LOAN AND SECURITY AGREEMENT
Dated as of March 30, 2000
Among
THE FINANCIAL INSTITUTIONS NAMED HEREIN
as the Lenders
and
BANK OF AMERICA, N.A.
as the Agent and Sole Lead Arranger
and
EFTC CORPORATION,
and
RM ELECTRONICS, INC.,
as the Borrowers
TABLE OF CONTENTS
Section
Page
ARTICLE 1 INTERPRETATION OF THIS AGREEMENT................................................................1
1.1 Definitions.....................................................................................1
1.2 Accounting Terms...............................................................................26
1.3 Interpretive Provisions........................................................................27
ARTICLE 2 LOANS AND LETTERS OF CREDIT....................................................................28
2.1 Total Facility.................................................................................28
2.2 Revolving Loans................................................................................28
2.3 Intentionally Deleted..........................................................................34
2.4 Letters of Credit..............................................................................34
2.5 Bank Products..................................................................................40
ARTICLE 3 INTEREST AND FEES..............................................................................40
3.1
Interest.........................................................................................................40
3.2 Continuation and Conversion Elections..........................................................41
3.3 Maximum Interest Rate..........................................................................42
3.4 Agent's Fees...................................................................................42
3.5 Unused Line Fee................................................................................43
3.6 Letter of Credit Fee...........................................................................43
ARTICLE 4 PAYMENTS AND PREPAYMENTS.......................................................................43
4.1 Revolving Loans................................................................................43
4.2 Termination of Facility........................................................................43
4.3 [Intentionally Deleted]........................................................................44
4.4 [Intentionally Deleted]........................................................................44
4.5 [Intentionally Deleted]........................................................................44
4.6 Payments by the Borrowers......................................................................44
4.7 Payments as Revolving Loans....................................................................45
4.8 Apportionment, Application and Reversal of Payments............................................45
4.9 Indemnity for Returned Payments................................................................46
4.10 Agent's and Lenders' Books and Records; Monthly Statements.....................................46
ARTICLE 5 TAXES, YIELD PROTECTION AND ILLEGALITY.........................................................47
5.1 Taxes..........................................................................................47
5.2 Illegality.....................................................................................48
5.3 Increased Costs and Reduction of Return........................................................48
5.4 Funding Losses.................................................................................48
5.5 Inability to Determine Rates...................................................................49
5.6 Certificates of Lenders........................................................................49
5.7 Survival.......................................................................................49
ARTICLE 6 COLLATERAL.....................................................................................50
6.1 Grant of Security Interest.....................................................................50
6.2 Perfection and Protection of Security Interest.................................................51
6.3 Location of Collateral.........................................................................52
6.4 Title to, Liens on, and Sale and Use of Collateral.............................................52
6.5 Appraisals.....................................................................................53
6.6 Access and Examination; Confidentiality; Consent to Advertising................................53
6.7 Collateral Reporting...........................................................................54
6.8 Accounts.......................................................................................54
6.9 Collection of Accounts; Payments...............................................................56
6.10 Inventory; Perpetual Inventory.................................................................57
6.11 Equipment......................................................................................57
6.12 Assigned Contracts.............................................................................58
6.13 Documents, Instruments, and Chattel Paper......................................................59
6.14 Right to Cure..................................................................................59
6.15 Power of Attorney..............................................................................59
6.16 The Agent's and Lenders' Rights, Duties and Liabilities........................................60
6.17 Site Visits, Observations and Testing..........................................................60
ARTICLE 7 BOOKS AND RECORDS; FINANCIAL INFORMATION; NOTICES..............................................61
7.1 Books and Records..............................................................................61
7.2 Financial Information..........................................................................61
7.3 Notices to the Lenders.........................................................................64
ARTICLE 8 GENERAL WARRANTIES AND REPRESENTATIONS.........................................................66
8.1 Authorization, Validity, and Enforceability of this Agreement and the Loan Documents...........66
8.2 Validity and Priority of Security Interest.....................................................66
8.3 Organization and Qualification.................................................................66
8.4 Corporate Name; Prior Transactions.............................................................67
8.5 Subsidiaries and Affiliates....................................................................67
8.6 Financial Statements and Projections...........................................................67
8.7 Capitalization.................................................................................67
8.8 Solvency.......................................................................................68
8.9 Debt...........................................................................................68
8.10 Distributions..................................................................................68
8.11 Title to Property..............................................................................68
8.12 Real Estate; Leases............................................................................68
8.13 Proprietary Rights.............................................................................69
8.14 Trade Names....................................................................................69
8.15 Litigation.....................................................................................69
8.16 Restrictive Agreements.........................................................................69
8.17 Labor Disputes.................................................................................69
8.18 Environmental Laws.............................................................................69
8.19 No Violation of Law............................................................................71
8.20 No Default.....................................................................................71
8.21 ERISA Compliance...............................................................................71
8.22 Taxes..........................................................................................72
8.23 Regulated Entities.............................................................................72
8.24 Use of Proceeds; Margin Regulations............................................................72
8.25 Copyrights, Patents, Trademarks and Licenses, etc..............................................72
8.26 No Material Adverse Change.....................................................................72
8.27 Full Disclosure................................................................................73
8.28 Material Agreements............................................................................73
8.29 Bank Accounts..................................................................................73
8.30 Governmental Authorization.....................................................................73
ARTICLE 9 AFFIRMATIVE AND NEGATIVE COVENANTS.............................................................73
9.1 Taxes and Other Obligations....................................................................73
9.2 Corporate Existence and Good Standing..........................................................74
9.3 Compliance with Law and Agreements; Maintenance of Licenses....................................74
9.4 Maintenance of Property........................................................................74
9.5 Insurance......................................................................................74
9.6 Condemnation...................................................................................75
9.7 Environmental Laws.............................................................................76
9.8 Compliance with ERISA..........................................................................77
9.9 Mergers, Consolidations or Sales...............................................................77
9.10 Distributions; Capital Change; Restricted Investments..........................................77
9.11 Transactions Affecting Collateral or Obligations...............................................78
9.12 Guaranties.....................................................................................78
9.13 Debt...........................................................................................78
9.14 Prepayment.....................................................................................78
9.15 Transactions with Affiliates...................................................................78
9.16 Investment Banking and Finder's Fees...........................................................79
9.17 Directors' Fees................................................................................79
9.18 Business Conducted.............................................................................79
9.19 Liens..........................................................................................79
9.20 Sale and Leaseback Transactions................................................................79
9.21 New Subsidiaries...............................................................................80
9.22 Fiscal Year....................................................................................80
9.23 Capital Leases.................................................................................80
9.24 Operating Lease Obligations....................................................................80
9.25 Capital Expenditures...........................................................................80
9.26 Cash Flow......................................................................................80
9.27 [Intentionally Deleted]........................................................................80
9.28 [Intentionally Deleted]........................................................................80
9.29 Coverage Ratio.................................................................................81
9.30 Use of Proceeds................................................................................81
9.31 Payment of Honeywell...........................................................................81
9.32 Further Assurances.............................................................................81
ARTICLE 10 CONDITIONS OF LENDING..........................................................................81
10.1 Conditions Precedent to Making of Loans on the Closing Date....................................81
10.2 Conditions Precedent to Each Loan..............................................................83
ARTICLE 11 DEFAULT; REMEDIES..............................................................................84
11.1 Events of Default..............................................................................84
11.2 Remedies.......................................................................................87
ARTICLE 12 TERM AND TERMINATION...........................................................................88
12.1 Term and Termination...........................................................................88
ARTICLE 13 AMENDMENTS; WAIVERS; PARTICIPATIONS; ASSIGNMENTS; SUCCESSORS...................................88
13.1 Amendments and Waivers.........................................................................88
13.2 Assignments; Participations....................................................................89
ARTICLE 14 THE AGENT......................................................................................91
14.1 Appointment and Authorization..................................................................91
14.2 Delegation of Duties...........................................................................92
14.3 Liability of Agent.............................................................................92
14.4 Reliance by Agent..............................................................................92
14.5 Notice of Default..............................................................................93
14.6 Credit Decision................................................................................93
14.7 Indemnification................................................................................93
14.8 Agent in Individual Capacity...................................................................94
14.9 Successor Agent................................................................................94
14.10 Withholding Tax................................................................................95
14.11 Co-Agents......................................................................................96
14.12 Collateral Matters.............................................................................96
14.13 Restrictions on Actions by Lenders; Sharing of Payments........................................97
14.14 Agency for Perfection..........................................................................98
14.15 Payments by Agent to Lenders...................................................................98
14.16 Concerning the Collateral and the Related Loan Documents.......................................98
14.17 Field Audit and Examination Reports; Disclaimer by Lenders.....................................98
14.18 Relation Among Lenders.........................................................................99
ARTICLE 15 MISCELLANEOUS..................................................................................99
15.1 No Waivers; Cumulative Remedies................................................................99
15.2 Severability...................................................................................99
15.3 GOVERNING LAW; CHOICE OF FORUM; SERVICE OF PROCESS............................................100
15.4 WAIVER OF JURY TRIAL..........................................................................100
15.5 Survival of Representations and Warranties....................................................101
15.6 Other Security and Guaranties.................................................................101
15.7 Fees and Expenses.............................................................................101
15.8 Notices.......................................................................................102
15.9 Waiver of Notices.............................................................................103
15.10 Binding Effect................................................................................103
15.11 Indemnity of the Agent and the Lenders by Each Borrower.......................................104
15.12 Limitation of Liability.......................................................................104
15.13 Final Agreement...............................................................................105
15.14 Counterparts..................................................................................105
15.15 Captions......................................................................................105
15.16 Right of Setoff...............................................................................105
15.17 Replacement of Affected Lenders...............................................................106
15.18 Joint and Several Liability...................................................................106
15.19 Contribution and Indemnification among the Borrowers..........................................107
15.20 Agency of the Parent for each other Borrower..................................................108
EXHIBITS AND SCHEDULES
EXHIBIT A - FORM OF BORROWING BASE CERTIFICATE
EXHIBIT B - FORM OF FINANCIAL COVENANT CERTIFICATE
EXHIBIT C - FINANCIAL STATEMENTS
EXHIBIT D - FORM OF NOTICE OF BORROWING
EXHIBIT E - FORM OF NOTICE OF CONTINUATION/CONVERSION
EXHIBIT F - FORM OF ASSIGNMENT AND ACCEPTANCE AGREEMENT
EXHIBIT G - GECC PAYMENT AGREEMENT
SCHEDULE 1.1 - ASSIGNED CONTRACTS
SCHEDULE 6.3 - LOCATION OF COLLATERAL AND CHIEF EXECUTIVE OFFICES
SCHEDULE 8.3 - ORGANIZATION AND QUALIFICATIONS
SCHEDULE 8.4 - CORPORATE NAMES, ETC.
SCHEDULE 8.5 - SUBSIDIARIES AND AFFILIATES
SCHEDULE 8.9 - DEBT
SCHEDULE 8.11 - TITLE
SCHEDULE 8.12 - REAL ESTATE; LEASES
SCHEDULE 8.13 - PROPRIETARY RIGHTS
SCHEDULE 8.14 - TRADE NAMES
SCHEDULE 8.20 - DEFAULTS
SCHEDULE 8.28 - MATERIAL AGREEMENTS
SCHEDULE 8.29 - BANK ACCOUNTS
LOAN AND SECURITY AGREEMENT
Loan and Security Agreement, dated as of March 30, 2000, among the
financial institutions listed on the signature pages hereof (such financial
institutions, together with their respective successors and assigns, are
referred to hereinafter each individually as a "Lender" and collectively as the
"Lenders"), Bank of America, N.A. with an office at 00 Xxxxx Xxxx Xxxxxx, Xxxxx
000, Xxxxxxxx, Xxxxxxxxxx 00000, as agent for the Lenders (in its capacity as
agent, the "Agent") and as the sole lead arranger, and EFTC Corporation, a
Colorado corporation ("EFTC" or "Parent") with a chief executive office
located at 0000 Xxxxx Xxxxxx, 0xx Xxxxx, Xxxxxx, Xxxxxxxx 00000 and RM
Electronics, Inc., a New Hampshire corporation (doing business as Personal
Electronics) ("PEI" and collectively with EFTC, the "Borrowers"), with a
chief executive office located at Xxx Xxxxxxxxx Xxxx, Xxxxxxxxxx, Xxx
Xxxxxxxxx 00000.
W I T N E S S E T H
WHEREAS, the Borrowers have requested the Lenders to make available to
the Borrowers a revolving line of credit for loans and letters of credit in an
amount not to exceed $45,000,000 and which extension of credit the Borrowers
will use for their working capital needs and general business purposes;
WHEREAS, the Lenders have agreed to make available to the Borrowers a
revolving credit facility upon the terms and conditions set forth in this
Agreement.
NOW, THEREFORE, in consideration of the mutual conditions and
agreements set forth in this Agreement, and for good and valuable consideration,
the receipt of which is hereby acknowledged, the Lenders, the Agent, and the
Borrowers hereby agree as follows.
ARTICLE 1
INTERPRETATION OF THIS AGREEMENT
1.1 Definitions. As used herein:
"Accounts" means all of the Borrowers' now owned or hereafter
acquired or arising accounts as defined in the UCC, including any rights to
payment for the sale or lease of goods or rendition of services, whether or not
they have been earned by performance.
"Accounts Advance Rate" means 85%; provided, however, that
such rate shall be reduced by one percentage point if the Dilution is equal to
or greater than 8% and shall be further reduced by an additional percentage
point for each full percent that the Dilution exceeds 8% and provided further,
however, that if the Dilution is equal to or greater than 11%, the Accounts
Advance Rate shall be reduced by two percentage points for each full percent
that the Dilution exceeds 10%. By way of example: (i) Dilution of 7.5% would
result in an Accounts Advance Rate of 85%; (ii) dilution of 10.5% would result
in an Accounts Advance Rate of 82%; and (iii) Dilution of 14.6% would result in
an Accounts Advance Rate of 74%.
"Account Debtor" means each Person obligated in any way on or
in connection with an Account.
"ACH Transactions" means any cash management or related
services including the automatic clearing house transfer of funds by the Bank
for the account of any Borrower pursuant to agreement or overdrafts.
"Adjusted Net Earnings from Operations" means, with respect to
any fiscal period of the Parent, the Parent's net income after provision for
income taxes for such fiscal period, as determined in accordance with GAAP and
reported on the Financial Statements for such period, excluding any and all of
the following included in such net income: (a) gain or loss arising from the
sale of any capital assets; (b) gain arising from any write-up in the book value
of any asset; (c) earnings of any Person, substantially all the assets of which
have been acquired by the Parent in any manner, to the extent realized by such
other Person prior to the date of acquisition; (d) earnings of any Person in
which the Parent has an ownership interest unless (and only to the extent) such
earnings shall actually have been received by the Parent in the form of cash
distributions; (e) earnings of any Person to which assets of the Parent shall
have been sold, transferred or disposed of, or into which the Parent shall have
been merged, or which has been a party with the Parent to any consolidation or
other form of reorganization, prior to the date of such transaction; (f) gain
arising from the acquisition of debt or equity securities of the Parent or from
cancellation or forgiveness of Debt; (g) gain arising from extraordinary items,
as determined in accordance with GAAP, or from any other non-recurring
transaction; and (h) other one-time adjustments for gains (or losses) to the
extent agreed upon by the Borrower, the Agent and the Majority Lenders.
"Affiliate" means, as to any Person, any other Person (a)
which directly or indirectly, is in control of, is controlled by, or is under
common control with, such Person or (b) which owns, directly or indirectly, ten
percent (10%) or more of the outstanding equity interest of such Person;
provided, however, that this clause (b) shall not include a company whose
securities are owned by either RCBA, Xxxxxx or any of their respective
affiliates unless either RCBA, Xxxxxx or any of their respective affiliates, as
the case may be, own more than 50% of the voting securities of that company. A
Person shall be deemed to control another Person if the controlling Person
possesses, directly or indirectly, the power to direct or cause the direction of
the management and policies of the other Person, whether through the ownership
of voting securities, by contract, or otherwise.
"Agent" means the Bank, solely in its capacity as agent for
the Lenders, and any successor agent.
"Agent Advances" has the meaning specified in Section 2.2(i).
"Agent's Fee Letter" means that certain letter agreement,
dated of even date herewith, among the Agent and the Borrowers, as amended,
modified, supplemented or replaced from time to time.
"Agent's Liens" means the Liens in the Collateral granted to
the Agent, for the benefit of the Lenders, Bank, and Agent pursuant to this
Agreement and the other Loan Documents.
"Agent-Related Persons" means the Agent, together with its
Affiliates, and the officers, directors, employees, agents and attorneys-in-fact
of the Agent and such Affiliates.
"Aggregate Revolver Outstandings" means, at any date of
determination, the sum of (a) the unpaid balance of Revolving Loans, (b) the
aggregate amount of Pending Revolving Loans, (c) one hundred percent (100%) of
the aggregate undrawn face amount of all outstanding Letters of Credit, and (d)
the aggregate amount of any unpaid reimbursement obligations in respect of
Letters of Credit.
"Agreement" means this Loan and Security Agreement.
"Anniversary Date" means each anniversary of the Closing Date.
"Applicable Margin" means
(i) with respect to Base Rate Revolving Loans and all
other Obligations (other than LIBOR Rate Loans), 0.50%; and
(ii) with respect to LIBOR Rate Loans, 2.75%;
provided, however, that, upon the first day of the first month following the
delivery to the Agent and the Lenders of the Parent's audited Financial
Statements for either Fiscal Year 2000 or Fiscal Year 2001, as required by
Section 7.2 (a), together with a Financial Covenant Certificate for the last
fiscal quarter of such Fiscal Year, the then effective Applicable Margins set
forth in clauses (i) and (ii) above each shall be reduced to either Pricing
Level I or Pricing Level II as provided in the following table if (a) no Event
of Default then exists and (b) such Financial Statements and the Financial
Covenant Certificate demonstrate the Parent's compliance for such Fiscal Year
with both the Coverage Ratio Test and the Inventory Turnover Test required for
such Pricing Level:
Pricing Level Applicable Margins
Level I 0.25% for Base Rate Revolving Loans and all other
Obligations other than LIBOR Rate Loans
2.50% for LIBOR Rate Loans
Level II 0.00% for Base Rate Revolving Loans and all other
Obligations other than LIBOR Rate Loans
2.25% for LIBOR Rate Loans
All such adjustments shall be made effective on the later of the first
Anniversary Date following the end of such Fiscal Year or the first day of the
first month after the Agent's receipt of such Financial Statements for such
Fiscal Year, but no such adjustment shall affect any LIBOR Revolving Loan with
an Interest Period that commenced prior to the delivery of the Financial
Covenant Certificate and Financial Statements demonstrating such compliance.
Subject to the applicability of the Default Rate, a failure by the Parent to
achieve an Inventory Turnover Test or a Coverage Ratio Test that it achieved in
a prior Fiscal Year will not result in an increase in the Applicable Margin. As
used in this definition, the term "Coverage Ratio Test" means a Coverage Ratio
greater than 1.0 to 1.0 (for Pricing Level I) or greater than 1.4 to 1.0 (for
Pricing Level II), and the term "Inventory Turnover Test" means an Inventory
Turnover Rate of less than 86 days (for Pricing Level I) or less than 75 days
(for Pricing Level II).
"Assigned Contracts" means, collectively, all of the
Borrowers' rights and remedies under, and all moneys and claims for money due or
to become due to any Borrower under those contracts set forth on Schedule 1.1,
and any other material contracts, and any and all amendments, supplements,
extensions, and renewals thereof including all rights and claims of any Borrower
now or hereafter existing: (i) under any insurance, indemnities, warranties, and
guarantees provided for or arising out of or in connection with any of the
foregoing agreements; (ii) for any damages arising out of or for breach or
default under or in connection with any of the foregoing contracts; (iii) to all
other amounts from time to time paid or payable under or in connection with any
of the foregoing agreements; or (iv) to exercise or enforce any and all
covenants, remedies, powers and privileges thereunder.
"Assignee" has the meaning specified in Section 13.2(a).
"Assignment and Acceptance" has the meaning specified in
Section 13.2(a).
"Attorney Costs" means and includes all reasonable fees,
expenses and disbursements of any law firm or other counsel engaged by the
Agent, the reasonable allocated costs of internal legal services of the Agent
and the reasonable expenses of internal counsel to the Agent.
"Availability" means, at any time, (a) the Borrowing Base
minus (b) the Aggregate Revolver Outstandings.
"Availability Reserve" means a reserve initially in the amount
of $19,000,000. So long as no Event of Default then exists, and based upon the
Agent's receipt of a Borrowing Base Certificate together with such other
financial information as the Agent may require, the Agent shall reduce the
Availability Reserve from time to time to an amount not to exceed the greater
of: (a) the amount, if any, of the then outstanding accounts payable of Parent
owing to Honeywell in respect of One Time Buy Inventory, or (b) $15,000,000
minus the then outstanding amount of Eligible Accounts owed by Honeywell
to Parent.
"Bank" means Bank of America, N.A., a national banking
association, or any successor entity thereto.
"Bank Products" means any one or more of the following types
of services or facilities extended to any Borrower by the Bank or any affiliate
of the Bank in reliance on the Bank's agreement to indemnify such affiliate: (i)
credit cards; (ii) ACH Transactions; and (iii) Hedge Agreements.
"Bank Product Reserves" means all reserves which the Agent
from time to time establishes in its sole discretion for the Bank Products then
provided or outstanding; which reserves (or the potential therefor) will be
disclosed at the time Bank enters into such Bank Products with the Borrowers.
"Bankruptcy Code" means Title 11 of the United States Code (11
X.X.X.xx. 101 et seq.).
"Base Rate" means, for any day, the rate of interest in effect
for such day as publicly announced from time to time by the Bank in Charlotte,
North Carolina as its "prime rate" (the "prime rate" being a rate set by the
Bank based upon various factors including the Bank's costs and desired return,
general economic conditions and other factors, and is used as a reference point
for pricing some loans, which may be priced at, above, or below such announced
rate). Any change in the prime rate announced by the Bank shall take effect at
the opening of business on the day specified in the public announcement of such
change. Each Interest Rate based upon the Base Rate shall be adjusted
simultaneously with any change in the Base Rate.
"Base Rate Loans" means the Base Rate Revolving Loans.
"Base Rate Revolving Loan" means a Revolving Loan during
any period in which it bears interest based on the Base Rate.
"Blocked Account Agreement" means an agreement among the
Borrower, the Agent and a Clearing Bank, in form and substance satisfactory to
the Agent, concerning the collection of payments which represent the proceeds of
Accounts or of any other Collateral.
"Borrowing" means a borrowing hereunder consisting of
Revolving Loans made on the same day by the Lenders to any Borrower or by Bank
in the case of a Borrowing funded by Non-Ratable Loans or by the Agent in the
case of a Borrowing consisting of an Agent Advance, or the issuance of Letters
of Credit hereunder.
"Borrowing Base" means, at any time, an amount equal to (a)
the lesser of (i) the Maximum Revolver Amount or (ii) the sum of (A) (1) the
Accounts Advance Rate times (2) the difference between (y) the Net Amount of
Eligible Accounts less (z) the Honeywell Reserve; plus (B) the lesser of (1) the
Inventory Limit or (2) the sum of (x) 50% of the value of Eligible Inventory
consisting of raw materials and finished goods plus (y) 30% of the value of
Eligible Inventory consisting of work in process minus (z) the Availability
Reserve; minus (b) the sum of (i) reserves for accrued and unpaid interest on
the Obligations, (ii) the Environmental Compliance Reserve, (iii) the Bank
Product Reserves, (iv) The Rent Reserve, and (v) all other reserves which the
Agent deems necessary in the exercise of its reasonable credit judgment to
maintain with respect to any Borrower's account, including reserves for any
amounts which the Agent or any Lender may be obligated to pay in the future for
the account of any Borrower.
"Borrowing Base Certificate" means a certificate by a
Responsible Officer of the Parent, substantially in the form of Exhibit A (or
another form acceptable to the Agent) setting forth the calculation of the
Borrowing Base, including a calculation of each component thereof, all in such
detail as shall be satisfactory to the Agent. All calculations of the Borrowing
Base in connection with the preparation of any Borrowing Base Certificate shall
originally be made by Parent and certified to the Agent; provided, that the
Agent shall have the right to review and adjust, in the exercise of its
reasonable credit judgment, any such calculation (1) to reflect its reasonable
estimate of declines in value of any of the Collateral described therein, and
(2) to the extent that such calculation is not in accordance with this
Agreement.
"Business Day" means (a) any day that is not a Saturday,
Sunday, or a day on which banks in Los Angeles, California are closed, and (b)
with respect to all notices, determinations, fundings and payments in connection
with the LIBOR Rate or LIBOR Rate Loans, any day that is a Business Day pursuant
to clause (a) above and that is also a day on which trading in Dollars is
carried on by and between banks in the London interbank market.
"Capital Adequacy Regulation" means any guideline, request or
directive of any central bank or other Governmental Authority, or any other law,
rule or regulation, whether or not having the force of law, in each case,
regarding capital adequacy of any bank or of any corporation controlling a bank.
"Capital Expenditures" means all payments due (whether or not
paid) in respect of the cost of any fixed asset or improvement, or replacement,
substitution, or addition thereto, which has a useful life of more than one
year, including, without limitation, those costs arising in connection with the
direct or indirect acquisition of such asset by way of increased product or
service charges or in connection with a Capital Lease.
"Capital Lease" means any lease of property by any Borrower
which, in accordance with GAAP, should be reflected as a capital lease on the
balance sheet of such Borrower.
"Cash Flow" means, for any period, (a) Parent's EBITDA for
such period, minus (b) Parent's Fixed Charges for such period.
"Change of Control" means the occurrence of any of the
following events: (i) a "Change in Control" shall have occurred as provided in
the Senior Subordinated Debt, (ii) prior to the consummation of a Successful
Tender Offer (as that term is defined in the Securities Purchase Agreement), if
either (w) individuals nominated by RCBA and Xxxxxx (together with Persons
controlled by RCBA or Xxxxxx) constitute fewer than 2 in number or 15% in
proportion of the total members of the Parent's Board of Directors or (x) RCBA
and Xxxxxx (together with Persons controlled by RCBA or Xxxxxx) collectively are
the legal and beneficial owners of less than 60% of the principal amount of the
Senior Subordinated Debt, (ii) following the consummation of a Successful Tender
Offer, if either (y) RCBA and Xxxxxx (together with Persons controlled by RCBA
or Xxxxxx) collectively cease to have voting control over at least 40% (on a
fully diluted basis) of the total voting stock of the Parent or (z) any other
Person or two or more Persons (other than RCBA, Xxxxxx, and Persons controlled
by RCBA or Xxxxxx) acting in concert (within the meaning of Section 13(d) of the
Exchange Act) shall have voting control over more of the total voting stock of
the Parent than does RCBA, Xxxxxx, and Persons controlled by RCBA or Xxxxxx,
collectively.
"Clearing Bank" means the Bank or any other banking
institution with whom a Payment Account has been established pursuant to a
Blocked Account Agreement.
"Closing Date" means the date of this Agreement.
"Code" means the Internal Revenue Code of 1986, as amended
from time to time, and any successor statute, and regulations promulgated
thereunder.
"Collateral" has the meaning specified in Section 6.1.
"Commitment" means, at any time with respect to a Lender, the
principal amount set forth beside such Lender's name under the heading
"Commitment" on the signature pages of this Agreement or on the signature page
of the Assignment and Acceptance pursuant to which such Lender became a Lender
hereunder in accordance with the provisions of Section 13.2, as such Commitment
may be adjusted from time to time in accordance with the provisions of Section
13.2, and "Commitments" means, collectively, the aggregate amount of the
commitments of all of the Lenders.
"Contaminant" means any waste, pollutant, hazardous substance,
toxic substance, hazardous waste, special waste, petroleum or petroleum-derived
substance or waste, asbestos in any form or condition, polychlorinated biphenyls
("PCBs"), or any constituent of any such substance or waste.
"Continuation/Conversion Date" means the date on which the
Loan is converted into or continued as a LIBOR Rate Loan.
"Coverage Ratio" means, for any period, the ratio of (a)
EBITDA for such period to (b) Fixed Charges for such period; provided, however,
that (i) for purposes of determining whether investments can be made under
Section 9.10, measurement of the Coverage Ratio as of the last day of Parent's
fiscal quarters ending on March 31, 2000, June 30, 2000, and September 30, 2000
shall be calculated on the basis of the one, two, and three quarters then
ending, respectively, and measurements of the Coverage Ratio as of the last day
of each of the Parent's fiscal quarters thereafter shall be calculated on the
basis of the four fiscal quarters then ending; (ii) for purposes of determining
whether the Parent has complied with the minimum Coverage Ratio set forth in
Section 9.29, measurement of the Coverage Ratio as of the last day of the
Parent's fiscal quarters ending on March 31, 2001, June 30, 2001, September 30,
2001, and December 31, 2001 shall be calculated on the basis of the one, two,
three and four quarters then ending, respectively, and measurement of the
Coverage Ratio as of the last day of each of the Parent's months commencing
January 31, 2002 shall be calculated on the basis of the twelve months then
ending; and (iii) for purposes of determining whether the Parent has met the
Coverage Ratio Test: the December 31, 2000 measurement shall be calculated for
the three fiscal quarters then ending, and the December 31, 2001 measurement
shall be calculated for the four fiscal quarters then ending.
"Coverage Ratio Test" has the meaning set forth in the
definition of "Applicable Margin."
"Credit Support" has the meaning specified in Section 2.4(a).
"Debt" means, without duplication, all liabilities,
obligations and indebtedness of any Borrower to any Person, of any kind or
nature, now or hereafter owing, arising, due or payable, howsoever evidenced,
created, incurred, acquired or owing, whether primary, secondary, direct,
contingent, fixed or otherwise, and including, without in any way limiting the
generality of the foregoing: (a) such Borrower's liabilities and obligations to
trade creditors; (b) all Obligations; (c) all obligations and liabilities of any
Person secured by any Lien on such Borrower's property, even though such
Borrower shall not have assumed or become liable for the payment thereof;
provided, however, that all such obligations and liabilities which are limited
in recourse to such property shall be included in Debt only to the extent of the
book value of such property as would be shown on a balance sheet of such
Borrower prepared in accordance with GAAP; (d) all obligations or liabilities
created or arising under any Capital Lease or conditional sale or other title
retention agreement with respect to property used or acquired by such Borrower,
even if the rights and remedies of the lessor, seller or lender thereunder are
limited to repossession of such property; provided, however, that all such
obligations and liabilities which are limited in recourse to such property shall
be included in Debt only to the extent of the book value of such property as
would be shown on a balance sheet of such Borrower prepared in accordance with
GAAP; and (e) all obligations and liabilities under Guaranties.
"Debt For Borrowed Money" means, as to any Person, all Debt
that constitutes (a) Debt for borrowed money or as evidenced by notes, bonds
(other than performance or surety bonds), debentures or similar evidences of any
such Debt of such Person, (b) the deferred and unpaid purchase price of any
property or business (other than trade accounts payable incurred in the ordinary
course of business and constituting current liabilities) and (c) all obligations
under Capital Leases.
"Default" means any event or circumstance which, with the
giving of notice, the lapse of time, or both, would (if not cured, waived, or
otherwise remedied during such time) constitute an Event of Default.
"Defaulting Lender" has the meaning specified in Section
2.2(g)(ii).
"Default Rate" means a fluctuating per annum interest rate at
all times equal to the sum of (a) the otherwise applicable Interest Rate plus
(b) 2.0%. Each Default Rate shall be adjusted simultaneously with any change in
the applicable Interest Rate. In addition, with respect to Letters of Credit,
the Default Rate shall mean an increase in the Letter of Credit Fee by two
percentage points.
"Dilution" means, in each case based upon the experience of
the immediately prior three months, the result of dividing (a) the Dollar amount
of Borrowers' bad debt write-downs, discounts, advertising allowances, offsets,
returns, promotional allowances, credits, or other dilutive items with respect
to the Accounts, by (b) the Dollar amount of Borrowers' gross xxxxxxxx for such
period.
"Distribution" means, in respect of any corporation: (a) the
payment or making of any dividend or other distribution of property in respect
of capital stock (or any options or warrants for or other rights with respect to
such stock) of such corporation, other than distributions in capital stock (or
any options or warrants for or other rights with respect to such stock) of the
same class; or (b) the redemption or other acquisition by such corporation of
any capital stock (or any options or warrants for such stock) of such
corporation.
"DOL" means the United States Department of Labor or any
successor department or agency.
"Dollar" and "$" means dollars in the lawful currency of the
United States.
"EBITDA" means, for any period, the sum of:
(1) the Adjusted Net Earnings From Operations of the
Parent for such period; plus (or minus)
(2) to the extent that any of the items referred to in any of
clauses (i) through (iv) below are deducted (or added) in calculating such net
income (or net loss):
(i) Interest Expense of the Parent (to the
extent it exceeds interest income of the Parent) for such period;
(ii) income tax expense of the Parent with
respect to operations for such period;
(iii) the amount of all depreciation and
amortization of the Parent for such period; and
(iv) the amount of any non-recurring
charges incurred in Fiscal Year 2000 in respect of:
(x) transaction costs, (y) moving the "NEO" facility (not to exceed $500,000),
and (z) consulting fees (not to exceed $3,500,000) provided, however, the sum of
all transaction costs that have been incurred in the Parent's Fiscal Year 2000,
cannot exceed $7,000,000.
"Eligible Accounts" means the Accounts which the Agent in the
exercise of its reasonable commercial discretion determines to be Eligible
Accounts. Without limiting the discretion of the Agent to establish other
criteria of ineligibility, Eligible Accounts shall not, unless the Agent in its
sole discretion elects, include any Account:
(a) with respect to which more than 120 days
have elapsed since the date of the original invoice therefor or which is
more than 60 days past due;
(b) with respect to which any of the
representations, warranties, covenants, and agreements contained in Section
6.8 are not or have ceased to be complete and correct or have been breached;
(c) with respect to which Account (or any other
Account due from such Account Debtor), in whole or in part, a check,
promissory note, draft, trade acceptance or other instrument for the payment of
money has been received, presented for payment and returned uncollected for any
reason;
(d) which represents a progress billing (as
hereinafter defined) or as to which the applicable Borrower has extended the
time for payment without the consent of the Agent; for the purposes hereof,
"progress billing" means any invoice for goods sold or leased or services
rendered under a contract or agreement pursuant to which the Account Debtor's
obligation to pay such invoice is conditioned upon such Borrower's completion of
any further performance under the contract or agreement;
(e) with respect to which any one or more of the
following events has occurred to the Account Debtor on such Account: death or
judicial declaration of incompetency of an Account Debtor who is an individual;
the filing by or against the Account Debtor of a request or petition for
liquidation, reorganization, arrangement, adjustment of debts, adjudication as a
bankrupt, winding-up, or other relief under the bankruptcy, insolvency, or
similar laws of the United States, any state or territory thereof, or any
foreign jurisdiction, now or hereafter in effect; the making of any general
assignment by the Account Debtor for the benefit of creditors; the appointment
of a receiver or trustee for the Account Debtor or for any of the assets of the
Account Debtor, including, without limitation, the appointment of or taking
possession by a "custodian," as defined in the Federal Bankruptcy Code; the
institution by or against the Account Debtor of any other type of insolvency
proceeding (under the bankruptcy laws of the United States or otherwise) or of
any formal or informal proceeding for the dissolution or liquidation of,
settlement of claims against, or winding up of affairs of, the Account Debtor;
the sale, assignment, or transfer of all or any material part of the assets of
the Account Debtor; the nonpayment generally by the Account Debtor of its debts
as they become due; or the cessation of the business of the Account Debtor as a
going concern;
(f) if 50% or more of the aggregate Dollar
amount of outstanding Accounts owed at such time by the Account Debtor thereon
is classified as ineligible under clause (a) above;
(g) owed by an Account Debtor which: (i) does
not maintain its chief executive office in the United States of America or
Canada; or (ii) is not organized under the laws of the United States of America
or Canada or any state or province thereof; or (iii) is the government of any
foreign country or sovereign state, or of any state, province, municipality, or
other political subdivision thereof, or of any department, agency, public
corporation, or other instrumentality thereof; except to the extent that such
Account is owed by Bayer Diagnostics (Ireland), Agfa-Gevaert Group, or by such
other account debtor as is specifically approved by the Agent in its sole
discretion, or secured or payable by a letter of credit satisfactory to the
Agent in its discretion;
(h) owed by an Account Debtor which is an
Affiliate or employee of any Borrower;
(i) except as provided in clause (k)
below, with respect to which either the perfection, enforceability, or validity
of the Agent's Lien in such Account, or the Agent's right or ability to obtain
direct payment to the Agent of the proceeds of such Account, is governed by any
federal, state, or local statutory requirements other than those of the UCC;
(j) (i) owed by an Account Debtor to which any
Borrower or any of its Subsidiaries, is indebted in any way, or which is subject
to any right of setoff or recoupment by the Account Debtor, unless the Account
Debtor has entered into an agreement acceptable to the Agent to waive setoff
rights; or (ii) if the Account Debtor thereon has disputed liability or made any
claim with respect to any other Account due from such Account Debtor; but in
each the case of clauses (i) and (ii) of this paragraph, only to the extent of
such indebtedness, setoff, recoupment, dispute, or claim;
(k) owed by the government of the United
States of America, or any department, agency, public corporation, or other
instrumentality thereof, unless the Federal Assignment of Claims Act of 1940, as
amended (31 X.X.X.xx. 3727 et seq.), and any other steps necessary to perfect
the Agent's Lien therein, have been complied with to the Agent's satisfaction
with respect to such Account;
(l) owed by any state, municipality, or other
political subdivision of the United States of America, or any department,
agency, public corporation, or other instrumentality thereof and as to which the
Agent determines that its Lien therein is not or cannot be perfected;
(m) which represents a sale on a xxxx-and-hold,
guaranteed sale, sale and return, sale on approval, consignment, or other
repurchase or return basis;
(n) which is evidenced by a promissory note or
other instrument or by chattel paper;
(o) if the Agent believes, in the exercise of
its reasonable judgment, that the prospect of collection of such Account is
impaired or that the Account may not be paid by reason of the Account Debtor's
financial inability to pay;
(p) with respect to which the Account Debtor is
located in any state requiring the filing of a Notice of Business Activities
Report or similar report in order to permit the applicable Borrower to seek
judicial enforcement in such State of payment of such Account, unless such
Borrower has qualified to do business in such state or has filed a Notice of
Business Activities Report or equivalent report for the then current year;
(q) which arises out of a sale not made in the
ordinary course of the applicable Borrower's business;
(r) with respect to which the goods giving rise
to such Account have not been shipped and delivered to and accepted by the
Account Debtor or the services giving rise to such Account have not been
performed by the applicable Borrower, and, if applicable, accepted by the
Account Debtor, or the Account Debtor revokes its acceptance of such goods or
services;
(s) owed by an Account Debtor which is obligated
to the applicable Borrower respecting Accounts the aggregate unpaid balance of
which exceeds 15% (or in the case of Honeywell and its affiliates, collectively,
80%) of the aggregate unpaid balance of all Accounts owed to the Borrowers at
such time by all of the Borrowers' Account Debtors, but only to the extent of
such excess;
(t) which arises out of an enforceable contract
or order which, by its terms, forbids, restricts or makes void or unenforceable
the granting of a Lien by the applicable Borrower to the Agent with respect to
such Account; or
(u) which is not subject to a first priority and
perfected security interest in favor of the Agent for the benefit of the
Lenders.
