Exhibit 10.3
__________________________________
LOAN AGREEMENT
___________________________
among
________________________
POWERWAVE TECHNOLOGIES, INC.,
as Borrower
________________________
COMERICA BANK-CALIFORNIA,
not in its individual capacity,
but solely as Agent for the Lenders
and
The Financial Institutions
parties hereto from time to time,
as Lenders
__________________________________
Dated as of May 26, 2000
TABLE OF CONTENTS
Page
1. DEFINITIONS........................................................................ 1
2. CREDIT FACILITY.................................................................... 9
2.1 Revolving Loan................................................................ 9
2.2 Borrowing Procedure........................................................... 9
2.3 Lenders' Records.............................................................. 10
2.4 Commitment Fee................................................................ 10
3. PAYMENTS OF PRINCIPAL, INTEREST AND OTHER AMOUNTS.................................. 10
3.1 Interest...................................................................... 10
3.2 Interest Payments and Computations............................................ 11
3.3 LIBOR Lending Unlawful........................................................ 11
3.4 Deposits Unavailable.......................................................... 11
3.5 Increased LIBOR Loan Costs, etc............................................... 11
3.6 Funding Losses................................................................ 11
3.7 Direct Debit Authorization.................................................... 12
4. THE AGENT.......................................................................... 12
4.1 Actions....................................................................... 12
4.2 Funding Reliance, etc......................................................... 12
4.3 Exculpation................................................................... 12
4.4 Successor..................................................................... 13
4.5 Loans and other Transactions by Comerica...................................... 13
4.6 Credit Decisions.............................................................. 13
4.7 Copies, etc................................................................... 13
5. CONDITIONS PRECEDENT............................................................... 13
5.1 Closing Conditions............................................................ 13
5.2 Borrowing Conditions.......................................................... 15
6. REPRESENTATIONS AND WARRANTIES..................................................... 15
6.1 Existence and Authority...................................................... 15
6.2 Authorization................................................................ 16
6.3 Binding Effect............................................................... 16
6.4 Ownership Interests.......................................................... 16
6.5 Business Operations and Other Information; Financial Condition............... 16
6.6 Subsidiaries................................................................. 17
6.7 Litigation; No Violation of Governmental Orders or Laws...................... 17
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TABLE OF CONTENTS
(continued)
Page
6.8 Outstanding Indebtedness; Investments........................................ 17
6.9 Consents, etc................................................................ 18
6.10 Title to Properties.......................................................... 18
6.11 Taxes........................................................................ 19
6.12 No Conflicts with Agreements, Etc............................................ 19
6.13 [RESERVED]................................................................... 19
6.14 Disclosure................................................................... 19
6.15 Broker's or Finder's Commissions............................................. 19
6.16 Labor Matters................................................................ 20
6.17 Environmental Matters........................................................ 20
6.18 Possession of Franchises, Licenses, Etc...................................... 21
6.19 Intellectual Property........................................................ 21
6.20 Margin Regulations; Use of Proceeds.......................................... 22
6.21 Compliance with ERISA........................................................ 22
6.22 Material Contracts........................................................... 23
6.23 Insurance.................................................................... 23
6.24 Solvency..................................................................... 24
6.25 Status under Certain Laws.................................................... 24
6.26 Places of Business........................................................... 24
6.27 Other Names.................................................................. 24
6.28 Reliance by Agent and Lenders; Cumulative.................................... 24
7. COVENANTS.......................................................................... 24
7.1 Financial Statements and Information......................................... 24
7.2 Payment of Principal, Interest and Fees; to Keep Books; Reserves; Etc........ 26
7.3 Payment of Taxes and Claims.................................................. 26
7.4 Maintenance of Properties and Corporate Existence............................ 27
7.5 Insurance.................................................................... 27
7.6 Further Assurances........................................................... 28
7.7 Restrictions on Indebtedness................................................. 28
7.8 Restrictions on Liens........................................................ 28
7.9 [RESERVED]................................................................... 29
7.10 [RESERVED]................................................................... 29
7.11 Transactions with Affiliates................................................. 29
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TABLE OF CONTENTS
(continued)
Page
7.12 Consolidation, Merger or Disposition of Assets; Acquisitions................. 29
7.13 Sale or Discount of Receivables.............................................. 30
7.14 Certain Contracts............................................................ 30
7.15 Restricted Payments and Investments.......................................... 31
7.16 Financial Covenants.......................................................... 31
7.17 Acquisition of Margin Securities............................................. 31
7.18 Negative Pledges, Restrictive Agreements, etc................................ 31
7.19 Operating Accounts........................................................... 31
7.20 Subsidiary Guarantees........................................................ 32
8. EVENTS OF DEFAULT; REMEDIES........................................................ 32
8.1 Events of Default............................................................. 32
8.2 Remedies...................................................................... 33
9. GENERAL PROVISIONS................................................................. 33
9.1 Notices....................................................................... 33
9.2 Successors and Assigns........................................................ 34
9.3 Section Headings.............................................................. 35
9.4 Interpretation................................................................ 35
9.5 Severability of Provisions.................................................... 35
9.6 Amendments and Waivers........................................................ 35
9.7 Set-Offs...................................................................... 36
9.8 Attorneys' Fees and Costs..................................................... 36
9.9 Indemnification............................................................... 37
9.10 Dissemination................................................................. 37
9.11 Counterparts................................................................. 37
9.12 Integration.................................................................. 37
9.13 No Waiver; Remedies Cumulative............................................... 37
9.14 GOVERNING LAW................................................................ 38
9.15 WAIVER OF JURY TRIAL......................................................... 38
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LOAN AGREEMENT
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This LOAN AGREEMENT (this "Agreement") is made and entered into as of May
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26, 2000 by and among Powerwave Technologies, Inc., a Delaware corporation (the
"Borrower"), COMERICA BANK-CALIFORNIA, a California banking corporation, as
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agent for the Lenders (the "Agent"), and the various financial institutions that
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are (or may from time to time hereafter become) parties hereto as lenders (each
a "Lender" and collectively the "Lenders").
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RECITALS
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WHEREAS, Borrower has requested that the Lenders provide certain credit
facilities to Borrower; and
WHEREAS, the Lenders are willing to provide such credit facilities to
Borrower on the terms and conditions set forth herein; and
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
1. DEFINITIONS. As used in this Agreement, the following terms shall have the
respective meanings (such meanings to be equally applicable to both the singular
and the plural forms of the terms defined) provided below in this Section 1:
"Accountants" is defined in Section 7.1(a).
"Advance" is defined in Section 2.3.
"Affiliate" means, as to any Person, (a) any Person which, directly or
indirectly, is in control of, is controlled by, or is under common control with
such Person, (b) any Person who is a director, officer, partner or principal (i)
of such Person, (ii) of any Subsidiary of such Person or (iii) of any Person
described in clause (a) above, or (c) any individual who is a relative of any
Person described in clause (a) or clause (b) above. For purposes of this
definition, "control" (including the terms "controlling", "controlled by" and
"under common control with") of a Person shall mean the power, direct or
indirect, (i) to vote or direct the voting of 10% or more of the securities
having ordinary voting power for the election of directors of such Person, or
(ii) to direct or cause the direction of the management and policies of such
Person whether by contract or otherwise. For the purposes of this Agreement,
neither Agent nor any Lender shall be deemed to be an Affiliate of Borrower or
any of its Subsidiaries.
"Agent" is defined in the preamble.
"Applicable Base Rate Margin" means with respect to any Loan, 0.00%.
"Applicable LIBOR Margin" means with respect to any Loan, the applicable
percentage set forth below based upon Borrower's Leverage Ratio at the end of
the most recently-ended fiscal quarter:
Leverage Ratio Applicable LIBOR Margin
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0.50 or more 1.50%
Less than 0.50 1.25%
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"Base Rate" means a variable rate of interest per annum which is announced
from time to time by Agent as the "prime rate," "reference rate," "base rate,"
or other similar rate. The Base Rate is a reference rate and does not
necessarily represent the lowest or best rate actually charged to any customer
by Agent.
"Borrowing Request" is defined in Section 2.2.
"Business Day" means any day on which members of the Federal Reserve system
are not required to close, and, if such day relates to a borrowing of, a payment
or prepayment of principal of or interest on, or a Conversion of or into, or an
Interest Period for, a Loan bearing interest with reference to LIBOR or a notice
by Borrower with respect to any such Loan, a day which is also a day on which
dealings in Dollar deposits are carried out on the London interbank market.
"Capitalized Lease" means any lease of Property which in accordance with
GAAP should be capitalized on the balance sheet of any Person or for which the
amount of the asset and liability thereunder as if so capitalized should be
disclosed in a note to such balance sheet.
"Capitalized Lease Obligation" means the amount of the liability of any
Person which in accordance with GAAP should be capitalized or disclosed on the
balance sheet of such Person in respect of a Capitalized Lease.
"Change of Control" means any Person, or any group of Persons acting in
concert, becoming the direct or indirect beneficial owner (within the meaning of
Rule 13d under the Exchange Act) of more than 35% of the outstanding shares of
Borrower's capital stock having ordinary voting power.
"Closing Date" means the date of the effectiveness of this Agreement, which
(subject to satisfaction of the applicable conditions set forth herein) shall
occur at 12:00 P.M. (Pacific time) on May 26, 2000, or such other time and date
as shall be mutually acceptable to Borrower and Agent and at the offices of
Manatt, Xxxxxx & Xxxxxxxx, LLP, 00000 Xxxx Xxxxxxx Xxxx., Xxx Xxxxxxx, XX
00000, or at such other place as the parties may agree.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commitment" means each commitment of a Lender under this Agreement to
advance Loan funds to Borrower, as set forth on Schedule I.
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"Consolidated Current Assets" of any Person means all cash, marketable
securities and net trade accounts receivable of such Person and its
Subsidiaries, determined on a consolidated basis in accordance with GAAP.
"Consolidated Current Liabilities" of any Person means all liabilities of
such Person and its Subsidiaries on a consolidated basis maturing on demand or
within one year from the date as of which such liabilities are to be determined,
and such other liabilities (including, but not limited to, accrued taxes) as may
properly be classified as current liabilities in accordance with GAAP, and
including, in any event, the outstanding principal balance of the Revolving
Loan.
"Consolidated Interest Expense" of any Person means, for any period, total
interest expense (including, but not limited to, that portion of any Capitalized
Lease Obligations attributable to interest expense in conformity with GAAP and
amortization of capitalized interest) paid or accrued with respect to all
outstanding Indebtedness of such Person and its Subsidiaries, including all
commissions, discounts and
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other fees and charges owed with respect to letter of credit and bankers
acceptance financing, prepayment charges, agency fees, administrative fees,
commitment fees, capitalized transaction costs allocated to interest expense,
payments owed under any interest rate hedging, cap or similar agreement or
arrangement, all as determined for such Person and its Subsidiaries on a
consolidated basis for such period in accordance with GAAP.
"Consolidated Net Income (Loss)" means, for any period, the net income (or
loss) of Borrower and its Subsidiaries on a consolidated basis for such period
taken as a single accounting period, determined in accordance with GAAP (but in
any event without deduction of dividends paid or payable in respect of any
equity interest of Borrower); provided that in determining Consolidated Net
Income (Loss) there shall be excluded (i) the income (or loss) of any Person
(other than a Subsidiary of Borrower) in which any Person other than Borrower or
any of its Subsidiaries has a joint interest or partnership interest, except to
the extent of the amount of dividends or other distributions actually paid to
Borrower or any of its Subsidiaries by such Person during such period, (ii) the
income (or loss) of any Person accrued prior to the date it becomes a Subsidiary
of Borrower or is merged into or consolidated with Borrower or any of its
Subsidiaries or that Person's assets are acquired by Borrower or any of its
Subsidiaries, (iii) the proceeds of any life insurance policy, (iv) gains and
losses from the sale, exchange, transfer or other disposition of Property or
assets not in the ordinary course of business, and related tax effects in
accordance with GAAP, (v) any other extraordinary or non-recurring gains and
losses, and related tax effects in accordance with GAAP, and (vi) the income of
any Subsidiary of Borrower to the extent that the declaration or payment of
dividends or similar distributions by that Subsidiary of that income is not at
the time permitted by operation of the terms of its charter or of any agreement,
instrument, judgment, decree, Order, statute, rule or governmental regulation
applicable to that Subsidiary.
"Continue", "Continuation" and "Continued" shall refer to the continuation
pursuant to Section 3.1 hereof of a LIBOR Loan from one Interest Period to the
next Interest Period.
"Convert", "Conversion" and "Converted" shall refer to a conversion
pursuant to Section 3.1 hereof of (a) a LIBOR Loan into a Floating Rate Loan, or
(b) a Floating Rate Loan into a LIBOR Loan.
"Default" means any event or condition which, with due notice or lapse of
time or both, would become an Event of Default.
"Environmental Laws" means the Comprehensive Environmental Response,
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Compensation and Liability Act, the Resource Conservation and Recovery Act, the
Emergency Planning and Community Right to Know Act, the Safe Drinking Water Act,
the Hazardous Materials Transportation Act, the Clean Air Act, the Clean Water
Act, the Federal Insecticide, Fungicide and Rodenticide Act, the Noise Control
Act, Occupational Safety and Health Act, the Toxic Substances Control Act, any
so-called "Superfund" or "Superlien" Laws, any regulation promulgated under any
of the foregoing or any other Federal, state, or local statute, law, ordinance,
code, rule, regulation, order, decree, common law or other requirement of any
Governmental Body regulating, relating to or imposing liability or standards of
conduct concerning the environment, health and safety, siting, wetlands, coastal
zone management, air emissions, discharges to surface or ground water,
discharges to any sewer or septic system, noise emissions, solid waste disposal
or any Hazardous Material, or the generation, use, transportation or other
management of Hazardous Materials, all as now or at any time hereafter may be in
effect.
"Environmental Matter" means any claim, investigation, notice letter,
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information request, litigation, administrative proceeding, cleanup or
remediation order, whether pending or, to the knowledge of Borrower, threatened,
or judgment or Order, relating to any Hazardous Materials, the release thereof,
or any Environmental Law.
3
"ERISA" means the Employee Retirement Income Security Act of 1974, as
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amended.
"ERISA Affiliate" means any corporation or other Person which is a member
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of the same controlled group (within the meaning of Section 414(b) of the Code)
of corporations or other Persons as Borrower or any of its Subsidiaries, or
which is under common control (within the meaning of Section 414(c) of the Code)
with Borrower or any of its Subsidiaries, or any corporation or other Person
which is a member of an affiliated service group (within the meaning of Section
414(m) of the Code) with Borrower or any of its Subsidiaries, or any corporation
or other Person which is required to be aggregated with Borrower or any of its
Subsidiaries pursuant to Section 414(o) of the Code or the regulations
promulgated thereunder, to the extent effective.
"Event of Default" is defined in Section 8.1.
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"Exchange Act" means the Securities Exchange Act of 1934, as amended, or
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any similar Federal statute then in effect, and a reference to a particular
section thereof shall include a reference to the comparable section, if any, of
any such similar Federal statute.
"Fair Market Value" means the amount a willing buyer would pay to a willing
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seller for the assets in question, neither party being under compulsion to act
and both having reasonable knowledge of all relevant facts.
"Funded Debt" of any Person means all Indebtedness of such Person other
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than Indebtedness of the types described in clauses (vii) and (viii) of the
definition of "Indebtedness" set forth herein.
