EXECUTION COPY
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U.S. $12,000,000
AMENDED AND RESTATED
CREDIT AGREEMENT
Dated as of April 11, 1994
between
VODAVI COMMUNICATIONS SYSTEMS, INC.
as Borrower
and
GENERAL ELECTRIC CAPITAL CORPORATION
as Lender
As Amended and Restated as of June 11, 1997
TABLE OF CONTENTS
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1. DEFINITIONS; INTERPRETATIONS................................................1
1.1 Definitions......................................................1
1.2 Other Definitional Provisions...................................21
1.3 Accounting Matters..............................................22
2. AMOUNT AND TERMS OF CREDIT.................................................22
2.1 Revolving Credit Facility.......................................22
2.2 Interest on Revolving Credit Loan...............................24
2.3 Fees............................................................25
2.4 Calculation of Interest and Fees................................25
2.5 Early Termination...............................................25
2.6 Manner of Payment; Time.........................................26
2.7 Application and Allocation of Payments..........................26
2.8 Accounting......................................................26
2.9 Taxes...........................................................27
2.10 Increased Commitment or Funding Costs...........................27
2.11 Failure to Charge Not Subsequent Waiver.........................28
2.12 Survivability...................................................28
3. CONDITIONS PRECEDENT.......................................................28
3.1 Conditions to Each Extension of Credit..........................28
4. REPRESENTATIONS AND WARRANTIES.............................................29
4.1 Corporate Existence; Compliance with Law........................29
4.2 Executive Offices; Corporate or Other Names.....................29
4.3 Corporate Power; Authorization; Enforceable Obligations.........30
4.4 Financial Statements and Projections............................30
4.5 Material Adverse Xxxxx..........................................31
4.6 Ownership of Property; Liens....................................31
4.7 Restrictions; No Default........................................32
4.8 Labor Matters...................................................32
4.9 Ventures, Subsidiaries and Affiliates, and Indebtedness.........32
4.10 Government Regulation...........................................32
4.11 Margin Regulations..............................................33
4.12 Taxes...........................................................33
4.13 ERISA...........................................................34
4.14 No Litigation...................................................35
4.15 Brokers.........................................................35
4.16 Employment Matters..............................................35
4.17 Patents, Trademarks, Copyrights, Licenses and Accreditation....35
4.18 Full Disclosure.................................................36
4.19 Hazardous Materials.............................................36
4.20 Insurance Policies..............................................36
4.21 Deposit Accounts................................................36
4.22 Solvent Financial Condition.....................................37
4.23 Credit Party Questionnaires.....................................37
5. FINANCIAL STATEMENTS AND INFORMATION.......................................37
5.1 Reports and Notices.............................................37
5.2 Communication with Accountants..................................39
6. AFFIRMATIVE COVENANTS......................................................39
6.1 Maintenance of Existence and Conduct of Business................39
6.2 Payment of Obligations..........................................40
6.3 Books and Records...............................................40
6.4 Litigation......................................................40
6.5 Insurance.......................................................41
6.6 Compliance with Laws............................................41
6.7 Agreement.......................................................41
6.8 Employee Plans..................................................42
6.9 Environmental Matters...........................................42
6.10 Access..........................................................42
6.11 Cash Management.................................................43
6.12 Goldstar Agreements.............................................43
7. NEGATIVE COVENANTS.........................................................43
7.1 Mergers, Etc....................................................43
7.2 Investments.....................................................43
7.3 Indebtedness....................................................44
7.4 Affiliate and Employee Loans;
Transactions and Employment Agreements.........................44
7.5 Capital Structure and Business..................................44
7.6 Liens...........................................................44
7.7 Sale of Assets..................................................45
7.8 Events of Default...............................................45
7.9 ERISA...........................................................45
7.10 Financial Covenants.............................................45
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7.11 Hazardous Materials.............................................46
7.12 Restricted Payments.............................................46
7.13 Change in Control...............................................46
8. EVENTS OF DEFAULT; RIGHTS AND REMEDIES.....................................46
8.1 Events of Default...............................................46
8.2 Remedies........................................................48
8.3 Cumulative Remedies.............................................48
8.4 Waivers by Borrower.............................................48
9. MISCELLANEOUS..............................................................49
9.1 Complete Agreement; Modification of Agreement...................49
9.2 Fees and Expenses...............................................49
9.3 Indemnity.......................................................50
9.4 No Waiver.......................................................51
9.5 Successors and Assigns..........................................52
9.6 Severability....................................................52
9.7 Conflict of Terms...............................................52
9.8 Authorized Signature; Oral Instructions.........................52
9.9 Governing Law...................................................52
9.10 Notices.........................................................53
9.11 Subordination...................................................55
9.12 Survival of Obligations Upon Termination of
Financing Arrangement..........................................55
9.13 Section Titles..................................................56
9.14 Counterparts....................................................56
9.15 Time of Essence.................................................56
9.16 Waiver of Jury Trial............................................56
9.17 Syndication.....................................................56
9.18 Special Provision Relating to this Amendment and Restatement....57
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AMENDED AND RESTATED
CREDIT AGREEMENT
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VODAVI COMMUNICATIONS SYSTEMS, INC., formerly known as V.
Technology Acquisition Corp. ("Borrower"), and GENERAL ELECTRIC CAPITAL
CORPORATION, a New York corporation ("Lender"), are parties to that certain
Credit Agreement, dated as of April 11, 1994, as amended to the date hereof (the
"Original Agreement"), and hereby amend and restate the Original Agreement as
follows:
RECITALS
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Borrower desires to make certain amendments to the Original
Agreement which relates to a loan facility (the "Revolving Credit Facility")
under which the Lender has made available to the Borrower up to Twelve Million
Dollars ($12,000,000) in revolving loans outstanding at any time, and the Lender
has agreed to such amendments to such facility, all upon the terms and
conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants hereinafter contained, the parties hereto agree as follows:
ARTICLE 1.
DEFINITIONS; INTERPRETATIONS
1.1 Definitions. Any and all capitalized terms used herein shall
have the following respective meanings when used in this Agreement unless
otherwise specified where used:
"Account Debtor" shall mean any Person who may become
obligated to any Credit Party under, with respect to, or on account of, an
Account.
"Account Agreement" shall mean any agreement among the
Borrower, the Lender and the bank in which such account or lockbox is held
pledging any Collection Account to the Lender as security for the Obligations,
in the form attached hereto as Exhibit E or in such other form as the Lender
shall approve.
"Accounts" shall mean, with respect to any Credit Party, all
"accounts," as such term is defined in the Code, now owned or hereafter acquired
by such Credit Party and, in any event, including, without limitation, (a) all
accounts receivable, other receivables, book debts and other forms of
obligations (other than forms of obligations evidenced by Chattel Paper,
Documents or Instruments) now owned or hereafter received or acquired by or
belonging or owing to such Credit Party, whether arising out of goods sold or
leased or for services rendered by it or from any other transaction (including,
without limitation, any such obligations which may be characterized as an
account or contract right under the Code), (b) all of such Credit Party's rights
in, to and under all purchase orders or receipts now owned or hereafter acquired
by it for goods or services, (c) all of such Credit Party's rights to
any goods represented by any of the foregoing (including, without limitation,
unpaid sellers' rights of rescission, replevin, reclamation and stoppage in
transit and rights to returned, reclaimed or repossessed goods), (d) all monies
due or to become due to such Credit Party under all purchase orders and
contracts for the sale of goods or the performance of services or both by such
Credit Party or in connection with any other transaction (whether or not yet
earned by performance on the part of such Credit Party) now or hereafter in
existence, including, without limitation, the right to receive the proceeds of
said purchase orders and contracts, and (e) all collateral security, instruments
and guarantees of any kind, now or hereafter in existence, given by any Person
with respect by any of the foregoing.
"Affiliate" shall mean, with respect to any Person, (i) each
Person that, directly or indirectly, owns or controls, whether beneficially, or
as a trustee, guardian or other fiduciary, five percent (5%) or more of the
Stock having ordinary voting power in the election of directors of such Person,
(ii) each Person that controls, is controlled by or is under common control with
such Person or any Affiliate of such Person or (iii) each of such Person's
officers, directors, joint venturers and partners. For the purpose of this
definition, "control" of a Person shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of its management or
policies, whether through the ownership of voting securities, by contract or
otherwise.
"Agreement" shall mean this Amended and Restated Credit
Agreement, including any appendices, exhibits or schedules hereto.
"Applicable Law" shall mean, anything in Section 9.9 to the
contrary notwithstanding, (i) all applicable common law and principles of equity
and (ii) all applicable provisions of all (A) constitutions, statutes, rules,
regulations and orders of governmental bodies, (B) Governmental Approvals and
(C) orders, decisions, judgments and decrees of all courts and arbitrators.
"ARS" shall mean Arizona Repair Services, Inc., an Arizona
corporation which is an Affiliate of the Borrower.
"Authorized Borrower Representative" shall have the meaning
assigned to it in Section 9.8.
"Base Rate" shall mean for each month, the per annum rate
equal to the GE Capital Index Rate, plus 2.5%. Changes in the GE Capital Index
Rate shall take effect as of the beginning of the first day of each month.
"Borrower" shall mean Vodavi Communications Systems, Inc., an
Arizona corporation formerly known as V Technology Acquisition Corp.
"Borrowing Base" shall mean at any time an amount not to
exceed the sum of: (i) 85% of Eligible Accounts, and (ii) up to the lesser of:
(A) $6,000,000 and (B) not more than 60% of Eligible Inventory in each case
(Eligible Accounts and Eligible Inventory) as
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shown on the most recently delivered Borrowing Base Certificate delivered by the
Borrower, less such additional reserves as Lender shall deem reasonably
necessary.
"Borrowing Base Certificate" shall mean a certificate in the
form attached hereto as Exhibit B.
"Business Day" shall mean any day that is not a Saturday, a
Sunday or a day on which banks are required or permitted to be closed in the
State of New York.
"Capital Expenditures" shall mean all payments for any fixed
assets or improvements or for replacements, substitutions or additions thereto,
that have a useful life of more than one year and that are required to be
capitalized under GAAP.
"Capital Lease" shall mean, with respect to any Person, any
lease of any property (whether real, personal or mixed) by such Person as lessee
that, in accordance with GAAP, either would be required to be classified and
accounted for as a capital lease on a balance sheet of such Person or otherwise
be disclosed as such in a note to such balance sheet.
"Capital Lease Obligation" shall mean, with respect to any
Capital Lease, the amount of the obligation of the lessee thereunder that, in
accordance with GAAP, would appear on a balance sheet of such lessee in respect
of such Capital Lease or otherwise be disclosed in a note to such balance sheet.
"Charges" shall mean, with respect to any Credit Party, all
federal, state, county, city, municipal, local, foreign or other governmental
taxes (including, without limitation, taxes owed to PBGC at the time due and
payable), levies, assessments, charges, liens, claims or encumbrances upon or
relating to (i) the Collateral, (ii) the Obligations, (iii) the employees,
payroll, income or gross receipts of such Credit Party, (iv) such Credit Party's
ownership or use of any of its assets, or (v) any other aspect of such Credit
Party's business.
"Chattel Paper" shall mean, with respect to any Credit Party,
any "chattel paper," as such term is defined in the Code, now owned or hereafter
acquired by such Credit Party, wherever located, including, without limitation,
any writing or writings which evidence both a monetary obligation and a security
interest in or a lease of specified goods.
"Closing Date" shall mean April 11, 1994.
"Closing Fee" shall have the meaning assigned to it in Section
2.3(a).
"Code" shall mean the Uniform Commercial Code as the same may,
from time to time, be in effect in the State of New York; provided, however, in
the event that, by reason of mandatory provisions of law, any or all of the
attachment, perfection or priority of Lender's security interest in any
Collateral is governed by the Uniform Commercial Code as
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in effect in a jurisdiction other than the State of New York, the term "Code"
shall mean the Uniform Commercial Code as in effect in such other jurisdiction
for purposes of the provisions hereof relating to such attachment, perfection or
priority and for purposes of definitions related to such provisions.
"Collateral" shall mean the property covered by the Collateral
Documents and any other property, real or personal, tangible or intangible, now
existing or hereafter acquired, that may at any time be or become subject to a
Lien in favor of Lender to secure the Obligations.
"Collateral Documents" shall mean the Security Agreements, the
Account Agreements, the Pledge Agreement, the Trademark Security Agreement(s) in
substantially the form of Exhibit N hereto and the Patent Collateral Assignment
Agreement(s) in substantially the form of Exhibit M hereto.
"Collection Account" shall mean any account, lock box or other
depository into which Borrower deposits or receives the proceeds of its
Accounts.
"Commitment" shall have the meaning assigned to it in Section
2.1(a).
"Commitment Fee" shall mean the fee in the amount of $50,000
paid to Lender by Borrower on or before the Closing Date as compensation for
Lender committing to make funds available to Borrower.
"Commitment Termination Date" shall mean the earliest of (i)
the Maturity Date, (ii) the date of termination of the Commitment pursuant to
Section 8.2, and (iii) the date of prepayment in full by Borrower of the
Revolving Credit Loan and termination of the Commitment in accordance with the
provisions of Section 2.5.
"Consolidated Subsidiary" of any Person shall mean, at any
time, any Subsidiary or other entity the accounts of which would be consolidated
with those of such Person in its consolidated financial statements as of such
time in accordance with GAAP.
"Contracts" shall mean, with respect to any Credit Party, all
the contracts, undertakings, or agreements (other than rights evidenced by
Chattel Paper, Documents or Instruments but including, in the case of the
Borrower, rights under the Goldstar Agreements) in or under which such Credit
Party may now or hereafter have any right, title or interest, including, any
agreement relating to the terms of payment or the terms of performance of any
Account.
"Credit Parties" shall mean the Borrower, ARS and ESI, and
"Credit Party" shall mean any of the foregoing.
"Credit Party Questionnaire" shall mean any questionnaire
delivered by a Credit Party in substantially the form of Exhibit J.
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"Default" shall mean any Event of Default, and any event that,
with the passage of time or the giving of notice or both, would, unless cured or
waived, become an Event of Default.
"Default Rate" shall mean the Base Rate plus 2%.
"Disbursement Account" shall mean the zero balance
disbursement account from which the Borrower makes all payments in the ordinary
course of its business.
"DOL" shall mean the United States Department of Labor or any
successor thereto.
"Documents" shall mean, with respect to any Credit Party, any
"documents," as such term is defined in the Code, now owned or hereafter
acquired by such Credit Party, wherever located, and in any event including
bills of lading, dock warrants, dock receipts, warehouse receipts or other
documents of title.
"EBITDA" shall mean, for any period of twelve months ending on
the last day of any Fiscal Period, (i) net income before interest and taxes
plus, (ii) to the extent deducted in determining such income, depreciation,
amortization and other similar non-cash charges, minus (iii) to the extent
recognized in determining such income, extraordinary gains, plus (iv) to the
extent recognized in determining such income, the absolute value of
extraordinary losses, of Borrower for such period.
"Eligible Accounts" shall mean the aggregate amount of
Accounts of Borrower from goods sold or services rendered in the ordinary course
of Borrower's business and that Lender, in its reasonable discretion, deems to
be Eligible Accounts. In determining what constitutes Eligible Accounts, Lender
may exclude, without duplication or limitation, any of the following:
(a) that portion of any Account upon which (i) Borrower's
right to receive payment is not absolute or is contingent upon the
fulfillment of any condition whatever or (ii) Borrower is not able
to bring suit or otherwise enforce its remedies against the Account
Debtor through judicial process;
(b) that portion of any Account against which is asserted or
available any defense, counterclaim or setoff, whether well-founded
or otherwise;
(c) that portion of any Account that is not a true and correct
statement of a bona fide indebtedness incurred in the amount of the
Account for goods or services provided to, and accepted by, the
Account Debtor obligated upon such Account;
(d) any Account with respect to which an invoice, acceptable
to Lender in form and substance, has not been sent;
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(e) any Account that is not owned by Borrower that is subject
to any right, claim, or interest of another other than the Lien in
favor of Lender;
(f) any Account that arises from a sale of goods to an
employee or Affiliate;
(g) any Account that is the obligation of an Account Debtor
that is the federal government or a political subdivision thereof
unless Lender has agreed to the contrary in writing and Borrower
has complied with the Federal Assignment of Claims Act of 1940, and
any amendments thereto, with respect to such obligation;
(h) any Account that is the obligation of an Account Debtor
domiciled in a foreign country; provided, however, that accounts of
Canadian Account Debtors shall not be excluded pursuant to this
clause (h) so long as the Lien of the Lender thereon, in the
reasonable judgment of the Lender, constitutes a first-priority,
perfected Lien that is enforceable against the Account Debtor and
all third parties, and Borrower shall have provided the Lender with
all such documents, opinions and evidences as the Lender shall
reasonably request to establish the same;
(i) any Account that is the obligation of an Account Debtor to
whom Borrower is or may become liable for goods sold or services
rendered or money loaned by the Account Debtor to Borrower;
(j) any Account that arises with respect to goods that are
delivered on a cash- on-delivery basis or placed on consignment,
guaranteed sale, sale-or-return, sale-on- approval, or other terms
by reason of which the payment by the Account Debtor may be
conditional;
(k) any Account that is in default; provided, however, that an
Account shall be deemed in default upon the occurrence of any of
the following:
(i) the Account remaining unpaid beyond sixty (60) days
from its due date;
(ii) if any Account Debtor obligated upon such Account
suspends business, makes a general assignment for the benefit
of creditors, or fails to pay its debts generally as they come
due; or
(iii) if any petition is filed by or against any Account
Debtor obligated upon such Account under any bankruptcy law or
any other national, state or provincial receivership,
insolvency relief or other law or laws for the relief of
debtors;
(l) any Account that is the obligation of an Account Debtor
that is in default (as defined in subparagraph (k)(i) above) on 50%
or more of the Accounts
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upon which such Account Debtor is obligated to Borrower;
(m) any Account that remains unpaid beyond ninety (90) days
from its date of invoice;
(n) any Account that arises from any xxxx-and-hold or other
sale of goods that remain in Borrower's possession or under
Borrower's control;
(o) any Account in which Lender does not have a first-priority
perfected security interest;
(p) any portion of an Account that exceeds any credit or
concentration limit established by Lender in its sole discretion
for the Account Debtor thereon;
(q) any Account as to which any of Borrower's representations
or warranties pertaining to such Account in any Loan Document are
untrue;
(r) any Account that is the obligation of an Account Debtor
that is located in the State of New Jersey, Minnesota or Indiana
unless the Borrower has filed any requisite notice of business
activity (or similar report) for the then-current year with the
appropriate public office of such state; and
(s) any Account that is not otherwise acceptable to Lender in
its reasonable discretion.
Up to 60% (or such lesser percentage as Lender may determine from time to time
in its reasonable discretion) of Eligible Accounts outstanding at any one time
may be accounts on which Graybar is directly or indirectly an Account Debtor and
up to 15% of Eligible Accounts outstanding at any one time may be accounts on
which any single Person (other than Graybar) is directly or indirectly obligated
as an Account Debtor.
"Eligible Inventory" shall mean the aggregate amount of Gross
Inventory of Borrower that Lender, in its reasonable discretion, deems to be
Eligible Inventory. In determining what constitutes Eligible Inventory, the
Lender may exclude, without duplication or limitation, any of the following:
(a) Inventory that the Borrower does not own free and clear of
all Liens and rights of others, except the first-priority Lien in
favor of Lender;
(b) Inventory that is not located on premises owned and
operated by Borrower; provided, however, that if the Inventory is
located on premises leased by Borrower, the lessor thereof shall
have executed a Waiver and Consent in favor of Lender substantially
in the form of Exhibit I to the Credit Agreement (or in such other
form as is acceptable to Lender);
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(c) Inventory that is in transit unless covered by a
negotiable document of title and unless such document and evidence
of acceptable insurance covering such Inventory have been delivered
to Lender or its agent, and the seller of such Inventory has waived
any right to reclaim such goods or to stop the delivery of such
goods in possession of a carrier or other bailee and any similar
right to interfere with the Lender's prior rights to the Inventory,
whether arising pursuant to Section 2-702 or Section 2-705 of the
Code, or otherwise;
(d) Inventory that, in Lender's opinion, is obsolete,
unsalable, shopworn, damaged, or unfit for further processing;
(e) Inventory that does not constitute finished goods, such as
supplies, repair parts, work-in-process, sales literature, display
items, packing and shipping materials or goods that have been
returned by a buyer;
(f) Inventory that consists of discontinued or slow-moving
items or substandard quality goods;
(g) Inventory that is placed by Borrower on consignment;
(h) Inventory as to which Lender's Lien thereon is not a
first-priority and perfected security interest;
(i) Inventory that is not of a type held for sale in the
ordinary course of Borrower's business;
(j) Any reserves that Borrower has established on its books
against Inventory, including but not limited to those reserves for
loss of Inventory due to shrinkage; and
(k) Inventory that is not otherwise acceptable to Lender in
its reasonable discretion.
