
value of Equipment owned by Borrower, except changes in the ordinary course of
business, none of which individually or in the aggregate has been materially
adverse. The fiscal year of Borrower ends on the last day of February of each
year.
(k) Full Disclosure. The financial statements referred to in
subsection 7.1(j) hereof do not, nor does this Agreement or any other written
statement of Borrower to Lender, contain any untrue statement of a material fact
or omit a material fact necessary to make the statements contained therein or
herein not misleading.
(l) Solvent Financial Condition. Borrower is now and, after
giving effect to the Loans to be made and the Letters of Credit and LC
Guaranties to be issued hereunder and the application of the proceeds thereof,
will be, Solvent.
(m) Surety Obligations. Except as shown on Exhibit 7.1.13 hereto,
Borrower is not obligated as surety or indemnitor under any surety or similar
bond or other contract issued or entered into any agreement to assure payment,
performance, or completion of performance of any undertaking or obligation of
any Person.
(n) Taxes. Borrower's federal tax identification number is
00-0000000. Borrower has filed all federal, state, and local tax returns and
other reports it is required by law to file and has paid, or made provision for
the payment of, all taxes, assessments, fees, levies, and other governmental
charges shown thereon to be due upon it, its income and Properties as and when
such taxes, assessments, fees, levies, and charges that are due and payable,
unless and to the extent any thereof are being actively contested in good faith
and by appropriate proceedings, and Borrower maintains reasonable reserves on
its books therefor. The provision for taxes on the books of Borrower are
adequate for all years not closed by applicable statutes, and for its current
fiscal year.
(o) Brokers. Except as disclosed in writing to Lender prior to
the date hereof, there are no claims for brokerage commissions, finder's fees,
or investment banking fees in connection with the transactions contemplated by
this Agreement.
(p) Patents, Trademarks, Copyrights, and Licenses. Borrower owns
or possesses all the patents, trademarks, service marks, trade names,
copyrights, and licenses necessary for the conduct of its business. Borrower is
in compliance with the foregoing without any known conflict with the rights of
others. All such patents, trademarks, service marks, tradenames, copyrights,
licenses, and other similar rights are
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listed on Exhibit 7.1.16 hereto.
(q) Governmental Consents. Borrower has, and is in good standing
with respect to, all governmental consents, approvals, licenses, authorizations,
permits, certificates, inspections, and franchises necessary to continue to
conduct its business as heretofore or proposed to be conducted by it and to own
or lease and operate its Properties as now owned or leased by it.
(r) Compliance with Laws. Borrower has duly complied in all
material respects with, and its Properties, business operations, and leaseholds
are in compliance in all material respects with, the provisions of all federal,
state, and local laws, rules, and regulations applicable to Borrower, its
Properties or the conduct of its business, and there have been no citations,
notices, or orders of noncompliance issued to Borrower under any such law, rule,
or regulation. Borrower has established and maintains an adequate monitoring
system to insure that it remains in compliance with all federal, state, and
local laws, rules and regulations applicable to it. No Inventory has been
produced in violation of the Fair Labor Standards Act (29 U.S.C. ss. 201 et
seq.), as amended.
(s) Restrictions. Borrower is not a party or subject to any
contract, agreement, or charter or other corporate restriction, which materially
and adversely affects its business or the use or ownership of any of its
Properties. Borrower is not a party or subject to any contract or agreement
which restricts its right or ability to incur Indebtedness, other than as set
forth on Exhibit 7.1.19 hereto, none of which prohibit the execution of or
compliance with this Agreement or the other Loan Documents by Borrower.
(t) Litigation. Except as set forth on Exhibit 7.1.20 hereto,
there are no actions, suits, proceedings, or investigations pending, or to the
knowledge of Borrower, threatened against or affecting Borrower, or the
business, operations, Properties, prospects, profits, or condition of Borrower
that reasonably could be expected to have a material adverse effect on Borrower,
its properties, assets, financial condition, business, or prospects. Borrower is
not in default with respect to any known order, writ, injunction, judgment,
decree, or rule of any court, governmental authority or arbitration board or
tribunal.
(u) No Defaults. No event has occurred and no condition exists
which would, upon or after the execution and delivery of this Agreement or
Borrower's performance hereunder, constitute a Default or an Event of Default.
Borrower is not in default, and no event has occurred and no condition exists
which constitutes, or which with the passage of time or the giving of notice or
both would constitute, a default in the payment of any Indebtedness to any
Person for Money Borrowed in excess of Fifty Thousand Dollars ($50,000).
(v) Leases. Exhibit 7.1.22(A) hereto is a complete listing of all
capitalized leases of Borrower and Exhibit 7.1.22(B) hereto is a complete
listing of all
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26
operating leases of Borrower. Borrower is in compliance in all material respects
with all of the terms of each of its respective capitalized and operating
leases.
(w) Pension Plans. Except as disclosed on Exhibit 7.1.23 hereto,
Borrower does not have any Plan. Borrower is in full compliance with the
requirements of ERISA and the regulations promulgated thereunder with respect to
each Plan. No fact or situation that could result in a material adverse change
in the financial condition of Borrower exists in connection with any Plan.
Borrower does not have any withdrawal liability in connection with a
Multiemployer Plan.
(x) Trade Relations. There exists no actual or, to the knowledge
of Borrower, threatened termination, cancellation or limitation of, or any
modification or change in, the business relationship between Borrower and any
customer or any group of customers whose purchases individually or in the
aggregate are material to the business of Borrower, or with any material
supplier, and there exists no present condition or state of facts or
circumstances that reasonably could be expected to materially adversely affect
Borrower or prevent Borrower from conducting such business after the
consummation of the transactions contemplated by this Agreement in substantially
the same manner in which it has heretofore been conducted.
(y) Labor Relations. Except as described on Exhibit 7.1.25
hereto, Borrower is not a party to any collective bargaining agreement. There
are no material grievances, disputes, or controversies with any union or any
other organization of Borrower's employees, or threats of strikes, work
stoppages, or any asserted pending demands for collective bargaining by any
union or organization.
(z) Inventory. All Inventory is now and shall be at all times
hereafter, in all material respects, of good and merchantable quality, free from
defects.
(aa) ESOP Qualification. The provisions of the ESOP in all
material respects in form satisfy the requirements applicable to a qualified
plan under Section 401(a) of the IRC, and the provisions of the ESOP Trust
Agreement in all material respects in form satisfy the requirements of an exempt
trust under Section 501(a) of the IRC. The provisions of the ESOP in all
material respects in form satisfy the requirements applicable to an "employee
stock ownership plan" under Section 4975(e)(7) of the IRC and Section 407(d)(6)
of ERISA.
(bb) ESOP Loan. The transactions contemplated by the ESOP
Transaction Documents and the Loan Documents will not constitute or result in a
non-exempt prohibited transaction under Section 4975(c)(1) of the IRC or Section
406(a) of ERISA, and the ESOP Loan is an "exempt loan" within the meaning of
Treas. Reg. ss.54-4975-7(b).
(cc) ESOP Trustee and Independent Financial Advisor. Both the
ESOP Trustee and the Independent Financial Advisor are independent of Borrower
and its
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Affiliates as defined in Prop. DOL Reg. ss.2510.3-18(b)(3)(iii).
7.2 Continuous Nature of Representations and Warranties. Each
representation and warranty contained in this Agreement and the other Loan
Documents shall be continuous in nature and shall remain accurate, complete, and
not misleading at all times during the term of this Agreement, except for
changes in the nature of Borrower's business or operations that would render the
information in any exhibit attached hereto either inaccurate, incomplete, or
misleading, so long as Lender has consented to such changes or such changes are
expressly permitted by this Agreement.
7.3 Survival of Representations and Warranties. All
representations and warranties of Borrower to Lender contained in this Agreement
or any of the other Loan Documents shall survive the execution, delivery, and
acceptance thereof by Lender and the parties thereto and the closing of the
transactions described therein or related thereto up to the termination of this
Agreement and the repayment in full of the Obligations.
SECTION 8. COVENANTS AND CONTINUING AGREEMENTS
8.1 Affirmative Covenants. During the term of this Agreement, and
thereafter for so long as there are any Obligations to Lender, Borrower
covenants that, unless otherwise consented to by Lender in writing, it shall:
(a) Visits and Inspections. Permit representatives of Lender,
from time to time, as often as may be reasonably requested, but only during
normal business hours upon reasonable prior written or telephonic notice, to
visit and inspect the Properties of Borrower, inspect, audit, and make extracts
from its books and records, and discuss with its officers, its employees, and
its independent accountants, Borrower's business, assets, liabilities, financial
condition, business prospects, and results of operations.
(b) Notices. Promptly notify Lender in writing of the occurrence
of any event or the existence of any fact which renders any representation or
warranty in this Agreement or any of the other Loan Documents inaccurate,
incomplete, or misleading in any material respect.
