Exhibit 10.14
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EXECUTION COPY
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REVOLVING CREDIT AGREEMENT
dated as of
November 21, 2001
among
NATIONAL TECHNICAL SYSTEMS, INC.,
the SUBSIDIARY BORROWERS FROM TIME TO TIME
PARTIES HERETO,
as Borrowers,
COMERICA BANK-CALIFORNIA,
as Agent,
and
THE FINANCIAL INSTITUTIONS FROM
TIME TO TIME PARTIES HERETO,
as Lenders
$16,000,000
TABLE OF CONTENTS
Page(s)
ARTICLE I DEFINITIONS AND INTERPRETATIONS....................................1
1.1 Definitions......................................................1
"Affiliate"......................................................1
"Agent"..........................................................1
"Agreement"......................................................1
"Asset"..........................................................1
"Asset Sale".....................................................2
"Assignment and Acceptance"......................................2
"Audit Fee"......................................................2
"Bankruptcy Code"................................................2
"Base LIBOR".....................................................2
"Borrowing"......................................................2
"Business Day"...................................................2
"Capital Expenditures"...........................................2
"Capital Lease"..................................................2
"Capital Lease Obligations"......................................2
"Capital Stock"..................................................2
"Change of Control"..............................................3
"Closing Date"...................................................3
"Closing Fee"....................................................3
"Comerica".......................................................3
"Commitment".....................................................3
"Compliance Certificate".........................................3
"Consolidated Effective Tangible Net Worth"......................3
"Consolidated Adjusted Net Income"...............................3
"Consolidated Total Liabilities to Consolidated Effective
Tangible Net Worth Ratio"........................................3
"Current Liabilities"............................................3
"Debt"...........................................................4
"Debt Service Coverage Ratio"....................................4
"Deed of Trust"..................................................4
"Distributions"..................................................4
"Dollars" or "$".................................................4
"Eligible Assignee"..............................................4
"ERISA"..........................................................5
"ERISA Event"....................................................5
"ERISA Group"....................................................5
"Event of Default"...............................................5
"Excluded Subsidiaries"..........................................5
"Expenses".......................................................5
"Facility Fee"...................................................6
"Federal Funds Rate".............................................6
i
"Fees"...........................................................6
"Financial Statement(s)".........................................6
"GAAP"...........................................................6
"Governing Documents"............................................6
"Governmental Authority".........................................7
"Guaranties" and "Guaranty"......................................7
"Guarantor(s)"...................................................7
"Hazardous Materials"............................................7
"Indemnified Person(s)"..........................................7
"Insolvency Proceeding"..........................................7
"Intangible Assets"..............................................7
"Interest Payment Date"..........................................7
"Interest Period"................................................7
"Internal Revenue Code"..........................................8
"Issuing Lender".................................................8
"Late Payment Fee"...............................................8
"L/C Participants"...............................................8
"Lenders"........................................................8
"Lending Office".................................................8
"Letter(s) of Credit"............................................8
"Letter of Credit Application"...................................8
"Letter of Credit Fee"...........................................8
"Letter of Credit Sublimit"......................................8
"Letter of Credit Usage".........................................8
"LIBOR"..........................................................9
"LIBOR Business Day".............................................9
"LIBOR Lending Rate".............................................9
"LIBOR Lending Rate Margin"......................................9
"LIBOR Lending Rate Portion".....................................9
"LIBOR Reserve Percentage".......................................9
"Lien"...........................................................9
"Loan Document(s)"...............................................9
"Loans".........................................................10
"Majority Lenders"..............................................10
"Material Adverse Effect".......................................10
"Multiemployer Plan"............................................10
"Net Cash Proceeds".............................................10
"Notes".........................................................11
"Notice of Borrowing"...........................................11
"Notice of Conversion or Continuation"..........................11
"Obligations"...................................................11
"Old Lender(s)".................................................11
"Participant"...................................................11
"Pay-Off Letters"...............................................11
"PBGC"..........................................................11
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"Permitted Asset Sales".........................................11
"Permitted Debt"................................................12
"Permitted Liens"...............................................12
"Person"........................................................12
"Plan"..........................................................12
"Prime Lending Rate"............................................13
"Prime Lending Rate Portion"....................................13
"Prime Rate"....................................................13
"Purchase Money Lien"...........................................13
"Quick Ratio"...................................................13
"Real Property Collateral"......................................13
"Register"......................................................13
"Regulation D"..................................................13
"Reimbursement Obligations".....................................13
"Reportable Event"..............................................13
"Responsible Officer"...........................................13
"Retiree Health Plan"...........................................13