"Environmental Laws" shall mean all federal, state and local
laws, statutes, ordinances and regulations, now or hereafter in effect, and in
each case as amended or supplemented from time to time, and any applicable
judicial or administrative interpretation thereof, including, without
limitation, any applicable judicial or administrative order, consent decree or
judgment relating to the regulation and protection of human health, safety, the
environment and natural resources (including, without limitation, ambient air,
surface water, groundwater, wetlands, land surface or subsurface strata,
wildlife, aquatic species and vegetation). Environmental Laws include, but are
not limited to, the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended (42 U.S.C. xx.xx. 9601 et seq.) ("CERCLA"),
the Hazardous Material Transportation Act, as amended (49 U.S.C. xx.xx. 1801 et
seq.), the Federal Insecticide, Fungicide, and Rodenticide Act, as amended (7
U.S.C. xx.xx. 136 et seq.), the Resource Conservation and Recovery Act, as
amended (42
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U.S.C. xx.xx. 6901 et seq.) ("RCRA"), the Toxic Substance Control Act, as
amended (15 U.S.C. xx.xx. 2601 et seq.), the Clean Air Act, as amended (42
U.S.C. xx.xx. 740 et seq.), the Federal Water Pollution Control Act, as amended
(33 U.S.C. xx.xx. 1251 et seq.), the Occupational Safety and Health Act, as
amended (29 U.S.C. xx.xx. 651 et seq.) ("OSHA"), and the Safe Drinking Water
Act, as amended (42 U.S.C. xx.xx. 300(f) et seq.), and any and all regulations
promulgated thereunder, and all analogous state and local counterparts or
equivalents and any transfer of ownership notification or approval statutes.
"Environmental Liabilities and Costs" shall mean all
liabilities, obligations, responsibilities, remedial actions, losses, damages,
punitive damages, consequential damages, treble damages, costs and expenses
(including, without limitation, all reasonable fees, disbursements and expenses
of counsel, experts and consultants and costs of investigation and feasibility
studies), fines, penalties, sanctions and interest incurred as a result of any
claim, suit, action or demand by any Person, whether based in contract, tort,
implied or express warranty, strict liability, criminal or civil statute or
common law (including, without limitation, any thereof arising under any
Environmental Law, permit, order or agreement with any Governmental Authority)
and that relate to any health or safety condition regulated under any
Environmental Law or in connection with any other environmental matter or
Release or the presence of a Hazardous Material or threatened Release of a
Hazardous Material.
"Equipment" shall mean, with respect to any Credit Party, all
equipment, as such term is defined in the Code, now owned or hereafter acquired
by such Credit Party, wherever located.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974 (or any successor legislation thereto), as amended from time to time,
and any regulations promulgated thereunder.
"ERISA Affiliate" shall mean, with respect to any Credit
Party, any trade or business (whether or not incorporated) under common control
with such Credit Party and that, together with such Credit Party, are treated as
a single employer within the meaning of Sections 414(b), (c), (m) or (o) of the
IRC.
"ERISA Event" shall mean, with respect to any Credit Party or
any other ERISA Affiliate, (i) a Reportable Event with respect to a Title IV
Plan or a Multiemployer Plan, (ii) the withdrawal of any Credit Party or any
ERISA Affiliate from a Title IV Plan subject to Section 4063 of ERISA during a
plan year in which it was a substantial employer, as defined in Section 4001(a)
(2) of ERISA, (iii) the complete or partial withdrawal of any Credit Party, or
any ERISA Affiliate from any Multiemployer Plan, (iv) the filing of a notice of
intent to terminate a Title IV Plan or the treatment of a plan amendment as a
termination under Section 4041 of ERISA, (v) the institution of proceeding to
terminate a Title IV Plan or Multiemployer Plan by the PBGC, (vi) the failure to
make required contributions to a Qualified Plan, or (vii) any other event or
condition that might reasonably be expected to constitute grounds under Section
4042 of ERISA for the termination of, or the appointment of a trustee to
administer, any Title IV Plan or Multiemployer Plan or the imposition of any
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liability under Title IV of ERISA other than PBGC premiums due but not
delinquent under Section 4007 of ERISA.
"ESI" shall mean Enhanced Systems, Inc., an Arizona
corporation which is an Affiliate of the Borrower.
"Event of Default" shall have the meaning assigned to it in
Section 8.1.
"Extension of Credit" shall mean the making of a Revolving
Credit Advance or the incurrence of a Letter of Credit Obligation.
"Federal Reserve Board" shall have the meaning assigned to it
in Section 4.11.
"Fees" shall mean the Closing Fee, the Non-use Fee, the
Commitment Fee, the Prepayment Fee, the Letter of Credit Fees and any other fees
due to Lender pursuant to the Loan Documents.
"FIFO Cost" shall mean the cost of Inventory of the Borrower,
determined on a First In - First Out basis in accordance with GAAP.
"Financials" shall mean the financial statements referred to
in paragraphs I(i) and I(ii) of Schedule 4.4.
"Fiscal Month" shall mean any of the monthly accounting
periods of Borrower.
"Fiscal Quarter" shall mean any of the quarterly accounting
periods of Borrower.
"Fiscal Year" shall mean the 12-month period of Borrower
ending December 31 of each year. Subsequent changes of the fiscal year of
Borrower shall not change the term "Fiscal Year," unless Lender shall consent in
writing to such change.
"Fixed Charge Coverage Ratio" shall have the meaning assigned
to it in Section 7.10(b).
"Fixed Charges" shall mean (without duplication), for any
fiscal period of Borrower, the sum of (i) Interest Expense (ii) required
payments of principal on Funded Debt, and (iii) income taxes paid in cash.
"Funded Debt" shall mean, without duplication, with respect to
Borrower, all of Borrower's Indebtedness that, by the terms of the agreement
governing or instrument evidencing such Indebtedness, matures more than one year
from, or is directly or indirectly renewable or extendible at the option of the
debtor under a revolving credit or similar
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agreement obligating the lender or lenders to extend credit over a period of
more than one year from, the date of creation thereof, including current
maturities of long-term debt, revolving credit, and short-term debt extendible
beyond one year at the option of the debtor, and shall also include, without
limitation, the Obligations.
"GAAP" shall mean generally accepted accounting principles in
the United States of America as in effect from time to time, consistently
applied.
"GE Capital" shall mean General Electric Capital Corporation,
a New York corporation having an office at 000 Xxxxx Xxxxxxx Xxxxx, Xxxxx 000,
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000.
"GE Capital Index Rate" shall mean for each month, the
annualized yield on 30- day commercial paper, as quoted for high grade unsecured
notes sold through dealers by major corporations in multiples of $1,000 in the
"Money Rates" section of The Wall Street Journal for the last day of the
preceding month on which The Wall Street Journal is published containing such
rates or, in the event that The Wall Street Journal ceases publication of such
rate, in such other publication of general circulation as Lender may, from time
to time, designate in writing.
"General Intangibles" shall mean, with respect to any Credit
Party, any "general intangibles," as such term is defined in the Code, now owned
or hereafter acquired by such Credit Party and, in any event, including, without
limitation, all right, title and interest that such Credit Party may now or
hereafter have in or under any Contract, all customer lists, Trademarks,
Patents, services marks, trade names, business names, corporate names, trade
styles, logos and other source or business identifiers, and all applications
therefor and reissues, extensions or renewals thereof, rights in intellectual
property, interests in partnerships, joint ventures and other business
associations, licenses, permits, copyrights, trade secrets, proprietary or
confidential information, inventions (whether or not patented or patentable),
technical information, procedures, designs, knowledge, know-how, software, data
bases, data, skill, expertise, experience, processes, models, drawings,
materials and records, goodwill (including, without limitation, the goodwill
associated with any Trademark, Trademark registration or Trademark licensed
under any Trademark license), all rights and claims in or under insurance
policies, (including, without limitation, insurance for fire, damage, loss, and
casualty, whether covering personal property, real property, tangible rights or
intangible rights, all liability, life, key man, and business interruption
insurance, and all unearned premiums), uncertificated securities, choses in
action, deposit and other bank accounts, rights to receive tax refunds and other
payments and rights of indemnification.
"Goldstar" shall mean LG Electronics, Inc., successor by
merger to Goldstar Telecommunications Co., Ltd. (Korea).
"Goldstar Agreements" shall mean all of the existing and
hereafter acquired supplier, license and distribution agreements between the
Borrower and Goldstar, all of which are described on Schedule 1.1 hereto.
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"Goods" shall mean, with respect to any Credit Party, all
"goods" as such term is defined in the Code, now owned or hereafter acquired by
such Credit Party, wherever located, and in any event including all things that
are movable or that are fixtures, including further without limitation any
equipment, inventory or other tangible personal property or fixtures.
"Governmental Approval" shall mean an authorization, consent,
approval, license or exemption of, registration or filing with, or report or
notice to, any governmental body, including, without limitation, any such
approval required under ERISA or by the PBGC.
"Governmental Authority" shall mean any nation or government,
any state or other political subdivision thereof, and any agency, department or
other entity exercising executive legislative, judicial, regulatory or
administrative functions of or pertaining to government.
"Gross Inventory" shall mean Borrower's Inventory per the
perpetual ledger, valued at the lower of FIFO Cost or market, plus deferred
freight, import duties (net of dumping duties) and in-transit Inventory.
"Graybar" shall mean Graybar Electric Company, Inc., a New
York corporation.
"Guaranteed Indebtedness" shall mean, as to any Person without
duplication, any obligation of such Person guaranteeing any Indebtedness, lease,
dividend, or other obligation ("primary obligations") of any other Person (the
"primary obligor") in any manner including, without limitation, any obligation
or arrangement of such Person (i) to purchase or repurchase any such primary
obligation, (ii) to advance or supply funds (a) for the purchase or payment of
any such primary obligation or (b) to maintain working capital or equity capital
of the primary obligor or otherwise to maintain the net worth or solvency or any
balance sheet condition of the primary obligor, (iii) to purchase property,
securities or services primarily for the purpose of assuring the owner of any
such primary obligation of the ability of the primary obligor to make payment of
such primary obligation, or (iv) to indemnify the owner of such primary
obligation against loss in respect thereof.
"Guaranty Agreement" shall mean the Guaranty Agreement from
ARS and ESI to Lender in substantially the form of Exhibit O hereto, pursuant to
which ARS and ESI shall jointly and severally guarantee payment and performance
of the Obligations.
"Hazardous Material" shall mean any substance, material or
waste, the generation, handling, storage, treatment or disposal of which is
regulated by, or form the basis of liability now or hereafter under, any
government authority, including, without limitation, any material or substance
that is (i) defined as a "solid waste," "hazardous waste," "hazardous material,"
"hazardous substance," "extremely hazardous waste" or "restricted hazardous
waste" or other similar term or phrase under any Environmental Laws, (ii)
petroleum or any fraction
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or by-product thereof, asbestos, polychlorinated biphenyls, a radioactive
substance, methane, volatile hydrocarbons or an industrial solvent, (iii)
designated as a "hazardous substance" pursuant to Section 311 of the Clean Water
Act, 33 U.S.C. xx.xx. 1251 et seq. (33 U.S.C. xx.xx. 1321) or listed pursuant to
Section 307 of the Clean Water Act (33 U.S.C. ss. 1317), (iv) defined as a
"hazardous waste" pursuant to Section 1004 of the Resource Conservation and
Recovery Act, 42 U.S.C. ss. 6901, et seq. (42 U.S.C. ss. 6903), or (v) defined
as a "hazardous substance" pursuant to Section 1012 of the Comprehensive
Environmental Response, Compensation, and Liability Act, 42 U.S.C. ss. 9601 et
seq. (42 U.S.C. ss. 9601).
"Indebtedness" of any Person shall mean, without duplication,
(i) all indebtedness of such Person for borrowed money or for the deferred
purchase price of property or services (including, without limitation,
reimbursement and all other obligations with respect to surety bonds, letters of
credit and bankers' acceptances, whether or not matured, but not including
obligations to trade creditors incurred (either for goods or services) in the
ordinary course of business that have a term of less than one year), (ii) all
obligations evidenced by notes, bonds, debentures or similar instruments, (iii)
all indebtedness created or arising under any conditional sale or other title
retention agreements with respect to property acquired by such Person (even
though the rights and remedies of the seller or lender under such agreement in
the event of a default are limited to repossession or sale of such property),
(iv) all Capital Lease Obligations, (v) all Guaranteed Indebtedness, (vi) all
obligations arising with respect to Mandatorily Redeemable Stock, (vii) all
Indebtedness referred to in clause (i), (ii), (iii), (iv) or (v) above secured
by (or for which the holder of such Indebtedness has an existing right,
contingent or otherwise, to be secured by) any Lien upon or in property
(including, without limitation, accounts and contract rights) owned by such
Person, even though such Person has not assumed or become liable for the payment
of such Indebtedness, (viii) the Obligations, and (ix) all liabilities under
Title IV or ERISA with respect to unfunded plans.
"Instruments" shall mean, with respect to any Credit Party,
any "instrument," as such term is defined in the Code, now owned or hereafter
acquired by such Credit Party, wherever located, including, without limitation,
all certificated securities and all notes and other evidences of indebtedness,
other than instruments that constitute, or are a part of a group of writings
that constitute, Chattel Paper.
"Intercompany Debt" shall mean any and all present or future
indebtedness, obligations and other liabilities of any Credit Party to any other
Credit Party or any other member of the Parent Group.
"Interest Expense" shall mean, for any fiscal period of
Borrower, cash interest expense of Borrower for such period in respect of its
Funded Debt.
"Inventory" shall mean, with respect to any Credit Party, all
inventory, as such term is defined in the Code, now owned or hereafter acquired
by such Credit Party, wherever located, and, in any event, including, without
limitation, all inventory, merchandise, goods and other personal property which
are held by or on behalf of such Credit Party for sale or lease
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or are furnished or are to be furnished under a contract of service or which
constitute raw materials, work in process, finished goods or materials used or
consumed or to be used or consumed in such Credit Party's business or in the
processing, production, packaging, promotion, delivery or shipping of the same,
including further any return inventory and all inventory in transit.
"IRC" shall mean the Internal Revenue Code of 1986, as
amended, and any successor thereto.
"IRS" shall mean the United States Internal Revenue Service,
or any successor thereto.
"Leases" shall mean, with respect to any Credit Party, all of
those leasehold estates in real property now owned or hereafter acquired by such
Credit Party, as lessee.
"Lender" shall mean GE Capital and, if at any time GE Capital
shall decide to assign or syndicate all or any portion of the Obligations, such
term shall include such assignee or such other members of the syndicate.
"Lending Office" shall have the meaning assigned to it in
Section 2.1(b).
"Letter of Credit Fees" shall have the meaning assigned to it
on Schedule 2.1(g).
"Letter of Credit Obligations" shall mean all outstanding
obligations incurred by Lender, whether direct or indirect, contingent or
otherwise, due or not due, in connection with the issuance or guaranty by Lender
or another Person, at the request of Borrower, of any Letters of Credit. The
amount of each Letter of Credit Obligation at any time shall equal the maximum
amount which may be payable by Lender thereupon or pursuant thereto at such
time.
"Letters of Credit" shall mean any and all commercial or
standby letters of credit issued at the request or for the account of Borrower
for which Lender has incurred a Letter of Credit Obligation.
"License" shall mean, with respect to any Credit Party, any
Patent License, Trademark License or other license of rights or interests now
held or hereafter acquired by such Credit Party.
"Lien" shall mean any mortgage or deed of trust, pledge,
hypothecation, assignment, deposit arrangement, lien, charge, claim, security
interest, easement or encumbrance, or preference, priority or other security
agreement or preferential arrangement of any kind or nature whatsoever
(including, without limitation, any lease or title retention agreement, any
financing lease having substantially the same economic effect as any of the
foregoing, and the filing of, or agreement to give, any financing statement
under the Code or
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comparable law of any jurisdiction).
"Loan Documents" shall mean the Agreement, the Note, the
Guaranty Agreement, the Collateral Documents and all other agreements,
instruments, documents and certificates identified herein or in the Schedule of
Documents in favor of Lender and including, without limitation, all other
pledges, powers of attorney, consents, assignments and contracts, whether
heretofore, now or hereafter executed by or on behalf of any Credit Party or any
of its Affiliates, or any employee of any Credit Party or any of its Affiliates,
and delivered to Lender in connection with the Agreement or the transactions
contemplated hereby.
"Mandatorily Redeemable Stock" means, as applied to a Person,
any share of such Person's capital stock to the extent that it is redeemable,
payable or required to be purchased or otherwise retired or extinguished (i) at
a fixed or determinable date, whether by operation of a sinking fund or
otherwise, (ii) at the option of any Person other than such Person or (iii) upon
the occurrence of a condition not solely within the control of such Person, such
as a redemption required to be made out of future earnings.
"Material Adverse Effect" shall mean a material adverse effect
on (i) the business, assets, operations, prospects or financial or other
condition of Borrower or the Parent Group taken as a whole, (ii) Borrower's and
the other Credit Parties' ability, taken as a whole, to pay the Obligations in
accordance with the terms hereof and the other Loan Documents, (iii) the
Collateral or Lender's Liens on the Collateral or the priority of any such Lien
or (iv) Lender's rights and remedies under the Agreement or the other Loan
Documents.
"Maturity Date" shall mean the date that is the later of: (i)
April 11, 2000, and (ii) the date to which, upon prior mutual written agreement
the Borrower and Lender, the expiration of the Revolving Credit Facility has
been extended.
"Maximum Inventory Turnover Days" shall mean, as of the last
day of any Fiscal Month, the number of days determined by the following formula:
The Borrower's Inventory on such day x 360
--------------------------------------------------------------------------------
The Borrower's costs of goods sold for the twelve month period
ending on such day
"Maximum Letter of Credit Obligations" shall mean $1,000,000.
"Maximum Permissible Rate" shall mean with respect to interest
(or amounts deemed interest) payable hereunder, the rate of interest that, if
exceeded, could, under Applicable Law, result in (i) civil or criminal penalties
being imposed on the Lender or (ii) the Lender being unable to enforce payment
of (or if collected, to retain) all or part of any Obligation or the interest
payable thereon.
"Multiemployer Plan" shall mean a "multiemployer plan" as
defined in
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Section 4001(a) (3) of ERISA, and to which any Credit Party or any ERISA
Affiliate is making, is obligated to make, has made or been obligated to make,
contributions on behalf of participants who are or were employed by any of them.
"Non-use Fee" shall have the meaning assigned to it in Section
2.3(b).
"Note" shall have the meaning assigned to it in Section
2.1(d).
"Obligations" shall mean all loans, advances, debts,
liabilities, and obligations for the performance of covenants, tasks or duties
or for payment of monetary amounts (whether or not such performance is then
required or contingent, or amounts are liquidated or determinable) owing by
Borrower or any other Credit Party to Lender, and all covenants and duties
regarding such amounts, of any kind or nature, present or future, whether or not
evidenced by any note, agreement or other instrument, arising under any of the
Loan Documents. This term includes, without limitation, all principal, interest,
Fees, Charges, expenses, attorneys' fees and any other sum chargeable to
Borrower or any other Credit Party under any of the Loan
Documents, and also includes, without limitation, all
Obligations relating to Letter of Credit Obligations.
"Original Agreement" shall have the meaning assigned to it in
the preamble hereof.
"Parent" shall mean Vodavi Technology, Inc., a Delaware
corporation formerly known as V Technology Holdings Corp., having no assets
other than the common stock of each of the Credit Parties and intercompany loans
to the Credit Parties.
"Parent Group" shall mean the Parent and its Consolidated
Subsidiaries.
"Patent License" shall mean, with respect to any Credit Party,
any right under any written agreement now owned or hereafter acquired by such
Credit Party granting any right with respect to any invention on which a Patent
is in existence.
"Patents" shall mean, with respect to any Credit Party, all of
the following in which such Credit Party now holds or hereafter acquires any
interest: (i) all letters patent of the United States or any other country, all
registrations and recordings thereof, and all applications for letters patent of
the United States or any other country, including registrations, recordings and
applications in the United States Patent and Trademark Office or in any similar
office or agency of the United States, any state or territory thereof, or any
other country, and (ii) all reissues, continuations, continuations-in-part or
extensions thereof.
"Payment Account" shall mean an account of the Lender, number
00-000-000, maintained at Bankers Trust Company, 00 Xxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000, ABA #000-000-000, Account Title: Vodavi, Attention: Collateral
Analyst, Reference: Vodavi, into which payments shall be made by or on behalf of
the Borrower.
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"PBGC" shall mean the Pension Benefit Guaranty Corporation or
any successor thereto.
"Pension Plan" shall mean an employee pension benefit plan, as
defined in Section 3 (2) of ERISA (other than a Multiemployer Plan), that is not
an individual account plan, as defined in Section 3 (34) of ERISA, and that any
Credit Party or, if a Title IV Plan, any ERISA Affiliate maintains, contributes
to or has an obligation to contribute to on behalf of participants who are or
were employed by any of them.