"GAAP" means generally accepted accounting principles as in effect from
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time to time in the United States of America, applied on a consistent basis as
to classification of items and amounts.
"Governmental Body" means any Federal, state, county, city, town, village,
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municipal or other governmental department, commission, board, bureau, agency,
authority or instrumentality, domestic or foreign.
"Guaranty" means any guaranty or other contingent liability (other than
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any endorsement for collection or deposit in the ordinary course of business),
direct or indirect, with respect to any obligations of another Person, through
an agreement or otherwise, including, without limitation, (a) any other
endorsement or discount with recourse or undertaking substantially equivalent to
or having economic effect similar to a guarantee in respect of any such
obligations and (b) any agreement (i) to purchase, or to advance or supply funds
for the payment or purchase of, any such obligations, (ii) to purchase, sell or
lease Property, products, materials or supplies, or transportation or services,
in respect of enabling such other Person to pay any such obligation or to assure
the owner thereof against loss regardless of the delivery or nondelivery of the
Property, products, materials or supplies or transportation or services or (iii)
to make any loan, advance or capital contribution to or other investment in, or
to otherwise provide funds to or for, such other Person in respect of enabling
such Person to satisfy any obligation (including any liability for a dividend,
stock liquidation payment or expense) or to assure a minimum equity, working
capital or other balance sheet condition in respect of any such obligation. The
amount of any Guaranty shall be equal to the outstanding amount of the
obligations directly or indirectly guaranteed.
"Hazardous Material" and "Hazardous Materials" mean, and shall be deemed to
------------------ -------------------
refer to:
(1) any "hazardous substance" as defined in, or for purposes of, the
Comprehensive Environmental Response, Compensation and Liability
Act, 42 U.S.C.A. (S)(S) 9601 & 9602, or any other so-called
4
"superfund" or "superlien" law and any judicial interpretation of
any of the foregoing;
(2) any "regulated substance" as defined pursuant to 40 C.F.R. Part
280;
(3) any "pollutant or contaminant" as defined in 42 U.S.C.A. (S)
9601(33);
(4) any "hazardous waste" as defined in, or for purposes of, the
Resource Conservation and Recovery Act;
(5) any "hazardous chemical" as defined in 29 C.F.R. Part 1910;
(6) any "hazardous material" as defined in, or for purposes of, the
Hazardous Materials Transportation Act; and
(7) any other substance, regardless of physical form, or form of
energy or pathogenic agent that is subject to any other past,
present or future law or requirement of any Governmental Body
regulating, relating to, or imposing obligations, liability, or
standards of conduct concerning the protection of human health,
plant life, animal life, natural resources, Property or the
reasonable enjoyment of life or Property from the presence in the
environment of any solid, liquid, gas, odor, pathogen or form of
energy, from whatever source.
Without limiting the generality of the foregoing, the term "Hazardous
Material" thus includes, but is not limited to, any material, waste or substance
that contains petroleum or any fraction thereof, asbestos, or polychlorinated
biphenyls, or that is flammable, explosive or radioactive.
"Indebtedness" of any Person means, without duplication, (i) all
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indebtedness of such Person for borrowed money, (ii) any obligation incurred for
all or any part of the purchase price of Property or services, other than
accounts payable and accrued expenses included in current liabilities and
incurred in respect of Property or services purchased in the ordinary course of
business, (iii) indebtedness or obligations evidenced by bonds, debentures,
notes or similar written instruments, (iv) the face amount of all letters of
credit issued for the account of such Person and all drafts drawn thereunder,
(v) any obligation (whether or not such Person has assumed or become liable for
the payment of such obligation) secured by a Lien on any Property of such
Person, (vi) Capitalized Lease Obligations of such Person, (vii) all
indebtedness, contingent or otherwise, with respect to any interest rate
agreement, including without limitation any interest rate swap agreement,
interest rate cap agreement, interest rate collar agreement or other similar
agreement or arrangement designed to protect such Person against fluctuations in
interest rates; (viii) any indebtedness, contingent or otherwise, under any
foreign exchange contract, currency swap agreement or other similar agreement or
arrangement designed to protect such Person against fluctuations in currency
values; and (ix) all Guaranties of such Person in respect of any obligations of
the foregoing description of any other Person.
"Intellectual Property" is defined in Section 6.19.
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"Interest Period" means, with respect to any portion of the outstanding
---------------
principal of the Loans bearing interest from time to time with reference to
LIBOR, the period commencing on and including the
5
date such principal is advanced or is Converted from the Floating Rate to LIBOR,
or the last day of the immediately preceding Interest Period for such principal
(if previously bearing interest with reference to LIBOR), and ending on but
excluding the 30th, 60th or 90th day thereafter; provided that if any Interest
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Period would end on a day that is not a Business Day, such Interest Period shall
be extended to the next day that is a Business Day (unless extending such
Interest Period to the next Business Day would cause the Interest Period to end
in a different calendar month, in which case the last day of such Interest
Period shall be the immediately preceding Business Day). In no event shall an
Interest Period extend beyond the Revolving Maturity Date; and if any Interest
Period would otherwise commence before and end after the Revolving Maturity
Date, then the LIBOR shall not be available hereunder for such period.
"Investment" means with respect to any Person, any investment of such
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Person so classified under GAAP, and, whether or not so classified, includes (a)
any loan or advance made by such Person to any other Person, (b) any Guaranty,
and (c) any ownership or similar interest in any other Person; and the amount of
any Investment shall be the original principal or capital amount thereof less
all cash returns of principal or equity thereof (and without adjustment by
reason of the financial condition of such other Person).
"Leverage Ratio" means, as of any date of determination with respect to any
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Person, the ratio of (x) the aggregate Indebtedness of such Person and its
Subsidiaries on a consolidated basis to (y) such Person's Tangible Net Worth.
"LIBOR" means, with respect to any portion of the outstanding Loans for any
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Interest Period therefor, the offered rate per annum for deposits of Dollars for
a period equal to such Interest Period that appears on Telerate Page 3750 as of
11:00 A.M. (London, England time) two Business Days prior to the commencement of
such Interest Period. If no such offered rate exists, the rate in respect of
such Interest Period will be the rate of interest per annum, as determined by
Agent (rounded upwards, if necessary, to the nearest 1/16 of 1%) at which
deposits of Dollars in immediately available and freely transferable funds are
offered at 11:00 A.M. (London, England time) two Business Days prior to the
commencement of such Interest Period by major financial institutions reasonably
satisfactory to Agent in the London interbank market for a period equal to such
Interest Period and for an amount equal or comparable to such portion of the
principal amount of the Loans.
"LIBOR Rate" is defined in Section 3.1.
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"LIBOR Loan" is defined in Section 3.1.
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"Lien" means any security interest, mortgage, pledge, lien, claim, charge,
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encumbrance of any kind, or any other type of preferential arrangement, title
retention agreement, any easement, right of way or other encumbrance on title to
real property, or lessor's interest under a Capitalized Lease or analogous
instrument.
"Loan" means the "Revolving Loan."
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"Loan Documents" means this Agreement, the Notes, each Subsidiary Guarantee
--------------
that may from time to time be delivered hereunder and all other documents,
instruments and agreements (including financing statements and certificates
executed and delivered from time to time in connection with or pursuant to this
Agreement).
"Material Adverse Effect" means any change or changes or effect or effects
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that individually or in the aggregate are or are reasonably likely to be
materially adverse to (i) the assets, business, operations, income, prospects or
condition (financial or otherwise) of Borrower and its Subsidiaries taken as a
whole,
6
(ii) the ability of Borrower and its Subsidiaries to perform their respective
obligations under this Agreement, the Notes, and the other Loan Documents to
which they may be parties or (iii) the validity or enforceability of any of the
Loan Documents in any manner that would impair the practical realization by the
Agent or the Lenders of their respective rights, benefits or remedies under
thereof.
"Multiemployer Plan" means a multiemployer plan as defined in Section 3(37)
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or Section 4001(a)(3) of ERISA or Section 414(f) of the Code contributed to by
Borrower or any of its ERISA Affiliates and which is subject to Title IV of
ERISA.
"Notes" means, collectively, the Revolving Notes.
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"Obligations" means all obligations (monetary or otherwise) of Borrower and
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its Subsidiaries to Agent and the Lenders arising under or in connection with
this Agreement, the Notes and each other Loan Document to which any such Person
is or may be a party.
"Officer's Certificate" means with respect to any Person a certificate
---------------------
signed on such Person's behalf by the Chairman of the Board, the President, one
of the Vice Presidents, or the chief financial officer of the specified Person,
in the signer's capacity as such officer.
"Order" means any order, writ, injunction, decree, judgment, award,
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determination or written direction or demand of any court, arbitrator or
Governmental Body.
"PBGC" means the Pension Benefit Guaranty Corporation, and any successor
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agency or Governmental Body performing similar functions.
"Pension Plan" means an employee pension benefit plan, as defined in
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Section 3(2) of ERISA which is subject to Section 412 of the Code, Section 302
of ERISA or Title IV of ERISA, excluding a Multiemployer Plan, maintained by or
contributed to by Borrower or any of its ERISA Affiliates.
"Percentage" means, with respect to any Lender, the percentage of the
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aggregate Commitments of all Lenders represented by the Commitment of such
Lender.
"Permitted Liens" is defined in Section 7.8.
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"Person" means any natural person, corporation, partnership, firm,
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association, trust, government, governmental agency or any other entity, whether
acting in an individual, fiduciary or other capacity.
"Property" means, with respect to any Person, any interest of such Person
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in any kind of property or asset, whether real, personal, or mixed, tangible or
intangible.
"Required Lenders" means, as of any date of determination, Lenders holding
----------------
Commitments comprising 100% or more of the aggregate Commitments of all of the
Lenders.
"Restricted Payment" means, with respect to any Person,
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(a) the declaration or payment of any dividend or other distribution on,
or the incurrence of any liability to make any other payment in respect of,
capital stock or other equity interest of such Person (other than one payable
solely in the same class of capital stock of such Person),
7
(b) any payment or distribution on account of the purchase,
redemption, defeasance (including in-substance or legal defeasance) or other
retirement of any capital stock of such Person, or of any warrant, option or
other right to acquire such capital stock, or any other payment or distribution
made in respect thereof, and
(c) any payment or distribution by such Person on account of the
principal of or prepayment charge, if any, or interest or other amounts, with
respect to any Indebtedness of Borrower which is subordinated and subject in
right of payment to the prior payment of the Obligations.
The amount of any Restricted Payment made in the form of Property shall be
deemed to be the Fair Market Value of such Property as of the date of such
payment.
"Revolving Commitment Limit" is defined in Section 2.1.
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"Revolving Loan" is defined in Section 2.1.
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"Revolving Maturity Date" is defined in Section 2.1.
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"Revolving Note" is defined in Section 2.1.
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"SEC" means the United States Securities and Exchange Commission and any
---
other agency or Governmental Body that may hereafter succeed to the functions
thereof.
"Securities Act" means the Securities Act of 1933, as amended, or any
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similar Federal statute then in effect, and a reference to a particular section
thereof shall include a reference to the comparable section, if any, of any such
similar Federal statute.
"Solvent" means, when used with respect to any Person, that (A) the fair
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value of the property of such Person is greater than the total amount of
liabilities (including, without limitation, contingent liabilities) of such
Person, (B) the present fair salable value of the assets of such Person is not
less than the amount that will be required to pay the probable liabilities of
such Person on its debts as they become absolute and matured, (C) such Person
does not intend to, and does not believe that it will, incur debts or
liabilities beyond such Person's ability to pay as such debts and liabilities
mature, and (D) such Person is not engaged in business or a transaction, and is
not about to engage in business or a transaction, for which such Person's
property would constitute unreasonably small capital. For such purposes, any
contingent liability (including, but not limited to, pending litigation,
Guaranties, pension plan liabilities and claims for federal, state, local and
foreign taxes, if any) is valued at the amount that, in light of all the facts
and circumstances existing at such time, represents the amount that can
reasonably be expected to become an actual or matured liability.
"Subsidiary" means as to any Person (a) a corporation of which outstanding
----------
shares of stock having ordinary voting power (other than stock having such power
only by reason of the happening of a contingency) to elect a majority of the
Board of Directors of such corporation are at the time owned, directly or
indirectly through one or more intermediaries, or both, by such Person and (b)
any partnership, association, joint venture or other business entity the
controlling interest of which is at the time owned, directly or indirectly
through one or more intermediaries, or both, by such Person.
"Subsidiary Guarantee" means a guaranty executed and delivered by a
--------------------
Subsidiary of Borrower pursuant to Section 7.20 in favor of Agent, for the
------------
benefit of the Lenders, substantially in the form of Exhibit C.
---------
8
"Tangible Net Worth" means gross book value of Borrower's assets, excluding
------------------
all assets properly classified as intangible in accordance with GAAP and
excluding in any event goodwill, patents, trademarks and other like intangibles
and intellectual property, and sums owing from affiliates, officers,
shareholders or directors of Borrower or any of its Subsidiaries, minus total
-----
liabilities, plus the principal amount of any Indebtedness that is expressly
----
subordinated to the Obligations on terms and conditions satisfactory to Agent,
all as determined for Borrower and its Subsidiaries on a consolidated basis in
accordance with GAAP.
2. CREDIT FACILITY. Lenders shall provide the following credit facility to
Borrower:
2.1 Revolving Loan. Lenders agree to make available to the Borrower a
--------------
revolving line of credit ("Revolving Loan") in the maximum principal amount
---------------
outstanding at any one time of TWENTY MILLION Dollars ($20,000,000) (the
"Revolving Commitment Limit"), which Revolving Loan shall be evidenced by one or
--------------------------
more Revolving Notes, each substantially in the form of Exhibit A hereto (each,
---------
a "Revolving Note" and collectively the "Revolving Notes"). Each Revolving Note
-------------- ---------------
shall be registered in the name of a Lender and shall have a maximum principal
amount equal to such Lender's Commitment. The Revolving Loan shall mature and
be payable in full on May 31, 2001 (the "Revolving Maturity Date"), and interest
-----------------------
on the Revolving Loan shall accrue and be payable as provided in Section 3.1.
-----------
Borrower may from time to time repay all or a portion of the amounts outstanding
under the Revolving Loan (together with accrued interest to the date of
repayment on the principal amount so repaid), which amounts may be re-borrowed
(subject to the Revolving Commitment Limit) so long as the Commitment of the
Lenders to make Advances under the Revolving Loan has not been terminated. With
respect to each disbursement of funds under the Revolving Loan (an "Advance"),
-------
each Lender is hereby authorized to record, on its books and records, the date
and amount of such Advance, the duration of each Interest Period therefor and
the interest rate applicable to such Interest Period. The information so
recorded by each Lender shall be conclusive and binding in the absence of
manifest error. Notwithstanding the foregoing, the failure by any Lender to
record any such information shall not impair the liability of Borrower to make
any payment of the Obligations when due.
2.2 Borrowing Procedure. Borrower may request an Advance pursuant to
-------------------
written notice or pursuant to telephonic notice confirmed in writing or by
facsimile (each a "Borrowing Request"). Each Borrowing Request shall be made
-----------------
not later than the applicable time and date specified in Section 3.1, and shall
-----------
specify the date and amount of the requested Advance, the initial Interest
Period therefor (in the case of a LIBOR Loan), and whether such Advance is to
bear interest with reference to LIBOR or the Floating Rate for such Interest
Period. All Borrowing Requests and confirmations thereof in writing or by
facsimile must be signed by an officer of Borrower who has been identified in
writing to Agent as an officer authorized to make Borrowing Requests on behalf
of Borrower. If there is any discrepancy between a telephonic notice and the
subsequent written confirmation thereof and Agent has already acted upon the
original telephonic notice, the terms of such telephonic notice shall be
determinative. Borrower indemnifies Agent, each Lender and their respective
officers, employees and agents, and holds each such Person harmless from all
liability, loss, cost and expense in connection with any act resulting from any
Borrowing Request (whether telephonic, written or by facsimile) which is
reasonably believed to have been made by an officer authorized to make Borrowing
Requests on behalf of Borrower. The foregoing indemnification shall survive the
termination of this Agreement.