If any Account at any time ceases to be an Eligible Account, then such
Account shall promptly be excluded from the calculation of Eligible Accounts.
"Eligible Assignee" means (a) a commercial bank, commercial
finance company or other asset based lender, having total assets in excess of
$1,000,000,000; (b) any Lender listed on the signature page of this Agreement;
(c) any Affiliate of any Lender; and (d) if an Event of Default exists, any
Person reasonably acceptable to the Agent.
"Eligible Inventory" means the Inventory, valued at the lower
of cost (on a "first-in, first-out" basis) or market in accordance with GAAP,
which the Agent, in its commercially reasonable discretion, determines to be
Eligible Inventory. Without limiting the discretion of the Agent to establish
other criteria of eligibility, Eligible Inventory shall meet all of the
following requirements:
(a) such Inventory is owned by a Borrower;
(b) such Inventory is subject to the Agent's Liens, which are
perfected as to such Inventory, and is subject to no other Lien whatsoever
(other than the Liens described in clause (d) of the definition of Permitted
Liens provided that such Permitted Liens (i) are junior in priority to the
Agent's Liens and (ii) do not impair directly or indirectly the ability of the
Agent to realize on or obtain the full benefit of the Collateral);
(c) such Inventory consists of finished goods,
work-in-process, or raw materials, provided, however, that the overhead cost
component of any raw materials or work-in-process shall not be considered
Eligible Inventory;
(d) such Inventory does not consist of service parts,
chemicals, supplies, or packing and shipping materials;
(e) such Inventory is in good condition, not unmerchantable or
defectives, and meets all standards imposed by any Governmental Authority,
having regulatory authority over such goods, their use or sale;
(f) such Inventory is currently either usable or salable,
at prices approximating at least cost, in the normal course of the applicable
Borrower's business;
(g) such Inventory is not obsolete (which for purposes of this Agreement shall
mean Inventory (other than Lifetime Buy Inventory) in excess of the greater of
(i) Inventory on hand exceeding nine months of supply or usage (consistent with
past practice) or (ii) the amount of Inventory set forth in the Parent's
obsolescence reserve set forth in its books and records), or used parts,
returned or repossessed goods, or goods taken in trade;
(h) such Inventory is located within the United States of America or Canada
(and not in-transit from vendors or suppliers);
(i) such Inventory is Lifetime Buy Inventory, but only to the extent that
Honeywell has agreed to repurchase such Inventory from the Borrowers or the
Agent pursuant to the Honeywell Buy Back Agreement;
(j) such Inventory is not leased or on consignment;
(k) if such Inventory contains or bears any Proprietary Rights
licensed to a Borrower by any Person, the Agent shall be satisfied that it may
sell or otherwise dispose of such Inventory in accordance with Article 11
without infringing the rights of the licensor of such Proprietary Rights or
violating any contract with such licensor (and without payment of any royalties
other than any royalties due with respect to the sale or disposition of such
Inventory pursuant to the existing license agreement), and, if the Agent deems
it necessary, the applicable Borrower shall deliver to the Agent a consent or
sublicense agreement from such licensor in form and substance acceptable to the
Agent; and
(l) such Inventory is not determined by the Agent in its
reasonable discretion, to be ineligible for any other reason.
If any Inventory at any time ceases to be Eligible Inventory,
such Inventory shall promptly be excluded from the calculation of Eligible
Inventory.
"Environmental Claims" means all claims, however asserted, by
any Governmental Authority or other Person alleging potential liability or
responsibility for violation of any Environmental Law, or for a Release or
injury to the environment.
"Environmental Compliance Reserve" means any reserve which the
Agent, after the Closing Date, establishes in its reasonable discretion from
time to time for amounts that are reasonably likely to be expended by any
Borrower in order for such Borrower and its operations and property (a) to
comply with any notice from a Governmental Authority asserting material
non-compliance with Environmental Laws, or (b) to correct any such material
non-compliance identified in a report delivered to the Agent and the Lenders
pursuant to Section 9.7.
"Environmental Laws" means all federal, state or local laws,
statutes, common law duties, rules, regulations, ordinances and codes, together
with all administrative orders, directed duties, licenses, authorizations and
permits of, and agreements with, any Governmental Authority, in each case
relating to environmental, health, safety and land use matters.
"Environmental Lien" means a Lien in favor of any Governmental
Authority for (a) any liability under Environmental Laws, or (b) damages arising
from, or costs incurred by such Governmental Authority in response to, a Release
or threatened Release of a Contaminant into the environment.
"Equipment" means all of the Borrowers' now owned and
hereafter acquired machinery, equipment, furniture, furnishings, fixtures, and
other tangible personal property (except Inventory), including motor vehicles
with respect to which a certificate of title has been issued, aircraft, dies,
tools, jigs, and office equipment, as well as all of such types of property
leased by any Borrower and all of the Borrowers' rights and interests with
respect thereto under such leases (including, without limitation, options to
purchase); together with all present and future additions and accessions
thereto, replacements therefor, component and auxiliary parts and supplies used
or to be used in connection therewith, and all substitutes for any of the
foregoing, and all manuals, drawings, instructions, warranties and rights with
respect thereto; wherever any of the foregoing is located.
"ERISA" means the Employee Retirement Income Security Act of
1974, and regulations promulgated thereunder.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) under common control with any Borrower within the meaning of
Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for
purposes of provisions relating to Section 412 of the Code).
"ERISA Event" means (a) a Reportable Event with respect to a
Pension Plan, (b) a withdrawal by any Borrower or any ERISA Affiliate from a
Pension Plan subject to Section 4063 of ERISA during a plan year in which it was
a substantial employer (as defined in Section 4001(a)(2) of ERISA) or a
cessation of operations which is treated as such a withdrawal under Section
4062(e) of ERISA, (c) a complete or partial withdrawal by any Borrower or any
ERISA Affiliate from a Multi-employer Plan or notification that a Multi-employer
Plan is in reorganization, (d) the filing of a notice of intent to terminate,
the treatment of a Plan amendment as a termination under Section 4041 or 4041A
of ERISA, or the commencement of proceedings by the PBGC to terminate a Pension
Plan or Multi-employer Plan, (e) the occurrence of an event or condition which
might reasonably be expected to constitute grounds under Section 4042 of ERISA
for the termination of, or the appointment of a trustee to administer, any
Pension Plan or Multi-employer Plan, or (f) the imposition of any liability
under Title IV of ERISA, other than for PBGC premiums due but not delinquent
under Section 4007 of ERISA, upon any Borrower or any ERISA Affiliate.
"Event of Default" has the meaning specified in Section 11.1.
"Exchange Act" means the Securities Exchange Act of 1934, and
regulations promulgated thereunder.
"FDIC" means the Federal Deposit Insurance Corporation, and
any Governmental Authority succeeding to any of its principal functions.
"Federal Funds Rate" means, for any day, the rate per annum
(rounded upwards, if necessary, to the nearest 1/100 of 1%) equal to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank of New York on the Business Day
next succeeding such day; provided that (a) if such day is not a Business Day,
the Federal Funds Rate for such day shall be such rate on such transactions on
the next preceding Business Day as so published on the next succeeding Business
Day, and (b) if no such rate is so published on such next succeeding Business
Day, the Federal Funds Rate for such day shall be the average rate charged to
the Bank on such day on such transactions as determined by the Agent.
"Federal Reserve Board" means the Board of Governors of the
Federal Reserve System or any successor thereto.
"Financial Covenant Certificate" means a certificate of a
Responsible Officer of Parent to be delivered in connection with the delivery by
the Parent of its Financial Statements respecting the end of each month or the
end of each fiscal quarter of each Fiscal Year of Parent, as the case may be,
and setting forth the Coverage Ratio, the Inventory Turnover Ratio, and the Cash
Flow as of the last day of each such month of Borrower, but only to the extent
that such measurement is required for such period under the terms of this
Agreement, together with such supporting documentation and calculations,
substantially in the form of Exhibit B, as the Agent may reasonably request with
respect to such Coverage Ratio, Inventory Turnover Ratio, and the Cash Flow.
"Financial Statements" means, according to the context in
which it is used, the financial statements referred to in Section 8.6 or any
other financial statements required to be given to the Lenders pursuant to this
Agreement.
"Fiscal Year" means the Parent's fiscal year for financial
accounting purposes. The current Fiscal Year of the Parent will end on December
31, 2000.
"Fixed Assets" means the Equipment and Real Estate of the
Borrowers.
"Fixed Charges" means, for any period, the sum of (i) the
aggregate amount of cash required to be paid by the Borrowers in respect of
Interest Expense for such period, (ii) the aggregate amount of cash required to
be paid by the Borrowers in respect of taxes for such period, (iii) all
non-financed Capital Expenditures of the Borrowers made in such period, and (iv)
all payments made in such period on account of: (x) the principal amount of the
Borrowers' Debt for Borrowed Money (other than the Obligations), (y)
Distributions, if any, allowed under Section 9.10, and (z) Restricted
Investments, if allowed, under Section 9.10.
"Funding Date" means the date on which a Borrowing occurs.
"GAAP" means generally accepted accounting principles and
practices 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 U.S. accounting profession), which are applicable to the
circumstances as of the Closing Date.
"GECC" means General Electric Capital Corporation.
"GECC Payment Agreement" means that certain Agreement, dated
December 5, 1997, between GECC and the Parent, regarding the GE Capital
Accelerated Payment Program, a copy of which is attached hereto as Exhibit G,
and pursuant to which GECC may purchase from the Parent certain Accounts owing
by Honeywell (as successor in interest to AlliedSignal, Inc.).
"General Intangibles" means all of the Borrowers, now owned or
hereafter acquired general intangibles, choses in action and causes of action
and all other intangible personal property of the Borrowers of every kind and
nature (other than Accounts), including, without limitation, all contract
rights, Proprietary Rights, corporate or other business records, inventions,
designs, blueprints, plans, specifications, patents, patent applications,
trademarks, service marks, trade names, trade secrets, goodwill, copyrights,
computer software, customer lists, registrations, licenses, franchises, tax
refund claims, any funds which may become due to any Borrower in connection with
the termination of any Plan or other employee benefit plan or any rights thereto
and any other amounts payable to any Borrower from any Plan or other employee
benefit plan, rights and claims against carriers and shippers, rights to
indemnification, business interruption insurance and proceeds thereof, property,
casualty or any similar type of insurance and any proceeds thereof, proceeds of
insurance covering the lives of key employees on which any Borrower is
beneficiary, and any letter of credit, guarantee, claim, security interest or
other security held by or granted to any Borrower.
"Governmental Authority" means any nation or government, any
state or other political subdivision thereof, any central bank (or similar
monetary or regulatory authority) thereof, any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government, and any corporation or other entity owned or controlled, through
stock or capital ownership or otherwise, by any of the foregoing.
"Guaranty" means, with respect to any Person, all obligations
of such Person which in any manner directly or indirectly guarantee or assure,
or in effect guarantee or assure, the payment or performance of any
indebtedness, dividend or other obligations of any other Person (the "guaranteed
obligations"), or assure or in effect assure the holder of the guaranteed
obligations against loss in respect thereof, including any such obligations
incurred through an agreement, contingent or otherwise: (a) to purchase the
guaranteed obligations or any property constituting security therefor; (b) to
advance or supply funds for the purchase or payment of the guaranteed
obligations or to maintain a working capital or other balance sheet condition;
or (c) to lease property or to purchase any debt or equity securities or other
property or services.
"Hedge Agreement" means any and all transactions, agreements
or documents now existing or hereafter entered into, which provides for an
interest rate, credit, commodity or equity swap, cap, floor, collar, forward
foreign exchange transaction, currency swap, cross currency rate swap, currency
option, or any combination of, or option with respect to, these or similar
transactions, for the purpose of hedging any Borrower's exposure to fluctuations
in interest or exchange rates, loan, credit exchange, security or currency
valuations or commodity prices.
"Honeywell" means Honeywell International Inc., a Delaware
corporation, together with such company's affiliates, Honeywell, Inc.,
AlliedSignal Avionics, Inc., and AlliedSignal, Inc..
"Honeywell No Offset Letter" means that certain letter
agreement between the Agent and Honeywell, of even date herewith, concerning
Honeywell's offset rights against the Parent.
"Honeywell Buy Back Agreement" means that certain Inventory
Repurchase Agreement, dated as of March 21, 2000, among Honeywell, the Agent,
and the Parent.
"Honeywell Reserve" means a reserve determined by the Agent in
the amount of amounts owing by Parent to Honeywell arising out of the Life Time
Buy Inventory and any other amounts payable by Parent to Honeywell or its
affiliates other than the One Time Buy Inventory.
"Intellectual Property Agreement" means the Security
Agreement, if any, executed and delivered by any Borrower to the Agent to
evidence and perfect the Agent's security interest in such Borrower's present
and future copyrights, patents, trademarks, and related licenses and rights, for
the benefit of the Agent and the Lenders.
"Intercompany Accounts" means all assets and liabilities,
however arising, which are due to any Borrower from, which are due from any
Borrower to, or which otherwise arise from any transaction by any Borrower with
any Affiliate of any Borrower.
"Interest Expense" means, for any period, total interest
expense of the Borrowers during such period determined in accordance with GAAP.
"Interest Period" means, as to any LIBOR Rate Loan, the period
commencing on the Funding Date of such Loan or on the Continuation/Conversion
Date on which the Loan is converted into or continued as a LIBOR Rate Loan, and
ending on the date one, two, three, six, or nine months thereafter as selected
by the applicable Borrower in its Notice of Borrowing, in the form attached
hereto as Exhibit D, or Notice of Continuation/Conversion, in the form attached
hereto as Exhibit E provided that:
(a) if any Interest Period would otherwise
end on a day that is not a Business Day, that Interest Period shall be extended
to the following Business Day unless the result of such extension would be to
carry such Interest Period into another calendar month, in which event such
Interest Period shall end on the preceding Business Day;
(b) any Interest Period pertaining to a
LIBOR Rate Loan that begins on the last Business Day of a calendar month (or on
a day for which there is no numerically corresponding day in the calendar month
at the end of such Interest Period) shall end on the last Business Day of the
calendar month at the end of such Interest Period; and
(c) no Interest Period shall extend beyond the
Stated Termination Date.
"Interest Rate" means each or any of the interest rates,
including the Default Rate, set forth in Section 3.1.
"Inventory" means all of the Borrowers' now owned and
hereafter acquired inventory, goods and merchandise, wherever located, to be
furnished under any contract of service or held for sale or lease, all returned
goods, raw materials, other materials and supplies of any kind, nature or
description which are used or consumed in the Borrowers' business or used in
connection with the packing, shipping, advertising, selling or finishing of such
goods or merchandise, and all documents of title or other documents representing
them.
"Inventory Limit" means $22,500,000 for the first six months
after the Closing Date, and at any time thereafter means the lesser of (a)
$22,500,000 or (b) the outstanding amount of Loans advanced at such time in
respect of Eligible Accounts.
"Investment Property" means all of the Borrowers' right, title
and interest in and to any and all: (a) securities whether certificated or
uncertificated; (b) securities entitlements; (c) securities accounts; (d)
commodity contracts; or (e) commodity accounts.
"Inventory Turnover Rate" means, as of any date, the product
of (a) the quotient of the net Inventory of Parent on such date divided by the
Parent's cost of goods sold for such Fiscal Year, multiplied by (b) 365.
"Inventory Turnover Test" has the meaning set forth in the
definition of "Applicable Margin."
"IRS" means the Internal Revenue Service and any Governmental
Authority succeeding to any of its principal functions under the Code.
"Latest Projections" means: (a) on the Closing Date and
thereafter until the Agent receives new projections pursuant to Section 7.2(f),
the projections of the Parent's financial condition, results of operations, and
cash flows, for the period commencing on January 1, 2000 and ending on December
31, 2009 and delivered to the Agent by the Parent prior to the Closing Date; and
(b) thereafter, the projections most recently received by the Agent pursuant to
Section 7.2(f).
"Lender" and "Lenders" have the meanings specified in the
introductory paragraph hereof and shall include the Agent to the extent of any
Agent Advance outstanding and the Bank to the extent of any Non-Ratable Loan
outstanding; provided that no such Agent Advance or Non-Ratable Loan shall be
taken into account in determining any Lender's Pro Rata Share.
"Letter of Credit" has the meaning specified in Section
2.4(a).
"Letter of Credit Fee" has the meaning specified in Section
3.6.
"Letter of Credit Issuer" means the Bank, any affiliate of the
Bank or any other financial institution that issues any Letter of Credit
pursuant to this Agreement.
"LIBOR Activation Date" means the first date on which the
Coverage Ratio is at least 1.0 to 1.0 for each of the two most recently
completed fiscal quarters for which Financial Covenant Certificates and
quarterly Financial Statements have been delivered to the Agent and the Lenders.
"LIBOR Rate" means, for any Interest Period, with respect to
LIBOR Rate Loans, the rate of interest per annum determined pursuant to the
following formula:
LIBOR Rate = Offshore Base Rate
------------------------------------
1.00 - Eurodollar Reserve Percentage
Where,
"Offshore Base Rate" means the rate per annum
appearing on Telerate Page 3750 (or any successor page) as the
London interbank offered rate for deposits in Dollars at
approximately 11:00 a.m. (London time) two Business Days prior
to the first day of such Interest Period for a term comparable
to such Interest Period. If for any reason such rate is not
available, the Offshore Base Rate shall be, for any Interest
Period, the rate per annum appearing on Reuters Screen LIBO
Page as the London interbank offered rate for deposits in
Dollars at approximately 11:00 a.m. (London time) two Business
Days prior to the first day of such Interest Period for a term
comparable to such Interest Period; provided, however, if more
than one rate is specified on Reuters Screen LIBO Page, the
applicable rate shall be the arithmetic mean of all such
rates. If for any reason none of the foregoing rates is
available, the Offshore Base Rate shall be, for any Interest
Period, the rate per annum determined by Agent as the rate of
interest at which dollar deposits in the approximate amount of
the LIBOR Rate Loan comprising part of such Borrowing would be
offered by the Bank's London Branch to major banks in the
offshore dollar market at their request at or about 11:00 a.m.
(London time) two Business Days prior to the first day of such
Interest Period for a term comparable to such Interest Period.
"Eurodollar Reserve Percentage" means, for any day
during any Interest Period, the reserve percentage (expressed
as a decimal, rounded upward to the next 1/100th of 1%) in
effect on such day applicable to member banks under
regulations issued from time to time by the Federal Reserve
Board for determining the maximum reserve requirement
(including any emergency, supplemental or other marginal
reserve requirement) with respect to Eurocurrency funding
(currently referred to as "Eurocurrency liabilities"). The
Offshore Rate for each outstanding LIBOR Rate Loan shall be
adjusted automatically as of the effective date of any change
in the Eurodollar Reserve Percentage.
"LIBOR Rate Loans" means the LIBOR Revolving Loans.
"LIBOR Revolving Loan" means a Revolving Loan during any
period in which it bears interest based on the LIBOR Rate.
"Lien" means: (a) any interest in property securing an
obligation owed to, or a claim by, a Person other than the owner of the
property, whether such interest is based on the common law, statute, or
contract, and including a security interest, charge, claim, or lien arising from
a mortgage, deed of trust, encumbrance, pledge, hypothecation, assignment,
deposit arrangement, agreement, security agreement, conditional sale or trust
receipt or a lease, consignment or bailment for security purposes; (b) to the
extent not included under clause (a), any reservation, exception, encroachment,
easement, right-of-way, covenant, condition, restriction, lease or other title
exception or encumbrance affecting property; and (c) any contingent or other
agreement to provide any of the foregoing.
"Lifetime Buy Inventory" means Inventory purchased by the
Parent from Honeywell no longer available in the market and expected to be used
over the remaining life of the end product.
"Loan Account" means the loan account of the Borrowers, which
account shall be maintained by the Agent.
"Loan Documents" means this Agreement, the Agent's Fee Letter,
the Stock Pledge, the Intellectual Property Agreement, and any other agreements,
instruments, and documents heretofore, now or hereafter evidencing, securing,
guaranteeing or otherwise relating to the Obligations, the Collateral, or any
other aspect of the transactions contemplated by this Agreement.
"Loans" means, collectively, all loans and advances provided
for in Article 2.
"Majority Lenders" means at any date of determination Lenders
whose Pro Rata Shares aggregate at least than 66-2/3% as such percentage is
determined under the definition of Pro Rata Share set forth herein; provided,
however, that at any time when there are only two Lenders, Majority Lenders
shall mean both Lenders.
"Margin Stock" means "margin stock" as such term is defined in
Regulation T, U or X of the Federal Reserve Board.
"Material Adverse Effect" means (a) a material adverse change
in, or a material adverse effect upon, the operations, business, properties,
condition (financial or otherwise) or prospects of any Borrower or the
Collateral; (b) a material impairment of the ability of any Borrower to perform
under any Loan Document to which it is a party and to avoid any Event of
Default; or (c) a material adverse effect upon the legality, validity, binding
effect or enforceability against any Borrower of any Loan Document to which it
is a party.
"Maximum Revolver Amount" means $45,000,000.
"Multi-employer Plan" means a "multi-employer plan" as defined
in Section 4001(a)(3) of ERISA which is or was at any time during the current
year or the immediately preceding six (6) years contributed to by any Borrower
or any ERISA Affiliate.
"Net Amount of Eligible Accounts" means, at any time, the
gross amount of Eligible Accounts less sales, excise or similar taxes, and less
returns, discounts, claims, credits and allowances of any nature at any time
issued, owing, granted, outstanding, available or claimed.
"Non-Ratable Loan" and "Non-Ratable Loans" have the meanings
specified in Section 2.2(h).
"Notice of Borrowing" has the meaning specified in Section
2.2(b).
"Notice of Continuation/Conversion" has the meaning specified
in Section 3.2(b).
"Obligations" means all present and future loans, advances,
liabilities, obligations, covenants, duties, and debts owing by any Borrower to
the Agent and/or any Lender, arising under or pursuant to this Agreement or any
of the other Loan Documents, whether or not evidenced by any note, or other
instrument or document, whether arising from an extension of credit, opening of
a letter of credit, acceptance, loan, guaranty, indemnification or otherwise,
whether direct or indirect, absolute or contingent, due or to become due,
primary or secondary, as principal or guarantor, and including all principal,
interest, charges, expenses, fees, attorneys' fees, filing fees and any other
sums chargeable to any Borrower hereunder or under any of the other Loan
Documents. "Obligations" includes, without limitation, (a) all debts,
liabilities, and obligations now or hereafter arising from or in connection with
the Letters of Credit and (b) all debts, liabilities and obligations now or
hereafter arising from or in connection with Bank Products.
"One Time Buy Inventory" means the approximately $19,000,000
of Inventory purchased by the Parent from Honeywell in February of 2000 as part
of the transition of product from Honeywell's facilities to the Parent's
Phoenix, Arizona facility.
"Other Taxes" means any present or future stamp or documentary
taxes or any other excise or property taxes, charges or similar levies which
arise from any payment made hereunder or from the execution, delivery or
registration of, or otherwise with respect to, this Agreement or any other Loan
Documents.
"Parent" has the meaning set forth in the introductory
paragraph of this Agreement.
"Participant" means any Person who shall have been granted the
right by any Lender to participate in the financing provided by such Lender
under this Agreement, and who shall have entered into a participation agreement
in form and substance satisfactory to such Lender.
"Payment Account" means each bank account established
pursuant to Section 6.9, to which the proceeds of Accounts and other Collateral
are deposited or credited, and which is maintained in the name of the Agent or
any Borrower, as the Agent may determine, on terms acceptable to the Agent.
"PBGC" means the Pension Benefit Guaranty Corporation or
any Governmental Authority succeeding to the functions ---- thereof.
"Pending Revolving Loans" means, at any time, the aggregate
principal amount of all Revolving Loans requested in any Notice of Borrowing
received by the Agent which have not yet been advanced.
"Pension Plan" means a pension plan (as defined in Section
3(2) of ERISA) subject to Title IV of ERISA which any Borrower sponsors,
maintains, or to which it makes, is making, or is obligated to make
contributions, or in the case of a Multi-employer Plan has made contributions at
any time during the immediately preceding five (5) plan years.
"Permitted Liens" means:
(a) Liens for taxes not delinquent or
statutory Liens for taxes in an amount not to exceed $100,000 provided that the
payment of such taxes which are due and payable is being contested in good faith
and by appropriate proceedings diligently pursued and as to which adequate
financial reserves have been established on the applicable Borrower's books and
records and a stay of enforcement of any such Lien is in effect;
(b) the Agent's Liens;
(c) Liens consisting of deposits made in the
ordinary course of business in connection with, or to secure payment of,
obligations under worker's compensation, unemployment insurance, social security
and other similar laws, or to secure the performance of bids, tenders or
contracts (other than for the repayment of borrowed money) or to secure
indemnity, performance or other similar bonds for the performance of bids,
tenders or contracts (other than for the repayment of borrowed money) or to
secure statutory obligations (other than liens arising under ERISA or
Environmental Liens) or surety or appeal bonds, or to secure indemnity,
performance or other similar bonds;
(d) Liens securing the claims or demands of
materialmen, mechanics, carriers, warehousemen, landlords and other like
Persons, provided that if any such Lien arises from the nonpayment of such
claims or demand when due, such claims or demands do not exceed $100,000 in the
aggregate;
(e) Liens constituting encumbrances in the
nature of reservations, exceptions, encroachments, easements, rights of way,
covenants running with the land, and other similar title exceptions or
encumbrances affecting any Real Estate, provided that they do not in the
aggregate materially detract from the value of the Real Estate or materially
interfere with its use in the ordinary conduct of the Borrowers' business;
(f) Liens arising from judgments and
attachments in connection with court proceedings provided that the attachment or
enforcement of such Liens would not result in an Event of Default hereunder and
such Liens are being contested in good faith by appropriate proceedings,
adequate reserves have been set aside and no material Property is subject to a
material risk of loss or forfeiture and the claims in respect of such Liens are
fully covered by insurance (subject to ordinary and customary deductibles) and a
stay of execution pending appeal or proceeding for review is in effect; and
(g) a Lien in favor of GECC, but limited to the
security interest in the Parent's rights in those invoices from Honeywell that
have been purchased by GECC as set forth in the GECC Payment Agreement, the
Accounts arising therefrom, and the proceeds thereof.
"Permitted Rentals" has the meaning specified in Section 9.24.
"Person" means any individual, sole proprietorship,
partnership, limited liability company, joint venture, trust, unincorporated
organization, association, corporation, Governmental Authority, or any other
entity.
"Plan" means an employee benefit plan (as defined in Section
3(3) of ERISA) which any Borrower sponsors or maintains or to which any Borrower
makes, is making, or is obligated to make contributions and includes any Pension
Plan.
"Pro Rata Share" means, with respect to a Lender, a fraction
(expressed as a percentage), the numerator of which is the amount of such
Lender's Commitment and the denominator of which is the sum of the amounts of
all of the Lenders' Commitments, or if no Commitments are outstanding, a
fraction (expressed as a percentage), the numerator of which is the amount of
Obligations owed to such Lender and the denominator of which is the aggregate
amount of the Obligations owed to the Lenders, in each case giving effect to a
Lender's participation in Non-Ratable Loans and Agent Advances.
"Proprietary Rights" means all of the Borrowers' now owned and
hereafter arising or acquired: licenses, franchises, permits, patents, patent
rights, copyrights, works which are the subject matter of copyrights,
trademarks, service marks, trade names, trade styles, patent, trademark and
service xxxx applications, and all licenses and rights related to any of the
foregoing, including those patents, trademarks, service marks, trade names and
copyrights set forth on Schedule 8.13 hereto, and all other rights under any of
the foregoing, all extensions, renewals, reissues, divisions, continuations, and
continuations-in-part of any of the foregoing, and all rights to xxx for past,
present and future infringement of any of the foregoing.
"RCBA" means RCBA Strategic Partners, L.P. a Delaware limited
partnership.
"Real Estate" means all of the Borrowers' now or hereafter
owned or leased estates in real property, including, without limitation, all
fees, leaseholds and future interests, together with all of the Borrowers' now
or hereafter owned or leased interests in the improvements thereon, the fixtures
attached thereto and the easements appurtenant thereto.
"Release" means a release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching or migration of a
Contaminant into the indoor or outdoor environment or into or out of any Real
Estate or other property, including the movement of Contaminants through or in
the air, soil, surface water, groundwater or Real Estate or other property.
"Rent Reserve" means all reserves that the Agent from time to
time establishes for Inventory located at a leased location, in any public
warehouse, or with any other third party bailee, if such lessor, warehouseman,
or bailee has not delivered to the Agent an acceptable landlord's waiver or
bailee letter, as applicable. Prior to an Event of Default, the amount of the
Rent Reserve with respect to each such location shall be equal to two months of
rental or storage costs owing to such lessor, warehouseman, or bailee, provided,
however, that the Agent agrees not to institute the Rent Reserve until 45 days
after the Closing Date with respect to each location other than the Parent's
Phoenix, Arizona facility (on which a Rent Reserve will be instituted
immediately).
"Rentals" has the meaning specified in Section 9.24.
"Reportable Event" means, any of the events set forth in
Section 4043(b) of ERISA or the regulations thereunder, other than any such
event for which the 30-day notice requirement under ERISA has been waived in
regulations issued by the PBGC.
"Requirement of Law" means, as to any Person, any law
(statutory or common), treaty, rule or regulation or determination of an
arbitrator or of a Governmental Authority, in each case applicable to or binding
upon the Person or any of its property or to which the Person or any of its
property is subject.
"Responsible Officer" means the chief executive officer or the
president of the applicable Borrower, or any other officer having substantially
the same authority and responsibility; or, with respect to compliance with
financial covenants and the preparation of the Borrowing Base Certificate or the
Financial Covenant Certificate, the chief financial officer, the treasurer, or
the Controller of the applicable Borrower, or any other officer having
substantially the same authority and responsibility.
"Restricted Investment" means, as to any Borrower, any
acquisition of property by any Borrower in exchange for cash or other property,
whether in the form of an acquisition of stock, debt, or other indebtedness or
obligation, or the purchase or acquisition of any other property, or a loan,
advance, capital contribution, or subscription, except the following: (a)
acquisitions of Equipment to be used in the business of any Borrower so long as
the acquisition costs thereof constitute Capital Expenditures permitted
hereunder; (b) acquisitions of Inventory in the ordinary course of business of
any Borrower; (c) acquisitions of current assets acquired in the ordinary course
of business of any Borrower; (d) direct obligations of the United States of
America, or any agency thereof, or obligations guaranteed by the United States
of America, provided that such obligations mature within one year from the date
of acquisition thereof; (e) acquisitions of certificates of deposit maturing
within one year from the date of acquisition, bankers' acceptances, Eurodollar
bank deposits, or overnight bank deposits, in each case issued by, created by,
or with a bank or trust company organized under the laws of the United States of
America or any state thereof having capital and surplus aggregating at least
$100,000,000; (f) acquisitions of commercial paper given a rating of "A2" or
better by Standard & Poor's Corporation or "P2" or better by Xxxxx'x Investors
Service, Inc. and maturing not more than 90 days from the date of creation
thereof; and (g) Hedge Agreements.
"Revolving Loans" has the meaning specified in Section 2.2 and
includes each Agent Advance and Non-Ratable Loan.
"Securities Purchase Agreement" shall mean that certain
Securities Purchase Agreement, dated March __, 2000, between Xxxxxx - XXXX
Funding, LLC and EFTC.
"Senior Subordinated Convertible Notes" means any of the
$54,000,000 of 8.875% Senior Convertible Notes due 2006 issued under the
Securities Purchase Agreement, and any extensions, replacements, amendments,
restatements, or modifications thereto or thereof.
"Senior Subordinated Debt" means either the Senior
Subordinated Exchange Notes or the Senior Subordinated Convertible Notes.
"Senior Subordinated Exchange Notes" means any of the
$54,000,000 of 15% Senior Subordinated Exchangeable Notes due 2006 issued under
the Securities Purchase Agreement, and any extensions, replacements, amendments,
restatements, or modifications thereto or thereof.
"Settlement" and "Settlement Date" have the meanings specified
in Section 2.2(j)(i).
"Solvent" means when used with respect to any Person that at
the time of determination:
(a) the assets of such Person, at a fair valuation, are
in excess of the total amount of its debts (including contingent liabilities);
and
(b) the present fair saleable value of its assets is
greater than its probable liability on its existing debts as such debts become
absolute and matured; and
(c) it is then able and expects to be able to pay its
debts (including contingent debts and other commitments) as they mature; and
(d) it has capital sufficient to carry on its business as
conducted and as proposed to be conducted.
For purposes of determining whether a Person is Solvent, the amount of any
contingent liability shall be computed as the amount that, in light of all the
facts and circumstances existing at such time, represents the amount that can
reasonably be expected to become an actual or matured liability, and the amount
of such Person's assets shall include the contingent claims for contribution
such Person may have under Section 15.19.
"Stated Termination Date" means March 30, 2003.
"Stock Pledge" means that certain Security Agreement-Stock
Pledge, of even date herewith, between Borrower and Agent.
"Subsidiary" of a Person means any corporation, association,
partnership, limited liability company, joint venture or other business entity
of which more than fifty percent (50%) of the voting stock or other equity
interests (in the case of Persons other than corporations), is owned or
controlled directly or indirectly by the Person, or one or more of the
Subsidiaries of the Person, or a combination thereof. Unless the context
otherwise clearly requires, references herein to a "Subsidiary" refer to a
Subsidiary of the Parent.
"Taxes" means any and all present or future taxes, levies,
imposts, deductions, charges or withholdings, and all liabilities with respect
thereto, excluding, in the case of each Lender and the Agent, such taxes
(including income taxes or franchise taxes) as are imposed on or measured by the
Agent's or each Lender's net income in any jurisdiction (whether federal, state
or local and including any political subdivision thereof) under the laws of
which such Lender or the Agent, as the case may be, is organized or maintains a
lending office.