"Revolving Credit Commitment"...................................14
"Revolving Credit Commitment Percentage"........................14
"Revolving Loans"...............................................14
"Revolving Loan Lender".........................................14
"Revolving Loans Maturity Date".................................14
"SEC"...........................................................14
"Security Agreement (Borrowers)"................................14
"Security Agreement (Guarantor)"................................14
"Shareholder"...................................................14
"Solvent".......................................................14
"Stock Pledge Agreement"........................................14
"Subsidiary"....................................................15
"Swaps".........................................................15
"Taxes".........................................................15
"Total Commitment Percentage"...................................15
"Total Credit"..................................................15
"Transferee"....................................................15
"UCC"...........................................................15
"Uniform Customs"...............................................15
"Unmatured Event of Default"....................................15
1.2 Accounting Terms and Determinations.............................15
1.3 Computation of Time Periods.....................................16
1.4 Construction....................................................16
1.5 Exhibits and Schedules..........................................16
1.6 No Presumption Against Any Party................................16
1.7 Independence of Provisions......................................16
ARTICLE II TERMS OF THE CREDIT..............................................16
2.1 Revolving Loans.................................................16
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2.2 [Intentionally Omitted].........................................17
2.3 [Intentionally Omitted].........................................17
2.4 Interest Rates; Payments of Interest............................17
2.5 Notice of Borrowing Requirements................................18
2.6 Conversion or Continuation Requirements.........................19
2.7 LIBOR Costs.....................................................20
2.8 Illegality; Impossibility.......................................21
2.9 Disaster........................................................21
2.10 Increased Risk-Based Capital Cost...............................22
2.11 Notes; Statements of Obligations................................22
2.12 Holidays........................................................23
2.13 Time and Place of Payments......................................23
2.14 Mandatory Principal Reductions..................................24
2.15 Fees............................................................24
ARTICLE III LETTERS OF CREDIT...............................................25
3.1 Letters of Credit...............................................25
3.2 Procedure for Issuance of Letters of Credit.....................26
3.3 Fees, Commissions and Other Charges.............................26
3.4 L/C Participations..............................................27
3.5 Reimbursement Obligations.......................................28
3.6 Obligations Absolute............................................28
3.7 Letter of Credit Payments.......................................29
ARTICLE IV CONDITIONS PRECEDENT AND SUBSEQUENT..............................29
4.1 Conditions to Initial Loans or Letter of Credit.................29
4.2 Conditions to all Loans and Letters of Credit...................31
4.3 Conditions Subsequent to all Loans and Letters of Credit........31
ARTICLE V REPRESENTATIONS AND WARRANTIES....................................32
5.1 Legal Status....................................................32
5.2 No Violation; Compliance........................................32
5.3 Authorization; Enforceability...................................33
5.4 Approvals; Consents.............................................33
5.5 Liens...........................................................33
5.6 Debt............................................................33
5.7 Litigation......................................................33
5.8 No Default......................................................34
5.9 Subsidiaries....................................................34
5.10 Taxes...........................................................34
5.11 Correctness of Financial Statements.............................34
5.12 ERISA...........................................................34
5.13 Other Obligations...............................................35
5.14 Public Utility Holding Company Act..............................35
5.15 Investment Company Act..........................................35
5.16 Patents, Trademarks, Copyrights, and Intellectual Property,
etc.............................................................35
5.17 Environmental Condition.........................................35
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5.18 Solvency........................................................35
ARTICLE VI AFFIRMATIVE COVENANTS............................................36
6.1 Punctual Payments...............................................36
6.2 Books and Records; Collateral Audits............................36
6.3 Financial Statements............................................36
6.4 Existence; Preservation of Licenses; Compliance with Law........37
6.5 Insurance.......................................................38
6.6 Assets..........................................................38
6.7 Taxes and Other Liabilities.....................................39
6.8 Notice to Agent and Lenders.....................................39
6.9 Employee Benefits...............................................39
6.10 Further Assurances..............................................40
6.11 Bank Accounts...................................................40
6.12 Environment.....................................................40
6.13 Additional Collateral...........................................41
6.14 Guarantors......................................................41
6.15 Stock Pledge Agreements.........................................41
ARTICLE VII NEGATIVE COVENANTS..............................................41
7.1 Use of Funds; Margin Regulation.................................42
7.2 Debt............................................................42
7.3 Liens...........................................................42
7.4 Merger, Consolidation, Transfer of Assets.......................42
7.5 Leases..........................................................42
7.6 Sales and Leasebacks............................................42
7.7 Asset Sales.....................................................43
7.8 Investments.....................................................43
7.9 Character of Business...........................................43
7.10 Distributions...................................................43
7.11 Guaranty........................................................44
7.12 Capital Expenditures............................................44
7.13 Transactions with Affiliates....................................44