"Permitted Encumbrances" shall mean, with respect to any
Credit Party, the following encumbrances: (i) Liens for taxes or assessments or
other governmental Charges or levies, either not yet due and payable or to the
extent that nonpayment thereof is permitted by the terms of Section 6.2(b); (ii)
pledges or deposits securing obligations under worker's compensation,
unemployment insurance, social security or public liability laws or similar
legislation; (iii) pledges or deposits securing bids, tenders, contracts (other
than contracts for the payment of money) or leases to which such Credit Party is
a party as lessee, made in the ordinary course of business in an aggregate
amount at any time not to exceed $200,000 in the aggregate for all of the Credit
Parties; (iv) deposits securing public or statutory obligations of such Credit
Party; (v) inchoate and unperfected workers', mechanics', suppliers' or similar
liens arising in the ordinary course of business; (vi) carriers', warehousemen's
or other similar possessory liens arising in the ordinary course of business and
securing indebtedness not yet due and payable in an outstanding aggregate amount
for all of the Credit Parties not in excess of $50,000 at any time; (vii)
deposits securing, or in lieu of, surety, appeal or customs bonds in proceedings
to which such Credit Party is a party; (viii) any attachment or judgment lien,
unless the judgment it secures shall not, within 30 days after the entry
thereof, have been discharged or execution thereof stayed pending appeal, or
shall not have been discharged within 30 days after the expiration of any such
stay; (ix) Purchase Money Security Interests securing Indebtedness existing as
of the Restatement Date and described on Schedule 4.9 and other Purchase Money
Security Interests securing Indebtedness incurred after the Restatement Date in
an aggregate outstanding principal amount for all of the Credit Parties not to
exceed $200,000 at any time; and (x) zoning restrictions, easements, licenses,
or other restrictions on the use of real property or other minor irregularities
in title (including leasehold title) thereto, so long as the same do not
materially impair the use, value, or marketability of such real property, leases
or leasehold estates.
"Permitted Exceptions" shall mean Liens described in items
(i), (v), (vi), (viii) and (ix) of the definition of Permitted Encumbrances.
"Permitted Indebtedness" shall mean Indebtedness of the Credit
Parties that is permitted pursuant to Section 7.3.
"Permitted Prior Exceptions" shall mean Liens described in
items (i) and (ix) of the definition of Permitted Encumbrances.
"Person" shall mean any individual, sole proprietorship,
partnership, joint
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venture, trust, unincorporated organization, association, corporation,
institution, public benefit corporation, entity or government (whether federal,
state, county, city, municipal or otherwise, including, without limitation, any
instrumentality, division, agency, body or department thereof).
"Plan" shall mean, with respect to any Credit Party or any
other ERISA Affiliate, at any time, an employee benefit plan, as defined in
Section 3(3) of ERISA, that such Person maintains, contributes to or has an
obligation to contribute to on behalf of participants who are or were employed
by any of them.
"Pledge Agreement" shall mean the Pledge and Security
Agreement from the Parent to the Lender in substantially the form of Exhibit F
hereto, as amended or restated from time to time, pursuant to which the Parent
shall pledge 100% of the outstanding stock of each of the Credit Parties to
Lender as security for the Obligations.
"Prepayment Fee" shall have the meaning assigned to it in
Section 2.5.
"Proceeds" shall mean "proceeds," as such term is defined in
the Code, whether now owned or hereafter acquired, and in whatever form, and, in
any event, shall include (i) any and all proceeds of any insurance, indemnity,
warranty or guaranty payable to any Credit Party from time to time with respect
to any of the Collateral, (ii) any and all payments (in any form whatsoever)
made or due and payable to any Credit Party from time to time in connection with
any requisition, confiscation, condemnation, seizure or forfeiture of all or any
part of the Collateral by any governmental body, authority, bureau or agency (or
any person acting under color of governmental authority), (iii) any claim of any
Credit Party against third parties (A) for past, present or future infringement
of any Patent or Patent License or (B) for past, present or future infringement
or dilution of any Trademark or Trademark License or for injury to the goodwill
associated with any Trademark, Trademark registration or Trademark licensed
under any Trademark License, (iv) any recoveries by any Credit Parties against
third parties with respect to any litigation or dispute concerning any of the
Collateral, and (v) any and all other amounts from time to time paid or payable
under or in connection with any of the Collateral, upon disposition or
otherwise.
"Projections" shall mean at any time the latest consolidating
operating plan of the Parent Group submitted to Lender pursuant to Section
5.1(e).
"Purchase Money Security Interest" shall mean a Lien granted
on an asset not more than 10 days after the acquisition thereof by a Credit
Party that secures only the Indebtedness incurred for the purpose of purchasing
such asset and no other, that extends only to the asset purchased and accessions
thereto, and that does not exceed in principal amount the lesser of the purchase
price paid for such asset and the fair market value thereof.
"Qualified Plan" shall mean an employee pension benefit plan,
as defined in Section 3(2) of ERISA, that is intended to be tax-qualified under
Section 401(a) of the IRC, and that any Credit Party, or any ERISA Affiliate
maintains, contributes to or has an
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obligation to contribute to on behalf of participants who are or were employed
by any of them.
"Release" shall mean any release, spill, emission, leaking,
pumping, injection, deposit, disposal, discharge, dispersal, dumping, leaching
or migration of Hazardous Materials in the indoor or outdoor environment
including the movement of Hazardous Materials through or in the air, soil,
surface water, ground water or property.
"Reportable Event" shall mean any of the events described in
Section 4043(b) (1), (2), (3), (5), (6), (8) or (9) of ERISA.
"Responsible Lending Officer" shall have the meaning assigned
to it in Section 2.1(b).
"Restatement Date" means June 11, 1997.
"Restricted Payment" shall mean, for any Credit Party (i) the
declaration or payment of any dividend (other than dividends payable solely in
shares of any class of common stock of such Credit Party) or the occurrence of
any liability to make any other payment or distribution of cash or other
property or assets in respect of such Credit Party's Stock, (ii) any payment on
account of the purchase, redemption, defeasance or other retirement of such
Credit Party's Stock or any other payment or distribution made in respect
thereof, either directly or indirectly, or (iii) any payment, loan,
contribution, or other transfer of funds or other property with respect to, or
on account of, such Credit Party's Stock.
"Retiree Welfare Plan" shall refer to any Welfare Plan
providing for continuing coverage or benefits for any participant or any
beneficiary of a participant after such participant's termination of employment,
other than continuation coverage provided pursuant to Section 4980B of the IRC
and at the sole expense of the participant or the beneficiary of the
participant.
"Revolving Credit Advance" shall have the meaning assigned to
it in Section 2.1(a).
"Revolving Credit Advance Availability" shall have the meaning
assigned to it in Section 2.1(a).
"Revolving Credit Commitment Availability" shall mean for any
day, the difference between (i) the amount of the Commitment and (ii) the sum
of: (A) the aggregate outstanding principal amount of the Revolving Credit Loan,
and (B) the aggregate outstanding principal amount of Letter of Credit
Obligations.
"Revolving Credit Facility" shall have the meaning ascribed to
it in the recital paragraph hereof.
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"Revolving Credit Loan" shall mean the loan made pursuant to
Section 2.1.
"Schedule of Documents" shall mean the schedule, including all
appendices, exhibits or schedules thereto, listing certain documents and
information to be delivered in connection with the initial closing of the Loan
Documents and the transactions contemplated thereunder, substantially in the
form attached hereto as Schedule A.
"Security Agreements" shall mean, collectively, the Security
Agreements entered into between Lender and each of Borrower, ARS and ESI,
respectively, in substantially the form of Exhibit D hereto.
"Security Interest" shall mean the rights and interest of
Lender in and to the Collateral intended to be conveyed under the Collateral
Documents.
"Solvent" shall mean, with respect to any Person, such Person
(i) owns property whose fair saleable value is greater than the amount required
to pay all of such Person's indebtedness (including contingent debts), (ii) is
able to pay all of its indebtedness as such indebtedness matures, and (iii) has
capital sufficient to carry on its business and transactions and all business
and transactions in which it is about to engage.
"Stock" shall mean all shares, options, warrants, general or
limited partnership interests, participation or other equivalents (regardless of
how designated) of or in a corporation, partnership or equivalent entity whether
voting or nonvoting, including, without limitation, common stock, preferred
stock, or any other "equity security" (as such term is defined in Rule 3a11-1 of
the General Rules and Regulations promulgated by the Securities and Exchange
Commission under the Securities Exchange Act of 1934, as amended).
"Subject Property" shall mean all real property owned, leased
or operated by Borrower.
"Taxes" shall mean taxes, levies, imposts, charges,
deductions, or withholdings, and all liabilities with respect thereto, excluding
taxes imposed on or measured by the net income of Lender by the government of
the United States of America or the jurisdiction under the laws of which Lender
is organized or any political subdivision thereof.
"Termination Date" shall mean the date on which the Revolving
Credit Facility and any other Obligations hereunder have been completely
discharged, no Letter of Credit Obligations are outstanding, and Borrower shall
have no further right to borrow any monies or obtain other credit extensions or
financial accommodations hereunder.
"Title IV Plan" shall mean a Pension Plan, other than a
Multiemployer Plan, that is covered by Title IV of ERISA.
"Trademarks" shall mean, with respect to any Credit Party, all
of the following now owned or hereafter acquired by such Credit Party: (i) all
trademarks, trade
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names, corporate names, business names, trade styles, service marks, logos,
other source or business identifiers, prints and labels on which any of the
foregoing have appeared or appear, designs and general intangibles of like
nature, now owned or existing or hereafter adopted or acquired, all
registrations and recordings thereof, and all applications in connection
therewith, including registrations, recordings and applications in the United
States Patent and Trademark Office or in any similar office or agency of the
United States, any state or territory thereof, or any other country or any
political subdivision thereof, and (ii) all reissues, extensions or renewals
thereof.
"Transaction Expenses" shall have the meaning assigned to it
in Section 9.2.
"Trademark License" shall mean, with respect to any Credit
Party, rights under any written agreement now owned or hereafter acquired by
such Credit Party granting any right to use any Trademark or Trademark
registration.
"Unfunded Pension Liability" shall mean, at any time, the
aggregate amount, if any, of the sum of (i) the amount by which the present
value of all accrued benefits under each Title IV Plan exceeds the fair market
value of all assets of such Title IV Plan allocable to such benefits in
accordance with Title IV of ERISA, all determined as of the most recent
valuation date for each such Title IV Plan using the actuarial assumptions in
effect under such Title IV
Plan, and (ii) for a period of five (5) years following a
transaction reasonably likely to be covered by Section 4069 of ERISA, the
liabilities (whether or not accrued) that could be avoided by Borrower, or any
ERISA Affiliate as a result of such transaction.
"Welfare Plans" shall mean any welfare plan, as defined in
Section 3(1) of ERISA, that is maintained or contributed to by Borrower or any
ERISA Affiliate.
"Withdrawal Liability" shall mean, at any time, the aggregate
amount of the liabilities, if any, pursuant to Section 4201 of ERISA, and any
increase in contributions pursuant to Section 4243 of ERISA with respect to all
Multiemployer Plans.
1.2 Other Definitional Provisions.
(a) Except as otherwise specified herein, all references
herein (A) to any Person, other than a Credit Party, shall be deemed to include
such Person's successors, transferees and assignees, (B) to any Credit Party
shall be deemed to include such Person's successors, (C) to any applicable law
specifically defined or referred to herein shall be deemed references to such
applicable law as the same may be amended or supplemented from time to time, (D)
to any contract defined or referred to herein shall be deemed references to such
contract (and, in the case of any instrument, any other instrument issued in
substitution therefor) as the terms thereof may have been amended, supplemented,
waived or otherwise modified from time to time, (E) to any Loan Document, as the
terms thereof may have been amended, supplemented, waived or otherwise modified
from time to time in accordance with Section 9.1 or any corresponding provision
of such Loan Document, (F) the words "consent", "approve" and "agree", and
derivations thereof or words of similar import, mean the prior
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written consent, approval or agreement of the Person in question; (G) the words
"include" and "including", and words of similar import, shall be deemed to be
followed by the words "without limitation"; (H) the Exhibits and Schedules to
this Credit Agreement are incorporated herein by reference; (I) the titles and
headings of Articles, Sections, Exhibits, Schedules, subsections, paragraphs and
clauses are inserted as a matter of convenience and shall not affect the
construction of this Credit Agreement; and (J) no inference in favor of or
against any Person shall be drawn from the fact that such Person or its
attorneys drafted any portion hereof.
(b) When used in this Agreement, the words "hereto", "herein",
"hereof" and "hereunder" and words of similar import shall refer to this
Agreement as a whole and not to any provision of this Agreement, and "Section,"
"Subsection," "Schedule" and "Exhibit" shall refer to Sections and Subsections
of, and Schedules and Exhibits to, this Agreement unless otherwise specified.
(c) Whenever the context so requires, the neuter gender
includes the masculine or feminine, and the singular number includes the plural,
and vice versa.
(d) All terms defined in this Agreement shall have the same
defined meanings when used in the Note or, except as otherwise expressly stated
therein, any certificate, opinion or other Loan Document or other document
delivered pursuant hereto.
1.3 Accounting Matters. Unless otherwise specified herein, all
accounting determinations hereunder and all computations utilized by the Parent
or any Credit Party in complying with the covenants contained herein shall be
made, all accounting terms used herein shall be interpreted, and all financial
statements requested to be delivered hereunder shall be prepared, in accordance
with GAAP, except, in the case of such financial statements, for departures from
GAAP that may from time to time be approved in writing by the Lender and the
independent certified public accountants who are at the time, in accordance with
Section 5.1, reporting on the consolidated financial statements of the Parent
and the Credit Parties. If any change in GAAP after December 31, 1996 in itself
materially affects the calculation of any financial covenant in Section 7.10 or
other financial test contained herein, Borrower may by notice to Lender, or
Lender may by notice to Borrower, require that such covenant thereafter be
calculated in accordance with GAAP as in effect, and applied by Borrower,
immediately before such change in GAAP occurs. If such notice is given, the
compliance certificates delivered pursuant to Section 5.1 after such change
occurs shall be accompanied by reconciliations of the difference between the
calculation set forth therein and a calculation made in accordance with GAAP as
in effect from time to time after such change occurs.
ARTICLE 2.
AMOUNT AND TERMS OF CREDIT
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2.1 Revolving Credit Facility.
(a) Credit. Upon and subject to the terms and conditions
hereof, Lender agrees from time to time to make available by deposit to the
Disbursement Account on any Business Day until the Commitment Termination Date,
upon the request of Borrower therefor, advances (each, a "Revolving Credit
Advance") in an aggregate amount outstanding that, when added to the aggregate
balance of Letter of Credit Obligations then outstanding, shall not at any given
time exceed the lesser of (the "Revolving Credit Advance Availability"): (i)
$12,000,000, as such amount may be terminated pursuant to the terms of Section
2.5 or 8.2 (the "Commitment"), and (ii) the Borrowing Base.
(b) Method of Borrowing. Until the Commitment Termination
Date, Borrower may from time to time borrow, repay and reborrow under this
Section 2.1(b). Each Revolving Credit Advance shall be made on notice by
Borrower to the officer of Lender identified on Schedule 2.1(b) (the
"Responsible Lending Officer") given at the office of the Lender specified on
Schedule 2.1(b) (the "Lending Office") no later than 11:00 a.m. on the Business
Day of the proposed Revolving Credit Advance. Each such notice (a "Notice of
Borrowing/Collection Report") shall be substantially in the form of Exhibit A
hereto, and shall specify therein the requested date (which shall be a Business
Day) of the proposed Revolving Credit Advance, the amount of such Revolving
Credit Advance, and such other information as may be required by Lender and
shall be given in writing (by telecopy, telex or cable) or by courier, telephone
confirmed immediately in writing.
(c) Mandatory Repayment. The entire unpaid balance of the
Revolving Credit Loan, together with all other Obligations, shall be immediately
due and payable on the Commitment Termination Date. In the event that the
outstanding principal balance of the Revolving Credit Loan shall, at any time,
exceed the applicable limit set forth in Section 2.1(a), Borrower shall
immediately repay the Revolving Credit Loan in the amount of such excess. If the
unpaid principal balance of the Revolving Credit Loan should at any time exceed
the above-referenced limit, the excess balance shall nevertheless constitute
Obligations that are secured by the Collateral and entitled to all of the
benefits thereof and of the Loan Documents and shall be evidenced by the Note.
(d) Evidence of Obligation. The Revolving Credit Loan shall be
evidenced by a note dated the Closing Date and substantially in the form of
Exhibit C (the "Note"). The Note shall represent the obligation of Borrower to
pay the amount of the Revolving Credit Commitment or, if less, the aggregate
unpaid principal amount of all Revolving Credit Advances made by Lender to the
Borrower, with interest thereon as prescribed in Section 2.2. The date and
amount of each Revolving Credit Advance and each payment of principal with
respect thereto shall be recorded on the books and records of Lender. Such books
and records shall constitute prima facie evidence of the accuracy of the
information therein recorded.
(e) Use of Proceeds. Borrower shall utilize the proceeds of
the Revolving Credit Advances to provide working capital for Borrower and the
other Credit Parties. Borrower may request that Lender incur Letter of Credit
Obligations to support any
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transaction for which Borrower could obtain a Revolving Credit Loan hereunder.
(f) Single Revolving Credit Loan. All Revolving Credit
Advances shall constitute a single Revolving Credit Loan hereunder. The
Revolving Credit Loan, any Letter of Credit Obligations, and all Obligations of
Borrower arising under this Agreement and under the other Loan Documents shall
constitute one general obligation of Borrower to Lender secured by all of the
Collateral.
(g) Letters of Credit. Subject to the terms and conditions of
Schedule 2.1(g) which is hereby incorporated herein by reference, Borrower shall
have the right to request, and Lender agrees to incur, Letter of Credit
Obligations for Borrower in accordance with Schedule 2.1(g).
2.2 Interest on Revolving Credit Loan.
(a) Rates. The Revolving Credit Loan shall bear interest on
the outstanding principal amount thereof from and including the date of the
making thereof until repaid in full, whether before or after default judgment,
or the institution of proceedings under any bankruptcy, insolvency or other
similar law, as provided in this Section 2.2(a). In the absence of an Event of
Default, each Revolving Credit Loan shall bear interest at the Base Rate. So
long as an Event of Default shall have occurred and be continuing, the Revolving
Credit Loan and, to the extent permitted by Applicable Law, all due and unpaid
Obligations other than the Revolving Credit Loan, shall bear interest at the
Default Rate.
(b) Payment. Interest shall be payable in arrears on the first
Business Day of each month with respect to interest accrued through the last day
of the preceding month and on the Commitment Termination Date. Interest at the
Default Rate shall be payable on demand.
(c) Maximum Permissible Rate. Notwithstanding anything to the
contrary set forth in this Section 2.2, if, at any time until payment in full of
all of the Obligations, the amount deemed interest payable hereunder exceeds the
Maximum Permissible Rate, then in such event and so long as the Maximum
Permissible Rate would be so exceeded, the rate of interest payable hereunder
shall be equal to the Maximum Permissible Rate; provided, however, that if at
any time thereafter the rate of interest payable hereunder is less than the
Maximum Permissible Rate, Borrower shall continue to pay interest hereunder at
the Maximum Permissible Rate until such time as the total interest received by
Lender from the making of Revolving Credit Advances hereunder is equal to the
total interest which Lender would have received had the interest rate payable
hereunder been (but for the operation of this paragraph) the interest rate
payable since the Closing Date as otherwise provided in this Agreement.
Thereafter, the interest rate payable hereunder shall be the rate of interest
provided in Section 2.2(a) of this Agreement, unless and until the rate of
interest again exceeds the Maximum Permissible Rate, in which event this
paragraph shall again apply. In no event shall the total interest received by
Lender pursuant to the terms hereof exceed the amount which Lender could
lawfully have received had the interest due hereunder been
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calculated for the full term hereof at the Maximum Permissible Rate. In the
event the Maximum Permissible Rate is calculated pursuant to this paragraph,
such interest shall be calculated at a daily rate equal to the Maximum
Permissible Rate divided by the number of days in the year in which such
calculation is made. In the event that a court of competent jurisdiction,
notwithstanding the provisions of this Section 2.2(c), shall make a final
determination that Lender has received interest hereunder or under any of the
Revolving Credit Loan Documents in excess of the Maximum Permissible Rate,
Lender shall, to the extent permitted by Applicable Law, promptly apply such
excess first to any interest due and not yet paid hereunder, then to the
outstanding principal of the Obligations, then to Fees and any other unpaid
Obligations and thereafter shall refund any excess to Borrower or as a court of
competent jurisdiction may otherwise order.