2.3 Lenders' Records. With respect to each Loan, each Lender is hereby
----------------
authorized to xxxx the date, principal amount, interest rate and Interest Period
(if any) applicable thereto and any payments made thereon on its books and
records (either manually or by electronic entry) and/or on any schedule attached
to the applicable Note, which notations shall be conclusive evidence of the
information marked, in the absence of manifest error.
9
2.4 Commitment Fee. Borrower will to pay to Agent, for the ratable
--------------
benefit of the Lenders, an unused commitment fee on a quarterly basis in arrears
(accruing from the Closing Date), at the rate of 0.25% per annum calculated on
the daily unused portion of the Revolving Commitment Limit.
3. PAYMENTS OF PRINCIPAL, INTEREST AND OTHER AMOUNTS.
3.1 Interest. Amounts outstanding under the Revolving Loan shall bear
--------
interest based at the rate per annum equal to the sum of the Base Rate from time
to time plus the Applicable Base Rate Margin (the "Floating Rate") or, at
-------------
Borrower's election (which election shall not be available at any time when an
Event of Default is continuing) subject to the following provisions of this
Section 3.1, at the rate per annum equal to the sum of LIBOR plus the Applicable
-----------
LIBOR Margin (the "LIBOR Rate"); provided, that following the occurrence and
---------- --------
during the continuance of an Event of Default, all amounts outstanding under
each Facility shall, at the option of Agent, bear interest at the rate per annum
equal to the sum of the Floating Rate plus 2%. A portion of principal
outstanding hereunder bearing interest at the Floating Rate shall be referred to
as a "Floating Rate Loan"; and a portion of principal outstanding hereunder
------------------
bearing interest at the LIBOR Rate shall be referred to as a "LIBOR Loan". With
----------
respect to any Floating Rate Loan, any Advance shall be requested upon at least
one (1) Business Day's prior notice given to the Agent prior to 12:00 noon
California time (but Lenders will consider Advancing, to the extent practicable,
Floating Rate Loans on the same day requested). With respect to any LIBOR Loan,
Borrower may, at the end of the applicable Interest Period (or, subject to
Section 3.6, on any other Business Day), Convert such loan to a Floating Rate
-----------
Loan. Borrower may at any time (subject to the following sentence) Convert a
Floating Rate Loan into a LIBOR Loan. At the time any Advance is requested to
which Borrower desires the LIBOR Rate to be applicable, and/or Borrower wishes
to have the LIBOR Rate apply to all or a portion of the outstanding principal of
the Loans, and at the end of any Interest Period for a LIBOR Loan which Borrower
wishes to Continue as a LIBOR Loan, Borrower shall give Agent notice (which
notice shall be delivered not less than three (3) Business Days prior to the
first day of the Interest Period) specifying (i) the interest rate option
selected by Borrower, (ii) the principal amount to be subject to such interest
rate, and (iii) if the LIBOR Rate is selected, the length of the applicable
Interest Period. Any such notice may be given by telephone so long as, in the
case of LIBOR Loans, Agent receives written confirmation of such telephonic
notice not later than three (3) Business Days after such telephonic notice is
given. Notwithstanding the foregoing, Borrower may only request the LIBOR Rate
for amounts of principal that are at least $1,000,000 in the aggregate and
integral multiples of $500,000, and no more than five (5) LIBOR Loans may be
outstanding at any time. With respect to any portion of the Loans for which the
LIBOR Rate has not been duly selected in accordance with the foregoing
provisions of this Section 3.1, Borrower will be deemed to have selected the
-----------
Floating Rate.
3.2 Interest Payments and Computations. Accrued interest on all
----------------------------------
outstanding Floating Rate Loans shall be due and payable on the last Business
Day of each month. Accrued interest on all outstanding LIBOR Loans shall be due
and payable on the last day of the applicable Interest Period, but in no event
later than 90 days following the commencement of such Interest Period. Interest
on LIBOR Loans shall be computed on the basis of a 360-day year and shall be
assessed for the actual number of days elapsed from the first day of the
applicable Interest Period, but excluding the last day of such period. Interest
on each Floating Rate Loan shall be computed on the basis of a 365- or 366-day
year and shall be assessed for the actual number of days elapsed.
3.3 LIBOR Lending Unlawful. If any Lender shall determine in its
----------------------
reasonable discretion (which determination shall, upon notice thereof to
Borrower and Agent, be conclusive and binding on Borrower) that the introduction
of or any change in or in the interpretation of any law makes it unlawful, or
any central bank or other Governmental Body asserts that it is unlawful, for
such Lender to make, continue or maintain any loan as, or to convert any loan
into, a LIBOR Loan, the obligations of such Lender to make, continue, maintain
or convert any such loans shall, upon such determination, forthwith
10
be suspended until Lender shall notify Borrower and Agent that the circumstances
causing such suspension no longer exist, and all LIBOR Loans shall automatically
convert into Floating Rate Loans at the end of the then current Interest Periods
with respect thereto or sooner, if required by such law or assertion.
3.4 Deposits Unavailable. If any Lender shall have determined in its
--------------------
reasonable discretion that by reason of circumstances affecting such Lender's
relevant market, adequate means do not exist for ascertaining the interest rate
applicable hereunder to LIBOR Loans, then, upon notice from such Lender to
Borrower, the obligations of such Lender to make or continue any loans as, or to
convert any loans into, LIBOR Loans shall forthwith be suspended until such
Lender shall notify Borrower and Agent that the circumstances causing such
suspension no longer exist.
3.5 Increased LIBOR Loan Costs, etc. Borrower agrees to reimburse each
--------------------------------
Lender for any increase in the cost to such Lender of, or any reduction in the
amount of any sum receivable by such Lender in respect of, making, continuing or
maintaining (or of its obligation to make, continue or maintain) any loans as,
or of converting (or of its obligation to convert) any loans into, LIBOR Loans.
Each Lender shall promptly notify Borrower and Agent in writing upon the
occurrence of any such event, which notice shall state, in reasonable detail,
the reasons therefor and the additional amount required fully to compensate such
Lender for such increased cost or reduced amount. Such additional amounts shall
be payable by Borrower directly to such Lender within five days of its receipt
of such notice, and such notice shall, in the absence of manifest error, be
conclusive and binding on Borrower.
3.6 Funding Losses. In the event that any Lender shall incur any loss or
--------------
expense (including any loss or expense incurred by reason of the liquidation or
reemployment of deposits or other funds acquired by such Lender to make,
Continue or maintain any portion of the principal amount of any loan as, or to
convert any portion of the principal amount of any loan into, a LIBOR Loan) as a
result of (a) any Conversion or repayment or prepayment of the principal amount
of any LIBOR Loan on a date other than the scheduled last day of the Interest
Period applicable thereto, for any reason, or (b) any loans not being made as
LIBOR Loans in accordance with Borrower's request therefor; then, upon the
written notice of such Lender to Borrower and Agent, Borrower shall, within five
days of its receipt thereof, pay directly to such Lender such amount as will (in
such Lender's reasonable determination) reimburse such Lender for such loss or
expense. Such written notice (which shall include calculations in reasonable
detail) shall, in the absence of manifest error, be conclusive and binding on
Borrower.
3.7 Direct Debit Authorization. Agent is hereby authorized, but shall
--------------------------
not be required, to deduct automatically from Borrower's account number
1891120121 maintained at Comerica Bank-California, scheduled payments of
principal of and interest on the Loans as and when the same shall become due and
payable.
4. THE AGENT
4.1 Actions. Each Lender hereby appoints COMERICA BANK-CALIFORNIA
---------------
("Comerica") as its Agent under and for purposes of this Agreement and each
--------
other Loan Document. Each Lender authorizes Agent to act on behalf of such
Lender under this Agreement and each other Loan Document and, in the absence of
other written instructions from the Required Lenders received from time to time
by Agent (with respect to which Agent agrees that it will comply, except as
otherwise provided in this Section or as otherwise advised by counsel), to
exercise such powers hereunder and thereunder as are specifically delegated to
or required of Agent by the terms hereof and thereof, together with such powers
as may be reasonably incidental thereto. Each Lender hereby indemnifies (which
indemnity shall survive any termination of this Agreement) Agent, pro rata
--- ----
according to such Lender's Percentage, from and against any and all liabilities,
obligations, losses, damages, claims, costs or expenses of any kind or
11
nature whatsoever which may at any time be imposed on, incurred by, or asserted
against, Agent in any way relating to or arising out of this Agreement and any
other Loan Document, including reasonable attorneys' fees, and as to which Agent
is not reimbursed by Borrower; provided, however, that no Lender shall be liable
-------- -------
for the payment of any portion of such liabilities, obligations, losses,
damages, claims, costs or expenses which are determined by a court of competent
jurisdiction in a final proceeding to have resulted solely from Agent's gross
negligence or willful misconduct. Agent shall not be required to take any action
hereunder, or under any other Loan Document, or to prosecute or defend any suit
in respect of this Agreement or any other Loan Document, unless it is
indemnified hereunder to its satisfaction. If any indemnity in favor of Agent
shall be or become, in Agent's determination, inadequate, Agent may call for
additional indemnification from the Lenders and cease to do the acts indemnified
against hereunder until such additional indemnity is given.
4.2 Funding Reliance, etc. Unless Agent shall have been notified by
---------------------
telephone, confirmed in writing, by any Lender by 12:00 p.m., Los Angeles,
California time, on the day prior to any Advance or disbursement that such
Lender will not make available the amount which would constitute its Percentage
of such Advance or disbursement on the date specified therefor, Agent may assume
that such Lender has made such amount available to Agent and, in reliance upon
such assumption, make available to Borrower a corresponding amount. If and to
the extent that such Lender shall not have made such amount available to Agent,
such Lender agrees to repay Agent forthwith on demand such corresponding amount
together with interest thereon, for each day from the date Agent made such
amount available to Borrower to the date such amount is repaid to Agent, at the
interest rate applicable at the time to the portion of the Loans comprising such
Advance or disbursement, as the case may be.
4.3 Exculpation. Neither Agent nor any of its directors, officers,
-----------
employees or agents shall be liable to any Lender for any action taken or
omitted to be taken by it under this Agreement or any other Loan Document, or in
connection herewith or therewith, except for its own willful misconduct or gross
negligence, nor responsible for any recitals or warranties herein or therein,
nor for the effectiveness, enforceability, validity or due execution of this
Agreement or any other Loan Document, nor for the creation, perfection or
priority of any Liens purported to be created by any of the Loan Documents, or
the validity, genuineness, enforceability, existence, value or sufficiency of
any collateral security, nor to make any inquiry respecting the performance by
Borrower or any of its Subsidiaries of their respective obligations under the
Loan Documents. Any such inquiry which may be made by Agent shall not obligate
it to make any further inquiry or to take any action. Agent shall be entitled to
rely upon advice of counsel concerning legal matters and upon any notice,
consent, certificate, statement or writing which Agent believes to be genuine
and to have been presented by a proper Person.
4.4 Successor. Agent may resign as such at any time upon at least 30
---------
days' prior notice to Borrower and all Lenders. If Agent at any time shall
resign, the Required Lenders may appoint another Lender as a successor Agent
which shall thereupon become Agent hereunder. If no successor Agent shall have
been so appointed by the Required Lenders, and shall have accepted such
appointment, within 30 days after the retiring Agent's giving notice of
resignation, then the retiring Agent may, on behalf of the Lenders, appoint a
successor Agent, which shall be one of the Lenders or a commercial banking
institution organized under the laws of the U.S. (or any State thereof) or a
U.S. branch or agency of a commercial banking institution, and having a combined
capital and surplus of at least $500,000,000. Upon the acceptance of any
appointment as Agent hereunder by a successor Agent, such successor Agent shall
be entitled to receive from the retiring Agent such documents of transfer and
assignment as such successor Agent may reasonably request, and shall thereupon
succeed to and become vested with all rights, powers, privileges and duties of
the retiring Agent, and the retiring Agent shall be discharged from its duties
and obligations under this Agreement. After any retiring Agent's resignation
hereunder as Agent, the provisions of this Section 4 shall inure to its benefit
---------
as to any actions taken or omitted to be
12
taken by it while it was Agent under this Agreement; and Sections 9.8 and 9.9
------------ ---
shall continue to inure to its benefit.
4.5 Loans and other Transactions by Comerica. Comerica shall have the
----------------------------------------
same rights and powers with respect to (x) the Revolving Loan made by it or any
of its Affiliates, and (y) the Notes held by it or any of its Affiliates as any
other Lender and may exercise the same as if it were not Agent. Comerica and its
Affiliates may accept deposits from, lend money to, and generally engage in any
kind of business with Borrower, any of its Subsidiaries or any of their
Affiliates as if Comerica were not Agent hereunder.
4.6 Credit Decisions. Each Lender acknowledges that it has,
----------------
independently of Agent and each other Lender, and based on such Lender's review
of the financial information of Borrower and its Subsidiaries, this Agreement,
the other Loan Documents (the terms and provisions of which being satisfactory
to such Lender) and such other documents, information and investigations as such
Lender has deemed appropriate, made its own credit decision to extend its
Commitment. Each Lender also acknowledges that it will, independently of Agent
and each other Lender, and based on such other documents, information and
investigations as it shall deem appropriate at any time, continue to make its
own credit decisions as to exercising or not exercising from time to time any
rights and privileges available to it under this Agreement or any other Loan
Document.
4.7 Copies, etc. Agent shall give prompt notice to each Lender of each
-----------
notice or request required or permitted to be given to Agent by Borrower
pursuant to the terms of this Agreement (unless concurrently delivered to the
Lenders by Borrower). Agent will distribute to each Lender each document or
instrument received for its account and copies of all other communications
received by Agent from Borrower for distribution to the Lenders by Agent in
accordance with the terms of this Agreement.
5. CONDITIONS PRECEDENT.
5.1 Closing Conditions . The occurrence of the Closing Date is subject
-------------------
to the fulfillment, to the satisfaction of Agent, the Lenders and their counsel,
of each of the following conditions:
(a) Proceedings Satisfactory; Due Diligence. All corporate and other
---------------------------------------
proceedings taken or to be taken in connection with the transactions
contemplated hereby and all documents incident thereto shall be reasonably
satisfactory in form and substance to Agent and its counsel, and Lenders and
their counsel shall have received all such counterpart originals or certified or
other copies of such documents as they may reasonably request. Agent shall have
completed its due diligence review of Borrower (including, without limitation,
the status of any litigation), the results of which shall be satisfactory to
Agent in all respects.
(b) Delivery of Notes. There shall have been delivered to each
-----------------
Lender such Lender's respective Revolving Note, each duly executed by Borrower
and dated the Closing Date, in the respective principal amounts, having the
required maturity date and as otherwise provided herein.
(c) Opinion of Borrower's Counsel. Agent and the Lenders shall have
-----------------------------
received from Xxxxxxxxx Xxxxx Xxxxxxx & Xxxxx, counsel for Borrower, legal
opinions addressed to Agent and the Lenders and dated the Closing Date
substantially to the effect of the matters set forth in Exhibit B.