7.14 Stock Issuance..................................................44
7.15 Financial Condition.............................................44
7.16 Transactions Under ERISA........................................45
ARTICLE VIII EVENTS OF DEFAULT AND REMEDIES.................................46
8.1 Events of Default...............................................46
8.2 Remedies........................................................47
8.3 Appointment of Receiver or Trustee..............................48
8.4 Remedies Cumulative.............................................48
ARTICLE IX TAXES............................................................48
9.1 Taxes on Payments...............................................48
9.2 Indemnification For Taxes.......................................48
9.3 Evidence of Payment.............................................49
9.4 Certain Withholding Taxes.......................................49
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ARTICLE X AGENT AND LENDERS.................................................50
10.1 Appointment of Agent............................................50
10.2 Nature of Duties of Agent.......................................50
10.3 Lack of Reliance on Agent.......................................50
10.4 Certain Rights of Agent.........................................51
10.5 Reliance by Agent...............................................51
10.6 Indemnification of Agent........................................51
10.7 Agent in its Individual Capacity................................51
10.8 Holders of Notes................................................52
10.9 Successor Agent.................................................52
10.10 Collateral Matters..............................................52
10.11 Actions with Respect to Defaults................................53
10.12 Delivery of Information.........................................54
10.13 Register........................................................54
10.14 Issuing Lender..................................................54
10.15 Sharing of Payments, Etc........................................54
10.16 Replacement of Affected Lenders.................................55
ARTICLE XI MISCELLANEOUS....................................................56
11.1 Notices.........................................................56
11.2 No Waivers......................................................56
11.3 Expenses; Documentary Taxes; Indemnification....................56
11.4 Amendments and Waivers..........................................57
11.5 Successors and Assigns; Participations; Disclosure..............58
11.6 Confidentiality.................................................60
11.7 Counterparts; Effectiveness; Integration........................60
11.8 Severability....................................................60
11.9 CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER......................60
ARTICLE XII JOINT AND SEVERAL LIABILITY; SINGLE LOAN ACCOUNT................61
12.1 Joint and Several Liability.....................................61
12.2 Primary Obligation; Waiver of Marshalling.......................61
12.3 Financial Condition of Borrowers................................62
12.4 Continuing Liability............................................62
12.5 Additional Waivers..............................................62
12.6 Settlements or Releases.........................................65
12.7 No Election.....................................................65
12.8 Indefeasible Payment............................................65
12.9 Single Loan Account.............................................66
12.10 Apportionment of Proceeds of Loans..............................66
12.11 Agent and Lenders Held Harmless.................................66
12.12 Borrowers' Integrated Operations................................66
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EXHIBITS AND SCHEDULES
Exhibit 1 - Form of Addendum
Exhibit 1.1A - Form of Assignment and Acceptance
Exhibit 1.1L - Form of Letter of Credit Application
Exhibit 2.5(b) - Form of Notice of Borrowing
Exhibit 2.6(b) - Form of Notice of Conversion or Continuation
Exhibit 2.11(a) - Form of Note
Exhibit 4.1(b) - Form of Opinions of Borrowers' Counsel
Exhibit 6.3(a) - Form of Compliance Certificate
Schedule 1.1C - Commitments
Schedule 1.1R - Real Property Collateral
Schedule 5.6 - Permitted Debt
Schedule 5.7 - Litigation
Schedule 5.9 - Subsidiaries
Schedule 5.12 - Employee Benefit Plans
Schedule 5.17 - Environmental Condition
Schedule 6.11 - Deposit Account Banks
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REVOLVING CREDIT AGREEMENT
This REVOLVING CREDIT AGREEMENT, dated as of November 21, 2001, is
entered into among NATIONAL TECHNICAL SYSTEMS, INC., a California corporation
("Parent"), NTS TECHNICAL SYSTEMS, a California corporation, dba National
Technical Systems ("NTS"), XXCAL, INC., a California corporation ("XXCAL"),
APPROVED ENGINEERING TEST LABORATORIES, INC., a California corporation ("AETL"),
ETCR, INC., a California corporation ("ETCR"), ACTON ENVIRONMENTAL TESTING
CORPORATION, a Massachusetts corporation ("Acton"), and one or more Subsidiaries
of Parent, whether now existing or hereafter acquired or formed, which become
party to this Agreement by executing an Addendum hereto in the form of Exhibit 1
(NTS, XXCAL, AETL, ATCR, Acton and such other Subsidiaries are sometimes
individually referred to herein as a "Subsidiary Borrower" and collectively
referred to herein as "Subsidiary Borrowers", and Subsidiary Borrowers and
Parent are sometimes individually referred to herein as a "Borrower" and
collectively referred to herein as "Borrowers"), the financial institutions from
time to time parties hereto as Lenders, whether by execution hereof or an
Assignment and Acceptance in accordance with Section 11.5(c), and Comerica Bank
- California, in its capacity as contractual representative for itself and the
other Lenders ("Agent").
The parties hereto agree as follows:
ARTICLE I
DEFINITIONS AND INTERPRETATIONS
1.1 Definitions. The following terms, as used herein, shall have
the following meanings:
"Affiliate" means any Person (i) that, directly or indirectly,
controls, is controlled by or is under common control with any Borrower or any
Subsidiary; (ii) which, to the knowledge of any Borrower, directly or indirectly
beneficially owns or controls ten percent (10%) or more of any class of voting
stock of any Borrower or any Subsidiary; or (iii) ten percent (10%) or more of
the voting stock of which is directly or indirectly beneficially owned or held
by any Borrower or any Subsidiary. For purposes of the foregoing, control
(including controlled by and under common control with) shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise.
"Agent" means Comerica or any successor appointed pursuant to the
terms of Article X.
"Agreement" means this Revolving Credit Agreement, as amended or
restated from time to time in accordance with its terms.
"Asset" means any interest of a Person in any kind of property or
asset, whether real, personal, or mixed real and personal, and whether tangible
or intangible.
1
"Asset Sale" means any sale, transfer or other disposition of any
Borrower's or any Subsidiary's businesses or Asset(s) now owned or hereafter
acquired, including shares of stock and indebtedness of any Subsidiary,
receivables and leasehold interests.
