CREDIT AGREEMENT
Among
Circuit Systems, Inc.,
Circuit Systems of Tennessee, L.P., and
SVPC Circuit Systems, Inc.
as the Borrowers,
The Lenders Which are Parties Hereto,
and
LaSalle National Bank
as Agent
Dated as of January 6, 1999
TABLE OF CONTENTS
Page
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ARTICLE 1. DEFINITIONS; RULES OF CONSTRUCTION1
1.1 Defined Terms 1
1.2 Accounting Terms 21
1.3 Rules of Construction 21
ARTICLE 2. THE LOANS 22
2.1 Revolving Credit Commitment 22
2.1a Revolving Credit Loans 22
2.1b Commitments of the Lenders 22
2.1c Mandatory and Voluntary Reductions of Revolving Credit
Commitment; Mandatory and Voluntary Principal Payments 22
(i) Borrowing Base Amount 22
(ii) Voluntary Permanent Reductions 22
(iii) Effect of Reductions 22
(iv) Application of Reductions and Prepayments 23
(v) Funding Breakage Fee 23
2.1d Amount of Revolving Credit Loans 24
2.1e Interest Rate 24
2.1f Repayments 24
2.1g Revolving Credit Note 24
2.2 Intentionally Left Blank 24
2.3 Term Loan 25
2.3a Term Loan: Term Loan Notes 25
2.3b Commitments of the Lenders 25
2.3c Term Loan Scheduled Payments 25
2.3d Prepayment of Term Loan 25
(i) Voluntary Prepayments 25
(ii) Payment of Interest and Fees on Prepayment 25
2.3e Interest Rate 26
2.4 Intentionally Left Blank 26
2.5 Interest 26
2.5a Interest Rates; Base Rate and LIBOR-Rate Options 26
2.5b Adjustments to Interest Rates and Fees 26
(i) Changes in Funded Debt to EBITDA Ratio 26
(ii) Changes in Base Rate 27
(iii) Changes in LIBOR-Rate Reserve Percentage 27
(iv) Default Rate 27
2.5c Interest Rate Option Elections Renewals and Conversions 27
2.5d Limitation on Election of LIBOR-Rate Options 28
2.5e Special Provisions Relating to LIBOR-Rate Option 28
(i) LIBOR-Rate Unascertainable 28
(ii) Illegality of Offering LIBOR-Rate 28
(iii) Inability to Offer LIBOR-Rate 29
(iv) Indemnity 29
2.5f Yield Protection 29
2.5g Method of Calculation 30
2.5h Interest Payment Dates 30
2.5i Calculation of Interest 30
2.6 Requests for Loans, Interest Rate Options and Conversions 30
2.7 Method of Disbursements and Payments 31
2.8 Capital Adequacy 31
2.9 Loan Accounts 32
2.10 Fees 32
2.10a Draw Fees 32
2.10b Unused Availability Fee 32
2.10c Fees Fully Earned 32
2.11 All Obligations to Constitute One Obligation 32
2.12 Payment From Accounts Maintained by the Borrowers 32
ARTICLE 3. SET-OFF AND SECURITY INTERESTS 32
3.1 Set-Off 32
3.2 Personal Property Interests 33
3.3 Real Property Interests 33
ARTICLE 4. REPRESENTATIONS AND WARRANTIES 33
4.1 Organization and Powers 33
4.1a Corporations 33
4.1b CSTLP 34
4.2 Capitalization/Ownership 34
4.3 Power and Authority 34
4.4 Validity; Binding Effect and Enforceability 34
4.5 No Conflict 35
4.6 Financial Matters 35
4.6a Historical Financial Statements 35
4.6b Financial Pro-Forma and Projections 36
4.7 Material Adverse Change 36
4.8 Litigation 36
4.9 Compliance with Laws 36
4.10 Material Contracts 36
4.11 Labor Matters 37
4.12 Account Warranties 37
4.13 Names 37
4.14 Locations: Mortgaged Parcels 37
4.15 Condition of and Title to Assets 38
4.15a Real Property Owned by Any Borrower which is not a
Mortgaged Parcel 38
4.15b Leased Real Property 39
4.16 Tax Returns and Payments 39
4.17 Intellectual Property 39
4.18 Insurance 40
4.19 Consents and Approvals 40
4.20 Plans and Benefit Arrangements 40
4.21 Solvency 41
4.22 Margin Stock 41
4.23 Investment Company Act 41
4.24 Public Utility Holding Company Act 41
4.25 Year 2000 Problem 41
4.26 Full Disclosure 41
ARTICLE 5. AFFIRMATIVE COVENANTS 42
5.1 Use of Proceeds 42
5.2 Delivery of Financial Statements and Other Information 42
5.2a Annual Financial Statements 42
5.2b Quarterly Budgets. 43
5.2c Monthly Statement of Operations 43
5.2d Compliance Certificate 43
5.2e Borrowing Base Certificate 43
5.2f Management Letters 43
5.2g Other Reports, Information and Notices 43
(i) Notice of Defaults and Material Adverse Changes 43
(ii) Notice of Litigation 44
(iii) ERISA Reports 44
(iv) Notices of Tax Audits 44
(v) Notice of Name Change 44
(vi) Labor Matters 45
(vii) Annual Forecast 45
5.2h Statements and Reports 45
5.2i SEC Reports 45
5.2j Additional Information; Visitation 45
5.3 Preservation of Existence; Qualification 45
5.4 Compliance with Laws, Contracts and Licenses 45
5.5 Continuance of Business 46
5.6 Accounting System: Books and Records 46
5.7 Payment of Taxes and Other Liabilities 46
5.8 Insurance 46
5.9 Maintenance of Properties 47
5.10 Plans and Benefit Arrangements 47
5.11 Access to Accountants and Management 47
5.12 Audit 47
5.13 Collateral Locations 47
5.14 Updates to Representations, Warranties and Schedules 48
5.15 Further Assurances: Power of Attorney 48
5.16 Key Man Life Insurance Policy 48
5.17 Primary Banking Relationship 49
5.18 Ownership of Subsidiaries. 49
5.19 Silicon Valley Acquisition 49
ARTICLE 6. NEGATIVE COVENANTS 49
6.1 Indebtedness 49
6.2 Guarantees 50
6.3 Liens: Negative Pledge 50
6.4 Financial Covenants 50
6.4a Minimum EBITDA 50
6.4b Adjusted Debt Service Ratio 50
6.4c Minimum Tangible Net Worth 50
6.4d Maximum Debt to Tangible Net Worth Ratio 50
6.4e Capital Expenditures 50
6.4f Operating Lease Expense 51
6.5 Distribution Restriction 51
6.6 Liquidations, Mergers, Consolidations, Acquisitions, Etc 51
6.7 Subsidiaries 51
6.8 Loans and Other Advances and Payments 51
6.8a Loans 51
6.8b Prepayments 51
6.9 Investments 51
6.10 Affiliate Transactions 52
6.11 Change of Business 52
6.12 ERISA 52
6.13 Capital Expenditure Limits 53
6.14 Asset Dispositions 53
ARTICLE 7. CONDITIONS TO EXTENSIONS OF CREDIT53
7.1 All Loans 53
7.1a Request for Loan or Application 53
7.1b Borrowing Base Certificate 53
7.1c No Default or Event of Default 53
7.1d Representations Correct 53
7.1e Landlord Waivers and Consent 54
7.1f Loans for Silicon Valley Acquisition 54
7.2 Initial Extension of Credit 54
7.2a Closing Documents 54
7.2b Lien Searches 55
7.2c Termination Statements, Etc 55
7.2d Title Insurance 55
7.2e Surveys 55
7.2f Site Assessments 55
7.2g Environmental Agreement 55
7.2h Appraisals 56
7.2i Audit of Accounts and Inventory 56
7.2j Hazard and Liability Insurance 56
7.2k Flood Insurance 56
7.2l Termination of Existing Bank Credit Agreement 56
7.2m Organizational Documents 56
7.2n Intentionally Left Blank 56
7.2o Opinion of Counsel 56
7.2p Intentionally left blank 57
7.2q Governmental Approvals 57
7.2r Performance of Agreements 57
7.2s Request for Initial Loans 57
7.2t Assignment of Life Insurance Policy 57
7.2u Landlord Waivers and Consents 57
7.2v Solvency Certificate 57
7.2w No Deterioration 57
7.2x No Litigation 57
7.2y Closing Date Applicable Margin Statement 57
7.2z Payment of Fees 57
7.3 Conditions for Loans Made for the Silicon Valley Acquisition 58
7.3a Purchase and Sale Agreement 58
7.3b UCC-1 Financing Statements 58
7.3c Lien Searches 58
7.3d Termination Statements, Etc 58
7.3e Termination of Existing Indebtedness 58
7.3f Opinion of Counsel 58
7.3g Governmental Approvals 58
7.3h Landlord Waivers and Consents 59
7.3i Solvency Certificate 59
7.3j No Deterioration 59
ARTICLE 8. EVENTS OF DEFAULT; REMEDIES59
8.1 Events of Default 59
8.1a Nonpayment of Any Borrower's Obligations 59
8.1b Violations Under Other Indebtedness and Obligations 59
8.1c Insolvency, Etc. 59
(i) Involuntary Proceedings 59
(ii) Voluntary Proceedings 60
8.1d Dissolution; Cessation of Business 60
8.1e ERISA 60
8.1f Change of Control 60
8.1g Adverse Judgments 60
8.1h Failure to Comply with Loan Documents 60
(i) Failure to Comply with Negative Covenants 60
(ii) Failure to Comply with Other Covenants 60
(iii) Defaults under or Failure to Comply with Other
Loan Documents 61
8.1i Misrepresentation 61
8.1j Invalidity, Etc. of Loan Documents 61
8.1k Material Adverse Change 61
8.1l Agent's Lien 61
8.2 Remedies 61
8.2a Events of Default Under Sections 8.1c and 8.1d 61
8.2b Remaining Events of Default 62
8.2c Additional Remedies 62
8.2d Exercise of Remedies; Remedies Cumulative 62
ARTICLE 9. AGREEMENT AMONG LENDERS 62
9.1 General; No Third Party Beneficiary 62
9.2 Appointment and Grant of Authority 62
9.3 Non-Reliance on the Agent 63
9.4 Responsibility of the Agent and Other Matters 63
9.4a Ministerial Nature of Duties 63
9.4b Limitation of Liability 63
9.4c Reliance 64
9.5 Action on Instructions 64
9.6 Action Upon Occurrence of a Default or Event of Default 64
9.7 Indemnification 64
9.8 Agent's Rights as a Lender 65
9.9 Loan Advances by the Agent 65
9.10 Payment to Lenders 65
9.11 Pro Rata Sharing 66
9.12 Notice of Event of Default 66
9.13 Successor Agent 66
ARTICLE 10. GENERAL PROVISIONS 66
10.1 Amendments and Waivers 66
10.2 Taxes 68
10.3 Expenses 68
10.4 Notices 69
10.4a Notice to the Borrower 69
10.4b Notice to the Agent 69
10.4c Notice to the Lenders 70
10.4d Effectiveness of Notices 70
10.5 Assignments 70
10.5a Assignments 70
10.5b Assignment to Federal Reserve Bank 71
10.5c Assignment Register 71
10.6 Participations 71
10.6a Sale of Participations 72
10.6b Right of Setoff 72
10.7 Indemnity 72
10.8 Successors and Assigns 73
10.9 Confidentiality 73
10.10 Severability 73
10.11 Survival 73
10.12 Governing Law 73
10.13 Forum 74
10.14 Non-Business Days 74
10.15 Integration 74
10.16 Joint and Several Obligations 74
10.17 Headings 74
10.17 Counterparts 74
10.18 WAIVER OF JURY TRIAL 75
CREDIT AGREEMENT
This CREDIT AGREEMENT, dated as of January 6, 1999, is entered
into by and among CIRCUIT SYSTEMS, INC., an Illinois corporation
("CSI"), CIRCUIT SYSTEMS OF TENNESSEE, L.P., a Tennessee limited
partnership ("CSTLP"), and SVPC CIRCUIT SYSTEMS, INC., a California
corporation ("SVPCCS"), (each, a "Borrower" as further defined below,
and collectively, the "Borrowers"), the financial institutions which
are or which become parties hereto (each a "Lender" and collectively
the "Lenders," as further defined below), and LASALLE NATIONAL BANK, a
national banking association, for itself as a Lender and as the agent
for the Lenders (in such capacity the "Agent").
WITNESSETH:
WHEREAS, the Borrowers have requested that the Lenders make
available to them (i) a revolving credit facility in the maximum
principal amount of $18,000,000 and (ii) a term loan in the maximum
principal amount of $7,000,000, and the Lenders have agreed to do so,
on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the premises (each of which
is incorporated herein by reference) and the mutual promises contained
herein and other valuable consideration, the receipt and adequacy of
which are hereby acknowledged, and with the intent to be legally bound
hereby, the parties hereto agree as follows:
ARTICLE 1. DEFINITIONS; RULES OF CONSTRUCTION
1.1 Defined Terms. As used in this Agreement, including the preamble
and recitals hereto, and in the other Loan Documents, the following
terms shall have the meanings set forth below or in the Section or
Subsection of this Agreement referred to, unless the context otherwise
requires:
Account: An account, as that term is defined in the Uniform
Commercial Code, due any Borrower, whether now in existence or
hereafter created or acquired.
Account Debtor: Any Person who is or becomes obligated under or
with respect to an Account.
Adjusted Net Income: Net income of the Borrowers on a
consolidated basis determined in accordance with GAAP, less any
gain on the sale of any asset not in the ordinary course of
business and/or any extraordinary income and income tax
liability.
Affiliate: As to any Person, any other person directly or
indirectly through one or more intermediaries Controlling,
Controlled by, or under direct or indirect common Control with
such Person.
Agent: LaSalle National Bank, a national banking association, in
its capacity as agent for the Lenders hereunder, and its
successors and assigns, and any Person that becomes a successor
agent hereunder.
Agreement: This Credit Agreement, together with all exhibits and
schedules hereto and all extensions, renewals, amendments,
restatements, substitutions, and replacements hereto and hereof.
Applicable Margin: As to each (i) Revolving Loan Tranche and
Term Loan Tranche, an incremental amount in excess of the Base
Rate or the LIBOR-Rate which will fluctuate as a function of the
Funded Debt to EBITDA Ratio, pursuant to Section 2.5a.
Assignment and Assumption Agreement: An Assignment and
Assumption Agreement entered into by and between a Purchasing
Lender, and a Transferor Lender, substantially in the form of
Exhibit "N" hereto, with appropriate insertions, and all
exhibits, schedules, extensions, renewals, amendments,
substitutions, and replacements thereto and thereof.
Authorized Officer: X.X. Xxxxx and Xxxxx X. Xxxxx. The Agent
and the Lenders shall be entitled to rely on the incumbency
certificates delivered pursuant to Section 7.2 for the initial
designation of each Authorized Officer. Additions or deletions
to the list of Authorized Officers may be made by CSI at any time
by delivering to the Agent a revised, fully-executed incumbency
certificate.
Base Rate: The per annum rate of interest equal to the Prime
Rate.
Base Rate Loan: A Revolving Loan Tranche or Term Loan Tranche
bearing interest under the Base Rate Option, as set forth in
Subsection 2.5a.
Base Rate Option: The ability of the Borrowers to elect Base
Rate Loans, as set forth in Subsection 2.5a.
Benefit Arrangement: An "employee benefit plan," within the
meaning of Section 3(3) of ERISA, which is not a Plan or a
Multiemployer Plan and which is maintained or otherwise
contributed to by the Borrowers or any ERISA Affiliate for the
benefit of employees of the Borrowers or any ERISA Affiliate.
Borrower: Any of CSI, CSTLP, or SVPCCS.
Borrowing Base:
For the Revolving Credit Loans: The lesser of
$18,000,000 or the sum of (i) 85% of Eligible Accounts,
(ii) 50% of Eligible Finished Goods, (iii) 75% of
Eligible Finished Goods on Consignment, not greater
than $2,500,000, (iv) the sum of 40% of the Raw
Materials of SVPCCS and 50% of Raw Materials of all
other entities, together, not greater than $2,000,000,
and (v) 60% of the current market value of the common
stock of SigmaTron held by CSI, not greater than
$2,000,000.
For the Term Loan: The lesser of $7,000,000 or the sum
of (a) 75% of the fair market value of the Mortgaged
Parcels and (b) 75% of the orderly liquidation value of
the Borrowers' machinery and equipment less the sum of
the current outstanding loans and leases secured by
such machinery and equipment.
Borrowing Base Certificate: A borrowing base certificate
substantially in the form of Exhibit "K" which has been executed
by an Authorized Officer and delivered to the Agent.
Business: The manufacture or sourcing, distribution and sale of
printed circuit boards by CSI and its Subsidiaries.
Business Day: Any day other than a Saturday or a Sunday or a
legal holiday on which the offices of the Agent (currently
located in Chicago, Illinois) are authorized or required to be
closed for business, and if the applicable Business Day related
to any LIBOR-Rate Loan, such day must also be a day on which
dealings are carried on in the London interbank market.
Capital Expenditure: Any expenditure which would be classified
as a capital expenditure in accordance with GAAP.
Capitalized Lease: Any lease of property which would be
capitalized on a balance sheet prepared in accordance with GAAP.
Capitalized Lease Obligations: The amount of the obligations
under Capitalized Leases which would be shown as a liability on a
balance sheet prepared in accordance with GAAP.
Change of Control: Any transaction or series of transactions or
occurrences which result at any time in any Person (other than
X.X. Xxxxx) or group of Persons (within the meaning of Sections
13 and 14 of the Securities Exchange Act of 1934, as amended and
the rules and regulations thereunder) shall have the beneficial
ownership (within the meaning of Rule 13d-3 promulgated by the
Securities Exchange Commission under said Act) of securities
representing 25% or more of the combined voting power of all
outstanding voting securities of CSI or (b) X.X. Xxxxx shall own
less than 25% of all outstanding voting securities of CSI.
Chattel Paper: Any chattel paper, as that term is defined in the
Uniform Commercial Code, of any Borrower, whether now owned or
hereafter created or acquired.
Closing Certificate: A certificate substantially in the form of
Exhibit "L" which has been executed by the Borrowers and
delivered to the Agent.
Closing Date: A date mutually agreed to by the parties hereto
upon the satisfaction or fulfillment of the conditions precedent
set forth in Article 7.
Closing Date Applicable Margin Statement: A pro forma financial
statement showing Funded Debt of CSI on a Consolidated basis to
the EBITDA of CSI on a consolidated basis for the twelve months
ended November 30, 1998 which reflects the Funded Debt as of the
Closing Date, the Silicon Valley Acquisition and the costs and
expenses of the Silicon Valley Acquisition and those hereunder.
Collateral: Collectively, all of the property (whether real,
personal or mixed, and whether tangible or intangible), rights,
titles and interests subject to any Lien in favor of the Agent
for the benefit of the Lenders pursuant to this Agreement or any
other Loan Document.
Commission: The Securities and Exchange Commission.
Commitment: With respect to each Lender, the commitment of such
Lender to make Revolving Credit Loans and the Term Loan pursuant
to Article 2 in the aggregate Dollar amounts not to exceed at any
one time outstanding: (i) as to any Lender which is an original
signatory to this Agreement, the Dollar amounts for such Lender
set forth on Annex A hereto or as modified on Schedule I to the
most recent Assignment and Assumption Agreement, if any, which
such Lender executes as a Transferor Lender, as the case may be,
or (ii) as to any Lender which is not an original signatory to
this Agreement but which becomes a Lender by executing an
Assignment and Assumption Agreement as a Purchasing Lender, the
Dollar amounts for such Lender set forth on Schedule I to such
Assignment and Assumption Agreement, or as modified on Schedule I
to the most recent Assignment and Assumption Agreement, if any,
which such Lender executes as a Transferor Lender.
Commitment Percentage: With respect to each Lender, its
percentage commitment of the Revolving Credit Commitment and the
Term Loan, which shall be (i) as to any Lender which is an
original signatory to this Agreement, the percentage set forth on
Annex A hereto or as modified on Schedule I to the most recent
Assignment and Assumption Agreement, if any, which such Lender
executes as a Transferor Lender, as the case may be, or (ii) as
to any Lender which is not an original signatory to this
Agreement but which becomes a Lender by executing an Assignment
and Assumption Agreement as a Purchasing Lender, the percentage
set forth on Schedule I to such Assignment and Assumption
Agreement, or as modified on Schedule I to the most recent
Assignment and Assumption Agreement, if any, which such Lender
executes as a Transferor Lender.
Compliance Certificate: A certificate substantially in the form
of Exhibit "J", as the case may be, which has been executed by an
Authorized Officer and delivered to the Agent.
Control (and its derivatives): Either (i) the ownership of five
percent (5%) or more of any class of voting securities, limited
liability company membership interests, partnership interests or
other equity interest of a Person, or (ii) the possession,
directly or indirectly, of the power to direct or cause the
direction of the management or policies of a Person, whether as a
general partner of a limited partnership, manager of a limited
liability company or through the ownership of voting securities,
partnership interests or other equity interests, by contract or
otherwise, including without limitation the power to elect a
majority of the directors of a corporation or trustees of a
trust, as the case may be.
CSI: Circuit Systems, Inc., an Illinois corporation.
CST: Circuit Systems of Tennessee, Inc., a Tennessee
corporation, and the general partner of CSTLP.
CSTLP: Circuit Systems of Tennessee, L.P., a Tennessee limited
partnership.
Debt Service: As of any date of determination, the sum of (i)
interest expense on Indebtedness, (ii) scheduled payments of
principal on Indebtedness (other than on the Revolving Credit
Loans or any voluntary prepayments of principal), (iii) lease
payments made with respect to Capitalized Leases and (iv) rental
payments for leased real property all determined in accordance
with GAAP consistently applied.
Default: Any condition, event, omission or act which with the
giving of notice, the passage of time or the occurrence of any
condition, event or act would constitute an Event of Default.
Default Rate: The rate of interest described in Section
2.5b(iv).
Document: Any document, as that term is defined in the Uniform
Commercial Code, of the Borrowers, whether now owned or in
existence or hereafter created or acquired.
Dollars or $: The legal tender of the United States of America.
EBITDA: The sum of (i) Adjusted Net Income, (ii) interest
expense, (iii) depreciation, (iv) amortization, (v) income tax
expense, of the Borrowers on a consolidated basis, and (vi) the
one-time restructuring charge of $1,520,000 taken in the first
quarter of Fiscal Year 1999, all determined in accordance with
GAAP consistently applied (and limited, in the cases of (ii)
through (vi) above, to the extent such items are deducted from
such Adjusted Net Income).