(c) Financial Statements. Keep adequate records and books of
account with respect to its business activities in which proper entries are made
in accordance with GAAP reflecting all its financial transactions, and cause to
be prepared and furnished to Lender the following (all to be prepared in
accordance with GAAP applied on a consistent basis, unless Borrower's certified
public accountants concur in any change therein and such change is disclosed to
Lender and is consistent with GAAP):
(i) not later than ninety (90) days after the close of each
fiscal year of Borrower, unqualified audited financial statements
of Borrower as of the end of such year, certified by a firm of
independent
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certified public accountants of recognized standing
selected by Borrower but acceptable (such acceptance not to be
unreasonably withheld or delayed) to Lender (except for a
qualification for a change in accounting principles with which
the accountant concurs, but expressly not to include any
qualification as a result of the failure of Borrower to conduct a
physical inventory);
(ii) not later than thirty-five (35) days after the end of
each month hereafter, including the last month of Borrower' s
fiscal year, unaudited interim financial statements of Borrower
as of the end of such month and of the portion of Borrower's
financial year then elapsed, certified by the principal financial
officer of Borrower as prepared in accordance with GAAP and
fairly presenting in all material respects the financial position
and results of operations of Borrower for such month and period
subject only to changes from audit and year-end adjustments and
except that such statements need not contain notes;
(iii) promptly after the sending or filing thereof, as the
case may be, copies of any proxy statements, financial
statements, or reports which Borrower has made available to its
stockholders generally and copies of any regular, periodic and
special reports or registration statements which Borrower files
with the Securities and Exchange Commission or any governmental
authority which may be substituted therefor, or any national
securities exchange;
(iv) promptly after the filing thereof, copies of any
annual report required by ERISA to be filed in connection with
each Plan; and
(v) such other data and information (financial and
otherwise) as Lender, from time to time, may reasonably request,
bearing upon or related to the Collateral or Borrower's financial
condition or results of operations.
Concurrently with the delivery of the financial statements
described in clause (i) of this subsection 8.1, Borrower shall forward to Lender
a copy of the accountants' letter to Borrower's management that is prepared in
connection with such financial statements. Concurrently with the delivery of the
financial statements described in clauses (i) and (ii) of this subsection 8.1,
or more frequently if requested by Lender, Borrower shall cause to be prepared
and furnished to Lender a Compliance Certificate in the form of Exhibit 8.1.3
hereto executed by the Chief Financial Officer of Borrower.
(d) Landlord and Storage Agreements. Provide Lender with copies
of all agreements between Borrower and any landlord or warehouseman which owns
any premises at which any Inventory may, from time to time, be kept.
22.
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(e) [Intentionally omitted]
(f) Projections. No later than thirty (30) days after the end of
each fiscal year of Borrower, deliver to Lender Projections of Borrower for the
forthcoming three (3) years, year by year, and for the forthcoming fiscal year,
month by month.
8.2 Negative Covenants. During the term of this Agreement, and
thereafter for so long as there are any Obligations to Lender, Borrower
covenants that, unless Lender has first consented thereto in writing, it will
not:
(a) Mergers; Consolidations; Acquisitions. Merge or consolidate
with any Person, nor acquire all or any substantial part of the Properties of
any Person.
(b) Loans. Other than the ESOP Loan, make any loans or other
advances of money (other than for salary, travel advances, advances against
commissions, and other similar advances in the ordinary course of business) to
any Person in excess of $250,000 in the aggregate outstanding at any one time.
(c) Total Indebtedness. Create, incur, assume, or suffer to exist
any Indebtedness, except:
(i) Obligations owing to Lender;
(ii) [Intentionally omitted];
(iii) [Intentionally omitted];
(iv) accounts payable to trade creditors and current
operating expenses (other than for Money Borrowed) which are not
aged more than one hundred twenty (120) days from the billing
date, in each case incurred in the ordinary course of business
and paid within such time period, unless the same are being
actively contested in good faith and by appropriate and lawful
proceedings and Borrower shall have set aside such reserves, if
any, with respect thereto as are required by GAAP and deemed
adequate by Borrower and its independent accountants;
(v) accounts payable to trade creditors and current
operating expenses (other than for Money Borrowed) which are not
aged more than ninety (90) days from the due date nor more than
two hundred forty (240) days from the billing date, in each case
incurred in the ordinary course of business and paid within such
time period, unless the same are being actively contested in good
faith and by appropriate
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and lawful proceedings and Borrower shall have set aside such
reserves, if any, with respect thereto as are required by GAAP
and deemed adequate by Borrower and its independent accountants;
(vi) Obligations to pay Rentals permitted by subsection
8.2(l) hereof;
(vii) Permitted Purchase Money Indebtedness;
(viii) contingent liabilities arising out of endorsements
of checks and other negotiable instruments for deposit or
collection in the ordinary course of business; and
(ix) Indebtedness not included in paragraphs (i) through
(vii) above which does not exceed at any time, in the aggregate,
the sum of Three Hundred Fifty Thousand Dollars ($350,000).
(d) Affiliate Transactions. Other than the ESOP Transactions,
enter into, or be a party to, any transaction with any Affiliate of Borrower,
except in the ordinary course of and pursuant to the reasonable requirements of
Borrower's business and upon fair and reasonable terms which are fully disclosed
to Lender and are no less favorable to Borrower than would obtain in a
comparable arm's length transaction with a Person not an Affiliate or
stockholder of Borrower.
(e) Limitation on Liens. Create or suffer to exist any Lien upon
any of its Property, income or profits, whether now owned or hereafter acquired,
except:
(i) Liens at any time granted in favor of Lender;
(ii) Liens for taxes (excluding any Lien imposed pursuant
to any of the provisions of ERISA) not yet due, or being
contested in the manner described in subsection 7.1(n) hereto,
but only if in Lender's judgment such Lien does not adversely
affect Lender's rights or the priority of Lender's Lien in the
Collateral;
(iii) Ordinary Course Liens;
(iv) Purchase Money Liens securing Permitted Purchase Money
Indebtedness;
(v) [Intentionally omitted];
(vi) such other Liens as appear on Exhibit 8.2.5 hereof;
and
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(vii) such other Liens as Lender may hereafter approve in
writing.
(viii) [Intentionally omitted].
(f) Distributions. Declare or make any Distributions, except:
(i) [Intentionally omitted];
(ii) [Intentionally omitted];
(iii) [Intentionally omitted];
(vi) the declaration and making of (i) non-cash
contributions to the ESOP, and (ii) cash contributions to the
ESOP so long as the maximum aggregate amount of such cash
contributions in any one year do not exceed $100,000; and
(vii) [Intentionally omitted].
(g) Capital Expenditures. Make Capital Expenditures (including,
without limitation, by way of capitalized leases) which, in the aggregate, as to
Borrower, exceed $2,500,000 during any fiscal year of Borrower.
(h) Disposition of Assets. Other than the ESOP Transactions,
sell, lease, or otherwise dispose of any of its Properties, including any
disposition of Property as part of a sale and leaseback transaction, to or in
favor of any Person, except (i) sales of Inventory in the ordinary course of
business for so long as no Event of Default exists hereunder or (ii)
dispositions expressly authorized by this Agreement.
(i) [Intentionally omitted].
(j) Xxxx-and-Hold Sales, Etc. Make a sale to any customer on a
xxxx-and-hold, guaranteed sale, sale and return, sale on approval or consignment
basis, or any sale on a repurchase or return basis.
(k) Restricted Investment. Make or have any Restricted
Investment.
(l) Leases. Become a lessee under any operating lease (other than
a lease under which Borrower is lessor) of Property if the aggregate Rentals
payable during any current or future period of twelve (12) consecutive months
under the lease in question and all other leases under which Borrower is then
lessee would exceed $1,750,000. The
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32
term "Rentals" means, as of the date of determination, all payments which the
lessee is required to make by the terms of any lease.
(m) Tax Consolidation. File or consent to the filing of any
consolidated income tax return with any Person other than a Subsidiary.
8.3 Specific Financial Covenants. During the term of this
Agreement, and thereafter for so long as there are any Obligations to Lender,
Borrower covenants that, unless otherwise consented to by Lender in writing, it
shall:
(a) [intentionally omitted].
(b) Profitability. Achieve EBITDA of not less than the amount
shown below for the period corresponding thereto:
Period EBITDA
------ ------
March 1, 1997 through
November 30, 1997 $6,500,000
March 1, 1997 through
February 28, 1998 $8,000,000
For each 12 month period
ending May 31
during each subsequent fiscal year $8,000,000
For each 12 month period
ending August 31
during each subsequent fiscal year $8,000,000
For each 12 month period
ending November 30
during each subsequent fiscal year $8,000,000
For each 12 month period
ending February 28/29
during each subsequent fiscal year $8,000,000
(c) Total Senior Debt Coverage Ratio. Maintain at all times a
Total Senior Debt Coverage Ratio of not less than the ratio shown below for the
period corresponding thereto:
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Period Ratio
------ -----
March 1, 1997 through
November 30, 1997 3.25:1.0
March 1, 1997 through
February 28, 1998 3.25:1.0
For each 12 month period
ending May 31
during each subsequent fiscal year 3.25:1.0
For each 12 month period
ending August 31
during each subsequent fiscal year 3.25:1.0
For each 12 month period
ending November 30
during each subsequent fiscal year 3.25:1.0
For each 12 month period
ending February 28/29
during each subsequent fiscal year 3.25:1.0
(d) [Intentionally omitted].
(e) [Intentionally omitted].
(f) [Intentionally omitted].
(g) [Intentionally omitted].
(h) [Intentionally omitted].
SECTION 9. CONDITIONS PRECEDENT TO INITIAL CREDITS
Notwithstanding any other provision of this Agreement or any of
the other Loan Documents, and without affecting in any manner the rights of
Lender under the other sections of this Agreement, Lender shall not be required
to make or issue the initial Loans, Letters of Credit, or L/C Guaranties under
this Agreement unless and until each of the following conditions has been and
continues to be satisfied:
9.1 Documentation. Lender shall have received, in form and
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34
substance satisfactory to Lender and its counsel, a duly executed copy of this
Agreement and the other Loan Documents, together with such additional documents,
instruments, and certificates as Lender and its counsel shall require in
connection therewith, all in form and substance satisfactory to Lender and its
counsel. In this regard, Borrower shall execute and deliver an agreement or
agreements in form satisfactory to Lender to the effect that (a) the Existing
Loan Agreement is terminated, and (b) the Patent Security Agreement and
Trademark Security Agreement are deemed amended to the extent necessary to cause
such agreements to secure the obligations of Borrower arising under this
Agreement.