2.3 Fees.
(a) Closing Fee. As additional compensation for Lender's costs
and risks in making this Revolving Credit Facility available to Borrower during
its initial term, Borrower has paid to Lender, a non-refundable fee (the
"Closing Fee") in an amount equal to $180,000, less the Commitment Fee and any
remaining portion of the $100,000 initial underwriting deposit made to Lender by
Borrower on September 13, 1993 after deducting therefrom (i) all cost and
expenses incurred by Lender and its Affiliates (including, but not limited to,
legal and professional fees and costs of indemnification) and (ii) Commitment
Fee. The Closing Fee was deemed fully earned upon the execution of the Original
Agreement.
(b) Non-use Fee. As additional compensation for Lender's costs
and risks in making the Commitment available to Borrower, Borrower agrees to pay
to Lender, in arrears for the preceding month, on the first Business Day of each
month prior to the Commitment Termination Date and on the Commitment Termination
Date, a fee for Borrower's non-use of the Commitment (the "Non-use Fee") in an
amount equal to one quarter of one percent (0.25%) per annum on the average
daily Revolving Credit Commitment Availability.
(c) Letter of Credit Fees. In connection with the Letter of
Credit Obligations, Borrower agrees to pay to Lender the Letter of Credit Fees
set forth on Schedule 2.1(g).
2.4 Calculation of Interest and Fees. All computations of
interest and periodic fees shall be made by Lender on the basis of a 360-day
year for the actual number of days occurring in the period for which such
interest or fee is payable. If the date for any payment of principal is extended
(whether by operation of this Agreement, any provision of law or otherwise),
fees payable pursuant to this Agreement as well as interest, shall be payable
for such extended time. Each determination by Lender of an interest rate or fee
hereunder shall be presumed correct, subject to the Borrower's ability to rebut
such presumption by a preponderance of evidence to the contrary.
2.5 Early Termination. Borrower shall have the right at any
time, on 90
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days' prior written notice to Lender, to voluntarily terminate the Commitment,
prepay the entire Revolving Credit Loan and all accrued and unpaid Obligations,
cause all outstanding Letter of Credit Obligations to be cancelled, and
terminate this Agreement. Upon such prepayment, cancellation and termination,
Borrower's right to receive Revolving Credit Advances and to cause Lender to
incur Letter of Credit Obligations shall simultaneously terminate. Any
termination of the Commitment for any reason other than (i) Lender's assessment
of a material change pursuant to Section 2.10 or (ii) Lender's acceleration of
the Obligations due to an Event of Default pursuant to clause (i) of Section
8.1(K), shall require prepayment of the outstanding Revolving Credit Loan and
all accrued and unpaid Obligations and cancellation of all outstanding Letter of
Credit Obligations, and shall also require payment to Lender of a prepayment fee
(the "Prepayment Fee") as follows: one percent (1%) of the amount of the
Commitment if the Commitment is terminated prior to April 11, 1998. No partial
termination of the Revolving Credit Facility by the Borrower shall be permitted
without the consent of Lender.
2.6 Manner of Payment; Time.
(a) Manner of Payment. Borrower shall make each payment under
this Agreement not later than 11:00 a.m. on the day when due in lawful money of
the United States of America in immediately available funds to the Payment
Account without any deduction whatsoever, including, but not limited to, any
deduction for any set-off, recoupment, counterclaim or Tax. Amounts received to
the Payment Account shall be deemed received (i) on the second Business Day
following the irrevocable deposit therein of collected funds, for the purposes
of calculating accrual of interest, and (ii) on the date of the irrevocable
deposit therein of collected funds, for the purposes of calculating
availability. Amounts received to the Payment Account shall be applied against
the outstanding Obligations pursuant to Section 2.7.
(b) Time. All references to time contained in this Agreement,
unless otherwise specified, shall be to local time in effect in Los Angeles,
California.
2.7 Application and Allocation of Payments. Borrower
irrevocably waives the right to direct the application of any and all payments
at any time or times hereafter received from or on behalf of Borrower, and
Borrower irrevocably agrees that Lender shall have the continuing exclusive
right to apply any and all such payments against the then due and payable
Obligations of Borrower as Lender may deem advisable. In the absence of a
specific determination by Lender with respect thereto, the same shall be applied
in the following order: (i) then due and payable Fees and expenses; (ii) then
due and payable interest payments; (iii) Obligations other than Fees, expenses
and interest and principal payments; and (iv) then due and payable principal
payments on the Revolving Credit Loan and the Letter of Credit Obligations.
Lender is authorized to, and at its option may, make or cause to be made
Revolving Credit Advances on behalf of Borrower under this Agreement for payment
of all Fees, expenses, Charges, costs, interest, reimbursement obligations or
other Obligations owing by Borrower under this Agreement or any of the Loan
Documents if and to the extent Borrower fails to promptly pay any such amounts
as and when due.
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2.8 Accounting. Lender will provide a monthly accounting of
transactions under the Revolving Credit Facility to Borrower. Each and every
such accounting shall be deemed final, binding and conclusive upon Borrower in
all respects as to all matters reflected therein, unless Borrower, within 30
days after the date any such accounting is rendered, shall notify Lender in
writing of any objection which Borrower may have to any such accounting,
describing the basis for such objection with specificity. In that event, only
those items expressly objected to in such notice shall be deemed to be disputed
by Borrower. Lender's determination, based upon the facts available, of any item
objected to by Borrower in such notice shall be presumed correct, subject to the
Borrower's ability to rebut such presumption by a preponderance of evidence to
the contrary.
2.9 Taxes.
(a) Any and all payments by or on behalf of Borrower hereunder
or under any Note or any other Loan Document shall be made, in accordance with
this Section 2.9, free and clear of and without deduction for any and all
present or future Taxes. If Borrower or any other Person shall be required by
law to deduct any Taxes from or in respect of any sum payable hereunder or under
the Note or any other Loan Document to Lender, (i) the sum payable shall be
increased as may be necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this Section
2.9) Lender receives an amount equal to the sum it would have received had no
such deductions been made by Borrower or such other Person, (ii) Borrower or
such other Person shall make such deductions, and (iii) Borrower or such other
Person shall pay the full amount deducted to the relevant taxing or other
authority in accordance with Applicable Law.
(b) Borrower shall indemnify and pay, within 10 days of demand
therefor, Lender for the full amount of Taxes (including without limitation, any
Taxes imposed by any jurisdiction on amounts payable under this Section 2.9)
paid by Lender and any liability (including penalties, interest and expenses)
arising therefrom or with respect thereto, whether or not such Taxes were
correctly or legally asserted; provided, however, that Borrower shall be
entitled to a credit against the Obligations to the extent that any such Taxes
paid by Borrower pursuant to this Section 2.9 are subsequently refunded to the
Lender or to the extent that the Lender receives a credit against the Taxes
imposed on it by its jurisdiction of incorporation by virtue of the Taxes paid
or reimbursed by Borrower under this Section 2.9 having been paid by it or on
its behalf.
(c) Within 30 days after the date of any payment of Taxes
pursuant to this Section 2.9, Borrower shall furnish or cause to be furnished to
Lender, at its address referred to in Section 9.10, the original or a certified
copy of a receipt evidencing payment thereof.
2.10 Increased Commitment or Funding Costs. If the Lender
reasonably determines that either (a) the introduction of or any change in any
Laws or in the interpretation or administration of any Law by any Governmental
Authority charged with the interpretation or administration thereof after the
date of this Agreement relating to the regulation of banks or commercial lenders
or (b) compliance with any guideline or request
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issued or made after the date hereof from any such Governmental Authority
relating to the regulation of banks or commercial lenders (whether or not having
the force of law) has or would have the effect of reducing the rate of return on
the capital of Lender or any corporation controlling Lender as a consequence of
or with reference to Lender's funding, incurring or maintaining the Commitment,
any Revolving Credit Advance, any Letter of Credit Obligation, the Revolving
Credit Loan or any other extension of credit or transaction hereunder below the
rate that Lender or such other corporation could have achieved but for such
introduction, change or compliance (taking into account the policies of Lender
or corporation with regard to capital), then Borrower shall from time to time,
upon demand by Lender, pay to Lender additional amounts sufficient to compensate
Lender or other corporation for such reduction. Any notice under this Section
2.10 shall be given to Borrower as promptly as practicable after Lender obtains
knowledge of such change, guideline or request and shall be accompanied by a
certificate from Lender setting forth in reasonable detail the nature and
calculation of the relevant amounts.
2.11 Failure to Charge Not Subsequent Waiver. Any failure by
Lender to require payment of any interest (including interest at the Default
Rate), fee, cost or other amount payable under any Loan Document, or to
calculate any amount payable by a particular method, on any occasion shall in no
way limit to be deemed a waiver of Lender's right to require full payment of any
such interest, fee, cost or other amount payable by another method, on any other
or subsequent occasion.
2.12 Survivability. All of Borrower's obligations under
Sections 2.9 and 2.10 shall survive the payment in full of all obligations
hereunder.
ARTICLE 3.
CONDITIONS PRECEDENT
3.1 Conditions to Each Extension of Credit . It shall be a
condition to the funding of the initial and each subsequent Revolving Credit
Advance and to the incurrence by Lender of each Letter of Credit Obligation,
that each and every one of the following statements shall be true on and as of
the Restatement Date and as of the date of each such funding:
(a) Each of the representations and warranties contained
herein or in any of the other Loan Documents is true and correct, except to the
extent that any such representation or warranty expressly relates to an earlier
date and except for changes therein expressly permitted or expressly
contemplated by this Agreement, both before and after giving effect to such
Revolving Credit Advance or Letter of Credit Obligation;
(b) No Default has occurred and is continuing either before or
after giving effect to the requested Revolving Credit Advance or Letter of
Credit Obligation; and
(c) After giving effect to such Revolving Credit Advance or to
such Letter
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of Credit Obligation, (i) the aggregate principal amount of the Revolving Credit
Loan plus the aggregate principal amount of the outstanding Letter of Credit
Obligations does not exceed the lesser of (x) the Commitment and (y) the
Borrowing Base, without requiring that a payment be made to Lender, and (ii) the
aggregate outstanding amount at such time of all Letter of Credit Obligations
incurred by Lender does not exceed $1,000,000.
The request or acceptance by Borrower of the proceeds of any Revolving Credit
Advance or the incurrence of any Letter of Credit Obligations shall be deemed to
constitute, as of the date of such request or acceptance, (i) a representation
and warranty by Borrower that the conditions in this Section 3.1 have been
satisfied and (ii) a confirmation by Borrower of the granting and continuance of
Lender's Liens pursuant to the Collateral Documents, unless in each case (i) or
(ii), a notice to the contrary specifically captioned "Disclosure Statement" is
received by the Lender from the Borrower prior to 2:00 p.m. on the Business Day
preceding the date of the Revolving Credit Advance. To the extent that the
Lender agrees to make any Extension of Credit after receipt of a Disclosure
Statement in accordance with the preceding sentence, the representations and
warranties and confirmation pursuant to the preceding sentence will be deemed
made as modified by the contents of such statement and repeated at the time of
the making of such Extension of Credit as so modified. Any such modification
shall be effective only for the occasion on which the Lender elects to make such
Extension of Credit, and unless expressly agreed by the Lender in writing to the
contrary as provided in Section 9.1, shall not be deemed a waiver or
modification of any condition to any future Extension of Credit.
ARTICLE 4.
REPRESENTATIONS AND WARRANTIES
To induce the Lender to make this Revolving Credit Facility
available to the Borrower, and to make Extensions of Credit, as herein provided
for, Borrower, for itself and on behalf of the other Credit Parties, makes the
following representations and warranties to the Lender, each and all of which
shall be true and correct as of the date of execution and delivery of this
Agreement and shall survive the execution and delivery of this Agreement:
4.1 Corporate Existence; Compliance with Law. Each Credit
Party (i) is a corporation duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation and is duly qualified to
do business and is in good standing in each other jurisdiction where its
ownership or lease of property or the conduct of its business requires such
qualification, except where the failure to so qualify or be in good standing
could not reasonably be expected to have a Materially Adverse Effect; (ii) has
the requisite corporate power and authority and the legal right to own, pledge,
mortgage or otherwise encumber and operate its properties, to lease the property
it operates under lease, and to conduct its business as now, heretofore and
proposed to be conducted, except where the failure to have such legal right
could not reasonably be expected to have a Materially Adverse Effect; (iii) has
all licenses, permits, consents or approvals from or by, and has made all
filings with, and has given all notices to, all Governmental Authorities having
jurisdiction, to
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the extent required for such ownership, lease operation and conduct, except such
of the foregoing, that the failure to have, to have made or to have given which
could not reasonably be expected to have a Materially Adverse Effect; (iv) is in
compliance with its certificate or articles of incorporation and by-laws; and
(v) is in compliance with all provisions of Applicable Law where the failure to
comply could reasonably be expected to have a Materially Adverse Effect.
4.2 Executive Offices; Corporate or Other Names.
(a) The current locations of Borrower's chief executive office
and principal place of business are as set forth in response to question 6.a. of
the Credit Party Questionnaire completed by the Borrower. During the preceding
five (5) years, neither the Borrower nor Vodavi have been known as or used any
corporate, fictitious or trade names except as disclosed in response to question
2 of the Credit Party Questionnaire completed by the Borrower. The Borrower has
no professional office locations except as disclosed in the Credit Party
Questionnaire completed by the Borrower.
(b) The current locations of the chief executive office and
principal place of business of each of ARS and ESI are as set forth in response
to question 6.a. of the Credit Party Questionnaire completed by such Credit
Party. During the preceding five (5) years, neither ARS nor ESI have been known
as or used any corporate, fictitious or trade names except as disclosed in
response to question 2 of the Credit Party Questionnaire completed by such
Credit Party. Neither ARS nor ESI have any professional office locations except
as disclosed on the Credit Party Questionnaire completed by such Credit Party.
4.3 Corporate Power; Authorization; Enforceable Obligations.
The execution, delivery and performance by each Credit Party of the Loan
Documents executed by such Credit Party and of all instruments and documents to
be delivered by such Credit Party hereunder and thereunder and the creation of
all Liens provided for herein and therein: (i) are within such Credit Party's
corporate power; (ii) have been duly authorized by all necessary corporate and
shareholder action; (iii) are not in contravention of any provision of such
Credit Party's certificate or articles of incorporation or by-laws; (iv) do not
violate any law or regulation, or any order or decree of any court or
governmental instrumentality applicable to such Credit Party; (v) do not
conflict with or result in the breach or termination of, constitute a default
under or accelerate any performance required by, any material indenture,
mortgage, deed of trust, lease, note, loan agreement or other agreement or
instrument to which such Credit Party is a party or by which such Credit Party
or any of its property is bound; (vi) do not result in the creation or
imposition of any Lien upon any of the property of such Credit Party other than
those in favor of Lender created pursuant to the Loan Documents; and (vii) do
not require the consent or approval of any Governmental Authority or any other
Person, except those delivered to Lender pursuant to Section 9.18(a) and except
those not yet required to have been obtained, all of which will have been duly
obtained, made or complied with. Each of the Loan Documents has been duly
executed and delivered by each Credit Party which is a party thereto and each
constitutes the legal, valid and binding obligation of such Credit Party,
enforceable against it in accordance with its terms except to the extent that
such
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enforceability may be effected by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the rights and remedies of creditors
generally, and general principles of equity.
4.4 Financial Statements and Projections. Schedule 4.4 sets
forth the latest financial statements and Projections that Borrower has
delivered to Lender prior to the Restatement Date. All of the balance sheets and
statements of income, retained earnings and cash flows of the Parent and the
Credit Parties listed on Schedule 4.4 have been, except as noted therein,
prepared in conformity with GAAP and present fairly the financial position of
the Parent or such Credit Party, as the case may be, in each case as of the
dates thereof, and the results of operations and cash flows for the periods then
ended (as to the unaudited interim financial statements, subject to normal
year-end audit adjustments and the absence of footnotes). The Projections
disclose all material assumptions made with respect to general economic,
financial and market conditions in formulating such Projections. No facts exist
as of the date of any making of this representation that would result in any
material change in any of such Projections. The Projections are based upon
reasonable estimates and assumptions, all of which are reasonable in light of
conditions existing at the Restatement Date, have been prepared on the basis of
the assumptions stated therein, and reflect the reasonable estimate of Borrower
of the results of operations and other information projected therein.
4.5 Material Adverse Change. Except as disclosed in audited
consolidated financial statements of the Parent Group for the fiscal year ended
December 31, 1996, that were delivered to the Lender, Borrower and the other
Credit Parties have no obligations, contingent liabilities, or liabilities for
Charges, long-term leases or unusual forward or long-term commitments that
could, alone or in the aggregate, have or result in a Material Adverse Effect.
Since December 31, 1996, (i) there has been no material adverse change in the
business, assets, operations, prospects or financial or other condition of
Borrower or the Parent Group, taken as a whole, and (ii) no Credit Party has
paid, made or declared any dividend, advance or other distribution to any
stockholder of such Credit Party, except as permitted pursuant to this
Agreement. No shares of stock of any Credit Party have been, or are now required
to be, redeemed, retired, purchased or otherwise acquired for value by Borrower
and there exists no present agreement, understanding or requirements (contingent
or otherwise) to redeem, retire, purchase or otherwise acquire for value any
such shares in the future except as disclosed on Schedule 4.5.
4.6 Ownership of Property; Liens.
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(a) The real estate listed on Schedule 4.6 constitutes all of
the real property owned, leased, or used in its business by Borrower or any
other Credit Party. Except as disclosed on Schedule 4.6, each Credit Party owns:
(i) good and marketable fee simple title to all of the real estate owned or used
by it other than such as its holds as lessee, and (ii) valid and marketable
leasehold interests in all of its Leases (both as lessor and lessee, sublessee
or assignee). Except as disclosed on Schedule 4.6, each Credit Party holds title
to, or valid leasehold interests in, all of its other properties and assets.
None of the properties or assets of any Credit Party is subject to any Liens,
except (x) Permitted Encumbrances and (y) the Liens in favor of Lender pursuant
to the Collateral Documents. Each Credit Party has received all deeds,
assignments, waivers, consents, non-disturbance and recognition or similar
agreements, bills of sale and other documents, and duly effected all recordings,
filings and other actions necessary to establish, protect and perfect its right,
title and interest in and to all such real estate and other assets or property.
Except as described on Schedule 4.6, (i) none of the Credit Parties nor any
other party to any such Lease described on Schedule 4.6 is in default of its
obligations thereunder or has delivered or received any notice of default under
any such Lease, and no event has occurred which, with the giving of notice, the
passage of time or both, would constitute a default under any such Lease, (ii)
none of the Credit Parties owns or holds, or is obligated under or a party to,
any option, right of first refusal or any other contractual right to purchase,
acquire, sell, assign or dispose of any real property owned or leased by such
Person, and (iii) no portion of any real property owned or leased by any Credit
Party has suffered any material damage by fire or other casualty loss or a
Release which has not heretofore been completely repaired and restored to its
original condition or is being remedied. All permits required to have been
issued or appropriate to enable the real property owned or leased by any Credit
Party to be lawfully occupied and used for all of the purposes for which they
are currently occupied and used, have been lawfully issued and are, as of the
date hereof, in full force and effect.
4.7 Restrictions; No Default. No contract, lease, agreement,
judgment, decree or other instrument or order to which any Credit Party is a
party or by which it or any of its properties or assets is bound or affected and
no provision of existing Applicable Law has or results in a Material Adverse
Effect, or insofar as any Credit Party can reasonably foresee could have or
result in a Material Adverse Effect. None of the Credit Parties is in default,
and to each Credit Party's knowledge no third party is in default, under or with
respect to any material contract, agreement, lease or other instrument to which
any Credit Party is a party. No Default has occurred and is continuing.
4.8 Labor Matters. There are no strikes or other labor
disputes against any Credit Party that are pending or, to any Credit Party's
knowledge, threatened which could have or result in a Material Adverse Effect or
could cause or result in the incurrence by any Credit Party of a material
liability, contingent or liquidated. Hours worked by and payment made to
employees of each Credit Party have not been in violation of the Fair Labor
Standards Act or any other applicable law dealing with such matters which could
have or result in a Material Adverse Effect or could cause or result in the
incurrence by any Credit Party of a material liability, contingent or
liquidated. All payments due from any Credit Party
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on account of employee health and welfare insurance which could have or result
in a Material Adverse Effect or could cause or result in the incurrence by any
Credit Party of a material liability, contingent or liquidated, if not paid have
been paid or accrued as a liability on the books of such Credit Party. None of
the Credit Parties has any obligation under any collective bargaining agreement
or any employment agreement, except as disclosed on Schedule 4.16 or permitted
pursuant to Section 7.4. There is no organizing activity involving any Credit
Party pending or threatened by any labor union or group of employees. Except as
set forth on Schedule 4.14, there are no representation proceedings involving
employees of any Credit Party pending or threatened with the National Labor
Relations Board, and no labor organization or group of employees of any Credit
Party have made a pending demand for recognition. Except as set forth on
Schedule 4.14, there are no complaints or charges against any Credit Party
pending or threatened to be filed with any federal, state, local or foreign
court, governmental agency or arbitrator based on, arising out of, in connection
with, or otherwise relating to the employment or termination of employment by
any Credit Party of any individual, except such complaints and charges that,
singularly or in the aggregate, would not require notice to the Lender pursuant
to Section 6.4.