"Termination Date" means the earliest to occur of (i) the
Stated Termination Date, (ii) the date the Total Facility is terminated either
by the Parent pursuant to Section 4.2 or by the Majority Lenders pursuant to
Section 11.2, and (iii) the date this Agreement is otherwise terminated for any
reason whatsoever pursuant to the terms of this Agreement.
"Xxxxxx" means Xxxxxx Equity Investors IV, L.P., a Delaware
limited partnership.
"Total Facility" has the meaning specified in Section 2.1.
"UCC" means the Uniform Commercial Code (or any revision,
amendment or successor statute thereto), as in effect from time to time, of the
State of New York or of any other state the laws of which are required as a
result thereof to be applied in connection with the issue of perfection of
security interests.
"Unfunded Pension Liability" means the excess of a Plan's
benefit liabilities under Section 4001(a)(16) of ERISA, over the current value
of that Plan's assets, determined in accordance with the assumptions used for
funding the Pension Plan pursuant to Section 412 of the Code for the applicable
plan year.
"Unused Letter of Credit Subfacility" means an amount equal to
$15,000,000 minus the sum of (a) the aggregate undrawn amount of all outstanding
Letters of Credit plus (b) the aggregate unpaid reimbursement obligations with
respect to all Letters of Credit.
"Unused Line Fee" has the meaning specified in Section 3.5.
1.2 Accounting Terms. (a) Any accounting term used in this Agreement shall have,
unless otherwise specifically provided herein, the meaning customarily given in
accordance with GAAP, and all financial computations hereunder shall be
computed, unless otherwise specifically provided herein, in accordance with GAAP
as consistently applied and using the same method for inventory valuation as
used in the preparation of the Financial Statements.
(b) Whenever the term "Parent" is used in respect of a
Financial Statement, a financial covenant or a related definition, such term
shall mean Parent and its Subsidiaries (including the other Borrowers) on a
consolidated basis, unless the context clearly requires otherwise.
1.3 Interpretive Provisions. (a) The meanings of defined terms are
equally applicable to the singular and plural forms of the defined terms.
(b) The words "hereof," "herein," "hereunder" and similar
words refer to this Agreement as a whole and not to any particular provision of
this Agreement; and Subsection, Section, Schedule and Exhibit references are to
this Agreement unless otherwise specified.
(c) (i) The term "documents" includes any and
all instruments, documents, agreements, certificates, indentures, notices and
other writings, however evidenced.
(ii) The term "including" is not limiting and
means "including without limitation."
(iii) In the computation of periods of time from
a specified date to a later specified date, the word "from" means "from and
including," the words "to" and "until" each mean "to but excluding" and the word
"through" means "to and including."
(d) Unless otherwise expressly provided herein, (i) references
to agreements (including this Agreement) and other contractual instruments shall
be deemed to include all subsequent amendments and other modifications thereto,
but only to the extent such amendments and other modifications are not
prohibited by the terms of any Loan Document, and (ii) references to any statute
or regulation are to be construed as including all statutory and regulatory
provisions consolidating, amending, replacing, supplementing or interpreting the
statute or regulation.
(e) The captions and headings of this Agreement are for
convenience of reference only and shall not affect the interpretation of this
Agreement.
(f) This Agreement and other Loan Documents may use several
different limitations, tests or measurements to regulate the same or similar
matters. All such limitations, tests and measurements are cumulative and shall
each be performed in accordance with their terms.
(g) This Agreement and the other Loan Documents are the result
of negotiations among and have been reviewed by counsel to the Agent, the
Borrowers and the other parties, and are the products of all parties.
Accordingly, they shall not be construed against the Lenders or the Agent merely
because of the Agent's or Lenders' involvement in their preparation.
ARTICLE 2
LOANS AND LETTERS OF CREDIT
2.1 Total Facility. Subject to all of the terms and conditions of this
Agreement, the Lenders severally agree to make available a total credit facility
of up to $45,000,000 (the "Total Facility") for the Borrowers' use from time to
time during the term of this Agreement. The Total Facility shall be composed of
a revolving line of credit consisting of Revolving Loans and Letters of Credit
up to the Borrowing Base, as described in Sections 2.2 and 2.4.
2.2 Revolving Loans. (a) Amounts. Subject to the satisfaction of the conditions
precedent set forth in Article 10, each Lender severally, but not jointly,
agrees, upon the applicable Borrower's request from time to time on any Business
Day during the period from the Closing Date to the Termination Date, to make
revolving loans (the "Revolving Loans") to such Borrower in amounts not to
exceed (except for the Bank with respect to Non-Ratable Loans and except for the
Agent with respect to Agent Advances) such Lender's Pro Rata Share of the
Borrowing Base. The Lenders, however, in their unanimous discretion, may elect
to make Revolving Loans or issue or arrange to have issued Letters of Credit in
excess of the Availability on one or more occasions, but if they do so, neither
the Agent nor the Lenders shall be deemed thereby to have changed the limits of
the Borrowing Base or to be obligated to exceed such limits on any other
occasion. If the Aggregate Revolver Outstandings exceed the Borrowing Base, the
Lenders may refuse to make or otherwise restrict the making of Revolving Loans
as the Lenders determine until such excess has been eliminated, subject to the
Agent's authority, in its sole discretion, to make Agent Advances pursuant to
the terms of Section 2.2(i).
(b) Procedure for Borrowing. (1) Each Borrowing shall be made
upon the applicable Borrower's irrevocable written notice delivered to the Agent
in the form of a notice of borrowing ("Notice of Borrowing") together with a
Borrowing Base Certificate reflecting sufficient Availability, which must be
received by the Agent prior to 10:00 a.m. (Los Angeles, California time) (i)
three Business Days prior to the requested Funding Date, in the case of LIBOR
Rate Loans and (ii) no later than 12:00 noon (Los Angeles, California time) on
the requested Funding Date, in the case of Base Rate Loans, specifying:
(A) the amount of the Borrowing,
which in the case of a LIBOR Rate Loan may not be less than $500,000.
(B) the requested Funding Date, which
shall be a Business Day;
(C) whether the Revolving Loans
requested are to be Base Rate Revolving Loans or LIBOR Revolving Loans (and if
not specified, it shall be deemed a request for a Base Rate Revolving Loan); and
(D) the duration of the Interest
Period if the requested Revolving Loans are to be LIBOR Revolving Loans. If the
Notice of Borrowing fails to specify the duration of the Interest Period for any
Borrowing comprised of LIBOR Rate Loans, such Interest Period shall be one
month;
provided, however, that with respect to any Borrowing to be made before the
LIBOR Activation Date, such Borrowings will consist of Base Rate Revolving Loans
only.
(2) With respect to any request for Base
Rate Revolving Loans, in lieu of delivering the above-described Notice of
Borrowing the applicable Borrower may give the Agent telephonic notice of such
request by the required time, with such telephonic notice to be confirmed in
writing within 24 hours of the giving of such notice but the Agent at all times
shall be entitled to rely on such telephonic notice in making such Revolving
Loans, regardless of whether any such confirmation is received by Agent.
(3) The Borrowers shall have no right to request
a LIBOR Rate Loan before the LIBOR Activation Date or at any time while a
Default or Event of Default has occurred and is continuing.
(c) Reliance upon Authority. Each Borrower shall deliver to
the Agent, prior to the Closing Date, a writing setting forth the account of
such Borrower to which the Agent is authorized to transfer the proceeds of the
Revolving Loans requested pursuant to this Section 2.2. which account shall be
reasonably satisfactory to the Agent. The Agent shall be entitled to rely
conclusively on any person's request for Revolving Loans on behalf of a
Borrower, the proceeds of which are to be transferred to the account specified
by such Borrower pursuant to the immediately preceding sentence, until the Agent
receives written notice from such Borrower that the proceeds of the Revolving
Loans are to be sent to a different account. The Agent shall have no duty to
verify the identity of any individual representing himself or herself as a
person authorized by a Borrower to make such requests on its behalf.
(d) No Liability. The Agent shall not incur any liability to
any Borrower as a result of acting upon any notice referred to in Sections
2.2(b) and (c), which notice the Agent believes in good faith to have been given
by an officer or other person duly authorized by such Borrower to request
Revolving Loans on its behalf or for otherwise acting in good faith under this
Section 2.2, and the crediting of Revolving Loans to such Borrower's deposit
account, as such Borrower shall direct, shall conclusively establish the
obligation of such Borrower to repay such Revolving Loans as provided herein.
(e) Notice Irrevocable. Any Notice of Borrowing (or telephonic
notice in lieu thereof) made pursuant to Section 2.2(b) shall be irrevocable and
the applicable Borrower shall be bound to borrow the funds requested therein in
accordance therewith.
(f) Agent's Election. Promptly after receipt of a Notice of
Borrowing (or telephonic notice in lieu thereof) pursuant to Section 2.2(b), the
Agent shall elect, in its discretion, (i) to have the terms of Section 2.2(g)
apply to such requested Borrowing, or (ii) to request the Bank to make a
Non-Ratable Loan pursuant to the terms of Section 2.2(h) in the amount of the
requested Borrowing; provided, however, that if the Bank declines in its sole
discretion to make a Non-Ratable Loan pursuant to Section 2.2(h), the Agent
shall elect to have the terms of Section 2.2(g) apply to such requested
Borrowing.
(g) Making of Revolving Loans. (i) In the event that the Agent
shall elect to have the terms of this Section 2.2(g) apply to a requested
Borrowing as described in Section 2.2(f), then promptly after receipt of a
Notice of Borrowing or telephonic notice pursuant to Section 2.2(b), the Agent
shall notify the Lenders by telecopy, telephone or other similar form of
transmission, of the requested Borrowing. Each Lender shall make the amount of
such Lender's Pro Rata Share of the requested Borrowing available to the Agent
in immediately available funds, to such account of the Agent as the Agent may
designate, not later than 12:00 noon, (Los Angeles, California time) on the
Funding Date applicable thereto. After the Agent's receipt of the proceeds of
such Revolving Loans, the Agent shall make the proceeds of such Revolving Loans
available to the applicable Borrower on the applicable Funding Date by
transferring same day funds equal to the proceeds of such Revolving Loans
received by the Agent to the account of the applicable Borrower, designated in
writing by the applicable Borrower and acceptable to the Agent; provided,
however, that the amount of Revolving Loans so made on any date shall in no
event exceed the Availability on such date.
(ii) Unless the Agent receives notice from a
Lender on or prior to the Closing Date or, with respect to any Borrowing after
the Closing Date, at least one Business Day prior to the date of such Borrowing,
that such Lender will not make available as and when required hereunder to the
Agent for the account of the applicable Borrower the amount of that Lender's Pro
Rata Share of the Borrowing, the Agent may assume that each Lender has made such
amount available to the Agent in immediately available funds on the Funding Date
and the Agent may (but shall not be so required), in reliance upon such
assumption, make available to the applicable Borrower on such date a
corresponding amount. If and to the extent any Lender shall not have made its
full amount available to the Agent in immediately available funds and the Agent
in such circumstances has made available to the applicable Borrower such amount,
that Lender shall on the Business Day following such Funding Date make such
amount available to the Agent, together with interest at the Federal Funds Rate
for each day during such period. A notice by the Agent submitted to any Lender
with respect to amounts owing under this subsection shall be conclusive, absent
manifest error. If such amount is so made available, such payment to the Agent
shall constitute such Lender's Revolving Loan for all purposes of this
Agreement. If such amount is not made available to the Agent on the Business Day
following the Funding Date, the Agent will notify the applicable Borrower of
such failure to fund and, upon demand by the Agent, the applicable Borrower
shall pay such amount to the Agent for the Agent's account, together with
interest thereon for each day elapsed since the date of such Borrowing, at a
rate per annum equal to the Interest Rate applicable at the time to the
Revolving Loans comprising such Borrowing. The failure of any Lender to make any
Revolving Loan on any Funding Date (any such Lender, prior to the cure of such
failure, being hereinafter referred to as a "Defaulting Lender") shall not
relieve any other Lender of any obligation hereunder to make a Revolving Loan on
such Funding Date, but no Lender shall be responsible for the failure of any
other Lender to make the Revolving Loan to be made by such other Lender on any
Funding Date.
(iii) The Agent shall not be obligated to
transfer to a Defaulting Lender any payments made by the Borrowers to the Agent
for the Defaulting Lender's benefit; nor shall a Defaulting Lender be entitled
to the sharing of any payments hereunder. Amounts payable to a Defaulting Lender
shall instead be paid to or retained by the Agent. The Agent may hold and, in
its discretion, re-lend to the Borrowers the amount of all such payments
received or retained by it for the account of such Defaulting Lender. Any
amounts so re-lent to the Borrowers shall bear interest at the rate applicable
to Base Rate Revolving Loans and for all other purposes of this Agreement shall
be treated as if they were Revolving Loans, provided, however, that for purposes
of voting or consenting to matters with respect to the Loan Documents and
determining Pro Rata Shares, such Defaulting Lender shall be deemed not to be a
"Lender". Until a Defaulting Lender cures its failure to fund its Pro Rata Share
of any Borrowing (A) such Defaulting Lender shall not be entitled to any portion
of the Unused Line Fee and (B) the Unused Line Fee shall accrue in favor of the
Lenders which have funded their respective Pro Rata Shares of such requested
Borrowing and shall be allocated among such performing Lenders ratably based
upon their relative Commitments. This Section shall remain effective with
respect to such Lender until such time as the Defaulting Lender shall no longer
be in default of any of its obligations under this Agreement. The terms of this
Section shall not be construed to increase or otherwise affect the Commitment of
any Lender, or relieve or excuse the performance by any Borrower of its duties
and obligations hereunder.
(h) Making of Non-Ratable Loans. (i) In the event the Agent
shall elect, with the consent of the Bank, to have the terms of this Section
2.2(h) apply to a requested Borrowing as described in Section 2.2(f), the Bank
shall make a Revolving Loan in the amount of such Borrowing (any such Revolving
Loan made solely by the Bank pursuant to this Section 2.2(h) being referred to
as a "Non-Ratable Loan" and such Revolving Loans being referred to collectively
as "Non-Ratable Loans") available to the applicable Borrower on the Funding Date
applicable thereto by transferring same day funds to an account of the
applicable Borrower, designated in writing by the applicable Borrower and
acceptable to the Agent. Each Non-Ratable Loan shall be subject to all the terms
and conditions applicable to other Revolving Loans except that all payments
thereon shall be payable to the Bank solely for its own account (and for the
account of the holder of any participation interest with respect to such
Revolving Loan). The Agent shall not request the Bank to make any Non-Ratable
Loan if (A) the Agent shall have received written notice from any Lender that
one or more of the applicable conditions precedent set forth in Article 10 will
not be satisfied on the requested Funding Date for the applicable Borrowing, or
(B) the requested Borrowing would exceed the Availability on such Funding Date.
The Agent shall not otherwise be required to determine whether the applicable
conditions precedent set forth in Article 10 have been satisfied or the
requested Borrowing would exceed the Availability on the Funding Date applicable
thereto prior to making, in its sole discretion, any Non-Ratable Loan.
(ii) The Non-Ratable Loans shall be secured
by the Agent's Liens in and to the Collateral, shall constitute Revolving Loans
and Obligations hereunder, and shall bear interest at the rate applicable to the
Revolving Loans from time to time.
(i) Agent Advances. (i) Subject to the limitations set forth
in the provisos contained in this Section 2.2(i), the Agent is hereby authorized
by the Borrowers and the Lenders, from time to time in the Agent's sole
discretion, (A) after the occurrence of a Default or an Event of Default, or (B)
at any time that any of the other applicable conditions precedent set forth in
Article 10 have not been satisfied, to make Base Rate Revolving Loans to the
Borrowers on behalf of the Lenders which the Agent, in its reasonable business
judgment, deems necessary or desirable (1) to preserve or protect the
Collateral, or any portion thereof, (2) to enhance the likelihood of, or
maximize the amount of, repayment of the Loans and other Obligations, or (3) to
pay any other amount chargeable to the Borrowers pursuant to the terms of this
Agreement, including costs, fees and expenses as described in Section 15.7 (any
of the advances described in this Section 2.2(i) being hereinafter referred to
as "Agent Advances"); provided, that the Majority Lenders may at any time revoke
the Agent's authorization contained in this Section 2.2(i) to make Agent
Advances, any such revocation to be in writing and to become effective
prospectively upon the Agent's receipt thereof;
(ii) The Agent Advances shall be repayable on
demand and secured by the Agent's Liens in and to the Collateral, shall
constitute Revolving Loans and Obligations hereunder, and shall bear interest at
the rate applicable to Base Rate Revolving Loans from time to time. The Agent
shall notify each Lender in writing of each such Agent Advance.
(j) Settlement. It is agreed that each Lender's funded portion
of the Revolving Loans is intended by the Lenders to be equal at all times to
such Lender's Pro Rata Share of the outstanding Revolving Loans. Notwithstanding
such agreement, the Agent, the Bank, and the other Lenders agree (which
agreement shall not be for the benefit of or enforceable by the Borrowers) that
in order to facilitate the administration of this Agreement and the other Loan
Documents, settlement among them as to the Revolving Loans, the Non-Ratable
Loans and the Agent Advances shall take place on a periodic basis in accordance
with the following provisions:
(i) The Agent shall request settlement
("Settlement") with the Lenders on at least a weekly basis, or on a more
frequent basis if so determined by the Agent, (A) on behalf of the Bank, with
respect to each outstanding Non-Ratable Loan, (B) for itself, with respect to
each Agent Advance, and (C) with respect to collections received, in each case,
by notifying the Lenders of such requested Settlement by telecopy, telephone or
other similar form of transmission, of such requested Settlement, no later than
12:00 noon (Los Angeles, California time) on the date of such requested
Settlement (the "Settlement Date"). Each Lender (other than the Bank, in the
case of Non-Ratable Loans and the Agent in the case of Agent Advances) shall
make the amount of such Lender's Pro Rata Share of the outstanding principal
amount of the Non-Ratable Loans and Agent Advances with respect to which
Settlement is requested available to the Agent, to such account of the Agent as
the Agent may designate, not later than 12:00 noon (Los Angeles, California
time), on the Settlement Date applicable thereto, which may occur before or
after the occurrence or during the continuation of a Default or an Event of
Default and whether or not the applicable conditions precedent set forth in
Article 10 have then been satisfied. Such amounts made available to the Agent
shall be applied against the amounts of the applicable Non-Ratable Loan or Agent
Advance and, together with the portion of such Non-Ratable Loan or Agent Advance
representing the Bank's Pro Rata Share thereof, shall constitute Revolving Loans
of such Lenders. If any such amount is not made available to the Agent by any
Lender on the Settlement Date applicable thereto, the Agent shall (A) on behalf
of the Bank, with respect to each outstanding Non-Ratable Loan, and (B) for
itself, with respect to each Agent Advance be entitled to recover such amount on
demand from such Lender together with interest thereon at the Federal Funds Rate
for the first three (3) days from and after the Settlement Date and thereafter
at the Interest Rate then applicable to the Revolving Loans.
(ii) Notwithstanding the foregoing, not more
than one (1) Business Day after demand is made by the Agent (whether before or
after the occurrence of a Default or an Event of Default and regardless of
whether the Agent has requested a Settlement with respect to a Non-Ratable Loan
or Agent Advance), each other Lender (A) shall irrevocably and unconditionally
purchase and receive from the Bank or the Agent, as applicable, without recourse
or warranty, an undivided interest and participation in such Non-Ratable Loan or
Agent Advance equal to such Lender's Pro Rata Share of such Non-Ratable Loan or
Agent Advance and (B) if Settlement has not previously occurred with respect to
such Non-Ratable Loans or Agent Advances, upon demand by Bank or Agent, as
applicable, shall pay to Bank or Agent, as applicable, as the purchase price of
such participation an amount equal to one-hundred percent (100%) of such
Lender's Pro Rata Share of such Non-Ratable Loans or Agent Advances. If such
amount is not in fact made available to the Agent by any Lender, the Agent shall
be entitled to recover such amount on demand from such Lender together with
interest thereon at the Federal Funds Rate for the first three (3) days from and
after such demand and thereafter at the Interest Rate then applicable to Base
Rate Revolving Loans.
(iii) From and after the date, if any, on
which any Lender purchases an undivided interest and participation in any
Non-Ratable Loan or Agent Advance pursuant to clause (ii) preceding, the Agent
shall promptly distribute to such Lender, such Lender's Pro Rata Share of all
payments of principal and interest and all proceeds of Collateral received by
the Agent in respect of such Non-Ratable Loan or Agent Advance.
(iv) Between Settlement Dates, the Agent, to the
extent no Agent Advances are outstanding, may pay over to the Bank any payments
received by the Agent, which in accordance with the terms of this Agreement
would be applied to the reduction of the Revolving Loans, for application to the
Bank's Revolving Loans including Non-Ratable Loans. If, as of any Settlement
Date, collections received since the then immediately preceding Settlement Date
have been applied to the Bank's Revolving Loans (other than to Non-Ratable Loans
or Agent Advances in which such Lender has not yet funded its purchase of a
participation pursuant to Section 2.2(j)(ii) above), as provided for in the
previous sentence, the Bank shall pay to the Agent for the accounts of the
Lenders, to be applied to the outstanding Revolving Loans of such Lenders, an
amount such that each Lender shall, upon receipt of such amount, have, as of
such Settlement Date, its Pro Rata Share of the Revolving Loans. During the
period between Settlement Dates, the Bank with respect to Non-Ratable Loans, the
Agent with respect to Agent Advances, and each Lender with respect to the
Revolving Loans other than Non-Ratable Loans and Agent Advances, shall be
entitled to interest at the applicable rate or rates payable under this
Agreement on the actual average daily amount of funds employed by the Bank, the
Agent and the other Lenders.
(k) Notation. The Agent shall record on its books the
principal amount of the Revolving Loans owing to each Lender, including the
Non-Ratable Loans owing to the Bank, and the Agent Advances owing to the Agent,
from time to time. In addition, each Lender is authorized, at such Lender's
option, to note the date and amount of each payment or prepayment of principal
of such Lender's Revolving Loans in its books and records, including computer
records, such books and records constituting presumptive evidence, absent
manifest error, of the accuracy of the information contained therein.
(l) Lenders' Failure to Perform. All Revolving Loans (other
than Non-Ratable Loans and Agent Advances) shall be made by the Lenders
simultaneously and in accordance with their Pro Rata Shares. It is understood
that (i) no Lender shall be responsible for any failure by any other Lender to
perform its obligation to make any Revolving Loans hereunder, nor shall any
Commitment of any Lender be increased or decreased as a result of any failure by
any other Lender to perform its obligation to make any Revolving Loans
hereunder, (ii) no failure by any Lender to perform its obligation to make any
Revolving Loans hereunder shall excuse any other Lender from its obligation to
make any Revolving Loans hereunder, and (iii) the obligations of each Lender
hereunder shall be several, not joint and several.
2.3 Intentionally Deleted.
2.4 Letters of Credit.
(a) Agreement to Issue or Cause To Issue. Subject to the terms
and conditions of this Agreement, and in reliance upon the representations and
warranties of the Borrowers herein set forth, the Agent agrees (i) to cause the
Letter of Credit Issuer to issue for the account of a Borrower one or more
commercial/documentary and standby letters of credit ("Letter of Credit") and/or
(ii) to provide credit support or other enhancement to a Letter of Credit Issuer
acceptable to Agent, which issues a Letter of Credit for the account of a
Borrower (any such credit support or enhancement being herein referred to as a
"Credit Support") in accordance with this Section 2.4 from time to time during
the term of this Agreement.
(b) Amounts; Outside Expiration Date. The Agent shall not have
any obligation to take steps to issue or cause to be issued any Letter of Credit
or to provide Credit Support for any Letter of Credit at any time if: (i) the
maximum face amount of the requested Letter of Credit is greater than the Unused
Letter of Credit Subfacility at such time; (ii) the maximum undrawn amount of
the requested Letter of Credit and all commissions, fees, and charges due from
the Borrowers in connection with the opening thereof exceed the Availability at
such time; or (iii) such Letter of Credit has an expiration date later than the
Stated Termination Date or more than twelve (12) months from the date of
issuance for standby letters of credit and 180 days for merchandise letters of
credit.
(c) Other Conditions. In addition to being subject to the
satisfaction of the applicable conditions precedent contained in Article 10, the
obligation of the Agent to issue or to cause to be issued any Letter of Credit
or to provide Credit Support for any Letter of Credit is subject to the
following conditions precedent having been satisfied in a manner reasonably
satisfactory to the Agent:
(1) The applicable Borrower shall have
delivered to the Letter of Credit Issuer, at such times and in such manner as
such Letter of Credit Issuer may prescribe, an application in form and substance
satisfactory to such Letter of Credit Issuer and reasonably satisfactory to the
Agent for the issuance of the Letter of Credit and such other documents as may
be required pursuant to the terms thereof, and the form and terms of the
proposed Letter of Credit shall be reasonably satisfactory to the Agent and the
Letter of Credit Issuer; and
(2) As of the date of issuance, no order of any
court, arbitrator or Governmental Authority shall purport by its terms to enjoin
or restrain money center banks generally from issuing letters of credit of the
type and in the amount of the proposed Letter of Credit, and no law, rule or
regulation applicable to money center banks generally and no request or
directive (whether or not having the force of law) from any Governmental
Authority with jurisdiction over money center banks generally shall prohibit, or
request that the proposed Letter of Credit Issuer refrain from, the issuance of
letters of credit generally or the issuance of such Letters of Credit.
(d) Issuance of Letters of Credit.
(1) Request for Issuance. The applicable
Borrower shall give the Agent three Business Days prior written notice of the
applicable Borrower's request for the issuance of a Letter of Credit. Such
notice shall be irrevocable and shall specify the original face amount of the
Letter of Credit requested, the effective date (which date shall be a Business
Day) of issuance of such requested Letter of Credit, whether such Letter of
Credit may be drawn in a single or in partial draws, the date on which such
requested Letter of Credit is to expire (which date shall be a Business Day),
the purpose for which such Letter of Credit is to be issued, and the beneficiary
of the requested Letter of Credit. The applicable Borrower shall attach to such
notice the proposed form of the Letter of Credit.
(2) Responsibilities of the Agent; Issuance.
The Agent shall determine, as of the Business Day immediately preceding the
requested effective date of issuance of the Letter of Credit set forth in the
notice from the applicable Borrower pursuant to Section 2.4(d)(1), (A) the
amount of the applicable Unused Letter of Credit Subfacility and (B) the
Availability as of such date. If (i) the undrawn amount of the requested Letter
of Credit is not greater than the Unused Letter of Credit Subfacility and (ii)
the amount of such requested Letter of Credit and all commissions, fees, and
charges due from the Borrowers in connection with the opening thereof would not
exceed the Availability, the Agent shall, so long as the other conditions hereof
are met, cause the Letter of Credit Issuer to issue the requested Letter of
Credit on such requested effective date of issuance.
(3) Notice of Issuance. On each Settlement
Date, the Agent shall give notice to each Lender of the issuance of all Letters
of Credit issued since the last Settlement Date.
(4) No Extensions or Amendment. The Agent
shall not be obligated to cause the Letter of Credit Issuer to extend or amend
any Letter of Credit issued pursuant hereto unless the requirements of this
Section 2.4 are met as though a new Letter of Credit were being requested and
issued. With respect to any Letter of Credit which contains any "evergreen" or
automatic renewal provision, each Lender shall be deemed to have consented to
any such extension or renewal unless any such Lender shall have provided to the
Agent, not less than thirty (30) days prior to the last date on which the
applicable issuer can in accordance with the terms of the applicable Letter of
Credit decline to extend or renew such Letter of Credit, written notice that it
declines to consent to any such extension or renewal; provided, that if all of
the requirements of this Section 2.4 are met and no Default or Event of Default
exists, no Lender shall decline to consent to any such extension or renewal.
(e) Payments Pursuant to Letters of Credit.
(1) Payment of Letter of Credit Obligations.
The Borrowers agree to reimburse, immediately upon demand, the Letter of Credit
Issuer for any draw under any Letter of Credit and the Agent for the account of
the Lenders upon any payment pursuant to any Credit Support, and to pay the
Letter of Credit Issuer the amount of all other obligations and other amounts
payable to such Letter of Credit Issuer under or in connection with any Letter
of Credit immediately when due, irrespective of any claim, setoff, defense or
other right which the Borrowers may have at any time against such issuer or any
other Person.
(2) Revolving Loans to Satisfy Reimbursement
Obligations. Each drawing under any Letter of Credit shall constitute a request
by the applicable Borrower to the Agent for a Borrowing of a Base Rate Revolving
Loan in the amount of such drawing. The Funding Date with respect to such
Borrowing shall be the date of such drawing.
(f) Participations.
(1) Purchase of Participations. Immediately
upon issuance of any Letter of Credit in accordance with Section 2.4(d), each
Lender shall be deemed to have irrevocably and unconditionally purchased and
received without recourse or warranty, an undivided interest and participation
equal to such Lender's Pro Rata Share of the face amount of such Letter of
Credit or the Credit Support provided through the Agent to the Letter of Credit
Issuer, if not the Agent, in connection with the issuance of such Letter of
Credit (including all obligations of the Borrowers with respect thereto, and any
security therefor or guaranty pertaining thereto).
(2) Sharing of Reimbursement Obligation
Payments. Whenever the Agent receives a payment from the Borrowers on account of
reimbursement obligations in respect of a Letter of Credit or Credit Support as
to which the Agent has previously received for the account of the Letter of
Credit Issuer thereof payment from a Lender pursuant to Section 2.4(e)(2), the
Agent shall promptly pay to such Lender such Lender's Pro Rata Share of such
payment from the Borrowers in Dollars. Each such payment shall be made by the
Agent on the Business Day on which the Agent receives immediately available
funds paid to such Person pursuant to the immediately preceding sentence, if
received prior to 1:00 p.m. (Los Angeles, California time) on such Business Day
and otherwise on the next succeeding Business Day.
(3) Documentation. Upon the request of any
Lender, the Agent shall furnish to such Lender copies of any Letter of Credit,
Credit Support for any Letter of Credit, reimbursement agreements executed in
connection therewith, applications for any Letter of Credit, and such other
documentation as may reasonably be requested by such Lender.
(4) Obligations Irrevocable. The obligations
of each Lender to make payments to the Agent with respect to any Letter of
Credit or with respect to their participation therein or with respect to
any Credit Support for any Letter of Credit or with respect to the
Revolving Loans made as a result of a drawing under a Letter of Credit and
the obligations of the Borrowers to make payments to the Agent, for the
account of the Lenders, shall be irrevocable, not subject to any
qualification or exception whatsoever, including any of the following
circumstances:
(i) any lack of validity or
enforceability of this Agreement or any of the other Loan Documents;
(ii) the existence of any claim, setoff,
defense or other right which any Borrower may have at any time against a
beneficiary named in a Letter of Credit or any transferee of any Letter of
Credit (or any Person for whom any such transferee may be acting), any
Lender, the Agent, the issuer of such Letter of Credit, or any other
Person, whether in connection with this Agreement, any Letter of Credit,
the transactions contemplated herein or any unrelated transactions
(including any underlying transactions between any Borrower or any other
Person and the beneficiary named in any Letter of Credit);
(iii) any draft, certificate or any other
document presented under the Letter of Credit proving to be forged,
fraudulent, invalid or insufficient in any respect or any statement therein
being untrue or inaccurate in any respect;
(iv) the surrender or impairment of any
security for the performance or observance of any of the terms of any of
the Loan Documents;
(v) the occurrence of any Default or
Event of Default; or
(vi) the failure of the Borrowers to
satisfy the applicable conditions precedent set forth in Article 10.
(g) Recovery or Avoidance of Payments. In the event any
payment by or on behalf of the Borrowers received by the Agent with respect to
any Letter of Credit or Credit Support provided for any Letter of Credit and
distributed by the Agent to the Lenders on account of their respective
participations therein is thereafter set aside, avoided or recovered from the
Agent in connection with any receivership, liquidation or bankruptcy proceeding,
the Lenders shall, upon demand by the Agent, pay to the Agent their respective
Pro Rata Shares of such amount set aside, avoided or recovered, together with
interest at the rate required to be paid by the Agent upon the amount required
to be repaid by it.
(h) Indemnification; Exoneration; Power of Attorney
(1) Indemnification. In addition to amounts
payable as elsewhere provided in this Section 2.4, the Borrowers hereby
agree to protect, indemnify, pay and save the Lenders and the Agent
harmless from and against any and all claims, demands, liabilities,
damages, losses, costs, charges and expenses (including reasonable
attorneys' fees) which any Lender or the Agent (other than the Bank in its
capacity as Letter of Credit Issuer) may incur or be subject to as a
consequence, direct or indirect, of the issuance of any Letter of Credit or
the provision of any Credit Support or enhancement in connection therewith.
The agreement in this Section 2.4(h)(1) shall survive payment of all
Obligations. Nothing contained in this Agreement is intended to limit the
Borrowers' rights, if any, with respect to the Letter of Credit Issuer
which arise as a result of the letter of credit application and related
documents executed by and between any Borrower and the Letter of Credit
Issuer.
(2) Assumption of Risk by the Borrowers. As
among the Borrowers, the Lenders, and the Agent, the Borrowers assume all
risks of the acts and omissions of, or misuse of any of the Letters of
Credit by, the respective beneficiaries of such Letters of Credit. In
furtherance and not in limitation of the foregoing, the Lenders and the
Agent shall not be responsible for: (A) the form, validity, sufficiency,
accuracy, genuineness or legal effect of any document submitted by any
Person in connection with the application for and issuance of and
presentation of drafts with respect to any of the Letters of Credit, even
if it should prove to be in any or all respects invalid, insufficient,
inaccurate, fraudulent or forged; (B) the validity or sufficiency of any
instrument transferring or assigning or purporting to transfer or assign
any Letter of Credit or the rights or benefits thereunder or proceeds
thereof, in whole or in part, which may prove to be invalid or ineffective
for any reason; (C) the failure of the beneficiary of any Letter of Credit
to comply duly with conditions required in order to draw upon such Letter
of Credit; (D) errors, omissions, interruptions, or delays in transmission
or delivery of any messages, by mail, cable, telegraph, telex or otherwise,
whether or not they be in cipher; (E) errors in interpretation of technical
terms; (F) any loss or delay in the transmission or otherwise of any
document required in order to make a drawing under any Letter of Credit or
of the proceeds thereof; (G) the misapplication by the beneficiary of any
Letter of Credit of the proceeds of any drawing under such Letter of
Credit; or (H) any consequences arising from causes beyond the control of
the Lenders or the Agent, including any act or omission, whether rightful
or wrongful, of any present or future de jure or de facto Governmental
Authority. None of the foregoing shall affect, impair or prevent the
vesting of any rights or powers of the Agent or any Lender under this
Section 2.4(h).
(3) Exoneration. In furtherance and extension,
and not in limitation, of the specific provisions set forth above, any
action taken or omitted by the Agent or any Lender under or in connection
with any of the Letters of Credit or any related certificates, if taken or
omitted in good faith, shall not put the Agent or any Lender under any
resulting liability to any Borrower or relieve any Borrower of any of its
obligations hereunder to any such Person. Nothing contained in this
Agreement is intended to limit any Borrower's rights, if any, with respect
to the Letter of Credit Issuer which arise as a result of the letter of
credit application and related documents executed by and between any
Borrower and the Letter of Credit Issuer.
(4) Indemnification by Lenders. The Lenders
agree to indemnify the Letter of Credit Issuer (to the extent not
reimbursed by the Borrowers and without limiting the obligations of the
Borrowers hereunder) ratably in accordance with their respective Pro Rata
Shares, for any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses (including attorneys'
fees) or disbursements of any kind and nature whatsoever that may be
imposed on, incurred by or asserted against the Letter of Credit Issuer in
any way relating to or arising out of any Letter of Credit or the
transactions contemplated thereby or any action taken or omitted by the
Letter of Credit Issuer under any Letter of Credit or any Loan Document in
connection therewith; provided that no Lender shall be liable for any of
the foregoing to the extent it arises from the gross negligence or willful
misconduct of the Person to be indemnified. Without limitation of the
foregoing, each Lender agrees to reimburse the Letter of Credit Issuer
promptly upon demand for its Pro Rata Share of any costs or expenses
payable by the Borrowers to the Letter of Credit Issuer, to the extent that
the Letter of Credit Issuer is not promptly reimbursed for such costs and
expenses by the Borrowers. The agreement contained in this Section shall
survive payment in full of all Obligations.