9.2 Other Loan Documents. Each of the conditions precedent set
forth in the other Loan Documents shall have been satisfied.
9.3 Approvals and Consents. Borrower shall have received all
governmental consents, approvals, licenses, authorizations, permits,
certificates, inspections, and franchises necessary for the consummation of the
transactions contemplated by the Loan Documents.
9.4 Interim Financial Statements. Prior to the Closing Date,
Lender shall have received copies of Borrower's interim financial statements,
dated as of August 31, 1997, certified by an appropriate officer of Borrower as
presenting fairly in all material respects the financial condition of Borrower.
9.5 Certified Documents of Borrower. On or before the Closing
Date, Borrower shall have delivered to Lender copies of the following documents,
duly certified, or the following certificates, as applicable:
(a) Resolutions of the Board of Directors of Borrower authorizing
(i) the execution, delivery, and performance of the Loan Documents to which
Borrower is a party, (ii) the consummation of the transactions contemplated by
the Loan Documents to which Borrower is a party, and (iii) all other actions to
be taken by Borrower in connection with the Loan Documents to which Borrower is
a party;
(b) A certificate, signed by the Secretary or an Assistant
Secretary of Borrower, dated as of the Closing Date, as to (i) the incumbency,
and containing the specimen signature or signatures, of the Person or Persons
authorized to execute the Loan Documents to which Borrower is a party on behalf
of Borrower, together with evidence of the incumbency of such Secretary or
Assistant Secretary, and (ii) the authenticity and completeness of the
respective Certificate of Incorporation and By-Laws of Borrower; and
(c) Certificates of status or good standing of Borrower, from the
Secretary of State of Delaware and of each state or other jurisdiction in which
Borrower is qualified to do business, dated within five (5) days of the Closing
Date.
9.6 Opinion of Counsel. Lender shall have received from counsel
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35
for Borrower a legal opinion in form and substance satisfactory to Lender and
its counsel.
9.7 Projections. Lender shall have received a set of Projections
as to the projective financial performance of Borrower through fiscal year ended
February 28, 1999. Such Projections shall be prepared on a month-by-month basis.
The Projections shall be in form and substance satisfactory to Lender and
certified by the chief financial officer of Borrower as being such officers good
faith, best estimate of the financial performance of Borrower during such
period.
SECTION 9-A. CONDITIONS PRECEDENT TO ALL LOANS
Notwithstanding any other provision of this Agreement or any of
the other Loan Documents, and without affecting in any manner the rights of
Lender under the other sections of this Agreement, Lender shall not be required
to make or issue any Loans, Letters of Credit, or L/C Guaranties under this
Agreement unless each of the following conditions is satisfied:
9-A.1 No Default. No Default or Event of Default shall exist.
9-A.2 Representations and Warranties. 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 date of such Loan (except
to the extent that such representations and warranties relate solely to an
earlier date).
9-A.3 No Litigation. No action, proceeding, investigation,
regulation, or legislation shall have been instituted, threatened, or proposed
before any court, governmental agency, or legislative body to enjoin, restrain,
or prohibit, or to obtain damages in respect of, or which is related to or
arises out of this Agreement or the consummation of the transactions
contemplated hereby.
SECTION 10. EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT
10.1 Events of Default. The occurrence of one or more of the
following events shall constitute an "Event of Default":
(a) Payment of Note. Borrower shall fail to pay any installment
of principal, interest or premium, if any, owing on the CapEx Notes on the due
date of such installment.
(b) Payment of Other Obligations. Borrower shall fail to pay any
of the Obligations that are not evidenced by the CapEx Notes on the due date
thereof (whether due at stated maturity, upon acceleration, or otherwise) and
the same shall not be paid within 3 days of the date on which such payment first
is due and payable.
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(c) Misrepresentations. Any representation, warranty, or other
statement made or furnished to Lender by or on behalf of Borrower in this
Agreement, any of the other Loan Documents or any instrument, certificate or
financial statement furnished in compliance with or in reference thereto proves
to have been false or misleading in any material respect when made or furnished
or when reaffirmed pursuant to Section 7.2 hereof.
(d) Breach of Specific Covenants. (i) Borrower shall fail or
neglect to perform, keep, or observe any covenant contained in subsections 5.2,
6.1(a), 6.2, or 8.1(c) hereof on the date that Borrower is required to perform,
keep, or observe such covenant, and the breach of such covenant is not cured to
Lender's satisfaction within five (5) days after the sooner to occur of
Borrower's receipt of written notice of such breach from Lender or the date on
which Borrower first has knowledge thereof or reasonably should have had
knowledge thereof; and (ii) Borrower shall fail or neglect to perform, keep, or
observe any covenant contained in subsections 8.1(a), 8.2, or 8.3 hereof on the
date that Borrower is required to perform, keep, or observe such covenant.
(e) Breach of Other Covenants. Borrower shall fail or neglect to
perform, keep, or observe any covenant contained in this Agreement (other than a
covenant which is dealt with specifically elsewhere in Section 10.1 hereof) and
the breach of such other covenant is not cured to Lender's satisfaction within
thirty (30) days after the sooner to occur of Borrower's receipt of written
notice of such breach from Lender or the date on which Borrower first has
knowledge thereof or reasonably should have had knowledge thereof.
(f) Default Under Security Documents/Other Agreements/ESOP
Transactions Documents. Borrower shall default in the performance or observance
of any term, covenant, condition, or agreement contained in, any of the Security
Documents, any of the Other Agreements, or the ESOP Transactions Documents, and
such default shall continue beyond any applicable grace period.
(g) Other Defaults. (a) There shall occur any default or event of
default on the part of Borrower under any agreement, document, or instrument to
which Borrower is a party or by which Borrower or any of its Property is bound,
creating or relating to any Indebtedness (other than the Obligations) in excess
of $300,000 if the payment or maturity of such Indebtedness is accelerated in
consequence of such event of default or demand for payment of such Indebtedness
is made.
(h) Uninsured Losses. Any material loss, theft, damage, or
destruction of any of the Collateral not fully covered (subject to such
deductibles as Lender shall have permitted) by insurance.
(i) Adverse Changes. There shall occur any material adverse
change in the financial condition or business prospects of Borrower.
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(j) Insolvency and Related Proceedings. Borrower shall cease to
be Solvent or shall suffer the appointment of a receiver, trustee, custodian, or
similar fiduciary, or shall make an assignment for the benefit of creditors, or
any petition for an order for relief shall be filed by or against Borrower under
the Bankruptcy Code (if against Borrower, the continuation of such proceeding
for more than sixty (60) days), or Borrower shall make any offer of settlement,
extension, or composition to its unsecured creditors generally.
(k) Business Disruption. There shall occur a cessation of a
substantial part of the business of Borrower for a period which significantly
affects Borrower's capacity to continue its business, on a profitable basis; or
Borrower shall suffer the loss or revocation of any license or permit now held
or hereafter acquired by Borrower, or any lease or agreement to which Borrower
is or becomes a party, which is necessary to the continued or lawful operation
of its business; or Borrower shall be enjoined, restrained, or in any way
prevented by court, governmental or administrative order from conducting all or
any material part of its business affairs.
(l) Change of Ownership. The Principal Stockholders shall cease
to own and control, beneficially and of record, at least 24% of the issued and
outstanding common stock of Borrower.
(m) ERISA. A Reportable Event shall occur which Lender, in its
sole discretion, shall determine in good faith constitutes grounds for the
termination by the Pension Benefit Guaranty Corporation of any Plan or for the
appointment by the appropriate United States district court of a trustee for any
Plan, or if any Plan shall be terminated (other than in a "standard termination"
as defined in Section 4041(b) of ERISA) or any such trustee shall be requested
or appointed, or if Borrower is in "default" (as defined in Section 4219(c)(5)
of ERISA) with respect to payments in excess of Fifty Thousand Dollars ($50,000)
to a Multiemployer Plan resulting from Borrower's complete or partial withdrawal
from such Plan.
(n) Challenge to Agreement. Borrower or any Affiliate of Borrower
shall challenge or contest in any action, suit, or proceeding the validity or
enforceability of this Agreement, or any of the other Loan Documents, the
legality or enforceability of any of the Obligations or the perfection or
priority of any Lien granted to Lender.
(o) [Intentionally omitted].
(p) Criminal Forfeiture. Borrower shall be criminally indicted or
convicted under any law that could lead to a forfeiture of any Property of
Borrower valued in the aggregate in excess of $100,000.
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(q) Judgments. Any money judgment, writ of attachment, or similar
process is filed against Borrower or any of its Property in connection with a
claim in excess of $300,000 and the same is not discharged or bonded against
within thirty (30) days of the date of such filing.
(r) ESOP Loan. If the ESOP fails to pay when due and payable or
when declared due and payable, but subject to any requirement of prior notice or
the expiration of any grace period set forth in the ESOP Loan Agreement, any
amount payable under the ESOP Loan Agreement as a result of Borrower's failure
to make contributions to the ESOP.
10.2 Acceleration of the Obligations. Without in any way limiting
the right of Lender to demand payment of any portion of the Obligations payable
on demand in accordance with subsection 3.2 hereof, upon or at any time after
the occurrence of an Event of Default, all or any portion of the Obligations
shall, at the option of Lender and without presentment, demand protest or
further notice by Lender, become at once due and payable and Borrower shall
forthwith pay to Lender, the full amount of such Obligations, provided that upon
the occurrence of an Event of Default specified in subsection 10.1(j) hereof,
all of the Obligations shall become automatically due and payable without
declaration, notice, or demand by Lender.