---------
(d) Representations and Warranties True, Etc.; Certificates. The
-------------------------------------------------------
representations and warranties contained in Section 6 and elsewhere in this
---------
Agreement and the representations and warranties contained in the other Loan
Documents shall be true in all material respects on and as of the Closing Date
with the same effect as if such representations and warranties had been made on
and as of
13
the Closing Date, except that any such representation or warranty which is
expressly made only as of a specified date need be true only as of such date.
Borrower shall have performed all material agreements on its part required to be
performed under this Agreement and the other Loan Documents on or prior to the
Closing Date; there shall exist on the Closing Date no Default or Event of
Default; Borrower shall have delivered to Agent an officer's certificate, dated
the Closing Date, to such effect and to the effects specified in subsections
(f), (g), (h) and (i) below, inclusive.
(e) Absence of Material Adverse Effect, Etc.. Since January 2,
----------------------------------------
2000, except as disclosed in Borrower's periodic reports filed with the SEC, no
change or changes shall have occurred to the business, operations, Properties,
assets, income, prospects or condition, financial or otherwise, of Borrower
which Agent reasonably believes constitutes or is likely to have a Material
Adverse Effect.
(f) Consents and Approvals. All necessary consents, approvals and
----------------------
authorizations of, and declarations, registrations and filings with,
Governmental Bodies and nongovernmental Persons required in order to consummate
the transactions contemplated by this Agreement shall have been obtained or made
and shall be in full force and effect.
(g) Absence of Litigation, Orders, Etc.. Except as disclosed on
-----------------------------------
Schedule 6.7, there shall not be pending or, to the knowledge of Borrower,
------------
threatened, any action, suit, proceeding, governmental investigation or
arbitration against or affecting Borrower or the respective assets or Property
of any of such Persons which seeks to enjoin or restrain any of the transactions
contemplated by this Agreement or which Agent reasonably believes in good faith
is likely to have a Material Adverse Effect. No Order of any court, arbitrator
or Governmental Body shall be in effect which purports to enjoin or restrain any
of the transactions contemplated by this Agreement or which Agent reasonably
believes in good faith constitutes or is likely to have a Material Adverse
Effect.
(h) Constituent Documents. Agent shall have received copies of (i)
---------------------
the Articles or Certificate of Incorporation of Borrower, certified as of a
recent date by the Secretary of State of the State of its incorporation, and
(ii) Borrower's By-Laws certified as of the Closing Date by the Secretary of
Borrower.
(i) Resolutions; Incumbency. Agent shall have received certified
-----------------------
resolutions of the Board of Directors of Borrower with respect to this Agreement
and the other Loan Documents, together with a certificate identifying Borrower's
incumbent President, Chief Executive Officer and Chief Financial Officer and
setting for specimen signatures of such officers.
(j) Fees Payable at Closing. Borrower shall have paid (i) Agent's
-----------------------
initial administrative fee as set forth in that certain letter agreement between
Borrower and Agent and (ii) the fees of Agent's counsel for the legal fees and
expenses incurred in their representation of Agent in connection with the
preparation and negotiation of this Agreement and the other Loan Documents and
the consummation of transactions contemplated hereby, to the extent invoiced in
reasonable detail at least two (2) days prior to the Closing Date.
(k) Insurance. Agent shall have received policies or certificates
---------
of insurance satisfactory to Agent demonstrating that Borrower has obtained
insurance as required by this Agreement.
5.2 Borrowing Conditions. The obligation of Lenders to make any Advance
--------------------
hereunder is further subject to the fulfillment, to the satisfaction of Agent,
the Lenders and their counsel, of each of the following conditions:
14
(a) Compliance with Warranties, No Default, etc. Both before and
-------------------------------------------
after giving effect to any Advance, (i) each of the representations and
warranties set forth in Section 6 shall be true and correct in all material
---------
respects with the same effect as if then made, except that any such
representation or warranty which is expressly made only as of a specified date
need be true only as of such date, (ii) there shall exist no Default or Event of
Default, and (iii) no condition shall exist and no event shall have occurred
which has had or could have a Material Adverse Effect.
(b) Borrowing Request. Agent shall have received a Borrowing Request
-----------------
conforming to the requirements of Section 2.2. The delivery of each Borrowing
-----------
Request shall constitute a representation and warranty by Borrower that on the
date of such Advance (both immediately before and after giving effect to such
Advance) the statements made in the foregoing subsection (a) are true and
--------------
correct.
(c) Limit Not Exceeded. The aggregate outstanding principal amount
------------------
of the Revolving Loan, after giving effect to such Advance, shall not exceed the
Revolving Commitment Loan.
(d) Satisfactory Legal Form. All documents executed or submitted
-----------------------
pursuant hereto by or on behalf of Borrower shall be satisfactory in form and
substance to Agent, the Lenders and their counsel; Agent, the Lenders and their
counsel shall have received all information, approvals, opinions, documents or
instruments as they may reasonably request.
6. REPRESENTATIONS AND WARRANTIES. Borrower hereby makes the following
------------------------------
representations and warranties to Agent and each Lender.
6.1 Existence and Authority. Borrower and each of its Subsidiaries (a)
------------------------
is a corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization and is duly qualified to do
business in each additional jurisdiction where the failure to so qualify would
have a Material Adverse Effect and (b) has all requisite power to own its
Properties and to carry on its business as now being conducted and as proposed
to be conducted, and to execute, deliver and perform its obligations under this
Agreement and the other Loan Documents to which it is a party to execute, issue,
sell, deliver and perform its obligations under the Notes (in the case of
Borrower) and to engage in the respective transactions contemplated by this
Agreement and the Loan Documents to which it is a party.
6.2 Authorization. The execution, delivery and performance by Borrower
-------------
and its Subsidiaries of this Agreement, the Notes and the Loan Documents to
which it is a party, are within its powers and have been duly authorized by all
necessary corporate action.
6.3 Binding Effect. This Agreement and the Loan Documents to which
--------------
Borrower and each of its Subsidiaries is or may be a party are the legal, valid
and binding obligations of Borrower or such Subsidiary (as the case may be), and
the Notes when issued and delivered against payment therefor as herein provided
will be the legal, valid and binding obligations of Borrower and each of its
Subsidiaries party thereto, enforceable in accordance with their respective
terms, except, in each case, as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, or other laws relative to or
affecting the enforcement of creditors' rights generally in effect from time to
time and by general principles of equity.
6.4 Ownership Interests. Except as set forth on Schedule 6.4A, Borrower
------------------- -------------
will not have outstanding any equity or ownership interests or other securities
convertible into or exchangeable for any of its equity or ownership interests,
nor will there be outstanding any rights to subscribe for or to purchase, or any
options or warrants for the purchase of, or any agreements (contingent or
otherwise) providing for the issuance of, or any calls, commitments or claims of
any character relating to, any of its
15
equity or ownership interests or any securities convertible into or exchangeable
for any of its equity or ownership interests. After giving effect to this
Agreement and the Loans, Borrower will not be subject to any obligation
(contingent or otherwise) to repurchase or otherwise acquire or retire any of
its equity interests.
6.5 Business Operations and Other Information; Financial Condition.
--------------------------------------------------------------
(a) Borrower has delivered to Agent and the Lenders true and complete
copies of (i) the audited consolidated balance sheets of Borrower as of January
3, 1999 and January 2, 2000, and the related audited statements of operations
and earnings (or deficit) and cash flows for each of the fiscal years then
ended, together with the notes thereto and the reports thereon of Deloitte &
Touche, LLP (the "Audited Financial Statements"), and (ii) the unaudited balance
----------------------------
sheet of Borrower as of April 2, 2000, and the related unaudited statements of
operations and earnings and cash flows for the portion of Borrower's fiscal year
then ended (the "Unaudited Financial Statements"; the Audited Financial
------------------------------
Statements and the Unaudited Financial Statements are sometimes hereinafter
collectively referred to as the "Financial Statements"). True and complete
--------------------
copies of the Financial Statements are attached hereto as Schedule 6.5A. The
-------------
Financial Statements have been prepared in accordance with GAAP (except as noted
thereon) consistently applied throughout the periods involved, and present
fairly, in all material respects, the financial position of Borrower as at each
of the dates of the balance sheets contained therein and the respective results
of operations and cash flows of Borrower for each of the respective periods then
ended, subject, in the case of the Unaudited Financial Statements, to non-
material year-end audit adjustments and absence of the notes required by GAAP.
As of the date of each of the balance sheets included in the Financial
Statements Borrower had no Indebtedness or liability, absolute or contingent,
liquidated or unliquidated, except Indebtedness and liabilities reflected or
reserved against on such respective balance sheets or described in the notes
thereto.
(b) Except as contemplated herein or in the Loan Documents, or as
disclosed in Schedule 6.5B or in Borrower's periodic reports filed with the
-------------
SEC, since January 2, 2000, Borrower has not:
(1) written off or been required by GAAP to write off any accounts
receivable or inventory other than in the ordinary course of
business in accordance with its past practices; or
(2) suffered any Material Adverse Effect or any event or condition
which could reasonably be expected to result in a Material
Adverse Effect.
(c) Borrower has delivered to Agent and the Lenders its latest (as of
the Closing Date) projections of the income and cash flow (assuming consummation
of this Agreement) for fiscal year 2000. Such projections have been prepared in
good faith by management of Borrower on the basis of assumptions, set forth
therein, which such management reasonably believes are fair and reasonable in
light of the historical financial performance of Borrower and the Business and
of current and reasonably foreseeable business conditions.
6.6 Subsidiaries. Except as set forth on Schedule 6.6, Borrower does not
------------ ------------
have (a) any Subsidiaries or (b) any capital stock or other equity interest in
any other Person or any option, warrant or right to purchase or acquire any such
capital stock or other equity interest. As of the Closing Date, none of
Borrower's Subsidiaries owns any material assets or conducts any material
business.
16
6.7 Litigation; No Violation of Governmental Orders or Laws.
-------------------------------------------------------
(a) Except as set forth in Schedule 6.7(a), there are no actions,
---------------
suits or proceedings pending, or, to the best knowledge of Borrower after due
inquiry, threatened against or affecting Borrower and each of its Subsidiaries
or against any officer or director of Borrower and each of its Subsidiaries
which is reasonably likely to individually or in the aggregate, a Material
Adverse Effect; or which seek to enjoin, or otherwise prevent the consummation
of, any of the transactions contemplated by this Agreement in any court or
before any arbitrator of any kind or before or by any Governmental Body.
(b) Except as set forth in Schedule 6.7(b), Borrower and each of its
---------------
Subsidiaries will not be, after or as a result of giving effect to this
Agreement and the Loans, in default under or in violation of any Order of any
court, arbitrator or Governmental Body or any statute or law or any rule or
regulation of any Governmental Body, which default or violation has or might
have a Material Adverse Effect; and none of them is subject to or a party to any
Order of any court or Governmental Body arising out of any action, suit or
proceeding under any statute or other law respecting antitrust, monopoly,
restraint of trade, unfair competition or similar matters.
6.8 Outstanding Indebtedness; Investments.
-------------------------------------
(a) Schedule 6.8A sets forth a correct and complete list and
-------------
description of each item of Indebtedness in excess of $1,000,000 of Borrower and
all Liens securing such Indebtedness, now outstanding or existing, or which will
be outstanding or existing on the Closing Date after giving effect to the this
Agreement.
(b) Schedule 6.8B sets forth a correct and complete list of each
-------------
item of Investments of Borrower which is now outstanding or existing, or which
will be outstanding or existing on the Closing Date after giving effect to this
Agreement, other than investments in Subsidiaries, marketable securities, cash
equivalents and other short-term cash equivalent items.
6.9 Consents, etc. No consent, approval or authorization of or
--------------
declaration, registration or filing with any Governmental Body or any
nongovernmental Person (including, without limitation, any creditor or
stockholder of Borrower, and also including, without limitation, any consent,
approval, authorization, declaration or filing or the expiration of any waiting
period under the Xxxx-Xxxxx-Xxxxxx Anti-Trust Improvements Act of 1976, as
amended) is required in connection with the execution or delivery of this
Agreement, the Notes or any of the other Loan Documents by the respective
parties thereto or the performance by such parties of their respective
obligations thereunder, or in connection with the consummation of the
transactions hereunder, or as a condition to the legality, validity or
enforceability of this Agreement, the Notes or any of the other Loan Documents,
except for such consents, approvals, authorizations, declarations, registrations
or filings as are listed in Schedule 6.9, all of which have been or will on or
------------
prior to the Closing Date be obtained and are or will then be in full force and
effect.
6.10 Title to Properties.
-------------------
(a) Borrower and each of its Subsidiaries has (i) good and marketable
fee simple title to its respective real Properties (other than real Properties
which are leased from others), subject to no Lien of any kind except Liens
permitted by Section 7.8 and (ii) good title to all of its Equipment and
-----------
other personal Property and assets (other than Properties and assets leased from
others), subject to no Lien of any kind except Liens permitted by Section 7.8.
-----------
Schedule 6.10(a) sets forth a true and complete list and brief description of
----------------
all real Property owned or leased by Borrower and each of its Subsidiaries on
the
17
Closing Date, together with a true and complete list of all leases of real
Property to which Borrower and each of its Subsidiaries is a party, identifying
the parties to each such lease and the Property to which it relates. True and
complete copies of all such leases, together with all amendments, modifications
and supplements thereto to the date hereof, will be made available to Agent.
Borrower and each of its Subsidiaries enjoys peaceful and undisturbed possession
under all such leases to which it is a party, none of which contains any unusual
or burdensome provisions which might reasonably be expected to have a Material
Adverse Effect, and all such leases are valid and subsisting and in full force
and effect. Borrower and each of its Subsidiaries are not in breach or violation
of the terms of any of such leases (except for such breaches and violations as
could not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect), and after due inquiry Borrower knows of no breach or
violation of any of such leases by any party other than Borrower and each of its
Subsidiaries. Except as set forth in Schedule 6.10(a), as of the Closing Date
----------------
the tangible Properties of Borrower are and will be reasonably fit for the use
for which they are being put by each of such Persons in the ordinary course of
its business and are in reasonably sufficient and satisfactory condition to
operate the business of each of such Persons as presently conducted except for
such tangible Properties with respect to which the failure to be so fit or to be
in such condition could not reasonably be expected to give rise to a Material
Adverse Effect.
(b) Except as disclosed in Schedule 6.10(b), the real Property of
----------------
Borrower is not in violation of any law or any building, zoning or other
ordinance, code, rule, order, requirement or regulation, except for violations
which, individually and in the aggregate, would not have a Material Adverse
Effect; all licenses and certificates of occupancy which are material to the
ownership or operation of such real Property have been obtained and are usable
by such respective Persons, and are transferable, if necessary, or consent to
such transfer will be obtained before the Closing Date (without cost or penalty
to Agent); and there is no pending or, to the best knowledge of Borrower after
due inquiry, threatened litigation, administrative action or examination, claim
or demand relating to such real Property.