(5) Power of Attorney. In connection with all
Inventory financed by Letters of Credit, the Borrowers hereby appoint the
Agent, or the Agent's designee, as their attorney, with full power and
authority: (a) to sign and/or endorse any Borrower's name upon any
warehouse or other receipts; (b) to sign any Borrower's name on bills of
lading and other negotiable and non-negotiable documents; (c) to clear
Inventory through customs in the Agent's or any Borrower's name, and to
sign and deliver to customs officials powers of attorney in any Borrower's
name for such purpose; (d) to complete in any Borrower's or the Agent's
name, any order, sale, or transaction, obtain the necessary documents in
connection therewith, and collect the proceeds thereof; and (e) to do such
other acts and things as are necessary in order to enable the Agent to
obtain possession or control of the Inventory and to obtain payment of the
Obligations. Neither the Agent nor its designee, as the Borrowers'
attorney, will be liable for any acts or omissions, nor for any error of
judgment or mistakes of fact or law. This power, being coupled with an
interest, is irrevocable until all Obligations have been paid and
satisfied.
(6) Account Party. The Borrowers hereby
authorize and direct any Letter of Credit Issuer to name any Borrower as
the "Account Party" therein and to deliver to the Agent all instruments,
documents and other writings and property received by the Letter of Credit
Issuer pursuant to the Letter of Credit, and to accept and rely upon the
Agent's instructions and agreements with respect to all matters arising in
connection with the Letter of Credit or the application therefor.
(7) Control of Inventory. In connection with
all Inventory financed by Letters of Credit, the Borrowers will, at the
Agent's request, instruct all suppliers, carriers, forwarders, customs
brokers, warehouses or others receiving or holding cash, checks, Inventory,
documents or instruments in which the Agent holds a security interest to
deliver them to the Agent and/or subject to the Agent's order, and if they
shall come into any Borrower's possession, to deliver them, upon request,
to the Agent in their original form. The Borrowers shall also, at the
Agent's request, designate the Agent as the consignee on all bills of
lading and other negotiable and non-negotiable documents.
(i) Supporting Letter of Credit; Cash Collateral. If,
notwithstanding the provisions of Section 2.4(b) and Section 12.1, any Letter of
Credit or Credit Support is outstanding upon the termination of this Agreement,
then upon such termination the Borrowers shall deposit with the Agent, for the
ratable benefit of the Agent and the Lenders, with respect to each Letter of
Credit or Credit Support then outstanding, as the Majority Lenders, in their
discretion shall specify, either (A) a standby letter of credit (a "Supporting
Letter of Credit") in form and substance satisfactory to the Agent, issued by an
issuer satisfactory to the Agent in an amount equal to the greatest amount for
which such Letter of Credit or such Credit Support may be drawn plus any fees
and expenses associated with such Letter of Credit or such Credit Support, under
which Supporting Letter of Credit the Agent is entitled to draw amounts
necessary to reimburse the Agent and the Lenders for payments to be made by the
Agent and the Lenders under such Letter of Credit or Credit Support and any fees
and expenses associated with such Letter of Credit or Credit Support, or (B)
cash in amounts necessary to reimburse the Agent and the Lenders for payments
made by the Agent or the Lenders under such Letter of Credit or such Credit
Support and any fees and expenses associated with such Letter of Credit. Such
Supporting Letter of Credit or deposit of cash shall be held by the Agent, for
the ratable benefit of the Agent and the Lenders, as security for, and to
provide for the payment of, the aggregate undrawn amount of such Letters of
Credit or such Credit Support remaining outstanding.
2.5 Bank Products.
Each Borrower may request and the Bank may, in its sole and
absolute discretion, arrange for each Borrower to obtain from the Bank or the
Bank's Affiliates Bank Products although the Borrowers are not required to do
so. To the extent Bank Products are provided by an Affiliate of the Bank, each
Borrower agrees to indemnify and hold the Bank and the Lenders harmless from any
and all costs and obligations now or hereafter incurred by the Bank or any of
the Lenders which arise from the indemnity given by the Bank to its Affiliates
related to such Bank Products; provided, however, nothing contained herein is
intended to limit any Borrower's rights, with respect to the Bank or its
Affiliates, if any, which arise as a result of the execution of documents by and
between any Borrower and the Bank which relate to Bank Products. The agreement
contained in this Section shall survive termination of this Agreement. Any
Borrower acknowledges and agrees that the obtaining of Bank Products from the
Bank or the Bank's Affiliates (a) is in the sole and absolute discretion of the
Bank or the Bank's Affiliates, and (b) is subject to all rules and regulations
of the Bank or the Bank's Affiliates.
ARTICLE 3
INTEREST AND FEES
3.1 Interest.
(a) Interest Rates. All outstanding Obligations shall bear interest on the
unpaid principal amount thereof (including, to the extent permitted by law, on
interest thereon not paid when due) from the date made until paid in full in
cash at a rate determined by reference to the Base Rate or the LIBOR Rate and
Sections 3.1(a)(i), or (ii), as applicable, but not to exceed the Maximum Rate
described in Section 3.3. Subject to the provisions of Section 3.2, any of the
Loans may be converted into, or continued as, Base Rate Loans or LIBOR Rate
Loans in the manner provided in Section 3.2. If at any time Loans are
outstanding with respect to which notice has not been delivered to the Agent in
accordance with the terms of this Agreement specifying the basis for determining
the interest rate applicable thereto, then those Loans shall be Base Rate Loans
and shall bear interest at a rate determined by reference to the Base Rate until
notice to the contrary has been given to the Agent in accordance with this
Agreement and such notice has become effective. Except as otherwise provided
herein, the outstanding Obligations shall bear interest as follows:
(i) For all Base Rate Revolving Loans and
other Obligations (other than LIBOR Rate Loans) at a fluctuating per annum
rate equal to the Base Rate plus the Applicable Margin; and
(ii) For all LIBOR Revolving Loans at a per
annum rate equal to the LIBOR Rate plus the Applicable Margin.
Each change in the Base Rate shall be reflected in the interest rate described
in clauses (i) and (ii) above as of the effective date of such change. All
interest charges shall be computed on the basis of a year of 360 days and actual
days elapsed (which results in more interest being paid than if computed on the
basis of a 365-day year). Interest accrued on all Loans will be payable in
arrears on the first day of each month hereafter and on the Termination Date.
(b) Default Rate. If any Default or Event of Default occurs and is continuing
and the Agent or the Majority Lenders in their discretion so elect, then, while
any such Default or Event of Default is continuing, all of the Obligations shall
bear interest at the Default Rate applicable thereto.
3.2 Continuation and Conversion Elections. (a) The Borrowers may, upon
irrevocable written notice to the Agent in accordance with Section 3.2(b):
(i) elect, as of any Business Day, in the
case of Base Rate Loans to convert any such Loans (or any part thereof in
an amount not less than $500,000, or that is in an integral multiple of
$100,000 in excess thereof) into LIBOR Rate Loans; or
(ii) elect, as of the last day of the
applicable Interest Period, to continue any LIBOR Rate Loans having
Interest Periods expiring on such day (or any part thereof in an amount not
less than $500,000, or that is in an integral multiple of $100,000 in
excess thereof);
provided, that if at any time the aggregate amount of LIBOR Rate Loans in
respect of any Borrowing is reduced, by payment, prepayment, or conversion of
part thereof to be less than $500,000, such LIBOR Rate Loans shall automatically
convert into Base Rate Loans, and on and after such date the right of the
Borrowers to continue such Loans as, and convert such Loans into, LIBOR Rate
Loans, as the case may be, shall terminate, and provided further that if the
notice shall fail to specify the duration of the Interest Period, such Interest
Period shall be one month.
(c) The applicable Borrower shall deliver a notice of conversion/continuation
("Notice of Continuation/Conversion") to be received by the Agent not later than
10:00 a.m. (Los Angeles, California time) at least three Business Days in
advance of the Continuation/Conversion Date, if the Loans are to be converted
into or continued as LIBOR Rate Loans and specifying:
(i) the proposed Continuation/Conversion Date;
(ii) the aggregate amount of Loans to be
converted or renewed;
(iii) the type of Loans resulting from the
proposed conversion or continuation; and
(iv) the duration of the requested Interest
Period.
(d) If upon the expiration of any Interest Period applicable to LIBOR Rate
Loans, the applicable Borrower has failed to select timely a new Interest Period
to be applicable to LIBOR Rate Loans or if any Default or Event of Default then
exists, the applicable Borrower shall be deemed to have elected to convert such
LIBOR Rate Loans into Base Rate Loans effective as of the expiration date of
such Interest Period.
(e) The Agent will promptly notify each Lender of its receipt of a Notice of
Conversion/Continuation. All conversions and continuations shall be made ratably
according to the respective outstanding principal amounts of the Loans with
respect to which the notice was given held by each Lender.
(f) During the existence of a Default or Event of Default, the Borrowers may not
elect to have a Loan converted into or continued as a LIBOR Rate Loan.
(g) After giving effect to any conversion or continuation of Loans, there may
not be more than six different Interest Periods in effect hereunder.
3.3 Maximum Interest Rate. In no event shall any interest rate provided for
hereunder exceed the maximum rate legally chargeable by any Lender under
applicable law for such Lender with respect to loans of the type provided for
hereunder (the "Maximum Rate"). If, in any month, any interest rate, absent such
limitation, would have exceeded the Maximum Rate, then the interest rate for
that month shall be the Maximum Rate, and, if in future months, that interest
rate would otherwise be less than the Maximum Rate, then that interest rate
shall remain at the Maximum Rate until such time as the amount of interest paid
hereunder equals the amount of interest which would have been paid if the same
had not been limited by the Maximum Rate. In the event that, upon payment in
full of the Obligations, the total amount of interest paid or accrued under the
terms of this Agreement is less than the total amount of interest which would,
but for this Section 3.3, have been paid or accrued if the interest rate
otherwise set forth in this Agreement had at all times been in effect, then the
Borrowers shall, to the extent permitted by applicable law, pay the Agent, for
the account of the Lenders, an amount equal to the excess of (a) the lesser of
(i) the amount of interest which would have been charged if the Maximum Rate
had, at all times, been in effect or (ii) the amount of interest which would
have accrued had the interest rate otherwise set forth in this Agreement, at all
times, been in effect over (b) the amount of interest actually paid or accrued
under this Agreement. In the event that a court of competent jurisdiction
determines that the Agent and/or any Lender has received interest and other
charges hereunder in excess of the Maximum Rate, such excess shall be deemed
received on account of, and shall automatically be applied to reduce, the
Obligations other than interest, in the inverse order of maturity, and if there
are no Obligations outstanding, the Agent and/or such Lender shall refund to the
Borrowers such excess.
3.4 Agent's Fees. The Borrowers agree to pay the Agent, for its sole account,
the fees set forth in the Agent's Fee Letter, at the times and in the amounts
set forth therein. The Borrowers agree that such fees shall be financed by the
Lenders as a Revolving Loan.
3.5 Unused Line Fee. Until the Loans have been paid in full and this Agreement
terminated, the Borrowers agree to pay, on the first day of each month and on
the Termination Date, to the Agent, for the account of the Lenders, in
accordance with their respective Pro Rata Shares, an unused line fee (the
"Unused Line Fee") equal to 0.375% per annum times the amount by which the
Maximum Revolver Amount exceeded the sum of the average daily outstanding amount
of Revolving Loans and the average daily undrawn face amount of outstanding
Letters of Credit, during the immediately preceding month or shorter period if
calculated on the Termination Date. The Unused Line Fee shall be computed on the
basis of a 360-day year for the actual number of days elapsed. All payments
received by the Agent shall be deemed to be credited to the Borrowers' Loan
Account immediately upon receipt for purposes of calculating the Unused Line Fee
pursuant to this Section 3.5.
3.6 Letter of Credit Fee. The Borrowers agree to pay to the Agent, for the
account of the Lenders, in accordance with their respective Pro Rata Shares, for
each Letter of Credit, a fee (the "Letter of Credit Fee") equal to 1.50% per
annum of the undrawn face amount of each Letter of Credit, plus all reasonable
out-of-pocket costs, fees and expenses incurred by the Agent in connection with
the application for, processing of, issuance of, or amendment to any Letter of
Credit, which costs, fees and expenses shall include a "fronting fee" payable to
such issuer. The Letter of Credit Fee shall be payable monthly in arrears on the
first day of each month following any month in which a Letter of Credit was
issued and/or in which a Letter of Credit remains outstanding and on the
Termination Date. The Letter of Credit Fee shall be computed on the basis of a
360-day year for the actual number of days elapsed.
ARTICLE 4
PAYMENTS AND PREPAYMENTS
4.1 Revolving Loans. The Borrowers shall repay the outstanding principal balance
of the Revolving Loans, plus all accrued but unpaid interest thereon, on the
Termination Date. The Borrowers may prepay Revolving Loans at any time, and
reborrow subject to the terms of this Agreement; provided, however, that with
respect to any LIBOR Revolving Loans prepaid by the Borrowers prior to the
expiration date of the Interest Period applicable thereto, the Borrowers shall
pay to the Agent for account of the Lenders the amounts described in Section
5.4. In addition, and without limiting the generality of the foregoing, upon
demand the Borrowers shall pay to the Agent, for account of the Lenders, the
amount, without duplication, by which the Aggregate Revolver Outstandings
exceeds the Borrowing Base.
4.2 Termination of Facility. The Parent may terminate this Agreement upon at
least thirty (30) Business Days' notice to the Agent and the Lenders, upon (a)
the payment in full of all outstanding Revolving Loans, together with accrued
interest thereon, and the cancellation and return of all outstanding Letters of
Credit, (b) the payment of the early termination fee set forth in the next
sentence, (c) the payment in full in cash of all other Obligations together with
accrued and unpaid interest thereon, and (d) with respect to any LIBOR Rate
Loans prepaid in connection with such termination prior to the expiration date
of the Interest Period applicable thereto, the payment of the amounts described
in Section 5.4. If this Agreement is terminated at any time prior to the Second
Anniversary Date, whether pursuant to this Section or pursuant to Section 11.2,
the Borrowers shall pay to the Agent, for the account of the Lenders, an early
termination fee determined in accordance with the following table:
Period during which
early termination Early Termination
occurs Fee
On or prior to the second 1.0% of the average Loans and Letters of Credit
Anniversary Date outstanding during the 180 days (or lesser period
if within 180 days of the Closing Date) prior to
the date of termination
provided, however, that the early termination fee described in this Section 4.2
shall not be payable in the event that: (i) at any time after the first
Anniversary Date the Borrowers terminate this Agreement and pay all Obligations
utilizing either the proceeds of a credit facility agented by the Bank or any of
its Affiliates or the proceeds of a debt or equity issuance that is arranged by
the Bank or any of the Bank's Affiliates; or (ii) such termination occurs within
60 days of the exercise by the Agent of its discretion to institute a reserve
against Availability of a type not already specified, or to make ineligible any
category of previously Eligible Accounts or Eligible Inventory, which in any
such case results in Availability being less than $0.
4.3 [Intentionally Deleted]
4.4 [Intentionally Deleted]
4.5 [Intentionally Deleted]
4.6 Payments by the Borrowers. (a) All payments to be made by the Borrowers
shall be made without set-off, recoupment or counterclaim. Except as otherwise
expressly provided herein, all payments by the Borrowers shall be made to the
Agent for the account of the Lenders , at the account designated by the Agent
and shall be made in Dollars and in immediately available funds, no later than
12:00 noon (Los Angeles, California time) on the date specified herein. Any
payment received by the Agent later than 12:00 noon (Los Angeles, California
time) shall be deemed to have been received on the following Business Day and
any applicable interest or fee shall continue to accrue.
(b) Subject to the provisions set forth in the definition of
"Interest Period" herein, whenever any payment is due on a day other than a
Business Day, such payment shall be due on the following Business Day, and such
extension of time shall in such case be included in the computation of interest
or fees, as the case may be.
(c) Unless the Agent receives notice from the Borrowers prior
to the date on which any payment is due to the Lenders that the Borrowers will
not make such payment in full as and when required, the Agent may assume that
the Borrowers have made such payment in full to the Agent on such date in
immediately available funds and the Agent may (but shall not be so required), in
reliance upon such assumption, distribute to each Lender on such due date an
amount equal to the amount then due such Lender. If and to the extent the
Borrowers have not made such payment in full to the Agent, each Lender shall
repay to the Agent on demand such amount distributed to such Lender, together
with interest thereon at the Federal Funds Rate for each day from the date such
amount is distributed to such Lender until the date repaid.
4.7 Payments as Revolving Loans. All payments of principal, interest,
reimbursement obligations in connection with Letters of Credit and Credit
Support for Letters of Credit, fees, premiums and other sums payable hereunder,
including all reimbursement for expenses pursuant to Section 15.7, may, at the
option of the Agent, in its sole discretion, subject only to the terms of this
Section 4.7, be paid from the proceeds of Revolving Loans made hereunder,
whether made following a request by the Borrowers pursuant to Section 2.2 or a
deemed request as provided in this Section 4.7. The Borrowers hereby irrevocably
authorize the Agent to charge the Loan Account for the purpose of paying
principal, interest, reimbursement obligations in connection with Letters of
Credit and Credit Support for Letters of Credit, fees, premiums and other sums
payable hereunder, including reimbursing expenses pursuant to Section 15.7, and
agrees that all such amounts charged shall constitute Revolving Loans (including
Non-Ratable Loans and Agent Advances) and that all such Revolving Loans so made
shall be deemed to have been requested by Borrowers pursuant to Section 2.2.
4.8 Apportionment, Application and Reversal of Payments. Principal and interest
payments shall be apportioned ratably among the Lenders (according to the unpaid
principal balance of the Loans to which such payments relate held by each
Lender) and payments of the fees shall, as applicable, be apportioned ratably
among the Lenders. All payments shall be remitted to the Agent and all such
payments not relating to principal or interest of specific Loans, or not
constituting payment of specific fees, and all proceeds of Accounts or other
Collateral received by the Agent, shall be applied, ratably, subject to the
provisions of this Agreement, first, to pay any fees, indemnities or expense
reimbursements then due to the Agent from any Borrower; second, to pay any fees
or expense reimbursements then due to the Lenders from the Borrowers; third, to
pay interest due in respect of all Revolving Loans, including Non-Ratable Loans
and Agent Advances; fourth, to pay or prepay principal of the Non-Ratable Loans
and Agent Advances; fifth, to pay or prepay principal of the Revolving Loans
(other than Non-Ratable Loans and Agent Advances) and unpaid reimbursement
obligations in respect of Letters of Credit; and sixth, to the payment of any
other Obligation including any amounts relating to Bank Products due to the
Agent or any Lender by the Borrowers. Notwithstanding anything to the contrary
contained in this Agreement, unless so directed by the Borrowers, or unless an
Event of Default has occurred and is continuing, neither the Agent nor any
Lender shall apply any payments which it receives to any LIBOR Revolving Loan,
except (a) on the expiration date of the Interest Period applicable to any such
LIBOR Rate Loan, or (b) in the event, and only to the extent, that there are no
outstanding Base Rate Revolving Loans. The Agent shall promptly distribute to
each Lender, pursuant to the applicable wire transfer instructions received from
each Lender in writing, such funds as it may be entitled to receive, subject to
a Settlement delay as provided for in Section 2.2(j). The Agent and the Lenders
shall have the continuing and exclusive right to apply and reverse and reapply
any and all such proceeds and payments to any portion of the Obligations.
4.9 Indemnity for Returned Payments. If after receipt of any payment which is
applied to the payment of all or any part of the Obligations, the Agent or any
Lender is for any reason compelled to surrender such payment or proceeds to any
Person because such payment or application of proceeds is invalidated, declared
fraudulent, set aside, determined to be void or voidable as a preference,
impermissible setoff, or a diversion of trust funds, or for any other reason,
then the Obligations or part thereof intended to be satisfied shall be revived
and continued and this Agreement shall continue in full force as if such payment
or proceeds had not been received by the Agent or such Lender and the Borrowers
shall be liable to pay to the Agent and the Lenders, and hereby does indemnify
the Agent and the Lenders and hold the Agent and the Lenders harmless for the
amount of such payment or proceeds surrendered. The provisions of this Section
4.9 shall be and remain effective notwithstanding any contrary action which may
have been taken by the Agent or any Lender in reliance upon such payment or
application of proceeds, and any such contrary action so taken shall be without
prejudice to the Agent's and the Lenders' rights under this Agreement and shall
be deemed to have been conditioned upon such payment or application of proceeds
having become final and irrevocable. The provisions of this Section 4.9 shall
survive the termination of this Agreement.
4.10 Agent's and Lenders' Books and Records; Monthly Statements. Each Borrower
agrees that the Agent's and each Lender's books and records showing the
Obligations and the transactions pursuant to this Agreement and the other Loan
Documents shall be admissible in any action or proceeding arising therefrom, and
shall constitute rebuttably presumptive proof thereof, irrespective of whether
any Obligation is also evidenced by a promissory note or other instrument. The
Agent will provide to the Borrowers a monthly statement of Loans, payments, and
other transactions pursuant to this Agreement. Such statement shall be deemed
correct, accurate, and binding on the Borrowers and an account stated (except
for reversals and reapplications of payments made as provided in Section 4.8 and
corrections of errors discovered by the Agent), unless the Borrowers notify the
Agent in writing to the contrary within sixty (60) days after such statement is
rendered. In the event a timely written notice of objections is given by the
Borrowers, only the items to which exception is expressly made will be
considered to be disputed by the Borrowers.
ARTICLE 5
TAXES, YIELD PROTECTION AND ILLEGALITY
5.1 Taxes. (a) Any and all payments by any Borrower to each Lender or the Agent
under this Agreement and any other Loan Document shall be made free and clear
of, and without deduction or withholding for any Taxes. In addition, the
Borrowers shall pay all Other Taxes.
(b) Each Borrower agrees to indemnify and hold harmless each
Lender and the Agent for the full amount of Taxes or Other Taxes (including any
Taxes or Other Taxes imposed by any jurisdiction on amounts payable under this
Section) paid by any Lender or the Agent and any liability (including penalties,
interest, additions to tax and expenses) arising therefrom or with respect
thereto, whether or not such Taxes or Other Taxes were correctly or legally
asserted. Payment under this indemnification shall be made within 30 days after
the date such Lender or the Agent makes written demand therefor.
(c) If any Borrower shall be required by law to deduct or
withhold any Taxes or Other Taxes from or in respect of any sum payable
hereunder to any Lender or the Agent, then:
(i) the sum payable shall be increased as
necessary so that after making all required deductions and withholdings
(including deductions and withholdings applicable to additional sums
payable under this Section) such Lender or the Agent, as the case may be,
receives an amount equal to the sum it would have received had no such
deductions or withholdings been made;
(ii) such Borrower shall make such deductions and
withholdings;
(iii) such Borrower shall pay the full amount
deducted or withheld to the relevant taxing authority or other authority in
accordance with applicable law; and
(iv) such Borrower shall also pay to each
Lender or the Agent for the account of such Lender, at the time interest is
paid, all additional amounts which the respective Lender specifies as
necessary to preserve the after-tax yield such Lender would have received
if such Taxes or Other Taxes had not been imposed.
(d) Within 30 days after the date of any payment by any
Borrower of Taxes or Other Taxes, such Borrower shall furnish the Agent the
original or a certified copy of a receipt evidencing payment thereof, or other
evidence of payment satisfactory to the Agent.
(e) If any Borrower is required to pay additional amounts to
any Lender or the Agent pursuant to subsection (c) of this Section, then such
Lender shall use reasonable efforts (consistent with legal and regulatory
restrictions) to change the jurisdiction of its lending office so as to
eliminate any such additional payment by such Borrower which may thereafter
accrue, if such change in the judgment of such Lender is not otherwise
disadvantageous to such Lender.
5.2 Illegality. (a) If any Lender determines that the introduction of any
Requirement of Law, or any change in any Requirement of Law, or in the
interpretation or administration of any Requirement of Law, has made it
unlawful, or that any central bank or other Governmental Authority has asserted
that it is unlawful, for any Lender or its applicable lending office to make
LIBOR Rate Loans, then, on notice thereof by that Lender to the Borrowers
through the Agent, any obligation of that Lender to make LIBOR Rate Loans shall
be suspended until that Lender notifies the Agent and the Borrowers that the
circumstances giving rise to such determination no longer exist.
(b) If a Lender determines that it is unlawful to maintain any
LIBOR Rate Loan, the Borrowers shall, upon their receipt of notice of such fact
and demand from such Lender (with a copy to the Agent), prepay in full such
LIBOR Rate Loans of that Lender then outstanding, together with interest accrued
thereon and amounts required under Section 5.4, either on the last day of the
Interest Period thereof, if that Lender may lawfully continue to maintain such
LIBOR Rate Loans to such day, or immediately, if that Lender may not lawfully
continue to maintain such LIBOR Rate Loans. If the Borrowers are required to so
prepay any LIBOR Rate Loans, then concurrently with such prepayment, the
Borrowers shall borrow from the affected Lender, in the amount of such
repayment, a Base Rate Loan.
5.3 Increased Costs and Reduction of Return. (a) If any Lender determines that
due to either (i) the introduction of or any change in the interpretation of any
law or regulation or (ii) the compliance by that Lender with any guideline or
request from any central bank or other Governmental Authority (whether or not
having the force of law), there shall be any increase in the cost to such Lender
of agreeing to make or making, funding or maintaining any LIBOR Rate Loans, then
the Borrowers shall be liable for, and shall from time to time, upon demand
(with a copy of such demand to be sent to the Agent), pay to the Agent for the
account of such Lender, additional amounts as are sufficient to compensate such
Lender for such increased costs.
(b) If any Lender shall have determined that (i) the
introduction of any Capital Adequacy Regulation, (ii) any change in any Capital
Adequacy Regulation, (iii) any change in the interpretation or administration of
any Capital Adequacy Regulation by any central bank or other Governmental
Authority charged with the interpretation or administration thereof, or (iv)
compliance by such Lender or any corporation or other entity controlling such
Lender with any Capital Adequacy Regulation, affects or would affect the amount
of capital required or expected to be maintained by such Lender or any
corporation or other entity controlling such Lender and (taking into
consideration such Lender's or such corporation's or other entity's policies
with respect to capital adequacy and such Lender's desired return on capital)
determines that the amount of such capital is increased as a consequence of its
Commitments, loans, credits or obligations under this Agreement, then, upon
demand of such Lender to the Borrowers through the Agent, the Borrowers shall
pay to such Lender, from time to time as specified by such Lender, additional
amounts sufficient to compensate such Lender for such increase.
5.4 Funding Losses. The Borrowers shall reimburse each Lender and hold
each Lender harmless from any loss or expense which such Lender may sustain or
incur as a consequence of:
(a) the failure of any Borrower to make on a timely basis
any payment of principal of any LIBOR Rate Loan;
(b) the failure of any Borrower to borrow, continue or convert
a Loan after such Borrower has given (or is deemed to have given) a Notice of
Borrowing or a Notice of Continuation/Conversion; or
(c) the prepayment or other payment (including after
acceleration thereof) of any LIBOR Rate Loans on a day that is not the last
day of the relevant Interest Period;
including any such loss of anticipated profit and any loss or expense arising
from the liquidation or reemployment of funds obtained by it to maintain its
LIBOR Rate Loans or from fees payable to terminate the deposits from which such
funds were obtained. Borrowers shall also pay any customary administrative fees
charged by any Lender in connection with the foregoing.
5.5 Inability to Determine Rates. If the Agent determines that for any reason
adequate and reasonable means do not exist for determining the LIBOR Rate for
any requested Interest Period with respect to a proposed LIBOR Rate Loan, or
that the LIBOR Rate for any requested Interest Period with respect to a proposed
LIBOR Rate Loan does not adequately and fairly reflect the cost to the Lenders
of funding such Loan, the Agent will promptly so notify the Borrowers and each
Lender. Thereafter, the obligation of the Lenders to make or maintain LIBOR Rate
Loans hereunder shall be suspended until the Agent revokes such notice in
writing. Upon receipt of such notice, any Borrower may revoke any Notice of
Borrowing or Notice of Conversion/Continuation then submitted by it. If the
applicable Borrower does not revoke such Notice, the Lenders shall make, convert
or continue the Loans, as proposed by such Borrower, in the amount specified in
the applicable notice submitted by such Borrower, but such Loans shall be made,
converted or continued as Base Rate Loans instead of LIBOR Rate Loans.
5.6 Certificates of Lenders. Any Lender claiming reimbursement or compensation
under this Article 5 shall deliver to the Borrowers (with a copy to the Agent) a
certificate setting forth in reasonable detail the amount payable to such Lender
hereunder and such certificate shall be conclusive and binding on the Borrowers
in the absence of manifest error.
5.7 Survival. The agreements and obligations of the Borrowers in
this Article 5 shall survive the payment of all other Obligations.
ARTICLE 6
COLLATERAL
6.1 Grant of Security Interest. (a) As security for all Obligations, each
Borrower hereby grants to the Agent, for the benefit of the Agent and the
Lenders, a continuing security interest in, lien on, assignment of and right of
set-off against, all of the right, title, and interest of such Borrower in the
following property and assets, whether now owned or existing or hereafter
acquired or arising, regardless of where located:
(i) all Accounts (including any credit
enhancement therefor);
(ii) all Inventory;
(iii) all contract rights, letters of credit,
Assigned Contracts, chattel paper, instruments, notes, documents, and
documents of title;
(iv) all General Intangibles;
(v) all Equipment;
(vi) all Investment Property;
(vii) all money, cash, cash equivalents,
securities and other property of any kind of such Borrower held directly or
indirectly by the Agent or any Lender;
(viii) all of such Borrower's deposit accounts,
credits, and balances with and other claims against the Agent or any Lender
or any of their Affiliates or any other financial institution with which
such Borrower maintains deposits, including any Payment Accounts;
(ix) all books, records and other property
related to or referring to any of the foregoing, including books, records,
account ledgers, data processing records, computer software and other
property and General Intangibles at any time evidencing or relating to any
of the foregoing; and
(x) all accessions to, substitutions for and
replacements, products and proceeds of any of the foregoing, including, but
not limited to, proceeds of any insurance policies, claims against third
parties, and condemnation or requisition payments with respect to all or
any of the foregoing.
All of the foregoing, and all other property of the Borrowers in which the Agent
or any Lender may at any time be granted a Lien, is herein collectively referred
to as the "Collateral."
(b) Notwithstanding anything to the contrary contained herein,
the foregoing grant of a security interest shall not include any rights or
interests in any General Intangible or contracts (including, without limitation,
Assigned Contracts) if and to the extent that (a) the terms of the contract of
document creating or evidencing such General Intangible or contract right
prohibits assignment or encumbrance thereof, (b) the term prohibiting such
assignment or encumbrance is effective as a matter of law (including Section
9-318 of the UCC), and (c) the term prohibiting such assignment or encumbrance
has not been waived or the consent of the necessary party of the grant of such
security interest to the Agent has not been obtained; provided, however that all
proceeds of any such General Intangible or contract shall continue to be covered
by the grant of a security interest.
(c) All of the Obligations shall be secured by all of the
Collateral.
6.2 Perfection and Protection of Security Interest. (a) Each Borrower shall, at
its expense, perform all steps requested by the Agent at any time to perfect,
maintain, protect, and enforce the Agent's Liens, including: (i) executing,
delivering and/or filing and recording of the Intellectual Property Agreement
and executing and filing financing or continuation statements, and amendments
thereof, in form and substance reasonably satisfactory to the Agent; (ii)
delivering to the Agent the originals of all instruments, documents, and chattel
paper, and all other Collateral of which the Agent determines it should have
physical possession in order to perfect and protect the Agent's security
interest therein, duly pledged, endorsed or assigned to the Agent without
restriction; (iii) delivering to the Agent warehouse receipts covering any
portion of the Collateral located in warehouses and for which warehouse receipts
are issued and certificates of title covering any portion of the collateral for
which certificates of title have been issued; (iv) when an Event of Default
exists, transferring Inventory to warehouses or other locations designated by
the Agent; (v) placing notations on such Borrower's books of account to disclose
the Agent's security interest; (vi) delivering to the Agent all letters of
credit on which such Borrower is named beneficiary; and (vii) taking such other
steps as are deemed necessary or desirable by the Agent to maintain and protect
the Agent's Liens. To the extent permitted by applicable law, the Agent may
file, without the applicable Borrower's signature, one or more financing
statements disclosing the Agent's Liens. Each Borrower agrees that a carbon,
photographic, photostatic, or other reproduction of this Agreement or of a
financing statement is sufficient as a financing statement.
(b) If any Collateral is at any time in the possession or
control of any warehouseman, bailee or any of a Borrower's agents or processors,
then such Borrower shall notify the Agent thereof and shall, at the request of
Agent, notify such Person of the Agent's security interest in such Collateral
and instruct such Person to hold all such Collateral for the Agent's account
subject to the Agent's instructions. If at any time any Collateral is located in
any operating facility of a Borrower not owned by such Borrower, then such
Borrower shall, at the request of the Agent, obtain written landlord lien
waivers or subordinations, in form and substance reasonably satisfactory to the
Agent, of all present and future Liens to which the owner or lessor of such
premises may be entitled to assert against the Collateral.
(c) From time to time, each Borrower shall, upon the Agent's request, execute
and deliver confirmatory written instruments pledging to the Agent, for the
ratable benefit of the Agent and the Lenders, the Collateral with respect to
such Borrower, but such Borrower's failure to do so shall not affect or limit
any security interest or any other rights of the Agent or any Lender in and to
the Collateral with respect to such Borrower. So long as this Agreement is in
effect and until all Obligations have been fully satisfied, the Agent's Liens
shall continue in full force and effect in all Collateral (whether or not deemed
eligible for the purpose of calculating the Availability or as the basis for any
advance, loan, extension of credit, or other financial accommodation).
(d) Within 60 days after the Closing Date, upon the Agent's request, the Parent
shall deliver to the Agent a deed of trust, mortgage or similar instrument to
perfect the Agent's Lien on the Parent's Real Estate located in Lawrence,
Kansas; provided, however, that the Borrowers shall not be responsible to pay
more than $10,000 of the costs (including Attorney Costs) and expenses of
preparing and recording such instrument.
6.3 Location of Collateral. Each Borrower represents and warrants to the Agent
and the Lenders that: (a) Schedule 6.3 is a correct and complete list of such
Borrower's state of incorporation, chief executive office, the location of its
books and records, the locations of the Collateral (other than Inventory in
transit to such a location), and the locations of all of its other places of
business; and (b) Schedule 6.3 correctly identifies any of such facilities and
locations that are not owned by such Borrower and sets forth the names of the
owners and lessors or sublessors of such facilities and locations. Each Borrower
covenants and agrees that it will not (i) maintain any Collateral at any
location other than those locations listed for such Borrower on Schedule 6.3,
(ii) otherwise change or add to any of such locations, or (iii) change the
location of its chief executive office from the location identified in Schedule
6.3, or reincorporate in any other jurisdiction, unless it gives the Agent at
least thirty (30) days' prior written notice thereof and executes any and all
financing statements and other documents that the Agent reasonably requests in
connection therewith; provided, however, that no Inventory that is subject to
Honeywell's obligation to repurchase under the Honeywell Buy Back Agreement may
be moved from the Parent's Phoenix, Arizona location or from the Parent's
Tijuana, Mexico location to any third location without (y) the advance written
confirmation from Honeywell that, notwithstanding such relocation, Honeywell
will remain obligated to repurchase such Inventory under the Honeywell Buy Back
Agreement and (z) such Inventory being moved to a location in which the Agent's
first priority Lien thereon has been perfected. Not more than $6,000,000 of
Inventory subject to the Honeywell Buy Back Agreement will be located at the
Parent's Tijuana, Mexico location at any one time. Without limiting the
foregoing, each Borrower represents that all of its Inventory (other than
Inventory in transit) is, and covenants that all of its Inventory will be,
located either (a) on premises owned by the Borrower, (b) on premises leased by
such Borrower, provided that the Agent has, if requested by the Agent, received
an executed landlord waiver from the landlord of such premises in form and
substance satisfactory to the Agent, or (c) in a warehouse or with a bailee,
provided that the Agent has, if requested by the Agent, received an executed
bailee letter from the applicable Person in form and substance satisfactory to
the Agent.
6.4 Title to, Liens on, and Sale and Use of Collateral. Each Borrower represents
and warrants to the Agent and the Lenders and agrees with the Agent and the
Lenders that: (a) all of the Collateral is and will continue to be owned by the
Borrowers free and clear of all Liens whatsoever, except for Permitted Liens;
(b) the Agent's Liens in the Collateral will not be subject to any prior Lien
except for those Liens identified in clauses (c), (d), (e) and (g) of the
definition of Permitted Liens; and (c) the Borrowers will use, store, and
maintain the Collateral with all reasonable care and will use such Collateral
for lawful purposes only.