Eligible Account: Any Account of any Borrower which the Agent,
in its sole discretion exercised in good faith, determines to
have met all of the following minimum requirements:
(i) The Account represents a complete bona fide transaction
for goods sold and delivered or services rendered (excluding any
amounts in the nature of a service charge added to the amount due
on an invoice because the invoice has not been paid when due)
which requires no further act under any circumstances on the part
of the Borrower to make such Account payable by the Account
Debtor;
(ii) The Account arises from an arm's-length transaction in
the ordinary course of the business of the Borrower between the
Borrower and an Account Debtor which (unless the Account Debtor
is SigmaTron or unless the Agent otherwise agrees in writing) is
not (A) an Affiliate or Subsidiary of any Borrower, (B) a Person
Controlled by a Subsidiary or Affiliate of any Borrower, (C) an
officer, director, stockholder or employee of any of the
Borrowers or any Affiliate or Subsidiary of the Borrowers, or (D)
a member of the family of an officer, director, stockholder or
employee of any Borrower or a Subsidiary or Affiliate of any
Borrower;
(iii) The Account shall not (A) be or have been unpaid
more than ninety (90) days from the original due date of the
invoice or (B) be payable by an Account Debtor (1) more than 25%
of whose Accounts are not deemed Eligible Accounts or (2) whose
Accounts constitute 20% or more of the aggregate amount of all
outstanding Accounts, provided, however, that the 20% limit shall
not apply to Lucent Technologies, Inc. and other Account Debtors
approved in writing by the Required Lenders and provided further,
that, as to such (B)(2) Account Debtors, only the amount of such
Accounts in excess of 20% shall not be an Eligible Account;
(iv) The goods the sale of which gave rise to the Account
were shipped or delivered or provided to the Account Debtor on an
absolute sale basis and not on a xxxx-and-hold, consignment sale,
guaranteed sale or sale-or-return basis or on the basis of any
other similar understanding, and no part of such goods have been
returned or rejected;
(v) The Account is not evidenced by Chattel Paper or an
Instrument of any kind and has not been reduced to judgment;
(vi) The Account Debtor with respect to the Account (A) is
Solvent, (B) is not the subject of any bankruptcy or insolvency
proceedings of any kind or of any other proceeding or action,
threatened or pending, which might have a materially adverse
effect on his or its business, operations or properties, (C) has
not made an assignment for the benefit of his or its creditors,
(D) has not failed, suspended business, ceased to be Solvent,
dissolved or consented to or suffered the appointment of a
receiver, trustee, liquidator or custodian for him or it or for
all or a significant portion of his or its assets or affairs, (E)
is not, in the sole discretion of the Agent exercised in good
faith, deemed ineligible for credit for other reasons (including,
without limitations, unsatisfactory past experience of any of the
Borrowers, respectively, or the Agent with such Account Debtor or
the unsatisfactory reputation of such Account Debtor), and (F) is
not located in Indiana, Minnesota, New Jersey or any other
jurisdiction which requires a Borrower, as a precondition to
commencing or maintaining an action in the courts of that
jurisdiction, either (i) to receive a certificate of authority to
do business and be in good standing in that jurisdiction, or (ii)
to file a Notice of Business Activities Report or similar report
with such jurisdiction's taxing authority, unless (X) the
Borrower has taken one of the actions described in clause (i) or
(ii), (Y) the failure to take one of the actions described in
either clause (i) or (ii) may be cured retroactively by the
Borrower at its election, or (Z) the Borrower has proven, to the
Agent's reasonable satisfaction, that it is exempt from any such
requirements under any such jurisdiction's laws for all required
periods;
(vii) The Account Debtor is not located outside of the
United States of America, unless (a) the foreign Account Debtor
is a Fortune 1000 company, the Borrower has delivered to the Bank
any or all letters of credit and/or cash against documents
relating to such foreign Account or evidence of credit insurance,
as requested by the Agent and deemed adequate and acceptable by
the Agent or (b) the foreign Account has been deemed eligible by
the Agent in its sole discretion;
(viii) The Account Debtor is not the government of the
United States of America, or any department, agency or
instrumentality of the United States of America, unless the
Borrower assigns its right to payment of such Account to the
Agent, in form and substance satisfactory to the Agent, so as to
comply with the Assignment of Claims Act of 1940 (31 U.S.C. '203
et seq.), as amended from time to time, or applicable similar or
successor legislation.
(ix) The Account is a valid, legally enforceable obligation
of the Account Debtor with respect thereto and is only that
portion of an Account which is not subject to any dispute,
condition, contingency, offset, recoupment, reduction, claim for
credit, allowance, adjustment, counterclaim or defense on the
part of such Account Debtor, and the Account is not otherwise
subject to any right of setoff to the extent of any of the
foregoing.
(x) The Account is subject to a valid, perfected, first
priority Lien in favor of the Agent, subject only to the
Permitted Liens;
(xi) The Account is evidenced by an invoice or other
reasonably appropriate documentation;
(xii) The Account is not subject to any provision
prohibiting its assignment or requiring notice of or consent to
such assignment;
(xiii) The goods giving rise to the Account were not, at
the time of sale thereof, subject to any Lien except a Lien in
favor of the Agent;
(xiv) The Account is payable in freely transferable
Dollars;
(xv) The Borrower has not made any agreement with the
Account Debtor for any deduction therefrom, except for discounts
or allowances which are made in the ordinary course of business
for prompt payment and which discounts or allowances are
reflected in the calculation of the face value of each invoice
related to such Account;
(xvi) The Borrower has not made any agreement with the
Account Debtor to extend the time of payment of such Account
beyond the ninety (90) day period referred to in (iii) unless the
Account is supported by an irrevocable letter of credit issued by
a Bank acceptable to the Agent without prior written consent of
the Lenders; and
(xvii) No covenant, representation or warranty contained
in this Agreement or any of the other Loan Documents with respect
to such Account has been breached.
In addition to the foregoing requirements, Accounts of any
Account Debtor which are otherwise Eligible Accounts shall be
reduced to the extent of any accounts payable (including, without
limitation, the Agent's good faith estimate of any contingent
liabilities) owing by the Borrower to such Account Debtor, which
accounts payable are known as "contras".
Eligible Finished Goods: Any of the finished goods in the
Inventory of the Borrowers which the Agent, in its sole
discretion exercised in good faith, determines to have met all of
the following minimum requirements:
(i) The finished goods are (A) located in the United States
at the premises listed on Schedule 4.14 and the Agent's Lien has
been perfected at such location, unless the applicable Borrower
has complied with the terms of Section 5.13 and the Agent's Lien
has been perfected in any new location for Inventory and (B) not
in transit;
(ii) The finished goods are not stored with a bailee,
warehouseman, consignee or similar party;
(iii) The finished goods are not located on the premises
of an outside processor or an independent sales office;
(iv) The finished goods are new and of good and merchantable
quality, are not obsolete and represent no more than an 18-month
supply of such finished goods;
(v) The finished goods are not packaging material or
packaging supplies unless such materials or supplies have already
been incorporated into the finished goods;
(vi) The finished goods are subject to a valid, perfected,
first priority Lien in favor of the Agent and are not subject to
any other Lien whatsoever, other than the Permitted Liens;
(vii) No covenant, representation or warranty contained
in this Agreement or any of the other Loan Documents with respect
to such finished goods has been breached; and
(viii) The finished goods have not been manufactured in
violation of any Federal minimum wage or overtime laws, including
the Fair Labor Standards Act, 29 U.S.C. 215(a)(1) or any similar
or successor legislation.
Eligible Finished Goods On Consignment: That portion of the
Borrowers' finished goods inventory (i) which is held by an
Agent-approved Account Debtor, (ii) which is subject to a
consignment agreement which has been approved by Agent in form
and substance, and (iii) in which the Agent holds a perfected
security interest. The only Agent-approved Account Debtor
holding Eligible Goods On Consignment as of the Closing Date is
Lucent Technologies, Inc.
Environmental Agreement: The Environmental Indemnity Agreement
substantially in the form of Exhibit "G", together with all
exhibits, schedules, extensions, renewals, amendments,
substitutions and replacements thereto and thereof.
Environmental Law: This term shall have the meaning given it in
the Environmental Agreement.
Equipment: Any equipment, as that term is defined in the Uniform
Commercial Code, owned by the Borrowers, whether now owned or
hereafter acquired and wherever located.
ERISA: The Employee Retirement Income Security Act of 1974, as
it may from time to time be amended, supplemented, or otherwise
modified, or any successor statute, and the rules and regulations
promulgated thereunder.
ERISA Affiliate: At any time any member of a controlled group of
corporations under Section 414(b) of the Internal Revenue Code of
which any Borrower is a member, and any trade or business
(whether or not incorporated) under common control with any
Borrower under Section 414(c) of the Internal Revenue Code, and
all other entities which, together with any of the Borrowers, are
or were treated as a single employer under Section 414(m) or
414(o) of the Internal Revenue Code.
Event of Default: Any of the events specified in Section 8.1.
Existing Bank Credit Agreement: The Credit Agreement dated as of
July 24, 1997 entered into by and between CSI and American
National Bank, together with all extensions, renewals,
amendments, substitutions and replacements thereto and thereof.
Existing Bank Indebtedness: All outstanding principal, accrued
and unpaid interest and fees, and all other unpaid amounts owed
to American National Bank pursuant to the Existing Bank Credit
Agreement.
Expenses: Those amounts described in Section 10.3.
Fee: Any of the Unused Availability Fee, the Term Loan Draw Fee
or any other fee payable by the Borrowers to the Agent or the
Lenders hereunder or under any of the other Loan Documents.
Fiscal Quarter: Each three-month fiscal period of CSI beginning
respectively on each successive February 1, May 1, August 1 and
November 1 during the term thereof and ending on the immediately
succeeding April 30, July 31, October 31 and January 31.
Fiscal Year: Each annual fiscal period of CSI beginning May 1
and ending on the immediately succeeding April 30.
Fixture: Any fixture, as that term is defined in the Uniform
Commercial Code, owned by the Borrowers, whether now owned or
hereafter acquired and wherever located.
Funded Debt: As of any date of determination, the total amount
of the Borrowers' outstanding Indebtedness, reported on a
consolidated basis.
Funded Debt to EBITDA Ratio: The ratio of Funded Debt as of the
end of a Fiscal Quarter to EBITDA for such Fiscal Quarter, on a
rolling four quarter basis; provided that for periods prior to
the Closing Date the ratio shall be determined on the basis of
the Funded Debt as of the Closing Date and the EBITDA for the
relevant period.
Funding Breakage Fee: The prepayment fee described in Section
2.1c(v).
GAAP: Generally accepted accounting principles set forth from
time to time in the opinions and pronouncements of the Accounting
Principles Board and the American Institute of Certified Public
Accountants and statements and pronouncements of the Financial
Accounting Standards Board (or agencies with similar functions of
comparable stature and authority within the accounting
profession) which are applicable to the circumstances as of the
date of determination.
General Intangible: Any general intangible, as that term is
defined in the Uniform Commercial Code, of the Borrowers, whether
now owned or in existence or hereafter created or acquired,
including without limitation any cause of action, business
records, deposit account, invention, design, patent, patent
application, trademark, trademark application, service xxxx,
service xxxx application, trade name, trade name application,
trade secret, goodwill, copyright, copyright application,
registration, license, franchise, customer guaranties, security
interests, rights to indemnification or any other intangible
property of any kind or nature (other than an Account).
Goods: All goods, as that term is defined in the Uniform
Commercial Code, of the Borrowers, whether now owned or hereafter
acquired and wherever located.
Governmental Approval: Any order, consent, authorization,
license, validation, approval or permit required to be issued to
or obtained by any of the Borrower from any Governmental
Authority in connection with (i) the ownership, construction,
erection, installation, operation, use and maintenance by it of
its properties, (ii) the conduct of its present and proposed
businesses and (iii) the execution, delivery and performance by
it of and under the Loan Documents.
Governmental Authority: The government of the United States or
the government of any state or locality therein, any political
subdivision or any governmental, quasi-governmental, judicial,
public or statutory instrumentality, court, arbitrator,
authority, body or entity or other regulatory bureau, authority,
body or entity of the United States or any state, territory or
municipality or locality therein, or any central bank or any
comparable authority, and any successor to any of the foregoing
or any corporation or other entity owned or controlled, through
stock or capital ownership or otherwise, by any of the foregoing.
Governmental Rule: Any law, statute, rule, regulation, treaty,
ordinance, order, writ, injunction, decree, judgment, guideline,
directive or decision of any Governmental Authority, including
without limitation Environmental Laws, whether in existence on
the Closing Date or whether issued, enacted or adopted after the
Closing Date, and any change therein or in the interpretation or
application thereof following the Closing Date.
Guaranty: As to any Person, any obligation, direct or indirect,
by which such Person undertakes to guaranty, assume or remain
liable for the payment of a second Person's obligations,
including but not limited to (i) endorsements of negotiable
instruments, (ii) discounts with recourse, (iii) agreements to
pay or perform upon a second Person's failure to pay or perform,
(iv) agreements to remain liable on obligations assumed by a
second Person, (v) agreements to maintain the capital, working
capital, solvency or general financial condition of a second
Person and (vi) agreements for the purchase or other acquisition
of products, materials, supplies or services, if in any case
payment therefor is to be made regardless of the nondelivery of
such products, materials or supplies or the nonfurnishing of such
services.
Indebtedness: Individually and collectively, (i) all obligations
and indebtedness for borrowed money, including but not limited to
the Obligations and subordinated financing (to the extent such
financing shall be treated as indebtedness (or debt) under GAAP);
(ii) all obligations evidenced by bonds, debentures, notes,
including but not limited to the Notes, or similar instruments;
(iii) all obligations under conditional sale or other title
retention agreements relating to property purchased by any
Borrower; (iv) all obligations issued or assumed as the deferred
purchase price of property or services; (v) all Capitalized Lease
Obligations; (vi) all obligations with respect to letters of
credit, whether matured or contingent; (vii) all obligations of
others secured by any Lien or property or assets owned or
acquired, whether or not the obligations secured thereby have
been assumed; (viii) any Guaranty; (ix) all obligations with
respect to any interest hedge agreement (i.e. any type of
agreement or arrangement designed to provide protection against
fluctuations in interest rates); and (x) any other transaction
which shall be treated as indebtedness (or debt) in accordance
with GAAP; provided, however, that Indebtedness shall not include
accounts payable incurred in the ordinary course of business and
not more than 90 days old, unless disputed in good faith, if
those accounts payable do not constitute obligations to repay
borrowed money.
Indemnified Person: This term shall have the meaning given it in
Section 10.7.
Instrument: Any instrument, as that term is defined in the
Uniform Commercial Code, owned or held by any Borrower, whether
now owned or in existence or hereafter created or acquired.
Interest Rate Option: Either the Base Rate Option or the LIBOR-
Rate Option.
Internal Revenue Code: The Internal Revenue Code of 1986 or any
successor legislation thereto, and the rules and regulations
issued or promulgated thereunder, including any amendments to any
of the foregoing.
Inventory: All inventory, as that term is defined in the Uniform
Commercial Code, owned by any Borrower, including but not limited
to any and all new or used goods, merchandise or other personal
property, including but not limited to goods in transit, of any
Borrower, and which is or may at any time be held as finished
goods, raw materials, work-in-process, supplies or materials used
or consumed in the business of such Borrower or held for sale or
lease or furnished under a contract of service in the ordinary
course of the business of such Borrower, including but not
limited to all returned and repossessed goods and all
supplementary items, packing and shipping supplies and
advertising materials, all of the foregoing whether now owned or
hereafter acquired and wherever located.
Investment Property: Any investment property, as that term is
defined in the Uniform Commercial Code, of any of the Borrowers,
whether now owned or in existence as hereinafter created or
acquired.
Lender: Each financial institution listed on Annex A, and any
financial institution which becomes a party hereto in the future,
and its successors and permitted assigns.
LIBOR-Rate: With respect to each Revolving Loan Tranche and each
Term Loan Tranche to which the LIBOR-Rate Option applies for any
LIBOR-Rate Interest Period, the interest rate per annum
determined by the Agent by dividing (the resulting quotient
rounded upward or downward to the nearest 1/16th of 1% per annum)
(i) the rate of interest determined by the Agent in accordance
with its usual procedures (which determination shall be
conclusive, absent manifest error) to be quoted on the Reuters
screen ISDA page to be the average of the rates per annum for
deposits in Dollars offered to major money center banks in the
London interbank market (or, if such Reuters quotation is not
available, determined in good faith by the Agent, after inquiry
to three reference banks selected by the Agent from among the
Lenders, in accordance with its usual procedures when reference
banks are consulted), at approximately 11:00 a.m., London time,
two Business Days prior to the first day of such LIBOR-Rate
Interest Period for delivery on the first day of such LIBOR-Rate
Interest period and in an amount comparable to such Revolving
Loan Tranche or Term Loan Tranche and having a borrowing date and
a maturity comparable to such LIBOR-Rate Interest Period by (ii)
a number equal to 1.00 minus the LIBOR-Rate Reserve Percentage.
LIBOR-Rate Interest Period: (i) With respect to any Revolving
Loan Tranche or Term Loan Tranche, any individual period of one,
two or three months commencing on the date a LIBOR-Rate Option is
effective; provided, however, that (A) any LIBOR-Rate Interest
Period which would otherwise end on a day which is not a Business
Day shall be extended to the next Business Day unless such
Business Day falls in the succeeding calendar month, in which
case such LIBOR-Rate Interest Period shall end on the next
preceding Business Day, (B) any LIBOR-Rate Interest Period which
begins on the last day of a calendar month or on a day for which
there is no numerically corresponding day in the subsequent
calendar month during which such LIBOR-Rate Interest Period is to
end shall end on the last Business Day of such subsequent month,
and (C) no LIBOR-Rate Interest Period for any Revolving Loan
Tranche may end after the Revolving Credit Termination Date, and
no LIBOR-Rate interest period for any Term Loan Tranche may end
after the Term Loan Maturity Date.
LIBOR-Rate Loan: A Revolving Loan Tranche or Term Loan Tranche
bearing interest under the LIBOR-Rate Option, as set forth in
Subsection 2.5a.
LIBOR-Rate Option: The ability of the Borrowers to elect LIBOR-
Rate Loans, as set forth in Subsection 2.5c.
LIBOR-Rate Reserve Percentage: The maximum percentage (expressed
as a decimal rounded upward to the nearest 1/16 of 1%), as
determined by the Agent (which determination shall be conclusive,
absent manifest error) which is in effect during any relevant
period, as prescribed by the Board of Governors of the Federal
Reserve System (or any successor) for determining the maximum
reserve requirements (including supplemental, marginal and
emergency reserve requirements) with respect to eurocurrency
funding (currently referred to as "Eurocurrency Liabilities") of
a member bank in such System. The LIBOR-Rate shall be adjusted
automatically as of the effective date of each change in the
LIBOR-Rate Reserve Percentage. The LIBOR-Rate Option shall be
calculated in accordance with the foregoing whether or not any
Lender is actually required to hold reserves in connection with
its eurocurrency funding or, if required to hold such reserves,
is required to hold reserves at the "LIBOR-Rate Reserve
Percentage" as herein defined.
Lien: Any security interest, mortgage, charge, pledge,
hypothecation, assignment, deposit arrangement, encumbrance, lien
(statutory or other), preference, priority or other security
agreement or preferential arrangement of any kind or nature
whatsoever (including, without limitation, any conditional sale
or other title retention agreement, any Capitalized Lease having
substantially the same economic effect as any of the foregoing,
and the filing of any financing statement under the Uniform
Commercial Code evidencing any of the foregoing), in, upon or
against any asset of any Borrower or any Subsidiary, whether or
not voluntarily given.
Loan: A Revolving Credit Loan or the Term Loan, and
collectively, the "Loans."
Loan Account: Any loan account referred to in Section 2.9.
Loan Document: Any of this Agreement, any Revolving Credit Note,
any Term Note, any Security Document, the Environmental
Agreement, the Pledge Agreement, and all other agreements,
documents and instruments executed and delivered to govern,
evidence or secure the Obligations, and the statements, reports,
certificates and other documents required by, or related to, any
of the foregoing, together with all extensions, renewals,
amendments, substitutions and replacements to and of any of the
foregoing.
Loan Request: Each Loan Request executed by a Borrower and
delivered to the Agent, substantially in the form of Exhibit "C".
Material Adverse Change: Any set of circumstances or events
which (i) has or could reasonably be expected to have any
material adverse effect whatsoever upon the validity of
enforceability of this Agreement or any of the other Loan
Documents, (ii) is or could reasonably be expected to be material
and adverse to the business, properties, assets, financial
condition or results of operations of the Borrowers, taken as a
whole, (iii) impairs materially or could reasonably be expected
to impair materially the ability of a Borrower to duly and
punctually pay or perform the Obligations, or (iv) impairs
materially or could reasonably be expected to impair materially
the ability of the Agent or any Lender to enforce their
respective legal remedies pursuant to this Agreement and the
other Loan Documents.
Material Adverse Effect: An effect that results in or causes a
Material Adverse Change.
Money: Any money, as that term is defined in the Uniform
Commercial Code, of the Borrowers, whether now owned or hereafter
acquired.
Mortgage: Any mortgage or deed of trust delivered pursuant to
this Agreement, substantially in the form of Exhibit "F", for the
Mortgaged Parcels, together with all extensions, renewals,
amendments, restatements, substitutions and replacements thereto
and thereof.
Mortgaged Parcel or Mortgaged Parcels: The parcels of real
estate and all improvements and appurtenances owned by any
Borrower, identified on Schedule 4.14, which are to be mortgaged
by such Borrower pursuant to this Agreement.
Multiemployer Plan: A "Multiemployer Plan" as defined in Section
4001(a)(3) of ERISA to which any Borrower or any ERISA Affiliate
is making or accruing an obligation to make contributions, or has
within any of the preceding five plan years made or accrued an
obligation to make contributions.
Note: Individually, any Revolving Credit Note and any Term Loan
Note, and collectively, all of the Revolving Credit Notes and the
Term Loan Notes, the "Notes".
Obligations: Collectively, (i) all unpaid principal and accrued
and unpaid interest with respect to the Loans, (ii) all accrued
and unpaid Fees and Expenses, (iii) any other amounts due
hereunder or under any of the other Loan Documents, including all
reimbursements, indemnities, costs, expenses, prepayment
premiums, yield protection obligations, the Funding Breakage Fee
and other obligations of any Borrower to the Agent, any Lender or
any Indemnified Person hereunder and thereunder, and (iv) all
out-of-pocket costs and expenses incurred by the Agent and any
Lender in connection with this Agreement and the other Loan
Documents, including but not limited to the reasonable fees and
expenses of the Agent's and the Lender's counsel which the
Borrowers are responsible to pay pursuant to the terms of this
Agreement and the other Loan Documents.
Outstanding Revolving Credit Amount: The aggregate principal
amount of outstanding Revolving Credit Loans.
Participant: Any bank or financial institution which acquires
from any Lender an interest in such Lender's Revolving Credit
Commitment and Loans, pursuant to Section 10.6.
Participation: The sale, made in accordance with the provisions
of Section 10.6, by a Lender to any Participant of an undivided
interest in such Lender's Revolving Credit Commitment and Loans.
PBGC: The Pension Benefit Guaranty Corporation established
pursuant to ERISA, or any entity succeeding to any or all of its
functions under ERISA.
Permitted Encumbrances: Certain permitted liens, easements and
encumbrances described in Section 7.2d.
Permitted Lien: Any of the following:
(i) The security interests in the Collateral granted to the
Agent for the benefit of the Lenders as security for the
Obligations;
(ii) Liens to secure Indebtedness permitted to exist
pursuant to items (ii) and (iii) of Section 6.1, including,
without limitation, purchase money security interests granted in
favor of sellers of personal property so long as the lien does
not exceed eighty percent (80%) of such Indebtedness;
(iii) Good faith deposits made in the ordinary course of
business in connection with bids, tenders, contracts or leases to
which a Borrower is a party, or deposits made to secure public or
statutory obligations;
(iv) Deposits to secure replevin, surety, attachment or
appeal bonds relating to legal proceedings to which a Borrower is
a party;
(v) Liens for taxes, assessments, governmental charges or
levies on the Borrower's properties, including any such liens
made pursuant to any Environmental Law, if such taxes,
assessments, governmental charges or levies are not at the time
due and payable or are being contested in good faith by
appropriate proceedings diligently conducted and with respect to
which the applicable Borrower has created adequate reserves;
(vi) Pledges or deposits to secure payment of workers'
compensation obligations, unemployment insurance, deposits or
indemnities to secure public or statutory obligations or for
similar purposes;
(vii) Liens arising out of judgments or awards against
any Borrower with respect to which enforcement has been stayed
and the applicable Borrower at the time shall currently be
prosecuting an appeal or proceeding for review in good faith by
appropriate proceedings diligently conducted provided that all
such Liens in the aggregate do not exceed $100,000;
(viii) Mechanics', carriers', workmen's, repairmen's and
other similar statutory Liens incurred in the ordinary course of
the business of any Borrower, so long as the obligation secured
is not overdue or, if overdue, is being contested in good faith
by appropriate actions or proceedings being diligently conducted
and as to which such Borrower has created adequate reserves;
(ix) Security interests in favor of lessors of personal
property, which property is the subject of a true lease between
such lessor and any Borrower;
(x) Liens existing on the Closing Date which are listed on
Schedule 6.3.
Person: Any individual, partnership, corporation, association,
trust, business trust, joint venture, joint stock company,
limited liability company, unincorporated organization or
enterprise, entity or Governmental Authority.
Plan: As to any Person, any employee pension benefit plan other
than a Multiemployer Plan which is covered by Title IV of ERISA
and which either (i) is maintained by such Person and/or any
ERISA Affiliate of such Person for employees of such Person
and/or any ERISA Affiliate or (ii) has at any time within the
preceding five years been maintained by such Person and/or any
entity which was an ERISA Affiliate at such time for their
respective employees.
Pledge Agreement: The pledge by CSI of all of the capital stock
of SigmaTron owned by CSI and 100% of the CSI's Subsidiaries now
existing or hereafter acquired, pursuant to the terms of a Pledge
Agreement dated of even date executed by CSI in the form of
Exhibit "E", together with all extensions, renewals, amendments,
restatements, substitutions and replacements thereto and thereof.
Prime Rate: For any day, a variable per annum interest rate
equal at all times to the rate of interest established and quoted
by the Agent as its Prime Rate, such rate to change
contemporaneously with each change in the established and quoted
rate. In the event that the Agent, during the term of the Loans,
shall abolish or abandon the practice of publishing the Prime
Rate, the Prime Rate hereunder shall be the lowest published
prime rate announced by one of the other Lenders under this
Agreement. The Prime Rate is a reference rate and does not
necessarily represent the lowest or best rate actually charged to
a customer by the Agent.