6.11 Taxes. Except as disclosed on Schedule 6.11, as of the Closing Date
----- -------------
Borrower and each of its Subsidiaries, and each Person required to file any tax
or informational return in respect of any consolidated group of which any of
them is or has been a member, as the case may be, has prepared and timely filed
or on behalf of each of such Persons there have been filed, all required
federal, state, local and foreign tax returns which are required to have been
filed by or on behalf of such Persons, which returns were prepared on a basis
consistent with its financial records and all taxes shown thereon to be due have
been timely paid in full. To the best of Borrower's knowledge, as of the
Closing Date no tax liens have been filed and no claims are being asserted with
respect to any such taxes. Except as disclosed on Schedule 6.11, as of the
-------------
Closing Date no tax assessment against any such Person has been proposed and all
of their respective tax liabilities are adequately provided for on their
respective books and financial statements in accordance with GAAP.
6.12 No Conflicts with Agreements, Etc.. Neither the execution and
----------------------------------
delivery of this Agreement, the Notes or any other Loan Document nor the
fulfillment of or compliance with the terms and provisions hereof or thereof,
will conflict with, or result in a breach or violation of any of the terms,
conditions or provisions of, or constitute a default under, the charter or by-
laws of Borrower or any contract, agreement, mortgage, indenture, lease,
instrument, Order, statute, law, rule or regulation to which any of them or any
of their respective assets is subject, or (except pursuant to the Loan
Documents) result in the creation of any Lien on any Properties of Borrower and
each of its Subsidiaries, which conflict, breach, violations, defaults or Liens,
could reasonably be expected to have a Material Adverse Effect, or require for
its validity any authorization, consent, approval, exemption or other action by
or notice to any Governmental Body or any of the equity holders of any of them,
except for such authorizations, consents, approvals, exemptions or other actions
as have been taken or obtained prior to
18
or on the Closing Date and are in full force and effect on such date. Neither
Borrower nor any of its Subsidiaries is in violation of, or in default under,
any (i) Order, law or administrative regulation binding upon it or any of its
Properties or (ii) any contract, mortgage, indenture, lease, instrument or
agreement binding upon it or any of its Properties, which breach, conflict,
violation or default could reasonably be expected to have, individually or in
the aggregate with all other such breaches, conflicts, violations and defaults,
a Material Adverse Effect.
6.13 [RESERVED].
----------
6.14 Disclosure. Neither this Agreement nor any other document,
----------
certificate or statement furnished to Agent in writing by or on behalf of
Borrower and each of its Subsidiaries in connection herewith, contained, as of
its respective date, any untrue statement of a material fact or as of any such
date omitted, to state a material fact necessary in order to make the statements
contained herein and therein not misleading. There is no fact known to Borrower
(other than matters disclosed in Borrower's annual and quarterly reports filed
with the SEC pursuant to the Exchange Act and matters of a general economic or
political nature) which now has or could reasonably be expected to have a
Material Adverse Effect.
6.15 Broker's or Finder's Commissions. Except as set forth on
--------------------------------
Schedule 6.15, no broker's or finder's fee or commission will be payable by
-------------
Borrower with respect to any of the transactions contemplated by this Agreement.
Borrower agrees to indemnify Agent and hold Agent harmless against any loss,
cost, claim or liability (including, without limitation, reasonable attorneys'
fees and disbursements for the investigation and defense of claims) arising out
of or relating to any such actual or alleged fee or commission.
6.16 Labor Matters.
-------------
(a) Borrower and each of its Subsidiaries is in compliance with all
applicable laws respecting employment and employment practices, terms and
conditions of employment and wages and hours (except for such instances of non-
compliance as could not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect), and none of such Persons is engaged in
any unlawful labor or employment practice nor has received any notice of a
complaint, charge or allegation to the contrary (except for such instances of
the foregoing description as could not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect). There is no labor
strike, dispute, slowdown or work stoppage pending or, to Borrower's best
knowledge after due inquiry, threatened against or affecting Borrower and each
of its Subsidiaries. No material grievance or arbitration proceeding arising out
of or under any collective bargaining agreement to which Borrower and each of
its Subsidiaries is a party or subject is pending. To Borrower's best knowledge
after due inquiry, no present or former employee of Borrower and each of its
Subsidiaries has any claim for wrongful discharge (except for such claims as
could not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect).
(b) During the five year period ending on the Closing Date, no
present or former employee or independent contractor of Borrower and each of its
Subsidiaries has any pending or threatened claim for (A) overtime pay, other
than overtime pay for the current period; (B) wages, salaries or profit sharing
(excluding wages, salaries or profit sharing for the current payroll period);
(C) vacations, time off or pay in lieu of vacation or time off, other than
vacation or time off (or pay in lieu thereof) earned in respect of the
employer's current fiscal year; (D) any violation of any statute, ordinance,
contract or regulation relating to minimum wages or maximum hours of work; (E)
discrimination against employees on any basis; (F) unlawful or wrongful
employment or termination practices; (G) unlawful retirement, termination or
labor relations practices, breach of contract or other claim arising under a
19
collective bargaining agreement, individual, express or implied contract, or
policy, practice or procedure manual or statement; (H) any violation of
occupational safety or health standards, or any violation of the Worker
Adjustment Retraining and Notification Act ("WARN"), except, in the case of all
of the matters described in the foregoing clauses (A) through (H), for such
claims that could not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect.
6.17 Environmental Matters. Except as set forth in Schedule 6.17, as of
--------------------- -------------
the Closing Date:
(a) there is no pending Environmental Matter relating to Borrower
and each of its Subsidiaries or any of its Properties, and after due inquiry
Borrower is aware of no facts that could result in any such Environmental
Matter. None of such Persons has agreed to assume by contract or otherwise any
liability of any other Person for cleanup, compliance, or required capital
expenditures in connection with any Environmental Matter arising prior to the
date hereof;
(b) the Properties used, owned, leased, operated, managed or
controlled at any time by Borrower and each of its Subsidiaries are free of
contamination from Hazardous Materials, including, without limitation, any
contamination of the associated air, soil, groundwater or surface waters, and
are free of any other potentially injurious chemical or physical conditions;
(c) Borrower and each of its Subsidiaries is in compliance with all
applicable Environmental Laws (except for such instances of non-compliance as
could not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect), has cured any past violations or alleged violations of
Environmental Laws to the satisfaction of Governmental Bodies, is not currently
in receipt of any notice of violation, is not currently in receipt of any notice
of any potential liability for cleanup of Hazardous Materials and is not now
subject to any investigation or information request by a Governmental Body
concerning Hazardous Materials or any Environmental Laws. Borrower and each of
its Subsidiaries holds and is in compliance with all governmental permits,
licenses, and authorizations necessary to operate their businesses that relate
to siting, wetlands, coastal zone management, air emissions, discharges to
surface or ground water, discharges to any sewer or septic system, noise
emissions, solid waste disposal or the generation, use, transportation or other
management of Hazardous Materials (except for such instances of non-compliance
as could not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect). To the best knowledge of Borrower after due inquiry,
such Persons have at all times generated, manufactured, refined, recycled,
discharged, emitted, released, buried, processed, produced, reclaimed. stored.
treated. transported and disposed of Hazardous Materials in material compliance
with all applicable laws and regulations, including permit requirements;
(d) no real Property of Borrower or any of its Subsidiaries is (i)
listed or, to the best of Borrower's knowledge, proposed for listing on the
National Priorities List under the Comprehensive Environmental Response,
Compensation and Liability Act or is (ii) listed in the Comprehensive
Environmental Response, Compensation, Liability Information System List
promulgated pursuant to the Comprehensive Environmental Response, Compensation
and Liability Act, or on any comparable list maintained by any Governmental
Body;
(e) no Properties of Borrower and each of its Subsidiaries is
subject to any Lien or claim for Lien in favor of any Person as a result of any
Environmental Matter or response thereto;
(f) to the best knowledge of Borrower after due inquiry, no
Hazardous Materials, including leachate and effluents, generated, disposed of,
transported, managed or released by Borrower and each of its Subsidiaries have
caused or will cause in whole or in party any contamination or injury to the
environment, any person, any natural resource or any Property, including,
without limitation, Property through which or to which such materials were
shipped. To the best knowledge of Borrower after due
20
inquiry, neither Borrower nor any of its Subsidiaries has handled, transported,
disposed of or managed any Hazardous Material in any manner that may form the
basis for any present or future Environmental Matter, and no such Person has any
material liabilities, absolute or contingent, on the date hereof with respect
thereto; and
(g) to the best knowledge of Borrower after due inquiry, all
facilities where any Person has treated, stored, disposed of, reclaimed, or
recycled any Hazardous Material on behalf of Borrower are in compliance in all
material respects with all applicable Environmental Laws.
6.18 Possession of Franchises, Licenses, Etc.. Borrower and each of its
----------------------------------------
Subsidiaries is in possession of all material permits, licenses or other
authorizations of Governmental Bodies required for the conduct of its business
and the ownership of its respective Properties, and their respective businesses
are being conducted in accordance with the material requirements of such
permits, licenses or other authorizations of Governmental Bodies in effect on
the date hereof, and after due inquiry Borrower is not aware of any condition
that would prevent the renewal of such permits, licenses or other authorizations
or cause it to incur any material costs to renew such permits, licenses or other
authorizations.
6.19 Intellectual Property. Borrower is the sole owner of, or has the
---------------------
right to use, free from any restrictions, claims, rights, encumbrances or
burdens (including without limitation restrictions as to time or geography and
rights of reversion) which would limit or interfere in any material respect with
Borrower's use thereof in the ordinary course of its business, all patents,
copyrights, trademarks, trade names, service marks, registrations of and
applications for registration of any of the foregoing, inventions, trade
secrets, technology, data, documentation, computer programs, source codes,
object code and all other intellectual property or proprietary rights
(collectively, "Intellectual Property"), including each portion thereof, that
---------------------
are necessary for the operation of its business, other than computer software
which is commercially available from third parties and which is used solely for
the internal operations of Borrower). All of the applications for registration
included in the Intellectual Property are still pending in good standing and
have not been abandoned, except for rights abandoned based upon the
determination, in the exercise of Borrower's business judgment, that the
abandoned rights are not material to the conduct of Borrower's business.
Borrower has no obligation to pay royalties or any other fees which are unpaid
as of, or which may become due after, the date of this Agreement, which
individually or in the aggregate would have a Material Adverse Effect. Adequate
steps have been taken to protect the confidentiality of any trade secrets or
other confidential information included in the Intellectual Property. All of
Borrower's right, title and interest in, to and under the Intellectual Property
is free and clear of any encumbrances, options, distribution rights and
restrictions that would impair or interfere with the use and exploitation
thereof in the ordinary course of Borrower's business. Borrower has not granted
any licenses to the Intellectual Property to third parties, other than in the
ordinary course of business and consistent with past practices. Except as
identified on Schedule 6.7(a), there are no pending or, to the best of
---------------
Borrower's knowledge, threatened, claims, actions, suits, proceedings,
judgments, decrees or orders (whether or not purportedly on behalf of Borrower)
affecting or relating to the Intellectual Property, Borrower's right, title and
interest therein or the validity, use, transfer or potential transfer of
Borrower's right, title and interest therein, or alleging that the Intellectual
Property conflicts with, violates or infringes the proprietary or contractual
rights of others, which constitute, individually or in the aggregate, a Material
Adverse Effect, nor, to the best of Borrower's knowledge, are there any existing
grounds on which any such claim might be made or such action, suit or proceeding
might be commenced.
6.20 Margin Regulations; Use of Proceeds. Borrower neither owns nor now
-----------------------------------
intends to acquire any "margin stock" as defined in Regulation U of the Board of
Governors of the Federal Reserve System (12 CFR 207). The proceeds of the Loans
will be used for Borrower's working capital needs. No part of the proceeds of
the Loans will be used directly or indirectly, for the purpose of buying or
carrying any
21
margin stock within the meaning of Regulation U of the Board of Governors of the
Federal Reserve System (12 CFR 207), or for the purpose of buying or carrying or
trading in any securities under such circumstances as to involve Borrower in a
violation of Regulation X of said Board (12 CFR 224) or to involve any broker or
dealer in a violation of Regulation T of said Board (12 CFR 220). As used in
this Section, the term "purpose of buying or carrying" has the meaning assigned
thereto in the aforesaid Regulation U.
6.21 Compliance with ERISA.
---------------------
(a) No Pension Plan which is subject to Part 3 of Subtitle B of
Title 1 of ERISA or Section 412 of the Code had an accumulated funding
deficiency (as such term is defined in Section 302 of ERISA or Section 412 of
the Code), whether or not waived, as of the last day of the most recent fiscal
year of such Pension Plan heretofore ended;
(b) neither Borrower nor any ERISA Affiliate maintains or has
maintained, contributes to or has contributed to, or has any liability or
contingent liability with respect to a Pension Plan subject to Title IV of
ERISA;
(c) neither Borrower nor any ERISA Affiliate maintains or has
maintained, contributes to or has contributed to, or has any liability or
contingent liability with respect to a Multiemployer Plan;
(d) neither Borrower nor any ERISA Affiliate has any contingent
liability with respect to any post-retirement benefit under a welfare plan (as
such term is defined in Section 3(1) of ERISA) other than liability for
continuation coverage described in Part 6 of Title 1 of ERISA;
(e) Borrower and all Plans contributed to or maintained by it are in
compliance in all material respects with all applicable provisions of ERISA and
the Code and with the applicable law and administrative requirements of any
relevant jurisdiction and the regulations and published interpretations
thereunder, including, without limitation, the provisions of ERISA and the Code
requiring continuation coverage under Plans which are group health plans subject
to the Consolidated Omnibus Budget Reconciliation Act of 1985 or similar law;
(f) neither Borrower nor any of its ERISA Affiliates is a party in
interest with respect to any employee benefit plan (as defined in Section 3(3)
of ERISA) other than a Plan;
(g) neither Borrower nor any of its ERISA Affiliates has breached
any of the responsibilities, obligations or duties imposed upon any of such
Persons by the Code or ERISA which breach has given rise, or could reasonably be
expected to give rise in the future to any obligation to pay money that would
have a Material Adverse Effect;
(h) there are no actions, suits or claims other than for routine
claims for benefits pending or threatened, involving the Plans that would have a
Material Adverse Effect; and
(i) all required reports and descriptions of the Plans of Borrower
or its ERISA Affiliates (including but not limited to Form 5500 Annual Reports,
Summary Annual Reports and Summary Plan Descriptions) have been timely filed and
distributed, and any notices required by ERISA or the Code or the law of any
other applicable jurisdiction or any ruling or regulation of any administrative
agency of any applicable jurisdiction with respect to such Plans, including but
not limited to any notices required by Section 204(h) or Section 606 of ERISA or
Section 4980B of the Code have been appropriately given.
22
6.22 Material Contracts. Each of the Material Contracts is, and on the
------------------
Closing Date after giving effect to this Agreement will be, valid, subsisting
and in full force and effect, neither Borrower nor any of its Subsidiaries is in
default under any of the Material Contracts, nor has any such default under any
of the Material Contracts been asserted by any other party thereto, and there
has not occurred any event which, with the giving of notice or the passage of
time, or both, would constitute such a default. On the Closing Date, after
giving effect to this Agreement, neither Borrower nor any of its Subsidiaries
will be a party to any Material Contract or be subject to any restriction which
has or is reasonably likely to have a Material Adverse Effect. "Material
--------
Contracts" means all supply agreements, requirements contracts, customer
---------
agreements, franchise agreements, license agreements, distribution agreements,
joint venture agreements, asset purchase agreements, stock purchase agreements,
merger agreements, agency or advertising agreements and other contracts,
agreements and commitments to which Borrower or any of its Subsidiaries is a
party and which are material to the business, assets or operations of such
Persons
6.23 Insurance. Borrower has provided to Agent evidence of all policies of
---------
workers compensation, general liability, fire, property, casualty, marine,
business interruption, errors and omissions, flood, earthquake and other
insurance carried by Borrower and its Subsidiaries, true and complete copies of
which policies have been previously delivered to Agent to the extent requested.