6.5 Appraisals. Whenever a Default or Event of Default exists, and at such other
times not more frequently than once a year as the Agent requests, the Borrowers
shall, upon the Agent's request, provide the Agent with appraisals or updates
thereof of any or all of the Collateral from an appraiser, and prepared on a
basis, satisfactory to the Agent, such appraisals and updates to include,
without limitation, information required by applicable law and regulation and by
the internal policies of the Lenders. Any such appraisals conducted prior to an
Event of Default shall be at the sole cost and expense of the Agent and Lenders,
and any such appraisals conducted after an Event of Default shall be at the sole
cost and expense of the Borrowers.
6.6 Access and Examination; Confidentiality; Consent to Advertising. (a) The
Agent, accompanied by any Lender which so elects, may at all reasonable times
during regular business hours (and at any time when a Default or Event of
Default exists and is continuing) have access to, examine, audit, make extracts
from or copies of and inspect any or all of the Borrowers' records, files, and
books of account and the Collateral, and discuss the Borrowers' affairs with the
Borrowers' officers and management. Each Borrower will deliver to the Agent any
instrument necessary for the Agent to obtain records from any service bureau
maintaining records for such Borrower. The Agent may, and at the direction of
the Majority Lenders shall, at any time when a Default or Event of Default
exists, and at the Borrowers' expense, make copies of all of the Borrowers'
books and records, or require the Borrowers to deliver such copies to the Agent.
The Agent may, without expense to the Agent, use such of the Borrowers.
respective personnel, supplies, and Real Estate as may be reasonably necessary
for maintaining or enforcing the Agent's Liens. The Agent shall have the right,
at any time, in the Agent's name or in the name of a nominee of the Agent, to
verify the validity, amount or any other matter relating to the Accounts,
Inventory, or other Collateral, by mail, telephone, or otherwise.
(b) The Agent and each Lender may (with the Parent's prior
approval) issue and disseminate to the public general information describing the
credit accommodation entered into pursuant to this Agreement, including the name
and address of such Borrower and a general description of such Borrower business
and may use such Borrower's name in advertising and other promotional material.
(c) Each Lender severally agrees to take normal and reasonable
precautions and exercise due care, in accordance with sound banking practices,
to maintain the confidentiality of all information provided to the Agent or such
Lender by or on behalf of such Borrower, under this Agreement or any other Loan
Document, except to the extent that such information (i) was or becomes
generally available to the public other than as a result of disclosure by the
Agent or such Lender, or (ii) was or becomes available on a nonconfidential
basis from a source other than such Borrower, provided that such source is not
bound by a confidentiality agreement with such Borrower known to the Agent or
such Lender; provided, however, that the Agent and any Lender may disclose such
information (1) at the request or pursuant to any requirement of any
Governmental Authority to which the Agent or such Lender is subject or in
connection with an examination of the Agent or such Lender by any such
Governmental Authority; (2) pursuant to subpoena or other court process; (3)
when required to do so in accordance with the provisions of any applicable
Requirement of Law; (4) to the extent reasonably required in connection with any
litigation or proceeding (including, but not limited to, any bankruptcy
proceeding) to which the Agent, any Lender or their respective Affiliates may be
party; (5) to the extent reasonably required in connection with the exercise of
any remedy hereunder or under any other Loan Document; (6) to the Agent's or
such Lender's independent auditors, accountants, attorneys and other
professional advisors; (7) to any prospective Participant or Assignee under any
Assignment and Acceptance, actual or potential, provided that such prospective
Participant or Assignee agrees to keep such information confidential to the same
extent required of the Agent and the Lenders hereunder; (8) as expressly
permitted under the terms of any other document or agreement regarding
confidentiality to which such Borrower is party or is deemed party with the
Agent or such Lender, and (9) to its Affiliates, provided that such Affiliates
have agreed to keep such information confidential to the same extent required of
the Agent and the Lenders hereunder.
6.7 Collateral Reporting. The Parent shall provide the Agent with the following
documents at the following times in form satisfactory to the Agent: (a) on a
weekly basis, or more frequently if requested by the Agent, a schedule of each
Borrower's Accounts created since the last such schedule and a Borrowing Base
Certificate; (b) on a monthly basis, by the 15th day of the following month, or
more frequently if requested by the Agent, an aging of each Borrower's Accounts,
together with a reconciliation to the previous month's aging of each Borrower's
Accounts and to each Borrower's general ledger; (c) on a monthly basis by the
15th day of the following month, or more frequently if requested by the Agent,
an aging of each Borrower's accounts payable; (d) on a monthly basis by the 15th
day of the following month (or more frequently if requested by the Agent),
Inventory reports by category and location, with additional detail showing
additions to and deletions from the Inventory, together with a reconciliation to
each Borrower's general ledger; (e) upon request, copies of invoices in
connection with each Borrower's Accounts, customer statements, credit memos,
remittance advices and reports, deposit slips, shipping and delivery documents
in connection with each Borrower's Accounts and for Inventory and Equipment
acquired by each Borrower, purchase orders and invoices; (f) upon request, a
statement of the balance of each of the Intercompany Accounts; (g) such other
reports as to the Collateral of each Borrower as the Agent shall reasonably
request from time to time; and (h) with the delivery of each of the foregoing, a
certificate of the Parent executed by an officer thereof certifying as to the
accuracy and completeness of the foregoing. If any Borrower's records or reports
of the Collateral are prepared by an accounting service or other agent, such
Borrower hereby authorizes such service or agent to deliver such records,
reports, and related documents to the Agent, for distribution to the Lenders.
6.8 Accounts. (a) Each Borrower hereby represents and warrants to the Agent and
the Lenders, with respect to such Borrower's Accounts, that: (i) each existing
Account represents, and each future Account will represent, a bona fide sale or
lease and delivery of goods by such Borrower, or rendition of services by such
Borrower, in the ordinary course of such Borrower's business; (ii) each existing
Account is, and each future Account will be, for a liquidated amount payable by
the Account Debtor thereon on the terms set forth in the invoice therefor or in
the schedule thereof delivered to the Agent, without any offset, deduction,
defense, or counterclaim except those known to such Borrower and disclosed to
the Agent and the Lenders pursuant to this Agreement; (iii) no payment will be
received with respect to any Account, and no credit, discount, or extension, or
agreement therefor will be granted on any Account, except as reported to the
Agent and the Lenders in accordance with this Agreement; (iv) each copy of an
invoice delivered to the Agent by such Borrower will be a genuine copy of the
original invoice sent to the Account Debtor named therein; and (v) all goods
described in any invoice representing a sale of goods will have been delivered
to the Account Debtor and all services of such Borrower described in each
invoice will have been performed.
(b) No Borrower shall re-date any invoice or sale or make
sales on extended dating beyond that customary in such Borrower's business or
extend or modify any Account. If any Borrower becomes aware of any matter
adversely affecting the collectibility of any Account or the Account Debtor
therefor involving an amount greater than $100,000, including information
regarding the Account Debtor's creditworthiness, such Borrower will promptly so
advise the Agent.
(c) No Borrower shall accept any note or other instrument
(except a check or other instrument for the immediate payment of money) with
respect to any Account without the Agent's written consent. If the Agent
consents to the acceptance of any such instrument, it shall be considered as
evidence of the Account and not payment thereof and such Borrower will promptly
deliver such instrument to the Agent, endorsed by such Borrower to the Agent in
a manner satisfactory in form and substance to the Agent. Regardless of the form
of presentment, demand, notice of protest with respect thereto, such Borrower
shall remain liable thereon until such instrument is paid in full.
(d) Each Borrower shall notify the Agent promptly of all
disputes and claims in excess of $100,000 with any Account Debtor, and agrees to
settle, contest, or adjust such dispute or claim at no expense to the Agent or
any Lender. No discount, credit or allowance shall be granted to any such
Account Debtor without the Agent's prior written consent, except for discounts,
credits and allowances made or given in the ordinary course of such Borrower's
business when no Event of Default exists hereunder. Each Borrower shall send the
Agent a copy of each credit memorandum in excess of $100,000 as soon as issued.
The Agent may at all times when an Event of Default exists hereunder, settle or
adjust disputes and claims directly with Account Debtors for amounts and upon
terms which the Agent or the Majority Lenders, as applicable, shall consider
advisable and, in all cases, the Agent will credit the Borrowers' Loan Account
with the net amounts received by the Agent in payment of any Accounts.
(e) If an Account Debtor returns any Inventory to any Borrower
when no Event of Default exists, then such Borrower shall promptly determine the
reason for such return and shall issue a credit memorandum to the Account Debtor
in the appropriate amount. Each Borrower shall immediately report to the Agent
any return involving an amount in excess of $100,000. Each such report shall
indicate the reasons for the returns and the locations and condition of the
returned Inventory. In the event any Account Debtor returns Inventory to any
Borrower when an Event of Default exists, such Borrower, upon the request of the
Agent, shall: (i) hold the returned Inventory in trust for the Agent; (ii)
segregate all returned Inventory from all of its other property; (iii) dispose
of the returned Inventory solely according to the Agent's written instructions;
and (iv) not issue any credits or allowances with respect thereto without the
Agent's prior written consent. All returned Inventory shall be subject to the
Agent's Liens thereon. Whenever any Inventory is returned, the related Account
shall be deemed ineligible to the extent of the amount owing by the Account
Debtor with respect to such returned Inventory
6.9 Collection of Accounts; Payments. (a) Until the Agent notifies the Borrowers
to the contrary, the Borrowers shall make collection of all Accounts and other
Collateral for the Agent, shall receive all payments as the Agent's trustee, and
shall immediately deliver all payments in their original form duly endorsed in
blank into a Payment Account established for the account of the Borrowers at a
Clearing Bank acceptable to the Agent, subject to a Blocked Account Agreement.
If the Agent requests, the Borrowers shall establish a lock-box service for
collections of Accounts at a Clearing Bank acceptable to the Agent and subject
to a Blocked Account Agreement and other documentation acceptable to the Agent.
If such lock-box service is established, the Borrowers shall instruct all
Account Debtors to make all payments directly to the address established for
such service. If, notwithstanding such instructions, any Borrower receives any
proceeds of Accounts, it shall receive such payments as the Agent's trustee, and
shall immediately deliver such payments to the Agent in their original form duly
endorsed in blank or deposit them into a Payment Account, as the Agent may
direct. All collections received in any lock-box or Payment Account or directly
by any Borrower or the Agent, and all funds in any Payment Account or other
account to which such collections are deposited shall be subject to the Agent's
sole control and withdrawals by the Borrowers shall not be permitted. The Agent
or the Agent's designee may, at any time after the occurrence and during the
continuance of an Event of Default, notify Account Debtors that the Accounts
have been assigned to the Agent and of the Agent's security interest therein,
and may collect them directly and charge the collection costs and expenses to
the Loan Account as a Revolving Loan. So long as an Event of Default has
occurred and is continuing, each Borrower, at the Agent's request, shall execute
and deliver to the Agent such documents as the Agent shall require to grant the
Agent access to any post office box in which collections of Accounts are
received.
(b) If sales of Inventory are made or services are rendered
for cash, the applicable Borrower shall immediately deliver to the Agent or
deposit into a Payment Account the cash which such Borrower receives.
(c) All payments including immediately available funds
received by the Agent at a bank account designated by it, will be the Agent's
sole property for its benefit and the benefit of the Lenders and will be
credited to the Loan Account (conditional upon final collection) immediately
upon receipt for purposes of (i) determining Availability, (ii) calculating the
Unused Line Fee pursuant to Section 3.5, and (iii) calculating the amount of
interest accrued thereon solely for purposes of determining the amount of
interest to be distributed by the Agent to the Lenders (but not the amount of
interest payable by the Borrowers).
(d) In the event the Borrowers repay all of the Obligations
upon the termination of this Agreement or upon acceleration of the Obligations,
other than through the Agent's receipt of payments on account of the Accounts or
proceeds of the other Collateral, such payment will be credited (conditional
upon final collection) to the Loan Account on the same Business Day as the
Agent's receipt of such funds.
6.10 Inventory; Perpetual Inventory. Each Borrower represents and warrants to
the Agent and the Lenders and agrees with the Agent and the Lenders that all of
the Inventory owned by such Borrower is and will be held for sale or lease, or
to be furnished in connection with the rendition of services, in the ordinary
course of such Borrower's business, and is and will be fit for such purposes.
Each Borrower will keep its Inventory in good and marketable condition, except
for damaged or defective goods arising in the ordinary course of such Borrower's
business. Each Borrower will not, without the prior written consent of the
Agent, acquire or accept any Inventory on consignment or approval; provided,
however, that the Parent may have on hand up to $1,000,000 at any one time (in
book value) of consigned Inventory so long as all such consigned Inventory shall
be reported to the Agent and be kept identifiable and segregated from the
Parent's other Inventory. Each Borrower agrees that all Inventory produced by
such Borrower in the United States of America will be produced in accordance
with the Federal Fair Labor Standards Act of 1938, as amended, and all rules,
regulations, and orders thereunder. The Parent will conduct cycle counts,
consistent with past practices, of the Inventory at least once per Fiscal Year,
and after and during the continuation of an Event of Default, at such other
times as the Agent requests. Each Borrower will maintain a perpetual inventory
reporting system at all times. Each Borrower will not, without the Agent's
written consent, sell any Inventory on a xxxx-and-hold, guaranteed sale, sale
and return, sale on approval, consignment, or other repurchase or return basis.
6.11 Equipment. (a) Each Borrower represents and warrants to the Agent and the
Lenders and agrees with the Agent and the Lenders that all of the Equipment
owned by such Borrower is and will be used or held for use in such Borrower's
business, and is and will be fit for such purposes. Except as set forth on
Schedule 6.11, the Borrowers shall keep and maintain the Equipment in good
operating condition and repair (ordinary wear and tear excepted) and shall make
all necessary replacements thereof.
(b) The Borrowers shall promptly inform the Agent of any
material additions to or deletions from the Equipment. The Borrowers shall not
permit any Equipment to become a fixture with respect to real property or to
become an accession with respect to other personal property with respect to
which real or personal property the Agent does not have a Lien. The Borrowers
will not, without the Agent's prior written consent, alter or remove any
identifying symbol or number on any of the Equipment constituting Collateral.
(c) The Borrowers shall not, without the Agent's prior written
consent, sell, lease as a lessor, or otherwise dispose of any of the Equipment;
provided, however, that the Borrowers may (i) sell the Equipment located at the
EFTC's Fort Lauderdale, Florida facility and the "NEO" facility, or (ii) dispose
of obsolete or unusable Equipment having an orderly liquidation value no greater
than $500,000 in the aggregate in any Fiscal Year, or $1,500,000 in the
aggregate during the term of this Agreement, in each case without the Agent's
consent, subject to the conditions set forth in the next sentence. In the event
any of such Equipment is sold, transferred or otherwise disposed of pursuant to
the proviso contained in the immediately preceding sentence, (1) if such sale,
transfer or disposition is effected without replacement of such Equipment, or
such Equipment is replaced by Equipment leased by the Borrowers or by Equipment
purchased by the Borrowers subject to a Lien, then the Borrowers shall deliver
the net cash proceeds of any such sale, transfer or disposition to the Agent,
which proceeds shall be applied to the reduction of the Obligations, or (2) if
such sale, transfer or disposition is made in connection with the purchase by
the Borrowers of replacement Equipment, then the Borrowers shall use the
proceeds of such sale, transfer or disposition to purchase such replacement
Equipment and, with respect to purchases exceeding $200,000 in the aggregate in
any Fiscal Year, shall deliver to the Agent written evidence of the use of the
proceeds for such purchase. All replacement Equipment purchased by the Borrowers
shall be free and clear of all Liens except the Agent's Lien.
6.12 Assigned Contracts. Each Borrower shall fully perform all of its material
obligations under each of the Assigned Contracts, and shall enforce all of its
rights and remedies thereunder, in each case, as it deems appropriate in its
business judgment; provided, however, that the Borrowers shall not take any
action or fail to take any action with respect to the Assigned Contracts which
would cause the termination of a material Assigned Contract. Without limiting
the generality of the foregoing, each Borrower shall take all action necessary
or appropriate to permit, and shall not take any action which would have any
materially adverse effect upon, the full enforcement of all indemnification
rights under its Assigned Contracts. Each Borrower shall notify the Agent and
the Lenders in writing, promptly after such Borrower becomes aware thereof, of
any event or fact which could give rise to a material claim by it for
indemnification under any of its Assigned Contracts, and shall diligently pursue
such right and report to the Agent on all further developments with respect
thereto. Each Borrower shall deposit into the Payment Account or remit directly
to the Agent for application to the Obligations in such order as the Majority
Lenders shall determine, all amounts received by such Borrower as
indemnification or otherwise pursuant to its Assigned Contracts. If any Borrower
shall fail after the Agent's demand to pursue diligently any right under its
Assigned Contracts, or if an Event of Default then exists, the Agent may, and at
the direction of the Majority Lenders shall, directly enforce such right in its
own or such Borrower's name and may enter into such settlements or other
agreements with respect thereto as the Agent or the Majority Lenders, as
applicable, shall determine. In any suit, proceeding or action brought by the
Agent for the benefit of the Lenders under any Assigned Contract for any sum
owing thereunder or to enforce any provision thereof, the Borrowers shall
indemnify and hold the Agent and Lenders harmless from and against all expense,
loss or damage suffered by reason of any defense, setoff, counterclaims,
recoupment, or reduction of liability whatsoever of the obligor thereunder
arising out of a breach by any Borrower of any obligation thereunder or arising
out of any other agreement, indebtedness or liability at any time owing from any
Borrower to or in favor of such obligor or its successors. All such obligations
of the Borrowers shall be and remain enforceable only against the Borrowers and
shall not be enforceable against the Agent or the Lenders. Notwithstanding any
provision hereof to the contrary, each Borrower shall at all times remain liable
to observe and perform all of its duties and obligations under its Assigned
Contracts, and the Agent's or any Lender's exercise of any of their respective
rights with respect to the Collateral shall not release any Borrower from any of
such duties and obligations. Neither the Agent nor any Lender shall be obligated
to perform or fulfill any of a Borrower's duties or obligations under its
Assigned Contracts or to make any payment thereunder, or to make any inquiry as
to the nature or sufficiency of any payment or property received by it
thereunder or the sufficiency of performance by any party thereunder, or to
present or file any claim, or to take any action to collect or enforce any
performance, any payment of any amounts, or any delivery of any property.
6.13 Documents, Instruments, and Chattel Paper. Each Borrower represents and
warrants to the Agent and the Lenders that (a) all documents, instruments, and
chattel paper describing, evidencing, or constituting Collateral, and all
signatures and endorsements thereon, are and will be complete, valid, and
genuine, and (b) all goods evidenced by such documents, instruments, and chattel
paper are and will be owned by the applicable Borrower, free and clear of all
Liens other than Permitted Liens.
6.14 Right to Cure. The Agent may, in its discretion, and shall, at the
direction of the Majority Lenders, pay any amount or do any act required of any
Borrower hereunder or under any other Loan Document in order to preserve,
protect, maintain or enforce the Obligations, the Collateral or the Agent's
Liens therein, and which such Borrower fails to pay or do, including payment of
any judgment against such Borrower, any insurance premium, any warehouse charge,
any finishing or processing charge, any landlord's or bailee's claim, and any
other Lien upon or with respect to the Collateral. All payments that the Agent
makes under this Section 6.14 and all out-of-pocket costs and expenses that the
Agent pays or incurs in connection with any action taken by it hereunder shall
be charged to the Loan Account as a Revolving Loan. Any payment made or other
action taken by the Agent under this Section 6.14 shall be without prejudice to
any right to assert an Event of Default hereunder and to proceed thereafter as
herein provided.
6.15 Power of Attorney. Each Borrower hereby appoints the Agent and the Agent's
designee as such Borrower's attorney, with power: (a) to endorse such Borrower's
name on any checks, notes, acceptances, money orders, or other forms of payment
or security that come into the Agent's or any Lender's possession; (b) to sign
such Borrower's name on any invoice, xxxx of lading, warehouse receipt or other
document of title relating to any Collateral, on drafts against customers, on
assignments of Accounts, on notices of assignment, financing statements and
other public records and to file any such financing statements by electronic
means with or without a signature as authorized or required by applicable law or
filing procedure; (c) so long as any Event of Default has occurred and is
continuing, to notify the post office authorities to change the address for
delivery of such Borrower's mail to an address designated by the Agent and to
receive, open and dispose of all mail addressed to such Borrower; (d) to send
requests for verification of Accounts to customers or Account Debtors; (e) to
clear Inventory through customs in such Borrower's name, the Agent's name or the
name of the Agent's designee, and to sign and deliver to customs officials
powers of attorney in such Borrower's name for such purpose; and (f) to do all
things necessary to carry out this Agreement. Each Borrower ratifies and
approves all acts of such attorney. None of the Lenders or the Agent nor their
attorneys will be liable for any acts or omissions or for any error of judgment
or mistake of fact or law except for their gross negligence or willful
misconduct. This power, being coupled with an interest, is irrevocable until
this Agreement has been terminated and the Obligations have been fully
satisfied.
6.16 The Agent's and Lenders' Rights, Duties and Liabilities. Each Borrower
assumes all responsibility and liability arising from or relating to the use,
sale or other disposition of the Collateral. The Obligations shall not be
affected by any failure of the Agent or any Lender to take any steps to perfect
the Agent's Liens or to collect or realize upon the Collateral, nor shall loss
of or damage to the Collateral release any Borrower from any of the Obligations.
Following the occurrence and continuation of an Event of Default, the Agent may
(but shall not be required to), and at the direction of the Majority Lenders
shall, without notice to or consent from any Borrower, xxx upon or otherwise
collect, extend the time for payment of, modify or amend the terms of,
compromise or settle for cash, credit, or otherwise upon any terms, grant other
indulgences, extensions, renewals, compositions, or releases, and take or omit
to take any other action with respect to the Collateral, any security therefor,
any agreement relating thereto, any insurance applicable thereto, or any Person
liable directly or indirectly in connection with any of the foregoing, without
discharging or otherwise affecting the liability of any Borrower for the
Obligations or under this Agreement or any other agreement now or hereafter
existing between the Agent and/or any Lender and any Borrower.
6.17 Site Visits, Observations and Testing. The Agent and its representatives
will have the right at any reasonable time to enter and visit the Real Estate
and any other place where any property of any Borrower is located for the
purposes of observing the Real Estate, taking and removing soil or groundwater
samples, and conducting tests on any part of the Real Estate. The Agent is under
no duty, however, to visit or observe the Real Estate or to conduct tests, and
any such acts by the Agent will be solely for the purposes of protecting the
Agent's Liens and preserving the Agent and the Lenders' rights under this
Agreement. No site visit, observation or testing by the Agent and the Lenders
will result in a waiver of any default of any Borrower or impose any liability
on the Agent or the Lenders. In no event will any site visit, observation or
testing by the Agent be a representation that hazardous substances are or are
not present in, on or under the Real Estate, or that there has been or will be
compliance with any Environmental Law. Neither any Borrower nor any other party
is entitled to rely on any site visit, observation or testing by the Agent. The
Agent and the Lenders owe no duty of care to protect any Borrower or any other
party against, or to inform any Borrower or any other party of, any hazardous
substances or any other adverse condition affecting the Real Estate. The Agent
may in its discretion disclose to any Borrower or to any other party if so
required by law any report or findings made as a result of, or in connection
with, any site visit, observation or testing by the Agent. Each Borrower
understands and agrees that the Agent makes no warranty or representation to
such Borrower or any other party regarding the truth, accuracy or completeness
of any such report or findings that may be disclosed. Each Borrower also
understands that depending on the results of any site visit, observation or
testing by the Agent and disclosed to such Borrower, such Borrower may have a
legal obligation to notify one or more environmental agencies of the results,
that such reporting requirements are site-specific, and are to be evaluated by
such Borrower without advice or assistance from the Agent. In each instance, the
Agent will give the applicable Borrower reasonable notice before entering the
Real Estate or any other place the Agent is permitted to enter under this
Section 6.17. The Agent will make reasonable efforts to avoid interfering with
any Borrower's use of the Real Estate or any other property in exercising any
rights provided hereunder. Any such site visit, observation and testing
undertaken by the Agent or its representative under this Section 6.17 while no
Event of Default exists shall be at the sole cost and expense of the Agent and
Lenders.
ARTICLE 7
BOOKS AND RECORDS; FINANCIAL INFORMATION; NOTICES
7.1 Books and Records. Each Borrower shall maintain, at all times, correct and
complete books, records and accounts in which complete, correct and timely
entries are made of its transactions in accordance with GAAP applied
consistently with the audited Financial Statements required to be delivered
pursuant to Section 7.2(a). Each Borrower shall, by means of appropriate
entries, reflect in such accounts and in all Financial Statements proper
liabilities and reserves for all taxes and proper provision for depreciation and
amortization of property and bad debts, all in accordance with GAAP. Each
Borrower shall maintain at all times books and records pertaining to the
Collateral in such detail, form and scope as the Agent or any Lender shall
reasonably require, including, but not limited to, records of (a) all payments
received and all credits and extensions granted with respect to the Accounts;
(b) the return, rejection, repossession, stoppage in transit, loss, damage, or
destruction of any Inventory; and (c) all other dealings affecting the
Collateral.
7.2 Financial Information. Each Borrower shall promptly furnish to each Lender,
all such financial information as the Agent shall reasonably request. Without
limiting the foregoing, the Parent will furnish to the Agent and each Lender, in
such detail as the Agent or the Lenders shall request, the following:
(a) As soon as available, but in any event not later than 90
days after the close of each Fiscal Year (or by April 15, 2000, with respect to
Fiscal Year 1999), consolidated audited balance sheets, and statements of income
and expense, cash flow and of stockholders' equity for the Parent and its
Subsidiaries for such Fiscal Year, and the accompanying notes thereto, setting
forth in each case in comparative form figures for the previous Fiscal Year, all
in reasonable detail, fairly presenting the financial position and the results
of operations of the Parent and its consolidated Subsidiaries as at the date
thereof and for the Fiscal Year then ended, and prepared in accordance with
GAAP. Such statements shall be examined in accordance with generally accepted
auditing standards by and, in the case of such statements performed on a
consolidated basis, accompanied by a report thereon unqualified in any respect
of independent certified public accountants selected by the Parent and
reasonably satisfactory to the Agent. The Parent hereby authorizes the Agent to
communicate directly with its certified public accountants and, by this
provision, authorizes those accountants to disclose to the Agent any and all
financial statements and other supporting financial documents and schedules
relating to the Parent and to discuss directly with the Agent the finances and
affairs of the Parent and its consolidated Subsidiaries.
(b) As soon as available, but in any event not later than 30
days after the end of each month, consolidated and divisional (to the extent
prepared) unaudited balance sheets of the Parent and its consolidated
Subsidiaries as at the end of such month, and consolidated and divisional (to
the extent prepared) unaudited statements of income and expense and cash flow
for the Parent and its consolidated Subsidiaries for such month and for the
period from the beginning of the Fiscal Year to the end of such month, all in
reasonable detail, fairly presenting the financial position and results of
operations of the Parent and its consolidated Subsidiaries as at the date
thereof and for such periods, and prepared in accordance with the Parent's past
practices applied consistently with the audited Financial Statements required to
be delivered pursuant to Section 7.2(a). The Parent shall certify by a
certificate signed by its chief financial officer that all such statements have
been prepared in accordance with the Parent's past practices and present fairly,
subject to normal year-end adjustments, the Parent's financial position as at
the dates thereof and its results of operations for the periods then ended.
(c) As soon as available, but in any event not later than 45
days after the close of each fiscal quarter other than the fourth quarter of a
Fiscal Year, consolidated and divisional (to the extent prepared) unaudited
balance sheets of the Parent and its consolidated Subsidiaries as at the end of
such quarter, and consolidated and divisional (to the extent prepared) unaudited
statements of income and expense and statement of cash flows for the Parent and
its Subsidiaries for such quarter and for the period from the beginning of the
Fiscal Year to the end of such quarter, all in reasonable detail, fairly
presenting the financial position and results of operation of the Parent and its
Subsidiaries as at the date thereof and for such periods, prepared in accordance
with GAAP consistent with the audited Financial Statements required to be
delivered pursuant to Section 7.2(a). The Parent shall certify by a certificate
signed by its chief financial officer that all such statements have been
prepared in accordance with GAAP and present fairly, subject to normal year-end
adjustments, the Parent's financial position as at the dates thereof and its
results of operations for the periods then ended.
(d) With each of the audited Financial Statements delivered
pursuant to Section 7.2(a), a written statement by the independent certified
public accountants (a) stating whether, in connection with their audit
examination, any condition or event that constitutes a Default or Event of
Default has come to their attention and, if such a condition or event has come
to their attention, specifying the nature and period of existence thereof, it
being understood that such audit examination extended only to accounting matters
and that no special investigation was made with respect to the existence of
Defaults or Events of Default, and (b) stating that based on their audit
examination nothing has come to their attention that causes them to believe
either or both that the information contained in the certificates delivered
therewith pursuant to Section 7.2(a) is not correct or that the matters set
forth in compliance certificates delivered therewith pursuant to Section 7.2(e)
for the applicable Fiscal Year are not stated in accordance with the terms of
this Agreement.
(e) With each of the annual audited Financial Statements
delivered pursuant to Section 7.2(a), and within 30 days after the end of each
month, a certificate of the chief financial officer of the Parent (i) setting
forth in reasonable detail the calculations required to establish that the
Parent was in compliance with the covenants set forth in Sections 9.23 through
9.29 during the period covered in such Financial Statements and as at the end
thereof, and (ii) stating that, except as explained in reasonable detail in such
certificate, (A) all of the representations and warranties of the Borrowers
contained in this Agreement and the other Loan Documents are correct and
complete in all material respects as at the date of such certificate as if made
at such time, except for those that speak as of a particular date, (B) the
Borrowers are, at the date of such certificate, in compliance in all material
respects with all of their respective covenants and agreements in this Agreement
and the other Loan Documents, (C) no Default or Event of Default then exists or
existed during the period covered by such Financial Statements, (D) describing
and analyzing in reasonable detail all material trends, changes, and
developments in each and all Financial Statements; and (E) explaining the
variances of the figures in the corresponding budgets and prior Fiscal Year
Financial Statements. If such certificate discloses that a representation or
warranty is not correct or complete, or that a covenant has not been complied
with, or that a Default or Event of Default existed or exists, such certificate
shall set forth what action the Borrowers have taken or propose to take with
respect thereto.
(f) No sooner than 60 days before and not later than 45 days
after the beginning of each Fiscal Year, annual forecasts (to include forecasted
Availability, consolidated and divisional (to the extent prepared) balance
sheets, statements of income and expenses and statements of cash flow) for the
Parent and its Subsidiaries as at the end of and for each fiscal quarter of such
Fiscal Year.
(g) Promptly after filing with the PBGC and the IRS, a copy of
each annual report or other filing filed with respect to each Plan of any
Borrower.
(h) Promptly upon the filing thereof, copies of all reports,
if any, to or other documents filed by any Borrower or any of its Subsidiaries
with the Securities and Exchange Commission under the Exchange Act, and all
reports, notices, or statements sent or received by any Borrower or any of its
Subsidiaries to or from the holders of any equity interests of any Borrower
(other than routine non-material correspondence sent by shareholders of any
Borrower to such Borrower) or any such Subsidiary or of any Debt for Borrowed
Money of any Borrower or any of its Subsidiaries registered under the Securities
Act of 1933 or to or from the trustee under any indenture under which the same
is issued.
(i) As soon as available, but in any event not later than 15
days after any Borrower's receipt thereof, a copy of all management reports and
management letters prepared for such Borrower by any independent certified
public accountants of such Borrower.
(j) Promptly after their preparation, copies of any and all
proxy statements, financial statements, and reports which any Borrower makes
available to its shareholders.
(k) Promptly after filing with the IRS, a copy of
each tax return filed by any Borrower or by any of its Subsidiaries.
(l) Such additional information as the Agent and/or any Lender
may from time to time reasonably request regarding the financial and business
affairs of any Borrower or any Subsidiary.
7.3 Notices to the Lenders. Each Borrower shall notify the Agent and
the Lenders in writing of the following matters at the following times:
(a) Immediately after becoming aware of any Default or Event
of Default;
(b) Immediately after becoming aware of the assertion by the
holder of any Debt in a face amount in excess of $100,000 that a default exists
with respect thereto or that any Borrower or such Subsidiary is not in
compliance with the terms thereof in any material respect, or the threat or
commencement by such holder of any enforcement action because of such asserted
default or non-compliance;
(c) Immediately after becoming aware of any event or
circumstance which could reasonably be expected to have a Material Adverse
Effect;
(d) Immediately after becoming aware of any pending or
threatened action, suit, or proceeding, by any Person, or any pending or
threatened investigation by a Governmental Authority, which could reasonably be
expected to have a Material Adverse Effect;
(e) Immediately after becoming aware of any pending or
threatened strike, work stoppage, unfair labor practice claim, or other labor
dispute affecting any Borrower or any of its Subsidiaries in a manner which
could reasonably be expected to have a Material Adverse Effect;
(f) Immediately after becoming aware of any violation of any
law, statute, regulation, or ordinance of a Governmental Authority affecting any
Borrower or any Subsidiary which could reasonably be expected to have a Material
Adverse Effect;
(g) Immediately after receipt of any notice of any violation
by any Borrower or any of its Subsidiaries of any Environmental Law which could
reasonably be expected to have a Material Adverse Effect or that any
Governmental Authority has asserted in writing that any Borrower or any
Subsidiary is not in compliance with any Environmental Law or is investigating
any Borrower's or such Subsidiary's compliance therewith;
(h) Immediately after receipt of any written notice that any
Borrower or any of its Subsidiaries is or may be liable to any Person as a
result of the Release or threatened Release of any Contaminant or that any
Borrower or any Subsidiary is subject to investigation by any Governmental
Authority evaluating whether any remedial action is needed to respond to the
Release or threatened Release of any Contaminant which, in either case, is
reasonably likely to give rise to liability in excess of $100,000;
(i) Immediately after receipt of any written notice of
the imposition of any Environmental Lien against any property of any Borrower or
any of its Subsidiaries;
(j) Any change in any Borrower's name, state of organization,
or form of organization, trade names under which any Borrower will sell
Inventory or create Accounts, or to which instruments in payment of Accounts may
be made payable, in each case at least thirty (30) days prior thereto;
(k) Within ten (10) Business Days after any Borrower or any
ERISA Affiliate knows or has reason to know, that an ERISA Event or a prohibited
transaction (as defined in Sections 406 of ERISA and 4975 of the Code) has
occurred, and, when known, any action taken or threatened by the IRS, the DOL or
the PBGC with respect thereto;
(l) Upon request, or, in the event that such filing reflects a
significant change with respect to the matters covered thereby, within three (3)
Business Days after the filing thereof with the PBGC, the DOL or the IRS, as
applicable, copies of the following: (i) each annual report (form 5500 series),
including Schedule B thereto, filed with the PBGC, the DOL or the IRS with
respect to each Plan, (ii) a copy of each funding waiver request filed with the
PBGC, the DOL or the IRS with respect to any Plan and all communications
received by any Borrower or any ERISA Affiliate from the PBGC, the DOL or the
IRS with respect to such request, and (iii) a copy of each other filing or
notice filed with the PBGC, the DOL or the IRS, with respect to each Plan by
either any Borrower or any ERISA Affiliate;
(m) Upon request, copies of each actuarial report for any Plan
or Multi-employer Plan and annual report for any Multi-employer Plan; and within
three (3) Business Days after receipt thereof by any Borrower or any ERISA
Affiliate, copies of the following: (i) any notices of the PBGC's intention to
terminate a Plan or to have a trustee appointed to administer such Plan; (ii)
any favorable or unfavorable determination letter from the IRS regarding the
qualification of a Plan under Section 401(a) of the Code; or (iii) any notice
from a Multi-employer Plan regarding the imposition of withdrawal liability;
(n) Within three (3) Business Days after the occurrence
thereof: (i) any changes in the benefits of any existing Plan which increase any
Borrower's annual costs with respect thereto, or the establishment of any new
Plan or the commencement of contributions to any Plan to which any Borrower or
any ERISA Affiliate was not previously contributing; or (ii) any failure by any
Borrower or any ERISA Affiliate to make a required installment or any other
required payment under Section 412 of the Code on or before the due date for
such installment or payment; or
(o) Within three (3) Business Days after any Borrower or any
ERISA Affiliate knows or has reason to know that any of the following events has
or will occur: (i) a Multi-employer Plan has been or will be terminated; (ii)
the administrator or plan sponsor of a Multi-employer Plan intends to terminate
a Multi-employer Plan; or (iii) the PBGC has instituted or will institute
proceedings under Section 4042 of ERISA to terminate a Multi-employer Plan.