Prohibited Transaction: A "prohibited transaction" as defined
under Section 406 of ERISA or Section 4975 of the Internal
Revenue Code.
Purchasing Lender: A Lender which becomes a party to this
Agreement by executing an Assignment and Assumption Agreement.
Qualified Lender: Either (i) the Agent or any Lender or (ii) any
other bank or trust company organized under the laws of the
United States of America or any state thereof, having total
assets in excess of $5,000,000,000 and whose long-term
certificates of deposit are rated "A" or better by Standard and
Poor's Ratings Group, a division of XxXxxx-Xxxx, Inc., or "A" or
better by Xxxxx'x Investors Service, Inc.
Raw Material Inventory: That portion of a Borrower's Inventory
which consists of raw materials normally used by that Borrower in
the manufacture of finished goods.
Register: This term shall have the meaning given it in Section
10.5c.
Regulations D,G,T,U and X: Regulations D, G, T, U and X
promulgated by the Board of Governors of the Federal Reserve
System (12 C.F.R. Part 204 et seq., 12 C.F.R. Part 207 et. seq.,
12 C.F.R. Part 220 et. seq., 12 C.F.R. Part 221 et. seq. and 12
C.F.R. Part 224 et. seq., respectively), as such regulations are
now in effect and as may hereafter be amended.
Reportable Event: A "reportable event" described in Section 4043
of ERISA and in 29 C.F.R. Part 2615.
Required Lenders: Prior to the termination of the Revolving
Credit Commitment, the Lenders whose Commitment Percentages
aggregate at least sixty-six and two-thirds percent (66-2/3%) of
the aggregate Commitment Percentages of all the Lenders, and
after the termination of the Revolving Credit Commitment, whether
on the stated Revolving Credit Termination Date, by acceleration
or otherwise, the Lenders whose outstanding principal amounts of
the Loans aggregate at least sixty-six and two-thirds percent
(66-2/3%) of the aggregate principal amount of the outstanding
Loans.
Revolving Credit Commitment: The obligation of the Lenders to
make available to the Borrowers Revolving Credit Loans in a
maximum aggregate principal amount not to exceed $18,000,000.
Revolving Credit Loan: An individual borrowing by a Borrower
under the Revolving Credit Commitment including any increases,
extensions or renewals thereto or thereof and collectively with
other borrowings by other Borrowers under the Revolving Credit
Commitment, the "Revolving Credit Loans".
Revolving Credit Note: Any promissory note of a Borrower
evidencing Indebtedness of that Borrower under the Revolving
Credit Commitment and in substantially the form of Exhibit "A",
together with all extensions, renewals, amendments, substitutions
and replacements thereto and thereof.
Revolving Credit Termination Date: October 31, 2001.
Revolving Loan Tranche: A specified portion of the Revolving
Credit Loans as follows: (i) any Revolving Credit Loan to which
the LIBOR-Rate Option applies which becomes subject to the same
LIBOR-Rate Option under the same Loan Request and for election of
or conversion to an Interest Rate Option by the Borrowers and
which has the same LIBOR-Rate Interest Period shall constitute
one Revolving Loan Tranche and (ii) any Revolving Credit Loan to
which the Base Rate Option applies shall constitute one Revolving
Loan Tranche.
Security Agreement: The Security Agreement executed by the
Borrowers and substantially in the form of Exhibit "D", together
with all extensions, renewals, amendments, restatements,
substitutions and replacements thereto and thereof.
Security Documents: Any and all of (i) the Security Agreement,
(ii) the Mortgages, (iii) the Pledge Agreement, (iv) all
additional documents and instruments entered into from time to
time for the purpose of securing the Obligations, (v) any and all
ancillary documents and instruments relating to any of the
foregoing, such as Uniform Commercial Code financing statements,
and (vi) all extensions, renewals, amendments, substitutions,
replacements and continuations to and of any of the foregoing.
Shareholder Distribution: Any dividend, redemption or other
acquisition for value of capital stock now or hereafter
outstanding, return of capital or any distribution of assets to
any shareholder.
SigmaTron: SigmaTron International, Inc., a Delaware
corporation.
Silicon Valley: H.O.T.L.R.T., Inc. d/b/a Silicon Valley Printed
Circuits, a California corporation.
Silicon Valley Acquisition: The transaction (which will have
been consummated prior to January 4, 1999) through which SVPCCS
shall acquire substantially all of the assets and certain assumed
liabilities of Silicon Valley with a combination of seller notes
aggregating no more than $4,000,000 and cash and other
consideration valued at no more than $3,000,000.
Solvent: As to any Person, the condition which exists when such
Person (i) owns assets whose value (both at fair market value and
present fair saleable value) is, on the date of determination,
greater than the amount of such Person's liabilities (including
without limitation contingent and unliquidated liabilities), (ii)
is able to pay all of its obligations as they mature and (iii)
has capital that is not unreasonably small and is sufficient in
relation to its present business and transactions and all
business and transactions in which it is about to engage.
Subsidiary: Either (i) any corporation more than 50% of the
outstanding voting securities of which is at the time owned or
Controlled, directly or indirectly, by a Borrower, or by a
Borrower and one or more Subsidiaries, or (ii) any other Person
which is so owned or Controlled.
Tangible Net Worth: An amount equal to (i) the sum of the
capital stock and additional paid-in capital plus retained
earnings (or minus accumulated deficit) calculated in accordance
with GAAP, less intangible assets, whether or not in accordance
with GAAP, including, without limitation, unamortized covenants
not to compete, prepayments, deferred charges, unamortized debt
discount and expense, good will, franchises, licenses, patents,
trademarks, trade names, copyrights, service marks and brand
names, all obligations owed to the Borrower by any Affiliate or
Subsidiary, and all loans by the Borrowers to their officers,
shareholders, Subsidiaries or employees.
Term Loan: The term loan made by the Lenders to the Borrowers in
the principal amount of $7,000,000, including any increases,
extension or renewals thereto or thereof.
Term Loan Draw Fee: The Fee described in subsection 2.10a.
Term Loan Maturity Date: October 31, 2003.
Term Loan Note: A promissory note of the Borrowers evidencing
indebtedness of the Borrowers under the Term Loan, in
substantially the form of Exhibit "B", together with all
extensions, renewals, amendments, substitutions and replacements
thereto and thereof.
Term Loan Tranche: A specified portion of the principal amount
of the Term Loan as follows: (i) any portion of the principal of
the Term Loan to which the LIBOR-Rate Option applies which
becomes subject to the same LIBOR-Rate Option under the same
election of or conversion to an Interest Rate Option by the
Borrowers and which has the same LIBOR-Rate Interest Period shall
constitute one Term Loan Tranche and (ii) the entire portion of
the principal of the Term Loan to which the Base Rate Option
applies shall constitute one Term Loan Tranche.
Transfer Effective Date: For each Assignment and Assumption
Agreement, the date upon which such Assignment and Assumption
Agreement is effective.
Transferor Lender: The selling Lender pursuant to an Assignment
and Assumption Agreement as permitted by Section 10.5.
Treasury Rate Applicable to LIBOR-Rate Loan Prepayment: The rate
per annum as of any "Funding Breakage Date" referenced in
Subsection 2.1c(v) determined by the applicable Lender (which
determination shall be conclusive absent manifest error) to be
the semiannual equivalent yield to maturity (expressed as a
semiannual equivalent and decimal and, in the case of United
States Treasury bills, converted to a bond equivalent yield) for
United States Treasury securities maturing on the last day of the
corresponding treasury rate maturity date and trading in the
secondary market in reasonable volume (or if no such securities
mature on such date, the rate determined by standard securities
interpolation methods as applied to the series of securities
maturing as close as possible to, but earlier than, such date,
and the series of such securities maturing as close as possible
to, but later than, such date.)
Uniform Commercial Code: The Uniform Commercial Code as enacted
in the applicable jurisdiction, in effect on the Closing Date and
as amended from time to time.
Unused Availability Fee: That Fee described in subsection 2.10b.
1.2 Accounting Terms. Each accounting term not defined herein and
each accounting term partly defined herein, to the extent not defined,
shall have the meaning given it under GAAP.
1.3 Rules of Construction. (i) Except as otherwise specified herein,
all references in any Loan Document (A) to any Person shall be deemed
to include such Person's heirs, executors, administrators, successors
and assigns, (B) to any applicable Governmental Rule shall be deemed
references to such Governmental Rule as the same may have been or may
be amended, supplemented or replaced from time to time and (C) to any
Loan Document defined or referred to herein shall be deemed references
to such Loan Document (and, in the case of any Note or other
instrument, any instrument issued in substitution therefor) as the
terms thereof may have been or may be amended, supplemented, waived or
otherwise modified from time to time.
(ii) When used in any Loan Document, the words "herein," and
"hereunder" and words of similar import shall refer to such Loan
Document as a whole and not to any particular provision of such Loan
Document, and the words "Article," "Section," "Subsection,"
"Schedule," "Exhibit," and "Annex" shall refer to Articles, Sections
and Subsections of, and Schedules, Exhibits and Annexes to, such Loan
Document, unless otherwise specified.
(iii) Whenever the context so requires, in all Loan Documents
the use of or reference to any gender includes the masculine, feminine
and neuter genders; "or" has the inclusive meaning represented by the
phrase "and/or"; "including" has the meaning represented by the phrase
"including without limitation"; and all terms used in the singular
shall have comparable meanings when used in the plural and vice versa.
ARTICLE 2. THE LOANS
2.1 Revolving Credit Commitment.
2.1a Revolving Credit Loans. The Lenders agree, severally and
not jointly, subject to the terms and conditions hereof and relying
upon the representations and warranties herein set forth, that any
Borrower shall have the right to borrow, repay and reborrow, from the
date hereof until the Revolving Credit Termination Date, an aggregate
principal amount which shall not exceed in the aggregate at any one
time outstanding the lesser of (i) $18,000,000 or (ii) the Borrowing
Base for the Revolving Credit Loans.
2.1b Commitments of the Lenders. Each Lender agrees, for itself
only, and subject to the terms and conditions of this Agreement, to
make Revolving Credit Loans to the Borrowers from time to time not to
exceed an aggregate principal amount at any time equal to such
Lender's Commitment Percentage of the Revolving Credit Commitment;
provided, however, that in no event shall any Lender be required to
advance an amount in excess of its Commitment with respect to the
Revolving Credit Loans; and provided, further, that if any Lender
fails to advance to any Borrower its commitment Percentage of any
Revolving Credit Loan, the remaining Lenders shall not be required to
advance to that Borrower the defaulting Lender's share of such
Revolving Credit Loan.
2.1c Mandatory and Voluntary Reductions of Revolving Credit
Commitment; Mandatory and Voluntary Principal Payments.
(i) Borrowing Base Amount. In the event that at any time either
any Loan Account or the Borrowing Base Certificate most recently
delivered by a Borrower to the Agent shows that the Outstanding
Revolving Credit Amount exceeds the Borrowing Base, the Borrowers
shall repay, simultaneously with the delivery of any such Borrowing
Base Certificate to the Agent or upon demand by the Agent, whichever
is earlier, an amount which is sufficient to reduce the Outstanding
Revolving Credit Amount so that, after such repayment, the Borrowing
Base has not been exceeded. Until such repayment occurs, the Lenders
shall not be required to make additional Revolving Credit Loans to any
Borrower.
(ii) Voluntary Permanent Reductions. Upon two Business Days'
written notice to the Agent, the Borrowers may from time to time
voluntarily permanently reduce the Revolving Credit Commitment. Each
voluntary reduction shall be in a minimum amount of $1,000,000 or, if
greater than $1,000,000, in integral multiples of $500,000.
(iii) Effect of Reductions. The portion of the Revolving
Credit Commitment so terminated pursuant to the preceding item (ii)
shall no longer be available for borrowing. Simultaneously with each
voluntary permanent reduction, the Borrowers shall make a payment of
the outstanding Revolving Credit Loans equal to the excess, if any, of
(A) the aggregate principal amount of the Outstanding Revolving Credit
Amount over (B) the Revolving Credit Commitment, as so reduced, and
all accrued and unpaid interest thereon. Notice of a reduction, once
given, shall be irrevocable. All such reductions shall be without
penalty or premium (except for amounts owing pursuant to Section
2.1c(v) and Section 2.5e, if any).
(iv) Application of Reductions and Prepayments. Any and all
Revolving Credit Commitment reductions or prepayments (mandatory or
voluntary) made pursuant to any particular item of this Section 2.1c
shall be made in addition to, and not in lieu of, any and all
Revolving Credit Commitment reductions and prepayments (mandatory or
voluntary) to be made pursuant to any other item of this Section 2.1c.
All such mandatory and voluntary prepayments of Revolving Credit
Loans shall be accompanied by all accrued and unpaid interest thereon
and all amounts due pursuant to Section 2.1c(v) and Section 2.5h, if
any, and, in the case of a permanent reduction of the Revolving Credit
Commitment to zero, any other outstanding Obligations relating to the
Revolving Credit Commitment which are then due and payable. All such
mandatory and voluntary prepayments shall be applied by the Agent to
repay Base Rate Loans first, and then to repay LIBOR-Rate Loans.
(v) Funding Breakage Fee. In addition to all other amounts
payable hereunder, if and to the extent for any reason any part of any
Revolving Loan Tranche of any LIBOR-Rate Loan becomes due (by
acceleration or otherwise), or is paid, prepaid or converted to
another Interest Rate Option (whether or not such payment, prepayment
or conversion is mandatory or automatic and whether or not such
payment or prepayment is then due) on a day other than the last day of
the corresponding LIBOR-Rate Interest Period (the date such amount so
becomes due, or is so paid, prepaid or converted, being referred to as
the "Funding Breakage Date"), the Borrowers shall pay each Lender an
amount ("Funding Breakage Fee") determined by such Lender as follows:
(A) first, calculate the following amount (w) the principal
amount of such Revolving Loan Tranche of the Loans owing to such
Lender which so became due, or which was so paid, prepaid or
converted, times (x) the greater of (1) zero or (2) the rate of
interest applicable to such principal amount on the Funding Breakage
Date minus the Treasury Rate Applicable to LIBOR-Rate Loan Prepayment
as of the Funding Breakage Date, times (y) the number of days from and
including the Funding Breakage Date to but not including the last day
of such LIBOR-Rate Interest Period, times (z) l/360; and
(B) the Funding Breakage Fee to be paid by the Borrowers to
such Lender shall be the amount equal to the present value as of the
Funding Breakage Date (discounted at the Treasury Rate Applicable to
LIBOR-Rate Loan Prepayment as of such Funding Breakage Date, and
calculated on the basis of a year of 360 days, as the case may be, and
actual days elapsed) of the amount described in the preceding clause
(A) (which amount described in the preceding clause (A) is assumed for
purposes of such present value calculation to be payable on the last
day of the corresponding LIBOR-Rate Interest Period).
Such Funding Breakage Fee shall be due and payable on demand, and each
Lender shall, upon making such demand, notify the Agent of the amount
so demanded. In addition, the Borrowers shall, on the due date for
payment of any Funding Breakage Fee, pay to such Lender an additional
amount equal to interest on such Funding Breakage Fee from the Funding
Breakage Date to but not including such due date at the Base Rate
Option (calculated on the basis of a year of 360 days and actual days
elapsed). The amount payable to each Lender under this Subsection
shall be determined in good faith by such Lender, and such
determination shall be conclusive.
2.1d Amount of Revolving Credit Loans. Except as required by
Section 2.4d, each Revolving Credit Loan shall be in a minimum amount
of $500,000, or if in excess of $500,000, in integral multiples of
$100,000; provided, however, that if the entire amount of Revolving
Credit Loans available to the Borrowers is less than $500,000, then
such Revolving Credit Loan shall be for such entire amount.
2.1e Interest Rate. The Revolving Credit Loans shall bear
interest at the rate or rates set forth in Section 2.5 hereof, unless
the Default Rate is in effect at that time, in which case the
Revolving Credit Loan shall bear interest at the Default Rate until
the Default Rate becomes inapplicable.
2.1f Repayments. Except for prepayments or repayments required
(i) pursuant to Section 2.1c and (ii) as otherwise provided herein,
each repayment of Revolving Credit Loans made by any Borrower shall be
in a minimum principal amount and an integral multiple of $50,000;
provided, however, that if the entire amount of Revolving Credit Loans
to such Borrower then outstanding is less than $50,000, then such
Borrower shall repay such entire lesser amount. On the Revolving
Credit Termination Date the entire Outstanding Revolving Credit
Amount, plus all accrued and unpaid interest thereon, any unpaid Fees
relating thereto and any other outstanding Obligations relating to the
Revolving Credit Commitment shall be due and payable in immediately
available funds.
2.1g Revolving Credit Note. The obligation of the Borrowers to
repay, on or before the Revolving Credit Termination Date, the
aggregate unpaid principal amount of Revolving Credit Loans shall be
evidenced by Revolving Credit Notes, each substantially in the form of
Exhibit "A", (i) drawn by the Borrowers to the order of a Lender in
the maximum amount of that Lender's Commitment Percentage of the
Revolving Credit Commitment, (ii) duly executed by the Borrowers and
(iii) delivered to the Agent for redelivery to such Lender. The
principal amount actually due and owing each Lender under the
Revolving Credit Note payable to it shall be the aggregate unpaid
principal amount of all Revolving Credit Loans made by such Lender,
all as shown on the Loan Accounts established pursuant to Section 2.9.
2.2 Intentionally Left Blank.
2.3 Term Loan.
2.3a Term Loan: Term Loan Notes. The Lenders agree, severally
and not jointly, subject to the terms and conditions hereof and
relying upon the representations and warranties herein set forth, to
make the Term Loan to the Borrowers in an aggregate principal amount
of $7,000,000. The Term Loan shall be funded in one drawing and
amounts borrowed thereunder and repaid may not be reborrowed. The
obligation of the Borrowers to repay, on or before the Term Loan
Maturity Date shall be evidenced by the Term Loan Notes, each
substantially in the form of Exhibit "B," (i) drawn by the Borrowers
to the order of a Lender in the amount of that Lender's Commitment
Percentage of the Term Loan, (ii) duly executed by the Borrowers and
(iii) delivered to the Agent for redelivery to such Lender.
2.3b Commitments of the Lenders. Each Lender agrees, for itself
only, and subject to the terms and conditions of this Agreement, to
make the Term Loan to the Borrowers in an amount not to exceed the
principal amount equal to such Lender's Commitment Percentage of the
Term Loan. If any Lender fails to advance to the Borrowers its
Commitment Percentage of the Term Loan, the remaining Lenders shall
not be required to advance to the Borrowers the defaulting Lender's
share of the Term Loan.
2.3c Term Loan Scheduled Payments. Principal payments under the
Term Loan Notes shall be due and payable in consecutive monthly
installments beginning on January 31, 1999 and continuing thereafter
on the last day of each month, of $97,222.22 each, and otherwise in
accordance with the terms set forth in the Term Loan Notes.
On the Term Loan Maturity Date, any outstanding Obligations relating
to the Term Loan shall be due and payable.
2.3d Prepayment of Term Loan
(i) Voluntary Prepayments. Any of the Borrowers may prepay the
outstanding principal of the Term Loan in amounts of $50,000 and any
integral multiple thereof (subject to the requirements of Section
2.5d) upon ten (10) days prior notice to the Agent specifying the
proposed date of prepayment and the amount to be prepaid (a "Term Loan
Prepayment Notice"). Each Term Loan Prepayment Notice shall be
irrevocable and upon delivery thereof to the Agent the amount
specified therein shall be and become due and payable on the date
specified therein.
(ii) Payment of Interest and Fees on Prepayment. Each prepayment
of principal of the Term Loan pursuant to this Subsection 2.3d shall
be accompanied by payment of all accrued and unpaid interest on the
amount prepaid. Prepayment shall be without premium or penalty,
provided that prepayment of any Term Loan Tranche bearing interest
under the LIBOR-Rate Option shall be accompanied by the Funding
Breakage Fee calculated in a manner consistent with Subsection 2.1c(v)
and all amounts owed pursuant to Section 2.5e, if any.
2.3e Interest Rate. The Term Loan shall bear interest at the
rate or rates set forth in Section 2.5 hereof, unless the Default Rate
is in effect at that time, in which case the Term Loan shall bear
interest at the Default Rate until the Default Rate becomes
inapplicable.
2.4 Intentionally Left Blank.
2.5 Interest.
2.5a Interest Rates; Base Rate and LIBOR-Rate Options. During
the term hereof the interest applicable to the Loans outstanding may
fluctuate in accordance with the terms and provisions of this Section
2.5a. Subject to the limitations set forth in Subsection 2.5b, each
Borrower may elect an interest rate (A) under the Base Rate Option
which shall accrue at a rate per annum equal to the sum of the Base
Rate plus the Applicable Margins as set forth on Annex B, and (B)
under the LIBOR-Rate Option which shall accrue at a rate per annum
equal to the sum of the LIBOR-Rate plus the Applicable Margins as set
forth on Annex B, and in all cases the Applicable Margin shall
fluctuate in accordance with the Funded Debt to EBITDA Ratio as set
forth on Annex B. The Applicable Margin for the Base Rate Loans and
the LIBOR-Rate Loans effective as of the Closing Date will be at the
Level on Annex B which corresponds to the Funded Debt to EBITDA Ratio
to be determined by the Lenders from the Closing Date Applicable
Margin Statements delivered to the Lenders by the Borrower.
2.5b Adjustments to Interest Rates and Fees.
(i) Changes in Funded Debt to EBITDA Ratio. Interest rate and
Fee adjustments resulting from changes in the Funded Debt to EBITDA
Ratio shall be made without notice to the Borrowers, based on such
ratio as of the end of a Fiscal Quarter. The applicable interest rate
or Fee shall be reduced to a specified level only in the event that
(A) no Default or Event of Default exists as of the date of
determination and (B) the required Funded Debt to EBITDA Ratio has
been satisfied; provided, however, that if a Default or Event of
Default has been remedied as provided in Section 8.1 within any
applicable cure period set forth therein or waived by the Lenders in
writing, the applicable interest rate or Fee shall be reduced
effective as of the applicable date contemplated by Subsections (A)
through (C) below. All adjustments shall be determined by the Agent
and shall be effective as follows:
(A) the Agent shall make its interest rate determination
within five (5) Business Days of the receipt by the Lenders (the
"Review Period") of the Borrowers' consolidated quarterly or annual
financial statements and Compliance Certificate indicating that an
adjustment in the Applicable Margin or Fee is warranted;
(B) any reduction or increase in the Applicable Margin
after the Review Period with respect to a Revolving Loan Tranche or a
Term Loan Tranche for a LIBOR-Rate Loan shall be effective on the
first day following the maturity of a LIBOR-Rate Interest Period;
provided that if Funded Debt to EBITDA Ratio which warranted an
adjustment to the Applicable Margin has not been maintained for any
Fiscal Quarter pending maturity of such LIBOR-Rate Interest Period the
Applicable Margin shall not be reduced;
(C) any reduction or increase in the Applicable Margin with
respect to a Revolving Loan Tranche or a Term Loan Tranche for a Base
Rate Loan or any Fee shall be effective one (1) Business Day following
the Review Period; and
(D) if any financial statements necessary for calculation
of the Funded Debt to EBITDA Ratio provided for in this Section 2.5b
are not delivered to the Agent within the time periods specified in
Section 5.2, and such statements when ultimately delivered give rise
to an increase in the Applicable Margin or Fees, such increase shall
be retroactive to the date such financial statements were required to
be delivered pursuant to Section 5.2.
(ii) Changes in Base Rate. The Base Rate Option shall be
adjusted from time to time, without notice to the Borrower, as
necessary to reflect any changes in the Prime Rate, which adjustments
shall be automatically effective on the day of any such change.
(iii) Changes in LIBOR-Rate Reserve Percentage. The LIBOR-
Rate Option shall be adjusted from time to time, without notice to the
Borrowers, as necessary to reflect any changes in the LIBOR-Rate
Reserve Percentage, which adjustments shall be automatically effective
on the day of such change.
(iv) Default Rate. Upon the occurrence of and during the
continuance of an Event of Default, the outstanding principal amount
of the Loans shall bear interest from the date of such occurrence at a
rate per annum which is equal to two percent (2%) in excess of the
rate then in effect (e.g. the Base Rate plus the Applicable Margin
plus 2%, or the LIBOR-Rate plus the Applicable Margin plus 2%);
provided that with respect to any sum other than principal of the
Loans which bears interest at the Default Rate pursuant to this
Agreement or any of the other Loan Documents, Default Rate shall mean
the Base Rate plus the Applicable Margin plus 2%.
2.5c Interest Rate Option Elections Renewals and Conversions.