10.3 Other Remedies. Upon and after the occurrence of an Event of
Default, Lender shall have and may exercise, from time to time, the following
rights and remedies:
(a) All of the rights and remedies of a secured party under the
Code or under other applicable law, and all other legal and equitable rights to
which Lender may be entitled, all of which rights and remedies shall be
cumulative and shall be in addition to any other rights or remedies contained in
this Agreement or any of the other Loan Documents, and none of which shall be
exclusive.
(b) The right to take immediate possession of the Collateral, and
to (i) require Borrower to assemble the Collateral, at Borrower's expense, and
make it available to Lender at a place designated by Lender which is reasonably
convenient to both parties, and (ii) enter any premises where any of the
Collateral shall be located and to keep and store the Collateral on said
premises until sold (and if said premises be the Property of Borrower, Borrower
agrees not to charge Lender for storage thereof).
(c) The right to sell or otherwise dispose of all or any
Collateral in its then condition, or after any further manufacturing or
processing thereof, at public or private sale or sales, with such notice as may
be required by law, in lots or in bulk, for cash or on credit, all as Lender, in
its sole discretion, may deem advisable. Borrower agrees that ten (10) days
written notice to Borrower of any public or private sale or other disposition of
Collateral shall be reasonable notice thereof, and such sale shall be at such
locations as
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Lender may designate in said notice. Lender shall have the right to conduct such
sales on Borrower's premises, without charge therefor, and such sales may be
adjourned from time to time in accordance with applicable law. Lender shall have
the right to sell, lease, or otherwise dispose of the Collateral, or any part
thereof, for cash, credit, or any combination thereof, and Lender may purchase
all or any part of the Collateral at public or, if permitted by law, private
sale and, in lieu of actual payment of such purchase price, may set off the
amount of such price against the Obligations. The proceeds realized from the
sale of any Collateral may be applied, after allowing two (2) Business Days for
collection, first to the costs, expenses and attorneys' fees incurred by Lender
in collecting the Obligations, in enforcing the rights of Lender under the Loan
Documents and in collecting, retaking, completing, protecting, removing,
storing, advertising for sale, selling, and delivering any Collateral, second to
the interest due upon any of the Obligations; and third, to the principal of the
Obligations. If any deficiency shall arise, Borrower shall remain liable to
Lender therefor.
(d) Lender is hereby granted a license or other right to use,
without charge, Borrower's labels, patents, copyrights, rights of use of any
name, trade secrets, tradenames, trademarks and advertising matter, or any
Property of a similar nature as it pertains to the Collateral, in advertising
for sale and selling any Collateral and Borrower's rights under all licenses and
all franchise agreements shall inure to Lender's benefit for the purposes of
this Agreement and the other Loan Documents.
(e) Lender may, at its option, require Borrower to deposit with
Lender funds equal to the LC Amount and, if Borrower fails to promptly make such
deposit, Lender may advance such amount as a Revolving Credit Loan (whether or
not an Overadvance is created thereby). Any such deposit or advance shall be
held by Lender as a reserve to fund future payments on such LC Guaranties and
future drawings against such Letters of Credit. At such time as all LC
Guaranties have been paid or terminated and all Letters of Credit have been
drawn upon or expired, any amounts remaining in such reserve shall be applied
against any outstanding Obligations, or, if all Obligations have been
indefeasibly paid in full, returned to Borrower.
10.4 Remedies Cumulative; No Waiver. All covenants, conditions,
provisions, warranties, guaranties, indemnities, and other undertakings of
Borrower contained in this Agreement and the other Loan Documents, or in any
document referred to herein or contained in any agreement supplementary hereto
or in any schedule given to Lender or contained in any other agreement between
Lender and Borrower, heretofore, concurrently, or hereafter entered into, shall
be deemed cumulative to and not in derogation or substitution of any of the
terms, covenants, conditions, or agreements of Borrower herein contained. The
failure or delay of Lender to require strict performance by Borrower of any
provision of this Agreement or to exercise or enforce any rights, Liens, powers,
or remedies hereunder or under any of the aforesaid agreements or other
documents or security or Collateral shall not operate as a waiver of such
performance, Liens, rights, powers, and remedies, but all such requirements,
Liens, rights, powers, and remedies shall continue in
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40
full force and effect until all Loans and all other Obligations owing or to
become owing from Borrower to Lender shall have been fully satisfied. None of
the undertakings, agreements, warranties, covenants, and representations of
Borrower contained in this Agreement or any of the other Loan Documents and no
Event of Default by Borrower under this Agreement or any other Loan Documents
shall be deemed to have been suspended or waived by Lender, unless such
suspension or waiver is by an instrument in writing specifying such suspension
or waiver and is signed by a duly authorized representative of Lender and
directed to Borrower.
SECTION 11. MISCELLANEOUS
11.1 Power of Attorney. Borrower hereby irrevocably designates,
makes, constitutes, and appoints Lender (and all Persons designated by Lender)
as Borrower's true and lawful attorney (and agent-in-fact) and Lender, or
Lender's agent, may, without notice to Borrower and in either Borrower's or
Lender's name, but at the cost and expense of Borrower:
(a) At such time or times upon or after the occurrence of an
Event of Default as Lender or said agent, in its sole discretion, may determine,
endorse Borrower's name on any checks, notes, acceptances, drafts, money orders
or any other evidence of payment or proceeds of the Collateral which come into
the possession of Lender or under Lender's control.
(b) At such time or times upon or after the occurrence of an
Event of Default as Lender or its agent in its sole discretion may determine:
(i) demand payment of the Accounts from the Account Debtors, enforce payment of
the Accounts by legal proceedings or otherwise, and generally exercise all of
Borrower's rights and remedies with respect to the collection of the Accounts;
(ii) settle, adjust, compromise, discharge or release any of the Accounts or
other Collateral or any legal proceedings brought to collect any of the Accounts
or other Collateral; (iii) sell or assign any of the Accounts and other
Collateral upon such terms, for such amounts and at such time or times as Lender
deems advisable; (iv) take control, in any manner, of any item of payment or
proceeds relating to any Collateral; (v) prepare, file, and sign Borrower's name
to a proof of claim in bankruptcy or similar document against any Account Debtor
or to any notice of lien, assignment or satisfaction of lien or similar document
in connection with any of the Collateral; (vi) receive, open and dispose of all
mail addressed to Borrower and to notify postal authorities to change the
address for delivery thereof to such address as Lender may designate; (vii)
endorse the name of Borrower upon any of the items of payment or proceeds
relating to any Collateral and deposit the same to the account of Lender on
account of the Obligations; (viii) endorse the name of Borrower upon any chattel
paper, document, instrument, invoice, freight xxxx, xxxx of lading or similar
document or agreement relating to the Accounts, Inventory and any other
Collateral; (ix) use Borrower's stationery and sign the name of Borrower to
verifications of the Accounts and notices thereof to Account Debtors; (x) use
the information recorded on or contained in any data processing equipment and
computer hardware and software relating to the Accounts, Inventory, Equipment
and any other Collateral; (xi) make and adjust claims
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under policies of insurance; and (xii) do all other acts and things necessary,
in Lender's determination, to fulfill Borrower's obligations under this
Agreement.
11.2 Indemnity. Borrower hereby agrees to indemnify Lender and
hold Lender harmless from and against any liability, loss, damage, suit, action,
or proceeding ever suffered or incurred by Lender (including reasonable
attorneys fees and legal expenses) as the result of Borrower's failure to
observe, perform or discharge Borrower's duties hereunder. In addition, Borrower
shall defend Lender against and save it harmless from all claims of any Person
with respect to the Collateral. Without limiting the generality of the
foregoing, these indemnities shall extend to any claims asserted against Lender
by any Person under any Environmental Laws or similar laws by reason of
Borrower's or any other Person's failure to comply with laws applicable to solid
or hazardous waste materials or other toxic substances which failure proximately
relates to Borrower's facilities, products, or the Collateral. Notwithstanding
any contrary provision in this Agreement, the obligation of Borrower under this
subsection 11.2 shall survive for a period of 5 years following the payment in
full of the Obligations and the termination of this Agreement.
11.3 Modification of Agreement; Sale of Interest. This Agreement
may not be modified, altered or amended, except by an agreement in writing
signed by Borrower and Lender. Borrower may not sell, assign or transfer any
interest in this Agreement, any of the other Loan Documents, or any of the
Obligations, or any portion thereof, including, without limitation, Borrower's
rights, title, interests, remedies, powers, and duties hereunder or thereunder.
Borrower hereby consents to Lender's participation, sale, assignment, transfer
or other disposition, at any time or times hereafter, of this Agreement and any
of the other Loan Documents, or of any portion hereof or thereof, including,
without limitation, Lender's rights, title, interests, remedies, powers, and
duties hereunder or thereunder; provided, however, that if no Event of Default
has occurred and is continuing and if Lender effects any such sale, assignment,
transfer, or other disposition (excluding, however, the sale of a participation
interest) without the prior written consent of Borrower which such consent shall
not be unreasonably withheld, delayed, or conditioned, then Borrower shall have
the right to prepay all of the Obligations under this Agreement and terminate
this Agreement without being obligated to pay the Early Termination Charge that
otherwise would be payable under subsection 4.2(c) hereof so long as such
prepayment occurs within 120 days of the date on which Borrower first received
notice of the consummation of such sale, assignment, transfer, or other
disposition (excluding, however, the sale of a participation interest). In the
case of an assignment, the assignee shall have, to the extent of such
assignment, the same rights, benefits and obligations as it would if it were
"Lender" hereunder and Lender shall be relieved of all obligations hereunder
upon any such assignments. Borrower agrees that it will use its best efforts to
assist and cooperate with Lender in any manner reasonably requested by Lender to
effect the sale of participations in or assignments of any of the Loan Documents
or any portion thereof or interest therein, including, without limitation,
assisting in the preparation of appropriate disclosure documents. Borrower
further agrees that Lender may disclose credit information regarding Borrower to
any potential participant or assignee in accordance with subsection 11.16
hereof.