"Assignment and Acceptance" means an Assignment and Acceptance
entered into by an assigning Lender and an assignee Lender pursuant to Section
11.5(c), in the form of Exhibit 1.1A.
"Audit Fee" has the meaning given to such term in Section 6.2.
"Bankruptcy Code" means The Bankruptcy Reform Act of 1978 (Pub. L.
No. 95-598; 11 U.S.C.), as amended or supplemented from time to time, or any
successor statute, and any and all rules and regulations issued or promulgated
in connection therewith.
"Base LIBOR" applicable to any Interest Period for a LIBOR Lending
Rate Portion means the offered rate per annum (rounded upward to the nearest
one-hundredth of one percent (.01%)), if any, to first-class banks in the LIBOR
market quoted by Agent at 11:00 a.m. Pacific time, two (2) LIBOR Business Days
prior to the first day of such Interest Period for Dollar deposits of an amount
comparable to the principal amount of the LIBOR Lending Rate Portion for which
the LIBOR Lending Portion is being determined with maturities comparable to the
Interest Period for which such LIBOR Lending Rate will apply.
"Borrowing" means a borrowing of Revolving Loans from the Revolving
Loan Lenders pursuant to the terms and conditions hereof.
"Business Day" means any day other than a Saturday, a Sunday, or a
day on which commercial banks in the City of Los Angeles, California are
authorized or required by law or executive order or decree to close.
"Capital Expenditures" means expenditures made in cash, or financed
with long term debt, by any Person for the acquisition of any fixed Assets or
improvements, replacements, substitutions, or additions thereto that have a
useful life of more than one (1) year, including the direct or indirect
acquisition of such Assets by way of increased product or service charges,
offset items, or otherwise, and the principal portion of payments with respect
to Capital Lease Obligations, calculated in accordance with GAAP.
"Capital Lease" means any lease of an Asset by a Person as lessee
which would, in conformity with GAAP, be required to be accounted for as an
Asset and corresponding liability on the balance sheet of that Person.
"Capital Lease Obligations" of a Person means the amount of the
obligations of such Person under all Capital Leases which would be shown as a
liability on a balance sheet of such Person prepared in accordance with GAAP.
"Capital Stock" means any and all shares, interests, participations
or other equivalents (however designated) of capital stock of a corporation, any
and all equivalent ownership interests in a Person (other than a corporation)
and any and all warrants or options to purchase any of the foregoing.
2
"Change of Control" means the time at which (i) any Person
(including a Person's Affiliates and associates) or group (within the meaning of
Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934) (other than
the shareholders of any Borrower on the Closing Date) becomes the beneficial
owner (as defined in Rule 13d-3 under the Securities Exchange Act of 1934) of a
percentage (based on voting power, in the event different classes of stock shall
have different voting powers) of the voting stock of any Borrower equal to at
least twenty-five percent (25%), or such Person or group shall otherwise obtain
the power to control the election of the Board of Directors of any Borrower,
(ii) there shall be consummated any consolidation or merger of any Borrower
pursuant to which such Borrower's common stock (or other capital stock) would be
converted into cash, securities or other property, other than a merger or
consolidation of such Borrower in which the holders of such common stock (or
other capital stock) immediately prior to the merger have the same proportionate
ownership, directly or indirectly, of common stock of the surviving corporation
immediately after the merger as they had of such Borrower's common stock
immediately prior to such merger, or (iii) all or substantially all of any
Borrower's Assets shall be sold, leased, conveyed or otherwise disposed of as an
entirety or substantially as an entirety to any Person (including an Affiliate
or associate of such Borrower) in one or a series of transactions.
"Closing Date" means the date when all of the conditions set forth
in Section 4.1 have been fulfilled to the reasonable satisfaction of Agent and
its counsel.
"Closing Fee" has the meaning set forth in Section 2.15(b).
"Comerica" means Comerica Bank-California, a California banking
corporation.
"Commitment" means a Lender's Revolving Credit Commitment.
"Compliance Certificate" means a certificate of compliance to be
delivered in accordance with Section 6.3(a), substantially in the form of
Exhibit 6.3(a).
"Consolidated Effective Tangible Net Worth" means, as of any date of
determination, the result of (a) Borrowers' consolidated total stockholder's
equity, minus (b) the sum of (i) all Intangible Assets of Borrowers, and (ii)
all amounts due to Borrowers from Affiliates.
"Consolidated Adjusted Net Income" means, with respect to any
period, the consolidated net income of Borrowers and the Subsidiaries after all
federal, state and local income taxes reflected on Borrowers' Financial
Statement for such period, calculated in accordance with GAAP plus (x) any
non-cash compensation paid to Borrowers' and the Subsidiaries' officers,
directors and employees, (y) a one time expense in a fiscal year ending January
31, 2002 of $100,000 and (z) a one time write-off of goodwill pursuant to FASB
142 in fiscal year ending January 31, 2002 or 2003.
"Consolidated Total Liabilities to Consolidated Effective Tangible
Net Worth Ratio" means, as of the date of determination, the ratio of (i)
Borrowers' consolidated total liabilities, calculated in accordance with GAAP;
to (ii) Consolidated Effective Tangible Net Worth.