Subject to the remaining provisions of this Agreement, each Borrower
shall have the option to elect to have all or any Revolving Loan
Tranche or Term Loan Tranche bear interest at either of the Interest
Rate Options and shall have the right to renew elections of Interest
Rate Options and convert Revolving Loan Tranches or Term Loan Tranches
to other Interest Rate Options. Notice of the Borrower's election
shall be made in accordance with Section 2.6. Elections of,
conversions to or renewals of the Base Rate Option shall continue in
effect until converted to the LIBOR-Rate Option. Elections of,
conversions to or renewals of the LIBOR-Rate Option shall expire as to
each such LIBOR-Rate Option at the expiration of the applicable LIBOR-
Rate Interest Period. Any Revolving Loan Tranche or Term Loan Tranche
outstanding for which no elections have been made shall bear interest
under the Base Rate Option.
2.5d Limitation on Election of LIBOR-Rate Options. Each election
of the LIBOR-Rate Option or the prepayment of all or any LIBOR-Rate
Loans shall be in the minimum principal amount of $500,000 or, if in
excess of $500,000, in integral multiples of $100,000. Upon the
occurrence and during the continuance of an Event of Default, each
Borrower's right to elect, renew or convert to LIBOR-Rate Loans shall
be suspended.
2.5e Special Provisions Relating to LIBOR-Rate Option.
(i) LIBOR-Rate Unascertainable. In the event that on any date
on which a LIBOR-Rate would otherwise be set the Agent shall have
determined in good faith (which determination shall be final and
conclusive) that, by reason of circumstances affecting the London
interbank market, adequate and reasonable means do not exist for
ascertaining the LIBOR-Rate, the Agent shall give prompt notice of
such determination to the Borrowers and the other Lenders, and until
the Agent notifies the Borrowers that the circumstances giving rise to
such determination no longer exist, the right of the Borrowers to
borrow under, renew or convert to the LIBOR-Rate Option shall be
treated as a request to borrow under, renew or convert to the Base
Rate Option.
(ii) Illegality of Offering LIBOR-Rate. If the Agent shall
determine in good faith, which determination shall be final and
conclusive, that compliance by the Agent or any Lender with any
applicable Governmental Rule (whether or not having the force of law),
or the interpretation or application thereof by any Governmental
Authority has made it unlawful for such Lender to make or maintain
LIBOR-Rate Loans, the Agent shall give notice of such determination to
the Borrowers and the Lenders. Notwithstanding any provision of this
Agreement to the contrary, unless and until the Agent shall give
notice to the Borrowers that the circumstances giving rise to such
determination no longer apply:
(A) with respect to any LIBOR-Rate Interest Periods
thereafter commencing, interest on the corresponding LIBOR-Rate Loans
shall be computed and payable under the Base Rate Option; and
(B) on such date, if any, as shall be required by law, any
LIBOR-Rate Loans then outstanding shall be automatically renewed at
the Base Rate Option: and the Borrower shall pay to the Lenders the
accrued and unpaid interest on such LIBOR-Rate Loans to (but not
including) such renewal date. The Borrowers shall pay the Lenders any
additional amounts reasonably necessary to compensate the Lenders (on
an after-tax basis) for any out-of-pocket costs incurred by the
Lenders as a result of any renewal pursuant to item (B) above on a day
other than the last day of the relevant LIBOR-Rate Interest Period,
including, but not limited to, any interest or fees payable by the
Lenders to lenders of funds obtained by them to loan or maintain the
Loans so converted. The Lenders shall furnish to the Borrowers a
certificate showing the calculation of the amount necessary to
compensate the Lenders (on an after-tax basis) for such costs (which
certificate, in the absence of manifest error, shall be conclusive),
and the Borrowers shall pay such amount to the Lenders, as additional
consideration hereunder, within ten (10) days of the Borrowers'
receipt of such certificate.
(iii) Inability to Offer LIBOR-Rate. In the event that a
Lender shall determine, in its sole discretion, that it is unable to
obtain deposits in the London interbank market in sufficient amounts
and with maturities related to the LIBOR-Rate Loans which would enable
such Lender to fund such LIBOR-Rate Loans, then such Lender shall
immediately notify the Agent. The Agent shall then notify the
Borrowers that the right of the Borrowers to borrow under, convert to
or renew the LIBOR-Rate Option shall be suspended. Following
notification of the suspension of the LIBOR-Rate Option, the Borrowers
agree to negotiate with the affected Lender for a modified LIBOR-Rate
which will allow such Lender to realize its anticipated and bargained-
for yield. In the event that the Borrowers and the affected Lender
cannot agree on a modified LIBOR-Rate, any notice of borrowing under,
conversion to or renewal of the LIBOR-Rate Option which was to become
effective during the period of suspension shall be treated as a
request to borrow under, convert to or renew the Base Rate Option with
respect to the principal amount specified therein.
(iv) Indemnity. In addition to the other provisions of this
Section 2.5e, the Borrowers hereby agree to indemnify the Agent and
the Lenders against any loss or expense which the Agent or any Lender
may sustain or incur as a consequence of any default by the Borrowers
in failing to make any borrowing, conversion or renewal hereunder to
bear interest at the LIBOR-Rate Option on the scheduled date, in
failing to make when due (whether by declaration, acceleration or
otherwise) any payment of any LIBOR-Rate Loan or in making any payment
or prepayment of any LIBOR-Rate Loan or any part thereof on any day
other than the last day of the relevant LIBOR-Rate Interest Period,
including but not limited to any loss of profit, premium or penalty
incurred by the Agent or any Lender in respect of funds borrowed by it
for the purpose of making or maintaining any LIBOR-Rate Loan as
determined in good faith by the Agent or any Lender in the exercise of
its sole but reasonable discretion. The affected Lender shall furnish
to the Borrowers a certificate showing the calculation of the amount
of any such loss or expense (which certificate, absent manifest error,
shall be conclusive), and the Borrowers shall pay such amount to the
affected Lender within ten days of the Borrowers' receipt of such
certificate.
2.5f Yield Protection. If any Governmental Rule or the
interpretation or application thereof by any court, any Governmental
Authority charged with the administration thereof or the compliance
with any guideline or request from any central bank or other
Governmental Authority, whether or not having the force of law:
(i) subjects the Agent or any Lender to any tax, levy, impost,
charge, fee, duty, deduction or withholding of any kind hereunder
(other than any tax imposed or based upon the income of the Agent or
such Lender and payable to any Governmental Authority or taxing
authority of the United States of America or any state thereof) or
changes the basis of taxation of the Agent or any Lender with respect
to payments by the Borrowers of principal, interest or other amounts
due from the Borrowers hereunder (other than any change which affects,
and to the extent that it affects, the taxation by the United States
of America or any state thereof of the total net income of the Agent
or such Lender); or
(ii) imposes, modifies or deems applicable any reserve, special
deposit, special assessment or similar requirements against assets
held by, deposits with or for the account of or credit extended by the
Agent or any Lender (other than such requirements which are included
in the determination of the LIBOR-Rate hereunder); or
(iii) imposes upon the Agent or any Lender any other
condition with respect to this Agreement; and the result of any of the
foregoing is to increase the cost to the Agent or the affected Lender,
reduce the income receivable by the Agent or such Lender, reduce the
rate of return on the Agent's or such Lender's capital or impose any
expense upon the Agent or such Lender by an amount which the Agent or
such Lender in its sole but reasonable discretion deems to be material
(each, a "Yield Protection Event"), the Agent or the affected Lender
shall from time to time notify the Agent of the amount determined by
such Lender (which determination absent manifest error, shall be
conclusive) to be reasonably necessary to compensate the Agent or such
Lender (on an after-tax basis) for such increase in cost, reduction in
income, reduction in rate of return or additional expense, and setting
forth the calculations therefor, and the Agent shall thereupon notify
the Borrowers. The affected Lender shall notify the Borrowers of any
Yield Protection Event as promptly as possible. The Borrowers shall
pay such amount to the Agent or the affected Lender, as additional
consideration hereunder, within ten (10) days of the Borrowers'
receipt of such notice from the Agent.
2.5g Method of Calculation. In determining the amount due the
Agent and the Lenders hereunder by reason of the application of this
Section 2.5, the Agent and the Lenders may use any reasonable
averaging or attribution method; provided, however, that the Agent and
each Lender must use reasonable efforts to minimize such losses and
costs.
2.5h Interest Payment Dates. Interest due on all outstanding
Base Rate Loans shall be payable monthly in arrears on the last day of
each month, with the first such payment due on December 31, 1998.
Interest due on all outstanding LIBOR-Rate Loans shall be payable on
the last day of each LIBOR-Rate Interest Period and, for LIBOR-Rate
Interest Periods of in excess of thirty days, also on the 30th, 60th
and 90th day of such LIBOR-Rate Interest Period. After any maturity
of any Note or the Obligations, whether on a scheduled maturity date,
by acceleration or otherwise, all accrued and unpaid interest shall be
due and payable on demand until all amounts due hereunder are paid in
full.
2.5i Calculation of Interest. Interest under the Loans shall be
calculated on the basis of the actual number of days elapsed, using a
year of 360 days. Interest for any period shall be calculated from
and including the first day thereof to but not including the last day
thereof.
2.6 Requests for Loans, Interest Rate Options and Conversions. Each
request for a Revolving Credit Loan and for the election or renewal of
or conversion to an Interest Rate Option for any Loan shall be made to
the Agent orally or in writing by an Authorized Officer no later than
11:00 a.m. (Chicago time) (i) on the Business Day of such Loan or
Interest Rate Option election, renewal or conversion, with respect to
Base Rate Loans and (ii) at least three (3) Business Days prior
thereto, with respect to LIBOR-Rate Loans. Any oral request for a
Loan or an Interest Rate Option shall be followed immediately by the
applicable Borrower's written confirmation of such request executed by
an Authorized Officer, which confirmation must set forth the amount
and date of the Loan, if applicable, the Interest Rate Option selected
and, if applicable, the LIBOR-Rate Interest Period being selected and
the proposed effective date thereof. All written requests and
confirmations shall be made pursuant to a Loan Request in the form of
Exhibit "C." A request from a Borrower pursuant to this Section 2.6
with respect to a LIBOR-Rate Loan shall irrevocably commit that
Borrower to accept such LIBOR-Rate Loan on the date specified in such
request. The Agent shall promptly notify the Lenders of each request
for a Loan no later than by 12:00 p.m. (Chicago time) on the Business
Days referred to in clause (i) or (ii) above. Each Lender shall make
its Commitment Percentage of any Loan available to the requesting
Borrower in immediately available funds at the principal office of the
Agent prior to 2:00 p.m. (Chicago time) on the date such Loan is to be
made.
2.7 Method of Disbursements and Payments. All Loans shall be made by
the Agent funding the account of the requesting Borrower maintained at
the Agent. All payments of principal, interest, Fees, costs and other
amounts due hereunder and under the other Loan Documents shall be made
by the applicable Borrower to the Agent at the Agent's principal
office at 000 Xxxxx XxXxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000 not later
than 11:00 a.m. (Chicago time) on the due date, without presentment,
demand, protest or notice of any kind, all of which are hereby
expressly waived by all Borrowers, and without set-off, counterclaim
or other deduction of any nature, and an action therefor shall
immediately accrue. All such Loans and payments shall be made in cash
or shall be immediately good funds when either transferred by the
Agent into the applicable Borrower's account with the Agent, or when
delivered by any Borrower to the Agent, as the case may be.
2.8 Capital Adequacy. If (i) any adoption of, change in or
interpretation of any Governmental Rule, or (ii) compliance with any
guideline, request or directive of any central bank or other
Governmental Authority or quasi-Governmental Authority exercising
control over banks or financial institutions generally, including but
not limited to regulations set forth at 12 C.F.R. Part 3 (Appendix A)
12 C.F.R. Part 208 (Appendix A), 00 X.X.X. Xxxx 000 (Xxxxxxxx X) and
12 C.F.R. Part 325 (Appendix A) or any court requires that the
commitments of any Lender hereunder be treated as an asset or
otherwise be included for purposes of calculating the appropriate
amount of capital to be maintained by such Lender or any corporation
controlling such Lender (a "Capital Adequacy Event"), the result of
which is to reduce the rate of return on such Lenders capital as a
consequence of such commitments to a level below that which such
Lender could have achieved but for such Capital Adequacy Event, taking
into consideration such Lender's policies with respect to capital
adequacy, by an amount which such Lender deems to be material, such
Lender shall promptly deliver to the Agent and the Borrowers a
certificate of the amount necessary to compensate such Lender for the
reduction in the rate of return on its capital attributable to such
commitments (the "Capital Compensation Amount"), calculated in good
faith, using reasonable attribution and averaging methods, which
certificate, absent manifest error, shall be presumed to be correct.
Such amount shall be due and payable by the Borrowers to the affected
Lender ten (10) days after such notice is given.
2.9 Loan Accounts. Each Lender shall open and maintain on its books
a Loan Account in each Borrower's name with respect to Loans made,
repayments, prepayments, the computation and payment of interest, Fees
and other amounts due and sums paid to such Lender hereunder and under
the other Loan Documents. Except in the case of manifest error in
computation, such records shall be conclusive and binding on the
Borrowers as to the amount at any time due to such Lender from the
Borrowers.
2.10 Fees. The Borrowers shall pay the following Fees, all of which
shall be fully earned when due and nonrefundable:
2.10a Draw Fees. On the Closing Date, the Borrowers shall
pay the Agent, for the pro rata benefit of Lenders, a Term Loan Draw
Fee in the amount of .5% of the Term Loan.
2.10b Unused Availability Fee. The Borrowers shall pay to
the Agent, for the pro rata benefit of Lenders, a fee in an amount
equal to the Revolving Credit Commitment less the sum of the average
daily balance of the Revolving Credit Loans of all the Borrowers
during the preceding month multiplied by the applicable Unused
Availability Fee (determined on the date such payment is due) in the
Pricing Matrix set forth in Annex B hereto, such fee to be calculated
quarterly on the basis of a 360 day year for the actual number of days
elapsed and to be payable quarterly in arrears on the last day of each
Fiscal Quarter following the Closing Date.
2.10c Fees Fully Earned. All Fees payable to the Agent
pursuant to any Loan Document shall be fully earned when due and shall
be non-refundable.
2.11 All Obligations to Constitute One Obligation. All Obligations of
a Borrower hereunder shall constitute one general obligation of such
Borrower, and shall be secured by the Agent's Lien on the Collateral
for the benefit of the Lenders and by all other Liens heretofore, now
or at any time or times hereafter granted by such Borrower to the
Agent.
2.12 Payment From Accounts Maintained by the Borrowers. The Agent is
hereby authorized to effect payment of principal, interest, and cash
management fees by debiting the demand deposit accounts of the
Borrowers now or in the future maintained with the Agent with
appropriate debits to the Loan Accounts for such amounts, provided
that the Agent shall give prompt notice thereof to the Borrowers.
ARTICLE 3. SET-OFF AND SECURITY INTERESTS
3.1 Set-Off. To secure the repayment of the Obligations, each
Borrower hereby gives to each Lender and any Participant a Lien and
security interest upon and in any of such Borrower's property,
credits, securities and Money which may at any time be delivered to,
or be in the possession of, or owed by such Lender and any Participant
in any capacity whatever, including the balance of any deposit account
maintained by such Borrower with such Lender or the Participant, as
the case may be. Each Borrower hereby authorizes each Lender and each
Participant, at any time and from time to time upon the occurrence and
during the continuance of an Event of Default, at such Lender's or the
Participant's option, to apply (through debit, set-off or otherwise),
at the discretion of such Lender or the Participant, to the payment of
the Obligations any and all such property, credits, securities or
Money now or hereafter in the hands of the Lender or the Participant
or belonging or owed to such Borrower.
3.2 Personal Property Interests. To secure the repayment of the
Obligations, each Borrower hereby grants to the Agent for and on
behalf of the Lenders, a Lien, subject only to Permitted Liens, in all
of its now owned or hereafter acquired Equipment, Fixtures, Goods,
Inventory, Accounts, Chattel Paper, Documents, General Intangibles,
Instruments and Investment Property, all as more fully described in
the Security Documents. To further evidence the grant of such Liens,
on or prior to the Closing Date and from time to time thereafter each
of the Borrower shall execute and will deliver to the Agent (i) the
Security Agreement substantially in the form of Exhibit "D," (ii) the
Pledge Agreement substantially in the forms of Exhibit "E", if
applicable, (iii) a collateral assignment of Patents and Trademarks
substantially in the form of Exhibit "H" and (iv) all Uniform
Commercial Code financing statements reasonably requested by the
Agent, so that all times during the Term hereof each Borrower has
granted to the Agent a valid, first priority perfected Lien in and to
all personal property owned by it, subject only to the Permitted
Liens.
3.3 Real Property Interests. To secure the repayment of the
Obligations, each applicable Borrower hereby agrees to grant to the
Agent for and on behalf of the Lenders, a Lien, subject only to
Permitted Encumbrances and Permitted Liens, in all of its now owned or
hereafter acquired interests in the Mortgaged Parcels. To further
evidence the grant of such Liens, on or prior to the Closing Date and
from time to time thereafter, each applicable Borrower shall execute
and deliver to the agent a Mortgage or Deed of trust for each
Mortgaged Parcel, in recordable form, substantially in the form of
Exhibit "F."
ARTICLE 4. REPRESENTATIONS AND WARRANTIES
To induce the Agent and the Lenders to enter into this Agreement
and to make the Loans herein provided for, each Borrower makes the
following representations and warranties to the Agent and the Lenders,
all of which shall survive the execution and delivery of this
Agreement and the making of the Loans:
4.1 Organization and Powers.
4.1a Corporations: Each of CSI, CST and SVPCCS is and shall at
all times be a corporation, is duly organized, validly existing and in
good standing under the laws of the state or territory of its
formation and is qualified to do business in all states in which it
owns Mortgaged Parcels and in the States listed on Schedule 4.1, which
represent all of the states in which the leasing of its property or
the operation of its business requires such corporation to be
qualified. Each of the CSI, CST and SVPCCS has all requisite
corporate power and authority to carry on its business as now
conducted and proposed to be conducted, to own and operate its
properties, and to enter into each Loan Document.
4.1b CSTLP: CSTLP is and shall at all times be a limited
partnership, is duly organized, validly existing and in good standing
under the laws of Tennessee and is qualified to do business in all
states in which it owns Mortgaged Parcels and in the states listed on
Schedule 4.1, which represent all of the States in which the leasing
of its property or the operation of its business requires such
corporation to be qualified. CST has all requisite corporate power
and authority to act as the general partner of CSTLP and to carry on
CSTLP's business as now conducted and proposed to be conducted, to own
and operate its properties, and to cause CSTLP to enter into each Loan
Document.
4.2 Capitalization/Ownership. The authorized capital stock of each
of CSI, CST and SVPCCS is as set forth on Schedule 4.2. All issued
and outstanding shares of capital stock of such corporations are duly
authorized and validly issued, fully paid, nonassessable, and such
shares were issued in compliance with all applicable state and federal
laws concerning the issuance of securities. Except as set forth on
Schedule 4.2, there are no preemptive or other outstanding rights,
options, warrants, conversion rights or similar agreements or
understandings for the purchase or acquisition from CSI of any shares
of capital stock or other securities of any of its Subsidiaries.
Except as set forth in Schedule 4.2, Borrowers have no Subsidiaries.
Schedule 4.2A sets forth the owners of all of the partnership
interests of CSTLP and the percentage of partnership interests owned
by such owner.
4.3 Power and Authority. Each of the Borrowers is duly authorized to
enter into, execute, deliver and perform all of the terms and
provisions of this Agreement and the other Loan Documents to which it
is a party, to incur the Obligations and to perform its obligations
under the Loan Documents to which it is a party. All necessary
actions required to authorize the execution, delivery and performance
of this Agreement and the other Loan Documents to which such Borrower
is a party have been properly taken by such Borrower.
4.4 Validity; Binding Effect and Enforceability. This Agreement and
the other Loan Documents have been duly executed and delivered by the
Borrowers. This Agreement and the other Loan Documents constitute
legal, valid and binding obligations of the Borrowers, enforceable
against each Borrower in accordance with their respective terms,
except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance or other
similar laws affecting the enforcement of creditors' rights generally
and except as such enforceability may be limited by the availability
of equitable remedies.
4.5 No Conflict. Neither the execution and delivery of this
Agreement and the other Loan Documents by any Borrower, nor the
consummation of the transactions herein or therein contemplated or
compliance with the terms and provisions hereof or thereof by such
Borrower, will conflict with, constitute a default under or result in
any breach of (i) the terms and conditions of such Borrower's Articles
of Incorporation, as amended, or By-Laws, as amended, or such
Borrower's Agreement of Limited Partnership (ii) any agreement or
instrument, or (iii) any order, writ, judgment, injunction or decree,
to which such Borrower is a party or by which it is bound or to which
it is subject, or will result in the creation or enforcement of any
Lien whatsoever upon any property, whether now owned or hereafter
acquired, of such Borrower, except for Permitted Liens and Permitted
Encumbrances.
4.6 Financial Matters.
4.6a Historical Financial Statements. The Borrowers have
delivered to the Lenders the audited consolidated annual financial
statements of CSI and its Subsidiaries dated April 30, 1998, and the
related audited consolidated statements of income or operations,
shareholders' equity and cash flows for the fiscal year ended on April
30, 1998, and the unaudited consolidated quarterly financial
statements of financial condition of CSI and its Subsidiaries dated as
of July 31, 1998 and October 31, 1998, and the related unaudited
consolidated statements of income or operations, shareholders' equity
and cash flows for the fiscal quarter ended on July 31, 1998 and
September 30, 1998:
(1) were prepared in accordance with GAAP consistently
applied throughout the period covered thereby,
except as otherwise expressly noted therein;
(2) present fairly the consolidated financial
condition of CSI and its Subsidiaries as of the
date thereof and results of operations for the
period covered thereby; and
(3) show all material indebtedness and other
liabilities, direct or contingent of CSI and its
Subsidiaries as of the date thereof, including
liabilities for taxes, and any material changes to
the material commitments and contingent
obligations shown on the most recent audited
consolidated annual financial statement delivered
to the Lenders.
CSI has also delivered to Agent all other reports and documents
required to be filed with the Commission or required by the Commission
to be mailed to shareholders of the CSI within the last two years.
The financial statements of each of the Borrowers have been
consolidated in CSI's financial statements.
4.6b Financial Pro-Forma and Projections. The pro-forma
unaudited consolidated balance sheet of CSI dated as of the Closing
Date and delivered to the Lenders (the "Pro-Forma Balance Sheet") was
based upon the unaudited consolidated balance sheets of CSI as of
October 31, 1998 and reflects the financial condition of the Borrowers
after giving effect to the transactions contemplated by this Agreement
and the Silicon Valley Acquisition. CSI has delivered to the Lenders
financial projections of CSI and its Subsidiaries for the one-year
period beginning with the Fiscal Year ending April 30, 1998, including
detailed assumptions and updated operating statements. Such
projections set forth a reasonable estimate of possible results in
light of the history of CSI's business, present and foreseeable
conditions and the intentions of CSI's management, and were prepared
in good faith and on a basis determined CSI to be reasonable based on
the assumptions set forth therein, which CSI believes to be
reasonable. Such projections accurately reflect the liabilities of
the Borrowers owed to the Lenders upon consummation of the
transactions contemplated hereby including the Silicon Valley
Acquisition.
4.7 Material Adverse Change. Since April 30, 1998, there has been no
Material Adverse Change and there have been no events or developments
that individually or in the aggregate have had a Material Adverse
Effect, except those restructuring charges recorded in the financial
statements filed with the Commission for the Fiscal Quarter ended July
31, 1998.
4.8 Litigation. There are no judgments outstanding against any of
the Borrowers as of the date hereof, and, except as set forth on
Schedule 4.8, there are no actions, suits, proceedings or
investigations pending or, to any Borrower's knowledge, threatened
against any Borrower, or any of their respective businesses,
operations, properties, prospects, profits or condition (financial or
otherwise), at law or in equity, before any Governmental Authority
which, individually or in the aggregate, if adversely determined,
could reasonably be expected to have a Material Adverse Effect, or
which purport to affect the rights and remedies of the Agent and the
Lenders pursuant to this Agreement or any other Loan Document or which
purport to restrain or enjoin (either temporarily, preliminarily or
permanently) the performance by any Borrower of any action
contemplated by any of the Loan Documents.
4.9 Compliance with Laws. Each of the Borrowers has duly complied
with, and its properties, business operations and leaseholds are in
compliance with, all Governmental Rules applicable to the Borrower,
its respective properties and the conduct of its business. The
Borrower's compliance with Environmental Law is set forth in the
Environmental Agreement, the form of which is attached hereto as
Exhibit G.