Each notice given under this Section shall describe the
subject matter thereof in reasonable detail, and shall set forth the action that
any Borrower, its Subsidiary, or any ERISA Affiliate, as applicable, has taken
or proposes to take with respect thereto.
ARTICLE 8
GENERAL WARRANTIES AND REPRESENTATIONS
Each Borrower warrants and represents to the Agent and the Lenders that
except as hereafter disclosed to and accepted by the Agent and the Majority
Lenders in writing:
8.1 Authorization, Validity, and Enforceability of this Agreement and the Loan
Documents. Each Borrower has the corporate power and authority to execute,
deliver and perform this Agreement and the other Loan Documents to which it is a
party, to incur the Obligations, and to grant to the Agent Liens upon and
security interests in the Collateral. Each Borrower has taken all necessary
corporate action (including obtaining approval of its stockholders if necessary)
to authorize its execution, delivery, and performance of this Agreement and the
other Loan Documents to which it is a party. This Agreement and the other Loan
Documents to which it is a party have been duly executed and delivered by each
Borrower, and constitute the legal, valid and binding obligations of each
Borrower, enforceable against it in accordance with their respective terms
without defense, setoff or counterclaim, except, with respect to enforceability,
as affected by bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting creditors' rights generally and general principles of equity.
Each Borrower's execution, delivery, and performance of this Agreement and the
other Loan Documents to which it is a party do not and will not conflict with,
or constitute a violation or breach of, or constitute a default under, or result
in, or require the creation or imposition of any Lien upon the property of such
Borrower or any of its Subsidiaries by reason of the terms of (a) any material
contract, mortgage, Lien, lease, agreement, indenture, or instrument to which
such Borrower is a party or which is binding upon it, (b) any material
Requirement of Law applicable to such Borrower or any of its Subsidiaries, or
(c) the certificate or articles of incorporation or by-laws of such Borrower or
any of its Subsidiaries.
8.2 Validity and Priority of Security Interest. The provisions of this Agreement
and the other Loan Documents create legal and valid Liens on all the Collateral
in favor of the Agent, for the ratable benefit of the Agent and the Lenders, and
such Liens constitute perfected and continuing Liens on all the Collateral,
having priority over all other Liens on the Collateral, except for those Liens
identified in clauses (c), (d), (e) and (g) of the definition of Permitted Liens
securing all the Obligations, and enforceable against the Borrowers and all
third parties.
8.3 Organization and Qualification. Each Borrower (a) is duly incorporated and
organized and validly existing in good standing under the laws of the state of
its incorporation, (b) is qualified to do business as a foreign corporation and
is in good standing in the jurisdictions set forth on Schedule 8.3 which are the
only jurisdictions in which failure to so qualify or be in good standing could
reasonably be expected to have a Material Adverse Effect and (c) has all
requisite power and authority to conduct its business and to own its property.
8.4 Corporate Name; Prior Transactions. Except as set forth on Schedule 8.4, no
Borrower has, during the past five (5) years, been known by or used any other
corporate or fictitious name, or been a party to any merger or consolidation, or
acquired all or substantially all of the assets of any Person, or acquired any
of its property outside of the ordinary course of business.
8.5 Subsidiaries and Affiliates. Schedule 8.5 is a correct and complete list of
the name and relationship to each Borrower of each and all of such Borrower's
Subsidiaries and other Affiliates. Each Subsidiary is (a) duly incorporated and
organized and validly existing in good standing under the laws of its state of
incorporation set forth on Schedule 8.5, and (b) qualified to do business as a
foreign corporation and in good standing in each jurisdiction in which the
failure to so qualify or be in good standing could reasonably be expected to
have a material adverse effect on any such Subsidiary's business, operations,
prospects, property, or condition (financial or otherwise) and (c) has all
requisite power and authority to conduct its business and own its property;
provided, however, that none of the Subsidiaries of the Parent (other than PEI)
presently conducts any business, owns any assets, or has any Debt.
8.6 Financial Statements and Projections. (a) The Parent has delivered to the
Agent and the Lenders the audited balance sheet and related statements of
income, retained earnings, cash flows, and changes in stockholders equity for
the Parent and its consolidated Subsidiaries as of December 31, 1998, and for
the Fiscal Year then ended, accompanied by the report thereon of the Parent's
independent certified public accountants, KPMG LLP. The Parent has also
delivered to the Agent and the Lenders the unaudited balance sheet and related
statements of income and cash flows for the Parent and its consolidated
Subsidiaries as of February 29, 2000. Such financial statements are attached
hereto as Exhibit C. All such financial statements have been prepared in
accordance with GAAP and present accurately and fairly the financial position of
the Parent and its consolidated Subsidiaries as at the dates thereof and their
results of operations for the periods then ended.
(b) The Latest Projections when submitted to the Lenders as
required herein represent the Parent's best estimate of the future financial
performance of the Parent and its consolidated Subsidiaries for the periods set
forth therein. The Latest Projections have been prepared on the basis of the
assumptions set forth therein, which the Parent believes are fair and reasonable
in light of current and reasonably foreseeable business conditions at the time
submitted to the Lenders except that the unaudited Financial Statements (i) do
not have all of the footnotes required by GAAP, and (ii) are subject to normal,
year end adjustments.
(c) The pro forma balance sheet of the Parent as at March 31,
2000, attached hereto as Exhibit C, presents fairly and accurately the Parent's
financial condition as at such date and has been prepared in accordance with
GAAP.
8.7 Capitalization. As of the date hereof, the capital stock of the Parent
consists of (i) 45,000,000 authorized shares of common stock (of which
15,543,489 are issued and outstanding; (ii) 45,000 authorized shares of Series A
Junior Participating Preferred Stock (of which none are issued and outstanding);
and (iii) 4,455,000 authorized shares of preferred stock (of which none are
issued and outstanding). As of the date hereof, the Parent has reserved (i)
4,495,000 shares of common stock for issuance pursuant to the Parent's Equity
Incentive Plan and (ii) 300,000 shares of common stock for issuance pursuant to
the Company's Non-Employee Director Plan. The outstanding shares of common stock
are validly issued, duly paid and non-assessable.
8.8 Solvency. Each Borrower is Solvent prior to and after giving effect to the
making of the Revolving Loans to be made on the Closing Date and the issuance of
the Letters of Credit to be issued on the Closing Date, and shall remain Solvent
during the term of this Agreement.
8.9 Debt. After giving effect to the making of the Revolving Loans to be made on
the Closing Date, the Borrowers have no Debt, except (a) the Obligations, (b)
Debt described on Schedule 8.9, (c) trade payables and other contractual
obligations arising in the ordinary course of business, and (d) other Debt
existing on the Closing Date and reflected in the Financial Statements attached
hereto as Exhibit C.
8.10 Distributions. Since December 31, 1998, no Distribution has been declared,
paid, or made upon or in respect of any capital stock or other securities of any
Borrower or any of its Subsidiaries.
8.11 Title to Property. Each Borrower has good and marketable title in fee
simple to the Real Estate identified on Schedule 8.12 as owned by such Borrower,
and each Borrower has good, indefeasible, and merchantable title to all of its
other property (including the assets reflected on the December 31, 1998
Financial Statements delivered to the Agent and the Lenders, except as disposed
of in the ordinary course of business since the date thereof), free of all Liens
except Permitted Liens.
8.12 Real Estate; Leases. Schedule 8.12 sets forth, as of the Closing Date, a
correct and complete list of all Real Estate owned by each Borrower, all leases
and subleases of real or personal property held by each Borrower as lessee or
sublessee (other than leases of personal property as to which such Borrower is
lessee or sublessee for which the value of such personal property is less than
$250,000), and all leases and subleases of real or personal property held by
each Borrower as lessor, or sublessor. Each Borrower has a valid and enforceable
leasehold interest in all Real Estate or personal property leased by it pursuant
to the terms of the lease agreements set forth on Schedule 8.12. Each Borrower
is in compliance in all material respects with the terms of such leases.
8.13 Proprietary Rights. Schedule 8.13 sets forth a correct and complete list of
all of the Borrowers' Proprietary Rights. None of the Proprietary Rights is
subject to any licensing agreement or similar arrangement except as set forth on
Schedule 8.13. To the best of each Borrower's knowledge, none of the Proprietary
Rights infringes on or conflicts with any other Person's property, and no other
Person's property infringes on or conflicts with the Proprietary Rights. The
Proprietary Rights described on Schedule 8.13 constitute all of the property of
such type necessary to the current and anticipated future conduct of the
Borrowers' business.
8.14 Trade Names. All trade names or styles under which any Borrower or any of
its Subsidiaries will sell Inventory or create Accounts, or to which instruments
in payment of Accounts may be made payable, are listed on Schedule 8.14.
8.15 Litigation. Except as disclosed, there is no pending, or to the best of any
Borrower's knowledge threatened, action, suit, proceeding, or counterclaim by
any Person, or to the best of any Borrower's knowledge investigation by any
Governmental Authority, or any basis for any of the foregoing, which could
reasonably be expected to cause a Material Adverse Effect.
8.16 Restrictive Agreements. No Borrower is a party to any contract or
agreement, or subject to any charter or other corporate restriction, which
adversely affects its ability to execute, deliver, and perform the Loan
Documents and repay the Obligations or which could reasonably be expected to
cause a Material Adverse Effect.
8.17 Labor Disputes. As of the Closing Date (a) there is no collective
bargaining agreement or other labor contract covering employees of any Borrower
or any of its Subsidiaries, (b) no such collective bargaining agreement or other
labor contract is scheduled to expire during the term of this Agreement, (c) no
union or other labor organization is seeking to organize, or to be recognized
as, a collective bargaining unit of employees of any Borrower or any of its
Subsidiaries or for any similar purpose, and (d) there is no pending or (to the
best of each Borrower's knowledge) threatened, strike, work stoppage, material
unfair labor practice claim, or other material labor dispute against or
affecting any Borrower or its Subsidiaries or their employees.
8.18 Environmental Laws.
(a) Each Borrower and its Subsidiaries have complied in all
material respects with all Environmental Laws and neither any Borrower nor any
Subsidiary nor any of their presently owned real property or presently conducted
operations, nor to their knowledge their previously owned real property or prior
operations, is subject to any enforcement order from or liability agreement with
any Governmental Authority or private Person respecting (i) compliance with any
Environmental Law or (ii) any potential liabilities and costs or remedial action
arising from the Release or threatened Release of a Contaminant.
(b) Each Borrower and its Subsidiaries have obtained all
material permits necessary for their current operations under Environmental
Laws, and all such permits are in good standing and each Borrower and its
Subsidiaries are in compliance with all material terms and conditions of such
permits.
(c) Neither any Borrower nor any of its Subsidiaries, nor, to
the best of each Borrower's knowledge, any of its predecessors in interest, has
in violation of applicable law stored, treated or disposed of any hazardous
waste.
(d) Neither any Borrower nor any of its Subsidiaries has
received any summons, complaint, order or similar written notice indicating that
it is not currently in compliance with, or that any Governmental Authority is
investigating its compliance with, any Environmental Laws or that it is or may
be liable to any other Person as a result of a Release or threatened Release of
a Contaminant.
(e) To the best of each Borrower's knowledge, none of the
present or past operations of any Borrower and its Subsidiaries is the subject
of any investigation by any Governmental Authority evaluating whether any
remedial action is needed to respond to a Release or threatened Release of a
Contaminant.
(f) There is not now, nor to the best of each Borrower's
knowledge has there ever been on or in the Real Estate:
(1) any underground storage tanks or surface
impoundments in violation of applicable Environmental Laws,
(2) any asbestos-containing material in
violation of applicable Environmental Laws, or
(3) any polychlorinated biphenyls (PCBs) used
in hydraulic oils, electrical transformers or other equipment in violation of
applicable Environmental Laws.
(g) Neither any Borrower nor any of its Subsidiaries has filed
any notice under any requirement of Environmental Law reporting a spill or
accidental and unpermitted Release or discharge of a Contaminant into the
environment.
(h) Neither any Borrower nor any of its Subsidiaries has
entered into any negotiations or settlement agreements with any Person
(including the prior owner of its property) imposing material obligations or
liabilities on any Borrower or any of its Subsidiaries with respect to any
remedial action in response to the Release of a Contaminant or environmentally
related claim.
(i) None of the products manufactured, distributed or
sold by any Borrower or any of its Subsidiaries contain asbestos containing
material.
(j) No Environmental Lien has attached to the Real
Estate.
8.19 No Violation of Law. Neither any Borrower nor any of its Subsidiaries is in
violation of any law, statute, regulation, ordinance, judgment, order, or decree
applicable to it which violation could reasonably be expected to have a Material
Adverse Effect.
8.20 No Default. Subject only to the repayment in full on the Closing Date of
the Debt for Borrowed Money owing by the Parent to the syndicate of lenders led
by Bank One, except as set forth on Schedule 8.20, neither any Borrower nor any
of its Subsidiaries is in default with respect to any note, indenture, loan
agreement, mortgage, lease, deed, or other agreement to which such Borrower or
such Subsidiary is a party or by which it is bound, which default could
reasonably be expected to have a Material Adverse Effect.
8.21 ERISA Compliance.
(a) Each Plan is in compliance in all material respects with
the applicable provisions of ERISA, the Code and other federal or state law.
Each Plan which is intended to qualify under Section 401(a) of the Code has
received a favorable determination letter from the IRS and to the best knowledge
of each Borrower, nothing has occurred which would cause the loss of such
qualification. Each Borrower and each ERISA Affiliate has made all required
contributions to any Plan subject to Section 412 of the Code, and no application
for a funding waiver or an extension of any amortization period pursuant to
Section 412 of the Code has been made with respect to any Plan.
(b) There are no pending or, to the best knowledge of any
Borrower, threatened claims, actions or lawsuits, or action by any Governmental
Authority, with respect to any Plan which has resulted or could reasonably be
expected to result in a Material Adverse Effect. There has been no prohibited
transaction or violation of the fiduciary responsibility rules with respect to
any Plan which has resulted or could reasonably be expected to result in a
Material Adverse Effect.
(c) (i) No ERISA Event has occurred or is reasonably expected
to occur; (ii) no Pension Plan has any Unfunded Pension Liability; (iii) neither
any Borrower nor any ERISA Affiliate has incurred, or reasonably expects to
incur, any liability under Title IV of ERISA with respect to any Pension Plan
(other than premiums due and not delinquent under Section 4007 of ERISA); (iv)
neither any Borrower nor any ERISA Affiliate has incurred, or reasonably expects
to incur, any liability (and no event has occurred which, with the giving of
notice under Section 4219 of ERISA, would result in such liability) under
Section 4201 or 4243 of ERISA with respect to a Multi-employer Plan; and (v)
neither any Borrower nor any ERISA Affiliate has engaged in a transaction that
could be subject to Section 4069 or 4212(c) of ERISA.
8.22 Taxes. Each Borrower and its Subsidiaries have filed all federal and other
tax returns and reports required to be filed, and have paid all federal and
other taxes, assessments, fees and other governmental charges levied or imposed
upon them or their properties, income or assets otherwise due and payable unless
such unpaid taxes and assessments would constitute a Permitted Lien.
8.23 Regulated Entities. None of any Borrower, any Person controlling any
Borrower, or any Subsidiary, is an "Investment Company" within the meaning of
the Investment Company Act of 1940. Each Borrower is subject to regulation under
the Public Utility Holding Company Act of 1935, the Federal Power Act, the
Interstate Commerce Act, any state public utilities code or law, or any other
federal or state statute or regulation limiting its ability to incur
indebtedness.
8.24 Use of Proceeds; Margin Regulations. The proceeds of the Loans are to be
used solely for the Borrowers' working capital purposes, general corporate
purposes, and, to the extent not prohibited hereunder, for capital expenditures
and Restricted Investments. Neither any Borrower nor any Subsidiary is engaged
in the business of purchasing or selling Margin Stock or extending credit for
the purpose of purchasing or carrying Margin Stock.
8.25 Copyrights, Patents, Trademarks and Licenses, etc. Each Borrower owns or is
licensed or otherwise has the right to use all of the patents, trademarks,
service marks, trade names, copyrights, contractual franchises, licenses, rights
of way, authorizations and other rights that are reasonably necessary for the
operation of its businesses as currently conducted, without, to the best of any
Borrower's knowledge, conflict with the rights of any other Person. To the best
knowledge of each Borrower, no slogan or other advertising device, product,
process, method, substance, part or other material now employed, or now
contemplated to be employed, by such Borrower or any Subsidiary infringes upon
any rights held by any other Person. No claim or litigation regarding any of the
foregoing is pending or to the best of any Borrower's knowledge, threatened, and
to the best knowledge of each Borrower, no patent, invention, device,
application, principle or any statute, law, rule, regulation, standard or code
is pending or proposed relating to such intellectual property, which, in either
case, could reasonably be expected to have a Material Adverse Effect.
8.26 No Material Adverse Change. No material adverse change has occurred in any
Borrower's property, business, operations, or conditions (financial or
otherwise) since the date of the Financial Statements delivered to the Lenders.
8.27 Full Disclosure. None of the representations or warranties made by any
Borrower or any Subsidiary in the Loan Documents as of the date such
representations and warranties are made or deemed made, and none of the
statements contained in any exhibit, report, statement or certificate furnished
by or on behalf of any Borrower or any Subsidiary in connection with the Loan
Documents (including the offering and disclosure materials delivered by or on
behalf of any Borrower to the Lenders prior to the Closing Date but excluding
the Latest Projections which shall be governed by Section 8.6(b)), contains any
untrue statement of a material fact or omits any material fact required to be
stated therein or necessary to make the statements made therein, in light of the
circumstances under which they are made, not misleading as of the time when made
or delivered.
8.28 Material Agreements. Schedule 8.28 hereto sets forth as of the
Closing Date all material agreements and contracts to which any Borrower or any
of its Subsidiaries is a party or is bound as of the date hereof.
8.29 Bank Accounts. Schedule 8.29 contains as of the Closing Date a
complete and accurate list of all bank accounts maintained by each Borrower
with any bank or other financial institution.
8.30 Governmental Authorization. No approval, consent, exemption, authorization,
or other action by, or notice to, or filing with, any Governmental Authority or
other Person is necessary or required in connection with the execution, delivery
or performance by, or enforcement against, any Borrower or any of its
Subsidiaries of this Agreement or any other Loan Document.
ARTICLE 9
AFFIRMATIVE AND NEGATIVE COVENANTS
Each Borrower covenants to the Agent and each Lender that so
long as any of the Obligations remain outstanding or this Agreement is in
effect:
9.1 Taxes and Other Obligations. Each Borrower shall, and shall cause each of
its Subsidiaries to, (a) file when due all tax returns and other reports which
it is required to file; (b) pay, or provide for the payment, when due, of all
taxes, fees, assessments and other governmental charges against it or upon its
property, income and franchises, make all required withholding and other tax
deposits, and establish adequate reserves for the payment of all such items, and
provide to the Agent and the Lenders, upon request, satisfactory evidence of its
timely compliance with the foregoing; and (c) pay when due all Debt owed by it
and all claims of materialmen, mechanics, carriers, warehousemen, landlords,
processors and other like Persons, and all other indebtedness owed by it and
perform and discharge in a timely manner all other obligations undertaken by it;
provided, however, so long as the Borrowers have notified the Agent in writing,
neither any Borrower nor any of its Subsidiaries need pay any tax, fee,
assessment, or governmental charge, that (i) it is contesting in good faith by
appropriate proceedings diligently pursued, (ii) such Borrower or its
Subsidiary, as the case may be, has established proper reserves for as provided
in GAAP, and (iii) no Lien (other than a Permitted Lien) results from such
non-payment.
9.2 Corporate Existence and Good Standing. Each Borrower shall, and shall cause
each of its Subsidiaries to, maintain its corporate existence and its
qualification and good standing in all jurisdictions in which the failure to
maintain such existence and qualification or good standing could reasonably be
expected to have a Material Adverse Effect.
9.3 Compliance with Law and Agreements; Maintenance of Licenses. Each Borrower
shall comply, and shall cause each Subsidiary to comply, in all material
respects with all Requirements of Law of any Governmental Authority having
jurisdiction over it or its business (including the Federal Fair Labor Standards
Act and all Environmental Laws). Each Borrower shall, and shall cause each of
its Subsidiaries to, obtain and maintain all licenses, permits, franchises, and
governmental authorizations necessary to own its property and to conduct its
business as conducted on the Closing Date. No Borrower shall modify, amend or
alter its certificate or article of incorporation other than in a manner which
does not adversely affect the rights of the Lenders or the Agent.
9.4 Maintenance of Property. Each Borrower shall, and shall cause each of its
Subsidiaries to, maintain all of its property necessary and useful in the
conduct of its business, in good operating condition and repair, ordinary wear
and tear excepted.
9.5 Insurance. (a) Each Borrower shall maintain, and shall cause each of its
Subsidiaries to maintain, with financially sound and reputable insurers having a
rating of at least AVII or better by Best Rating Guide, insurance against loss
or damage by fire with extended coverage; theft, burglary, pilferage and loss in
transit; public liability (including liability with respect to the Shareholder
Lawsuit) and third party property damage; larceny, embezzlement or other
criminal liability; business interruption; public liability and third party
property damage; and such other hazards or of such other types as is customary
for Persons engaged in the same or similar business, as the Agent, in its
discretion, or acting at the direction of the Majority Lenders, shall specify,
in amounts, and under policies acceptable to the Agent and the Majority Lenders.
Without limiting the foregoing, each Borrower shall also maintain, and shall
cause each of its Subsidiaries to maintain, flood insurance, in the event of a
designation of the area in which any Real Estate and any of the Equipment and
Inventory located on such Real Estate is located as "flood prone" or a "flood
risk area," (hereinafter "SFHA") as defined by the Flood Disaster Protection Act
of 1973, in an amount to be reasonably determined by the Agent, and shall comply
with the additional requirements of the National Flood Insurance Program as set
forth in said Act. Each Borrower shall also maintain flood insurance for its
Inventory and Equipment which is, at any time, located in a SFHA.
(b) Each Borrower shall cause the Agent, for the ratable
benefit of the Agent and the Lenders, to be named as secured party or mortgagee
and sole loss payee or additional insured, in a manner acceptable to the Agent.
Each policy of insurance shall contain a clause or endorsement requiring the
insurer to give not less than thirty (30) days' prior written notice to the
Agent in the event of cancellation of the policy for any reason whatsoever and a
clause or endorsement stating that the interest of the Agent shall not be
impaired or invalidated by any act or neglect of the Borrowers or any of their
Subsidiaries or the owner of any Real Estate for purposes more hazardous than
are permitted by such policy. All premiums for such insurance shall be paid by
the Borrowers when due, and certificates of insurance and, if requested by the
Agent or any Lender, photocopies of the policies, shall be delivered to the
Agent, in each case in sufficient quantity for distribution by the Agent to each
of the Lenders. If any Borrower fails to procure such insurance or to pay the
premiums therefor when due, the Agent may, and at the direction of the Majority
Lenders shall, do so from the proceeds of Revolving Loans.
(c) Each Borrower shall promptly notify the Agent and the
Lenders of any loss, damage, or destruction to the Collateral, whether or not
covered by insurance. The Agent is hereby authorized to collect all insurance
proceeds in respect of Collateral directly and to apply or remit them as
follows:
(i) With respect to insurance proceeds relating
to Collateral other than Fixed Assets, after deducting from such proceeds the
reasonable expenses, if any, incurred by the Agent in the collection or handling
thereof, the Agent shall apply such proceeds, ratably, to the reduction of the
Obligations in the order provided for in Section 4.8.
(ii) With respect to insurance proceeds
relating to Collateral consisting of Fixed Assets, after deducting from such
proceeds the reasonable expenses, if any, incurred by the Agent in the
collection or handling thereof, the Agent shall apply such proceeds to the
reduction of the Obligations, or at the option of the Majority Lenders, may
permit or require the Borrowers to use such money, or any part thereof, to
replace, repair, restore or rebuild the relevant Fixed Assets in a diligent and
expeditious manner with materials and workmanship of substantially the same
quality as existed before the loss, damage or destruction; provided, however,
that so long as there does not then exist any Default or Event of Default, the
Borrowers shall be permitted to use insurance proceeds relating to Collateral
consisting of Fixed Assets to replace, repair, restore or rebuild the relevant
Fixed Assets, in the manner set forth in this sentence; and provided, further,
that the Borrowers first (i) provide the Agent and the Majority Lenders with
plans and specifications for any such repair or restoration which shall be
reasonably satisfactory to the Agent and the Majority Lenders and (ii)
demonstrates to the reasonable satisfaction of the Agent and the Majority
Lenders that the funds available to them will be sufficient to complete such
project in the manner provided therein.
9.6 Condemnation. (a) Each Borrower shall, immediately upon learning of the
institution of any proceeding for the condemnation or other taking of any of its
property, notify the Agent of the pendency of such proceeding, and agrees that
the Agent may participate in any such proceeding, and each Borrower from time to
time will deliver to the Agent all instruments reasonably requested by the Agent
to permit such participation.
(b) The Agent is hereby authorized to collect the proceeds of
any condemnation claim or award directly, and to apply or remit them as follows:
(i) With respect to condemnation proceeds
relating to Collateral other than Fixed Assets, after deducting from such
proceeds the reasonable expenses, if any, incurred by the Agent in the
collection or handling thereof, the Agent shall apply such proceeds, ratably, to
the reduction of the Obligations in the order provided for in Section 4.8.
(ii) With respect to condemnation proceeds
relating to Collateral consisting of Fixed Assets, after deducting from such
proceeds the reasonable expenses, if any, incurred by the Agent in the
collection or handling thereof, the Agent shall apply such proceeds to the
reduction of the Obligations, or at the option of the Majority Lenders, may
permit or require the applicable Borrower to use such money, or any part
thereof, to replace, repair, restore or rebuild the relevant Fixed Assets in a
diligent and expeditious manner with materials and workmanship of substantially
the same quality as existed before the condemnation; provided, however, that so
long as there does not then exist any Default or Event of Default, the Borrowers
shall be permitted to use proceeds relating to Collateral consisting of Fixed
Assets to replace, repair, restore or rebuild the relevant Fixed Assets, in the
manner set forth in this sentence; and provided, further, that plans and
specifications for any such repair or restoration shall be reasonably
satisfactory to the Agent and the Majority Lenders and shall be subject to the
reasonable approval of the Agent and the Majority Lenders.
9.7 Environmental Laws. (a) Each Borrower shall, and shall cause each of its
Subsidiaries to, conduct its business in compliance with all Environmental Laws
applicable to it, including those relating to the generation, handling, use,
storage, and disposal of any Contaminant, except where failure to do so could
not reasonably be expected to have a Material Adverse Effect. Each Borrower
shall, and shall cause each of its Subsidiaries to, take prompt and appropriate
action to respond to any non-compliance with Environmental Laws and shall
regularly report to the Agent on such response.
(b) Without limiting the generality of the foregoing, each
Borrower shall submit to the Agent and the Lenders annually, commencing on the
first Anniversary Date, and on each Anniversary Date thereafter, an update of
the status of each environmental compliance or liability issue. The Agent or any
Lender may request copies of technical reports prepared by any Borrower and its
communications with any Governmental Authority to determine whether such
Borrower or any of its Subsidiaries is proceeding reasonably to correct, cure or
contest in good faith any alleged non-compliance or environmental liability.
Each Borrower shall, at the Agent's or the Majority Lenders' request and at such
Borrower's expense, (i) retain an independent environmental engineer acceptable
to the Agent to evaluate the site, including tests if appropriate, where the
non-compliance or alleged non-compliance with Environmental Laws has occurred
and prepare and deliver to the Agent, in sufficient quantity for distribution by
the Agent to the Lenders, a report setting forth the results of such evaluation,
a proposed plan for responding to any environmental problems described therein,
and an estimate of the costs thereof, and (ii) provide to the Agent and the
Lenders a supplemental report of such engineer whenever the scope of the
environmental problems, or the response thereto or the estimated costs thereof,
shall change in any material respect.
9.8 Compliance with ERISA. Each Borrower shall, and shall cause each of its
ERISA Affiliates to: (a) maintain each Plan in compliance in all material
respects with the applicable provisions of ERISA, the Code and other federal or
state law; (b) cause each Plan which is qualified under Section 401(a) of the
Code to maintain such qualification; (c) make all required contributions to any
Plan subject to Section 412 of the Code; (d) not engage in a prohibited
transaction or violation of the fiduciary responsibility rules with respect to
any Plan; and (e) not engage in a transaction that could be subject to Section
4069 or 4212(c) of ERISA.
9.9 Mergers, Consolidations or Sales. Neither any Borrower nor any of its
Subsidiaries shall enter into any transaction of merger, reorganization, or
consolidation, or transfer, sell, assign, lease, or otherwise dispose of all or
any part of its property, or wind up, liquidate or dissolve, or agree to do any
of the foregoing, except for (i) sales of Inventory in the ordinary course of
its business (ii) dispositions of Borrowers' Equipment and Real Estate in
connection with the sale of the Fort Lauderdale, Florida and "NEO" facilities
(iii) sales or other dispositions of Equipment in the ordinary course of
business that are obsolete or no longer useable by such Borrower in its business
as permitted by Section 6.11, (iv) sales of Accounts arising out of invoices
from Honeywell that are purchased by GECC pursuant to the terms of the GECC
Payment Agreement, but only to the extent that the purchase price paid therefor
is at least 99% of the invoice amount and such payment is made directly by GECC
into a Payment Account, and (v) the consummation of the tender offer
contemplated by the Securities Purchase Agreement. The inclusion of proceeds in
the definition of Collateral shall not be deemed to constitute the Agent's or
any Lender's consent to any sale or other disposition of the Collateral except
as expressly permitted herein.
9.10 Distributions; Capital Change; Restricted Investments. Neither any Borrower
nor any of its Subsidiaries shall (i) directly or indirectly declare or make, or
incur any liability to make, any Distribution including any Distributions in
connection with any warrants of the Parent, except Distributions to any Borrower
by its Subsidiaries, (ii) make any change in its capital structure which could
have a Material Adverse Effect or (iii) make any Restricted Investment other
than (y) the Parent's existing investment in its Subsidiaries; or (z) one or
more investments (including the acquisition of all or substantially all of the
assets or controlling equity interests of other Persons in the same line of
business as the Borrowers, and joint ventures with any Person in the same line
of business as the Borrowers) that would otherwise be Restricted Investments,
provided that (i) no Default or Event of Default exists at such time or would
result from such investment, (ii) at the time of making such investment, the
Coverage Ratio for each of the two most recent fiscal quarters of the Parent is
at least 1.1 to 1.0 and the Coverage Ratio would remain (on a pro forma basis
taking into account any payment that would be required under any new Debt for
Borrowed Money incurred in connection with such investment) at least 1.1 to 1.0,
(iii) at the time of making such investment (and taking such investment into
account) Availability would be at least 20% of the Borrowing Base.
9.11 Transactions Affecting Collateral or Obligations. Neither any
Borrower nor any of its Subsidiaries shall enter into any transaction which
would be reasonably expected to have a Material Adverse Effect.
9.12 Guaranties. Neither any Borrower nor any of its Subsidiaries shall
make, issue, or be or become liable on any Guaranty, except Guaranties of the
Obligations in favor of the Agent.
9.13 Debt. Neither any Borrower nor any of its Subsidiaries shall incur or
maintain any Debt, other than: (a) the Obligations; (b) trade payables and
contractual obligations to suppliers and customers arising in the ordinary
course of business; (c) other Debt existing on the Closing Date and reflected in
the Financial Statements attached hereto as Exhibit C; (d) Debt described on
Schedule 8.9; (e) unsecured, subordinated Debt (including Debt utilized to make
investments permitted under Section 9.10) on material terms that are no less
favorable to the Parent and the Lenders than the terms of the Senior
Subordinated Debt in effect on the Closing Date, or that is otherwise reasonably
acceptable to the Agent; provided, however, that any such subordinated Debt (up
to a maximum principal amount of $3,000,000) may provide for cash interest
payments, not to exceed 10% per annum, so long as the terms of such Debt specify
that no cash payments shall be made during the existence of or which would
result in an Event of Default; (f) Debt evidenced by Operating Lease Obligations
permitted under Section 9.24 and Capital Lease Obligations permitted under
Section 9.23; (g) purchase money Debt incurred to provide some or all of the
purchase price of Capital Expenditures permitted under Section 9.25, but only to
the extent that the amount of such Debt does not exceed the purchase price of
such assets, together with refinancings of such purchase money Debt from time to
time on terms no less favorable to the Parent than the original purchase money
Debt and so long as the amount refinanced is not greater than the outstanding
principal balance (plus accrued interest) outstanding at the time of such
refinancing; provided, however, that none of the subsidiaries of the Parent
(other than PEI) will incur any Debt.
9.14 Prepayment. Neither any Borrower nor any of its Subsidiaries shall
voluntarily prepay or redeem any Debt (including the Senior Subordinated Debt),
except the Obligations in accordance with the terms of this Agreement.
9.15 Transactions with Affiliates. Except as set forth below, neither any
Borrower nor any of its Subsidiaries shall, sell, transfer, distribute, or pay
any money or property, including, but not limited to, any fees or expenses of
any nature (including, but not limited to, any fees or expenses for management
services), to any Affiliate, or lend or advance money or property to any
Affiliate, or invest in (by capital contribution or otherwise) or purchase or
repurchase any stock or indebtedness, or any property, of any Affiliate, or
become liable on any Guaranty of the indebtedness, dividends, or other
obligations of any Affiliate. Notwithstanding the foregoing, while no Event of
Default has occurred and is continuing, each Borrower and its Subsidiaries may
engage in transactions with Affiliates in the ordinary course of business, in
amounts and upon terms fully disclosed to the Agent and the Lenders, and no less
favorable to such Borrower and its Subsidiaries than would be obtained in a
comparable arm's-length transaction with a third party who is not an Affiliate.
9.16 Investment Banking and Finder's Fees. Neither any Borrower nor any of its
Subsidiaries shall pay or agree to pay, or reimburse any other party with
respect to, any investment banking or similar or related fee, underwriter's fee,
finder's fee, or broker's fee to any Person in connection with this Agreement,
except a fee in an amount not to exceed $500,000 payable by the Parent to Xxxxxx
Xxxxx. Each Borrower shall defend and indemnify the Agent and the Lenders
against and hold them harmless from all claims of any Person that any Borrower
is obligated to pay for any such fees, and all costs and expenses (including
attorneys' fees) incurred by the Agent and/or any Lender in connection
therewith.
9.17 Directors' Fees. Neither any Borrower nor any of its Subsidiaries shall,
directly or indirectly make any payments to directors as directors fees (but
excluding reimbursement of expenses) in excess of $250,000 per year in the
aggregate, or at any time when an Event of Default exists or would result from
such payment.
9.18 Business Conducted. No Borrower shall, nor shall any Borrower permit any of
its Subsidiaries to, engage directly or indirectly, in any line of business
other than the businesses in which such Borrower is engaged on the Closing Date,
and any substantially similar businesses; provided, however, that none of the
Parent's Subsidiaries (other than PEI) shall own any assets or conduct any
business.
9.19 Liens. Neither any Borrower nor any of its Subsidiaries shall create,
incur, assume, or permit to exist any Lien on any property now owned or
hereafter acquired by any of them, except Permitted Liens.
9.20 Sale and Leaseback Transactions. Neither any Borrower nor any of its
Subsidiaries shall, directly or indirectly, enter into any arrangement with any
Person providing for any Borrower or such Subsidiary to lease or rent property
that such Borrower or such Subsidiary has sold or will sell or otherwise
transfer to such Person.
9.21 New Subsidiaries. No Borrower shall, directly or indirectly,
organize, create, acquire or permit to exist any Subsidiary other than those
listed on Schedule 8.5.
9.22 Fiscal Year. No Borrower shall change its Fiscal Year.
9.23 Capital Leases. Neither any Borrower nor any of its Subsidiaries shall
enter into any Capital Leases if, after giving effect thereto, the aggregate
amount of all Capital Leases by the Borrowers and their Subsidiaries on a
consolidated basis would exceed $15,000,000 during the term of this Agreement.
9.24 Operating Lease Obligations. Neither any Borrower nor any of its
Subsidiaries shall enter into, or suffer to exist, any lease of real or personal
property as lessee or sublessee (other than a Capital Lease), if, after giving
effect thereto, the aggregate amount of Rentals (as hereinafter defined) payable
by the Borrowers and their Subsidiaries on a consolidated basis in any Fiscal
Year in respect of such lease and all other such leases would exceed $15,000,000
(such amount being referred to herein as "Permitted Rentals"). The term
"Rentals" means all payments due from the lessee or sublessee under a lease,
including, without limitation, basic rent, percentage rent, property taxes,
utility or maintenance costs, and insurance premiums.