Such policies are in full force and effect on the date hereof, and none of such
Persons has received notice of cancellation with respect to any such policy.
All premiums payable with respect to such policies have been paid through the
Closing Date or otherwise will be paid in the ordinary course of business.
6.24 Solvency. Borrower and its Subsidiaries will be Solvent on the
--------
Closing Date after giving effect to this Agreement and the application of the
net proceeds of the Loans.
6.25 Status under Certain Laws. Neither Borrower nor any of its
-------------------------
Subsidiaries is an "investment company" or a "person directly or indirectly
controlled by or acting on behalf of an investment company" within the meaning
of the Investment Company Act of 1940, as amended, or a "holding company", or a
"subsidiary company" of a "holding company", or an "affiliate" of a "holding
company" or of a "subsidiary company" of a "holding company", within the meaning
of the Public Utility Company Holding Act of 1935, as amended. Borrower is not
subject to regulation as a "common carrier" or "contract carrier" or any similar
classification under applicable state or Federal laws.
6.26 Places of Business. The principal place of business and the chief
------------------
executive office of Borrower is, and on the Closing Date after giving effect to
this Agreement will be, located at 0000 XxXxx Xxxxxx, Xxxxxx, Xxxxxxxxxx 00000.
The books and records (including, without limitation, all records of accounts
receivable) of Borrower are, and on the Closing Date after giving effect to this
Agreement all will be, located at the location set forth above.
6.27 Other Names. The business conducted by Borrower has not been
-----------
conducted under any corporate, trade or fictitious name other than those names
listed on Schedule 6.27.
-------------
6.28 Reliance by Agent and Lenders; Cumulative. Each warranty and
-----------------------------------------
representation contained in this Agreement shall be conclusively presumed to
have been relied on by Agent and the Lenders regardless of any investigation
made or information possessed by Agent and the Lenders. The warranties and
representations set forth herein shall be cumulative and in addition to any and
all other warranties and representations that Borrower shall now or hereinafter
give, or cause to be given, to Agent and the Lenders.
7. COVENANTS. Borrower covenants and agrees that, so long as any credit
---------
hereunder shall be available and until payment in full of the Obligations,
Borrower shall, and shall cause each of its
23
Subsidiaries to comply with the following provisions of this Section 7, it being
understood that "causing" any Subsidiary to comply with such covenants shall
require Borrower to prevent any Subsidiary from taking any action that is
prohibited hereunder:
7.1 Financial Statements and Information. So long as any of the
------------------------------------
Obligations shall be outstanding, Borrower will furnish to Agent (with
sufficient copies for each Lender):
(a) as soon as available and in any event within 100 days after the
end of each fiscal year of Borrower, copies of the audited consolidated and (to
the extent requested by Agent) consolidating balance sheets of Borrower and its
Subsidiaries as of the end of such fiscal year, and of the related audited
consolidated (and, if requested, consolidating) statements of operations,
earnings and cash flows for such fiscal year, together with the notes thereto,
all in reasonable detail and stating in comparative form the respective audited
consolidated (and, if requested, consolidating) figures as of the end of and for
the previous fiscal year, (x) in the case of such audited consolidated financial
statements, accompanied by a report thereon of Deloitte & Touche LLP, or other
independent public accountants selected by Borrower and acceptable to Agent (the
"Accountants"), which report shall be unqualified as to going concern and scope
-----------
of audit and shall state that such consolidated financial statements present
fairly the consolidated financial position of Borrower and its Subsidiaries as
at the end of such fiscal year and the consolidated results of their operations
and cash flows for such fiscal year in conformity with GAAP applied on a basis
consistent with prior years and that the examination by the Accountants in
connection with such consolidated financial statements has been made in
accordance with generally accepted auditing standards, and (y) in the case of
any consolidating financial statements, Certified by the chief financial officer
of Borrower;
(b) within 45 days after the end of each fiscal quarter, copies of
the unaudited consolidated and (to the extent requested by Agent) consolidating
balance sheets of Borrower and its Subsidiaries as of the end of such fiscal
quarter and for the portion of Borrower's fiscal year then ended, and of the
related unaudited consolidated (and, if requested, consolidating) statements of
operations, earnings and cash flows for such fiscal quarter and a comparison to
budget, accompanied by an Officer's Certificate of Borrower (1) setting forth
calculations in reasonable detail demonstrating whether or not as at the end of
such fiscal quarter Borrower was in compliance with Sections 7.7, 7.8, 7.9 and
--------------------------
7.16 of this Agreement and (2) stating that, based upon such examination or
----
investigation and review of this Agreement and other Loan Documents as in the
opinion of the signer is necessary to enable the signer to express an informed
opinion with respect thereto, no Default or Event of Default exists or has
existed during such period or, if a Default or Event of Default shall exist or
have existed, the nature and period of existence thereof and what action
Borrower (or the applicable Subsidiary) has taken, is taking or proposes to take
with respect thereto;
(c) promptly after the same are available and in any event within 5
days of filing, copies of all such proxy statements, financial statements,
notices and reports as Borrower or any Subsidiary shall send or make available
generally to any of its securityholders, and copies of all regular and periodic
reports (including without limitation annual reports on Form 10-K and quarterly
reports on Form 10-Q), all reports on Form 8-K and all registration statements
which Borrower or any Subsidiary may file with the SEC or with any securities
exchange;
(d) within 30 days after the commencement of each fiscal year,
Borrower shall deliver to Agent a copy of a consolidated business plan for
Borrower and its Subsidiaries for such fiscal year, which business plan shall
contain a summary annual consolidated budget of Borrower and its Subsidiaries
for such fiscal year, consolidated balance sheets as well as consolidated
projections of sales, cash flow and borrowing needs for such fiscal year, on a
quarterly basis, and Borrower shall deliver to Agent any material revision to
any such budget promptly upon the adoption thereof;
24
(e) promptly after the receipt thereof by Borrower and in any event
within 3 Business Days thereof, copies of any final reports as to material
inadequacies in accounting controls (including reports as to the absence of any
such inadequacies) submitted to Borrower by the Accountants in connection with
any audit of such corporation made by the Accountants;
(f) promptly (and in any event within 5 Business Days) after becoming
aware of (1) the existence of any Default or Event of Default, an officer's
certificate of Borrower specifying the nature and period of existence thereof
and what action Borrower (or any of its Subsidiaries) is taking or proposes to
take with respect thereto; or (2) any Indebtedness of Borrower or of any of its
Subsidiaries in excess of $500,000 in the aggregate being declared due and
payable before its expressed maturity, or any holder of such Indebtedness having
the right to declare such Indebtedness due and payable before its expressed
maturity, because of the occurrence of any default (or any event which, with
notice and/or the lapse of time, shall constitute any such default) under such
Indebtedness, an officer's certificate of Borrower describing the nature and
status of such matters and what action Borrower (or any of its Subsidiaries) is
taking or proposes to take with respect thereto;
(g) promptly and in any event within 5 Business Days after Borrower
knows or, in the case of a Pension Plan has reason to know, that a Reportable
Event with respect to any Pension Plan has occurred, that any Pension Plan or
Multi Employer Plan is or reasonably may be terminated, reorganized, partitioned
or declared insolvent under Title IV of ERISA, or Borrower or any of its ERISA
Affiliates will or reasonably may incur any material liability to or on account
of a Pension Plan or Multi Employer Plan under Title IV of ERISA or any other
liability under ERISA which could reasonably have a Material Adverse Effect has
been asserted against Borrower or any of its ERISA Affiliates, an officer's
certificate of Borrower setting forth information as to such occurrence and what
action, if any, Borrower or an ERISA Affiliate is required or proposes to take
with respect thereto, together with any notices concerning such occurrences
which are (a) required to be filed by Borrower or an ERISA Affiliate or the plan
administrator of any such Pension Plan controlled by Borrower or such ERISA
Affiliate with the Internal Revenue Service or the PBGC, or (b) received by
Borrower or such ERISA Affiliate from any plan administrator of a Pension Plan
not under their control or from a Multi Employer Plan;
(h) promptly after becoming aware of any Material Adverse Effect with
respect to which notice is not otherwise required to be given pursuant to this
Section 7.1, an officer's certificate of Borrower setting forth the details of
-----------
such Material Adverse Effect and stating what action Borrower has taken or
proposes to take with respect thereto;
(i) promptly (and in any event within 7 days) after Borrower knows of
(a) the institution of, or reasonably credible threat of, any action, suit,
proceeding, governmental investigation or arbitration against or affecting
Borrower or any of its Property, or (b) any material development in any such
action, suit, proceeding, governmental investigation or arbitration, which, in
either case, if adversely determined, is likely to have a Material Adverse
Effect, an Officer's Certificate of Borrower describing the nature and status of
such matter in reasonable detail;
(j) any other information, including financial statements and
computations, relating to the performance of obligations arising under this
Agreement and/or the affairs of Borrower that Agent or any Lender may from time
to time reasonably request and which is capable of being obtained, produced or
generated without unreasonable cost by Borrower or of which Borrower has
knowledge.
7.2 Payment of Principal, Interest and Fees; to Keep Books; Reserves; Etc.
---------------------------------------------------------------------
Borrower will duly and punctually pay the principal of and interest and fees on
the Loans in accordance with the terms of the Notes and this Agreement.
Borrower will comply with all of the covenants, agreements and conditions
contained in this Agreement and the other Loan Documents to which it is a party.
Borrower's
25
fiscal year end is the Sunday closest to December 31, and Borrower will maintain
the same fiscal year at all times. Borrower will keep proper books of record and
account and set aside appropriate reserves, all in accordance with GAAP.
7.3 Payment of Taxes and Claims. Borrower will pay before they become
----------------------------
delinquent, to the extent that such delinquencies would have, individually or in
the aggregate, a Material Adverse Effect:
(a) all taxes (including excise taxes), assessments and governmental
charges or levies imposed upon it or its income or profits or upon its Property,
real, personal or mixed, or upon any part thereof;
(b) all claims for labor, materials and supplies which, if unpaid,
might result in the creation of a Lien upon its Property; and
(c) all claims, assessments, or levies required to be paid by any of
them pursuant to any agreement, contract, law, ordinance or governmental rule or
regulation governing any pension, retirement, profit-sharing or any similar
plan;
provided, that, with respect to Property, items of the foregoing description
--------
need not be paid while being diligently contested in good faith and by
appropriate proceedings so long as (i) adequate book reserves have been
established with respect thereto and (ii) Borrower's title to and right to use
its Property is not materially adversely affected by such non-payment. Borrower
will timely file all Federal and state tax returns and informational returns
required to be filed in connection with the payment of taxes and claims required
by this Section 7.3.
-----------
7.4 Maintenance of Properties and Corporate Existence. Borrower will:
-------------------------------------------------
(a) maintain its Property in good condition and make all necessary
renewals, repairs, replacements, additions, betterments, and improvements
thereto consistent with the historical practices of such Persons;
(b) keep true books of records and accounts in all material respects
in which entries will be made of all its business transactions that are full and
correct in all material respects and will reflect in its financial statements
adequate accruals and appropriations to reserves;
(c) do or cause to be done all things necessary to preserve and keep
in full force and effect its corporate existence, rights and powers and
franchises including, without limitation thereof, any necessary qualification or
licensing in any foreign jurisdiction, except for such licenses and
qualifications the absence of which could not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect;
(d) comply with (i) all applicable statutes, regulations, franchises,
and Orders of, and all applicable restrictions imposed by, any Governmental
Body, in respect of the conduct of its business and the ownership of its
Properties (including, without limitation, all Environmental Laws and all
applicable statutes, rules, ordinances, regulations and Orders relating to fair
labor standards, equal employment opportunities and occupational health and
safety) and (ii) all terms of any material mortgage, indenture, contract,
agreement or instrument, applicable to Borrower or any of its Properties, except
for such instances of non-compliance as could not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect; and
26
(e) keep any Property it owns or operates free of contamination from
Hazardous Materials and any other potentially harmful chemical or physical
conditions. If Borrower or any Subsidiary receives notice of any Environmental
Matter or contamination with Hazardous Materials that relates to any of them or
their respective Properties, then Borrower agrees, upon request of Agent, to
provide Agent with such reports, certificates, engineering studies or other
written material or data as Agent may require so as to satisfy Agent that
Borrower is in compliance with its obligations under this Agreement. Borrower
covenants and agrees to cooperate fully with such consultant in any such audits,
including, without limitation, by providing such access to Borrower's books,
records, Properties, employees and agents and by furnishing such written and
oral information as such consultant may reasonably request in connection with
any such audits.
7.5 Insurance. Borrower will carry and maintain in full force and effect
---------
at all times with financially sound and reputable insurers, rated A or better by
AM Best & Co., provided that if the rating of such insurer is lowered so that it
--------
no longer complies with this provision, Borrower shall have 30 days to replace
(or to cause the applicable Subsidiary to replace) such insurance with other
insurance satisfying the requirements of this Section 7.5 (or, as to workers'
-----------
compensation or similar insurance, in an insurance fund or by self-insurance
authorized by the jurisdiction in which its operations are carried on): (i) all
workers' compensation or similar insurance as may be required under the laws of
any jurisdiction, (ii) business interruption insurance covering risk of loss as
a result of the cessation for all or any part of one year of all or any
substantial part of the business conducted by it, (iii) insurance against such
other risks as are usually insured against by corporations of established
reputation engaged in the same or similar businesses and similarly situated,
including, without limitation, fire, casualty, flood, public liability, products
liability insurance, and (iv) with respect to any insurable Property, insurance
against loss by fire, explosion, theft and such other casualties as may be
reasonably satisfactory to Agent and insurance insuring Borrower against
liability for personal injury and property damage relating to such Property, in
the forms and amounts required hereunder. Insurance specified in clauses (ii),
(iii) and (iv) shall be maintained in such amounts (and with co-insurance,
deductibles and self-insured retention, if any) as such insurance is usually
carried by corporations of established reputation engaged in the same or similar
businesses and similarly situated. Insurance specified in clause (iv) shall (A)
provide that no cancellation, material reduction in amount or material change in
coverage thereof shall be effective until at least 30 days after receipt by
Agent of written notice thereof, and (B) name Agent (for the benefit of the
Lenders) as loss payee or additional insured, as its interests may appear.
7.6 Further Assurances. Promptly upon reasonable request by Agent,
------------------
Borrower shall (1) promptly upon request by Agent, correct any material defect
or error that may be discovered in any Loan Document or in the execution,
acknowledgment or recordation thereof, and (2) promptly upon request by Agent,
do, execute, acknowledge, deliver, record, re-record, file, re-file, register
and re-register any and all such further acts, and instruments as Agent may
reasonably require from time to time in order to carry out more effectively the
purposes of this Agreement or any other Loan Document.
7.7 Restrictions on Indebtedness. Borrower will not incur, create,
----------------------------
assume or suffer to exist any Indebtedness, other than the following:
(a) Indebtedness incurred pursuant to this Agreement and the other
Loan Documents;
(b) Accounts payable and other accrued liabilities arising in the
ordinary course of business;
(c) Indebtedness in addition to the Obligations in an aggregate
principal amount not to exceed $10,000,000 in at any one time outstanding;
27
(d) in addition to the foregoing, Indebtedness secured by Liens
permitted under Section 7.8; and
-----------
(e) Indebtedness consisting of Guarantee obligations permitted under
Section 7.14(a).