4.10 Material Contracts. All contracts material to the business of
the Borrowers are valid, binding and enforceable upon the applicable
Borrower and, to the best of such Borrower's knowledge, each of the
other parties thereto in accordance with their respective terms. No
Borrower is in default of any material provision of any such material
contract to which it is a party.
4.11 Labor Matters. Except as set forth on Schedule 4.11, no Borrower
is a party to any collective bargaining agreement, and there are no
strikes, work stoppages, material grievances, disputes or
controversies with any union or any other organization or known
threats of strikes, work stoppages or slowdowns, or any asserted
pending demands for collective bargaining by any union or organization
or other union organization effort. Except as set forth on Schedule
4.11, no Borrower has, within the two-year period preceding the date
hereof, taken any action which would have constituted or resulted in a
"plant closing" or "mass layoff" within the meaning of the Federal
Worker Adjustment and Retraining Notification Act of 1988 or any
similar applicable Governmental Rule. Any action taken by a Borrower
which constituted or resulted in such a "plant closing" or "mass
layoff" has complied in all material respects with the Federal Worker
Adjustment and Retraining Notification Act of 1988 or any similar
applicable Governmental Rule. The procedures by which each Borrower
has hired or will hire employees comply and will comply in all
respects with each collective bargaining agreement to which such
Borrower is a party and all applicable Governmental Rules.
4.12 Account Warranties. Each of the Borrowers represents, warrants
and covenants as to each Account that, to the best knowledge of such
Borrower in the exercise of its normal credit procedures, as of the
date of the initial Borrowing Base Certificate and each subsequent
Borrowing Base Certificate (i) the Account is a valid, bona fide
account, representing an undisputed indebtedness incurred by the named
account debtor for goods actually sold and delivered or for services
completely rendered; (ii) there are no setoffs, offsets or
counterclaims, genuine or otherwise, against the Account, except as
taken into account in subsection (ix) of the definition of Account;
(iii) the Account does not represent a sale to an Affiliate (except as
permitted by this Agreement) or a consignment, sale or return or a
xxxx and hold transaction (except as permitted by this Agreement);
(iv) no agreement exists permitting any deduction or discount (other
than the discount stated on the invoice); (v) such Borrower is the
lawful owner of the Account and has the right to assign the same to
agent, for the benefit of Lenders; (vi) the Account is free of all
security interests, liens and encumbrances other than those in favor
of the Agent, on behalf of Lenders, and the Permitted Liens; (vii) the
Account is due and payable in accordance with its terms; (viii) there
are no facts, events or occurrences which in any material respect
impair the validity or enforcement of any Account; (ix) all Account
Debtors have the ability to contract and are solvent; and (x) there
are no proceedings or actions which are pending or threatened against
any Account Debtor which are reasonably expected to result in any
material adverse change in such Account Debtor's financial condition.
4.13 Names. Schedule 4.13 sets forth all names, trade names,
fictitious names and business names under which any Borrower currently
conducts business or has at any time during the past three Fiscal
Years conducted business.
4.14 Locations: Mortgaged Parcels. Schedule 4.14 sets forth the
location of the Borrowers' chief executive and principal places of
business, the location of each Borrower's books and records, the
location of all other offices of the Borrowers, a list of the
Mortgaged Parcels, and all Collateral locations, and such locations
are the Borrower's sole locations for its business and the Collateral.
The Borrowers' federal employer identification numbers are set forth
on the signatures page hereof.
4.15 Condition of and Title to Assets. Each Borrower has good,
marketable and legal title to its properties and assets, except for
defects in title which, taken as a whole, are not material to the
Borrower. As of the date hereof, none of the properties or assets of
the Borrowers is subject to any Liens, except for Permitted Liens and
Permitted Encumbrances in existence on the Closing Date. All of the
assets and properties of each Borrowers that are necessary for the
operation of its business are in good working condition, ordinary wear
and tear excepted, and are able to serve the functions for which they
are currently being used. Each Borrower as lessee of any real or
other property has the right under valid leases to occupy, use,
possess and control all such property as now occupied, used, possessed
or controlled by such Borrower.
4.15a Real Property Owned by Any Borrower which is not a
Mortgaged Parcel. Each of the applicable Borrowers hereby represents:
(i) that such Borrower is lawfully seized of a fee simple
estate in the real property set forth in Schedule 4.15a (the "Owned
Property");
(ii) that the Owned Property is subject in all cases to no
lien, charge or encumbrance other than a Permitted Lien;
(iii) that there are no actions, suits or proceedings or
investigations at law or in equity pending, or to the knowledge of
Borrower threatened against or affecting the Owned Property, and such
Borrower is not in default with respect to any order, writ, judgment,
decree or demand of any court or any governmental authority;
(iv) that such Borrower's operation of the Owned Property is
in material compliance with all applicable laws, regulations, rules,
ordinances and restrictive covenants, including, without limitation,
all Environmental Laws;
(v) that such Borrower has paid all real property taxes and
assessments, and all other taxes and assessments of any kind or nature
whatsoever, which are assessed or imposed upon the Owned Property, or
become due and payable;
(vi) that the improvements now existing or hereafter erected
on the Owned Property are and shall be adequately insured;
(vii) that no portion of any Owned Property has been
targeted for condemnation or other taking;
(viii) that such Borrower has and shall maintain the Owned
Property and its improvements in good order, condition and repair, has
and shall comply in all material respects with all laws, ordinances
and regulations, and all other laws, regulations and requirements of
any governmental body or agency having jurisdiction over the Property,
or the use and occupancy thereof by such Borrower;
(ix) that the Owned Property does not contain any Hazardous
Materials (as defined in the Environmental Agreement) (except for
materials used in the ordinary course of business that are, in each
case, used in accordance with Environmental Laws);
Borrower hereby covenants and agrees to protect, defend,
indemnify and hold Lenders harmless from and against any and all loss,
cost (including reasonable attorneys' fees), liability, damage or
expense whatsoever incurred by Lenders by reason of a breach of the
representations and warranties contained in this Subsection 4.15a.
4.15b Leased Real Property. Each Lease of real property to
which any Borrower is a lessee is set forth in Schedule 4.15b. Each
Borrower has maintained and complied with, and during the term of this
Agreement shall continue to maintain and comply with, all leases
covering any real property used by such Borrower, in accordance with
their terms so as to prevent any default thereunder which may result
in the exercise or enforcement of any landlord's or other lien against
such Borrower unless Borrower is contesting in good faith, by an
appropriate proceeding, the validity, amount or imposition of any
lease charges or expenses while maintaining reserves, deemed adequate
by the Agent in its sole discretion, to cover the above, and such
contest does not cause a Material Adverse Change in the financial
condition of the Borrowers and does not impair the Borrowers' ability
to perform its Obligations.
4.16 Tax Returns and Payments. Each Borrower (i) has filed all
Federal, state, local and other tax returns required by law to be
filed and (ii) has paid all taxes, assessments and other governmental
charges levied upon it or any of its properties, assets, income or
franchises which are due and payable, other than (A) those presently
payable without penalty or interest, (B) those which are being
contested in good faith by appropriate proceedings and (C) those
which, if not paid, would not, in the aggregate, have a Material
Adverse Effect; and as to each of items (A), (B) and (C) each Borrower
has set aside on its books reserves for such claim as are determined
to be adequate by application of GAAP consistently applied. The
charges, accruals, and reserves on the books of each Borrower in
respect of Federal, state, local and other taxes and assessments for
all fiscal periods to date are adequate, and no Borrower knows of any
unpaid assessments for additional Federal, state, local or other taxes
for any such fiscal period or any basis therefor relating to such
Borrower.
4.17 Intellectual Property. Each of the Borrowers, owns or licenses
all the material patents, patent applications, trademarks, trademark
applications, permits, service marks, trade names, copyrights,
copyright applications, licenses, franchises, authorizations and other
intellectual property rights that are necessary for the operations of
its business, without infringement upon or conflict with the rights of
any other Person with respect thereto. No slogan or other
advertising, device, product, process, method, substance, part or
component or other material now employed, or now contemplated to be
employed, by any Borrower infringes upon or conflicts with any rights
owned by any other Person, and no claim or litigation regarding any of
the foregoing is pending or threatened. No patent, invention, device,
application, and no statute, law, rule, regulation, standard or code
involving the Borrowers' intellectual property is pending or, to the
knowledge of any Borrower, proposed. All of the Borrowers' material
patents, trademarks, permits, service marks, trade names, copyrights,
licenses, franchises and authorizations are listed on Schedule 4.17.
4.18 Insurance. The Borrowers currently maintain insurance which
meets or exceeds the requirements of Section 5.8 hereof and the
applicable insurance requirements set forth in the other Loan
Documents, and such insurance is provided by insurers meeting the
requirements of Section 5.8 and is of such types and at least in such
amounts as are customarily carried by, and insures against such risks
as are customarily insured against by similar businesses similarly
situated and owning, leasing and operating similar properties to those
owned, leased and operated by the Borrowers. All of such insurance
policies, which are listed on Schedule 4.18, are valid and in full
force and effect. No notice has been given or claim made and no
grounds exist to cancel or avoid any of such policies or to reduce the
coverage provided thereby.
4.19 Consents and Approvals. Except as listed on Schedule 4.19, no
order, authorization, consent, license, validation or approval of, or
notice to, filing, recording, or registration with any Governmental
Authority, or the exemption by any such Governmental Authority, is
required to authorize, or is required in connection with, (i) the
execution, delivery and performance of any of the Loan Documents, (ii)
the legality binding effect or enforceability of any Loan Document or
(iii) the Silicon Valley Acquisition.
4.20 Plans and Benefit Arrangements. Each Plan and Benefit
Arrangement has been maintained and administered in all material
respects in compliance with ERISA and the Internal Revenue Code and
all rules, orders and regulations issued thereunder. The Internal
Revenue Service has determined that each Plan and Benefit Arrangement
which constitutes an employee pension benefit plan as defined in
Section 3(2) of ERISA and which is intended to qualify under Section
401(a) of the Internal Revenue Code so qualifies under Section 401(a)
of the Internal Revenue Code, and that the trusts related thereto are
exempt from tax under the provisions of Section 501(a) of the Internal
Revenue Code. Nothing has occurred with respect to any such Plan or
Benefit Arrangement or to the related trusts since the date of the
most recent favorable determination letter issued by the Internal
Revenue Service which has adversely affected or may reasonably be
expected to affect adversely such qualification or exemption. No
Reportable Event for which notice is not waived under applicable
regulation, has occurred with respect to any Plan. No Borrower nor
any ERISA Affiliate currently contributes to, or is obligated to
contribute to, or is a member of, any Multiemployer Plan. No Borrower
nor any ERISA Affiliate has incurred, or is reasonably expected to
incur, any Withdrawal Liability to any Multiemployer Plan.
4.21 Solvency. After giving effect to the transactions contemplated
by the Silicon Valley Acquisition and the Loan Documents, each of the
Borrowers is, and at all times until the Obligations are satisfied in
full, shall be Solvent.
4.22 Margin Stock. No Borrower is engaged principally or as one of
its important activities in the business of extending credit for the
purpose, immediately, incidentally or ultimately, of purchasing or
carrying margin stock (within the meaning of Regulation U). No Loan
will be used, immediately, incidentally or ultimately, to purchase or
carry any margin stock or to extend credit to others for the purpose
of purchasing or carrying margin stock, or for any other purpose which
would violate or be inconsistent with any of the regulations of the
Board of Governors of the Federal Reserve System.
4.23 Investment Company Act. No Borrower is an "investment company"
registered or required to be registered under the Investment Company
Act of 1940, as amended from time to time, or a company under the
"control" of an "investment company," as those terms are defined in
such Act, and shall not become such an "investment company" or under
such "control."
4.24 Public Utility Holding Company Act. No Borrower is a "holding
company or a "subsidiary company" of a "holding company," or an
"affiliate" of a "holding company" or a "subsidiary company" of a
"holding company" within the meaning of the Public Utility Holding
Company Act of 1935, as amended from time to time.
4.25 Year 2000 Problem. Each of the Borrowers has reviewed the areas
within its business and operations which could be adversely affected
by, and have developed or are developing a program to address on a
timely basis, the "Year 2000 Problem" (that is, the risk that computer
applications used by such Borrower may be unable to recognize and
perform properly date-sensitive functions involving certain dates
prior to and any date on or after December 31, 1999), and have made
related appropriate inquiry of material suppliers and vendors to
determine where problems exist (the "Year 2000 Issues") and the
remedies which must be implemented to eliminate them. Based on such
review and program, each Borrower believes that the "Year 2000
Problem" will not have a Material Adverse Effect on such Borrower.
From time to time, at the request of the Bank, the Borrowers shall
provide to the Bank such updated information or documentation as is
requested regarding the status of their efforts to address the Year
2000 problem.
4.26 Full Disclosure. Neither this Agreement nor any other document,
certificate or statement furnished to the Agent or any Lender by or on
behalf of any Borrower pursuant to this Agreement contains any untrue
statement of a material fact or omits to state a material fact
necessary in order to make the statements contained herein and
therein, in light of the circumstances under which they were made, not
misleading. There is no fact known to any Borrower which materially
and adversely affects the business, property, assets, financial
condition, results of operations or prospects of such Borrower which
has not been set forth in this Agreement or in the other documents,
certificates and statements (financial or otherwise) furnished to the
Agent or any Lender by or on behalf of such Borrower prior to or on
the date hereof in connection with the transactions contemplated
hereby.
ARTICLE 5. AFFIRMATIVE COVENANTS
From the date hereof and thereafter until the termination of the
Revolving Credit Commitment and until the Loans and the other
Obligations of the Borrowers hereunder are paid in full, CSI agrees,
for the benefit of the Agent, the Co-Agent and the Lenders, that it
will comply, and shall cause the other Borrowers to comply, with each
of the following affirmative covenants:
5.1 Use of Proceeds. The Loans shall be used only for the following
purposes:
The Revolving Credit Loans and the Term Loan shall be used (A) to
repay on the Closing Date all outstanding Existing Bank Indebtedness,
(B) to provide funds for the Silicon Valley Acquisition, (C) to repay
certain of the assumed liabilities acquired pursuant to the Silicon
Valley Acquisition, (D) to repay existing machinery and equipment
loans, and (E) for working capital.
In addition, CSI may use no more than $3,000,000 of Revolving Credit
Loans to effect the repurchase of its common stock. The Agent shall
approve the stock purchase under the following conditions: (w) the
repurchase occurs in a single transaction or a group of transactions
which occur simultaneously; (x) for the two-month period prior to the
repurchase the available Borrowing Base for the Revolving Credit Loans
is in excess of $1,500,000 plus the amount of the repurchase, (y) for
two consecutive months following the repurchase the available
Borrowing Base for the Revolving Credit Loans on a pro forma basis
remains at or in excess of $1,500,000, and (z) such repurchase does
not result in an Event of Default.
5.2 Delivery of Financial Statements and Other Information. During
the term hereof, CSI shall deliver or cause to be delivered to the
Agent and each Lender the following financial statements and other
information:
5.2a Annual Financial Statements. As soon as available and in
any event within ninety (90) days after the end of each Fiscal Year of
CSI, a consolidated balance sheet of CSI and its consolidated
Subsidiaries as of the end of such Fiscal Year and the related
consolidated statements of income, retained earnings and cash flows or
such other similar or additional statements then required by the
Commission for annual reports filed pursuant to the Securities
Exchange Act of 1934, as amended, for such Fiscal Year, setting forth
in each case in comparative form the figures for the previous Fiscal
Year, all prepared on a consolidated basis in accordance with GAAP
consistently applied and presenting fairly the financial condition of
CSI and its consolidated Subsidiaries in such reasonable detail and
scope as the Agent may request from time to time, all of the foregoing
to be audited and certified by a recognized certified public
accounting firm reasonably acceptable to the Agent, whose opinion
shall be unqualified.
5.2b Quarterly Budgets. As soon as possible and in any event
within fifteen (15) days of the beginning of each Fiscal Quarter, a
budget of income and retained earnings for such Fiscal Quarter and for
the period from the beginning of the then current Fiscal Year to the
end of such Fiscal Quarter, with projected cash flow statements to the
end of the Fiscal Quarter, accompanied by the same statements for the
Subsidiaries in such reasonable detail as the Agent may request from
time to time.
5.2c Monthly Statement of Operations. As soon as possible and in
any event within thirty (30) days of the end of each month, a
consolidated balance sheet of CSI as at the end of such month and the
related consolidated statements of income and retained earnings for
such month and for the period from the beginning of the then current
Fiscal Year to the end of such month, with related cash flow
statements at the end of each month setting forth in each case in
comparative form, figures for the corresponding periods in the
preceding fiscal year and as of a date one year earlier, all prepared
on a consolidated basis in accordance with GAAP consistent with Fiscal
Year financial statements but omitting notes and subject to year-end
adjustments, accompanied by the same statements for the Subsidiaries,
each presenting fairly the financial condition of CSI and its
Subsidiaries in such reasonable detail as the Agent may request from
time to time and each certified as accurate by an Authorized Officer;
5.2d Compliance Certificate. Simultaneously with the delivery of
each set of annual financial statements and of each quarterly and
monthly financial statement referred to in Sections 5.2a, 5.2b and
5.2c, respectively an executed, completed Compliance Certificate
substantially in the form of Exhibit "J," executed by an Authorized
Officer and, in the case of the Compliance Certificate submitted with
the financial statements at the end of each month, containing
calculations with respect to Borrowers' compliance with each of the
financial covenants contained in this Agreement and such additional
information as the Agent may reasonably request from time to time;
5.2e Borrowing Base Certificate. Within ten (10) Business Days
following the end of each calendar month and on each date that any
Borrower requests a Loan to be made hereunder, a completed, executed
Borrowing Base Certificate substantially in the form of Exhibit "K"
for the calendar month just ended, executed by an Authorized Officer
and containing such additional information as may be requested by the
Agent from time to time;
5.2f Management Letters. Within ten (10) Business Days after
receipt by the Borrower of any management or similar letters or
reports from such certified public accountants, a copy of each
management letter or report;
5.2g Other Reports, Information and Notices. Within the time
periods set forth below, the following other reports, information and
notices:
(i) Notice of Defaults and Material Adverse Changes. Promptly
after any officer of any Borrower has learned of the occurrence or
existence of a Default or Event of Default or an event or set of
circumstances which has had or which may reasonably be expected to
have a Material Adverse Effect or which has caused or which may
reasonably be expected to cause a Material Adverse Change, telephonic
notice thereof specifying the details thereof, the anticipated effect
thereof and the action which the applicable Borrower has taken, is
taking or proposes to take with respect thereto, which notice shall be
promptly confirmed in writing within five days by an Authorized
Officer;
(ii) Notice of Litigation. (A) Promptly after the commencement
or threat thereof, written notice of any action, suit, proceeding or
investigation by or against the Borrower before any Governmental
Authority, court or arbitrator and, in any event, of any action, suit,
proceeding or investigation against any Borrower which involves a
potential claim in excess of $75,000 and (B) promptly after any
Authorized Officer has notice thereof, written notice of any decision,
ruling, judgment, appeal, reversal or other significant action in
connection with any existing action, suit, proceeding or investigation
before any Governmental Authority, court or arbitrator involving a
claim in excess $75,000;
(iii) ERISA Reports.
(A) as soon as possible, and in any event not later than
the date notice is sent to the PBGC, notice of any Reportable Event
for which notice is not waived under applicable regulation, regarding
any Plan and an explanation of any action which has been or which is
proposed to be taken with respect thereto;
(B) promptly after receipt thereof, a copy of any notice
which any Borrower or any ERISA Affiliate may receive from the PBGC
relating to the intention of the PBGC to terminate any Plan, or to
appoint a trustee to administer any Plan, or to assert any liability
under Title IV of ERISA against any Borrower or any ERISA Affiliate;
and
(C) concurrent with the filing thereof, a copy of any
Notice of Intent to Terminate any Plan filed under Section 4041(c) of
ERISA.
(iv) Notices of Tax Audits. Promptly, and in any event within
five (5) Business Days after receipt thereof by the Borrower, a copy
of each notice from any Governmental Authority received by the
Borrower of such Governmental Authority's intention to audit any
Federal tax return of any Borrower or any of the Subsidiaries which
audit could result in a potential liability in excess of $75,000, and
a copy of each subsequent notice with respect thereto from any such
Governmental Authority;
(v) Notice of Name Change. As soon as possible, and in any
event at least thirty (30) Business Days prior to the effective date
thereof, written notice of any change of the Borrower's or any
Subsidiary's name; and
(vi) Labor Matters. Within two (2) Business Days after any
Authorized Officer of a Borrower has knowledge thereof, written notice
of (A) any demand for collective bargaining by any union or
organization, (B) any other union organizing effort, (C) any actual or
threatened strike, work stoppage or slowdown, or (D) any material
grievance, dispute or controversy involving any labor union or other
organization.
(vii) Annual Forecast. Within sixty (60) days following the
end of each Fiscal Year of CSI, an annual forecast for the forthcoming
fiscal year, which shall include, without limitation, (i) a projected
consolidated balance sheet and statements of income, retained earnings
and cash flows of CSI, and (ii) a projected balance sheet and
statements of income, retained earnings and cash flows of its
Subsidiaries, each accompanied by a written explanation of material
changes to or variances from prior projections.
5.2h Statements and Reports: Promptly after the same are sent,
copies of all financial statements and reports which CSI sends to its
shareholders; and promptly after the same are filed, copies of all
financial statements and regular, periodical or special reports which
the CSI or any of its Subsidiaries makes to, or files with, the
Commission or any successor or similar Governmental Authority.
5.2i SEC Reports. Promptly upon the filing thereof, a copy of
all reports on Forms 10-K, 10-Q and 8-K (or their equivalents) which
CSI shall have filed with the Commission.
5.2j Additional Information; Visitation. The Borrowers shall
deliver to the Agent and each Lender such additional financial
statements, reports, financial projections, and other information,
whether or not financial in nature, as the Agent and the Lenders may
reasonably request from time to time. The Borrowers will permit the
Agent, the Lenders and their respective designated employees and
agents to have access, at any time and from time to time, upon
reasonable notice and during normal business hours, to visit any of
the properties of any Borrower or any Subsidiary thereof, to examine
and make copies of its books of record and account and such reports
and returns as such Borrower or any such Subsidiary may file with any
Governmental Authority and discuss such Borrower's affairs and
accounts with, and be advised about them by, any Authorized Officer
and such Borrower's accountants; provided, however, that no notice of
a visitation need be given when a Default or Event of Default exists.
5.3 Preservation of Existence; Qualification. At its own cost and
expense, each Borrower will to do all things necessary to preserve and
keep in full force and effect its existence and qualification under
the laws of the State or territory of its incorporation or formation
and be and remain qualified to transact business in each state where
due to the nature of its activities or the ownership of its
properties, qualification to transact business is required.
5.4 Compliance with Laws, Contracts and Licenses. Each Borrower
shall (i) comply with all applicable material Governmental Rules
including but not limited to the Securities Act of 1933, the
Securities Exchange Act of 1934, the Fair Labor Standards Act, and
Environmental Laws, (ii) comply with all material provisions of each
material contract and agreement to which it is a party, and
(iii) shall maintain in full force and effect all material
Governmental Approvals and other material contracts and agreements
which are necessary or advisable for the operation of their respective
businesses as now conducted and in compliance with all applicable
material Governmental Rules.
5.5 Continuance of Business. Each Borrower shall (i) do or cause to
be done all things reasonably necessary to preserve and keep in full
force and effect all of its material permits, rights and privileges
necessary for the proper conduct of its businesses and (ii) continue
to engage in the Business.
5.6 Accounting System: Books and Records. Each Borrower shall
maintain a system of accounting established and administered in
accordance with GAAP consistently applied and will set aside on its
books all such proper reserves as shall be required by GAAP. Further,
each Borrower shall maintain proper books of record and account in
accordance with GAAP in which full, true and correct entries shall be
made of all of its properties, assets, dealings and business affairs.
5.7 Payment of Taxes and Other Liabilities. Each Borrower shall
promptly pay and discharge all obligations, accounts and liabilities
which are owned by it, to which it is subject or which are asserted
against it, including but not limited to all taxes, assessments and
governmental charges and levies upon it or upon any of its income,
profits, or property prior to the date on which penalties attach
thereto; provided, however, that for purposes of this Agreement, a
Borrower shall not be required to pay any tax, assessment, charge or
levy (i) the payment of which is being contested in good faith by
appropriate and lawful proceedings diligently conducted and (ii) as to
which that Borrower shall have set aside on its books reserves for
such claim as are determined to be adequate by the application of GAAP
consistently applied, but only to the extent that failure to discharge
any such liabilities would not result in any additional liability
which would have a Material Adverse Effect; and provided, further,
that the Borrower shall pay all such contested liabilities forthwith
if a lien will attach as security therefor.