4.9 Ventures, Subsidiaries and Affiliates, and Indebtedness.
Except as set forth on Schedule 4.9, neither the Parent nor any of the Credit
Parties has any Subsidiaries, is engaged in any joint venture or partnership
with any other Person, or is an Affiliate of any other Person. All outstanding
Stock and Indebtedness in excess of $25,000 of each of the Credit Parties is
described on Schedule 4.9.
4.10 Government Regulation. None of the Credit Parties is an
"investment company" or an "affiliated person" of, or "promoter" or "principal
underwriter" for, an "investment company," as such terms are defined in the
Investment Company Act of 1940 as amended. None of the Credit Parties is subject
to regulation under the Public Utility Holding Company Act of 1935, the Federal
Power Act, the Interstate Commerce Act or any other federal or state statute
that restricts or limits its ability to incur Indebtedness, pledge its assets or
to perform its obligations hereunder or under any other Loan Document and the
making of the Revolving Credit Advances by Lender, the application of the
proceeds and repayment thereof by Borrower or any other Credit Party and the
consummation of the transactions contemplated by this Agreement and the other
Loan Documents will not violate any provision of any such statute or any rule,
regulation or order issued by the Securities and Exchange Commission (except
that no representation is made concerning whether any syndication or assignment
by Lender might or would violate any Federal securities laws, regulations or
orders).
4.11 Margin Regulations. None of the Credit Parties owns any
"margin security", as that term is defined in Regulations G and U of the Board
of Governors of the Federal Reserve System (the "Federal Reserve Board"), and
none of the proceeds of the Revolving Credit Advances will be used, directly or
indirectly, for the purpose of purchasing or carrying any margin security, for
the purpose of reducing or retiring any indebtedness which was originally
incurred to purchase or carry any margin security or for any other purpose which
might cause any of the loans or other extensions of credit under this
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Agreement to be considered a "purpose credit" within the meaning of Regulation
G, T, U or X of the Federal Reserve Board. None of the Credit Parties will take
or permit to be taken any action which might cause this Agreement or any
document or instrument delivered pursuant hereto to violate any regulation of
the Federal Reserve Board.
4.12 Taxes. All federal, state, local and foreign tax returns,
reports and statements required to be filed by any Credit Party (except for
sales and use tax returns involving, in the aggregate, immaterial amounts), have
been filed with the appropriate Governmental Authority and all Charges and other
impositions shown thereon to be due and payable that are or could reasonably be
expected to become a liability or charge against any Credit Party or its assets
have been paid prior to the date on which any fine, penalty, interest or late
charge may be added thereto for nonpayment thereof, or any such fine, penalty,
interest, late charge or loss has been paid, except for non-compliances that
could not reasonably be expected to have a Material Adverse Effect or to cause
or result in the incurrence by any Credit Party of a material liability,
contingent or liquidated. Each of the Credit Parties has paid prior to
delinquency all Charges which such Credit Party reasonably expects it will be
required to be paid by them, except for non-compliances that could not
reasonably be expected to have a Material Adverse Effect or to cause or result
in the incurrence by any Credit Party of a material liability, contingent or
liquidated. Proper and accurate amounts have been withheld by each of the Credit
Parties from its respective employees for all periods in full and complete
compliance with the tax, social security and unemployment withholding provisions
of applicable federal, state, local and foreign law and such withholdings have
been timely paid to the respective Governmental Authorities, except for
non-compliances that could not reasonably be expected to have a Material Adverse
Effect or to cause or result in the incurrence by any Credit Party of a material
liability, contingent or liquidated. Schedule 4.12 sets forth those taxable
years for which any Credit Party's tax returns are currently being audited by
the IRS or any other applicable Governmental Authority and any assessments or
threatened assessments in connection with such audit or which are otherwise
currently outstanding. Except as described on Schedule 4.12, none of the Credit
Parties has executed or filed with the IRS or any other Governmental Authority
any agreement or other document extending, or having the effect of extending,
the period for assessment or collection of any Charges. None of the Credit
Parties has any obligation under any written tax sharing agreement except as set
forth on Schedule 4.12.
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4.13 ERISA.
(a) Schedule 4.13 lists all Plans maintained or contributed to
by any Credit Party and all Qualified Plans maintained or contributed to by any
other ERISA Affiliate, and separately identifies the Title IV Plans,
Multiemployer Plans, any multiple employer plans subject to Section 4064 of
ERISA, unfunded Pension Plans, Welfare Plans and Retiree Welfare Plans. Each
Qualified Plan has been determined by the IRS to qualify under IRC Section 401,
and the trusts created thereunder have been determined to be exempt from tax
under the provisions of IRC Section 501, and to the best knowledge of each
Credit Party nothing has occurred that would cause the loss of such
qualification or tax-exempt status. Each Plan is in compliance with the
applicable provisions of ERISA and the IRC, including the filing of reports
required under the IRC or ERISA which are true and correct as of the date filed,
and with respect to each Plan, other than a Qualified Plan, all required
contributions and benefits have been paid in accordance with the provisions of
each such Plan. None of the Credit Parties or any other ERISA Affiliate, with
respect to any Qualified Plan, has failed to make any contribution or pay any
amount due as required by IRC Section 412 or Section 302 of ERISA or the terms
of any such Plan. With respect to all Retiree Welfare Plans, the present value
of future anticipated expenses pursuant to the latest actuarial projections of
liabilities does not exceed $50,000, and copies of such latest projections have
been provided to Lender; with respect to Pension Plans, other than Qualified
Plans, the present value of the liabilities for current participants thereunder
using PBGC interest assumptions does not exceed $50,000. None of the Credit
Parties has engaged in a prohibited transaction, as defined in Section 4975 of
the IRC or Section 406 of ERISA, in connection with any Plan, which would
subject any Credit Party (after giving effect to any exemption) to a material
tax on prohibited transactions imposed by IRC Section 4975 or any other material
liability.
(b) Except as set forth on Schedule 4.13: (i) no Title IV Plan
has any Unfunded Pension Liability; (ii) No ERISA Event or event described in
Section 4062(e) of ERISA with respect to any Title IV Plan has occurred or is
reasonably expected to occur; (iii) there are no pending, or to the knowledge of
any Credit Party, threatened claims, actions or lawsuits (other than claims for
benefits in the normal course), asserted or instituted against (x) any Plan or
its assets, (y) any fiduciary with respect to any Plan or (z) any Credit Party
or any other ERISA Affiliate with respect to any Plan; (iv) none of the Credit
Parties or any other ERISA Affiliate has incurred or reasonably expects to incur
any Withdrawal Liability (and no event has occurred which, with the giving of
notice under Section 4219 of ERISA, would result in such liability) under
Section 4201 of ERISA as a result of a complete or partial withdrawal from a
Multiemployer Plan; (v) within the last five years none of the Credit Parties or
any other ERISA Affiliate has engaged in a transaction which resulted in a Title
IV Plan with Unfunded Liabilities being transferred outside of the "controlled
group" (within the meaning of Section 4001(a)(14) of ERISA) of any such entity;
(vi) no plan which is a Retiree Welfare Plan provides for continuing benefits or
coverage for any participant or any beneficiary of a participant after such
participant's termination of employment (except as may be required by IRC
Section 4980B and at the sole expense of the participant or the beneficiary of
the participant); the Credit Parties and other ERISA Affiliates have complied
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with the notice and continuation coverage requirements of IRC Section 4980B and
the regulations thereunder except where the failure to comply could not have or
result in any Material Adverse Effect; and (vii) no liability under any Plan has
been funded, nor has such obligation been satisfied, with the purchase of a
contract from an insurance company that is not rated AAA by the Standard &
Poor's Corporation and the equivalent by each other nationally recognized rating
agency.
4.14 No Litigation. Except as set forth on Schedule 4.14, no
action, claim or proceeding is now pending or, to the knowledge of an officer of
any Credit Party, threatened against any Credit Party at law, in equity or
otherwise, before any court, board, commission, agency or instrumentality of any
federal, state or local government, or of any agency or subdivision thereof, or
before any arbitrator or panel of arbitrators, (i) that challenges any Credit
Party's right, power or competence to enter into or perform any of its
obligations under the Loan Documents, or the validity or enforceability of the
Security Interest or of any Loan Document or any action hereunder or thereunder
or (ii) that if determined adversely, could have or result in a Material Adverse
Effect or could cause or result in the incurrence by any Credit Party of a
material liability, contingent or liquidated, nor to the knowledge of an officer
of any Credit Party does a state of facts exist that is reasonably likely to
give rise to any such action, claim or proceeding.
4.15 Brokers. Except as set forth on Schedule 4.15, no broker
or finder acting on behalf of Borrower or any other Credit Party brought about
the obtaining, making or closing of the loans made pursuant to this Agreement or
the transactions contemplated by the Loan Documents and neither Borrower nor any
other Credit Party has any obligations to any Person in respect of any finder's
or brokerage fees in connection therewith.
4.16 Employment Matters. Except as set forth on Schedule 4.16
or permitted pursuant to Section 7.4, there are no employment, consulting or
management agreements covering management of any Credit Party. A true and
complete copy of each such agreement has been furnished to Lender by Borrower.
4.17 Patents, Trademarks, Copyrights, Licenses and
Accreditation. Except as otherwise set forth on Schedule 4.17, each Credit Party
owns or has undisputed possession of all licenses, patents, patent applications,
copyrights, service marks, trademarks, trademark applications, trade names,
certificates of need and accreditation and other rights, the failure to own or
possess which could have a Material Adverse Effect or could cause or result in
the incurrence by any Credit Party of a material liability, contingent or
liquidated, each of which is listed, together with Patent and Trademark Office
application or registration numbers, where applicable, on Schedule 4.17. Each
Credit Party is in full compliance with the provisions of each of the foregoing,
except for non-compliances that could not reasonably be expected to have a
Material Adverse Effect or to cause or result in the incurrence by such Credit
Party of a material liability, contingent or liquidated. Schedule 4.17 lists all
trade names or other names under which any of the Credit Parties conducts
business. Each Credit Party conducts its business without infringement or claim
of infringement of any license, patent, copyright, service xxxx, trademark,
trade name, trade secret or other intellectual
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property right of others, except where such infringement or claim of
infringement could not have or result in a Material Adverse Effect or could not
cause or result in the incurrence by such Credit Party of a material liability,
contingent or liquidated. There is no infringement or claim of infringement by
others of any material license, patent, copyright, service xxxx, trademark,
trade name, trade secret or other intellectual property right of any Credit
Party.
4.18 Full Disclosure. No information contained in this
Agreement, the other Loan Documents, the Projections, the Financials or any
written statement furnished to the Lender by or on behalf of any Credit Party
pursuant to the terms of this Agreement or any other Loan Document, contains any
untrue statement of a material fact or omits to state a material fact necessary
to make the statements contained herein or therein not misleading in light of
the circumstances under which they were made. The Security Interests granted to
Lender pursuant to the Collateral Documents will at all times be fully perfected
first priority Liens in and to the Collateral described therein, subject only to
such exceptions as are permitted under the applicable Collateral Document. No
event has occurred since December 31, 1996 and is continuing that has had or
could have or result in a Material Adverse Effect.
4.19 Hazardous Materials. Except as set forth on Schedule
4.19, the Subject Property is free of contamination from any Hazardous Material
that would constitute a violation of any Environmental Law. In addition,
Schedule 4.19 discloses potential material environmental liabilities of any
Credit Party of which an officer of such Credit Party has knowledge (i) related
to noncompliance with the Environmental Laws or (ii) associated with the Subject
Property. None of the Credit Parties has caused or suffered to occur any Release
with respect to any Hazardous Material that would constitute a violation of any
Environmental Law at, under, above or within any real property that it owns or
leases. None of the Credit Parties is involved in operations that could
reasonably be expected to lead to the imposition of any liability or Lien on it,
its property, or any premises that it occupies or any owner thereof, under the
Environmental Laws, and none of the Credit Parties has permitted any tenant or
occupant of such premises to engage in any such activity.
4.20 Insurance Policies. Schedule 4.20 Part II lists all
insurance of any nature maintained by the Credit Parties, as well as a summary
of the terms of such insurance. Such insurance complies with the standards set
forth on Schedule 4.20 Part I, and all policies listed on such schedule are in
full force and effect.
4.21 Deposit Accounts. Schedule 4.21 lists all banks and other
financial institutions at which any of the Credit Parties maintains deposits
and/or other accounts, and identifies as such each Collection Account, the
Disbursement Account, and such Schedule correctly identifies the name, address
and telephone number of each depository, the name in which the account is held,
a description of the purpose of the account, and the complete account number.
4.22 Solvent Financial Condition. Each of the Borrower and the
Parent Group, taken as a whole, is now, and after giving effect to the
incurrence of the obligations and the granting of the Security Interests
contemplated hereunder and under the other Loan
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Documents, will be Solvent.
4.23 Credit Party Questionnaires. The Credit Party
Questionnaires completed by each Credit Party are true and accurate in all
material respects.
ARTICLE 5.
FINANCIAL STATEMENTS AND INFORMATION
5.1 Reports and Notices. Borrower, for itself and on behalf of
the Parent and the other Credit Parties, covenants and agrees that from and
after the Restatement Date and until the Termination Date, it shall deliver or
cause to be delivered to Lender each of the following at the Lender's address
specified pursuant to Section 9.10.
(a) On each Business Day, a Notice of Borrowing/Collection
Report from Borrower in the form of Exhibit A hereto;
(b) On the first Business Day of each week, (i) an accounts
receivable summary from Borrower in the form of Exhibit K hereto with respect to
Borrower's Accounts for the preceding week and Lender, at its reasonable
discretion, may verify such Accounts owing by selected Account Debtors, and (ii)
an inventory summary from Borrower in the form of Exhibit L hereto with respect
to Eligible Inventory for the preceding week;
(c) Not later than the tenth Business Day of each month a
Borrowing Base Certificate from Borrower as of the last day of the preceding
month accompanied by such supporting detail and documentation as is satisfactory
to Lender, including but not limited to (i) a monthly trial balance sheet
showing accounts receivable outstanding by Account Debtor, aged from invoice
date as follows: 1 to 30 days, 31 to 60 days, 61 to 90 days, 91 to 120 days and
121 days or more; and (ii) reconciliation of the accounts receivable trial
balance to Borrower's general ledger and monthly financial statements;
(d) Within 30 days after the end of each Fiscal Month,
financial and other information for such Fiscal Month for Borrower, certified by
an officer of Borrower, including, without limitation, an internally-prepared
(i) statement of income and cash flow and balance sheet, (ii) sales analysis
report; (iii) inventory/product mix analysis, as well as a summary aged
receivable trial balance (by payor category), each of which shall be in form and
in substance reasonably satisfactory to Lender and each of which shall provide
comparisons to the internally prepared statement for the prior year's equivalent
period and to budget, (iv) at the end of each Fiscal Quarter only, a schedule in
reasonable detail showing the calculations used in determining Borrower's
compliance with the financial covenants set forth in Section 7.10, (v) a
consolidating balance sheet and statement of income for the Parent Group and
(vi) the certification of the president or chief financial officer of Borrower
that all such financial statements delivered pursuant to clauses (i) and (v)
above present fairly in accordance with GAAP (subject to normal year-end audit
adjustments and the absence of footnotes) the financial position, the results of
operations and the statements of cash flow of
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Borrower as at the end of such month and for the period then ended, that such
information is complete and correct in all material respects as of its date and
that no Default exists;
(e) Not more than 30 days prior to the beginning of each
Fiscal Year, a consolidating operating plan for the Parent Group, approved by
the Parent's board of directors, for such Fiscal Year that includes a monthly
budget for the following year and includes for such year, operating profit
estimates and plans for capital expenditures and facilities and that is
accompanied by a certificate of the chief executive officer or chief financial
officer of the Parent that such operating plan is based upon reasonable
estimates and assumptions, all of which are reasonable in light of conditions
then existing, have been prepared on the basis of the assumptions stated
therein, and reflect the reasonable estimate of the Parent of the expected
results of operations and other information projected therein;
(f) Within 90 days after the end of each Fiscal Year, annual
consolidated financial statements of the Parent and its Consolidated
Subsidiaries, consisting of a consolidated balance sheet and consolidated
statements of income, cash flows and stockholders' equity, which financial
statements shall be prepared in accordance with GAAP, reported on (only with
respect to the financial statements) without qualification by a firm of
independent certified public accountants of recognized national standing
selected by the Parent and reasonably acceptable to Lender, and accompanied by
(i) a report from such accountants to the effect that in connection with their
audit examination, nothing has come to their attention to cause them to believe
that a Default has occurred, (ii) the annual letter from the chief financial
officer of the Parent and each Credit Party to such accountants in connection
with their audit examination detailing such Credit Party's contingent
liabilities and material litigation matters involving such Credit Party, and
(iii) a certification of the chief executive officer or chief financial officer
of the Parent and each Credit Party that all such financial statements present
fairly in accordance with GAAP the financial position, the results of operations
and the cash flows of the Parent and each Credit Party as at the end of such
year and for the period then ended and that no Default exists;
(g) As soon as practicable, but in any event within two (2)
Business Days after any officer of any Credit Party becomes aware of the
existence of any Default, or any development or other information that could
reasonably be expected to have or result in a Material Adverse Effect,
telephonic or telegraphic notice specifying the nature of such Default or
development or information, including the anticipated effect thereof, which
notice shall be promptly confirmed in writing within five (5) Business Days;
(h) Promptly upon filing thereof, copies of such financial
statements and reports as the Parent or any Credit Party shall send to its
stockholders and all registration statements, and all regular or periodic
reports that the Parent or any Credit Party shall file, or may be required to
file, with the Securities and Exchange Commission or any successor commission;
(i) Promptly upon receipt thereof, copies of all reports, if
any, submitted to the Parent or any Credit Party or its board of directors by
its independent certified public
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accountants, including without limitation any management report;
(j) As often as Lender may request, such statements and
schedules further identifying and describing the Collateral and such other
reports in connection therewith as Lender may reasonably request, all in
reasonable detail;
(k) Promptly upon learning thereof, each Credit Party shall
advise Lender in reasonable detail of (i) any material Lien (other than as
permitted under Section 7.6) attaching to or asserted against any of the
Collateral, (ii) any material change in the composition of the Collateral or
(iii) the occurrence of any other event that could reasonably be expected to
have or result in a material adverse effect upon the Collateral and/or Lender's
Liens thereon; and
(l) Such other reports and information respecting the Parent's
or any Credit Party's business, financial condition or prospects as Lender may,
from time to time, reasonably request.
5.2 Communication with Accountants. Borrower, for itself and
on behalf of the Parent and each of the other Credit Parties, authorizes Lender
to communicate directly with its independent certified public accountants and
tax advisors and authorizes those accountants to disclose to Lender any and all
financial statements and other supporting financial documents and schedules
including copies of any management letter with respect to the business,
financial condition and other affairs of the Parent and the Credit Parties.
ARTICLE 6.
AFFIRMATIVE COVENANTS
Borrower, for itself and on behalf of each of the other Credit
Parties, covenants and agrees that, unless Lender shall otherwise consent in
writing, from and after the date hereof and until the Termination Date:
6.1 Maintenance of Existence and Conduct of Business. Each
Credit Party shall: (a) do or cause to be done all things necessary to preserve
and keep in full force and effect its corporate existence and its rights and
franchises, (b) continue to conduct its business substantially as now conducted
or as otherwise permitted hereunder, (c) at all times maintain, preserve and
protect all of its licenses, patents, patent applications, copyrights, service
marks, trademarks, trademark applications, trade names, certificates of need,
accreditation and other rights, the failure to preserve which could have a
Material Adverse Effect, and (d) preserve all the remainder of its property, in
use or useful in the conduct of its business, and keep the same in good repair,
working order and condition (taking into consideration ordinary wear and tear)
and from time to time make, or cause to be made, all necessary or appropriate
repairs, replacements and improvements thereto consistent with industry
practices, and (e) transact business only in its corporate name or such
fictitious or trade names as are expressly disclosed in the Security Agreement.
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6.2 Payment of Obligations.
(a) Each Credit Party shall: (i) prior to an Event of Default,
pay and discharge, or cause to be paid and discharged, its Indebtedness (other
than the Obligations) when due (giving effect to any applicable grace period),
and (ii) subject to Section 6.2(b), pay and discharge promptly all (A) Charges
imposed upon it, its income and profits, or any of its property (real, personal
or mixed) before such charges become delinquent, and (B) lawful claims for
labor, materials, supplies and services or otherwise, before any thereof shall
become in default.