9.25 Capital Expenditures. To the extent that no other term of this Agreement
would be breached thereby, the Parent shall be entitled to make Capital
Expenditures for the acquisition of Equipment to the extent necessary to conduct
its business, and up to $3,000,000 of Capital Expenditures for the acquisition
of Real Estate to be used in its business; provided, however, that in connection
with acquiring any such Real Estate that is not financed with purchase money
Debt, the Parent shall provide the Agent with a deed of trust, mortgage or
equivalent documentation providing the Agent with a Lien on such Real Estate,
and such Real Estate shall be Collateral hereunder.
9.26 Cash Flow. The Parent shall maintain Cash Flow of at least ($10,000,000)
(i.e. such Cash Flow shall be positive or, to the extent that it is negative, it
will not be worse than a negative $10,000,000) as of the last day of each month
during the term of this Agreement, measured from the first day of the first
month after the Closing Date.
9.27 [Intentionally Deleted]
9.28 [Intentionally Deleted]
9.29 Coverage Ratio. The Parent shall maintain a Coverage Ratio of at least 1.0
to 1.0 tested as of each quarter commencing with the fiscal quarter ending March
31, 2001 through the fiscal quarter ending December 31, 2001, and as of each
month end thereafter commencing January 31, 2002.
9.30 Use of Proceeds. No Borrower shall, nor shall it suffer or permit any
Subsidiary to, use any portion of the Loan proceeds, directly or indirectly, (i)
to purchase or carry Margin Stock, (ii) to repay or otherwise refinance
indebtedness of such Borrower or others incurred to purchase or carry Margin
Stock, (iii) to extend credit for the purpose of purchasing or carrying any
Margin Stock, or (iv) to acquire any security in any transaction that is subject
to Section 13 or 14 of the Exchange Act, or (v) to repurchase or effect the
repurchase or acquisition of any shares of stock of any Borrower.
9.31 Payment of Honeywell. Payments of the accounts payable owing by the Parent
to Honeywell arising out of the One Time Buy Inventory shall be made by wire
transfers by the Agent to Honeywell with proceeds of Loans or Agent Advances, as
the case may be, as instructed by the Parent in accordance with that certain
Memorandum of Understanding dated March 29, 2000 between Parent and Honeywell
regarding Amendment of Inventory Transfer Agreement. All such accounts payable
shall be paid in full by July 31, 2000.
9.32 Further Assurances. Each Borrower shall execute and deliver, or cause to be
executed and delivered, to the Agent and/or the Lenders such documents and
agreements, and shall take or cause to be taken such actions, as the Agent or
any Lender may, from time to time, reasonably request to carry out the terms and
conditions of this Agreement and the other Loan Documents.
ARTICLE 10
CONDITIONS OF LENDING
10.1 Conditions Precedent to Making of Loans on the Closing Date. The obligation
of the Lenders to make the initial Revolving Loans on the Closing Date, and the
obligation of the Agent to cause the Letter of Credit Issuer to issue any Letter
of Credit on the Closing Date, are subject to the following conditions precedent
having been satisfied in a manner satisfactory to the Agent and each Lender:
(a) This Agreement and the other Loan Documents shall have
been executed by each party thereto and each Borrower shall have performed and
complied with all covenants, agreements and conditions contained herein and the
other Loan Documents which are required to be performed or complied with by each
Borrower before or on such Closing Date.
(b) Upon making the Revolving Loans (including such Revolving
Loans made to finance fees or otherwise as reimbursement for fees, costs and
expenses then payable under this Agreement) and with all its obligations
current, the Borrowers would have Availability in an amount no less than
$5,000,000.
(c) All representations and warranties made hereunder and in
the other Loan Documents shall be true and correct in all material respects as
if made on such date unless specifically related to a different date.
(d) No Default or Event of Default shall exist on the Closing
Date, or would exist after giving effect to the Loans to be made, the Letters of
Credit to be issued and the Credit Support to be in place on such date.
(e) The Agent and the Lenders shall have received such
opinions of counsel for each Borrower as the Agent or any Lender shall request,
each such opinion to be in a form, scope, and substance satisfactory to the
Agent, the Lenders, and their respective counsel.
(f) The Agent shall have received preliminary title reports
(or other satisfactory title and lien search results), in form and substance
acceptable to Agent, with respect to owned Real Estate of the Borrowers.
(g) The Agent shall have received:
(i) acknowledgment copies (or other proof of the
filing) of proper financing statements, duly filed on or before the Closing Date
under the UCC of all jurisdictions that the Agent may deem necessary or
desirable in order to perfect the Agent's Lien;
(ii) duly executed UCC-3 Termination
Statements and such other instruments, in form and substance satisfactory to the
Agent, as shall be necessary to terminate and satisfy all Liens on the Property
of each Borrower and its Subsidiaries except Permitted Liens;
(iii) duly executed copies of all Subordinated
Debt Documents, containing terms and conditions, including subordination terms,
satisfactory to the Agent in its sole discretion, together with evidence that
the Parent has received or will receive on the Closing Date at least $54,000,000
in the aggregate in cash proceeds from the issuance of the Senior Subordinated
Exchange Notes;
(iv) a duly executed copy of the Honeywell
Buy Back Agreement, containing terms and conditions satisfactory to Agent in its
sole discretion, including the commitment of Honeywell to purchase all Inventory
located at the Parent's Phoenix, Arizona facility (including Lifetime Buy
Inventory but excluding obsolete Inventory) at a price equal to at least 90% of
such Inventory's cost and a duly executed copy of the Honeywell No Offset
Letter, containing terms and conditions satisfactory to Agent in its sole
discretion.
(h) The Borrowers shall have paid all fees and expenses of the
Agent and the Attorney Costs incurred in connection with any of the Loan
Documents and the transactions contemplated thereby to the extent invoiced.
(i) The Agent shall have received evidence, in form, scope,
and substance, reasonably satisfactory to the Agent, of all insurance coverage
as required by this Agreement.
(j) The Agent and the Lenders shall have had an opportunity, if they so choose,
to examine the books of account and other records and files of the Borrowers,
including all of the Borrowers' material contracts, and to make copies thereof,
and to conduct a pre-closing audit which shall include, without limitation,
verification of Inventory, Accounts, and the Borrowing Base, and the results of
such examination and audit shall have been satisfactory to the Agent and the
Lenders in all respects.
(k) a draft of the audited Financial Statements of the Parent for its
Fiscal Year ending 1999.
(l) All proceedings taken in connection with the execution of this Agreement,
all other Loan Documents and all documents and papers relating thereto,
including receipt of any governmental and third party consents and approvals
that may be required in connection with the Loan Documents and the transactions
contemplated thereby, shall be satisfactory in form, scope, and substance to the
Agent and the Lenders.
The acceptance by any Borrower of any Loans made or Letters of Credit
issued on the Closing Date shall be deemed to be a representation and warranty
made by such Borrower to the effect that all of the conditions precedent to the
making of such Loans or the issuance of such Letters of Credit have been
satisfied, with the same effect as delivery to the Agent and the Lenders of a
certificate signed by a Responsible Officer of the applicable Borrowers, dated
the Closing Date, to such effect.
Execution and delivery to the Agent by a Lender of a counterpart of
this Agreement shall be deemed confirmation by such Lender that (i) all
conditions precedent in this Section 10.1 have been fulfilled to the
satisfaction of such Lender, (ii) the decision of such Lender to execute and
deliver to the Agent an executed counterpart of this Agreement was made by such
Lender independently and without reliance on the Agent or any other Lender as to
the satisfaction of any condition precedent set forth in this Section 10.1, and
(iii) all documents sent to such Lender for approval consent, or satisfaction
were acceptable to such Lender.
10.2 Conditions Precedent to Each Loan. The obligation of the Lenders to make
each Loan, including the initial Revolving Loans on the Closing Date, and the
obligation of the Agent to cause the Letter of Credit Issuer to issue any Letter
of Credit shall be subject to the further conditions precedent that on and as of
the date of any such extension of credit:
(a) the following statements shall be true, and the acceptance
by any Borrower of any extension of credit shall be deemed to be a statement to
the effect set forth in clauses (i) and (ii), with the same effect as the
delivery to the Agent and the Lenders of a certificate signed by a Responsible
Officer, dated the date of such extension of credit, stating that:
(i) The representations and warranties
contained in this Agreement and the other Loan Documents are correct in all
material respects on and as of the date of such extension of credit as though
made on and as of such date, other than any such representation or warranty
which relates to a specified prior date and except to the extent the Agent and
the Lenders have been notified by any Borrower that any representation or
warranty is not correct and the Majority Lenders have explicitly waived in
writing compliance with such representation or warranty; and
(ii) No event has occurred and is continuing,
or would result from such extension of credit, which constitutes a Default or an
Event of Default; and
(b) The amount of the Borrowing Base shall be sufficient to
make such Revolving Loans or issue such Letters of Credit without exceeding the
Availability, provided, however, that the foregoing conditions precedent are not
conditions to each Lender participating in or reimbursing the Bank or the Agent
for such Lenders' Pro Rata Share of any Non-Ratable Loan or Agent Advance made
in accordance with the provisions of Sections 2.2(h), (i) and (j).
ARTICLE 11
DEFAULT; REMEDIES
11.1 Events of Default. It shall constitute an event of default ("Event
of Default") if any one or more of the following shall occur for any reason:
(a) any failure by the Borrowers to pay the principal
of or interest or premium on any of the Obligations or any fee or other amount
owing hereunder when due, whether upon demand or otherwise;
(b) any representation or warranty made or deemed made by any
Borrower in this Agreement or by any Borrower or any of its Subsidiaries in any
of the other Loan Documents, any Financial Statement, or any certificate
furnished by any Borrower or any of its Subsidiaries at any time to the Agent or
any Lender shall prove to be untrue in any material respect as of the date on
which made, deemed made, or furnished;
(c) any default shall occur in the observance or performance
of any of the covenants and agreements contained in this Agreement, any other
Loan Documents, or any other agreement entered into at any time to which any
Borrower or any Subsidiary and the Agent or any Lender are party (including in
respect of any Bank Products), or if any such agreement or document shall
terminate (other than in accordance with its terms or the terms hereof or with
the written consent of the Agent and the Majority Lenders) or become void or
unenforceable, without the written consent of the Agent and the Majority
Lenders;
(d) default shall occur with respect to any Debt For Borrowed
Money (other than the Obligations) of any Borrower or any of its Subsidiaries in
an outstanding principal amount which exceeds $1,000,000, or under any agreement
or instrument under or pursuant to which any such Debt For Borrowed Money may
have been issued, created, assumed, or guaranteed by any Borrower or any of its
Subsidiaries, and such default shall continue for more than the period of grace,
if any, therein specified, if the effect thereof (with or without the giving of
notice or further lapse of time or both) is to accelerate, or to permit the
holders of any such Debt For Borrowed Money to accelerate, the maturity of any
such Debt For Borrowed Money; or any such Debt For Borrowed Money shall be
declared due and payable or be required to be prepaid (other than by a regularly
scheduled required prepayment) prior to the stated maturity thereof;
(e) any Borrower or any of its Subsidiaries shall (i) file a
voluntary petition in bankruptcy or file a voluntary petition or an answer or
otherwise commence any action or proceeding seeking reorganization, arrangement
or readjustment of its debts or for any other relief under the federal
Bankruptcy Code, as amended, or under any other bankruptcy or insolvency act or
law, state or federal, now or hereafter existing, or consent to, approve of, or
acquiesce in, any such petition, action or proceeding; (ii) apply for or
acquiesce in the appointment of a receiver, assignee, liquidator, sequestrator,
custodian, monitor, trustee or similar officer for it or for all or any part of
its property; (iii) make an assignment for the benefit of creditors; or (iv) be
unable generally to pay its debts as they become due;
(f) an involuntary petition or proposal shall be filed or an
action or proceeding otherwise commenced seeking reorganization, arrangement,
consolidation or readjustment of the debts of any Borrower or any of its
Subsidiaries or for any other relief under the federal Bankruptcy Code, as
amended, or under any other bankruptcy or insolvency act or law, state or
federal, now or hereafter existing and any of the following events occur: (i)
either Borrower consents to the institution of such action or proceeding; (ii)
the petition commencing such action or proceeding is not timely controverted;
(iii) the petition commencing such action or proceeding is not dismissed within
60 calendar days of the date of the filing thereof; provided, however, that
during the pendency of such period, the Lenders shall be relieved of their
obligation to extend credit hereunder; or (iv) an order for relief shall have
been issued or entered;
(g) a receiver, assignee, liquidator, sequestrator, custodian,
monitor, trustee or similar officer for any Borrower or any of its Subsidiaries
or for all or any part of its property shall be appointed and the same shall not
have been removed within 60 days of such appointment; provided, however that
during the pendency of such period the Lenders shall be relieved of their
obligation to extend credit hereunder or a warrant of attachment, execution or
similar process shall be issued against any part of the property of any Borrower
or any of its Subsidiaries and the same shall not have been dissolved or
extinguished within 60 days of such issuance; provided, however that during the
pendency of such period the Lenders shall be relieved of their obligation to
extend credit hereunder;
(h) any Borrower or any of its Subsidiaries shall (i) file a
certificate of dissolution under applicable state law or shall be liquidated,
dissolved or wound-up or shall commence, or (ii) have commenced against it any
action or proceeding for dissolution, winding-up or liquidation, and such
proceeding is not dismissed within 60 calendar days of the date of the
commencement thereof; provided, however, that during the pendency of such
period, the Lenders shall be relieved of their obligation to extend credit
hereunder, or (iii) shall take any corporate action in furtherance thereof;
(i) all or any material part of the property of any Borrower
or any of its Subsidiaries shall be nationalized, expropriated or condemned,
seized or otherwise appropriated, or custody or control of such property or of
any Borrower or such Subsidiary shall be assumed by any Governmental Authority
or any court of competent jurisdiction at the instance of any Governmental
Authority, except where contested in good faith by proper proceedings diligently
pursued where a stay of enforcement is in effect;
(j) the Honeywell Buy Back Agreement or the Honeywell No
Offset Letter shall be terminated, revoked or declared void or invalid or the
GECC Payment Agreement is materially modified without the advance written
consent of the Agent or monies paid to the Parent thereunder by GECC are not
received in the Payment Account;
(k) one or more judgments, orders, decrees or arbitration
awards is entered against any Borrower involving in the aggregate liability (to
the extent not covered by independent third-party insurance as to which the
insurer does not dispute coverage) as to any single or related or unrelated
series of transactions, incidents or conditions, of $3,000,000 or more, and the
same shall remain unsatisfied, unvacated and unstayed pending appeal for a
period of 5 days after the entry thereof;
(l) any loss, theft, damage or destruction of any item or
items of Collateral or other property of any Borrower or any Subsidiary occurs
which could reasonably be expected to cause a Material Adverse Effect and is not
adequately covered by insurance;
(m) there occurs a Material Adverse Effect;
(n) there is filed against any Borrower or any of its
Subsidiaries any action, suit or proceeding under any federal or state
racketeering statute (including the Racketeer Influenced and Corrupt
Organization Act of 1970), which action, suit or proceeding (i) is not dismissed
within one hundred twenty (120) days, and (ii) could reasonably be expected to
result in the confiscation or forfeiture of any material portion of the
Collateral;
(o) for any reason other than the failure of the Agent to take
any action available to it to maintain perfection of the Agent's Liens, pursuant
to the Loan Documents, any Loan Document ceases to be in full force and effect
or any Lien with respect to any material portion of the Collateral intended to
be secured thereby ceases to be, or is not, valid, perfected and prior to all
other Liens (other than Permitted Liens) or is terminated, revoked or declared
void;
(p) an ERISA Event shall occur with respect to a Pension Plan or Multi-employer
Plan which has resulted or could reasonably be expected to result in liability
of any Borrower under Title IV of ERISA to the Pension Plan, Multi-employer Plan
or the PBGC; (ii) there shall exist any Unfunded Pension Liability among all
Pension Plans; or (iii) any Borrower or any ERISA Affiliate shall fail to pay
when due, after the expiration of any applicable grace period, any installment
payment with respect to its withdrawal liability under Section 4201 of ERISA
under a Multi-employer Plan;
(q) there occurs a Change of Control.
11.2 Remedies. (a) If a Default or an Event of Default exists, the Agent may, in
its discretion, and shall, at the direction of the Majority Lenders, do one or
more of the following at any time or times and in any order, without notice to
or demand on the Borrowers: (i) reduce the Maximum Revolver Amount, or the
advance rates against Eligible Accounts and/or Eligible Inventory used in
computing the Borrowing Base, or reduce one or more of the other elements used
in computing the Borrowing Base; (ii) restrict the amount of or refuse to make
Revolving Loans; and (iii) restrict or refuse to provide Letters of Credit or
Credit Support. If an Event of Default exists, the Agent shall, at the direction
of the Majority Lenders, do one or more of the following, in addition to the
actions described in the preceding sentence, at any time or times and in any
order, without notice to or demand on the Borrower: (A) terminate the
Commitments and this Agreement; (B) declare any or all Obligations to be
immediately due and payable; provided, however, that upon the occurrence of any
Event of Default described in Sections 11.1(e), 11.1(f), 11.1(g), or 11.1(h),
the Commitments shall automatically and immediately expire and all Obligations
shall automatically become immediately due and payable without notice or demand
of any kind; and (C) pursue its other rights and remedies under the Loan
Documents and applicable law.
(b) If an Event of Default has occurred and is continuing: (i)
the Agent shall have for the benefit of the Lenders, in addition to all other
rights of the Agent and the Lenders, the rights and remedies of a secured party
under the UCC; (ii) the Agent may, at any time, take possession of the
Collateral and keep it on the Borrowers' premises, at no cost to the Agent or
any Lender, or remove any part of it to such other place or places as the Agent
may desire, or the Borrowers shall, upon the Agent's demand, at the Borrowers'
cost, assemble the Collateral and make it available to the Agent at a place
reasonably convenient to the Agent; and (iii) the Agent may sell and deliver any
Collateral at public or private sales, for cash, upon credit or otherwise, at
such prices and upon such terms as the Agent deems advisable, in its sole
discretion, and may, if the Agent deems it reasonable, postpone or adjourn any
sale of the Collateral by an announcement at the time and place of sale or of
such postponed or adjourned sale without giving a new notice of sale. Without in
any way requiring notice to be given in the following manner, each Borrower
agrees that any notice by the Agent of sale, disposition or other intended
action hereunder or in connection herewith, whether required by the UCC or
otherwise, shall constitute reasonable notice to such Borrower if such notice is
mailed by registered or certified mail, return receipt requested, postage
prepaid, or is delivered personally against receipt, at least ten (10) Business
Days prior to such action to the Borrowers' address specified in or pursuant to
Section 15.8. If any Collateral is sold on terms other than payment in full at
the time of sale, no credit shall be given against the Obligations until the
Agent or the Lenders receive payment, and if the buyer defaults in payment, the
Agent may resell the Collateral without further notice to the Borrowers. In the
event the Agent seeks to take possession of all or any portion of the Collateral
by judicial process, each Borrower irrevocably waives: (A) the posting of any
bond, surety or security with respect thereto which might otherwise be required;
(B) any demand for possession prior to the commencement of any suit or action to
recover the Collateral; and (C) any requirement that the Agent retain possession
and not dispose of any Collateral until after trial or final judgment. Each
Borrower agrees that the Agent has no obligation to preserve rights to the
Collateral or marshal any Collateral for the benefit of any Person. The Agent is
hereby granted a license or other right to use, without charge, each Borrower's
labels, patents, copyrights, name, trade secrets, trade names, trademarks, and
advertising matter, or any similar property, in completing production of,
advertising or selling any Collateral, and each Borrower's rights under all
licenses and all franchise agreements shall inure to the Agent's benefit for
such purpose. The proceeds of sale shall be applied first to all expenses of
sale, including attorneys' fees, and then to the Obligations. The Agent will
return any excess to the Borrowers and the Borrowers shall remain liable for any
deficiency.
(c) If an Event of Default occurs and is continuing, each
Borrower hereby waives all rights to notice and hearing prior to the exercise by
the Agent of the Agent's rights to repossess the Collateral without judicial
process or to reply, attach or levy upon the Collateral without notice or
hearing.
ARTICLE 12
TERM AND TERMINATION
12.1 Term and Termination. The term of this Agreement shall end on the Stated
Termination Date. The Agent upon direction from the Majority Lenders may
terminate this Agreement without notice upon the occurrence of an Event of
Default. Upon the effective date of termination of this Agreement for any reason
whatsoever, all Obligations (including all unpaid principal, accrued and unpaid
interest and any early termination or prepayment fees or penalties) shall become
immediately due and payable and the Borrowers shall immediately arrange for the
cancellation and return of Letters of Credit then outstanding. Notwithstanding
the termination of this Agreement, until all Obligations are indefeasibly paid
and performed in full in cash, each Borrower shall remain bound by the terms of
this Agreement and shall not be relieved of any of its Obligations hereunder,
and the Agent and the Lenders shall retain all their rights and remedies
hereunder or under any other Loan Document (including the Agent's Liens in and
all rights and remedies with respect to all then existing and after-arising
Collateral).
ARTICLE 13
AMENDMENTS; WAIVERS; PARTICIPATIONS; ASSIGNMENTS; SUCCESSORS
13.1 Amendments and Waivers. No amendment or waiver of any provision of this
Agreement or any other Loan Document, and no consent with respect to any
departure by any Borrower therefrom, shall be effective unless the same shall be
in writing and signed by the Majority Lenders (or by the Agent at the written
request of the Majority Lenders) and the Borrowers and then any such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given; provided, however, that no such waiver, amendment, or
consent shall, unless in writing and signed by all the Lenders and the Borrowers
and acknowledged by the Agent, do any of the following:
(a) increase or extend the Commitment of any Lender;
(b) postpone or delay any date fixed by this Agreement or any
other Loan Document for any payment of principal, interest, fees or other
amounts due to the Lenders (or any of them) hereunder or under any other Loan
Document;
(c) reduce the principal of, or the rate of interest
specified herein on any Loan, or any fees or other amounts payable hereunder or
under any other Loan Document;
(d) change the percentage of the Commitments or of the
aggregate unpaid principal amount of the Loans which is required for the Lenders
or any of them to take any action hereunder;
(e) increase any of the percentages set forth in the
definition of the Borrowing Base;
(f) amend this Section or any provision of this Agreement
providing for consent or other action by all Lenders;
(g) release Collateral other than as permitted by Section
14.12;
(h) change the definition of "Majority Lenders"; or
(i) increase the Maximum Revolver Amount, the Maximum
Inventory Loan, and Unused Letter of Credit Subfacility;
provided, however, the Agent may, in its sole discretion and notwithstanding the
limitations contained in clauses (e) and (i) above and any other terms of this
Agreement, make Revolving Loans (including Agent Advances) in an amount not to
exceed 10% of the Borrowing Base and, provided further, that no amendment,
waiver or consent shall, unless in writing and signed by the Agent, affect the
rights or duties of the Agent under this Agreement or any other Loan Document.
13.2 Assignments; Participations.
(a) Any Lender may, with the written consent of the Agent
(which consent shall not be unreasonably withheld) and, unless there exists an
Event of Default, the Parent (which consent shall not be unreasonably withheld
or delayed), assign and delegate to one or more Eligible Assignees (provided
that no consent of the Agent shall be required in connection with any assignment
and delegation by a Lender to an Affiliate of such Lender) (each an "Assignee")
all, or any ratable part of all, of the Loans, the Commitments and the other
rights and obligations of such Lender hereunder, in a minimum amount of
$5,000,000 (provided that, unless an assignor Lender has assigned and delegated
all of its Loans and Commitments, no such assignment and/or delegation shall be
permitted unless, after giving effect thereto, such assignor Lender retains a
Commitment in a minimum amount of $5,000,000); provided, however, that the
Borrowers and the Agent may continue to deal solely and directly with such
Lender in connection with the interest so assigned to an Assignee until (i)
written notice of such assignment, together with payment instructions, addresses
and related information with respect to the Assignee, shall have been given to
the Borrowers and the Agent by such Lender and the Assignee; (ii) such Lender
and its Assignee shall have delivered to the Borrowers and the Agent an
Assignment and Acceptance in the form of Exhibit F ("Assignment and Acceptance")
and (iii) the assignor Lender or Assignee has paid to the Agent a processing fee
in the amount of $3,000.
(b) From and after the date that the Agent notifies the
assignor Lender that it has received an executed Assignment and Acceptance and
payment of the above-referenced processing fee, (i) the Assignee thereunder
shall be a party hereto and, to the extent that rights and obligations,
including, but not limited to, the obligation to participate in Letters of
Credit and Credit Support have been assigned to it pursuant to such Assignment
and Acceptance, shall have the rights and obligations of a Lender under the Loan
Documents, and (ii) the assignor Lender shall, to the extent that rights and
obligations hereunder and under the other Loan Documents have been assigned by
it pursuant to such Assignment and Acceptance, relinquish its rights and be
released from its obligations under this Agreement (and in the case of an
Assignment and Acceptance covering all or the remaining portion of an assigning
Lender's rights and obligations under this Agreement, such Lender shall cease to
be a party hereto).
(c) By executing and delivering an Assignment and Acceptance,
the assigning Lender thereunder and the Assignee thereunder confirm to and agree
with each other and the other parties hereto as follows: (i) other than as
provided in such Assignment and Acceptance, such assigning Lender makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement or any other Loan Document furnished
pursuant hereto or the attachment, perfection, or priority of any Lien granted
by the Borrowers to the Agent or any Lender in the Collateral; (ii) such
assigning Lender makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Borrowers or the
performance or observance by any Borrower of any of its obligations under this
Agreement or any other Loan Document furnished pursuant hereto; (iii) such
Assignee confirms that it has received a copy of this Agreement, together with
such other documents and information as it has deemed appropriate to make its
own credit analysis and decision to enter into such Assignment and Acceptance;
(iv) such Assignee will, independently and without reliance upon the Agent, such
assigning Lender or any other Lender, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this Agreement; (v) such
Assignee appoints and authorizes the Agent to take such action as agent on its
behalf and to exercise such powers under this Agreement as are delegated to the
Agent by the terms hereof, together with such powers, including the
discretionary rights and incidental power, as are reasonably incidental thereto;
and (vi) such Assignee agrees that it will perform in accordance with their
terms all of the obligations which by the terms of this Agreement are required
to be performed by it as a Lender.
(d) Immediately upon satisfaction of the requirements of
Section 13.2(a), this Agreement shall be deemed to be amended to the extent, but
only to the extent, necessary to reflect the addition of the Assignee and the
resulting adjustment of the Commitments arising therefrom. The Commitment
allocated to each Assignee shall reduce such Commitments of the assigning Lender
pro tanto.
(e) Any Lender may at any time sell to one or more commercial
banks, financial institutions, or other Persons not Affiliates of any Borrower
(a "Participant") participating interests in any Loans, the Commitment of that
Lender and the other interests of that Lender (the "originating Lender")
hereunder and under the other Loan Documents; provided, however, that (i) the
originating Lender's obligations under this Agreement shall remain unchanged,
(ii) the originating Lender shall remain solely responsible for the performance
of such obligations, (iii) the Borrowers and the Agent shall continue to deal
solely and directly with the originating Lender in connection with the
originating Lender's rights and obligations under this Agreement and the other
Loan Documents, and (iv) no Lender shall transfer or grant any participating
interest under which the Participant has rights to approve any amendment to, or
any consent or waiver with respect to, this Agreement or any other Loan
Document, and all amounts payable by the Borrowers hereunder shall be determined
as if such Lender had not sold such participation; except that, if amounts
outstanding under this Agreement are due and unpaid, or shall have been declared
or shall have become due and payable upon the occurrence of an Event of Default,
each Participant shall be deemed to have the right of set-off in respect of its
participating interest in amounts owing under this Agreement to the same extent
and subject to the same limitation as if the amount of its participating
interest were owing directly to it as a Lender under this Agreement.
(f) Notwithstanding any other provision in this Agreement, any
Lender may at any time create a security interest in, or pledge, all or any
portion of its rights under and interest in this Agreement in favor of any
Federal Reserve Bank in accordance with Regulation A of the FRB or U.S. Treasury
Regulation 31 CFR ss.203.14, and such Federal Reserve Bank may enforce such
pledge or security interest in any manner permitted under applicable law.
ARTICLE 14
THE AGENT
14.1 Appointment and Authorization. Each Lender hereby designates and appoints
Bank as its Agent under this Agreement and the other Loan Documents and each
Lender hereby irrevocably authorizes the Agent to take such action on its behalf
under the provisions of this Agreement and each other Loan Document and to
exercise such powers and perform such duties as are expressly delegated to it by
the terms of this Agreement or any other Loan Document, together with such
powers as are reasonably incidental thereto. The Agent agrees to act as such on
the express conditions contained in this Article 14. The provisions of this
Article 14 are solely for the benefit of the Agent and the Lenders and the
Borrowers shall have no rights as a third party beneficiary of any of the
provisions contained herein. Notwithstanding any provision to the contrary
contained elsewhere in this Agreement or in any other Loan Document, the Agent
shall not have any duties or responsibilities, except those expressly set forth
herein, nor shall the Agent have or be deemed to have any fiduciary relationship
with any Lender, and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into this Agreement or any other Loan
Document or otherwise exist against the Agent. Without limiting the generality
of the foregoing sentence, the use of the term "agent" in this Agreement with
reference to the Agent is not intended to connote any fiduciary or other implied
(or express) obligations arising under agency doctrine of any applicable law.
Instead, such term is used merely as a matter of market custom, and is intended
to create or reflect only an administrative relationship between independent
contracting parties. Except as expressly otherwise provided in this Agreement,
the Agent shall have and may use its sole discretion with respect to exercising
or refraining from exercising any discretionary rights or taking or refraining
from taking any actions which the Agent is expressly entitled to take or assert
under this Agreement and the other Loan Documents, including (a) the
determination of the applicability of ineligibility criteria with respect to the
calculation of the Borrowing Base, (b) the making of Agent Advances pursuant to
Section 2.2(i), and (c) the exercise of remedies pursuant to Section 11.2, and
any action so taken or not taken shall be deemed consented to by the Lenders.
14.2 Delegation of Duties. The Agent may execute any of its duties under this
Agreement or any other Loan Document by or through agents, employees or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Agent shall not be responsible for the
negligence or misconduct of any agent or attorney-in-fact that it selects as
long as such selection was made without gross negligence or willful misconduct.
14.3 Liability of Agent. None of the Agent-Related Persons shall (i) be liable
for any action taken or omitted to be taken by any of them under or in
connection with this Agreement or any other Loan Document or the transactions
contemplated hereby (except for its own gross negligence or willful misconduct),
or (ii) be responsible in any manner to any of the Lenders for any recital,
statement, representation or warranty made by any Borrower or any Subsidiary or
Affiliate of any Borrower, or any officer thereof, contained in this Agreement
or in any other Loan Document, or in any certificate, report, statement or other
document referred to or provided for in, or received by the Agent under or in
connection with, this Agreement or any other Loan Document, or the validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement or
any other Loan Document, or for any failure of any Borrower or any other party
to any Loan Document to perform its obligations hereunder or thereunder. No
Agent-Related Person shall be under any obligation to any Lender to ascertain or
to inquire as to the observance or performance of any of the agreements
contained in, or conditions of, this Agreement or any other Loan Document, or to
inspect the properties, books or records of any Borrower or any of any
Borrower's Subsidiaries or Affiliates.
14.4 Reliance by Agent. The Agent shall be entitled to rely, and shall be fully
protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, letter, telegram, facsimile, telex or telephone message,
statement or other document or conversation believed by it to be genuine and
correct and to have been signed, sent or made by the proper Person or Persons,
and upon advice and statements of legal counsel (including counsel to any
Borrower), independent accountants and other experts selected by the Agent. The
Agent shall be fully justified in failing or refusing to take any action under
this Agreement or any other Loan Document unless it shall first receive such
advice or concurrence of the Majority Lenders as it deems appropriate and, if it
so requests, it shall first be indemnified to its satisfaction by the Lenders
against any and all liability and expense which may be incurred by it by reason
of taking or continuing to take any such action. The Agent shall in all cases be
fully protected in acting, or in refraining from acting, under this Agreement or
any other Loan Document in accordance with a request or consent of the Majority
Lenders (or all Lenders if so required by Section 13.1) and such request and any
action taken or failure to act pursuant thereto shall be binding upon all of the
Lenders.
14.5 Notice of Default. The Agent shall not be deemed to have knowledge or
notice of the occurrence of any Default or Event of Default, unless the Agent
shall have received written notice from a Lender or a Borrower referring to this
Agreement, describing such Default or Event of Default and stating that such
notice is a "notice of default." The Agent will notify the Lenders of its
receipt of any such notice. The Agent shall take such action with respect to
such Default or Event of Default as may be requested by the Majority Lenders in
accordance with Section 11; provided, however, that unless and until the Agent
has received any such request, the Agent may (but shall not be obligated to)
take such action, or refrain from taking such action, with respect to such
Default or Event of Default as it shall deem advisable.
14.6 Credit Decision. Each Lender acknowledges that none of the Agent-Related
Persons has made any representation or warranty to it, and that no act by the
Agent hereinafter taken, including any review of the affairs of any Borrower and
its Affiliates, shall be deemed to constitute any representation or warranty by
any Agent-Related Person to any Lender. Each Lender represents to the Agent that
it has, independently and without reliance upon any Agent-Related Person and
based on such documents and information as it has deemed appropriate, made its
own appraisal of and investigation into the business, prospects, operations,
property, financial and other condition and creditworthiness of any Borrower and
its Affiliates, and all applicable bank regulatory laws relating to the
transactions contemplated hereby, and made its own decision to enter into this
Agreement and to extend credit to the Borrowers. Each Lender also represents
that it will, independently and without reliance upon any Agent-Related Person
and based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit analysis, appraisals and decisions in
taking or not taking action under this Agreement and the other Loan Documents,
and to make such investigations as it deems necessary to inform itself as to the
business, prospects, operations, property, financial and other condition and
creditworthiness of each Borrower. Except for notices, reports and other
documents expressly herein required to be furnished to the Lenders by the Agent,
the Agent shall not have any duty or responsibility to provide any Lender with
any credit or other information concerning the business, prospects, operations,
property, financial and other condition or creditworthiness of any Borrower
which may come into the possession of any of the Agent-Related Persons.
14.7 Indemnification. Whether or not the transactions contemplated hereby are
consummated, the Lenders shall indemnify upon demand the Agent-Related Persons
(to the extent not reimbursed by or on behalf of the Borrowers and without
limiting the obligation of the Borrowers to do so), pro rata, from and against
any and all Indemnified Liabilities as such term is defined in Section 15.11;
provided, however, that no Lender shall be liable for the payment to the
Agent-Related Persons of any portion of such Indemnified Liabilities resulting
solely from such Person's gross negligence or willful misconduct. Without
limitation of the foregoing, each Lender shall reimburse the Agent upon demand
for its ratable share of any costs or out-of-pocket expenses (including Attorney
Costs) incurred by the Agent in connection with the preparation, execution,
delivery, administration, modification, amendment or enforcement (whether
through negotiations, legal proceedings or otherwise) of, or legal advice in
respect of rights or responsibilities under, this Agreement, any other Loan
Document, or any document contemplated by or referred to herein, to the extent
that the Agent is not reimbursed for such expenses by or on behalf of the
Borrowers. The undertaking in this Section shall survive the payment of all
Obligations hereunder and the resignation or replacement of the Agent.
14.8 Agent in Individual Capacity. The Bank and its Affiliates may make loans
to, issue letters of credit for the account of, accept deposits from, acquire
equity interests in and generally engage in any kind of banking, trust,
financial advisory, underwriting or other business with any Borrower and its
Subsidiaries and Affiliates as though the Bank were not the Agent hereunder and
without notice to or consent of the Lenders. The Lenders acknowledge that,
pursuant to such activities, the Bank or its Affiliates may receive information
regarding any Borrower or its Affiliates (including information that may be
subject to confidentiality obligations in favor of such Borrower or such
Subsidiary) and acknowledge that the Agent and the Bank shall be under no
obligation to provide such information to them. With respect to its Loans, the
Bank shall have the same rights and powers under this Agreement as any other
Lender and may exercise the same as though it were not the Agent, and the terms
"Lender" and "Lenders" include the Bank in its individual capacity.