5.8 Insurance. Each Borrower shall maintain at all times adequate
insurance to the reasonable satisfaction of the Agent with the
insurers shown on Schedule 4.18 or other financially sound and
reputable insurers acceptable to the Agent against such risks of loss
as are customarily insured against and in amounts customarily carried
by Persons owning, leasing or operating similar properties, including,
but not limited to (i) fire and theft and extended coverage insurance
in an amount at least equal to the total full insurable value of their
respective insurable property, (ii) liability insurance on account of
injury to persons or property, (iii) insurance which complies with all
applicable workers compensation, unemployment and similar laws: (iv)
business interruption insurance; (v) flood insurance, for any real
property of any Borrower designated by any Governmental Authority to
be in an area of special flood hazard, and (vi) product liability,
larceny embezzlement or other criminal misappropriation, all of the
foregoing to be acceptable to the Agent at all times during the term
hereof. All policies of insurance shall provide for thirty (30) day
written minimum cancellation notice to the Agent. Prior to the first
borrowing under this Agreement and thereafter within ninety (90) days
of the close of each Fiscal Year, CSI shall deliver to the Agent a
schedule indicating all insurance coverage then in effect for the
Borrowers, in such detail as the Agent may reasonably request from
time to time, along with evidence satisfactory to the Agent showing
that Agent is the named mortgagee and loss payee for the insurance
described in this Section 5.8 pursuant to standard long-term mortgagee
and loss payee clauses.
5.9 Maintenance of Properties. Each Borrower shall maintain,
preserve, protect and keep its properties in good repair, working
order and condition (ordinary wear and tear excepted), and make all
necessary and proper repairs, renewals and replacements so that its
business carried on in connection therewith may be properly and
advantageously conducted at all times.
5.10 Plans and Benefit Arrangements. Each Borrower shall, and shall
cause each ERISA Affiliate to, comply with ERISA, the Internal Revenue
Code and all other applicable laws which are applicable to Plans and
Benefit Arrangements, except where the failure to do so, alone or in
conjunction with any other failure, would not result in a Material
Adverse Change.
5.11 Access to Accountants and Management. Each Borrower authorizes
the Agent and the Lenders to discuss the financial condition and
financial statements of the Borrower with such Borrower's independent
public accountants upon reasonable notice to such Borrower of its
intention to do so, and authorizes such accountants to respond to all
of the Agent's inquiries and to provide the Agent with copies of or
access to books, records or documents made available by the
accountants to such Borrower; provided, however, that when a Default
or Event of Default exists, 24 hours shall be deemed reasonable notice
to such Borrower. Each Lender may with the consent of the Agent,
which will not be unreasonably denied, confer with any Authorized
Officer directly regarding any Borrower's business, operations and
financial condition.
5.12 Audit. The Agent shall conduct one audit of Collateral each
Fiscal Year at the Borrowers' expense (which shall not exceed $7,000
for such annual audit), which audit process shall generate a report of
ineligible accounts and ineligible inventory of the Borrowers for
Borrowing Base purposes. The Agent may, at its option and as it deems
necessary, conduct additional audits of Collateral during any Fiscal
Year at the Borrowers' expense, which audit process shall generate a
report of ineligible accounts and ineligible inventory of the
Borrowers for Borrowing Base purposes.
5.13 Collateral Locations. Each Borrower will keep the Collateral
consisting of personal property at the locations specified on Schedule
5.13 (except for Collateral in transit in the ordinary course of
business), unless such Borrower complies with the terms and provisions
of this Section. A Borrower will give the Agent at least thirty (30)
day's advance written notice of any change in such Borrower's
principal place of business, any change in the location of its books
and records or the personal property Collateral or any new location
for its books and records or other personal property Collateral. With
respect to any new location of a Borrower (which in any event shall be
within the continental United States), the applicable Borrower will
execute such documents and take such actions as the Agent deems
necessary to perfect and protect the security interests of the Agent,
on behalf of the Lenders, in the Collateral prior to the transfer or
removal of any Collateral to such new location.
5.14 Updates to Representations, Warranties and Schedules. Should any
of the representations and warranties set forth herein or in any of
the other Loan Documents, or any of the Information or disclosures
provided on any of the Schedules hereto or to any of the other Loan
Documents, become outdated or incorrect in any material respect at any
time during the term of this Agreement, CSI shall promptly provide the
Agent in writing with such revisions or updates as may be necessary or
appropriate to update or correct same; provided, however, that no such
representation, warranty or Schedule shall be deemed to have been
amended, modified or superseded by any such correction or update, nor
shall any breach of warranty or representation resulting from such
inaccuracy or incompleteness be deemed to have been cured thereby,
unless and until the Required Lenders, in their sole and absolute
discretion, shall have accepted in writing such revisions or updates.
5.15 Further Assurances: Power of Attorney. At any time and from time
to time, upon the Agent's reasonable request, the Borrowers shall
make, execute and deliver to the Agent, and where appropriate shall
cause to be recorded or filed, and from time to time thereafter to be
re-recorded and refiled at such time and in such offices and places as
shall be deemed desirable by the Agent any and all such further
Security Documents, certificates and other documents and instruments
as the Agent may reasonably consider necessary or desirable in order
to effectuate, complete, perfect, continue or preserve the Obligations
of the Borrowers hereunder or under the other Loan Documents and the
Liens created thereby including, without limitation, (i) any documents
or assignments the Agent deems necessary to perfect its Liens in any
intellectual property rights of any Borrower, and (ii) any
documentation required by the Federal Assignment of Claims Act for
U.S. Government accounts. Each Borrower hereby appoints the Agent,
and any of its officers, directors, employees and authorized agents,
as its attorney-in-fact, with full power of substitution, upon any
failure by the Borrower to take or cause to be taken any action
described in the preceding sentence, to make, execute, record, file,
re-record or refile any and each such Security Document, instrument
certificate and document for and in the name of such Borrower. The
power of attorney granted pursuant to this Section is coupled with an
interest and shall be irrevocable until all of the Obligations are
paid in full and the Revolving Credit Commitment is terminated.
5.16 Key Man Life Insurance Policy. On or before January 11, 1999,
CSI shall deliver or cause to be delivered to Agent an assignment of a
term life insurance policy in the amount of Ten Million Dollars
($10,000,000) insuring the life of X.X. Xxxxx, said assignment to be
in substantially the form attached hereto as Exhibit I, and shall
maintain or cause to be maintained said policy in full force and
effect and assigned to Agent throughout the term of this Agreement.
5.17 Primary Banking Relationship. Throughout the term of this
Agreement, CSI shall maintain its primary banking relationship and
substantially all of its demand deposit accounts with the Agent,
including, without limitation, its lockbox accounts, balance
reporting, operating accounts and control disbursement services;
provided, however, the Borrowers shall be permitted to maintain local
depository accounts.
5.18 Ownership of Subsidiaries. Throughout the term of this
Agreement, CSI shall be and remain the owner and holder of 100% of the
issued and outstanding stock of CST, SVPCCS and Circuit Systems
Foreign Sales Corp., a Virgin Islands corporation.
5.19 Silicon Valley Acquisition. The Silicon Valley Acquisition shall
have been completed, and SVPCCS shall have succeeded to substantially
all of the assets and certain of the liabilities of Silicon Valley
substantially as described in Purchase and Sale Agreement attached
hereto as Exhibit O on or before January 4, 1999.
ARTICLE 6. NEGATIVE COVENANTS
From the date hereof and thereafter until the Term Loan Maturity
Date and until the Loans and the other Obligations of the Borrowers
hereunder are paid in full, each Borrower agrees to comply, for the
benefit of the Agent and the Lenders, with the following negative
covenants:
6.1 Indebtedness. No Borrower shall create, incur, assume or permit
to exist or remain outstanding any Indebtedness, except for:
(i) The Obligations owed by the Borrower to the Lenders
hereunder;
(ii) Indebtedness existing as of the Closing Date which shall
continue to be outstanding after the Closing Date, all as shown on
Schedule 6.1 hereto;
(iii) Indebtedness consisting of Capitalized Lease
Obligations up to the aggregate principal amount outstanding not to
exceed $5,000,000 during any Fiscal Year, the documents relating to
such liens to be in form acceptable to Agent. Capitalized Lease
Obligations in excess of such amounts shall be subject to the approval
of the Agent on a case by case basis;
(iv) Indebtedness represented by any Permitted Lien other than
the Permitted Lien described in clause (ix) of the definition of
Permitted Lien; and
(v) Indebtedness incurred in connection with any interest rate
hedge agreement (i.e., any type of agreement or arrangement designed
to provide protection against fluctuations in interest rates) entered
into with respect to Indebtedness described in Subsection (i) or (ii).
6.2 Guarantees. No Borrower shall enter into any Guaranty, except
endorsements of negotiable instruments for deposit and collection and
similar transactions in the ordinary course of business, and
guaranties approved by the Lenders in writing.
6.3 Liens: Negative Pledge. No Borrower shall create, assume, incur,
suffer or permit to exist any Lien upon any of its assets and
properties, whether tangible or intangible, whether now owned or in
existence or hereafter acquired or created and wherever located, nor
acquire nor agree to acquire any assets or properties subject to any
Lien except for Permitted Liens (including without limitation the
Liens described on Schedule 6.3) and Permitted Encumbrances. No
Borrower shall make or enter into any agreement to grant Liens for the
benefit of any Person.
6.4 Financial Covenants.
6.4a Minimum EBITDA. As of the Closing Date, the Borrowers'
EBITDA shall be no less than $7,800,000 (calculated as of October 31,
1998 for the previous 12 months). Thereafter the Borrowers' EBITDA
shall be no less that the amounts set forth in the table below for the
applicable periods. In all cases, EBITDA shall be determined
quarterly, based on a rolling twelve month basis.
Fiscal Quarter Periods Minimum EBITDA
---------------------- -----------
From Closing Date to and including January 31, 1999 $ 8,000,000
From February 1, 1999 to and including April 30, 1999 $10,000,000
From May 1, 1999 and at all times thereafter $10,000,000
6.4b Adjusted Debt Service Ratio. As of the last day of each
Fiscal Quarter and the three immediately preceding Fiscal Quarters
treated as a single accounting period, calculated on a consolidated
basis, the ratio of (i) EBITDA for such period less "unfinanced
capital expenditures" ("unfinanced capital expenditures" shall equal
Capital Expenditures minus increased long term debt) less income tax
expenses to (ii) Debt Service for such period shall not be less than:
Fiscal Quarter Periods Ratio
---------------------- -----
From Closing Date to and including January 31, 1999 .8 to 1.0
From February 1, 1999 and thereafter 1.0 to 1.0
6.4c Minimum Tangible Net Worth. As of the last day of each
Fiscal Quarter, Tangible Net Worth of the Borrowers shall be not less
than $11,000,000.
6.4d Maximum Debt to Tangible Net Worth Ratio. As of the last
day of each Fiscal Quarter, the ratio of Debt to Tangible Net Worth of
the Borrowers shall be no more than 5 to 1.0.
6.4e Capital Expenditures. Capital Expenditures for all
Borrowers shall not exceed $5,000,000 in the aggregate in any Fiscal
Year.
6.4f Operating Lease Expense. Operating lease expenses for all
Borrowers, determined and calculated in accordance with GAAP on a
consolidated basis, shall not exceed $1,000,000 in the aggregate in
any given Fiscal Year.
6.5 Distribution Restriction. No Borrower shall declare or make any
Shareholder Distribution unless such Shareholder Distribution is made
to a Borrower.
6.6 Liquidations, Mergers, Consolidations, Acquisitions, Etc. No
Borrower shall dissolve, liquidate or wind up its affairs,
recapitalize or become a party to any merger or consolidation, or
acquire by purchase, lease or otherwise all or substantially all of
the assets, or any capital stock or other equity or ownership interest
of any other Person, or permit a majority of its capital stock to be
acquired by any Person except as permitted by Section 6.13.
6.7 Subsidiaries. No Borrower shall form or acquire any new
Subsidiary, without the prior written consent of the Lenders, which
consent shall not be unreasonably withheld.
6.8 Loans and Other Advances and Payments.
6.8a Loans. No Borrower shall make loans, payments or other
advances of funds to any Person, except for:
(i) payments in the ordinary course of business for goods and
services, taxes and other assessments, and other ordinary course
payments; and
(ii) advances for expenses made to the Borrower's employees in
reasonable amounts and in the ordinary course of business.
6.8b Prepayments. No Borrower shall prepay, redeem, purchase,
defease or otherwise satisfy prior to the scheduled maturity thereof
in any manner, or make any payment in violation of any Indebtedness,
other than the prepayment of the Notes in accordance with the terms of
this Credit Agreement and regularly scheduled or required repayments
or redemptions of existing Indebtedness, or amend, modify or change in
any manner any term or condition of any existing Indebtedness, or
other than to prepay intercompany Indebtedness.
6.9 Investments. No Borrower shall at any time purchase, acquire or
own any stocks, bonds, notes, or securities of, or any partnership
interest (whether general or limited) in, or any other interest in, or
make any capital contribution to, any other Person, or become a joint
venture partner in any joint venture, or repurchase any of its stock
or partnership interests, or enter into any interest hedge agreement
for purposes of speculation, or agree, become or remain liable to do
any of the foregoing, except for:
(i) debt securities having a maturity of not more than one year
issued or guaranteed by the United States government or by an agency
or instrumentality thereof;
(ii) certificates of deposit, bankers acceptances and time
deposits, which in each case mature within one year from the date of
purchase thereof and which are issued by a Qualified Lender;
(iii) commercial paper maturing in 270 days or less from the
date of issuance which, at the time of acquisition by a Borrower
either (A) is accorded the highest rating by Standard and Poor's
Rating Group, a division of XxXxxx-Xxxx, Inc. or Xxxxx'x Investors
Service, Inc. or (B) is issued by a Qualified Lender;
(iv) direct obligations of the United States of America or any
agency or instrumentality of the United States of America, the payment
or guarantee of which constitutes a full faith and credit obligation
of the United States of America in each case maturing in 12 months or
less from the date of acquisition;
(v) cash management "sweep accounts" made available to CSI by
the Agent which invest directly or indirectly through common
investment funds, repurchase agreements or otherwise in securities of
the type described in items (i) through (iv) above; and
(vi) mutual funds made available by the Agent or its affiliates
which are invested in the types of investments described in items (i)
through and including (iv) above.
6.10 Affiliate Transactions. No Borrower shall enter into or carry
out any transaction with an Affiliate (including, without limitation,
purchasing or leasing property or services from or selling or leasing
property or services to any Affiliate) unless such transaction (i) is
not otherwise prohibited by this Agreement (ii) is entered into in the
ordinary course of business upon fair and reasonable arm's-length
terms and conditions which are fully disclosed to the Lenders and
(iii) is in accordance with all applicable Governmental Rules.
6.11 Change of Business. No Borrower shall engage in any business
other than the Business.
6.12 ERISA. No Borrower shall:
(i) (A) with respect to any Plan, incur any material liability
for failure to make timely payment of any contribution or installment
required under Section 302 of ERISA and Section 412 of the Internal
Revenue Code, whether or not waived, or otherwise materially fail to
comply with the funding provisions set forth therein (B) with respect
to any Plan or suffer to exist any lien under Section 302(f) of ERISA
or Section 41 2(n) of the Internal Revenue Code against the property
and rights to property of the Borrower or any ERISA Affiliate or (C)
terminate, or permit any ERISA Affiliate to terminate, any such Plan
in a manner which could reasonably be expected to result in the
imposition of a lien upon the property or rights to property of the
Borrower or any ERISA Affiliate pursuant to Section 4068 of ERISA; and
(ii) engage in any "prohibited transaction" (as defined in
Section 406 of ERISA or Section 4975 of the Internal Revenue Code)
with respect to any "employee benefit plan" (as defined in Section
3(3) of ERISA) for which a statutory or administrative exemption is
not available under Section 408 of ERISA or Section 4975 of the
Internal Revenue Code.
6.13 Capital Expenditure Limits. The aggregate amount of all
Borrowers' Capital Expenditures (excluding trade-ins and excluding
Capital Expenditures in respect of replacement assets to the extent
funded with casualty insurance proceeds) will not exceed $5,000,000 in
any Fiscal Year.
In the event that any Borrower enters into a Capitalized Lease or
other contract with respect to fixed assets, for purposes of
calculating Capital Expenditures under this Section only, the amount
of the Capitalized Lease or contract initially capitalized on such
Borrower's balance sheet prepared in accordance with GAAP shall be
considered expended in full on the date that such Borrower enters into
such Capitalized Lease or contract.
6.14 Asset Dispositions. No Borrower shall sell, lease, assign
transfer or otherwise dispose of any of its respective rights, title
or interest in and to the Collateral, excepting only sales of
inventory in the ordinary course of business and sales or other
dispositions of obsolete equipment or equipment being replaced in the
ordinary course of the business of such Borrower.
ARTICLE 7. CONDITIONS TO EXTENSIONS OF CREDIT
7.1 All Loans. The obligation of the Lenders to make each Loan is
subject to the satisfaction of each of the following conditions
precedent:
7.1a Request for Loan or Application. Receipt by the Agent of a
Loan Request satisfying the requirements of Section 2.6, and, if the
proceeds are to be used in connection with the Silicon Valley
Acquisition, the Borrowers shall describe such use in the Loan
Request.
7.1b Borrowing Base Certificate. Receipt by the Agent of an
executed Borrowing Base Certificate in the form attached as Exhibit K.
7.1c No Default or Event of Default. The Borrowers shall have
performed and complied with all agreements and conditions in the Loan
Documents required to be performed or complied with prior to any Loan
being made and, at the time such Loan is made or as a result of making
such Loan, no Default or Event of Default has occurred and is
continuing or will be caused by the making of such Loan.
7.1d Representations Correct. The representations and warranties
contained in Article 4 hereof and otherwise made in writing by or on
behalf of the Borrowers in connection with the transactions
contemplated by this Agreement shall be (i) correct when made and
(ii) correct in all material respects at the time of the making of
each Loan.
Each request for a Loan, whether made orally or in writing, shall
be deemed to be, as of the time made, a representation and warranty by
the Borrowers as to the accuracy of the matters set forth in Sections
7.1c and 7.1d.
7.1e Landlord Waivers and Consent. With respect to existing
landlords, Borrowers shall obtain the Landlord Waivers and Consents
substantially in the form of Exhibit "M" attached hereto prior to the
Closing Date. With respect to leases of real property entered into
after the date hereof, and each renewal of any lease of real property
(whether existing or entered into after the date hereof), Borrowers
shall deliver to Agent a Landlord Waiver and Consent substantially in
the form of Exhibit "M" hereto and reasonably satisfactory to Agent
prior to occupying the premises subject to any such leases or the
commencement of the renewal term, as applicable.
7.1f Loans for Silicon Valley Acquisition. In addition to the
conditions set forth in this Section 7.1, in order to make a Loan the
proceeds of which will be used for the Silicon Valley Acquisition, the
Borrowers must also meet the conditions set forth in Section 7.3
hereof.
7.2 Initial Extension of Credit. The obligation of the Lenders to
make the first Loan hereunder is subject to the satisfaction of each
of the following conditions precedent, in addition to the applicable
conditions precedent set forth in Section 7.1, all of which must be in
form and substance satisfactory to the Agent and the Lenders:
7.2a Closing Documents. Receipt by the Agent of the following
fully and duly executed documents:
(i) this Agreement executed by the Borrowers;
(ii) all schedules to this Agreement and the other Loan
Documents;
(iii) the Revolving Credit Notes executed by the Borrowers
and payable to each Lender for redelivery to each Lender;
(iv) the Term Notes executed by the Borrowers and payable to each
Lender for redelivery to each Lender;
(v) the Security Agreement, the Pledge Agreement and an
Assignment of Patents and Trademarks, each executed by the Borrowers;
(vi) UCC-1 financing statements requested by it, signed by the
applicable Borrowers, and the filing of such financing statements by
the Agent in the appropriate filing offices;
(vii) a Mortgage or Deed of Trust for each Mortgaged Parcel
in recordable form and the recordation thereof in the appropriate
recording office;
(viii) a Borrowing Base Certificate; and
(ix) the Closing Certificate.
7.2b Lien Searches. Receipt by the Agent of Lien and judgment
searches with results reasonably satisfactory to the Lenders.
7.2c Termination Statements, Etc. Receipt by the Agent of all
Uniform Commercial Code termination statements, mortgage
satisfactions, releases of pledge agreements and other documents and
instruments of termination and release necessary so that the security
interests granted to the Agent for the benefit of the Lenders pursuant
to the Security Documents are first priority Liens, subject only to
Permitted Liens or Permitted Encumbrances.
7.2d Title Insurance. The Borrowers shall deliver or cause to be
delivered to the Agent on the Closing Date, ALTA loan title insurance
policies issued by title insurers reasonably satisfactory to the Agent
(the "Mortgage Policies") and in amounts reasonably satisfactory to
the Agent insuring the Agent that the Mortgages are valid and
enforceable first priority mortgage liens on the respective Mortgaged
Parcel, free and clear of all defects and encumbrances except the
permitted encumbrances which are reasonably acceptable to the Agent
and are listed or described in each Mortgage (the "Permitted
Encumbrances"). The Mortgage Policies shall (i) have all standard
preprinted general exceptions deleted, (ii) include an endorsement
insuring against any gap, the effect of future advances under this
Agreement, for mechanics' liens and for any other matter that the
Agent may reasonably request, and (iii) provide for affirmative
insurance as the Agent may reasonably request. All taxes with respect
to each Mortgaged parcel must be paid to the Closing Date if due and
payable.
7.2e Surveys. Receipt by the Agent of a current survey meeting
the Minimum Standard Detail Requirements for Land Title Survey jointly
established by ALTA and ACSM in 1992 (or similar requirements
reasonably acceptable to the Agent) for each Mortgaged Parcel prepared
by a licensed registered surveyor and conforming to the Agent's
standard survey guidelines previously delivered to the Borrower. All
such surveys shall be sufficient to allow the title insurer of the
Mortgage Policies to issue an ALTA loan policy for each Mortgage
Parcel with the standard survey exceptions deleted.
7.2f Site Assessments. Receipt by the Agent of a Phase I, and if
reasonably requested by the Agent, a Phase II Environmental Site
Assessment, for each Mortgaged Parcel prepared by an environmental
engineering firm acceptable to Bank which complies with the Standard
Practice for Environmental Site Assessments: Phase I Environmental
Site Assessment Process published by the American Society for Testing
and Materials, and otherwise satisfactory to the Agent and revealing
no environmental defects unacceptable to the Agent.
7.2g Environmental Agreement. Receipt by the Agent of the
Environmental Agreement duly executed by the Borrowers.
7.2h Appraisals. Receipt by the Agent of (i) an appraisal by an
independent valuation firm acceptable to the Agent of the machinery
and equipment of Borrowers and (ii) a self-contained appraisal by a
qualified and licensed appraiser of each Mortgaged Parcel, each
satisfactory to the Lenders.
7.2i Audit of Accounts and Inventory. Each Lender shall have
satisfactorily completed its audit of the Accounts and Inventory of
the Borrowers, and the results thereof shall be satisfactory to the
Lenders in their sole discretion.
7.2j Hazard and Liability Insurance. Receipt by the Agent of (i)
a schedule of all of the current insurance coverage, and (ii) current
insurance certificates, with long-form loss payee and mortgagee's
endorsements, showing that the Borrowers, respectively, are in
compliance with Section 5.8 and the insurance requirements set forth
in the other Loan Documents.
7.2k Flood Insurance. Receipt by the Agent of evidence
satisfactory to it of flood insurance for each Mortgaged Parcel or
other plants or facilities of the Borrowers which are located in a
special flood hazard area or other similarly designated area.
7.2l Termination of Existing Bank Credit Agreement. The
Borrowers shall have authorized the Agent in writing to pay in full
the Existing Bank Indebtedness on the Closing Date with proceeds of
the first Loans made hereunder.
7.2m Organizational Documents. Receipt by the Agent of the
following documents: (i) a copy of the Articles of Incorporation and
any amendments thereto, certified as of a recent date by the Secretary
of State of the State of Illinois or other state or territory of
formation for CSI, CST, and SVPCCS; (ii) a copy of each such
corporation's by-laws and any amendments thereto, certified by the
Secretary or Assistant Secretary of such corporation as being true,
correct, complete and in effect; (iii) a copy of the Agreement of
Limited Partnership for CSTLP, as amended to and including the Closing
Date, certified by CST; (iv) a certificate of existence issued by the
Secretary of State of the State of formation for each Borrower and
CST; (v) an incumbency certificate, showing the names of the Persons
designated as authorized officers of each such Borrower, their
respective titles and containing their true signatures; (vi) the
certificates of good standing or existence for each Borrower issued by
the appropriate governmental agency from each State in which a
Mortgaged Parcel is located and those listed on Schedule 4.1; (vii) a
resolution authorizing the borrowing hereunder, execution of documents
and the consummation of the transactions contemplated hereby; and
(vii) a signature authorization certificate.