"Current Liabilities" means, as of the date of determination, the
sum of Borrowers' consolidated liabilities coming due within one year (including
3
the Revolving Loans and the Reimbursement Obligations, and all amounts due from
each Borrower's Shareholders, officers and Affiliates), calculated in accordance
with GAAP.
"Debt" means, as of the date of determination, the sum, but without
duplication, of any and all of a Person's: (i) indebtedness heretofore or
hereafter created, issued, incurred or assumed by such Person (directly or
indirectly) for or in respect of money borrowed; (ii) Capital Lease Obligations;
(iii) obligations evidenced by bonds, debentures, notes, or other similar
instruments; (iv) obligations for the deferred purchase price of property or
services (including trade obligations except accounts payable to trade creditors
for goods or services which are not aged more than 90 days from the billing date
and current operating liabilities (other than for borrowed money) which are not
more than 90 days past due, in each case incurred in the ordinary course of
business, as presently conducted, and paid within the specified time, unless
contested in good faith in appropriate proceedings (if applicable)); (v) current
liabilities in respect of unfunded vested benefits under any Plan; (vi)
obligations under letters of credit; (vii) obligations under acceptance
facilities; (viii) obligations under all guaranties, endorsements (other than
for collection or deposit in the ordinary course of business), and other
contingent obligations to purchase, to provide funds for payment, or supply
funds to invest in any other Person, or otherwise to assure a creditor against
loss; (ix) obligations secured by any Lien on any Asset of such Person, whether
or not such obligations have been assumed; and (x) Swaps.
"Debt Service Coverage Ratio" means, as of the date of
determination, (i) the sum of the following for the rolling four (4) quarter
period ending on the date of determination: (1) Consolidated Adjusted Net Income
for such period, plus (2) each Borrower's and the Subsidiaries' consolidated
depreciation and amortization expense for such period (including any non-cash
compensation paid to Borrowers' and the Subsidiaries' officers, directors,
employees, and agents), minus (3) any Distributions paid or Capital Stock of
each Borrower acquired or any other action taken under Section 7.10 during such
period, plus or minus (4) any change in Borrowers' deferred federal or state
taxes, to (ii) the sum of (1) the current portion of Borrowers' long term Debt
as of such date, calculated in accordance with GAAP, plus (2) (x) $1,500,000
from the Closing Date until April 30, 2002, or (y) $1,750,000 from July 31, 2002
until the Revolving Loans Maturity Date.
"Deed of Trust" means that certain Deed of Trust, Assignment of
Rents, Security Agreement and Fixture Filing, dated as of November 21, 2001, by
ETCR, as trustor, and Agent for the ratable benefit of Lenders, as beneficiary,
encumbering the Real Property Collateral to secure the Obligations.
"Distributions" means dividends or distributions of earnings made by
a Person to its shareholders, partners or members, as the case may be.
"Dollars" or "$" means lawful currency of the United States of
America.
"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 Agent.
4
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended from time to time, or any successor statute, and any and all
regulations thereunder.
"ERISA Event" means (a) a Reportable Event with respect to a Plan or
Multiemployer Plan, (b) the withdrawal of a member of the ERISA Group from a
Plan during a plan year in which it was a substantial employer (as defined in
Section 4001(a)(2) of ERISA), (c) the providing of notice of intent to terminate
a Plan in a distress termination (as described in Section 4041(c) of ERISA), (d)
the institution by the PBGC of proceedings to terminate a Plan or Multiemployer
Plan, (e) any event or condition (i) that provides a basis under Section
4042(a)(1), (2), or (3) of ERISA for the termination of or the appointment of a
trustee to administer, any Plan or Multiemployer Plan, of (ii) that may result
in termination of a Multiemployer Plan pursuant to Section 4041A of ERISA, (f)
the partial or complete withdrawal within the meaning of Sections 4203 and 4205
of ERISA of a member of the ERISA Group from a Multiemployer Plan, or (g)
providing any security to any Plan under Section 401(a)(29) of the Internal
Revenue Code by a member of the ERISA Group.
"ERISA Group" means Borrowers and all members of a controlled group
of corporations and all trades or business (whether or not incorporated) under
common control which, together with Borrowers are treated as a single employer
under Section 414 of the Internal Revenue Code.
"Event of Default" has the meaning set forth in Section 8.1.
"Excluded Subsidiaries" means, all Subsidiaries of Borrowers that:
(i) are not organized under the laws of any state or any territory of the United
States of America, or (ii) are not wholly owned by any Borrower or any
Subsidiary, including but not limited to XXCAL, Limited, a corporation organized
under the laws of the United Kingdom, XXCAL, Japan K.K, a corporation organized
under the laws of Japan, National Quality Assurance, Inc., a Massachusetts
corporation, NQA Laboratory Services, Inc., a Massachusetts corporation,
NQA-USA, a Massachusetts corporation, NQA Training and Development, Inc., a
Massachusetts corporation, and National Technical Systems Certifications
Services, a Delaware corporation.