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11.4 Severability. Wherever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective only to the
extent of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Agreement.
11.5 Successors and Assigns. This Agreement, the Other
Agreements, and the Security Documents shall be binding upon and inure to the
benefit of the successors and assigns of Borrower and Lender permitted under
subsection 11.3 hereof.
11.6 Cumulative Effect; Conflict of Terms. The provisions of the
Other Agreements and the Security Documents are hereby made cumulative with the
provisions of this Agreement. Except as otherwise provided in subsection 3.2
hereof and except as otherwise provided in any of the other Loan Documents by
specific reference to the applicable provision of this Agreement, if any
provision contained in this Agreement is in direct conflict with, or
inconsistent with, any provision in any of the other Loan Documents, the
provision contained in this Agreement shall govern and control.
11.7 Execution in Counterparts. This Agreement may be executed in
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed to be
an original and all of which counterparts taken together shall constitute but
one and the same instrument.
11.8 Notice. Except as otherwise provided herein, all notices,
requests and demands to or upon a party hereto, to be effective, shall be in
writing and shall be sent by certified or registered mail, return receipt
requested, by personal delivery against receipt, by overnight courier or by
facsimile and, unless otherwise expressly provided herein, shall be deemed to
have been validly served, given or delivered immediately when delivered against
receipt, 3 Business Days after deposit in the mail, postage prepaid, or with an
overnight courier or, in the case of facsimile notice, when sent, addressed as
follows:
If to
Lender: FLEET CAPITAL CORPORATION
00000 Xxxxxxx Xxxxxxxxx, Xxxxx 0000
Xxxxxxx Xxxx, Xxxxxxxxxx 00000
Attention: Loan Administration Manager
Facsimile No.: (000) 000-0000
With a
copy to: XXXXXXX, PHLEGER & XXXXXXXX LLP
000 Xxxxx Xxxx Xxxxxx
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Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxx Xxxxxxx Hilson, Esq.
Facsimile No.: (000) 000-0000
If to
Borrower: XXXXX INSTRUMENTS CORP.
0000 Xxx Xxxxxx
Xxxxxx, Xxxxxxxxxx 00000
Attention: Xx. Xxxx X. Xxxxxx
Xxxx X. Xxxxxxxx, Esq.
Facsimile No.: (000) 000-0000
With a
copy to: O'MELVENY & XXXXX
610 Newport Center Drive, Suite 1700
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Attention: J. Xxx Xxxxxx, Esq.
Facsimile No.: (000) 000-0000
or to such other address as each party may designate for itself by notice given
in accordance with this subsection 11.8; provided, however, that any notice,
request or demand to or upon Lender pursuant to subsection 3.1(a), 4.2(a), or
4.2(b) hereof shall not be effective until received by Lender.
11.9 Lender's Consent. Whenever Lender's consent is required to
be obtained under this Agreement, any of the Other Agreements, or any of the
Security Documents as a condition to any action, inaction, condition, or event,
Lender shall be authorized to give or withhold such consent in its sole and
absolute discretion and to condition its consent upon the giving of additional
collateral security for the Obligations, the payment of money or any other
matter.
11.10 Credit Inquiries. Borrower hereby authorizes and permits
Lender to respond to usual and customary credit inquiries from third parties
concerning Borrower.
11.11 Time of Essence. Time is of the essence of this Agreement,
the Other Agreements, and the Security Documents.
11.12 Entire Agreement. This Agreement and the other Loan
Documents, together with all other instruments, agreements and certificates
executed by the parties in connection therewith or with reference thereto,
embody the entire understanding and agreement between the parties hereto and
thereto with respect to the subject matter
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hereof and thereof and supersede all prior agreements, understandings and
inducements, whether express or implied, oral or written.
11.13 Interpretation. No provision of this Agreement or any of
the other Loan Documents shall be construed against or interpreted to the
disadvantage of any party hereto by any court or other governmental or judicial
authority by reason of such party having or being deemed to have structured or
dictated such provision.
11.14 GOVERNING LAW; CONSENT TO FORUM. THIS AGREEMENT HAS BEEN
NEGOTIATED, EXECUTED AND DELIVERED AT AND SHALL BE DEEMED TO HAVE BEEN MADE IN
LOS ANGELES, CALIFORNIA. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA; PROVIDED, HOWEVER, THAT IF
ANY OF THE COLLATERAL SHALL BE LOCATED IN ANY JURISDICTION OTHER THAN
CALIFORNIA, THE LAWS OF SUCH JURISDICTION SHALL GOVERN THE METHOD, MANNER AND
PROCEDURE FOR FORECLOSURE OF LENDER'S LIEN UPON SUCH COLLATERAL AND THE
ENFORCEMENT OF LENDER'S OTHER REMEDIES IN RESPECT OF SUCH COLLATERAL TO THE
EXTENT THAT THE LAWS OF SUCH JURISDICTION ARE DIFFERENT FROM OR INCONSISTENT
WITH THE LAWS OF CALIFORNIA. AS PART OF THE CONSIDERATION FOR NEW VALUE
RECEIVED, AND REGARDLESS OF ANY PRESENT OR FUTURE DOMICILE OR PRINCIPAL PLACE OF
BUSINESS OF BORROWER OR LENDER, BORROWER HEREBY CONSENTS AND AGREES THAT THE
SUPERIOR COURT OF LOS ANGELES, CALIFORNIA SHALL HAVE EXCLUSIVE JURISDICTION TO
HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN BORROWER AND LENDER PERTAINING
TO THIS AGREEMENT OR TO ANY MATTER ARISING OUT OF OR RELATED TO THIS AGREEMENT.
BORROWER EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY
ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND BORROWER HEREBY WAIVES ANY
OBJECTION WHICH BORROWER MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION,
IMPROPER VENUE OR FORUM NON CONVENIENS AND HEREBY CONSENTS TO THE GRANTING OF
SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH COURT. BORROWER
HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS
ISSUED IN ANY SUCH ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS,
COMPLAINT AND OTHER PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL
ADDRESSED TO BORROWER AT THE ADDRESS SET FORTH IN THIS AGREEMENT AND THAT
SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE EARLIER OF BORROWER'S ACTUAL
RECEIPT THEREOF OR THREE (3) DAYS AFTER DEPOSIT IN THE U.S. MAILS, PROPER
POSTAGE PREPAID. NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO AFFECT
THE RIGHT OF LENDER TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW,
OR TO PRECLUDE THE
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ENFORCEMENT BY LENDER OF ANY JUDGMENT OR ORDER OBTAINED IN SUCH FORUM OR THE
TAKING OF ANY ACTION UNDER THIS AGREEMENT TO ENFORCE SAME IN ANY OTHER
APPROPRIATE FORUM OR JURISDICTION.
11.15 WAIVERS BY BORROWER. BORROWER WAIVES (A) THE RIGHT TO TRIAL
BY JURY (WHICH LENDER HEREBY ALSO WAIVES) IN ANY ACTION, SUIT, PROCEEDING OR
COUNTERCLAIM OF ANY KIND ARISING OUT OF OR RELATED TO ANY OF THE LOAN DOCUMENTS,
THE OBLIGATIONS OR THE COLLATERAL; (B) PRESENTMENT, DEMAND AND PROTEST AND
NOTICE OF PRESENTMENT, PROTEST, DEFAULT, NON PAYMENT, MATURITY, RELEASE,
COMPROMISE, SETTLEMENT, EXTENSION OR RENEWAL OF ANY OR ALL COMMERCIAL PAPER,
ACCOUNTS, CONTRACT RIGHTS, DOCUMENTS, INSTRUMENTS CHATTEL PAPER AND GUARANTIES
AT ANY TIME HELD BY LENDER ON WHICH BORROWER MAY IN ANY WAY BE LIABLE AND HEREBY
RATIFIES AND CONFIRMS WHATEVER LENDER MAY DO IN THIS REGARD; (C) TO THE MAXIMUM
EXTENT PERMITTED BY APPLICABLE LAW, AND EXCEPT AS OTHERWISE EXPRESSLY PROVIDED
FOR IN THIS AGREEMENT OR ONE OF THE OTHER LOAN DOCUMENTS, NOTICE PRIOR TO TAKING
POSSESSION OR CONTROL OF THE COLLATERAL OR ANY BOND OR SECURITY WHICH MIGHT BE
REQUIRED BY ANY COURT PRIOR TO ALLOWING LENDER TO EXERCISE ANY OF LENDER'S
REMEDIES; (D) THE BENEFIT OF ALL VALUATION, APPRAISEMENT AND EXEMPTION LAWS; AND
(E) NOTICE OF ACCEPTANCE HEREOF. BORROWER ACKNOWLEDGES THAT THE FOREGOING
WAIVERS ARE A MATERIAL INDUCEMENT TO LENDER'S ENTERING INTO THIS AGREEMENT AND
THAT LENDER IS RELYING UPON THE FOREGOING WAIVERS IN ITS FUTURE DEALINGS WITH
BORROWER. BORROWER WARRANTS AND REPRESENTS THAT IT HAS REVIEWED THE FOREGOING
WAIVERS WITH ITS LEGAL COUNSEL AND HAS KNOWINGLY AND VOLUNTARILY WAIVED ITS JURY
TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF
LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE
COURT.