7.2n Intentionally Left Blank.
7.2o Opinion of Counsel. Receipt by the Agent of opinion letters
addressed to the Lenders from counsel to the Borrowers in all respects
reasonably satisfactory to the Lenders.
7.2p Intentionally left blank.
7.2q Governmental Approvals. All Governmental Approvals required
in connection with the execution, delivery and performance of this
Agreement shall have been obtained and be in full force and effect as
of the Closing Date. Any consent, approval, order or authorization
of, and any waiting period imposed by any Governmental Authority in
connection with the Silicon Valley Acquisition shall have been
obtained or, in the case of any waiting period, shall have expired.
7.2r Performance of Agreements. The Borrowers shall have
performed in all material respects all agreements and satisfied all
conditions which any Loan Document provides shall be performed by it
on or before the Closing Date.
7.2s Request for Initial Loans. Receipt by the Agent of written
instructions addressed to the Agent and executed by the Borrowers,
instructing the Agent as to the extensions of credit to be made
hereunder on the Closing Date, and containing complete wire transfer
instructions.
7.2t Assignment of Life Insurance Policy. Receipt by the Agent
of a collateral assignment of a term life insurance Policy in the
amount of Ten Million Dollars ($10,000,000) insuring the life of X.X.
Xxxxx.
7.2u Landlord Waivers and Consents. Compliance by Borrowers with
the provisions of Section 7.1d., relating to each parcel of real
property leased by Borrower identified on Schedule 4.14.
7.2v Solvency Certificate. Receipt by the Agent of an acceptable
Financial Certificate of the Borrowers, with the Pro-forma Balance
Sheet referenced in Section 4.6b attached, and the Lenders shall be
satisfied with the Borrower's financial condition and ability to meet
its obligations.
7.2w No Deterioration. The Lenders shall have determined that
there has been no material deterioration of the Borrowers' financial
position since September 30, 1998.
7.2x No Litigation. No litigation or other proceeding shall have
been commenced or threatened which could have a Material Adverse
Effect on the Business, the Silicon Valley Acquisition, the Collateral
or the Loans.
7.2y Closing Date Applicable Margin Statement. The Lenders shall
have received the Closing Date Applicable Margin Statements certified
by the Borrowers as being accurate and complete, accompanied by an
initial Compliance Certificate.
7.2z Payment of Fees. Receipt by Agent of all Fees and any other
fees and Expenses due as of the Closing Date hereunder and under the
other Loan Documents.
7.3 Conditions for Loans Made for the Silicon Valley Acquisition.
The obligation of the Lenders to make any Loan, the proceeds of which
are to be used in connection with the Silicon Valley Acquisition, is
subject to the satisfaction of each of the following conditions
precedent, in addition to the conditions precedent set forth in
Section 7.1, all of which must be in form and substance satisfactory
to the Agent and the Lenders. The Agent shall have received:
7.3a Purchase and Sale Agreement. A copy of the Purchase and
Sale Agreement and all ancillary documents, certified by an Authorized
Officer to be true and correct with no amendments thereto, and
evidence that all conditions to the consummation of the acquisition
(other than the payment of the purchase price) have been satisfied in
accordance with the terms of the Purchase and Sale Agreement. The
acquisition price shall not exceed $7,000,000 and no more than
$3,000,000 of that sum is to paid in cash.
7.3b UCC-1 Financing Statements. UCC-1 financing statements
requested by it, signed by SVPCCS and covering the assets acquired in
the acquisition, and the filing of such financing statements by the
Agent in the appropriate filing offices.
7.3c Lien Searches. Lien and judgment searches on the acquired
assets of Silicon Valley with results reasonably satisfactory to the
Lenders.
7.3d Termination Statements, Etc. All Uniform Commercial Code
termination statements, pay-off letters executed by secured parties
indicating all conditions of issuance of executed UCC termination
statements (in forms satisfactory to Agent in its sole discretion)
and/or other documents and instruments (reasonably satisfactory to
Agent) of termination and release necessary so that the security
interests granted to the Agent for the benefit of the Lenders pursuant
to the Security Documents are first priority Liens, subject only to
Permitted Liens or Permitted Encumbrances.
7.3e Termination of Existing Indebtedness. Evidence that all
existing bank indebtedness with respect to assets acquired pursuant to
the Silicon Valley Acquisition has been paid and satisfied in full.
7.3f Opinion of Counsel. Opinion letters addressed to the
Lenders from counsel to SVPCCS with respect to the Silicon Valley
Acquisition in all respects reasonably satisfactory to the Lenders.
7.3g Governmental Approvals. Evidence that any consent,
approval, order or authorization of, and any waiting period imposed by
any Governmental Authority in connection with the Silicon Valley
Acquisition has been obtained or, in the case of any waiting period,
has expired.
7.3h Landlord Waivers and Consents. Evidence that Borrowers have
complied with the provisions of Section 7.1d., relating to each parcel
of real property leased by Borrowers in California identified on
Schedule 4.14.
7.3i Solvency Certificate. An acceptable Financial Certificate
of the Borrowers, with the Pro-forma Balance Sheet referenced in
Section 4.6b attached, and the Lenders shall be satisfied with the
Borrowers' financial condition and ability to meet its obligations.
7.3j No Deterioration. The Borrowers have provided the Agent
with pro forma financial statements which indicate to the Agent's
satisfaction that there has been no material deterioration of the
Borrowers' financial position since September 30, 1998, giving effect
(on a pro forma basis) to the Silicon Valley Acquisition.
ARTICLE 8. EVENTS OF DEFAULT; REMEDIES
8.1 Events of Default. Each of the following events shall constitute
an Event of Default:
8.1a Nonpayment of Any Borrower's Obligations. Nonpayment by any
Borrower (i) of any payment of principal of the Loans when due, or of
the payment of interest on any Loans when due, and either default in
payment shall have continued for a period of five (5) calendar days
after such due date, or (ii) in the payment of any of the Fees,
expenses or other amounts due hereunder or under any of the other Loan
Documents when due, and such default in payment of interest, Fees,
expenses or other amounts shall have continued for a period of five
(5) calendar days after notice of such due date has been given to CSI
by the Agent.
8.1b Violations Under Other Indebtedness and Obligations. Any
Borrower shall (i) default in the payment of any other Indebtedness,
or (ii) default in the performance of any other term of any agreement
or instrument under which any other Indebtedness with an aggregate
principal outstanding balance of $500,000 or more is created or by
which it is governed or evidenced, or in any mortgage covering any
real property owned by any Borrower, if the effect of any such default
described in this clause (ii) is to cause such Indebtedness to become,
or if the holder or holders of such Indebtedness (or any Person on
behalf of such holder) declares such Indebtedness, due prior to its
expressed maturity.
8.1c Insolvency, Etc.
(i) Involuntary Proceedings. A proceeding shall have been
instituted in a court having jurisdiction seeking a decree or order
for relief in respect of any Borrower in an involuntary case under the
Federal bankruptcy laws, or any other similar applicable Federal or
state law, now or hereafter in effect, or for the appointment of a
receiver, liquidator, trustee, sequestrator or similar official for
any Borrower or for a substantial part of their respective property,
or for the winding up or liquidation of its affairs, and such shall
remain undismissed or unstayed and in effect for a period of sixty
(60) days.
(ii) Voluntary Proceedings. Any Borrower shall institute
proceedings to be adjudicated a voluntary bankrupt, or shall consent
to the filing of a bankruptcy proceeding against it, or shall file a
petition or answer or consent seeking reorganization under the Federal
bankruptcy laws, or any other similar applicable Federal or state law
now or hereafter in effect, or shall consent or acquiesce to the
filing of any such petition, or shall consent to or acquiesce in the
appointment of a receiver, liquidator, trustee, sequestrator or
similar official for any Borrower or for a substantial part of their
respective property, or shall make an assignment for the benefit of
creditors, or shall admit in writing its inability to pay its debts
generally as they become due, or action shall be taken by any Borrower
in furtherance of any of the foregoing.
8.1d Dissolution; Cessation of Business. Any Borrower shall
terminate its existence, cease to exist, dissolve, permanently cease
operations or abandon the operation of any of its material plants or
facilities.
8.1e ERISA. One or more of the following events occur: (i) a
Notice of Intent to Terminate any Plan (including any Plan of an ERISA
Affiliate) is filed under Section 4041(c) of ERISA; (ii) proceedings
shall be instituted for the appointment of a trustee by the
appropriate United States court to administer any Plan (including any
Plan of an ERISA Affiliate); or (iii) the PBGC shall institute
proceedings to terminate any Plan (including any Plan of an ERISA
Affiliate) or to appoint a trustee to administer any such Plan.
8.1f Change of Control. The occurrence of a Change of Control.
8.1g Adverse Judgments. The aggregate amount of unpaid final
judgments against the Borrowers for which no further appellate review
exists shall, at any one time, exceed for a period of thirty (30)
calendar days, by $1,000,000 or more, the aggregate amount of
insurance proceeds available to pay such judgments.
8.1h Failure to Comply with Loan Documents.
(i) Failure to Comply with Negative Covenants. Any default
shall occur or exist under a negative covenant contained in Section
6.1, 6.2, 6.4, 6.5, 6.6, 6.7, 6.8, 6.9, 6.11, 6.13 or 6.14 of this
Agreement.
(ii) Failure to Comply with Other Covenants. Any Borrower shall
default in the due performance or observance of any term, agreement,
covenant, condition or provision set forth in this Agreement (other
than occurrences described in other provisions of this Section 8.1) or
any default thereunder shall occur or exist, and such default
described in this item (ii) shall not be remedied to the satisfaction
of the Agent for a period of twenty (20) Business Days after the
earlier of (A) such default becoming known to any Authorized Officer
or (B) notice of such default being delivered by the Agent to CSI.
(iii) Defaults under or Failure to Comply with Other Loan
Documents. (A) An "Event of Default" shall occur or exist as such
term is defined in the Security Agreement, or in any Mortgage of a
Mortgaged Parcel to which the Borrower is a party, or in the Pledge
Agreement, or (B) any Borrower shall default in the due performance of
any covenant, condition or provision set forth in any other Loan
Document not listed in (A) to which such Borrower is a party, or any
default thereunder shall occur or exist (other than occurrences
described in other provisions of this Section 8.1h), and such default
shall not be remedied to the satisfaction of the Agent (x) within the
cure or grace period provided within any Loan Document, or (y) if no
such cure or grace period is provided, for a period of twenty (20)
Business Days after the earlier of (1) such default becoming known to
any Authorized Officer or (2) notice of such default being delivered
by the Agent to CSI.
8.1i Misrepresentation. Any representation or warranty made by
any Borrower or in any Loan Document to which it is a party is untrue
in any material respect as of the date made, or any schedule,
statement, report, notice, certificate or other writing furnished by
any Borrower to the Agent or any Lender is untrue in any material
respect on the date as of which the facts set forth therein are stated
or certified.
8.1j Invalidity, Etc. of Loan Documents. The validity or
enforceability of any material provision of this Agreement or any
other Loan Documents shall be contested by any Borrower or any
Governmental Authority, or any Borrower shall deny that it has any or
further liability or obligation under any Loan Document to which it is
a party.
8.1k Material Adverse Change. The occurrence of any Material
Adverse Change.
8.1l Agent's Lien. The Agent's Lien upon any material portion of
the Collateral, through no fault or inaction on the part of the Agent,
is or becomes unperfected or no longer constitutes, subject to
Permitted Liens or to Permitted Encumbrances, a valid, first priority
perfected Lien, and such failure is not remedied to the satisfaction
of the Agent for a period of five (5) Business Days after the earlier
of (i) such failure becomes known to any Authorized Officer or (ii)
notice of such failure being delivered by the Agent to CSI.
8.1m Post-Closing Preformance. The Borrowers fail to perform any
of the post-closing covenants set forth in a side letter among the
Borrowers and Agent dated January __, 1999 within the time period set
forth therein.
8.2 Remedies.
8.2a Events of Default Under Sections 8.1c and 8.1d. Upon the
occurrence of an Event of Default set forth in Sections 8.1c and 8.1d
and upon the occurrence of any violation of Paragraph 14 of the
Mortgages (Due on Sale Clause) executed by the Borrowers, the
Revolving Credit Commitment shall automatically terminate and the
Revolving Credit Notes, the Term Notes, interest accrued thereon and
all other Obligations of the Borrowers to the Lenders and the Agent
shall become immediately due and payable, without the necessity of
demand, presentation, protest, notice of dishonor or notice of
default, all of which are hereby expressly waived by the Borrowers.
Thereafter, the Lenders shall have no further obligation to make any
additional Loans hereunder.
8.2b Remaining Events of Default. Upon the occurrence and during
the continuance of any Event of Default set forth in sections 8.1a,
8.1b, 8.1e, 8.1f, 8.lg, 8.1h, 8.1i, 8.1j, 8.1k, or 8.1l the Lenders
may, at their option, declare the Revolving Credit Commitment
terminated and the Revolving Credit Notes, the Term Notes, interest
accrued thereon and all other Obligations of the Borrower to the
Lenders and the Agent to be due and payable, without the necessity of
demand, presentation, protests notice of dishonor or notice of
default, all of which are hereby expressly waived by the Borrower.
Thereafter, the Lenders shall have no further obligation to make any
additional Loans hereunder.
8.2c Additional Remedies. In addition to the remedies set forth
above, upon the occurrence of any Event of Default, the Lenders and
the Agent shall have all of the rights and remedies granted to them
under this Agreement and the other Loan Documents and all other rights
and remedies granted by law to creditors.
8.2d Exercise of Remedies; Remedies Cumulative. No delay on the
part of the Agent or the Lenders, and no failure by the Agent or the
Lenders to exercise any power, right or remedy under this Agreement or
are other Loan Document shall operate as a waiver thereof, nor shall
any single or partial exercise of any power, right or remedy or any
abandonment or discontinuance of steps to enforce such right, power or
remedy preclude other or further exercises thereof, or the exercise of
any other powers right or remedy No waiver of any Event of Default
shall extend to any other or future Event of Default. No forbearance
on the part of the Agent in enforcing the Agent's or any of the
Lender's rights shall constitute a waiver of any of their respective
rights. The rights and remedies in this Agreement and the other Loan
Documents are cumulative and not exclusive of any rights or remedies
(including, without limitation, the right of specific performance)
which the Agent and the Lenders would otherwise have.
ARTICLE 9. AGREEMENT AMONG LENDERS
9.1 General; No Third Party Beneficiary. The provisions of this
Article are solely for the benefit of the Agent and the Lenders, and
the Borrowers shall not have any rights as a third-party beneficiary
to any provisions hereof. In performing its functions and duties
under this Agreement and under the other Loan Documents, the Agent
shall act solely as agent of the Lenders and does not assume and shall
not be deemed to have assumed any obligation towards or relationship
of agency or trust with or for the Borrowers.
9.2 Appointment and Grant of Authority. Each Lender hereby
irrevocably appoints and authorizes LaSalle National Bank and LaSalle
National Bank hereby agrees to act as the Agent under this Agreement
and the other Loan Documents. The Agent shall have and may exercise
such powers under this Agreement as are specifically delegated to it
by the terms hereof or of the other Loan Documents, together with such
other powers as are incidental thereto. Without limiting the
foregoing, the Agent, on behalf of the Lenders, is authorized to
execute all of the Loan Documents (other than this Agreement) for and
on behalf of the Lenders and to accept all of the Loan Documents and
all other agreements, documents or instruments reasonably required to
carry out the intent of the parties to this Agreement.
9.3 Non-Reliance on the Agent. Each Lender agrees that it has,
independently and without reliance on the Agent, and based on such
documents and information as it has deemed appropriate, made its own
credit analysis of the Borrowers and its own decision to enter into
this Agreement and that it will, independently and without reliance
upon the Agent, and based on such documents and information as it
shall deem appropriate at the time, continue to make its own analysis
and decisions in taking or not taking action under this Agreement.
Except as otherwise provided herein, the Agent shall have no duty to
keep the Lenders informed as to the performance or observance by the
Borrowers of this Agreement or any other Loan Document referred to or
provided for herein or to inspect the properties or books of the
Borrowers; provided, however, that the Agent shall notify each Lender
of any request received from the Borrowers for a waiver of any
material term of, or any amendment to, any Loan Document, and shall
furnish to the Lenders upon request copies of results of any field
exams or audits of the Borrowers' business or the Collateral conducted
by the Agent. The agent, in the absence of gross negligence or
willful misconduct, shall not be liable to any Lender for its failure
to relay or furnish to the Lender any information.
9.4 Responsibility of the Agent and Other Matters.
9.4a Ministerial Nature of Duties. As between the Lenders and
itself, the Agent shall not have any duties or responsibilities except
those expressly set forth in this Agreement or in the other Loan
Documents, and those duties and responsibilities shall be subject to
the limitations and qualifications set forth in this Article 9. The
duties of the Agent shall be ministerial and administrative in nature.
9.4b Limitation of Liability. As between the Lenders and itself,
neither the Agent nor any of its directors, officers, employees or
agents shall be liable, in the absence of gross negligence or willful
misconduct, for any action taken or omitted (whether or not such
action taken or omitted is within or without the Agent's
responsibilities and duties expressly set forth in this Agreement)
under or in connection with this Agreement, any other Loan Document,
or any other instrument or document in connection herewith. Without
limiting the foregoing, neither the Agent nor any of its directors,
officers, employees or agents shall be responsible for, or have any
duty to examine (i) the genuineness, execution, validity,
effectiveness, enforceability, value or sufficiency of this Agreement
or any of the other Loan Documents or any other document or instrument
furnished pursuant to or in connection with this Agreement; (ii) the
collectibility of any amounts owed by the Borrowers to the Lenders;
(iii) the truthfulness of any recitals, statements, representations or
warranties made to the Agent or the Lenders in connection with this
Agreements the other Loan Documents or any other document or
instrument furnished pursuant to or in connection with this Agreement;
(iv) any failure of any party to this Agreement to receive any
communication sent, including any telegram, telex, teletype, telecopy,
bank wire, cable, radiogram or telephone message or any writing,
application, notice, report, statement, certificate, resolution,
request, order, consent letter or other instrument, paper or
communication entrusted to the mails or to a delivery service; or (v)
the assets, liabilities, financial condition, results of operations,
business, prospects or creditworthiness of the Borrowers or any of its
properties.
9.4c Reliance. The Agent shall be entitled to act, and shall be
fully protected in acting upon, any telegram, telex, teletype,
telecopy, bank wire, cable or radiogram or any writing, application,
notice, report, statement, certificate, resolution, request, order,
consent letter, other instrument, paper or communication believed by
the Agent in good faith to be genuine and correct and to have been
signed or sent or made by a proper Person. The Agent may consult
counsel and shall be entitled to act, and shall be fully protected in
any action taken in good faith, in accordance with advice given by
counsel. The Agent may employ agents and attorneys-in-fact and shall
not be liable for the default or misconduct of any such agents or
attorneys-in-fact selected by the Agent with reasonable care. The
Agent shall not be bound to ascertain or inquire as to the performance
or observance of any of the terms, provisions or conditions of this
Agreement or any of the other Loan Documents on the part of the
Borrowers. The Agent may deem and treat the payee of any note as the
owner thereof for all purposes hereof unless and until a written
notice of the assignment or transfer thereof shall have been filed
with the Agent and the provisions of Section 10.5 have been satisfied.
Any requests, authority or consent of any Person who at the time of
making such request or giving such authority or consent is the holder
of any Note shall be conclusive and binding on any subsequent holder,
transferee or assignee at that Note or of any Note or Notes issued in
exchange therefor or replacement thereof.
9.5 Action on Instructions. The Agent shall be entitled to act or
refrain from acting, and shall be fully protected in acting or
refraining from acting, under this Agreement, the other Loan Documents
or any other instrument or document in connection herewith or
therewith, in accordance with written instructions from the Required
Lenders or, in the case of the matters set forth in Section 10.1, from
all of the Lenders. For purposes of this Agreement and the other Loan
Documents, unless expressly stated otherwise, all determinations by,
requests by, or other references to "Lenders" shall mean the Required
Lenders.
9.6 Action Upon Occurrence of a Default or Event of Default. If a
Default or Event of Default has occurred, the Lenders shall
immediately consult with one another in an attempt to agree upon a
mutually acceptable course of conduct.
9.7 Indemnification. To the extent the Borrowers do not reimburse
and save harmless the Agent according to the terms hereof for and from
all out-of-pocket costs, expenses and disbursements in connection
herewith, such costs, expenses and disbursements shall be borne by the
Lenders ratably in accordance with their respective Commitments. Each
Lender hereby agrees on such basis (i) to reimburse the Agent for such
Lender's pro rata share of all such out-of-pocket costs, expenses and
disbursements on request and (ii) to the extent of each such Lender's
pro rata share, to indemnify and save harmless the Agent against and
from any and all losses, obligations, penalties, actions, judgments
and suits and other costs, expenses and disbursements of any kind or
nature whatsoever which may be imposed on, incurred by or asserted
against the Agent, other than as a consequence of gross negligence or
willful misconduct on the part of the Agent, arising out of or in
connection with this Agreement, the other Loan Documents or any other
agreement, instrument or document in connection herewith or therewith,
or any request of the Required Lenders, including without limitation
the out-of-pocket costs, expenses and disbursements in connection with
defending itself against any claim or liability related to the
exercise or performance of any of its powers or duties under this
Agreement, the other Loan Documents, or any of the other agreements,
instruments or documents delivered in connection herewith or the
taking of any action under or on connection with any of the foregoing.
9.8 Agent's Rights as a Lender. With respect to the Commitments of
the Agent as a Lender hereunder, and any Loans of the Agent under this
Agreement, the other Loan Documents and any other agreements,
instruments and documents delivered pursuant hereto, the Agent shall
have the same rights, powers, duties and obligations under this
Agreement, the other Loan Documents or other agreements, instruments
or documents as any Lender, and may exercise such rights and powers
and shall perform such duties and fulfill such obligations as though
it were not the Agent. The Agent may accept deposits from, lend money
to, and generally engage, and continue to engage in any kind of
business with the Borrowers as if it were not the Agent.
9.9 Loan Advances by the Agent. Unless the officers of the Agent
responsible for administering this Agreement shall have been notified
in writing by a Lender prior to the date and time specified herein of
any Loan that such Lender will not make the amount which would
constitute its pro rata share of such Loan available to the Agent on
or prior to the date of such Loan, the Agent may (but shall not be
required to) assume that such Lender has made such amount available to
the Agent on the date of such Loan and the Agent may, in reliance upon
such assumption make available to the Borrowers a corresponding
amount. If such pro rata share is made available to the Agent by a
Lender on a date after the date of such Loan, such Lender shall pay to
the Agent on demand an amount equal to the product of (i) the average,
computed for the period referred to in clause (iii) below, of the
weighted average interest rate for federal funds as determined by the
Agent during each day included in such period, times (ii) the amount
of such Lender's pro rata share of such Loan, times (iii) a fraction,
the numerator of which is the number of days that elapsed from and
including the date of such Loan, to the date on which such pro rata
share of such Loan became immediately available to the Agent, and the
denominator of which is 365. A statement of the Agent submitted to
any Lender with respect to any amounts owing under this Section 9.9
shall be prima facie evidence as to the amount owed by that Lender to
the Agent. If such Lender's pro rata share is not in fact made
available to the Agent by such Lender within three (3) Business Days
of the date of any Loan, such Lender shall pay such amount, with
interest thereon at the rate per annum then applicable under the Base
Rate Option during such period, on demand, to the Agent.
9.10 Payment to Lenders. Promptly after receipt from the Borrowers of
any principal repayment of the Loans, interest due on the Loans, and
any Fees or other amounts due under any of the Loan Documents which
are for the benefit of all the Lenders, the Agent shall distribute to
each Lender that Lender's Commitment Percentage of the funds so
received. Such delivery shall be accomplished in such a manner as to
allow each Lender to receive its share of such payment in immediately
available funds on the same day that the funds representing payment
due from the Borrowers are collected funds in the possession of the
Agent. If the Agent fails to make such a payment to a Lender on the
same day that the funds are received, such Lender shall be entitled to
receive a premium based upon such Lender's calculations made in
accordance with the same formula set forth in Section 9.9.