14.9 Successor Agent. The Agent may resign as Agent upon 30 days notice to the
Lenders and the Borrowers, such resignation to be effective upon the acceptance
of a successor agent to its appointment as Agent. In the event the Bank sells
all of its Commitment and Revolving Loans as part of a sale, transfer or other
disposition by the Bank of substantially all of its loan portfolio, the Bank
shall resign as Agent and such purchaser or transferee shall become the
successor Agent hereunder. If the Agent resigns under this Agreement, subject to
the proviso in the preceding sentence, the Majority Lenders shall appoint from
among the Lenders a successor agent for the Lenders. If no successor agent is
appointed prior to the effective date of the resignation of the Agent, the Agent
may appoint, after consulting with the Lenders and the Borrowers, a successor
agent from among the Lenders. Upon the acceptance of its appointment as
successor agent hereunder, such successor agent shall succeed to all the rights,
powers and duties of the retiring Agent and the term "Agent" shall mean such
successor agent and the retiring Agent's appointment, powers and duties as Agent
shall be terminated. After any retiring Agent's resignation hereunder as Agent,
the provisions of this Article 14 shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was Agent under this Agreement.
14.10 Withholding Tax. (a) If any Lender is a "foreign corporation,
partnership or trust" within the meaning of the Code and such Lender claims
exemption from, or a reduction of, U.S. withholding tax under Sections 1441 or
1442 of the Code, such Lender agrees with and in favor of the Agent, to deliver
to the Agent:
(i) if such Lender claims an exemption from, or
a reduction of, withholding tax under a United States of America tax treaty,
properly completed IRS Forms 1001 and W-8 before the payment of any interest in
the first calendar year and before the payment of any interest in each third
succeeding calendar year during which interest may be paid under this Agreement;
(ii) if such Lender claims that interest paid
under this Agreement is exempt from United States of America withholding tax
because it is effectively connected with a United States of America trade or
business of such Lender, two properly completed and executed copies of IRS Form
4224 before the payment of any interest is due in the first taxable year of such
Lender and in each succeeding taxable year of such Lender during which interest
may be paid under this Agreement, and IRS Form W-9; and
(iii) such other form or forms as may be required
under the Code or other laws of the United States of America as a condition to
exemption from, or reduction of, United States of America withholding tax.
Such Lender agrees to promptly notify the Agent of any change in circumstances
which would modify or render invalid any claimed exemption or reduction.
(b) If any Lender claims exemption from, or reduction of,
withholding tax under a United States of America tax treaty by providing IRS
Form 1001 and such Lender sells, assigns, grants a participation in, or
otherwise transfers all or part of the Obligations owing to such Lender, such
Lender agrees to notify the Agent of the percentage amount in which it is no
longer the beneficial owner of Obligations of the Borrowers to such Lender. To
the extent of such percentage amount, the Agent will treat such Lender's IRS
Form 1001 as no longer valid.
(c) If any Lender claiming exemption from United States of
America withholding tax by filing IRS Form 4224 with the Agent sells, assigns,
grants a participation in, or otherwise transfers all or part of the Obligations
owing to such Lender, such Lender agrees to undertake sole responsibility for
complying with the withholding tax requirements imposed by Sections 1441 and
1442 of the Code.
(d) If any Lender is entitled to a reduction in the applicable
withholding tax, the Agent may withhold from any interest payment to such Lender
an amount equivalent to the applicable withholding tax after taking into account
such reduction. If the forms or other documentation required by subsection (a)
of this Section are not delivered to the Agent, then the Agent may withhold from
any interest payment to such Lender not providing such forms or other
documentation an amount equivalent to the applicable withholding tax.
(e) If the IRS or any other Governmental Authority of the
United States of America or other jurisdiction asserts a claim that the Agent
did not properly withhold tax from amounts paid to or for the account of any
Lender (because the appropriate form was not delivered, was not properly
executed, or because such Lender failed to notify the Agent of a change in
circumstances which rendered the exemption from, or reduction of, withholding
tax ineffective, or for any other reason) such Lender shall indemnify the Agent
fully for all amounts paid, directly or indirectly, by the Agent as tax or
otherwise, including penalties and interest, and including any taxes imposed by
any jurisdiction on the amounts payable to the Agent under this Section,
together with all costs and expenses (including Attorney Costs). The obligation
of the Lenders under this subsection shall survive the payment of all
Obligations and the resignation or replacement of the Agent.
14.11 Co-Agents. None of the Lenders identified on the facing page or signature
pages of this Agreement as a "co-agent" shall have any right, power, obligation,
liability, responsibility or duty under this Agreement other than those
applicable to all Lenders as such. Without limiting the foregoing, none of the
Lenders so identified as a "co-agent" shall have or be deemed to have any
fiduciary relationship with any Lender. Each Lender acknowledges that it has not
relied, and will not rely, on any of the Lenders so identified in deciding to
enter into this Agreement or in taking or not taking action hereunder.
14.12 Collateral Matters.
(a) The Lenders hereby irrevocably authorize the Agent, at its
option and in its sole discretion, to release any Agent's Lien upon any
Collateral (i) upon the termination of the Commitments and payment and
satisfaction in full by Borrowers of all Loans and reimbursement obligations in
respect of Letters of Credit and Credit Support, and the termination of all
outstanding Letters of Credit (whether or not any of such obligations are due)
and all other Obligations; (ii) constituting property being sold or disposed of
if the applicable Borrower certifies to the Agent that the sale or disposition
is made in compliance with Section 9.9 (and the Agent may rely conclusively on
any such certificate, without further inquiry); (iii) constituting property in
which the Borrowers owned no interest at the time the Lien was granted or at any
time thereafter; or (iv) constituting property leased to a Borrower under a
lease which has expired or been terminated in a transaction permitted under this
Agreement. Except as provided above, the Agent will not release any of the
Agent's Liens without the prior written authorization of the Lenders; provided
that the Agent may, in its discretion, release the Agent's Liens on Collateral
valued in the aggregate not in excess of $2,000,000 during any one year period
without the prior written authorization of the Lenders. Upon request by the
Agent or the Borrowers at any time, the Lenders will confirm in writing the
Agent's authority to release any Agent's Liens upon particular types or items of
Collateral pursuant to this Section 14.12.
(b) Upon receipt by the Agent of any authorization required
pursuant to Section 14.12(a) from the Lenders of the Agent's authority to
release any Agent's Liens upon particular types or items of Collateral, and upon
at least five (5) Business Days prior written request by the applicable
Borrower, the Agent shall (and is hereby irrevocably authorized by the Lenders
to) execute such documents as may be necessary to evidence the release of the
Agent's Liens upon such Collateral; provided, however, that (i) the Agent shall
not be required to execute any such document on terms which, in the Agent's
opinion, would expose the Agent to liability or create any obligation or entail
any consequence other than the release of such Liens without recourse or
warranty, and (ii) such release shall not in any manner discharge, affect or
impair the Obligations or any Liens (other than those expressly being released)
upon (or obligations of the applicable Borrower in respect of) all interests
retained by the applicable Borrower, including the proceeds of any sale, all of
which shall continue to constitute part of the Collateral.
(c) The Agent shall have no obligation whatsoever to any of
the Lenders to assure that the Collateral exists or is owned by any Borrower or
is cared for, protected or insured or has been encumbered, or that the Agent's
Liens have been properly or sufficiently or lawfully created, perfected,
protected or enforced or are entitled to any particular priority, or to exercise
at all or in any particular manner or under any duty of care, disclosure or
fidelity, or to continue exercising, any of the rights, authorities and powers
granted or available to the Agent pursuant to any of the Loan Documents, it
being understood and agreed that in respect of the Collateral, or any act,
omission or event related thereto, the Agent may act in any manner it may deem
appropriate, in its sole discretion given the Agent's own interest in the
Collateral in its capacity as one of the Lenders and that the Agent shall have
no other duty or liability whatsoever to any Lender as to any of the foregoing.
14.13 Restrictions on Actions by Lenders; Sharing of Payments. (a) Each of the
Lenders agrees that it shall not, without the express consent of all Lenders,
and that it shall, to the extent it is lawfully entitled to do so, upon the
request of all Lenders, set off against the Obligations, any amounts owing by
such Lender to any Borrower or any accounts of any Borrower now or hereafter
maintained with such Lender. Each of the Lenders further agrees that it shall
not, unless specifically requested to do so by the Agent, take or cause to be
taken any action to enforce its rights under this Agreement or against any
Borrower, including the commencement of any legal or equitable proceedings, to
foreclose any Lien on, or otherwise enforce any security interest in, any of the
Collateral.
(b) If at any time or times any Lender shall receive (i) by
payment, foreclosure, setoff or otherwise, any proceeds of Collateral or any
payments with respect to the Obligations of any Borrower to such Lender arising
under, or relating to, this Agreement or the other Loan Documents, except for
any such proceeds or payments received by such Lender from the Agent pursuant to
the terms of this Agreement, or (ii) payments from the Agent in excess of such
Lender's ratable portion of all such distributions by the Agent, such Lender
shall promptly (1) turn the same over to the Agent, in kind, and with such
endorsements as may be required to negotiate the same to the Agent, or in same
day funds, as applicable, for the account of all of the Lenders and for
application to the Obligations in accordance with the applicable provisions of
this Agreement, or (2) purchase, without recourse or warranty, an undivided
interest and participation in the Obligations owed to the other Lenders so that
such excess payment received shall be applied ratably as among the Lenders in
accordance with their Pro Rata Shares; provided, however, that if all or part of
such excess payment received by the purchasing party is thereafter recovered
from it, those purchases of participations shall be rescinded in whole or in
part, as applicable, and the applicable portion of the purchase price paid
therefor shall be returned to such purchasing party, but without interest except
to the extent that such purchasing party is required to pay interest in
connection with the recovery of the excess payment.
14.14 Agency for Perfection. Each Lender hereby appoints each other Lender as
agent for the purpose of perfecting the Lenders' security interest in assets
which, in accordance with Article 9 of the UCC can be perfected only by
possession. Should any Lender (other than the Agent) obtain possession of any
such Collateral, such Lender shall notify the Agent thereof, and, promptly upon
the Agent's request therefor shall deliver such Collateral to the Agent or in
accordance with the Agent's instructions.
14.15 Payments by Agent to Lenders. All payments to be made by the Agent to the
Lenders shall be made by bank wire transfer or internal transfer of immediately
available funds to each Lender pursuant to wire transfer instructions delivered
in writing to the Agent on or prior to the Closing Date (or if such Lender is an
Assignee, on the applicable Assignment and Acceptance), or pursuant to such
other wire transfer instructions as each party may designate for itself by
written notice to the Agent. Concurrently with each such payment, the Agent
shall identify whether such payment (or any portion thereof) represents
principal, premium or interest on the Revolving Loans or otherwise.
14.16 Concerning the Collateral and the Related Loan Documents. Each Lender
authorizes and directs the Agent to enter into this Agreement and the other Loan
Documents, for the ratable benefit and obligation of the Agent and the Lenders.
Each Lender agrees that any action taken by the Agent or Majority Lenders, as
applicable, in accordance with the terms of this Agreement or the other Loan
Documents, and the exercise by the Agent or the Majority Lenders, as applicable,
of their respective powers set forth therein or herein, together with such other
powers that are reasonably incidental thereto, shall be binding upon all of the
Lenders.
14.17 Field Audit and Examination Reports; Disclaimer by Lenders. By signing
this Agreement, each Lender:
(a) is deemed to have requested that the Agent furnish such
Lender, promptly after it becomes available, a copy of each field audit or
examination report (each a "Report" and collectively, "Reports") prepared by the
Agent;
(b) expressly agrees and acknowledges that neither the Bank
nor the Agent (i) makes any representation or warranty as to the accuracy of any
Report, or (ii) shall be liable for any information contained in any Report;
(c) expressly agrees and acknowledges that the Reports are not
comprehensive audits or examinations, that the Agent or the Bank or other party
performing any audit or examination will inspect only specific information
regarding the Borrowers and will rely significantly upon the Borrowers' books
and records, as well as on representations of the Borrowers' personnel;
(d) agrees to keep all Reports confidential and strictly
for its internal use, and not to distribute except to its participants, or use
any Report in any other manner; and
(e) without limiting the generality of any other
indemnification provision contained in this Agreement, agrees: (i) to hold the
Agent and any such other Lender preparing a Report harmless from any action the
indemnifying Lender may take or conclusion the indemnifying Lender may reach or
draw from any Report in connection with any loans or other credit accommodations
that the indemnifying Lender has made or may make to the Borrowers, or the
indemnifying Lender's participation in, or the indemnifying Lender's purchase
of, a loan or loans of the Borrowers; and (ii) to pay and protect, and
indemnify, defend and hold the Agent and any such other Lender preparing a
Report harmless from and against, the claims, actions, proceedings, damages,
costs, expenses and other amounts (including Attorney Costs) incurred by the
Agent and any such other Lender preparing a Report as the direct or indirect
result of any third parties who might obtain all or part of any Report through
the indemnifying Lender.
14.18 Relation Among Lenders. The Lenders are not partners or co-venturers, and
no Lender shall be liable for the acts or omissions of, or (except as otherwise
set forth herein in case of the Agent) authorized to act for, any other Lender.
ARTICLE 15
MISCELLANEOUS
15.1 No Waivers; Cumulative Remedies. No failure by the Agent or any Lender to
exercise any right, remedy, or option under this Agreement or any present or
future supplement thereto, or in any other agreement between or among any
Borrower and the Agent and/or any Lender, or delay by the Agent or any Lender in
exercising the same, will operate as a waiver thereof. No waiver by the Agent or
any Lender will be effective unless it is in writing, and then only to the
extent specifically stated. No waiver by the Agent or the Lenders on any
occasion shall affect or diminish the Agent's and each Lender's rights
thereafter to require strict performance by any Borrower of any provision of
this Agreement. The Agent and the Lenders may proceed directly to collect the
Obligations without any prior recourse to the Collateral. The Agent's and each
Lender's rights under this Agreement will be cumulative and not exclusive of any
other right or remedy which the Agent or any Lender may have.
15.2 Severability. The illegality or unenforceability of any provision of this
Agreement or any Loan Document or any instrument or agreement required hereunder
shall not in any way affect or impair the legality or enforceability of the
remaining provisions of this Agreement or any instrument or agreement required
hereunder.
15.3 GOVERNING LAW; CHOICE OF FORUM; SERVICE OF PROCESS. (a) THIS AGREEMENT
SHALL BE INTERPRETED AND THE RIGHTS AND LIABILITIES OF THE PARTIES HERETO
DETERMINED IN ACCORDANCE WITH THE INTERNAL LAWS (AS OPPOSED TO THE CONFLICT OF
LAWS PROVISIONS PROVIDED THAT PERFECTION ISSUES WITH RESPECT TO ARTICLE 9 OF THE
UCC MAY GIVE EFFECT TO APPLICABLE CHOICE OR CONFLICT OF LAW RULES SET FORTH IN
DIVISION 9 OF THE UCC) OF THE STATE OF NEW YORK; PROVIDED THAT THE AGENT AND THE
LENDERS SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE
OF NEW YORK OR OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW
YORK, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE BORROWERS,
THE AGENT AND THE LENDERS CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY,
TO THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. EACH OF THE BORROWERS, THE
AGENT AND THE LENDERS IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION
TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT
MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH
JURISDICTION IN RESPECT OF THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO.
NOTWITHSTANDING THE FOREGOING: (1) THE AGENT AND THE LENDERS SHALL HAVE THE
RIGHT TO BRING ANY ACTION OR PROCEEDING AGAINST ANY BORROWER OR ITS PROPERTY IN
THE COURTS OF ANY OTHER JURISDICTION THE AGENT OR THE LENDERS DEEM NECESSARY OR
APPROPRIATE IN ORDER TO REALIZE ON THE COLLATERAL OR OTHER SECURITY FOR THE
OBLIGATIONS AND (2) EACH OF THE PARTIES HERETO ACKNOWLEDGES THAT ANY APPEALS
FROM THE COURTS DESCRIBED IN THE IMMEDIATELY PRECEDING SENTENCE MAY HAVE TO BE
HEARD BY A COURT LOCATED OUTSIDE THOSE JURISDICTIONS.
(c) EACH BORROWER HEREBY WAIVES PERSONAL SERVICE OF ANY AND
ALL PROCESS UPON IT AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE BY
REGISTERED MAIL (RETURN RECEIPT REQUESTED) DIRECTED TO SUCH BORROWER AT ITS
ADDRESS SET FORTH IN SECTION 15.8 AND SERVICE SO MADE SHALL BE DEEMED TO BE
COMPLETED FIVE (5) DAYS AFTER THE SAME SHALL HAVE BEEN SO DEPOSITED IN THE U.S.
MAILS POSTAGE PREPAID. NOTHING CONTAINED HEREIN SHALL AFFECT THE RIGHT OF AGENT
OR THE LENDERS TO SERVE LEGAL PROCESS BY ANY OTHER MANNER PERMITTED BY LAW.
15.4 WAIVER OF JURY TRIAL. SUBJECT TO THE PROVISIONS OF SECTION 15.3(d), EACH
BORROWER, THE LENDERS AND THE AGENT EACH IRREVOCABLY WAIVE THEIR RESPECTIVE
RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING
OUT OF OR RELATED TO THIS AGREEMENT, THE OTHER LOAN DOCUMENTS, OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN ANY ACTION, PROCEEDING OR OTHER
LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER PARTY OR
ANY AGENT-RELATED PERSON, PARTICIPANT OR ASSIGNEE, WHETHER WITH RESPECT TO
CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. EACH BORROWER, THE LENDERS AND THE
AGENT EACH AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A
COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, THE PARTIES FURTHER
AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF
THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN
WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT
OR THE OTHER LOAN DOCUMENTS OR ANY PROVISION HEREOF OR THEREOF. THIS WAIVER
SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS
TO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.
15.5 Survival of Representations and Warranties. All of the Borrowers'
representations and warranties contained in this Agreement shall survive the
execution, delivery, and acceptance thereof by the parties, notwithstanding any
investigation by the Agent or the Lenders or their respective agents.
15.6 Other Security and Guaranties. The Agent, may, without notice or demand and
without affecting any Borrower's obligations hereunder, from time to time: (a)
take from any Person and hold collateral (other than the Collateral) for the
payment of all or any part of the Obligations and exchange, enforce or release
such collateral or any part thereof; and (b) accept and hold any endorsement or
guaranty of payment of all or any part of the Obligations and release or
substitute any such endorser or guarantor, or any Person who has given any Lien
in any other collateral as security for the payment of all or any part of the
Obligations, or any other Person in any way obligated to pay all or any part of
the Obligations.
15.7 Fees and Expenses. Except as otherwise provided in the Agent's Fee Letter,
the Borrowers agree to pay to the Agent, for its benefit, on demand, all costs
and expenses that Agent pays or incurs in connection with the negotiation,
preparation, syndication, consummation, administration, enforcement, and
termination of this Agreement or any of the other Loan Documents, including: (a)
Attorney Costs; (b) costs and expenses (including reasonable attorneys' and
paralegals' fees and disbursements) for any amendment, supplement, waiver,
consent, or subsequent closing in connection with the Loan Documents and the
transactions contemplated thereby; (c) costs and expenses of lien and title
searches and title insurance; (d) taxes, fees and other charges for recording
the filing financing statements and continuations, and other actions to perfect,
protect, and continue the Agent's Liens (including costs and expenses paid or
incurred by the Agent in connection with the consummation of Agreement); (e)
sums paid or incurred to pay any amount or take any action required of any
Borrower under the Loan Documents that such Borrower fails to pay or take; (f)
costs of inspections, and verifications of the Collateral, including travel,
lodging, and meals for inspections of the Collateral and any Borrower's
operations by the Agent plus the Agent's then customary charge for field
examinations and audits and the preparation of reports thereof (such charge is
currently $750 per day (or portion thereof) for each agent or employee of the
Agent with respect to each field examination or audit); (g) costs and expenses
of forwarding loan proceeds, collecting checks and other items of payment, and
establishing and maintaining Payment Accounts and lock boxes; (h) costs and
expenses of preserving and protecting the Collateral; and (i) costs and expenses
(including Attorneys' Costs) paid or incurred to obtain payment of the
Obligations, enforce the Agent's Liens, sell or otherwise realize upon the
Collateral, and otherwise enforce the provisions of the Loan Documents, or to
defend any claims made or threatened against the Agent or any Lender arising out
of the transactions contemplated hereby (including preparations for and
consultations concerning any such matters). The foregoing shall not be construed
to limit any other provisions of the Loan Documents regarding costs and expenses
to be paid by any Borrower. All of the foregoing costs and expenses shall be
charged to the Borrowers' Loan Account as Revolving Loans as described in
Section 4.7.
15.8 Notices. Except as otherwise provided herein, all notices, demands and
requests that any party is required or elects to give to any other shall be in
writing, or by a telecommunications device capable of creating a written record,
and any such notice shall become effective (a) upon personal delivery thereof,
including, but not limited to, delivery by overnight mail and courier service,
(b) four (4) days after it shall have been mailed by United States mail, first
class, certified or registered, with postage prepaid, or (c) in the case of
notice by such a telecommunications device, when properly transmitted, in each
case addressed to the party to be notified as follows:
If to the Agent or to the Bank:
Bank of America, N.A.
00 Xxxxx Xxxx Xxxxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxxxxx 00000
Attention: Regional Manager
Telecopy No.: (000) 000-0000
with copies to:
Bank of America, N.A.
00000 Xxx Xxxxx Xxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
Attention: Legal Department
Telecopy No.: (000) 000-0000
If to any Borrower:
c/o EFTC Corporation
0000 Xxxxx Xxxxxx
0xx xxxxx
Xxxxxx, Xxxxxxxx 00000
Attention: Xxx Xxxxx
Telecopy No.: (000) 000-0000
with a copy to:
Xxxxxx Capital Partners
0000 Xxxxxxxxxxxx Xxxxxx XX
Xxxxx 000
Xxxxxxxxxx, X.X. 00000
Attention: Xxxxxxx XxXxxxxxx
Telecopy No.: (000) 000-0000
or to such other address as each party may designate for itself by like notice.
Failure or delay in delivering copies of any notice, demand, request, consent,
approval, declaration or other communication to the persons designated above to
receive copies shall not adversely affect the effectiveness of such notice,
demand, request, consent, approval, declaration or other communication.
15.9 Waiver of Notices. Unless otherwise expressly provided herein, each
Borrower waives presentment, and notice of demand or dishonor and protest as to
any instrument, notice of intent to accelerate the Obligations and notice of
acceleration of the Obligations, as well as any and all other notices to which
it might otherwise be entitled. No notice to or demand on any Borrower which the
Agent or any Lender may elect to give shall entitle any Borrower to any or
further notice or demand in the same, similar or other circumstances.
15.10 Binding Effect. The provisions of this Agreement shall be binding upon and
inure to the benefit of the respective representatives, successors, and assigns
of the parties hereto; provided, however, that no interest herein may be
assigned by any Borrower without prior written consent of the Agent and each
Lender. The rights and benefits of the Agent and the Lenders hereunder shall, if
such Persons so agree, inure to any party acquiring any interest in the
Obligations or any part thereof.
15.11 Indemnity of the Agent and the Lenders by Each Borrower.
(a) The Borrowers agree to defend, indemnify and hold the
Agent-Related Persons, and each Lender and each of its respective officers,
directors, employees, counsel, agents and attorneys-in-fact (each, an
"Indemnified Person") harmless from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
charges, expenses and disbursements (including Attorney Costs) of any kind or
nature whatsoever which may at any time (including at any time following
repayment of the Loans and the termination, resignation or replacement of the
Agent or replacement of any Lender) be imposed on, incurred by or asserted
against any such Person in any way relating to or arising out of this Agreement
or any document contemplated by or referred to herein, or the transactions
contemplated hereby, or any action taken or omitted by any such Person under or
in connection with any of the foregoing, including with respect to any
investigation, litigation or proceeding (including any Insolvency Proceeding or
appellate proceeding) related to or arising out of this Agreement, any other
Loan Document, or the Loans or the use of the proceeds thereof, whether or not
any Indemnified Person is a party thereto (all the foregoing, collectively, the
"Indemnified Liabilities"); provided, that the Borrowers shall have no
obligation hereunder to any Indemnified Person with respect to Indemnified
Liabilities resulting solely from the gross negligence or willful misconduct of
such Indemnified Person. The agreements in this Section shall survive payment of
all other Obligations.
(b) The Borrowers agree to indemnify, defend and hold harmless
the Agent and the Lenders from any loss or liability directly or indirectly
arising out of the use, generation, manufacture, production, storage, release,
threatened release, discharge, disposal or presence of a hazardous substance
relating to any Borrower's operations, business or property. This indemnity will
apply whether the hazardous substance is on, under or about a Borrower's
property or operations or property leased to any Borrower. The indemnity
includes but is not limited to Attorneys Costs. The indemnity extends to the
Agent and the Lenders, their parents, affiliates, subsidiaries and all of their
directors, officers, employees, agents, successors, attorneys and assigns.
"Hazardous substances" means any substance, material or waste that is or becomes
designated or regulated as "toxic," "hazardous," "pollutant," or "contaminant"
or a similar designation or regulation under any federal, state or local law
(whether under common law, statute, regulation or otherwise) or judicial or
administrative interpretation of such, including petroleum or natural gas. This
indemnity will survive repayment of all other Obligations.
15.12 Limitation of Liability. NO CLAIM MAY BE MADE BY ANY BORROWER, ANY LENDER
OR OTHER PERSON AGAINST THE AGENT, ANY LENDER, OR THE AFFILIATES, DIRECTORS,
OFFICERS, OFFICERS, EMPLOYEES, OR AGENTS OF ANY OF THEM FOR ANY SPECIAL,
INDIRECT, CONSEQUENTIAL OR PUNITIVE DAMAGES IN RESPECT OF ANY CLAIM FOR BREACH
OF CONTRACT OR ANY OTHER THEORY OF LIABILITY ARISING OUT OF OR RELATED TO THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY
ACT, OMISSION OR EVENT OCCURRING IN CONNECTION THEREWITH, AND EACH BORROWER AND
EACH LENDER HEREBY WAIVE, RELEASE AND AGREE NOT TO XXX UPON ANY CLAIM FOR SUCH
DAMAGES, WHETHER OR NOT ACCRUED AND WHETHER OR NOT KNOWN OR SUSPECTED TO EXIST
IN ITS FAVOR.
15.13 Final Agreement. This Agreement and the other Loan Documents are intended
by the Borrowers, the Agent and the Lenders to be the final, complete, and
exclusive expression of the agreement between them. This Agreement supersedes
any and all prior oral or written agreements relating to the subject matter
hereof. No modification, rescission, waiver, release, or amendment of any
provision of this Agreement or any other Loan Document shall be made, except by
a written agreement signed by the Borrowers and a duly authorized officer of
each of the Agent and the requisite Lenders.
15.14 Counterparts. This Agreement may be executed in any number of
counterparts, and by the Agent, each Lender and each Borrower in separate
counterparts, each of which shall be an original, but all of which shall
together constitute one and the same agreement; signature pages may be detached
from multiple separate counterparts and attached to a single counterpart so that
all signature pages are physically attached to the same document.
15.15 Captions. The captions contained in this Agreement are for convenience of
reference only, are without substantive meaning and should not be construed to
modify, enlarge, or restrict any provision.
15.16 Right of Setoff. In addition to any rights and remedies of the Lenders
provided by law, if an Event of Default exists or the Loans have been
accelerated, each Lender is authorized at any time and from time to time,
without prior notice to any Borrower, any such notice being waived by each
Borrower to the fullest extent permitted by law, to set off and apply any and
all deposits (general or special, time or demand, provisional or final) at any
time held by, and other indebtedness at any time owing by, such Lender to or for
the credit or the account of any Borrower against any and all Obligations owing
to such Lender, now or hereafter existing, irrespective of whether or not the
Agent or such Lender shall have made demand under this Agreement or any Loan
Document and although such Obligations may be contingent or unmatured. Each
Lender agrees promptly to notify the Borrowers and the Agent after any such
set-off and application made by such Lender; provided, however, that the failure
to give such notice shall not affect the validity of such set-off and
application. NOTWITHSTANDING THE FOREGOING, NO LENDER SHALL EXERCISE ANY RIGHT
OF SET-OFF, BANKER'S LIEN, OR THE LIKE AGAINST ANY DEPOSIT ACCOUNT OR PROPERTY
OF ANY BORROWER HELD OR MAINTAINED BY SUCH LENDER WITHOUT THE PRIOR WRITTEN
UNANIMOUS CONSENT OF THE LENDERS.
15.17 Replacement of Affected Lenders. If any Lender (other than the Agent) (x)
is owed a material amount of increased costs under Section 5.3 or ceases to be
obligated to make LIBOR Rate Loans as a result of the operation of Section 5.2,
(y) refuses to consent to certain proposed changes, waivers, discharges or
terminations with respect to this Agreement which have been approved pursuant to
Section 13.1 by Lenders whose Pro Rata Shares aggregate at least 66-2/3% as such
percentage is determined under the definition of Pro Rata Share set forth
herein; or (z) is a Defaulting Lender, then the Agent shall have the right, but
not the obligation, to replace such Lender (the "Replaced Lender") with one or
more Eligible Assignees (collectively, the "Replacement Lender") provided, that:
(i) at the time of any replacement pursuant to this Section
15.17, the Replacement Lender shall enter into one or more assignment agreements
pursuant to Section 13.2 pursuant to which the Replacement Lender shall acquire
all of the Commitments and outstanding Loans and participation in Letters of
Credit of the Replaced Lender and, in connection therewith, shall pay to (x) the
Replaced Lender in respect thereof an amount equal to the sum of (A) the
principal of, and all accrued interest on, all outstanding Loans of the Replaced
Lender, (B) an amount equal to all unpaid reimbursement obligations that have
been funded by (and not reimbursed to) such Replaced Lender, together with all
then unpaid interest with respect thereof at such time, and (C) all accrued, but
theretofore unpaid fees owing to the Replaced Lender, (y) the Letter of Credit
Issuer an amount equal to such Replaced Lender's Pro Rata Share of any unpaid
reimbursement obligations under any Letter of Credit to the extent such amount
was not theretofore funded by such Replaced Lender and (z) the Agent, the
processing fee set forth in Section 13.2(a);
(ii) all obligations of the Borrowers owing to the Replaced
Lender (other than those specifically described in preceding clause (i) in
respect of which the assignment purchase price has been, or is concurrently
being, paid) shall be paid by the Borrower in full to such Replaced Lender (or
by the Agent as an Agent Advance if the Borrower has refused to make any such
payments) concurrently with such replacement; and
(iii) upon the execution of the respective assignment
documentation pursuant to preceding clause (i) and the payment of amounts
referred to in preceding clauses (i) and (ii), the Replacement Lender shall
become a Lender hereunder and the Replaced Lender shall cease to constitute a
Lender hereunder, except with respect to indemnification provision of this
Agreement and the other Loan documents, which shall survive as to such Replaced
Lender.
15.18 Joint and Several Liability. Each Borrower shall be liable for all amounts
due to the Agent and/or any Lender under this Agreement, regardless of which
Borrower actually receives Loans or other extensions of credit hereunder or the
amount of such Loans received or the manner in which the Agent and/or such
Lender accounts for such Loans or other extensions of credit on its books and
records. Each Borrower's Obligations with respect to Loans made to it, and each
Borrower's Obligations arising as a result of the joint and several liability of
such Borrower hereunder, with respect to Loans made to the other Borrowers
hereunder, shall be separate and distinct obligations, but all such Obligations
shall be primary obligations of such Borrower.
Each Borrower's Obligations arising as a result of the joint
and several liability of such Borrower hereunder with respect to Loans or other
extensions of credit made to the other Borrowers hereunder shall, to the fullest
extent permitted by law, be unconditional irrespective of (i) the validity or
enforceability, avoidance or subordination of the Obligations of the other
Borrowers or of any promissory note or other document evidencing all or any part
of the Obligations of the other Borrowers, (ii) the absence of any attempt to
collect the Obligations from the other Borrowers, any other guarantor, or any
other security therefor, or the absence of any other action to enforce the same,
(iii) the waiver, consent, extension, forbearance or granting of any indulgence
by the Agent and/or any Lender with respect to any provision of any instrument
evidencing the Obligations of the other Borrowers, or any part thereof, or any
other agreement now or hereafter executed by the other Borrowers and delivered
to the Agent and/or any Lender, (iv) the failure by the Agent and/or any Lender
to take any steps to perfect and maintain its security interest in, or to
preserve its rights to, any security or collateral for the Obligations of the
other Borrowers, (v) the Agent's and/or any Lender's election, in any proceeding
instituted under the Bankruptcy Code, of the application of Section 1111(b)(2)
of the Bankruptcy Code, (vi) any borrowing or grant of a security interest by
the other Borrowers, as debtor-in-possession under Section 364 of the Bankruptcy
Code, (vii) the disallowance of all or any portion of the Agent's and/or any
Lender's claim(s) for the repayment of the Obligations of the other Borrowers
under Section 502 of the Bankruptcy Code, or (viii) any other circumstances
which might constitute a legal or equitable discharge or defense of a guarantor
or of the other Borrowers. With respect to each Borrower's Obligations arising
as a result of the joint and several liability of such Borrower hereunder with
respect to Loans or other extensions of credit made to any other Borrower
hereunder, each Borrower waives, until the Obligations shall have been paid in
full and the Loan Agreement shall have been terminated, any right to enforce any
right of subrogation or any remedy which the Agent and/or any Lender now has or
may hereafter have against the other Borrowers, any endorser or any guarantor of
all or any part of the Obligations, and any benefit of, and any right to
participate in, any security or collateral given to the Agent and/or any Lender
to secure payment of the Obligations or any other liability of the other
Borrowers to the Agent and/or any Lender.
Upon any Event of Default, the Agent may proceed directly and
at once, without notice, against each Borrower to collect and recover the full
amount, or any portion of the Obligations, without first proceeding against the
other Borrowers or any other Person, or against any security or collateral for
the Obligations. Each Borrower consents and agrees that the Agent shall be under
no obligation to marshal any assets in favor of such Borrower or against or in
payment of any or all of the Obligations.
15.19 Contribution and Indemnification among the Borrowers. Each Borrower is
obligated to repay the Obligations as joint and several obligors under this
Agreement. To the extent that any Borrower shall, under this Agreement as a
joint and several obligor, repay any of the Obligations constituting Loans made
to another Borrower hereunder or other Obligations incurred directly and
primarily by any other Borrower (an "Accommodation Payment"), then the Borrower
making such Accommodation Payment shall be entitled to contribution and
indemnification from, and be reimbursed by, each of the other Borrowers in an
amount, for each of such other Borrowers, equal to a fraction of such
Accommodation Payment, the numerator of which fraction is such other Borrower's
"Allocable Amount" (as defined below) and the denominator of which is the sum of
the Allocable Amounts of all of the Borrowers. As of any date of determination,
the "Allocable Amount" of each Borrower shall be equal to the maximum amount of
liability for Accommodation Payments which could be asserted against such
Borrower hereunder without (a) rendering such Borrower "insolvent" within the
meaning of Section 101 (31) of the Bankruptcy Code, Section 2 of the Uniform
Fraudulent Transfer Act ("UFTA") or Section 2 of the Uniform Fraudulent
Conveyance Act ("UFCA"), (ii) leaving such Borrower with unreasonably small
capital or assets, within the meaning of Section 548 of the Bankruptcy Code,
Section 4 of the UFTA, or Section 5 of the UFCA, or (iii) leaving such Borrower
unable to pay its debts as they become due within the meaning of Section 548 of
the Bankruptcy Code or Section 4 of the UFTA, or Section 5 of the UFCA. All
rights and claims of contribution, indemnification and reimbursement under this
Section shall be subordinate in right of payment to the prior payment in full of
the Obligations. The provisions of this Section shall, to the extent expressly
inconsistent with any provision in any Loan Document, supersede such
inconsistent provision.
15.20 Agency of the Parent for each other Borrower. Each of the other Borrowers
appoints the Parent as its agent for all purposes relevant to this Agreement,
including the giving and receipt of notices and execution and delivery of all
documents, instruments and certificates contemplated herein and all
modifications hereto. Any acknowledgement, consent, direction, certification or
other action which might otherwise be valid or effective only if given or taken
by
all of the Borrowers or acting singly, shall be valid and effective if given or
taken only by the Parent, whether or not either of the other Borrowers joins
therein.
IN WITNESS WHEREOF, the parties have entered into this
Agreement on the date first above written.
"BORROWERS"
EFTC CORPORATION,
a Colorado corporation
By /s/ Xxxx Xxxxxxxx
Title: Chief Executive Officer
RM ELECTRONICS, INC.,
a New Hampshire corporation (doing business as Personal
Electronics)
By
Title:
"AGENT"
BANK OF AMERICA, N.A., as the Agent
By
------------------------------
--------------, Vice President
"LENDERS"
Commitment: $45,000,000 BANK OF AMERICA, N.A., as a Lender
Pro Rata Share: 100%
By
------------------------------
--------------, Vice President