---------------
7.8 Restrictions on Liens. Borrower will not create, assume or suffer to
---------------------
exist any Lien upon any of its Properties (including without limitation any real
Property), whether now owned or hereafter acquired, except the following (herein
collectively referred to as "Permitted Liens"):
---------------
(a) Liens for taxes, assessments or governmental charges or claims
the payment of which is not at the time required by Section 7.3;
-----------
(b) Statutory Liens of landlords and Liens of carriers, warehousemen,
mechanics, materialmen and other Liens imposed by law incurred in the ordinary
course of business for sums not yet delinquent or being diligently contested in
good faith, if such reserve or other appropriate provision, if any, as shall be
required by GAAP shall have been made therefor;
(c) Liens (other than any Lien imposed by ERISA) incurred or deposits
made in the ordinary course of business in connection with workers'
compensation, unemployment insurance and other types of social security, or to
secure the performance of tenders, statutory obligations, surety and appeal
bonds, bids, leases, government contracts, performance and return-of-money bonds
and other similar obligations (exclusive of obligations for the payment of
borrowed money), provided that the amount of Liens of Borrower referred to in
--------
this Subsection (C) outstanding at any time shall not exceed $100,000 in the
aggregate;
(d) Any attachment or judgment Lien (including judgment or appeal
bonds) which, within 30 days after the entry thereof, shall have been discharged
or bonded, or the execution thereof shall have been stayed pending appeal;
(e) Leases or subleases granted to others not interfering with the
ordinary conduct of business;
(f) Easements, rights-of-way, restrictions and other similar charges
or encumbrances which do not, individually or in the aggregate, materially
interfere with the ordinary conduct of business;
(g) Any interest, title or Lien of a lessor under any permitted
operating lease;
(h) Liens in favor of customs and revenue authorities arising as a
matter of law to secure payment of customs duties in connection with the
importation of goods;
(i) Liens incurred pursuant to the Loan Documents;
(j) Liens (including Capitalized Leases) in respect of Property
acquired or constructed or improved by Borrower after the Closing Date, which
Liens exist or are created at the time of acquisition or completion of
construction or improvement of such Property or within 60 days thereafter, but
any such Lien shall cover only the Property so acquired or constructed and any
improvements thereto (and any real Property on which such Property is located,
if such Property is a building, improvement or fixture); and
28
(k) Liens existing on the Closing Date after giving effect to this
Agreement and listed on Schedule 7.8(K).
---------------
7.9 Sale-Leaseback Transactions. Borrower shall not be prohibited from
---------------------------
engaging in sale-leaseback transactions to the extent not otherwise prohibited
under this Agreement.
7.10 [RESERVED].
----------
7.11 Transactions with Affiliates. Borrower will not directly or
----------------------------
indirectly, enter into or permit to exist any transaction (including, without
limitation, the purchase, sale, lease or exchange of any Property or the
rendering of any service), with any Affiliate except in the ordinary course of
business and on terms that are not less favorable to Borrower or such Subsidiary
than those that would be obtainable at the time in an arm's-length transaction
with any Person who is not such an Affiliate; provided that Borrower shall be
permitted to enter into the transaction described on Schedule 7.12 with the
-------------
Affiliate referred to on such Schedule in the manner contemplated thereon.
7.12 Consolidation, Merger or Disposition of Assets; Acquisitions.
------------------------------------------------------------
Borrower will not enter into any transaction of merger or consolidation, or
liquidate, wind up or dissolve itself (or suffer any liquidation or
dissolution), or convey, sell, lease, transfer or otherwise dispose of, in one
transaction or a series of transactions, all or any part of its business,
Property or fixed assets, whether now owned or hereafter acquired, or acquire by
purchase or otherwise all or substantially all of the business, Property or
fixed assets of, or stock or other evidence of beneficial interest in any
Person, except:
(a) Borrower may in the ordinary course of its business sell or
otherwise dispose of inventory;
(b) Borrower may sell or otherwise dispose of, in the ordinary
course of business, Property that is worn out or obsolete or no longer used in
its business; and
(c) Borrower may consummate acquisitions of other businesses,
provided that (i) the business so acquired shall be in a substantially similar
--------
line of business as that conducted by Borrower at the Closing Date, (ii) no
material change in Borrower's management shall occur, (iii) the aggregate
consideration paid by Borrower and its Subsidiaries for all such transactions on
a cumulative basis following the Closing Date shall not exceed $25,000,000 and
(iv) at the time of, and immediately after giving effect to, such acquisition,
no Default or Event of Default shall have occurred and be continuing (it being
understood that the determination of the absence of a Default or Event of
Default "after giving effect to" any such transaction shall include the
calculation of the financial covenants under this Agreement on a pro-forma basis
as of the most recent date on which such covenants were measured hereunder as if
the applicable transaction had been consummated prior to such measurement date).
7.13 Sale or Discount of Receivables. Borrower will not directly or
-------------------------------
indirectly, sell with or without recourse, or discount or otherwise sell any of
its notes or accounts receivable, other than discounting and sales of accounts
made in the ordinary course of business in a manner consistent with past
practices.
7.14 Certain Contracts. Borrower will not enter into or be a party to,
------------------
except pursuant to, or as otherwise permitted by, the Loan Documents,
(a) any contract providing for the making of loans, advances (other
than advances in the ordinary course of business to employees of Borrower with
respect to expenses expected to be incurred by such employees in connection with
their duties as employees) or capital contributions to any
29
Person, or for the purchase of any Property from any Person in each case
primarily in order to enable such Person to maintain working capital, net worth
or any other balance sheet condition or to pay debts, dividends or expenses,
provided that Borrower may make loans, advances and Guarantees in an aggregate
--------
amount not exceeding $10,000,000 at any one time outstanding, or
(b) any contract for the purchase of materials, supplies or other
Property or services if such contract (or any related document) requires that
payment for such materials, supplies or other Property or services shall be made
regardless of whether or not delivery of such materials, supplies or other
Property or services is ever made or tendered, or
(c) any contract to rent or lease (as lessee) any real or personal
Property if such contract (or any related document) requires that the lessee
purchase or otherwise acquire securities or obligations of the lessor, or
(d) any contract for the sale or use of materials, supplies or other
Property, or the rendering of services, if such contract (or any related
document) requires that payment for such materials, supplies or other Property,
or the use thereof, or payment for such services, shall be subordinated to any
Indebtedness (of the purchaser or user of such materials, supplies or other
Property or the Person entitled to the benefit of such services) owed or to be
owed to any Person, or
(e) except as permitted under Section 7.7(c) or under subsection (a)
-------------- --------------
above, any Guarantee or contract which, in economic effect, is substantially
equivalent to a Guarantee.
7.15 Restricted Payments and Investments. Borrower will not directly or
------------------------------------
indirectly, make any Restricted Payment or any Investment other than investments
in Subsidiaries (subject to compliance with Section 7.20), investments in
------------
marketable securities, cash equivalents and other short-term cash equivalent
items, and Investments existing on the Closing Date and listed on Schedule 6.8B.
-------------
This Section 7.15 shall not be construed to prohibit any acquisition permitted
------------
under Section 7.12. Notwithstanding the foregoing, Borrower shall be permitted
------------
to make Restricted Payments consisting of repurchases of its capital stock.
7.16 Financial Covenants. All financial covenants are determined for
--------------------
Borrower and its Subsidiaries on a consolidated basis in accordance with GAAP.
(a) Leverage Ratio. Borrower will maintain a Leverage Ratio of not
--------------
more than 0.75:1.0 at the end of each fiscal quarter:
(b) Minimum Tangible Net Worth. Borrower will maintain, as at the
--------------------------
last day of each fiscal quarter, a Tangible Net Worth in accordance into GAAP of
not less than $150,000,000; provided that at April 2, 2000 and each fiscal
--------
quarter thereafter, Borrower's Tangible Net Worth shall be not less than the sum
of $150,000,000 plus 75% of Borrower's cumulative positive consolidated Net
Income (Loss) following the Closing Date and 75% of the proceeds of issuances
and sales of equity securities of Borrower and its Subsidiaries on a cumulative
basis following the Closing Date.
(c) Profitability. Borrower's Consolidated Net Income (Loss) for
-------------
each fiscal year shall be a positive number and shall not be a negative number
for more than one fiscal quarter during any period of four (4) consecutive
fiscal quarters; provided that the amount of any quarterly loss shall not be
--------
greater than 5% of Tangible Net Worth.
(d) Quick Ratio. Borrower shall have a ratio of Consolidated
-----------
Current Assets to Consolidated Current Liabilities of not less than 1.5 : 1.0 as
at the end of each fiscal quarter.
30
7.17 Acquisition of Margin Securities. Borrower will not, and will not
--------------------------------
permit any Subsidiary to, own, purchase or acquire (or enter into any contract
to purchase or acquire) any "margin security" as defined by any regulation of
the Board of Governors of the Federal Reserve System as now in effect or as the
same may hereafter be in effect unless, prior to any such purchase or
acquisition or entering into any such contract, Agent shall have received an
opinion of counsel satisfactory to it to the effect that such purchase or
acquisition will not cause this Agreement or the Loans to be in violation of
Regulations T, U or X or any other regulation of such Board then in effect.
7.18 Negative Pledges, Restrictive Agreements, etc. Borrower will not, and
---------------------------------------------
will not permit any of its Subsidiaries to, enter into any agreement (excluding
the Loan Documents) prohibiting the creation or assumption of any Lien upon any
of its Property, whether now owned or hereafter acquired, or the ability of
Borrower or any Subsidiary to amend or otherwise modify any Loan Document to
which it is a party.
7.19 Operating Accounts. Borrower will maintain its primary operating
------------------
accounts with Agent.
7.20 Subsidiary Guarantees. Solely to the extent that more than 25% of the
---------------------
consolidated total assets of Borrower and its Subsidiaries are owned by
Subsidiaries of Borrower, (a) Borrower shall cause each such Subsidiary to
execute and deliver to Agent a Subsidiary Guarantee and (b) Agent and the
Lenders receive, to the extent they shall request, an opinion of counsel to each
such Subsidiary addressing, with respect to such Subsidiary and its respective
Subsidiary Guarantee, the matters addressed with respect to Borrower's on the
Closing Date in the opinion attached hereto as Exhibit B. It is expressly
---------
understood that Borrower shall only be required to take the actions specified in
the preceding sentence to the extent necessary to cause no more than 25% of the
consolidated total assets of Borrower and its Subsidiaries to be owned by
Subsidiaries of Borrower that have not complied with clauses (a) and (b) of the
preceding sentence.
8. EVENTS OF DEFAULT; REMEDIES.
---------------------------
8.1 Events of Default. Any one or more of the following events shall
-----------------
constitute an Event of Default by Borrower under this Agreement.
(a) If Borrower fails to make any payment of all or any portion of
the Obligations when due and payable or when declared due and payable (whether
interest, fees or otherwise, including any interest which, but for the
provisions of the United States Bankruptcy Code, would have accrued on any of
the Obligations);
(b) If Borrower defaults in the performance or observance of any
term, provision, condition, covenant, or agreement contained in Section 7.1,
-----------
7.2, 7.5, 7.7, 7.8, 7.11, 7.12, 7.13, 7.14, 7.15, 7.16, 7.17, 7.18, 7.19, or
--- --- --- --- ---- ---- ---- ---- ---- ---- ---- ---- ----
7.20;
----
(c) If Borrower fails or neglects to perform, keep, or observe any
term, provision, condition, covenant, or agreement contained in this Agreement,
in any of the other Loan Documents other than as specified in subsections (a)
and (b) above and such failure or neglect continues unremedied for 30 days;
(d) If any material portion of the Properties of Borrower is
attached, seized, subjected to a writ or distress warrant, or is levied upon, or
comes into the possession of any judicial officer or assignee, and the foregoing
has not been vacated, discharged, stayed, satisfied or bonded pending appeal
within thirty (30) days from the entry thereof;
31
(e) If any bankruptcy, reorganization, receivership, liquidation,
assignment for the benefit of creditors or other insolvency proceeding (each, an
"Insolvency Proceeding") is commenced by Borrower or any Subsidiary;
---------------------
(f) If an Insolvency Proceeding is commenced against Borrower or any
Subsidiary and not dismissed within 60 calendar days;
(g) If Borrower is enjoined, restrained, or in any way prevented by
court order from continuing to conduct all or any material part of its business
affairs and such injunction or other order is not released to the satisfaction
of Agent within 10 calendar days of the entry of such injunction, restraint or
order;
(h) If a notice of lien, levy, or assessment is filed of record with
respect to any Property of Borrower by any Governmental Body, or if any taxes or
debts owing at any time hereafter to any one or more of such entities becomes a
Lien, whether xxxxxx or otherwise, upon any material portion of Borrower's
Property and the same is not paid on the payment date thereof, unless the same
is being contested in good faith by appropriate proceedings and with appropriate
reserves and no Lien has attached in respect thereof;
(i) If a judgment or other claim becomes a Lien upon any material
portion of Borrower's or any of its Subsidiaries' Property and is not being
contested in good faith by Borrower or the applicable Subsidiary, execution on
which has been stayed pending such contest;
(j) If any Loan Document shall cease to be valid and enforceable
against Borrower or any of its Subsidiaries, or Borrower or any Subsidiary shall
so assert;
(k) If any Change of Control shall occur;
(l) If there is a default in any agreement to which Borrower or any
Subsidiary is a party with third parties resulting in a right by such third
parties, whether or not exercised, to accelerate the maturity of any
Indebtedness of Borrower or any such Subsidiary in an aggregate principal amount
of $500,000 or more;
(m) any Reportable Event shall occur which could reasonably be
expected to constitute grounds for termination by the PBGC of any Pension Plan
or for the appointment by the appropriate United States District Court of a
trustee to administer any Pension Plan and such Reportable Event is not
corrected and such determination is not revoked within thirty (30) days after
the administrator of any Pension Plan (if Borrower or any of its ERISA
Affiliates is the administrator) or Borrower or any of its ERISA Affiliates, as
the case may be, has knowledge thereof; or any proceedings shall be instituted
by the PBGC to terminate any Pension Plan or to appoint a trustee to administer
any Pension Plan; or a trustee shall be appointed by the appropriate United
States District Court to administer any Pension Plan; or any Pension Plan shall
be terminated by its sponsor; or there shall occur a complete or partial
withdrawal from any Multiemployer Plan by Borrower or any of its ERISA
Affiliates (including any transaction described in, and meeting the requirements
of, Section 4204 of ERISA); and
(n) If any representation, warranty, certification or statement made
by or on behalf of Borrower or any of its Subsidiaries or any officer of any of
them in this Agreement, any other Loan Document or in any certificate,
instrument, financial statement or other document now or hereafter delivered
hereunder or pursuant to or in connection with any provision hereof shall prove
to be false or incorrect or breached in any material respect on the date as of
which made.
32
8.2 Remedies. If any Event of Default described in clause (d) (e) or (f)
-------- ---------- --- ---
of Section 8.1 shall occur, the Loan and the Commitments (if not theretofore
-----------
terminated) shall automatically terminate and the outstanding principal amount
of all outstanding Obligations shall automatically be and become immediately due
and payable, without notice or demand. If any other Event of Default shall occur
for any reason, whether voluntary or involuntary, and be continuing, Agent may,
by notice to Borrower (and shall, upon the request of the Required Lenders),
declare all or any portion of the outstanding principal amount of the
Obligations to be due and payable and/or the Loans and the Commitment (if not
theretofore terminated) to be terminated, whereupon the full unpaid amount of
such Obligations which shall be so declared due and payable shall be and become
immediately due and payable, without further notice, demand or presentment,
and/or, as the case may be, the Loans and the Commitments shall terminate. In
addition, upon any Event of Default, Agent shall have the right to exercise any
and all remedies available to it at law or in equity as well as any rights or
remedies specified in any the Loan Documents.