9.11 Pro Rata Sharing. Any sums obtained from the Borrowers by any
Lender by reason of the exercise of its rights of setoff or banker's
lien shall be shared pro rata among the Lenders. Nothing in this
Section 9.11 shall be deemed to require the sharing among the Lenders
of collections specifically relating to, or of the proceeds of
collateral which is not subject to or contemplated by the Security
Documents specifically securing, any other Indebtedness of the
Borrowers to any Lender.
9.12 Notice of Event of Default. Each Lender shall use its best
efforts to notify the Agent immediately in writing of any Default or
Event of Default of which it becomes aware. Upon receipt of any such
notice, the Agent shall use its best efforts to notify the Lenders
immediately in writing of such Default or Event of Default. The Agent
shall notify each Lender of any Default or Event of Default as soon as
practicable after obtaining knowledge thereof.
9.13 Successor Agent. The Agent may resign as the Agent upon thirty
(30) calendar days' notice to the Lenders and the CSI only in the
event that an Event of Default shall occur, be continuing and declared
by the Lenders. If such notice shall be given, the Lender shall
appoint from among the Lenders a successor agent for the Lenders,
during such thirty (30) day period, which successor agent shall be
reasonable satisfactory to the Borrowers, to serve as agent under the
Loan Documents. If at the end of such thirty (30) day period the
Lenders have not appointed such a successor, the Agent shall procure a
successor reasonably satisfactory to the Lenders and the Borrowers, to
serve as agent for the Lenders under the Loan Documents, any such
successor agent shall succeed to the rights, powers and duties of the
Agent. Upon the appointment of such successor agent or upon the
expiration of such thirty (30) day period (or any longer period to
which the Agent has agreed), the former Agent's rights, powers and
duties as the Agent shall be terminated, without any other or further
act or deed on the part of such former Agent or any of the parties to
this Agreement. After any retiring Agent's resignation hereunder as
Agent, the provisions of this Article 9 shall inure to the benefit of
such retiring Agent as to any actions taken or omitted to be taken by
it while it was the Agent under this Agreement.
ARTICLE 10. GENERAL PROVISIONS
10.1 Amendments and Waivers.
(i) Subject to the remaining provisions of this Section 10.1,
the Required Lenders, or the Agent with the consent of the Required
Lenders, and the Borrower may from time to time enter into amendments,
extensions, supplements and replacements to and of this Agreement and
the other Loan Documents to which they are parties, and the Required
Lenders may from time to time waive compliance with a provision of any
of the Loan Documents or consent to action taken by the Borrower.
Subject to the remaining provisions of this Section 10.1, no
amendment, extension, supplement, replacements waiver or consent shall
be effective unless it is in writing and is signed by the Required
Lenders and the Borrower. Each waiver and consent shall be effective
only for the specific instance and for the specific purpose for which
it is given.
(ii) The foregoing notwithstanding, no such amendment,
extensions, supplement, replacement or waiver shall, without the
consent of all the Lenders:
(A) increase the Revolving Credit Commitment or the maximum
principal amount of the Revolving Credit Loans or the Term Loans which
may be outstanding hereunder;
(B) reduce any of the Interest Rate Options hereunder or
any of the Fees due hereunder or under any of the other Loan
Documents;
(C) extend the Revolving Credit Termination Date the Term
Loan Maturity Date, or postpone any scheduled payment date of
principal (including any scheduled date tor a mandatory or voluntary
principal prepayment), interest or Fees hereunder or under any of the
other Loan Documents;
(D) release any obliger under any Loan Document or all or
any part of the Collateral;
(E) amend the percentages set forth in the definition of
"Borrowing Base," or amend in any material respect the definitions of
"Eligible Account" or "Eligible Inventory";
(F) determine the rights or remedies to be exercised after
the declaration of an Event of Default by the Required Lenders,
provided that any consent or waiver to be obtained from the Lenders
after the declaration of an Event of Default (other than matters
described in other provisions of this Subsection 10.1(ii)) shall be
effective if it is in writing and is signed by only the Required
Lenders;
(G) change, amend or waive any financial covenant set forth
in Section 6.4;
(H) forgive or reduce any principal or interest of any
Loans which are outstanding;
(I) change, amend or waive any of the covenants set forth
in Section 6.1(iii) or (iv) or 6.3;
(J) change, amend or waive the covenants set forth in
Section 6.13 only to the extent that an acquisition or acquisitions in
any given Fiscal Year or in the aggregate exceed twenty-five percent
(25%) of the payment amounts provided in such Section;
(K) change the definition of "Required Lenders"; or
(L) amend this Section 10.1.
10.2 Taxes. The Borrowers shall pay any and all stamp, document,
transfer and recording taxes, filing fees and similar impositions
payable or hereafter reasonably determined by the Agent to be payable
in connection with this Agreement, the other Loan Documents and any
other documents, instruments and transactions pursuant to or in
connection with any of the Loan Documents. Each of the Borrowers
agrees to save the Agent and the Lenders harmless from and against any
and all present and future claims or liabilities with respect to, or
resulting from, any delay in paying or failure to pay any such taxes
or similar impositions. The obligations of the Borrowers pursuant to
this Section 10.2 shall survive the termination of this Agreement and
the repayment of the Obligations.
10.3 Expenses. The Borrowers shall pay:
(i) All (A) out-of-pocket costs and expenses incurred by the
Agent in connection with the preparation, negotiation, execution and
delivery of this Agreement, the other Loan Documents, and any and all
other documents and instruments prepared in connection herewith,
including the Agent's reasonable legal fees and expenses in connection
therewith; and (B) all reasonable costs and expenses of the Agent
(including but not limited to reasonable fees and expenses of the
Agent's counsel) in connection with all amendments, waivers, consents
and other documents and instruments prepared or entered into from time
to time in connection with this Agreement and the other Loan
Documents, after the Closing Date; and
(ii) All reasonable costs and expenses of the Agent and the
Lenders (including without limitation the reasonable fees and
disbursements of the Lenders' counsel) in connection with (A) the
enforcement of this Agreement and the other Loan Documents arising
pursuant to a breach by any Person of any of the terms, conditions,
representations, warranties or covenants of any Loan Document or the
occurrence of a Default or an Event of Default; (B) the sale or other
action taken with respect to any of the Collateral; and (C) defending
or prosecuting any actions, suits or proceedings relating to any of
the Loan Documents.
All of such costs and expenses shall be payable by the Borrowers
to the Agent, for the benefit of the Lenders where appropriate, upon
demand or as otherwise agreed upon by the Agent and the Borrowers,
shall constitute Obligations under this Agreement, and shall bear
interest at the Default Rate if not paid when due. The Borrowers'
obligations to pay such costs and expenses shall survive the
termination of this Agreement and the repayment of the Obligations.
10.4 Notices.
10.4a Notice to the Borrowers. All notices required to be
delivered to the Borrowers pursuant to this Agreement shall be in
writing and shall be sent to CSI at the following address, by hand
delivery, recognized national overnight courier service, telecopier or
other means of electronic data communication:
Circuit Systems, Inc.
0000 Xxxx Xxxx Xxxxxx
Xxx Xxxxx Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxx
Fax: 847/000-0000
With copies to:
Xxxxx and Xxxxxx, P.C.
00 Xxxx Xxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx Xxxxx
Fax: 312/000-0000
Receipt by CSI of any such notice shall be deemed receipt by all
Borrowers.
10.4b Notice to the Agent. All notices required to be
delivered to the Agent pursuant to this Agreement shall be in writing
and shall be sent to the following address, by hand delivery,
recognized national overnight courier service, telecopier or other
means of electronic data communication:
LaSalle National Bank
000 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx
Fax: 312/000-0000
With copies to:
Jenner & Block
Xxx XXX Xxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxxxxx
Fax: 312/000-0000
10.4c Notice to the Lenders. All notices required to be
delivered to any Lender pursuant to this Agreement shall be in writing
and shall be sent to the address set forth on Annex A hereto or to the
Assignment and Assumption Agreement to which such Lender is a party,
by hand delivery, recognized national overnight courier service,
telecopier or other means of electronic data communication.
10.4d Effectiveness of Notices. All such notices shall be
effective on the date of telecopy transmission or when received,
whichever is earlier. The parties hereto may each change the address
for service of notice upon it by a notice in writing to the other
party hereto.
10.5 Assignments.
10.5a Assignments. Subject to the remaining provisions of
this Subsection 10.5a, any Lender may at any time, in the ordinary
course of its commercial banking business, in accordance with
applicable law, sell to one or more Purchasing Lenders (which
Purchasing Lenders may be affiliates of the Transferor Lender), a
portion of its rights and obligations under this Agreement, the Notes
then held by it and the other Loan Documents pursuant to an Assignment
and Assumption Agreement substantially in the form of Exhibit "N" and
satisfactory to the Agent, executed by the Transferor Lender, such
Purchasing Lender, the Agent and the Borrowers: subject, however to
the following requirements:
(i) Agent may sell any portion of its rights and obligations
under this Agreement pursuant to this Section 10.5 so long as its
Commitment Percentage remains not less than 50%;
(ii) The Borrowers and the Agent must give their prior consent to
any such assignment, which consents shall not be unreasonably
withheld;
(iii) Following an assignment permitted under this Section
there shall be no more than three (3) Lenders unless approved in
writing by the Borrowers and the Agent in their sole discretion;
(iv) Each assignment to a Purchasing Lender which is not a Lender
immediately prior to such assignment must be in a minimum amount of
$5,000,000, and each assignment to a Purchasing Lender which is a
Lender immediately period to such assignment may be in any amount; and
(v) Each Transferor Lender shall pay to the Agent a $3,500
service fee, for its sole benefit, in connection with each assignment
made by it;
provided, however, that (A) if an Event of Default shall have
occurred, be continuing and declared by the Lenders the restrictions
set forth in item (i) above shall not be applicable, and (B) after the
occurrence of and during the continuance of an Event of Default (1)
the restrictions set forth in item (iii) above shall not be applicable
and (2) the consents or agreements of the Borrowers contemplated in
item (ii) above shall not be required.
Upon the execution, delivery, acceptance and recording of any
such Assignment and Assumption Agreement, from and after the Transfer
Effective Date determined pursuant to such Assignment and Assumption
Agreement, (i) the Purchasing Lender thereunder shall be a party
hereto as a Lender and, to the extent provided in such Assignment and
Assumption Agreement, shall have the rights and obligations of a
Lender hereunder with a Commitment as set forth therein, and (ii) the
Transferor Lender thereunder shall, to the extent provided in such
Assignment and Assumption Agreement, be released from its obligations
under this Agreement as a Lender. Such Assignment and Assumption
Agreement shall be deemed to amend this Agreement to the extent, and
only to the extent, necessary to reflect the addition of such
Purchasing Lender as a Lender and the resulting adjustments of
Commitment Percentages arising from the purchase by such Purchasing
Lender of all or a portion of the rights and obligations of such
Transferor Lender under this Agreement and the Notes. On or prior to
the Transfer Effective Date, the Borrowers shall execute and deliver
to the Agent, in exchange for the surrendered Notes held by the
Transferor Lender, new Notes to the order of such Purchasing Lender in
an amount equal to the Commitment or the Loans assumed by it and
purchased by it pursuant to such Assignment and Assumption Agreement,
and new Notes to the order of the Transferor Lender in an amount equal
to the Commitment or the Loans retained by it hereunder.
10.5b Assignment to Federal Reserve Bank. In addition to the
assignments permitted above, any Lender may assign and pledge all or
any portion of its Loans and Notes to any Federal Reserve Bank as
collateral security pursuant to Regulation A of the Board of Governors
of the Federal Reserve System and any Operating Circular issued by
such Federal Reserve Bank. No such assignment shall release the
assigning Lender from its obligations and duties hereunder or under
the other Loan Documents.
10.5c Assignment Register. The Agent shall maintain at its
address referred to in Section 10.4 a copy of each Assignment and
Assumption Agreement delivered to it and a register (the "Register")
for the recordation of the names and addresses of the Lenders and the
amount of the Loans owing to each Lender from time to time. The
entries in the Register shall be conclusive, in the absence of
manifest error, and the Borrowers, the Agent and the Lenders may treat
each Person whose name is recorded in the Register as the owner of the
Loans recorded therein for all purposes of this Agreement. The
Register shall be available at the office of the Agent set forth in
Section 10.4 for inspection by the Borrowers or any Lender at any
reasonable time and from time to time upon reasonable prior notice.
10.6 Participations.
10.6a Sale of Participations. The Lenders may, in the
ordinary course of their commercial banking business and in accordance
with applicable law, and after first obtaining the consent of the
Agent, which consent shall not be unreasonably withheld, at any time
sell to one or more Participants (which Participants may be Affiliates
of a Lender) Participations in the Revolving Credit Commitment, the
Loans, the Notes and the other interests of the Lenders hereunder. In
the event of any such sale of a Participation, the selling Lender's
obligations under this Agreement to the Borrowers shall remain
unchanged, such Lender shall remain solely responsible for its
performance under this Agreement, such Lender shall remain the holder
of the Notes made payable to it for all purposes under this Agreement,
the Borrowers shall continue to deal solely and directly with the
selling Lender in connection with such Lender's rights and obligations
under this Agreement and the other Loan Documents and Participants
shall not be permitted to have any voting rights.
10.6b Right of Setoff. Each Borrower agrees that if amounts
outstanding under this Agreement and the Notes are due and unpaid, or
shall have been declared or shall have become due and payable upon the
occurrence of an Event of Default, each Participant shall be deemed to
have, to the extent permitted by applicable law, the right of setoff
in respect of its Participation in amounts owing under this Agreement
and the Notes to the same extent as if the amount of its Participation
were owing directly to it as a lender under this Agreement or the
Notes.
10.7 Indemnity. Each Borrower hereby agrees to indemnify the Agent,
the Lenders, each of their respective Controlling Persons, if any, and
the directors, officers, employees, attorneys, agents and Affiliates
or all of the foregoing (each of the foregoing an "Indemnified
Person") against and hold each of them harmless from, any loss,
liabilities, damages, claims, costs and expenses (including reasonable
attorneys' fees and disbursements) suffered or incurred by any
Indemnified Person arising out of, resulting from or in any manner
connected with, the execution, delivery and performance of each of the
Loan Documents, the Obligations and any and all transactions related
to or consummated in connection with the Obligations, other than as a
consequence of the gross negligence or willful misconduct on the part
of any Indemnified Person including, without limitation, losses,
liabilities, damages, claims, costs and expenses suffered or incurred
by any Indemnified Person arising out of or related to investigating,
preparing for, defending against, or providing evidence, producing
documents or taking any other action in respect of any commenced or
threatened litigation administrative proceeding or investigation under
any Federal securities law or any other Governmental Rule of any
jurisdiction, or at common law or otherwise, that is alleged to arise
out of or is based on (i) any untrue statement or alleged untrue
statement of any material fact of any Borrower or any Affiliate of the
Borrowers in any document or schedule filed with the Commission or any
other Governmental Authority; (ii) any omission or alleged omission to
state any material fact required to be stated in such document or
schedule, or necessary to make the statements made therein, in light
of the circumstances under which made, not misleading; (iii) any
actual or alleged acts, practices or omissions of any Borrower or any
of its respective directors, officers, employees, attorneys, agents or
Affiliates, related to the making of any acquisition, purchase of
shares or assets pursuant thereto, financing of such purchases or the
consummation of any other transactions contemplated by any such
acquisitions that are alleged to be in violation of any Federal
securities law or of any other statute, regulation or other law of any
jurisdiction applicable to the making of any such acquisition, the
purchase of shares or assets pursuant thereto, the financing of such
purchases or the consummation of the other transactions contemplated
by any such acquisition; or (iv) any withdrawals, termination or
cancellation of any such proposed acquisition for any reason
whatsoever. The indemnity set forth in this Section 10.7 shall be in
addition to any other obligations or liabilities of the Borrower to
the Agent or the Lenders, or at common law or otherwise. The
provisions of this Section 10.7 shall survive the payment of the
Obligations and the termination of this Agreement and the other Loan
Documents.
10.8 Successors and Assigns. This Agreement shall be binding upon the
Borrowers, the Agent, the Lenders and their respective successors and
assigns, and shall inure to the benefit of the Borrowers, the Agent,
the Lenders and their respective successors and assigns; provided
however, that no Borrower shall assign its rights or duties hereunder
or under any of the other Loan Documents without the prior written
consent of all of the Lenders and the Agent and the Lenders may only
assign as permitted in this Agreement.
10.9 Confidentiality. The Agent and the Lenders shall keep
confidential and not disclose to any Person, other than to their
respective directors, officers, employees, Affiliates and agents, and
to actual and potential Purchasing Lenders and Participants, all non-
public information concerning the Borrowers and the Borrowers'
Affiliates which comes into the possession of the Agent or the Lenders
during the term hereof. Notwithstanding the foregoing, the Agent and
the Lenders may disclose information concerning any Borrower (i) in
accordance with normal banking practices and the Agent's or such
Lender's policies concerning disclosure of such information, (ii)
pursuant to what the Agent or such Lender believes to be the lawful
requirements or request of any Governmental Authority regulating banks
or banking, (iii) as required by Governmental Rule, judicial process
or subpoena and (iv) to their respective attorneys, accountants and
auditors who shall also be bound by the terms of this Section.
10.10 Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
enforceability without invalidating the remaining portions hereof or
affecting the validity or enforceability of such provision in any
other jurisdiction.
10.11 Survival. All representations, warranties, covenants and
agreements of the Borrowers contained herein or in the other Loan
Documents or made in writing in connection herewith shall survive the
issuance of the Notes and shall continue in full force and effect so
long as any Borrower may borrow hereunder and so long thereafter until
payment in full of the Notes and the Obligations is made.
10.12 Governing Law. This Agreement and the other Loan Documents
shall be governed by and construed in accordance with the laws of the
State of Illinois, without regard to the principles thereof regarding
conflict of laws, excepting applicable federal law, except only to the
extent precluded by the mandatory application of the law of another
jurisdiction and except as expressly set forth in any of the other
loan documents.
10.13 Forum. THE PARTIES HERETO AGREE THAT THE COURTS OF THE
STATE OF ILLINOIS LOCATED IN CHICAGO, ILLINOIS, AND THE FEDERAL COURTS
LOCATED IN THE NORTHERN DISTRICT OF ILLINOIS, XXXX COUNTY, HAVE
EXCLUSIVE JURISDICTION OVER ANY AND ALL ACTIONS AND PROCEEDINGS
INVOLVING THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS TO WHICH THE
BORROWERS ARE PARTIES AND EACH PARTY HERETO HEREBY IRREVOCABLY AND
UNCONDITIONALLY AGREES TO SUBMIT TO THE JURISDICTION OF SUCH COURTS
FOR PURPOSES OF ANY SUCH ACTION OR PROCEEDING. EACH PARTY HERETO
HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY OBJECTION THAT IT
MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH ACTION OR
PROCEEDING, INCLUDING ANY CLAIM THAT SUCH COURT IS AN INCONVENIENT
FORUM, AND CONSENTS TO SERVICE OF PROCESS PROVIDED THE SAME IS IN
ACCORDANCE WITH THE TERMS HEREOF. FINAL JUDGMENT IN ANY SUCH
PROCEEDING AFTER ALL APPEALS HAVE BEEN EXHAUSTED OR WAIVED SHALL BE
CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE
JUDGMENT.
10.14 Non-Business Days. Whenever any payment of principal,
interest, Fees or any other amounts hereunder or under any of the
other Loan Documents is due and payable on a day which is not a
Business Day, except as otherwise provided in this Agreement such
payment may be made on the next succeeding Business Day, and such
extension of time shall in each such case be included in computing
interest, Fees or other amounts in connection with such payment.
10.15 Integration. This Agreement is the entire agreement among
the parties relating to this financing transaction and it supersedes
all prior understandings and agreements, whether written or oral,
between the parties hereto relating to the transactions provided for
herein.
10.16 Joint and Several Obligations. Notwithstanding anything to
the contrary herein or in any other Loan Document, CSI, CSTLP, and
SVPCCS hereby agree that all of the obligations of any party are the
joint and several obligations of all parties, including but not
limited to, the obligations of any or all parties to pay any and all
Obligations.
10.17 Headings. Article, Section, Subsection and other headings
used in this Agreement are intended for convenience only and shall not
affect the meaning or construction of this Agreement.
10.17 Counterparts. This Agreement and any amendment hereto may
be executed in several counterparts and by each party on a separate
counterpart, each of which, when so executed and delivered, shall be
an original, but all of which together shall constitute but one and
the same instrument. In proving this Agreement, it shall not be
necessary to produce or account for more than one such counterpart
signed by the other party against whom enforcement is sought.
10.18 WAIVER OF JURY TRIAL. EACH BORROWER, EACH LENDER AND THE
AGENT EACH HEREBY WAIVES THE RIGHT TO TRIAL BY JURY IN ANY COURT AND
IN ANY ACTION OR PROCEEDING OF ANY TYPE IN WHICH THE BORROWERS, THE
LENDERS, THE AGENT, OR ANY OF THEIR RESPECTIVE SUCCESSORS OR ASSIGNS
IS A PARTY, AS TO ALL MATTERS AND THINGS ARISING OUT OF THIS
AGREEMENT, THE NOTES OR THE OTHER LOAN DOCUMENTS, IN EACH CASE WHETHER
SOUNDING IN CONTRACT OR TORT OR OTHERWISE.
IN WITNESS WHEREOF, the parties hereto, intending to be legally
bound hereby, have caused this Credit Agreement to be executed by
their respective duly authorized officers as of the date first written
above.
CIRCUIT SYSTEMS, INC., an Illinois corporation
By: /s/___________________________
Name: ____________________________
Title:____________________________
FEIN: ____________________________
CIRCUIT SYSTEMS OF TENNESSEE, L.P, a Tennessee limited partnership,
by Circuit Systems of Tennessee, Inc., its general partner
By: /s/___________________________
Name: ____________________________
Title: ___________________________
FEIN: ____________________________
SVPC CIRCUIT SYSTEMS, INC, a California corporation
By: /s/___________________________
Name: ____________________________
Title: ___________________________
FEIN: ____________________________
LA SALLE NATIONAL BANK, a national
banking association
By: /s/____________________________
Name:______________________________
Title:_____________________________
ANNEX A
Commitments of Lenders
and Addresses
for Notices to Lenders
Amount of Amount of
Commitment for Commitment
Revolving for Term Commitment
Credit Loans Loan Percentage
---------- --------- ----
Name: LaSalle National
Bank
Address: 000 Xxxxx
XxXxxxx Xxxxxx
Xxxxxxx,
Xxxxxxxx 00000
$18,000,000 $7,000,000 100%
Attention:
Telephone: 312/904----
Telecopy: 312/904----
ANNEX B
Pricing Matrix
Applicable Margin for the Revolving Credit Loans:
Funded LIBOR + PRIME +
Debt/EBITDA
x > 4.5 2.75% .5%
3.5 < x 4.5 2.5% .5%
2.5 < x < 3.5 2.25% .25
x < 2.5 2.0% 0%
Applicable Margin for the Term Loan:
Funded LIBOR + PRIME +
Debt/EBITDA
x > 4.5 2.75% .75%
3.5 < x 4.5 2.5% .5%
2.5 < x < 3.5 2.25% .5%
x < 2.5 2.0% 0%
Unused Availability Fee for the Revolving Credit Commitment:
Funded Unused
Debt/EBITDA Availability Fee
x > 4.5 3/8%
3.5 < x 4.5 1/4%
2.5 < x < 3.5 1/4%
x < 2.5 1/8%
EXHIBITS
Exhibit Exhibit Principal
Designation Section
Reference
=========== ------- ---------
A Form of Revolving 2.1a
Credit Note
B Form of Term Loan Note 2.3a
C Form of Loan Request 2.6
D Form of Security 3.2
Agreement
E Form of Pledge 3.2
Agreement
F Form of Mortgage 3.3
G Form of Environmental 7.2g
Agreement
H Form of Assignment of 3.2
Patents and Trademarks
I Assignment of Term 5.17
Life Insurance Policy
J Compliance Certificate 5.2c
K Form of Borrowing Base 5.2d
Certificate
L Closing Certificate 7.2a
M Form of Landlord 7.1d
Waiver and Consent
N Assignment and 10.5a
Assumption Agreement
O Purchase and Sale 4.25
Agreement
ANNEXES AND SCHEDULES
Annex Designation Annex
----------------- -----
A Lenders; Commitments; Notice Addresses
B Pricing Matrix
Schedule Schedule
Designation
----------- --------
4.1 Organization and Powers
4.2 Capitalization
4.2A Partnership Interests
4.8 Litigation
4.11 Labor Matters
4.13 Names
4.14 Locations; Mortgaged Parcels
4.15a Owned Real Property
4.15b Leased Real Property
4.17 Intellectual Property
4.18 Insurance
4.19 Consents and Approvals
6.1 Indebtedness
6.3 Permitted Liens