(b) Each Credit Party may in good faith contest, by proper
legal actions or proceedings, the validity or amount of any Charges or claims
described in Section 6.2(a)(ii); provided, that at the time of commencement of
any such action or proceeding, and during the pendency thereof (i) no Event of
Default shall exist, (ii) adequate reserves with respect thereto are maintained
on the books of such Credit Party in accordance with GAAP, (iii) such contest
together with any bond that is a Permitted Encumbrance operates to suspend
collection of the contested Charges or claims and such contest is maintained and
prosecuted continuously and with diligence, (iv) none of the Collateral would be
subject to forfeiture or loss or any Lien, except for a Permitted Encumbrance,
by reason of the institution or prosecution of such contest, (v) no Lien shall
exist, be imposed or be attempted to be imposed for such Charges or claims
during such action or proceeding, and (vi) such Credit Party shall promptly pay
or discharge such contested Charges and all additional charges, interest,
penalties and expenses, if any, and shall deliver to Lender evidence reasonably
acceptable to Lender of such compliance, payment or discharge, if such contest
is terminated or discontinued adversely to such Credit Party.
6.3 Books and Records. Each Credit Party shall keep adequate
records and books of account with respect to its business activities, in which
proper entries, reflecting its financial transactions in accordance with sound
accounting practices, are made in accordance with GAAP and on a basis consistent
with preparation of the Financials referred to in paragraph I(b) of Schedule
4.4.
6.4 Litigation. Each Credit Party shall notify Lender in
writing, promptly upon learning thereof, of any litigation commenced or
threatened against such Credit Party, and of the institution against such Credit
Party of any suit or administrative proceeding, that (a) may involve an amount
in excess of $100,000 or (b) could reasonably be expected to have or result in a
Material Adverse Effect if adversely determined.
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6.5 Insurance.
(a) Each Credit Party, at its sole cost and expense, shall
maintain or cause to be maintained the policies of insurance described on
Schedule 4.20 in form, with such endorsements and with insurers recognized as
adequate by Lender. Such polices shall be in such amounts as are set forth on
Schedule 4.20 or such lesser amounts as the Lender shall reasonably agree in
writing. Each Credit Party shall notify Lender promptly of any casualty
occurrence causing a material loss or decline in value of any real or personal
property and the estimated (or actual, if available) amount of such loss or
decline. In the event any Credit Party at any time or times hereafter shall fail
to obtain or maintain any of the policies of insurance required above that
insure the Collateral or to pay any premium in whole or in part relating
thereto, Lender, without waiving or releasing any Obligation or Default
hereunder, may at any time or times thereafter (but shall not be obligated to)
obtain and maintain such policies of insurance and pay such premium and take any
other action with respect thereto which Lender deems advisable. All sums so
disbursed, including reasonable attorneys' fees, court costs and other charges
related thereto, shall be payable, on demand, by Borrower to Lender and shall be
additional Obligations hereunder secured by the Collateral, provided, that if
and to the extent Borrower fails to promptly pay any of such sums upon Lender's
demand therefor, Lender is authorized to, and at its option may, make or cause
to be made Revolving Credit Advances on behalf of Borrower for payment thereof.
(b) Lender reserves the right at any time, upon review of any
Credit Party's risk profile, to require additional forms and limits of insurance
to, in Lender's reasonable opinion, adequately protect Lender's interest. Each
Credit Party shall, if so requested by Lender, deliver to Lender, as often as
Lender may request, a report of a reputable insurance broker, satisfactory to
Lender with respect to its insurance policies.
(c) Each Credit Party shall deliver to Lender endorsements to
all of its general liability and other liability policies naming Lender an
additional insured.
6.6 Compliance with Laws. Each Credit Party shall comply in
all material respects with all Applicable Laws, including, without limitation,
those relating to licensing, environmental, consumer credit, ERISA and labor
matters.
6.7 Agreements. Each Credit Party shall perform, within all
required time periods (after giving effect to any applicable grace periods), all
of its obligations and enforce all of its rights under each agreement to which
such Credit Party is a party, including, without limitation, any lease and
customer contracts to which such Person is a party where the failure to so
perform and enforce could reasonably be expected to have a Material Adverse
Effect or to cause or result in the incurrence of a material liability,
contingent or liquidated. None of the Credit Parties shall terminate or modify
any provision of any agreement to which it is a party which termination or
modification could reasonably be expected to have or result in a Material
Adverse Effect or to cause or result in the incurrence by such Credit Party of a
material liability, contingent or liquidated.
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6.8 Employee Plans. Each Credit Party shall notify Lender of
(i) any and all claims, actions, or lawsuits asserted or instituted, and of any
threatened litigation or claims, against such Credit Party or any ERISA
Affiliate in connection with any Plan maintained, at any time, by any such
Person or to which any such Person has or had at any time any obligation to
contribute, or/and against any such Plan itself, or against any fiduciary of or
service provided to any such Plan, and (ii) the occurrence of any "Reportable
Event" with respect to any Pension Plan of any Credit Party or any ERISA
Affiliate.
6.9 Environmental Matters. Each Credit Party shall, (i) comply
in all respects with the Environmental Laws applicable to such Person except for
such non- compliances as singly or in the aggregate, could not reasonably be
expected to have a Materially Adverse Effect, (ii) notify Lender promptly after
any Credit Party becomes aware of any Release upon any premises owned or
occupied by such Credit Party that could reasonably be expected to have a
Materially Adverse Effect or result in the incurrence by such Credit Party of a
material liability, actual or contingent, and (iii) promptly forward to Lender a
copy of any order, notice, permit, application, or any communication or report
received by any Credit Party in connection with any such Release or in
connection with any other matter relating to the Environmental Laws that, singly
or in the aggregate, may adversely affect the use or value of such premises in
any material respect. The provisions of this Section 6.9 shall apply whether or
not the Environmental Protection Agency, any other federal agency or any state
or local environmental agency has taken or threatened any action in connection
with any Release or the presence of any Hazardous Materials.
6.10 Access. Each Credit Party shall: (i) provide access
during normal business hours to Lender and any of its officers, employees and
agents, upon reasonable prior notice (unless a Default shall have occurred and
be continuing, in which event no notice shall be required and Lender shall have
access at any and all times), to the properties and facilities of such Credit
Party; (ii) permit Lender and any of its officers, employees and agents to
inspect, audit and make extracts from all of its records, files and books of
account, and (iii) permit Lender to inspect, review and evaluate its accounts
and other records (excluding attorney-client privileged documents), at each
Credit Party's locations and at premises not owned by or leased to such Credit
Party. Each Credit Party shall make available to Lender and its counsel, as
quickly as practicable under the circumstances, copies of all books, records,
board minutes, contracts, insurance policies, environmental audits, business
plans, files, financial statements (actual and pro forma), filings with federal,
state and local regulatory agencies, and other instruments and documents
(excluding attorney-client privileged documents) that Lender may request. Each
Credit Party shall deliver any document or instrument reasonably necessary for
Lender, as it may from time to time request, to obtain records from any service
bureau or other Person which maintains records for such Credit Party, and shall
maintain duplicate records or supporting documentation on media, including,
without limitation, computer tapes and discs owned by such Credit Party. Upon
the request of the Lender, each Credit Party shall instruct its certified public
accountants and its banking and other financial institutions to make available
to Lender such information and records as Lender may reasonably request.
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6.11 Cash Management.
(a) Until the Termination Date, the Borrower shall deposit or
cause to be deposited directly, in either case on the date of receipt thereof
and in the form received, all cash, checks, notes, drafts or other similar items
of payment received only into the Collection Accounts and disburse or permit the
disbursement of amounts in the Collection Accounts only to the Payment Account.
(b) So long as no Default has occurred, Borrower may add or
replace a Collection Account; provided, however, that (i) Lender shall have
consented to the opening of such account with the relevant bank, and (ii) at the
time of the opening of such account, such bank shall have executed and delivered
to Lender a triparty account agreement, in form and substance satisfactory to
Lender.
(c) The Lender shall daily sweep amounts from the Collection
Accounts to the Payment Account for application against the Obligations as
described in Section 2.6. Borrower shall take all such steps as the Lender shall
reasonably request to facilitate the arrangements described in this Section 6.11
and to preserve the Lender's security interest granted in the amount deposited
to the Collection Accounts pursuant to the Loan Documents.
6.12 Goldstar Agreements. Borrower shall, on or before
December 31, 1997, enter into an extended or replacement Key System Agreement
with Goldstar, on terms that are at least as favorable to Borrower as if
Goldstar were not an equity holder of the Parent, which agreement shall have a
term of not less than 36 months, unless otherwise consented to by Lender in
writing, and shall otherwise contain terms that are in all respects acceptable
to Lender in its reasonable discretion.
ARTICLE 7.
NEGATIVE COVENANTS
Borrower covenants and agrees for itself and on behalf of the
other Credit Parties that, without Lender's prior written consent, from and
after the date hereof until the Termination Date:
7.1 Mergers, Etc. None of the Credit Parties shall directly or
indirectly, by operation of law or otherwise, merge with, consolidate with,
acquire all or substantially all of the assets or capital stock of, or otherwise
combine with, any Person or form any Subsidiary.
7.2 Investments. Except as set forth on Schedule 4.9 or in the
proviso at the end of this sentence, none of the Credit Parties shall make or
maintain any investment in, or make or accrue loans or advances of money to any
Person, through the direct or indirect holding of securities or otherwise (all
of the foregoing "Investments"); provided, however,
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that Borrower may make loans to ARS and ESI in an aggregate principal amount not
to exceed $1,250,000 outstanding at any time so long as (i) such indebtedness is
evidenced by a promissory note duly executed by such borrower payable to
Borrower and pledged by Borrower to Lender as security for the Obligations, and
(ii) Borrower has not less than $1,250,000 of unused Revolving Credit Advance
Availability hereunder at all times any such loan is outstanding.
7.3 Indebtedness. None of the Credit Parties shall create,
incur, assume or permit to exist any Indebtedness, except (i) Indebtedness of
the Borrower in an aggregate principal amount not to exceed $200,000 at any time
outstanding, (ii) the Obligations, (iii) reimbursement obligations of the
Borrower in respect of Letters of Credit, (iv) unfunded pension fund and other
employee benefit plan obligations and liabilities not to exceed $150,000 in the
aggregate for all Credit Parties and then only to the extent they are permitted
to remain unfunded under Applicable Law, (v) Intercompany Debt, so long as such
Indebtedness is subordinated to the Obligations in all respects on terms
reasonably acceptable to Lender, and (vi) other Indebtedness set forth on
Schedule 4.9.
7.4 Affiliate and Employee Loans; Transactions and Employment
Agreements. Except as expressly permitted hereunder or under Section 7.2, none
of the Credit Parties shall enter into any lending, borrowing or other
commercial transaction with any of its employees, directors or Affiliates, under
terms that are any less favorable to any Credit Party than similar transactions
negotiated in arms length transactions between such Credit Party and unrelated
third parties, including, without limitation, payment of any management
consulting, advisory or similar fee based on or related to any Credit Party's
operating revenue, performance or income or any percentage thereof other than
(a) pursuant to the transactions described on Schedule 7.4 and (b) full-time
employment agreements and incentive compensation programs with employees on
commercially reasonable terms that are substantially similar to the agreements
and programs described on Schedule 7.4 and that have been consented to by
Lender. Notwithstanding the foregoing provisions of this Section 7.4, the Credit
Parties shall not make any Loans to any employee, director or Affiliate, except
as expressly permitted under Section 7.2, without the consent of Lender.
7.5 Capital Structure and Business. None of the Credit Parties
shall make any changes in any of its business objectives, purposes, or
operations which could in any way be reasonably expected to adversely affect the
repayment of the Obligations, the security interests granted under the
Collateral Documents or to have or result in a Material Adverse Effect. None of
the Credit Parties shall engage in any business other than the business
currently engaged in by it.
7.6 Liens. None of the Credit Parties shall create or permit
any Lien on any of its properties or assets except presently existing or
hereafter created Liens in favor of Lender, Liens set forth on Schedule 7.6 and
Permitted Encumbrances. Each Credit Party also shall defend the right, title and
interest of Lender and any of such Credit Party's rights, titles and interest
in, to and under the Collateral against the claims and demands of all Persons
whomsoever and shall not enter into any agreement that prohibits such Credit
Party from
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granting any additional Liens to the Lender.
7.7 Sale of Assets. The Credit Parties shall not sell,
transfer, convey, assign or otherwise dispose of any of their respective assets
or properties (including, without limitation, sales of Accounts and Inventory
not made in the ordinary course of business) having an aggregate value, over the
term of this Agreement, of $50,000 or more.
7.8 Events of Default. None of the Credit Parties shall take
any action or omit to take any action, which act or omission would constitute
(a) a Default pursuant to, or noncompliance with any of, the terms of any of the
Loan Documents or (b) a material default or an event of default pursuant to, or
noncompliance with, any other Contract, lease, mortgage, deed of trust or
instrument to which it is a party or by which it or any of its property is
bound, or any document creating a Lien, except, in the case of the clause (b)
only, for such actions or omissions that, in the reasonable judgment of the
Lender, could not be expected to have a Materially Adverse Effect.
7.9 ERISA. None of the Credit Parties nor any ERISA Affiliate
thereof shall without Lender's prior written consent acquire any new ERISA
Affiliate that maintains or has an obligation to contribute to a Pension Plan
that has either an "accumulated funding deficiency," as defined in Section 302
of ERISA, or any "unfunded vested benefits," as defined in Section
4006(a)(3)(e)(iii) of ERISA, in the case of any plan other than a Multiemployer
Plan, and in Section 4211 of ERISA in the case of a Multiemployer Plan.
Additionally, none of the Credit Parties nor any ERISA Affiliate thereof shall,
without Lender's prior written consent, permit or suffer any condition set forth
on Schedule 4.13 to cease to be met and satisfied at any time; terminate any
Pension Plan that is subject to Title IV of ERISA where such termination could
reasonably be anticipated to result in liability to any such Person; permit any
accumulated funding deficiency, as defined in Section 302(a)(2) of ERISA, to be
incurred with respect to any Pension Plan; fail to make any contributions or
fail to pay any amounts due and owing as required by the terms of any Plan
before such contributions or amounts become delinquent; make a complete or
partial withdrawal (within the meaning of Section 4201 of ERISA) from any
Multiemployer Plan; or at any time fail to provide Lender with copies of any
Plan documents or governmental reports or filings, if reasonably requested by
Lender.
7.10 Financial Covenants. Borrower shall not at any time fail
to be in compliance with any of the following financial covenants:
(a) Maximum Capital Expenditures. Borrower shall not make
Capital Expenditures that exceed in the aggregate during any Fiscal Year,
$1,000,000.
(b) Minimum Fixed Charge Coverage Ratio. Borrower shall have a
ratio of (i) EBITDA minus Capital Expenditures (other than Capital Expenditures
financed with Capital Leases) to (ii) Fixed Charges, in each case measured as at
the end of each Fiscal Quarter for the twelve month period ending on such date
(the "Fixed Charge Coverage Ratio"), of not less than 1.25:1.
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(c) Maximum Inventory Turnover Days. Borrower shall have
Maximum Inventory Turnover Days of not more than 105 days as measured at the end
of each Fiscal Quarter for the twelve month period ending on such date.
7.11 Hazardous Materials. Except as set forth on Schedule
4.19, the Credit Parties shall not and shall not permit any other Person within
the control of any Credit Party to cause or permit a Release or the presence,
use, generation, manufacture, installation, Release, discharge, storage or
disposal of any Hazardous Materials on, under, in, above, or about any of its
real estate or the transportation of any Hazardous Materials to or from any real
estate where such Release or presence, use, generation, manufacture,
installation, Release, discharge, storage or disposal would violate any
Environmental Laws.
7.12 Restricted Payments. The Credit Parties shall not make
any Restricted Payment.
7.13 Change in Control. Parent shall not cease to own, free of
any Lien, the legal and beneficial interest in 100% of the outstanding stock of
each of the Credit Parties (on a fully diluted basis).
ARTICLE 8.
EVENTS OF DEFAULT; RIGHTS AND REMEDIES
8.1 Events of Default. The occurrence of any one or more of
the following events (regardless of the reason therefor) shall constitute an
"Event of Default" hereunder:
(a) Borrower or any other Credit Party shall fail to make any
payment in respect of any Obligation hereunder or under any of the other Loan
Documents when and as due and payable or declared due and payable; provided
that, so long as no Event of Default shall have occurred and be continuing, any
amount payable on demand of the Lender shall be payable upon the earlier of: (i)
the fifteenth day following such demand, and (ii) the occurrence of an Event of
Default.
(b) Borrower or any other Credit Party shall fail or neglect
to perform, keep or observe any of the provisions of Section 6.11 or Section 7.
(c) Borrower or any other Credit Party shall fail or neglect
to perform, keep or observe any term or provision of this Agreement (other than
any such term or provision referred to in paragraphs (a) or (b) above) or of any
of the other Loan Documents, and the same shall remain unremedied for a period
ending on the first to occur of 30 days after Borrower or such other Credit
Party shall receive written notice of any such failure from Lender or 60 days
after Borrower or such other Credit Party shall become aware thereof.
(d) A default shall occur under any other agreement, document
or
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instrument to which any Credit Party is a party or by which any Credit Party or
its property is bound and such default (i) involves the failure to make any
payment (whether of principal, interest or otherwise) when due (whether by
scheduled maturity, required prepayment, acceleration, demand or otherwise, and
after giving effect to any applicable grace period) in respect of any
Indebtedness of such Credit Party in an aggregate amount exceeding $200,000 or
(ii) causes or permits any holder of such Indebtedness or a trustee to cause
such Indebtedness, or a portion thereof in an aggregate amount exceeding
$200,000 to become due prior to its stated maturity or prior to its regularly
scheduled dates of payment.
(e) Any representation or warranty herein or in any Loan
Document or in any written statement pursuant thereto or hereto, any report,
financial statement or certificate made or delivered to Lender by any Credit
Party shall be untrue or incorrect in any material respect, as of the date when
made or deemed made (including those made or deemed made pursuant to Section
3.2).
(f) Any of the assets having a book or market value in excess
of $50,000 of any Credit Party shall be attached, seized, levied upon or
subjected to a writ or distress warrant, or come within the possession of any
receiver, trustee, custodian or assignee for the benefit of creditors of such
Person and such matter shall remain unstayed or undismissed for thirty (30)
consecutive days; or any Person other than such Credit Party shall apply for the
appointment of a receiver, trustee or custodian for any of its assets and such
matter shall remain unstayed or undismissed for thirty (30) consecutive days; or
any Credit Party shall have concealed, removed or permitted to be concealed or
removed, any part of such Person's property, with intent to hinder delay or
defraud its creditors or any of them or made or suffered a transfer of any of
its property or the incurring of an obligation which may be fraudulent under any
bankruptcy, fraudulent conveyance or other similar law.
(g) A case or proceeding shall have been commenced against any
Credit Party in a court having competent jurisdiction seeking a decree or order
(i) under Title 11 of the United States Code, as now constituted or hereafter
amended, or any other applicable federal, state or foreign bankruptcy,
insolvency, moratorium or other similar law, (ii) appointing a custodian,
receiver, liquidator, assignee, trustee or sequestrator (or similar official) of
such Credit Party or of any substantial part of its properties, or (iii)
ordering the winding up or liquidation of the affairs of such Credit Party and
such case or proceeding shall remain undismissed or unstayed for sixty (60)
consecutive days or such court shall enter a decree or order granting the relief
sought in such case or proceeding.
(h) Any Credit Party shall (i) file a petition seeking relief
under Title 11 of the United States Code, as now constituted or hereafter
amended, or any other applicable federal, state or foreign bankruptcy,
insolvency, moratorium or other similar law, (ii) consent to the institution of
proceedings thereunder or to the filing of any such petition or to the
appointment of or taking possession by a custodian, receiver, liquidator,
assignee, trustee or sequestrator (or similar official) of such Credit Party or
of any substantial part of its properties, (iii) fail generally pay its debts as
such debts become due, or (iv) take any corporate action in furtherance of any
such action.
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(i) Final judgment or judgments (after the expiration of all
times to appeal therefrom) for the payment or money in excess of $100,000 in the
aggregate shall be rendered against any Credit Party unless the same shall be
(i) fully covered by insurance in accordance with Section 6.5 or (ii) vacated,
stayed, bonded, paid or discharged within a period or thirty (30) days from the
date of such final judgment.
(j) Any other event shall have occurred or condition shall
exist which could reasonably be expected to have or result in a material adverse
change in the business, assets, operations, prospects or financial or other
condition of Borrower or the Parent Group, taken as a whole, and such event or
condition shall continue after the Lender shall have given Borrower at least
twenty (20) days notice thereof.