9. GENERAL PROVISIONS
------------------
9.1 Notices. All communications provided for hereunder shall be in writing
-------
and delivered by hand or sent by first class mail or sent by telecopy (with such
telecopy to be confirmed promptly in writing sent by first class mail), sent (i)
if to any Lender or Agent, to:
Comerica Bank-California
000 Xxxxx Xxxxxxxxx
Xxxxx Xxxx, XX 00000-0000
Attention: Xxxxxx X. Xxxx
Telecopy Number: 000-000-0000
or to such other address or telecopy number as Agent or such Lender may have
designated to Borrower in writing; and (ii) if to Borrower, to:
Powerwave Technologies, Inc.
0000 XxXxx Xxxxxx
Xxxxxx, XX 00000
Attention: Mr. Xxxxx Xxxxxxxx
Telecopy Number: 000-000-0000
or to such other address or addresses or telecopy number or numbers as Borrower
may most recently have designated in writing to Agent and the Lenders by such
notice. All such communications shall be deemed to have been given or made when
so delivered by hand or sent by or telecopy, or three Business Days after being
so mailed.
9.2 Successors and Assigns. This Agreement shall bind and inure to the
----------------------
benefit of the respective successors and assigns of each of the parties;
provided, however, that Borrower may not assign this Agreement or any rights or
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duties hereunder without Agent's prior written consent and any prohibited
assignment shall be absolutely void. No consent by Agent to an assignment by
Borrower shall release Borrower from its obligations. Each Lender may assign, or
sell participations in, its Commitment to one or more other Persons in
accordance with the following provisions of this Section 9.2; provided that any
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assignment must be allocated ratably between the assigning Lender's Percentage
of the Revolving Loan.
(a) Assignments. Subject to the foregoing limitations, any Lender may
-----------
at any time, with notice to Borrower and Agent, assign and delegate to one or
more commercial banks or other
33
financial institutions acceptable to Agent (each Person to whom such assignment
and delegation is to be made, being hereinafter referred to as an "Assignee
--------
Lender"), all or any fraction of such Lender's Commitment (which assignment and
------
delegation shall be of a constant, and not a varying, percentage of all the
assigning Lender's Commitment; provided, however, that Borrower and Agent shall
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be entitled to continue to deal solely and directly with such Lender in
connection with the interests so assigned and delegated to an Assignee Lender
until (i) written notice of such assignment and delegation, together with
payment instructions, addresses and related information with respect to such
Assignee Lender, shall have been given to Borrower and Agent by such Lender and
such Assignee Lender; and (ii) Agent shall have received its customary
processing fee from such Lender or Assignee Lender and an executed Assignment
and Acceptance in the form of Exhibit D.
---------
From and after the date that an assignment becomes effective as
provided in the preceding paragraph, (x) the Assignee Lender thereunder shall be
deemed automatically to have become a party hereto and to the extent that rights
and obligations hereunder have been assigned and delegated to such Assignee
Lender in connection with such assignment, shall have the rights and obligations
of a Lender hereunder and under the other Loan Documents, and (y) the assignor
Lender, to the extent that rights and obligations hereunder have been assigned
and delegated by it in connection with such assignment, shall be released from
its obligations hereunder and under the other Loan Documents. Within 5 Business
Days after its receipt of notice of such assignment and the surrender of the
assignor Lender's Note(s), Borrower shall execute and deliver to Agent (for
delivery to the relevant Assignee Lender) new Notes evidencing such Assignee
Lender's assigned Commitment and, if the assignor Lender has retained a
Commitment hereunder, replacement Notes each in the principal amount of the
applicable Loan retained by the assignor Lender hereunder (each such Note to be
in exchange for, but not in payment of, the Note then held by such assignor
Lender). Each such replacement Note shall be dated the date of the predecessor
Note. Accrued interest on that part of the predecessor Note evidenced by the
replacement Note, and accrued fees, shall be paid as provided in the
documentation effecting the Assignment. Accrued interest on that part of the
predecessor Note evidenced by the Revolving Note shall be paid to the assignor
Lender. Accrued interest and accrued fees shall be paid at the same time or
times provided in the predecessor Note and in this Agreement. Any attempted
assignment and delegation not made in accordance with this Section 9.2(a) shall
--------------
be null and void.
(b) Participations. Any Lender may at any time sell to one or more
--------------
commercial banks or other Persons (each of such commercial banks and other
Persons being herein called a "Participant") participating interests in any its
-----------
Commitment; provided, however, that
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(i) no participation contemplated in this Section 9.2(b) shall
--------------
relieve such Lender from its Commitment or its other obligations hereunder or
under any other Loan Document;
(ii) such Lender shall remain solely responsible for the performance
of its Commitment and such other obligations;
(iii) Borrower and Agent shall continue to deal solely and directly
with such Lender in connection with such Lender's rights and obligations
under this Agreement and each of the other Loan Documents;
(iv) no Participant, unless such Participant is itself a Lender,
shall be entitled to require such Lender to take or refrain from taking any
action hereunder or under any other Loan Document.
34
9.3 Section Headings. Headings and numbers have been set forth herein for
----------------
convenience only. Unless the contrary is compelled by the context, everything
contained in each paragraph applies equally to this entire Agreement.
9.4 Interpretation. Neither this Agreement nor any uncertainty or
--------------
ambiguity herein shall be construed or resolved against Agent, any Lender or
Borrower, whether under any rule of construction or otherwise. On the contrary,
this Agreement has been reviewed by all parties (each of which has had the
benefit of advice from legal counsel) and shall be construed and interpreted
according to the ordinary meaning of the words used so as to fairly accomplish
the purposes and intentions of all parties hereto.
9.5 Severability of Provisions. Each provision of this Agreement shall be
--------------------------
severable from every other provision of this Agreement for the purpose of
determining the legal enforceability of any specific provision.
9.6 Amendments and Waivers. No amendment, modification, termination, or
----------------------
waiver of any provision of this Agreement, the other Loan Documents, or any
other document or instrument executed in connection herewith, or consent to any
departure by Borrower therefrom, shall in any event be effective without the
written concurrence of the Required Lenders; provided, however, that no such
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amendment, modification or waiver which would:
(a) modify any requirement hereunder that any particular action be
taken by all the Lenders shall be effective unless consented to by all Lenders;
(b) modify this Section 9.6, change the definition of "Required
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Lenders", increase the Commitment of any Lender, reduce any fees payable to
-------
Agent or the Lenders, release any collateral that may from time to time secure
any of the Obligations, except as otherwise specifically provided in any Loan
Document, release any Guarantor or extend the Revolving Maturity Date shall be
effective without the consent of all Lenders;
(c) extend the due date for, or reduce or forgive the amount of, any
scheduled repayment or prepayment of principal of or interest on any portion of
any Loan (or reduce the principal amount of or rate of interest on any Loan)
shall be effective without the consent of all Lenders; or
(d) affect adversely the interests, rights or obligations of Agent
qua Agent shall be effective without consent of Agent.
---
9.7 Set-Offs. Upon the occurrence and during the continuance of any Event
--------
of Default, Agent and each Lender is hereby authorized at any time and from time
to time, without notice to Borrower (any such notice being expressly waived by
Borrower), to set off and apply to the payment of the Obligations (whether or
not then due and regardless of whether Agent shall have made any demand
therefor), and (as security for such Obligations) Borrower hereby grants to
Agent (for the benefit of the Lenders) a continuing security interest in, any
and all balances, credits, deposits, accounts or moneys of Borrower then or
thereafter maintained with Agent or any Lender (whether general or special, time
or demand, provisional or final). Agent and each Lender agrees promptly to
notify Borrower after set-off and application made by Agent or any Lender, as
the case may be, provided that the failure to give such notice shall not affect
--------
the validity of such set-off and application. The provisions of this Section
-------
9.7 are in addition to other rights and remedies (including, without limitation,
---
other rights of set-off) which Agent may have.
9.8 Attorneys' Fees and Costs. Borrower agrees to pay, whether or not the
-------------------------
transactions contemplated hereby are consummated, all reasonable expenses of
Agent (including the reasonable fees
35
and out-of-pocket expenses of counsel to Agent, of local counsel, if any, who
may be retained by Agent or its counsel, and allocated costs of in-house counsel
to Agent), in each case promptly following receipt of an invoice therefor in
reasonable detail, in connection with
(a) the negotiation, preparation, execution and delivery of this
Agreement and of each other Loan Document, including schedules and exhibits, and
any amendments, waivers, consents, supplements or other modifications to this
Agreement or any other Loan Document as may from time to time hereafter be
required, whether or not the transactions contemplated hereby are consummated,
and
(b) the preparation and review of the form of any document or
instrument relevant to this Agreement or any other Loan Document.
Borrower further agrees to pay, and to save Agent harmless from all liability
for, any stamp or other taxes (other than income taxes) which may be payable in
connection with the execution or delivery of this Agreement, the Advances
hereunder, or the issuance of the Notes or any other Loan Documents. Borrower
also agrees to reimburse Agent upon demand for all reasonable out-of-pocket
expenses (including attorneys' fees and legal expenses) incurred by Agent and
the Lenders in connection with (x) the negotiation of any restructuring or
"work-out", whether or not consummated, of any Obligations and (y) the
enforcement of any Obligations and any Lien in favor of Agent.
9.9 Indemnification. In consideration of the execution and delivery of
---------------
this Agreement by Agent and Lenders and Lenders' agreement to provide the Loans
hereunder, Borrower hereby indemnifies, exonerates and holds Agent, each Lender
and each of their respective parents, officers, directors, employees, equity
holders and agents (collectively, the "Indemnified Parties") free and harmless
-------------------
from and against any and all actions, causes of action, suits, losses, costs,
liabilities and damages, and expenses incurred in connection therewith
(irrespective of whether any such Indemnified Party is a party to the action for
which indemnification hereunder is sought), including reasonable attorneys' fees
and disbursements (collectively, the "Indemnified Liabilities"), incurred by the
-----------------------
Indemnified Parties or any of them as a result of, or arising out of, or
relating to any transaction financed or to be financed in whole or in part,
directly or indirectly, with the proceeds of the Loans; except for any such
Indemnified Liabilities arising for the account of a particular Indemnified
Party by reason of the relevant Indemnified Party's gross negligence or willful
misconduct. If and to the extent that the foregoing undertaking may be
unenforceable for any reason, Borrower hereby agrees to make the maximum
contribution to the payment and satisfaction of each of the Indemnified
Liabilities which is permissible under applicable law.
9.10 Dissemination. Agent or any Lender obtaining non-public financial or
-------------
other information pursuant to this Agreement which is designated in writing as
such by Borrower shall hold all such information confidential, in accordance
with its customary procedures for handling confidential information of this
nature, unless such information shall be publicly disclosed or become publicly
available other than by an action of such Person that violates the provisions of
this sentence; provided, however, that Agent or any Lender may make such
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disclosures (i) as may be consistent with such Person's customary business
practices to its parents, subsidiaries, affiliates and service providers
(provided that the recipient thereof agrees in writing to hold such information
confidential in a similar fashion), (ii) as may be reasonably required by that
Person in connection with the contemplated transfer of any Note or of any
interest therein or in the Loan Documents (provided that the potential
transferee thereof agrees in writing to hold such information confidential in a
similar fashion), or (iii) as required or requested by any court, arbitrator,
Governmental Body or regulatory authority. Borrower acknowledges that Agent and
the Lenders may provide information regarding Borrower and the Loans to each of
their respective parents, Subsidiaries, Affiliates, attorneys and accountants
who agree to be bound by the terms of this Section 9.10.
------------
36
9.11 Counterparts. This Agreement may be executed in any number of
------------
counterparts and by different parties on separate counterparts, each of which,
when executed and delivered, shall be deemed to be an original, and all of
which, when taken together, shall constitute but one and the same Agreement.
9.12 Integration. This Agreement, together with the other Loan Documents,
-----------
reflects the entire understanding of the parties with respect to the
transactions contemplated hereby and shall not be contradicted, modified, or
qualified by any other agreement, oral or written, whether before or after the
date hereof.
9.13 No Waiver; Remedies Cumulative. Agent and the Lenders shall not by
------------------------------
any act, delay, omission or otherwise be deemed to have waived any of its rights
or remedies hereunder, and no waiver shall be valid unless in writing, signed by
Agent and the Lenders and then only to the extent expressly provided therein. A
waiver by Agent and the Lenders of any right or remedy hereunder on any one
occasion shall not be construed as a bar to any right or remedy which Agent and
the Lenders would otherwise have had on any future occasion. No failure to
exercise nor any delay in exercising on the part of Agent and the Lenders, any
right, power or privilege hereunder, shall operate as a waiver thereof, nor
shall any single or partial exercise of any right, power or privilege hereunder
preclude any other or future exercise thereof or the exercise of any other
right, power or privilege. The rights and remedies hereunder provided are
cumulative and may be exercised singly or concurrently, and are not exclusive of
any rights and remedies provided by law.
9.14 GOVERNING LAW. THIS AGREEMENT, THE NOTES AND ALL OTHER LOAN DOCUMENTS
-------------
SHALL BE CONSTRUED IN ACCORDANCE WITH AND SHALL BE GOVERNED BY THE LAWS OF THE
STATE OF CALIFORNIA (WITHOUT GIVING EFFECT TO THE CHOICE OF LAW PRINCIPLES OF
SUCH STATE).
9.15 WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO ACKNOWLEDGES THAT
--------------------
THE RIGHT TO TRIAL BY JURY IS A CONSTITUTIONAL ONE, BUT THAT IT MAY BE WAIVED.
EACH OF THE PARTIES HERETO HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY
WAIVES (AFTER CONSULTING OR HAVING THE OPPORTUNITY TO CONSULT WITH COUNSEL OF
THEIR CHOICE) ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF
DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF ANY PARTY HERETO.
EACH OF THE PARTIES ACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED FULL AND
SUFFICIENT CONSIDERATION FOR THIS PROVISION (AND EACH OTHER PROVISION OF EACH
OTHER LOAN DOCUMENT TO WHICH IT IS A PARTY) AND THAT THIS PROVISION IS A
MATERIAL INDUCEMENT FOR AGENT AND EACH LENDER TO ENTER INTO THIS AGREEMENT AND
EACH SUCH OTHER LOAN DOCUMENT.
[remainder of page intentionally left blank; signatures follow]
37
IN WITNESS WHEREOF, the parties hereto have executed this Loan Agreement as
of the date first set forth above.
Borrower: POWERWAVE TECHNOLOGIES, INC.
--------
By: /s/ Xxxxx X. Xxxxxxxx
----------------------------
Print Name: Xxxxx X. Xxxxxxxx
--------------------
By: /s/ Xxxxxx Xxxx
----------------------------
Print Name: Xxxxxx Xxxx
--------------------
Agent: COMERICA BANK-CALIFORNIA
-----
By:
----------------------------
Print Name:
--------------------
Lenders: COMERICA BANK-CALIFORNIA
-------
By:
----------------------------
Print Name:
--------------------
38