"Expenses" means (i) all out-of-pocket expenses of Agent, Issuing
Lender and/or any Lender paid or incurred in connection with their due diligence
and investigation of Borrowers, including appraisal, filing, recording,
documentation, publication and search fees and other such expenses, and all
attorneys' fees and expenses (including attorneys' fees incurred pursuant to
proceedings arising under the Bankruptcy Code) incurred in connection with the
structuring, negotiation, drafting, preparation, execution and delivery of this
Agreement, the Loan Documents, and any and all other documents, instruments and
agreements entered into in connection herewith; (ii) all out-of-pocket expenses
of Agent, Issuing Lender and/or any Lender, including attorneys' fees and
expenses (including attorneys' fees incurred pursuant to proceedings arising
under the Bankruptcy Code) paid or incurred in connection with the negotiation,
preparation, execution and delivery of any waiver, forbearance, consent,
amendment or addition to this Agreement or any Loan Document, or the termination
hereof and thereof; (iii) all costs or expenses paid or advanced by Agent,
Issuing Lender and/or any Lender which are required to be paid by Borrowers
under this Agreement or the Loan Documents, including taxes and insurance
premiums of every nature and kind of Agent, Issuing Lender and/or any Lender;
and (iv) if an Event of Default occurs, all expenses paid or incurred by Agent,
5
Issuing Lender and/or any Lender, including attorneys' fees and expenses
(including attorneys' fees incurred pursuant to proceedings arising under the
Bankruptcy Code), costs of collection, suit, arbitration, judicial reference and
other enforcement proceedings, and any other out-of-pocket expenses incurred in
connection therewith or resulting therefrom, whether or not suit is brought, or
in connection with any refinancing or restructuring of the Obligations and the
liabilities of Borrowers under this Agreement, any of the Loan Documents, or any
other document, instrument or agreement entered into in connection herewith in
the nature of a workout.
"Facility Fee" has the meaning set forth in Section 2.15(c).
"Federal Funds Rate" means for any day, the weighted average of the
rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published on the next
succeeding Business Day by the Federal Reserve Bank of San Francisco, or, if
such rate is not so published for any day which is a Business Day, the average
of the quotations for the day of such transactions received by Agent from three
Federal funds brokers of recognized standing selected by it.
"Fees" means the Closing Fee, the Facility Fee, the Late Payment
Fee, the Letter of Credit Fees and the Audit Fees.
"Financial Statement(s)" means, with respect to any accounting
period of any Person, statements of income and statements of cash flows of such
Person for such period, and balance sheets of such Person as of the end of such
period, setting forth in each case in comparative form figures for the
corresponding period in the preceding fiscal year or, if such period is a full
fiscal year, corresponding figures from the preceding annual audit, all prepared
in reasonable detail and in accordance with GAAP, subject to year-end
adjustments in the case of monthly Financial Statements. Financial Statement(s)
shall include the schedules thereto and annual Financial Statements shall also
include the footnotes thereto.
"GAAP" means generally accepted accounting principles in the United
States of America, consistently applied, which are in effect as of the date of
this Agreement. If any changes in accounting principles from those in effect on
the date hereof are hereafter occasioned by promulgation of rules, regulations,
pronouncements or opinions by or are otherwise required by the Financial
Accounting Standards Board or the American Institute of Certified Public
Accountants (or successors thereto or agencies with similar functions), and any
of such changes results in a change in the method of calculation of, or affects
the results of such calculation of, any of the financial covenants, standards or
terms found herein, then the parties hereto agree to enter into and diligently
pursue negotiations in order to amend such financial covenants, standards or
terms so as to equitably reflect such changes, with the desired result that the
criteria for evaluating financial condition and results of operations of each
Borrower and the Subsidiaries shall be the same after such changes as if such
changes had not been made.
"Governing Documents" means the certificate or articles or
certificate of incorporation, by-laws, articles or certificate of organization,
operating agreement, or other organizational or governing documents of any
Person.
6
"Governmental Authority" means any federal, state, local or other
governmental department, commission, board, bureau, agency, central bank, court,
tribunal or other instrumentality or authority or subdivision thereof, domestic
or foreign, exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
"Guaranties" and "Guaranty" means, individually or collectively as
the context requires, each certain Continuing Guaranty executed by a Guarantor
in favor of Agent and Lenders.
"Guarantor(s)" means, individually or collectively as the context
requires, all Subsidiaries (other than Subsidiary Borrowers and Excluded
Subsidiaries), and every other Person who hereafter executes a Guaranty in favor
of Agent and Lenders with respect to the Obligations.
"Hazardous Materials" means all or any of the following: (a)
substances that are defined or listed in, or otherwise classified pursuant to,
any applicable laws or regulations as hazardous substances, hazardous materials,
hazardous wastes, toxic substances, or any other formulation intended to define,
list, or classify substances by reason of deleterious properties such as
ignitability, corrosivity, reactivity, carcinogenicity, reproductive toxicity,
or EP toxicity or are otherwise regulated for the protection of persons,
property or the environment; (b) oil, petroleum, or petroleum derived
substances, natural gas, natural gas liquids, synthetic gas, drilling fluids,
produced waters, and other wastes associated with the exploration, development,
or production of crude oil, natural gas, or geothermal resources; (c) any
flammable substances or explosives or any radioactive materials; and (d)
asbestos in any form or electrical equipment which contains any oil or
dielectric fluid containing levels of polychlorinated biphenyls in excess of
fifty (50) parts per million.
"Indemnified Person(s)" has the meaning given to such term in
Section 11.3(c).