(k) (i) Any provision that is deemed material by the Lender of
any Loan Document shall for any reason cease to be valid, binding and
enforceable in accordance with its terms, or (ii) any security interest created
under any Collateral Document shall cease to be a valid and perfected security
interest or Lien having the first priority (or other priority, if and as
provided for by the Collateral Document establishing such Lien) in any of the
Collateral purported to be covered thereby and that is deemed material by the
Lender; provided, however, that no event described in clause (i) of this
paragraph (k) shall constitute an Event of Default, if, within 30 days of the
Lender's notification to the Borrower of such event, the Borrower and the Lender
shall agree on an enforceable substitute provision or arrangement that has the
same practical effect as the invalidated provision or interest and that is
reasonably satisfactory to the Lender.
8.2 Remedies. If any Event of Default shall have occurred and
be continuing, Lender may, by notice to the Borrower, (a) terminate the
Commitment, (b) declare all or any portion of the Obligations to be forthwith
due and payable, whereupon such Obligations shall become and be due and payable,
without presentment, demand, protest or further notice of any kind, all of which
are expressly waived by Borrower, and (c) exercise any rights and remedies
provided to Lender under the Loan Documents and/or at law or equity, including
all remedies provided under the Code; provided, however, that upon the
occurrence of an Event of Default specified in Sections 8.1(f), (g) or (h), the
Obligations shall become immediately due and payable and any obligation on
Lender's part to make any further Revolving Credit Advances or to incur any
further Letter of Credit Obligations shall immediately terminate, all without
declaration, notice or demand by Lender.
8.3 Cumulative Remedies. Lender's rights and remedies under
this Agreement shall be cumulative and nonexclusive of any other rights and
remedies which Lender may have under any other agreement, including without
limitation, the Loan Documents, by operation of law or otherwise. Recourse to
the Collateral shall not be required.
8.4 Waivers by Borrower. Except as otherwise provided for in
this Agreement and to the fullest extent permitted by Applicable Law, Borrower,
for itself and on behalf of each other Credit Party, waives (i) presentment,
demand and protest and notice of
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presentment, dishonor, notice of intent to accelerate, notice of acceleration,
protest, default, nonpayment, maturity, release, compromise, settlement,
extension or renewal of any or all commercial paper, accounts, contract rights,
documents, instruments, chattel paper and guaranties at any time held by Lender
on which Borrower or any other Credit Party may in any way be liable, (ii) all
rights to notice and a hearing prior to Lender's taking possession or control
of, or to Lender's replevy, attachment or levy upon, the Collateral or any bond
or security which might be required by any court prior to allowing Lender to
exercise any of its remedies, and (iii) the benefit of all valuation, appraisal
and exemption laws. Borrower acknowledges that it has been advised by counsel of
its choice with respect to this Agreement, the other Loan Documents and the
transactions evidenced by this Agreement and the other Loan Documents.
ARTICLE 9.
MISCELLANEOUS
9.1 Complete Agreement; Modification of Agreement. The Loan
Documents constitute the complete agreement between the parties with respect to
the subject matter thereof, supersede all prior agreements, understandings or
inducements (whether express or implied, or oral or written), and may not be
modified, altered or amended except by an agreement in writing signed by
Borrower and Lender. Without limiting the generality of the immediately
preceding sentence, any letter of interest or commitment letter between Borrower
and Lender or any of its affiliates, predating this Agreement and relating to a
financing of substantially similar form, purpose or effect shall be merged with
and into and superseded by this Agreement.
9.2 Fees and Expenses. Borrower shall reimburse Lender for all
reasonable out-of-pocket expenses incurred in connection with (i) the
preparation, negotiation or consummation of the Loan Documents (including the
reasonable fees and expenses of all of its counsel, advisors, consultants and
auditors retained in connection with the Loan Documents and the transactions
contemplated thereby and advice in connection therewith) and (ii) wire transfers
to the account of Borrower. Borrower shall reimburse Lender for all reasonable
fees, costs and expenses, including, without limitation, the reasonable fees,
costs and expenses of counsel or other advisors (including environmental and
management consultants) for advice, assistance, or other representation in
connection with:
(i) the forwarding to Borrower or any other Person on behalf
of Borrower by Lender of the proceeds of the Revolving Credit
Advances;
(ii) any amendment, modification or waiver of, or consent with
respect to, any of the Loan Documents or advice in connection with
the administration of the loans made pursuant hereto or its rights
hereunder or thereunder;
(iii) any litigation, contest, dispute, suit, proceeding or
action
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(whether instituted by Lender, Borrower or any other Person) in any
way relating to the Collateral, any of the Loan Documents, any of
the Letters of Credit or Letter of Credit Obligations, or any other
agreement to be executed or delivered in connection therewith or
herewith, whether as party, witness, or otherwise, including any
litigation, contest, dispute, suit, case, proceeding or action, and
any appeal or review thereof, in connection with a case commenced
by or against Borrower or any other Person that may be obligated to
Lender by virtue of the Loan Documents;
(iv) any attempt to enforce any rights of Lender against
Borrower, any other Credit Party or any other Person that may be
obligated to Lender by virtue of any of the Loan Documents;
(v) any attempt to (A) monitor the Obligations, (B) evaluate,
observe, assess Borrower or its affairs, and (C) verify, protect,
evaluate, assess, appraise, collect, sell, liquidate or otherwise
dispose of the Collateral;
including, without limitation, the reasonable attorneys' and other professional
and service providers' fees arising from such services, including those in
connection with any appellate proceedings; and all expenses, costs, charges and
other fees incurred by such counsel and others in any way or respect arising in
connection with or relating to any of the events or actions described in this
Section 9.2 shall be payable, on demand, by Borrower to Lender; provided that,
so long as no Event of Default shall have occurred and be continuing, the
Borrower's obligation to reimburse Lender for fees and expenses incurred
pursuant to clause (v) above shall not exceed $15,000 per year. Without limiting
the generality of the foregoing, such expenses, costs, charges and fees may
include: reasonable fees, costs and expenses of accountants, environmental
advisors, appraisers, investment bankers, management and other consultants and
paralegals; court costs and expenses; photocopying and duplication expenses;
court report fees, costs and expenses; long distance telephone charges; air
express charges; telegram charges, secretarial overtime charges; and expenses
for travel, lodging and food paid or incurred in connection with the performance
of such legal or other advisory services (collectively, the "Transaction
Expenses").
9.3 Indemnity.
(a) Borrower shall indemnify and hold Lender and each of their
respective Affiliates, officers, directors, employees, attorneys and agents
(each, an "Indemnified Person"), harmless from and against any and all suits,
actions, proceedings, claims, damages, losses, liabilities and expenses
(including reasonable attorneys' fees and disbursements and other reasonable
costs of investigation or defense, including those incurred upon any appeal)
that may be instituted or asserted against or incurred by such Indemnified
Person as the result of credit having been extended under this Agreement and the
other Loan Documents or in connection with or arising out of the transactions
contemplated hereunder and thereunder, including any claim, action, suit,
proceeding, loss, cost, damage, liability, deficiency, fine, penalty, punitive,
exemplary or consequential damage or expense (including reasonable
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attorneys' and consultants' fees, investigation and laboratory fees, court costs
and litigation expenses), directly or indirectly resulting from, arising out of,
or based upon (i) the presence, Release, use, manufacture, installation,
generation, discharge, storage or disposal, at any time, of any Hazardous
Materials on, under, in or about, or the transportation of any such materials to
or from, any of the Subject Property, or (ii) the violation or alleged violation
by any Credit Party of any law, statute, ordinance, order, rule, regulation,
permit, judgment or license relating to the use, generation, manufacture,
installation, Release, discharge, storage or disposal of Hazardous Materials to
or from any of the Subject Property; which indemnity shall include, without
limitation, (A) any damage, liability, fine, penalty, punitive, exemplary or
consequential damage, cost or expense arising from or out of any claim, action,
suit or proceeding for personal injury (including sickness, disease, death, pain
or suffering), tangible or intangible property damage, compensation for lost
wages, business income, profits or other economic loss, damage to the natural
resources or the environment, nuisance, pollution, contamination, leak, Release
or other adverse effect on the environment, and (B) the cost of any required or
necessary repair, cleanup, treatment, remediation or detoxification of any of
the Subject Property and the preparation and implementation of any closure,
disposal, remedial or other required actions in connection with any of the
Subject Property; provided, that Borrower shall not be liable for any
indemnification to such Indemnified Person to the extent that any such suit,
action, proceeding, claim, damage, loss, liability or expense results solely
from such Indemnified Person's gross negligence or willful misconduct. NEITHER
LENDER NOR ANY OTHER INDEMNIFIED PERSON SHALL BE RESPONSIBLE OR LIABLE TO ANY
OTHER PARTY HERETO, ANY SUCCESSOR, ASSIGNEE OR THIRD PARTY BENEFICIARY OF SUCH
PERSON OR ANY OTHER PERSON ASSERTING CLAIMS DERIVATIVELY THROUGH SUCH PARTY, FOR
INDIRECT, PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES THAT MAY BE ALLEGED AS A
RESULT OF CREDIT HAVING BEEN EXTENDED UNDER THE LOAN DOCUMENTS.
(b) Borrower hereby acknowledges and agrees that Lender (i) is
not now, and has not ever been, in control of any of the Subject Property or the
affairs of Borrower, and (ii) does not have the capacity through the provisions
of the Loan Documents to influence Borrower's conduct with respect to the
ownership, operation or management of any of the Subject Property.
9.4 No Waiver. Lender's failure, at any time or times, to
require strict performance by Borrower or any other Credit Party of any
provision of this Agreement or any of the other Loan Documents shall not waive,
affect or diminish any right of Lender thereafter to demand strict compliance
and performance therewith. Any suspension or waiver of any Default under the
Loan Documents shall not suspend, waive or affect any other Default under this
Agreement or any of the other Loan Documents whether the same is prior or
subsequent thereto and whether of the same or of a different type. None of the
undertakings, agreements, warranties, covenants and representations of any
Credit Party contained in this Agreement or any of the other Loan Documents and
no Default by Borrower under this Agreement and no defaults by any Credit Party
under any of the other Loan Documents shall be deemed to have been suspended or
waived by Lender, unless such waiver or suspension is by an instrument in
writing signed by an officer of or other authorized
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employee of Lender and directed to Borrower specifying such suspension or
waiver.
9.5 Successors and Assigns. This Agreement and the other Loan
Documents shall be binding on and shall inure to the benefit of Borrower,
Lender, and their respective successors and assigns, except as otherwise
provided herein or therein. Borrower may not assign, transfer, hypothecate or
otherwise convey its rights, benefits, obligations or duties hereunder or under
any of the other Loan Documents without the prior express written consent of
Lender. Any such purported assignment, transfer, hypothecation or other
conveyance by Borrower without the prior express written consent of Lender shall
be void. The Lender may assign its rights and obligations hereunder to one or
more financial institutions with the consent of the Borrower, such consent not
to be unreasonably withheld or delayed. The terms and provisions of this
Agreement and the other Loan Documents are for the purpose of defining the
relative rights and obligations of Borrower and Lender with respect to the
transactions contemplated hereby and there shall be no third party beneficiaries
of any of the terms and provisions of this Agreement or any of the other Loan
Documents.
9.6 Severability. Wherever possible, each provision of this
Agreement shall be interpreted in such a manner as to be effective and valid
under applicable law, but if any provision of this Agreement shall be prohibited
by or invalid under applicable law, such provision shall be ineffective to the
extent of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Agreement.
9.7 Conflict of Terms. Except as otherwise provided in this
Agreement or any of the other Loan Documents by specific reference to the
applicable provisions of this Agreement, if any provision contained in this
Agreement is in conflict with, or inconsistent with, any provision in any of the
other Loan Documents, the provision contained in this Agreement shall govern and
control.
9.8 Authorized Signature; Oral Instructions. Until Lender
shall be notified by Borrower to the contrary, each of the Persons listed on
Schedule 9.8 (an "Authorized Borrower Representative") is authorized to act on
behalf of the Borrower in all respects hereunder and the Lender shall be
protected in all respect when acting in accordance with instructions given by
such Person. The signature upon any document or instrument delivered pursuant
hereto of any such Person shall bind Borrower and be deemed to be the act of
Borrower affixed pursuant to and in accordance with resolutions duly adopted by
Borrower's Board of Directors. The Lender has permitted telephonic instructions
hereunder as an accommodation to the Borrower. In exchange for such
accommodation, the Borrower agrees that the Lender's understanding of any oral
instruction shall be binding and conclusive upon the Borrower, notwithstanding
any divergence between such understanding and any later written confirmation
thereof, and the Lender shall in all respects be protected and held harmless
when acting in accordance with such understanding, it being the intention of the
parties that the Borrower assume all risks of the use of oral communication.
9.9 Governing Law. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN
ANY OF THE LOAN DOCUMENTS, IN ALL RESPECTS, INCLUDING
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ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS AGREEMENT AND THE
OBLIGATIONS ARISING HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS
MADE AND PERFORMED IN SUCH STATE, AND ANY APPLICABLE LAWS OF THE UNITED STATES
OF AMERICA. BORROWER HEREBY CONSENTS AND AGREES THAT THE STATE OR FEDERAL COURTS
LOCATED IN THE CITY AND STATE OF NEW YORK, BOROUGH OF MANHATTAN, SHALL HAVE
EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN
BORROWER AND LENDER PERTAINING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN
DOCUMENTS OR TO ANY MATTER ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY
OF THE OTHER LOAN DOCUMENTS, PROVIDED, THAT LENDER AND BORROWER ACKNOWLEDGE THAT
ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE OF
THE CITY AND STATE OF NEW YORK, BOROUGH OF MANHATTAN AND, PROVIDED, FURTHER,
THAT NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE LENDER
FROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION TO
COLLECT THE OBLIGATIONS, REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE
OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF LENDER
AND, PROVIDED, FURTHER, THAT NOTHING IN THIS AGREEMENT SHALL BE DEEMED TO
PRECLUDE THE BORROWER FROM PURSUING ANY COMPULSORY COUNTERCLAIM IN ANY
PROCEEDING BROUGHT BY THE LENDER IN ANY SUCH OTHER JURISDICTION. BORROWER
EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR
SUIT COMMENCED IN ANY SUCH COURT, AND BORROWER HEREBY WAIVES ANY OBJECTION THAT
BORROWER MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR
FORUM NON CONVENIENS AND HEREBY CONSENTS TO THE GRANTING OF SUCH LEGAL OR
EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH COURT. BORROWER HEREBY WAIVES
PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH
ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINTS AND OTHER
PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO BORROWER AT THE
ADDRESS SET FORTH ON IN SECTION 9.10 OF THIS AGREEMENT AND THAT SERVICE SO MADE
SHALL BE DEEMED COMPLETED UPON THE EARLIER OF BORROWER'S ACTUAL RECEIPT THEREOF
OR FIVE (5) DAYS AFTER DEPOSIT IN THE U.S. MAILS, PROPER POSTAGE PREPAID.
9.10 Notices. Except as otherwise provided herein, whenever it
is provided herein that any notice, demand, request, consent, approval,
declaration or other communication shall or may be given to or served upon
either of the parties by the other party, or whenever either of the parties
desires to give or serve upon the other party any communication with respect to
this Agreement, each such notice, demand, request, consent, approval,
declaration or other communication shall be in writing and shall be deemed to
have
-54-
been validly served, given or delivered (i) upon the earlier of actual receipt
and three days after deposit in the United States Mail, registered or certified
mail, return receipt requested, with proper postage prepaid, (ii) upon
transmission, when sent by telecopy or other similar facsimile transmission
(with such telecopy or facsimile promptly confirmed by delivery of a copy by
personal delivery or United States Mail as otherwise provided in this Section
9.10, (iii) one Business Day after deposit with a reputable overnight courier
with all charges prepaid or (iv) when delivered, if hand-delivered by messenger,
all of which shall be addressed to the party to be notified and sent to the
address or facsimile number indicated below:
(a) If to Lender:
General Electric Capital Corporation
000 Xxxxx Xxxxxxx Xxxxx
Xxxxx 000
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxxx
Telecopy No.: (000) 000-0000
With copies to:
General Electric Capital Corporation
000 Xxxx Xxxxx Xxxx
Xxxxxxxx, Xxxxxxxxxxx 00000-0000
Attention: Legal Counsel
Telecopy No.: (000) 000-0000
(b) If to Borrower, at:
Vodavi Communications Systems, Inc.
0000 Xxxx Xxxxxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxx 00000
Attention: Xxxx Xxxxxx
Telecopy No.: (000) 000-0000
With copies to:
X'Xxxxxx, Cavanagh, Anderson, Xxxxxxxxxxxxx
& Xxxxxxxx
Xxx Xxxx Xxxxxxxxx Xxxx
Xxxxx 0000
Xxxxxxx, XX 00000-0000
Attention: Xxxxxxx X. Xxxxxx, Esq.
Telecopy No.: (000) 000-0000
or to such other address (or facsimile number) as may be substituted by notice
given as herein
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provided. The giving of any notice required hereunder may be waived in writing
by the party entitled to receive such notice. Failure or delay in delivering
copies of any notice, demand, request, consent, approval, declaration or other
communication to any Person (other than Borrower or Lender) designated above to
receive copies shall in no way adversely affect the effectiveness of such
notice, demand, request, consent, approval, declaration or other communication.
9.11 Subordination. As an independent covenant, Borrower
hereby expressly covenants and agrees for the benefit of Lender that all present
or future indebtedness, obligations and liabilities of any other Credit Party to
Borrower of whatsoever description (collectively, the "Junior Claims") shall be
subordinate and junior in right of payment to all Obligations, effective upon
the occurrence and during the continuance of an Event of Default. If an Event of
Default shall occur, then, unless and until such Event of Default shall have
been cured or shall have ceased to exist, no direct or indirect payment (in
cash, property, securities, by set-off or otherwise) shall be made by any other
Credit Party to Borrower on account of or in any manner in respect of any Junior
Claim except such payments and distributions the proceeds of which shall be
applied to the Obligations. In the event of a Proceeding (as hereinafter
defined), all Obligations shall first be paid in full before any direct or
indirect payment or distribution (in cash, property, securities, by set-off or
otherwise) shall be made to Borrower on account of or in any manner in respect
of any Junior Claim except such payments and distributions the proceeds of which
shall be applied to the Obligations. For the purposes of the previous sentence,
a "Proceeding" shall occur if any Credit Party shall make an assignment for the
benefit of creditors, file a petition in bankruptcy, have entered against or in
favor of it an order for relief under the Bankruptcy Code or similar law of any
other jurisdiction, generally fail to pay its debts as they come due (either as
to number or amount), admit in writing its inability to pay its debts generally
as they mature, make a voluntary assignment for the benefit of creditors,
commence any proceeding relating to it under any reorganization, arrangement,
readjustment of debt, dissolution or liquidation law or statute of any
jurisdiction, whether now or hereafter in effect, or by any act, indicate its
consent to, approval of or acquiescence in any such proceeding or in the
appointment of any receiver of, or trustee or custodian (as defined in the
Bankruptcy Code) for itself, or any substantial part of its property, or a
trustee or a receiver shall be appointed for any Credit Party or for a
substantial part of the property of any Credit Party, or a petition under any
bankruptcy, reorganization, arrangement, readjustment of debt, dissolution or
liquidation law or statute or any jurisdiction (whether now or hereafter in
effect) shall be filed against any Credit Party. In the event any direct or
indirect payment or distribution is made to Borrower in contravention of this
Section, such payment or distribution shall be deemed received in trust for the
benefit of Lender and shall be immediately paid over to Lender for application
against the Obligations. Borrower agrees to execute such additional documents as
Lender may reasonably request to evidence the subordination provided for in this
Section.
9.12 Survival of Obligations Upon Termination of Financing
Arrangement. Except as otherwise expressly provided for in the Loan Documents,
no termination or cancellation (regardless or cause or procedure) of any
financing arrangement under this Agreement shall in any way affect or impair the
obligations, duties and liabilities of
-56-
Borrower or the rights of Lender relating to any unpaid Obligation, due or not
due, liquidated, contingent or unliquidated or any transaction or event
occurring prior to such termination, or any transaction or event, the
performance of which is not required until after the Termination Date. Except as
otherwise expressly provided herein or in any other Loan Document, all
undertakings, agreements, covenants, warranties and representations of or
binding upon Borrower, and all rights of Lender, all as contained in the Loan
Documents shall not terminate or expire, but rather shall survive such
termination or cancellation and shall continue in full force and effect until
such time as all of the Obligations have been indefeasibly paid in full in
accordance with the terms of the agreements creating such Obligations, provided,
however, that the Lender agrees to take such action as the Borrower shall
reasonably request, at the Borrower's cost and expense, to file such instruments
as shall be necessary to release its Liens under the Loan Documents upon
termination of the Commitment and receipt by the Lender of collected funds in
the amount of the outstanding Obligations.
9.13 Section Titles. The Section titles and Table of Contents
contained in this Agreement are and shall be without substantive meaning or
content of any kind whatsoever and are not a part of the agreement between the
parties hereto.
9.14 Counterparts. This Agreement may be executed in any
number of separate counterparts, each of which shall collectively and separately
constitute one agreement.