11.16 Confidentiality. Lender agrees that material, non-public
information regarding Borrower, its operations, assets, and existing and
contemplated business plans (including Projections) shall be treated by Lender
in a confidential manner and in conformity with applicable state and federal
laws, and shall not be disclosed by it to Persons who are not parties to this
Agreement, except: (a) to counsel for and other advisors, accountants, and
auditors to Lender, (b) as may be required by statute, decision, or judicial or
administrative order, rule, or regulation; provided, however, that Lender agrees
to endeavor, in good faith, to provide Borrower prior written notice of any
proposed disclosure under this clause (b), but the failure of Lender to provide
any such prior written notice to Borrower will not subject Lender to any
liability to Borrower whatsoever unless such failure is the result of gross
negligence or wilful misconduct on the part of Lender, (c) as may be agreed to
in advance by Borrower, (d) as to any such information that is or becomes
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generally available to the public, and (e) in connection with any assignment,
prospective assignment, sale, prospective sale, participation or prospective
participation, or pledge or prospective pledge of Lender's interests under this
Agreement, provided that any such assignee, prospective assignee, purchaser,
prospective purchaser, participant, prospective participant, pledgee, or
prospective pledgee shall have agreed in writing to take its interest hereunder
subject to the terms hereof.
40.
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IN WITNESS WHEREOF, this Agreement has been duly executed in Los
Angeles, California, on the day and year specified at the beginning of this
Agreement.
ATTEST: XXXXX INSTRUMENTS CORP.,
a Delaware corporation
Xxxxxx X. Xxxxxxx By /s/ Xxxxx X. Xxxxxxxxxxx
--------------------------------- -------------------------------
Secretary
Title V.P. - Finance and CFO
-------------------------------
ACCEPTED IN Los Angeles, California:
FLEET CAPITAL CORPORATION,
a Rhode Island corporation
By /s/ Xxxxx Xxxxxxxxx
--------------------------------
Title V.P.
--------------------------------
41.
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APPENDIX A
GENERAL DEFINITIONS
When used in the Amended and Restated Loan and Security Agreement
dated as of May 27, 1998, by and between Fleet Capital Corporation and Xxxxx
Instruments Corp., the following terms shall have the following meanings (terms
defined in the singular to have the same meaning when used in the plural and
vice versa):
Account Debtor - any Person who is or may become obligated under
or on account of an Account.
Accounts - all accounts, contract rights, chattel paper,
instruments (including the ESOP Note), and documents, whether now owned
or hereafter created or acquired by Borrower or in which Borrower now
has or hereafter acquires any interest.
Affiliate - a Person: (i) which directly or indirectly through
one or more intermediaries controls, or is controlled by, or is under
common control with, a Person; (ii) which beneficially owns or holds
10% or more of any class of the Voting Stock of a Person; or (iii) 10%
or more of the Voting Stock (or in the case of a Person which is not a
corporation, 10% or more of the equity interest) of which is
beneficially owned or held by a Person or a Subsidiary of a Person.
Agreement - the Amended and Restated Loan and Security Agreement
referred to in the first sentence of this Appendix A, all Exhibits
thereto and this Appendix A.
Bank - Fleet Bank Connecticut, N.A.
Base Rate - the rate of interest announced or quoted by Bank from
time to time as its prime rate for commercial loans, whether or not
such rate is the lowest rate charged by Bank to its most preferred
borrowers; and, if such prime rate for commercial loans is discontinued
by Bank as a standard, a comparable reference rate designated by Bank
as a substitute therefor shall be the Base Rate.
Base Rate CapEx Portion - that portion of any CapEx Loan that is
not subject to a LIBOR Election.
Base Rate Election - an election to cause interest on the Loans
to be computed with reference to the Base Rate.
Base Rate Portion - a Base Rate CapEx Portion or a Base Rate
Revolving Credit Portion.
49
Base Rate Revolving Credit Portion - that portion of the
Revolving Credit Loans that is not subject to a LIBOR Election.
Business Day - (a) when used with respect to the LIBOR Election,
shall mean a day on which dealings may be effected in deposits of
United States Dollars in the London interbank foreign currency deposits
market and on which Lender is conducting and other banks may conduct
business in London, England, or in the State of California, and (b)
when used with respect to any other provision of the Agreement, any day
excluding Saturday, Sunday, and any day which is a legal holiday under
the laws of the State of California or is a day on which banking
institutions located in such state are closed.
CapEx Loans - the Loan described in subsection 1.2(a) of the
Agreement.
CapEx Notes - the Secured Promissory Notes to be executed by
Borrower in favor of Lender to evidence the CapEx Loans, which shall be
in the form of Exhibit 1.2(a) to the Agreement.
Capital Expenditures - expenditures made or liabilities incurred
for the acquisition of any fixed assets or improvements, replacements,
substitutions or additions thereto which have a useful life of more
than one year, including the total principal portion of Capitalized
Lease Obligations.
Capitalized Lease Obligation - any Indebtedness represented by
obligations under a lease that is required to be capitalized for
financial reporting purposes in accordance with GAAP.
Closing Date - the date on which all of the conditions precedent
in Sections 9 and 9A of the Agreement are satisfied.
Code - the Uniform Commercial Code as adopted and in force in the
State of California as from time to time in effect.
Collateral - all of the Property and interests in Property
described in Section 5 of the Agreement, and all other Property and
interests in Property that now or hereafter secure the payment and
performance of any of the Obligations.
Collateral Access Agreement - a landlord waiver, mortgagee
waiver, bailee letter, or similar acknowledgement agreement of any
warehouseman or processor of Inventory or Equipment, in each case, in
form and substance satisfactory to Lender.
Consolidated - the consolidation in accordance with GAAP of the
accounts or other items as to which such term applies.
2.
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Default - an event or condition the occurrence of which would,
with the lapse of time or the giving of notice, or both, become an
Event of Default.
Default Rate - as defined in subsection 2.1(b) of the Agreement.
Distribution - in respect of any corporation means and includes:
(i) the payment of any dividends or other distributions on capital
stock of the corporation (except distributions of the same series of
Securities or capital stock), and (ii) the redemption or acquisition of
Securities unless made contemporaneously from the net proceeds of the
sale of Securities.
Early Termination Charge - as defined in subsection 4.2(c) of the
Agreement.
EBIT - with respect to any fiscal period, the sum of Borrower's
net earnings (or loss) before interest expense, and taxes for said
period as determined in accordance with GAAP.
EBITDA - with respect to any fiscal period, EBIT before
amortization and depreciation and before ESOP contribution expenses (to
the extent included in EBIT) for such period as determined in
accordance with GAAP.
Employer Securities - the shares of Common Stock purchased by the
ESOP with the proceeds of the ESOP Loan in accordance with the ESOP
Purchase Agreements.
Environmental Laws - all federal, state and local laws, rules,
regulations, ordinances, orders, and consent decrees relating to
health, safety and environmental matters.
Equipment - all machinery, apparatus, equipment, fittings,
furniture, fixtures, motor vehicles and other tangible personal
Property (other than Inventory) of every kind and description used in
Borrower's operations or owned by Borrower or in which Borrower has an
interest, whether now owned or hereafter acquired by Borrower and
wherever located, and all parts, accessories and special tools and all
increases and accessions thereto and substitutions and replacements
therefor.
ERISA - the Employee Retirement Income Security Act of 1974, as
amended, and all rules and regulations from time to time promulgated
thereunder.
ESOP - the "Xxxxx Instruments Corp. Employee Stock Ownership
Plan" established and maintained by Borrower as an employee benefit
plan, effective March 1, 1996, pursuant to the Xxxxx Instruments Corp.
Employee Stock Ownership Plan (the "ESOP Plan Document") and the ESOP
Trust Agreement.
3.
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ESOP Loan - the loan made by Borrower to the ESOP Trustee in the
original amount of Eleven Million Dollars ($11,000,000) in order to
enable the ESOP Trustee to purchase the Employer Securities in
accordance with the ESOP Purchase Agreements.
ESOP Loan Agreement - that certain ESOP Loan and Pledge
Agreement, dated as of the date hereof, between Borrower and the ESOP
Trustee.
ESOP Loan Documents - (i) the ESOP Loan Agreement, (ii) the ESOP
Note, and (iii) each other instrument or document executed and/or
delivered by the ESOP Trustee to Borrower to evidence or create any
obligation of the ESOP to Borrower to repay the ESOP Loan.
ESOP Note - that certain promissory note, dated as of the date
hereof, made by the ESOP to the order of Borrower, evidencing the
ESOP's obligations to Borrower under the ESOP Loan Agreement.
ESOP Purchase Agreements - collectively, those certain "Stock
Purchase Agreements," dated as of the date hereof, among the Principal
Stockholders, the ESOP Trustee, and Borrower pursuant to which the
Principal Stockholders have agreed to sell, and the ESOP Trustee has
agreed to purchase one million five hundred thousand (1,500,000) shares
of Borrower's Common Stock for $7.3333 per share and an aggregate
consideration of Ten Million Nine Hundred Ninety-Nine Thousand Nine
Hundred Fifty ($10,999,950).
ESOP Transactions - the transactions contemplated by the ESOP
Transaction Documents.
ESOP Transaction Documents - (i) the ESOP Plan Document, (ii) the
ESOP Trust Agreement, (iii) the ESOP Purchase Agreements, and (iv) the
ESOP Loan Documents.
ESOP Trust - the trust created by the ESOP Trust Agreement to
hold the assets of the ESOP.
ESOP Trust Agreement - the Xxxxx Instruments Corp. Employee Stock
Ownership Trust Agreement, effective on the date hereof, between
Borrower, as grantor, and the ESOP Trustee, as trustee, created to hold
the assets of the ESOP.
ESOP Trustee - Xxxxx Fargo Bank, N.A.
Event of Default - as defined in subsection 10.1 of the
Agreement.
Existing Loan Agreement - that certain Loan and Security
Agreement, dated
4.
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April 23, 1996, between Borrower and Lender.