"Insolvency Proceeding" means any proceeding commenced by or against
any Person, under any provision of the Bankruptcy Code, or under any other
bankruptcy or insolvency law, including, but not limited to, assignments for the
benefit of creditors, formal or informal moratoriums, compositions, or
extensions with some or all creditors.
"Intangible Assets" means, with respect to any Person, that portion
of the book value of all of such Person's assets that would be treated as
intangibles under GAAP.
"Interest Payment Date" means:
(i) with respect to each Prime Lending Rate Portion, the last day of
each and every month commencing the first such day after the making of such
Loan, and the Maturity Date; and
(ii) with respect to each LIBOR Lending Rate Portion, the earlier
of: (1) the last day of the Interest Period with respect thereto, or (2) if the
Interest Period has a duration of more than three months, every LIBOR Business
Day that occurs during such Interest Period every three months from the first
day of such Interest Period.
"Interest Period" means, with respect to each LIBOR Lending Rate
Portion, the period commencing on the date of such LIBOR Lending Rate Portion
7
and ending on the numerically corresponding day one (1), two (2), three (3), six
(6) or twelve (12) months thereafter as Parent or any Borrower may elect
pursuant to the applicable Notice of Borrowing or Notice of Conversion or
Continuation; provided, however, that:
(i) any Interest Period which would otherwise end on a day which is
not a LIBOR Business Day shall be extended to the next succeeding LIBOR Business
Day unless such LIBOR Business Day falls in another calendar month in which case
such Interest Period shall end on the immediately preceding LIBOR Business Day;
(ii) any Interest Period which begins on the last LIBOR Business Day
of the 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 LIBOR Business Day of the calendar month in which it would
have ended if there were a numerically corresponding day in such calendar month;
and
(iii) no Interest Period may extend beyond the Maturity Date.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended from time to time, or any successor statute, and any and all regulations
thereunder.
"Issuing Lender" means Comerica.
"Late Payment Fee" has the meaning given to such term in Section
2.15(d).
"L/C Participants" means all of the Revolving Loan Lenders other
than the Issuing Lender.
"Lenders" means the banks and financial institutions from time to
time parties to this Agreement, including without limitation, Issuing Lender
(each, a "Lender").
"Lending Office" means each Lender's office located at its address
set forth on the signature pages hereof, or such other office of such Lender as
it may hereafter designate as its Lending Office by notice to Parent.
"Letter(s) of Credit" means any standby letter(s) of credit issued
by Issuing Lender, pursuant to Section 3.1.
"Letter of Credit Application" means a Letter of Credit Application
substantially in the form of Exhibit 1.1L.
"Letter of Credit Fee" has the meaning given to such term in Section
3.3(a).
"Letter of Credit Sublimit" means Four Hundred Thousand Dollars
($400,000).
"Letter of Credit Usage" means, on any date of determination, the
aggregate maximum amounts available to be drawn under all outstanding Letters of
Credit, without regard to whether any conditions to drawing could then be met.
8
"LIBOR" means London interbank offered rate.
"LIBOR Business Day" means any Business Day on which major
commercial banks are open for international business (including dealings in
Dollar deposits) in Los Angeles, California and London, England.
"LIBOR Lending Rate" means, with respect to a LIBOR Lending Rate
Portion, the rate per annum (rounded upwards if necessary to the nearest whole
one-hundredth of one percent (.01%)), determined as the sum of: (a) the quotient
of: (i) Base LIBOR for the relevant Interest Period of such LIBOR Lending Rate
Portion; divided by (ii) the number equal to one hundred percent (100%) minus
the LIBOR Reserve Percentage with respect to such Interest Period; plus (b) the
LIBOR Lending Rate Margin. The LIBOR Lending Rate shall be adjusted
automatically on the effective date of any change in the LIBOR Reserve
Percentage, such adjustment to affect any LIBOR Lending Rate Portion outstanding
on such effective date to the extent such change is applied retroactively to
eurocurrency funding of a member bank in the Federal Reserve System. Each
determination of a LIBOR Lending Rate by Agent, including, but not limited to,
any determination as to the applicability or allocability of reserves to
eurocurrency liabilities or as to the amount of such reserves, shall be
conclusive and final in the absence of manifest error.
"LIBOR Lending Rate Margin" means, with respect to all Revolving
Loans, two and one-half percentage points (250 basis points).
"LIBOR Lending Rate Portion" means any portion of any Loan
designated by Parent or a Borrower as bearing interest at the LIBOR Lending Rate
pursuant to Section 2.5 or 2.6.
"LIBOR Reserve Percentage" means, for any Interest Period of any
LIBOR Lending Rate Portion, the daily average of the stated maximum rate
(rounded upward to the nearest one-hundredth of one percent (.01%)), as
determined by Agent in accordance with its usual procedures (which determination
shall be conclusive in the absence of manifest error), at which reserves are
required to be maintained during such Interest Period by Agent and Lenders
(including supplemental, marginal, and emergency reserves) under Regulation D by
Agent and Lenders against Eurocurrency liabilities (as such term is defined in
Regulation D), but without benefit or credit of proration, exemptions, or
offsets that might otherwise be available to Agent and Lenders from time to time
under Regulation D. Without limiting the generality of the foregoing, LIBOR
Reserve Percentage shall include any other reserves required to be maintained by
Agent and Lenders against (i) any category of liabilities that includes deposits
by reference to which the LIBOR Lending Rate for a LIBOR Lending Rate Portion is
being determined and (ii) any category of extension of credit or other assets
that includes LIBOR Lending Rate Portion.