9.15 Time of Essence. Time is of the essence of this Agreement
and each of the other Loan Documents.
9.16 Waiver of Jury Trial. BECAUSE DISPUTES ARISING IN
CONNECTION WITH COMPLEX FINANCIAL TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY
RESOLVED BY AN EXPERIENCED AND EXPERT PERSON AND THE PARTIES WISH APPLICABLE
STATE AND FEDERAL LAWS TO APPLY (RATHER THAN ARBITRATION RULES), THE PARTIES
DESIRE THAT THEIR DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS.
THEREFORE, TO ACHIEVE THE BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL
SYSTEM AND OF ARBITRATION, THE PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY
IN ANY ACTION, SUIT, OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE, WHETHER
SOUNDING IN CONTRACT, TORT, OR OTHERWISE, BETWEEN LENDER AND BORROWER ARISING
OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP
ESTABLISHED BETWEEN THEM IN CONNECTION WITH, THIS AGREEMENT OR ANY OF THE OTHER
LOAN DOCUMENTS OR THE TRANSACTIONS RELATED THERETO.
9.17 Syndication. The Borrower agrees to take such steps as
the Lender shall reasonably request to assist Lender in the sale and/or
syndication of the credit provided herein to one or more other financial
institutions. Such steps may include, at the discretion,
-57-
of the Lender, the preparation and dissemination of financial and other
disclosure documents to prospective purchasers, discussions by management with
such Persons and such amendments to the Loan Documents as shall be required to
cause them to conform with customary syndicated bank documents.
9.18 Special Provision Relating to this Amendment and
Restatement.
(a) This Amended and Restated Credit Agreement shall be
effective upon receipt by the Lender of the following items which shall be in
form and substance satisfactory to the Lender in all respects:
(i) counterparts of this Agreement duly executed by the
Borrower and consented to by the Parent;
(ii) counterparts of the Guaranty Agreement duly executed by
each of ARS and ESI;
(iii) counterparts of the Security Agreements, duly executed
by each of ARS and ESI;
(iv) counterparts of an amendment to the Pledge Agreement,
duly executed by the Parent and pledging all of the outstanding
capital stock of ARS and ESI, together with irrevocable stock
powers executed in blank;
(v) an opinion of counsel to the Borrower, the Parent and the
other Credit Parties as to the due execution and enforceability of
this Agreement, the Guaranty Agreement, the Security Agreement, and
the Pledge Agreement, and covering such other matters as the Lender
may request;
(vi) a certificate of Borrower, the Parent and each other
Credit Party, as to the due authorization, execution and delivery
of this Agreement, the Guaranty Agreement, the Security Agreements
and the Pledge Agreement and the truth of the representations and
warranties hereunder and thereunder;
(vii) evidence that no Indebtedness (other than Permitted
Indebtedness) is outstanding, and that no Liens exist upon any of
the property of any Credit Party other than Permitted Encumbrances;
(viii) evidence that each Credit Party has obtained consents
and acknowledgments of all Persons whose consents and
acknowledgments may be required, including, but not limited to, all
requisite Governmental Authorities, to the terms, and to the
execution and delivery, of this Agreement and the other Loan
Documents and the consummation of the transactions contemplated
hereby and thereby;
-58-
(ix) evidence that such action (including, without limitation,
the filing of appropriately completed and duly executed Uniform
Commercial Code financing statements) as may be necessary or
desirable, in the opinion of the Lender and its counsel, to perfect
the Security Interest shall have been taken;
(x) UCC, Lien, judgment and tax search reports for each
jurisdiction in which each Credit Party is located or has
Collateral, showing no Liens or financing statements of record
against any Credit Party, except Permitted Encumbrances, all in
form and substance satisfactory to the Lender;
(xi) evidence that the insurance policies provided for in
Section 6.5 and Schedule 4.20 are in full force and effect,
together with appropriate evidence showing loss payable and/or
additional insured clauses or endorsements, as appropriate, in
favor of the Lender and in form and substance satisfactory to the
Lender;
(xii) evidence that, as of the Restatement Date, and after
giving effect to the transactions contemplated hereby, each of
Borrower and the Parent Group, taken as a whole, is Solvent;
(xiii) evidence that, as of the Restatement Date, each Credit
Party is in compliance in all material respects with all Applicable
Law, including those relating to labor, environmental and ERISA
matters, which evidence may include environmental studies and
compliance audits of the Credit Parties, and their respective
assets;
(xiv) payment of all fees, expenses and amounts (including
Lender's attorney's fees) due to the Lender pursuant to the terms
hereof;
(xv) such other agreements, certificates, opinions of counsel
and other documents as the Lender shall request.
(b) This Amended and Restated Credit Agreement may be executed
in any number of counterparts, all of which shall be deemed to constitute but
one original and shall be binding upon all parties, their successors and
permitted assigns.
(c) References to the Original Agreement contained in any Loan
Document shall be deemed to be a reference to such agreement as amended and
restated hereby.
(d) Borrower hereby acknowledges that the Note and the
Collateral Documents previously executed and delivered by Borrower to Lender are
and shall remain in full force and effect, and hereby ratifies, confirms and
approves the Note and such Collateral Documents and all of the terms and
provisions thereof, and agrees that the Note and each of such Collateral
Documents constitutes the valid and binding obligation of Borrower, enforceable
by the Lender in accordance with its terms.
-59-
IN WITNESS WHEREOF, this Agreement has been duly executed as
of the date first written above.
VODAVI COMMUNICATIONS
SYSTEMS, INC. (formerly V. Technology
Acquisition Corp.)
By: /s/ Xxxx Xxxxxx
------------------------------------
Title: CFO, V.P.
---------------------------------
GENERAL ELECTRIC CAPITAL
CORPORATION
By: /s/ Xxxxxxx Xxxxxx
------------------------------------
Title: Duly Authorized Signatory
---------------------------------
SECTION 9.11 OF THE FOREGOING
AGREEMENT ACKNOWLEDGED AND
AGREED TO:
ARIZONA REPAIR SERVICES, INC.
By: /s/ Xxxx Xxxxxx
------------------------------------
Title: CFO, V.P.
---------------------------------
ENHANCED SYSTEMS, INC.
By: /s/ Xxxx Xxxxxx
------------------------------------
Title: Secretary and Treasurer
---------------------------------
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CONSENT OF PARENT
The undersigned does hereby consent to the execution, delivery
and performance of the within and foregoing Amended and Restated Credit
Agreement and to the consummation of all of the transactions contemplated
thereby and does hereby ratify and reaffirm all of its obligations to and
agreements with the Lender arising under the Pledge Agreement executed by the
undersigned in favor of the Lender in connection with the foregoing Amended and
Restated Credit Agreement, which Pledge Agreement remains in full force and
effect on and as of the date hereof.
IN WITNESS WHEREOF, the undersigned has executed this Consent
as of the day and year first above set forth.
VODAVI TECHNOLOGY, INC.
(formerly V. Technology Holdings Corp.)
By: /s/ Xxxx Xxxxxx
------------------------------------
Title: CFO, V.P.
---------------------------------
-61-
SCHEDULE 2.1(g)
to
CREDIT AGREEMENT
Dated as of April 11, 1994
As Amended and Restated as of June 11, 1997
(a) Lender agrees, subject to the terms and conditions of the
Agreement, to incur from time to time prior to the Commitment Termination Date,
upon written request of Borrower, Letter of Credit Obligations in respect of
Letters of Credit; provided, however, that (i) Lender shall have no obligation
to incur any further Letter of Credit Obligations on or after the Commitment
Termination Date, (ii) each Letter of Credit shall be in form and substance
satisfactory to Lender and, without limiting the generality of the foregoing,
unless the Lender shall otherwise consent in writing, no Letter of Credit shall
have an expiry date which is more than one year following the date of issuance
thereof and Lender shall be under no obligation to incur Letter of Credit
Obligations in respect of any Letter of Credit having an expiry date which is
later than the Commitment Termination Date, which shall be presumed to be the
Maturity Date unless the Lender shall have given or received notice to the
contrary as permitted pursuant to the Credit Agreement, and (iii) the
determination of the bank or other legally authorized Person (including Lender)
which shall issue any Letter of Credit contemplated by this paragraph (a) shall
be made by Lender, in its sole discretion. Each request by Borrower for Lender
to incur a Letter of Credit Obligation shall be substantially in the form of
Exhibit A hereto, shall specify the amount of such Letter of Credit Obligation
and provide such other information with respect thereto as may be required by
Lender, shall be given in writing (by telecopy, telex or cable) or by telephone
confirmed immediately in writing, and shall be given not less than ten (10)
Business Days prior to the requested date for Lender's incurring such Letter of
Credit Obligation. Each Letter of Credit Obligation incurred by Lender shall be
substantially in the form of Exhibit B attached hereto or in such other form as
may be acceptable to Lender.
(b) Borrower hereby irrevocably, absolutely and unconditionally agrees
to reimburse Lender on demand for the amount of any and all payments now or
hereafter made by Lender on or pursuant to any Letter of Credit Obligations
incurred by Lender. In the event the Lender shall make any payment on or
pursuant to any Letter of Credit Obligation incurred by Lender, such payment
shall then be deemed to constitute a Revolving Credit Advance by Lender to
Borrower under Section 2.1(a) of the Credit Agreement.
(c) (i) In the event that any Letter of Credit Obligation incurred by
Lender, whether or not then due and payable, shall for any reason be outstanding
on the Commitment Termination Date, Borrower will pay to Lender cash or cash
equivalents acceptable to Lender ("Cash Equivalents") in an amount equal to 105%
of the maximum amount then available to be drawn under the applicable Letters of
Credit. Such funds or Cash Equivalents shall be held by Lender in a cash
collateral account (the "Cash Collateral Account") maintained in Bankers Trust
Company, New York, New York (or at such other depository institution as may be
selected by Lender). The Cash Collateral Account shall be in the name of Lender
(as a cash collateral account), and shall be under the sole dominion and control
of Lender and
subject to the terms of this Schedule 2.1(g). Borrower hereby pledges, and
grants to Lender a security interest in, all such funds and Cash Equivalents
held in the Cash Collateral Account from time to time and all proceeds thereof,
as security for the payment of all amounts due in respect of the Letter of
Credit Obligations and all other Obligations, whether or not then due. The
Agreement shall constitute a security agreement under applicable law.
(ii) From time to time after funds are deposited in the Cash
Collateral Account, Lender may apply such funds or Cash Equivalents then held in
the Cash Collateral Account to the payment of any amounts, in such order as
Lender may elect, as shall be or shall become due and payable by Borrower to
Lender with respect to such Letter of Credit Obligations or any other
Obligations which may be then outstanding.
(iii) Neither Borrower nor any Person claiming on behalf of or through
Borrower shall have any right to withdraw any of the funds or Cash Equivalents
held in the Cash Collateral Account, except that upon the termination of all
Letter of Credit Obligations and the payment of all amounts payable by Borrower
to Lender in respect thereof and in respect of all other Obligations, any funds
remaining in the Cash Collateral Account in excess of the then remaining Letter
of Credit Obligations shall be returned to Borrower.
(iv) Lender shall not have any obligation to invest the funds in the
Cash Collateral Account or deposit such funds in any interest bearing account,
and interest and earnings thereon, if any, shall be the property of Lender.
(d) In the event that Lender shall incur any Letter of Credit Obligation
pursuant hereto at the request or on behalf of Borrower, Borrower agrees to pay
to Lender, as compensation to Lender for such Letter of Obligation, (i) all
costs and expenses incurred by Lender on account of such Letter of Credit
Obligation and (ii) commencing with the month in which such Letter of Credit
Obligation is incurred by Lender and monthly thereafter for each month during
which such Letter of Credit Obligation shall remain outstanding, a fee in an
amount equal to two percent (2%) per annum of the maximum amount available from
time to time to be drawn under the applicable Letter of Credit, calculated on
the basis of a 360-day year and the actual number of days elapsed; provided,
however, that so long as any Default or Event of Default has occurred and is
continuing, such letter of credit fee rate may be increased by Lender, in its
discretion, by up to an additional two percentage points (2.0%) above the rate
otherwise applicable. Fees payable by Borrower to Lender hereunder in respect of
Letter of Credit Obligations (collectively, the "Letter of Credit Fees") shall
be paid to Lender in arrears, on the first day of each month and on the
Commitment Termination Date and thereafter on demand. The fees, costs and
expenses provided for in this paragraph (d) are in addition to any fees, costs
and expenses payable to the issuers of the Letters of Credit, all of which shall
be solely for the account of Borrower and shall be paid or reimbursed by
Borrower.
(e) Borrower's Obligations to Lender with respect to any Letter of Credit
or Letter of Credit Obligation shall be evidenced by Lender's records and, in
the absence of manifest error, shall be absolute, unconditional and irrevocable
and shall not be affected, modified or
-2-
impaired by: (i) any lack of validity or enforceability of the transactions
contemplated by or related to such Letter of Credit or Letter of Credit
Obligation; (ii) any amendment or waiver of or consent to depart from all or any
of the terms of the transactions contemplated by or related to such Letter of
Credit or Letter of Credit Obligation; (iii) the existence of any claim,
set-off, defense or other right which Borrower or any other Credit Party may
have against Lender, the issuer or beneficiary of such Letter of Credit, or any
other Person, whether in connection with the Agreement or the transactions
contemplated therein or such Letter of Credit or the transactions contemplated
thereby or any unrelated transactions, provided however that this provision
shall not be deemed to prevent Borrower from pursuing any claim it may have
against Lender or the issuer of any Letter of Credit by separate proceeding
following the payment of any such Obligation or from pursuing any compulsory
counterclaim in any civil action filed in respect thereof; or (iv) the fact that
any draft, affidavit, letter, certificate, invoice, xxxx of lading or other
document presented under or delivered in connection with such Letter of Credit
or any other Letter of Credit proves to have been forged, fraudulent, invalid or
insufficient in any respect or any statement therein proves to have been untrue
or incorrect in any respect. Nothing in this paragraph (e) shall be deemed to
create any right in any Person other than the Lender.
(f) In addition to any other indemnity obligations which Borrower may have
to Lender under the Agreement and without limiting such other indemnification
provisions, Borrower hereby agrees to indemnify Lender from and to hold Lender
harmless against any and all claims, liabilities, losses, costs and expenses
(including, without limitation, attorney's fees and expenses) which Lender may
(other than as a result of its own gross negligence or willful misconduct) incur
or be subject to as a consequence, directly or indirectly, of (i) the issuance
of or payment of or failure to pay under any Letter of Credit or Letter of
Credit Obligation or (ii) any suit, investigation or proceeding as to which
Lender is or may become a party as a consequence, directly or indirectly, of the
issuance of any Letter of Credit, the incurring of any Letter of Credit
Obligation or any payment of or failure to pay under any Letter of Credit or
Letter of Credit Obligation. The obligations of Borrower under this paragraph
shall survive any termination of the Agreement.
(g) Borrower hereby assumes all risks of the acts, omissions or misuse of
each Letter of Credit by the beneficiary or issuer thereof and, in connection
therewith, Lender shall not be responsible (i) for the validity, sufficiency,
genuineness or legal effect of any document submitted in connection with any
drawing under any Letter of Credit even if it should in fact prove in any
respect to be invalid, insufficient, inaccurate, untrue, fraudulent or forged;
(ii) for the validity or sufficiency of any instrument transferring or assigning
or purporting to transfer or assign any Letter of Credit or any rights or
benefits thereunder or any proceeds thereof, in whole or in part, even if it
should prove to be invalid or ineffective for any reason; (iii) for the failure
of any issuer or beneficiary of any Letter of Credit to comply fully with the
terms thereof including without limitation the conditions required in order to
effect or pay a drawing thereunder; (iv) for any errors, omissions,
interruptions or delays in transmission or delivery of any messages, by mail,
telecopy, telex or otherwise; (v) for any loss or delay in the transmission or
otherwise of any document or draft required in order to make a drawing under any
Letter of Credit; or (vi) for any consequences arising from causes beyond the
-3-
control of Lender.
-4-
EXHIBIT A
to
SCHEDULE 2.1(g)
Letter of Credit Request
TO: General Electric Capital Corporation
Stamford, Connecticut
Attn: Xxxxxx Xxxxxxx
Fax: (000) 000-0000
Gentlemen:
The undersigned is an officer of VODAVI COMMUNICATIONS SYSTEMS, INC., an
Arizona corporation ("Borrower"), and is authorized to make and deliver this
Letter of Credit Request on behalf of Borrower pursuant to that certain Amended
and Restated Credit Agreement, dated as of April 11, 1994, and amended and
restated as of June 11, 1997, between Borrower and GENERAL ELECTRIC CAPITAL
CORPORATION, a New York corporation ("Lender") (as amended, supplemented,
extended, renewed, restated or replaced from time to time, the "Credit
Agreement"; all terms defined in the Credit Agreement shall have the same
meaning herein).
A. LETTER OF CREDIT REQUEST
------------------------
Borrower hereby requests that Lender incur a Letter of Credit Obligation
(the "Requested Letter of Credit Obligation") pursuant to and this request has
been prepared in accordance with Schedule 2.1(g) to Credit Agreement.
Stated Amount $_____________________
Request Date _____________________
Issuing Date _____________________
Expiration Date _____________________
Beneficiary _____________________
B. CREDIT BALANCE/COLLATERAL AVAILABILITY INFORMATION.
---------------------------------------------------
Revolver and Letter of Credit Balance
Before Requested Letter of Credit Obligation $________
PLUS: Requested Letter of Credit Obligation ________
LESS: Today's Deposit Sweep, if any ________
PLUS/MINUS: Miscellaneous Adjustments ________ (explain below)
Outstanding Loan Balance ________
A-1
Miscellaneous Reconciling Items:
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
C. BORROWER CERTIFICATIONS.
-----------------------
In connection with the foregoing and pursuant to the terms and
provisions of the Credit Agreement, the undersigned hereby certifies that the
following statements are true and correct:
(i) The statements contained in Section 3.1 of the Credit Agreement
are true and correct on and as of the date hereof and will be true and
correct on the date of the incurrence of the requested Letter of Credit
Obligation, both before and after giving effect to the incurrence
thereof with the same force and effect as if made on and as of such
date; and
(ii) All information supplied above is true, correct, and complete
as of the date hereof.
Borrower shall provide Lender with such other information or documents
regarding the above requested Letter of Credit Obligation as Lender may request.
Date: ________________, 19__.
VODAVI COMMUNICATIONS
SYSTEMS, INC.
By:____________________________________
Name:__________________________________
Title:_________________________________
A-2
EXHIBIT B
to
SCHEDULE 2.1(g)
FORM OF LETTER OF CREDIT INDEMNITY AGREEMENT
--------------------------------------------
________________, 19___
[Insert Name and Address of
Letter of Credit Issuing Bank]
Re: Vodavi Communications Systems Inc. (the "Company")
--------------------------------------------------
Gentlemen:
We understand that, pursuant to a ______________ Agreement, dated
___________________, 19___, between you and the Company (the "Letter of Credit
Agreement"), you issued for the account of the Company and for the benefit of
______________ (the "Beneficiary") your irrevocable letter of credit number
______________, dated ____________, 19__, in the original stated amount of
$______________ (the "Letter of Credit"). We further understand that the maximum
amount available to be drawn by the Beneficiary under the Letter of Credit from
and after this date is $_______________. The Letter of Credit, the Letter of
Credit Agreement and any drafts presently thereunder are hereinafter
collectively referred to as the "Credit".
The Company has entered into a Credit Agreement with us. Pursuant
to the Company's request, we hereby agree to indemnify you for any liabilities
or expenses you may incur in connection with the Credit and we hereby agree to
reimburse you on demand for all amounts paid by or charged to you with respect
to the Credit including without limitation the amount of any and all drafts
which you may hereafter pay under the Credit.
You are authorized and empowered, and you hereby agree, without
requirement of inquiry or investigation and with complete release and discharge
to you, to surrender to us, at our direction, the Credit, upon payment to you of
the amount of any and all drafts paid by or charged to you in connection with
the Credit. It is further understood and agreed that you shall not accept,
permit or effect any amendments, restatements or extensions of the Credit
without our prior written consent.
If the foregoing is acceptable to you and is in accordance with
your understanding, please sign and return to us the enclosed copy of this
letter to so indicate. The Company has signed below to indicate its agreement
with the foregoing and its intention to be bound by the conditions hereof. The
Company and us further acknowledge and agree that
B-1
this Letter shall constitute a Letter of Credit Obligation for purposes of (and
as such term is defined in) the Credit Agreement between the Company and us.
Very truly yours,
GENERAL ELECTRIC CAPITAL
CORPORATION
By:_____________________________________
Title:_______________________________
ACCEPTED:
[Insert name of Issuing Bank]
By:_______________________________
Title:________________________
CONFIRMED AND AGREED TO:
VODAVI COMMUNICATIONS SYSTEMS,
INC.
By:_______________________________
Title:________________________
B-2