GAAP - generally accepted accounting principles in the United
States of America in effect from time to time.
General Intangibles - all personal property of Borrower
(including things in action) other than goods, Accounts, chattel paper,
documents, instruments, and money (including, without limitation, all
of Borrower's right, title, and interest with respect to the key man
life insurance policy with respect to Xx. Xxxx X. Xxxxxx), whether now
owned or hereafter created or acquired by Borrower.
Indebtedness - as applied to a Person means, without duplication
(i) all items which in accordance with GAAP would be
included in determining total liabilities as shown on the
liability side of a balance sheet of such Person as at the date
as of which Indebtedness is to be determined, including, without
limitation, Capitalized Lease Obligations,
(ii) all obligations of other Persons which such Person
has guaranteed,
(iii) all reimbursement obligations in connection with
letters of credit or letter of credit guaranties issued for the
account of such Person, and
(iv) in the case of Borrower (without duplication), the
Obligations.
Independent Financial Advisor - the independent financial adviser
selected by the ESOP Trustee to evaluate that the purchase price being
paid by the ESOP Trustee for the Employer Securities does not exceed
the fair market value thereof.
Inventory - all of Borrower's inventory, whether now owned or
hereafter acquired including, but not limited to, all goods intended
for sale or lease by Borrower, or for display or demonstration; all
work in process; all raw materials and other materials and supplies of
every nature and description used or which might be used in connection
with the manufacture, printing, packing, shipping, advertising,
selling, leasing or furnishing of such goods or otherwise used or
consumed in Borrower's business; and all documents evidencing and
General Intangibles relating to any of the foregoing, whether now owned
or hereafter acquired by Borrower.
IRC - means the Internal Revenue Code of 1986, as amended, and
the regulations thereunder.
LC Amount - at any time, the aggregate undrawn face amount of all
Letters of Credit and LC Guaranties then outstanding.
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LC Guaranty - any guaranty pursuant to which Lender or any
Affiliate of Lender shall guaranty the payment or performance by
Borrower of its reimbursement obligation under any letter of credit.
Legal Requirement - any requirement imposed upon Lender by any
law of the United States of America or by any regulation, order,
interpretation, ruling, or official directive (whether or not having
the force of law) of the Board, or any other board, central bank or
governmental or administrative agency, institution or authority of in
the United States of America, or any political subdivision thereof.
Letter of Credit - any letter of credit issued by Lender or any
of Lender's Affiliates for the account of Borrower.
LIBOR CapEx Portion - that portion of any CapEx Loan specified in
a LIBOR Request that is not less than $500,000 and is an integral
multiple of $100,000, that does not exceed the outstanding balance of
such CapEx Loan not already subject to a LIBOR Election and, that, as
of the date of the LIBOR Request specifying such LIBOR CapEx Portion,
has met the conditions for basing interest on the LIBOR Rate in
subsection 2.4 of the Agreement and the LIBOR Period of which was
commenced and not terminated.
LIBOR Election - the option granted pursuant to subsection 2.4 of
the Agreement to have the interest on all or any portion of the
principal amount of the Revolving Credit Loans or any CapEx Loan based
on a LIBOR Rate.
LIBOR Interest Payment Date - with respect to any LIBOR Revolving
Credit Portion or any LIBOR CapEx Portion, the last day of each
calendar month during the applicable LIBOR Period.
LIBOR Period - any period of 1 month, 2 months, or 3 months
commencing on a Business Day, selected as provided in subsection 2.4(a)
of the Agreement; provided, however, that no LIBOR Period shall extend
beyond the last day of the Original Term or the Renewal Term, as
applicable, and that, with respect to any LIBOR CapEx Portion, no
applicable LIBOR Period shall extend beyond the scheduled installment
payment date for such LIBOR CapEx Portion. If any LIBOR Period so
selected shall end on a date that is not a Business Day, such LIBOR
Period shall instead end on the next preceding or succeeding Business
Day as determined by Lender in accordance with the then current banking
practice in London; provided that Borrower shall not be required to pay
double interest, even though the preceding LIBOR Period ends and the
new LIBOR Period begins on the same day. Each determination by Lender
of the LIBOR Period shall, in the absence of manifest error, be
conclusive.
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LIBOR Portion - a LIBOR Revolving Credit Portion or a LIBOR CapEx
Portion.
LIBOR Rate - with respect to any LIBOR Revolving Credit Portion
or LIBOR CapEx Portion for the related LIBOR Period, an interest rate
per annum (rounded upwards, if necessary, to the next higher 1/8 of 1%)
equal to the product of (a) the Base LIBOR Rate (as hereinafter
defined) multiplied by (b) Statutory Reserves. For purposes of this
definition, the term "Base LIBOR Rate" shall mean the rate at which
deposits of U.S. dollars approximately equal in principal amount to the
LIBOR Revolving Credit Portion or the LIBOR CapEx Portion specified in
the applicable LIBOR Request are offered to Lender by prime banks in
the London interbank foreign currency deposits market at approximately
11:00 a.m., London time, 2 Business Days prior to the commencement of
such LIBOR Period, for delivery on the first day of such LIBOR Period.
Each determination by Lender of any LIBOR Rate shall, in the absence of
manifest error, be conclusive.
LIBOR Request - a notice in writing (or by telephone confirmed by
telex, telecopy, or other facsimile transmission on the same day as the
telephone request) from Borrower to Lender requesting that interest on
a Revolving Credit Loan or an CapEx Loan be based on the LIBOR Rate,
specifying: (a) the first day of the LIBOR Period, (b) the length of
the LIBOR Period consistent with the definition of that term, and (c)
the dollar amount of the LIBOR Revolving Credit Portion or the LIBOR
CapEx Portion consistent with the definition of such terms.
LIBOR Revolving Credit Portion - that portion of the Revolving
Credit Loans specified in a LIBOR Request (including any portion of
Revolving Credit Loans that is being borrowed by Borrower concurrently
with such LIBOR Request) that is not less than $500,000 and is an
integral multiple of $100,000, that does not exceed the outstanding
balance of Revolving Credit Loans not already subject to a LIBOR
Election and, that, as of the date of the LIBOR Request specifying such
LIBOR Revolving Credit Portion, has met the conditions for basing
interest on the LIBOR Rate in subsection 2.4 of the Agreement and the
LIBOR Period of which was commenced and not terminated.
Lien - any interest in Property securing an obligation owed to,
or a claim by, a Person other than the owner of the Property, whether
such interest is based on common law, statute or contract. The term
"Lien" shall also include reservations, exceptions, encroachments,
easements, rights-of-way, covenants, conditions, restrictions, leases
and other title exceptions and encumbrances affecting Property. For the
purpose of the Agreement, Borrower shall be deemed to be the owner of
any Property which it has acquired or holds subject to a conditional
sale agreement or other arrangement pursuant to which title to the
Property has been retained by or vested in some other Person for
security purposes.
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55
Loan Account - the loan account established on the books of
Lender pursuant to subsection 3.6 of the Agreement.
Loan Documents - the Agreement, the Other Agreements, and the
Security Documents.
Loans - all loans and advances of any kind made by Lender
pursuant to the Agreement.
Maximum Revolving Amount - Fifteen Million Dollars ($15,000,000).
Money Borrowed - means (i) Indebtedness arising from the lending
of money by any Person to Borrower; (ii) Indebtedness, whether or not
in any such case arising from the lending by any Person of money to
Borrower, (A) which is represented by notes payable or drafts accepted
that evidence extensions of credit, (B) which constitutes obligations
evidenced by bonds, debentures, notes or similar instruments, or (C)
upon which interest charges are customarily paid (other than accounts
payable) or that was issued or assumed as full or partial payment for
Property payable over a period longer than six (6) months; (iii)
Indebtedness that constitutes a Capitalized Lease Obligation; (iv)
reimbursement obligations with respect to letters of credit or
guaranties of letters of credit; and (v) Indebtedness of Borrower under
any guaranty of obligations that would constitute Indebtedness for
Money Borrowed under clauses (i) through (iii) hereof, if owed directly
by Borrower.
Multiemployer Plan - has the meaning set forth in Section
4001(a)(3) of ERISA.
Obligations - all Loans and all other advances, debts,
liabilities, obligations, covenants and duties, together with all
interest, fees and other charges thereon (including, without
limitation, Early Termination Charges), owing, arising, due or payable
from Borrower to Lender of any kind or nature, present or future,
whether or not evidenced by any note, guaranty or other instrument,
whether arising under the Agreement or any of the other Loan Documents
or otherwise whether direct or indirect (including those acquired by
assignment), absolute or contingent, primary or secondary, due or to
become due, now existing or hereafter arising and however acquired.
Ordinary Course Liens - any of the following:
a. Liens arising by operation of law in favor of
warehouseman, landlords, carriers, mechanics, materialmen, laborers,
employees or suppliers, incurred in the ordinary course of business of
Borrower and not in connection with the borrowing of money, for sums
not yet delinquent or which are being contested in good faith and by
proper proceedings diligently pursued, provided that a reserve or
8.
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other appropriate provision, if any, required by GAAP shall have been
made therefor on the applicable financial statements of Borrower;
b. Deposits made in connection with worker's compensation
or other unemployment insurance incurred in the ordinary course of
Borrower's business;
c. Deposits to secure performance of bids, tenders, or
leases (to the extent permitted under this Agreement), incurred in the
ordinary course of business of Borrower and not in connection with the
borrowing of money;
d. Liens arising by reason of security for surety or appeal
bonds in the ordinary course of business of Borrower;
e. Liens of or resulting from any judgment or award, the
time for the appeal or petition for rehearing of which has not yet
expired, or in respect of which Borrower is in good faith prosecuting
an appeal or proceeding for a review, and in respect of which a stay of
execution pending such appeal or proceeding for review has been
secured; and
f. with respect to any real property: easements, rights of
way, zoning and similar covenants and restrictions and similar
encumbrances which customarily exist on properties of corporations
engaged in similar activities and similarly situated and which in any
event do not materially interfere with or impair the use or operation
of the Collateral by Borrower or the value of Lender's Lien on and
security interest therein, or materially interfere with the ordinary
conduct of the business of Borrower.
Original Term - as defined in Section 4.1 of the Agreement.
Other Agreements - the CapEx Notes, and any and all agreements,
instruments and documents (other than the Agreement and the Security
Documents), heretofore, now or hereafter executed by Borrower and
delivered to Lender in respect of the transactions contemplated by the
Agreement.
Overadvance - the amount, if any, by which the outstanding
principal amount of Revolving Credit Loans plus the LC Amount exceeds
the Maximum Revolving Amount.
Patent Security Agreement - that certain patent security
agreement between Borrower and Lender, in form and substance
satisfactory to Lender.
Permitted Liens - any Lien of a kind specified in subsection
8.2(e) of the Agreement.
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Permitted Purchase Money Indebtedness - Purchase Money
Indebtedness of Borrower incurred after the date hereof which is
secured by a Purchase Money Lien and which, when aggregated with the
principal amount of all other such Indebtedness and Capitalized Lease
Obligations of Borrower at the time outstanding, does not exceed
$3,000,000. For the purposes of this definition, the principal amount
of any Purchase Money Indebtedness consisting of capitalized leases
shall be computed as a Capitalized Lease Obligation.
Person - an individual, partnership, corporation, limited
liability company, joint stock company, land trust, business trust, or
unincorporated organization, or a government or agency or political
subdivision thereof.
Plan - an employee benefit plan now or hereafter maintained for
employees of Borrower that is covered by Title IV of ERISA.
Principal Stockholders - Xxxxxx Living Trust, Xx. Xxxxxx X.
Xxxxxx, Xx., and Xxxxxxx 1986 Trust.
Projections - Borrower's forecasted (i) balance sheets, (ii)
profit and loss statements, (iii) cash flow statements, and (iv)
capitalization statements, all prepared on a consistent basis with
Borrower's historical financial statements, together with appropriate
supporting details and a statement of underlying assumptions.
Property - any interest in any kind of property or asset, whether
real, personal or mixed, or tangible or intangible.
Purchase Money Indebtedness - means and includes (i) Indebtedness
(other than the Obligations) for the payment of all or any part of the
purchase price of any fixed assets, (ii) any Indebtedness (other than
the Obligations) incurred at the time of or within ten (10) days prior
to or after the acquisition of any fixed assets for the purpose of
financing all or any part of the purchase price thereof, and (iii) any
renewals, extensions or refinancings thereof, but not any increases in
the principal amounts thereof outstanding at the time.
Purchase Money Lien - a Lien upon fixed assets which secures
Purchase Money Indebtedness, but only if such Lien shall at all times
be confined solely to the fixed assets the purchase price of which was
financed through the incurrence of the Purchase Money Indebtedness
secured by such Lien.
Rentals - as defined in subsection 8.2(l) of the Agreement.
Renewal Terms - as defined in subsection 4.1 of the Agreement.
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Reportable Event - any of the events set forth in Section 4043(b)
of ERISA.
Restricted Investment - any investment made in cash or by
delivery of Property to any Person, whether by acquisition of stock,
Indebtedness or other obligation or Security, or by loan, advance or
capital contribution, or otherwise, or in any Property except the
following:
(i) [Intentionally omitted]
(ii) Property to be used in the ordinary course of
business;
(iii) Current Assets arising from the sale of goods and
services in the ordinary course of business of Borrower;
(iv) investments in direct obligations of the United States
of America, or any agency thereof or obligations guaranteed by the
United States of America, provided that such obligations mature within
one year from the date of acquisition thereof;
(v) investments in certificates of deposit maturing within
one (1) year from the date of acquisition issued by a bank or trust
company organized under the laws of the United States or any state
thereof having capital surplus and undivided profits aggregating at
least One Hundred Million Dollars ($100,000,000);
(vi) investments in commercial paper given the highest
rating by a national credit rating agency and maturing not more than
two hundred seventy (270) days from the date of creation thereof; and
(vii) additional contributions to the ESOP sufficient to
enable the ESOP to make payments of principal and interest when due
with respect to the ESOP Loan.
Revolving Credit Loan - a Loan made by Lender as provided in
subsection 1.1 of the Agreement.
Security - shall have the same meaning as in Section 2(1) of the
Securities Act of 1933, as amended.
Security Documents - the Trademark Security Agreement, the Patent
Security Agreement, and all other instruments and agreements now or at
any time hereafter securing the whole or any part of the Obligations.
Solvent - as to any Person, such Person (i) owns Property whose
fair saleable value is greater than the amount required to pay all of
such Person's Indebtedness
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(including contingent debts), (ii) is able to pay all of its
Indebtedness as such Indebtedness matures, and (iii) has capital
sufficient to carry on its business and transactions and all business
and transactions in which it is about to engage.
Statutory Reserves - a fraction (expressed as a decimal) the
numerator of which is the number 1, and the denominator of which is the
number 1 minus the aggregate of the maximum reserve percentages
(including, without limitation, any marginal, special, emergency, or
supplemental reserves), expressed as a decimal, established by the
Board of Governors of the Federal Reserve System and any other banking
authority to which Bank or Lender is subject for Eurocurrency
Liabilities (as defined in Regulation D of the Board of Governors of
the Federal Reserve System or any successor thereto). Such reserve
percentages shall include, without limitation, those imposed under such
Regulation D. LIBOR Revolving Credit Portions or LIBOR CapEx Portions
shall be deemed to constitute Eurocurrency Liabilities and as such
shall be deemed to be subject to such reserve requirements without
benefit of or credit for proration, exceptions, or offsets which may be
available from time to time to Bank or Lender under such Regulation D.
Statutory Reserves shall be adjusted automatically on and as of the
effective date of any change in any reserve percentages.
Subsidiary - any corporation of which a Person owns, directly or
indirectly through one or more intermediaries, more than 50% of the
Voting Stock at the time of determination.
Tax - in relation to any LIBOR Revolving Credit Portion or LIBOR
CapEx Portion and the applicable LIBOR Rate, any tax, levy, impost,
duty, deduction, withholding, or charges of whatever nature required by
any Legal Requirement to be (a) paid by Lender and/or (b) withheld or
deducted from any payment otherwise required hereby to be made by
Borrower to Lender; provided that the term "Tax" shall not include any
taxes imposed upon the net income of Lender by the United States of
America, or any political subdivision thereof.
Total Credit Facility - Twenty Million Dollars ($20,000,000).
Total Liabilities - at any date means all amounts properly
classified as liabilities of Borrower on a balance sheet at such date
in accordance with GAAP.
Total Senior Debt - means (i) Indebtedness arising from the
lending of money by any Person to Borrower; (ii) Indebtedness, whether
or not in any such case arising from the lending by any Person of money
to Borrower, (A) which is represented by notes payable or drafts
accepted that evidence extensions of credit, (B) which constitutes
obligations evidenced by bonds, debentures, notes or similar
instruments, or (C) upon which interest charges are customarily paid
(other than accounts payable) or that was issued or assumed as full or
partial payment for Property; and (iii) Indebtedness that constitutes a
Capitalized Lease Obligation.
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Total Senior Debt Coverage Ratio - with respect to any period,
the ratio of (i) Total Senior Debt as of the last day of such period,
to (ii) EBITDA for such period, all as determined in accordance with
GAAP.
Trademark Security Agreement - that certain trademark security
agreement between Borrower and Lender, in form and substance
satisfactory to Lender.
Voting Stock - Securities of any class or classes of a
corporation the holders of which are ordinarily, in the absence of
contingencies, entitled to elect a majority of the corporate directors
(or Persons performing similar functions).
Other Terms. All other terms contained in the Agreement shall
have, when the context so indicates, the meanings provided for by the
Code to the extent the same are used or defined therein.
Certain Matters of Construction. The terms "herein", "hereof" and
"hereunder" and other words of similar import refer to the Agreement as
a whole and not to any particular section, subsection, paragraph or
subdivision. Any pronoun used shall be deemed to cover all genders. The
section titles, table of contents and list of exhibits appear as a
matter of convenience only and shall not affect the interpretation of
the Agreement. All references to statutes and related regulations shall
include any amendments of same and any successor statutes and
regulations. All references to any of the Loan Documents shall include
any and all modifications thereto and any and all extensions or
renewals thereof. All references to "the knowledge of Borrower" or
"Borrower has knowledge" shall mean the actual conscious awareness of
senior officers of Borrower after having made a reasonable inquiry.
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LIST OF EXHIBITS
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Exhibit 1.2.1 CapEx Note
Exhibit 6.1.1 Borrower's Business Locations
Exhibit 7.1.1 Jurisdictions in which Borrower is Authorized to do Business
Exhibit 7.1.4 Capital Structure of Borrower
Exhibit 7.1.5 Corporate Names
Exhibit 7.1.13 Surety Obligations
Exhibit 7.1.16 Patents, Trademarks, Copyrights and Licenses
Exhibit 7.1.19 Contracts Restricting Borrower's Right to Incur Debts
Exhibit 7.1.20 Litigation
Exhibit 7.1.22(A) Capitalized Leases
Exhibit 7.1.22(B) Operating Leases
Exhibit 7.1.23 Pension Plans
Exhibit 7.1.25 Labor Contracts
Exhibit 8.1.3 Compliance Certificate
Exhibit 8.2.5 Permitted Liens
Exhibit 9.22 Closing Date Projections
14.