"Lien" means any mortgage, deed of trust, pledge, security interest,
hypothecation, assignment, deposit arrangement or other preferential
arrangement, charge or encumbrance (including, any conditional sale or other
title retention agreement, or finance lease) of any kind.
"Loan Document(s)" means each of the following documents,
instruments, and agreements individually or collectively, as the context
requires:
9
(i) the Notes;
(ii) the Security Agreement (Borrowers);
(iii) the Security Agreements (Guarantor);
(iv) the Guaranties;
(v) the Stock Pledge Agreements;
(vi) the Deed of Trust;
(vii) the Letter of Credit Applications; and
(viii) such other documents, instruments, and agreements (including
intellectual property security agreements, control agreements, financing
statements and fixture filings) as Agent may reasonably request in connection
with the transactions contemplated hereunder or to perfect or protect the liens
and security interests granted to Agent in connection herewith.
"Loans" means the Revolving Loans.
"Majority Lenders" means Lenders holding Total Commitment
Percentages in the aggregate of not less than 66.67%.
"Material Adverse Effect" means a material adverse effect on (i) the
business, Assets (valued in the aggregate in excess of $500,000), condition
(financial or otherwise), results of operations, or prospects of Parent, the
Subsidiary Borrowers and Guarantors taken as a whole; (ii) the ability of
Borrowers to perform their obligations under this Agreement and the Loan
Documents (including, without limitation, repayment of the Obligations as they
come due), or the ability of any Guarantor to perform its obligations under the
Loan Documents to which it is a party, (iii) the validity or enforceability of
this Agreement, the Loan Documents, or the rights or remedies of Agent and
Lenders hereunder and thereunder, (iv) a diminution in excess of $500,000 of the
value of the Assets assigned or pledged to Agent as collateral, or (v) the
priority of Agent's Liens with respect to the Assets (valued in the aggregate in
excess of $500,000) assigned or pledged thereto as collateral.
"Multiemployer Plan" means a multiemployer plan as defined in
Section 4001(a)(3) of ERISA or Section 3(37) of ERISA to which any member of the
ERISA Group has contributed, or was obligated to contribute, within the
preceding six plan years (while a member of such ERISA Group) including for
these purposes any Person which ceased to be a member of the ERISA Group during
such six year period.
"Net Cash Proceeds" means in connection with any Asset Sale, the
cash proceeds (including any cash payments received by way of deferred payment
whether pursuant to a note, installment receivable or otherwise, but only as and
when actually received) from such Asset Sale, less any proceeds used to replace
the Asset which is the subject of the Asset Sale and net of (i) attorneys' fees,
accountants' fees, investment banking fees, brokerage commissions and amounts
10
required to be applied to the repayment of any portion of the Debt secured by a
Lien not prohibited hereunder on any Asset which is the subject of such sale,
(ii) other customary fees, expenses and commissions incurred in connection with
the Asset Sale, and (iii) taxes paid or reasonably estimated to be payable as a
result of such Asset Sale.
"Notes" means, collectively, the promissory notes executed by
Borrowers to the order of each Lender pursuant to Section 2.11(a) (each, a
"Note").
"Notice of Borrowing" means an irrevocable notice from a Borrower to
Agent of such Borrower's request for a Borrowing pursuant to the terms of
Section 2.5, substantially in the form of Exhibit 2.5(b).
"Notice of Conversion or Continuation" means a written notice given
pursuant to the terms of Section 2.6(b), substantially in the form of Exhibit
2.6(b).
"Obligations" means any and all indebtedness, liabilities, and
obligations of Borrowers owing to Agent and Lenders and to their successors and
assigns, previously, now, or hereafter incurred, and howsoever evidenced,
whether direct or indirect, absolute or contingent, joint or several, liquidated
or unliquidated, voluntary or involuntary, due or not due, legal or equitable,
whether incurred before, during, or after any Insolvency Proceeding and whether
recovery thereof is or becomes barred by a statute of limitations or is or
becomes otherwise unenforceable or unallowable as claims in any Insolvency
Proceeding, together with all interest thereupon (including interest under
Section 2.4(b) and including any interest that, but for the provisions of the
Bankruptcy Code, would have accrued during the pendency of an Insolvency
Proceeding. The Obligations shall include, without limiting the generality of
the foregoing, all principal and interest owing under the Loans, all
Reimbursement Obligations, all Expenses, the Fees, any other fees and expenses
due hereunder and under the Loan Documents (including any fees or expenses that,
but for the provisions of the Bankruptcy Code, would have accrued during the
pendency of an Insolvency Proceeding), and all other indebtedness evidenced by
this Agreement and/or the Loan Documents.
"Old Lender(s)" means, individually or collectively as the context
requires, United California Bank and Mellon Bank, in their capacities as lenders
under that certain Credit Agreement dated as of September 8, 1997 between Sanwa
Bank California and NTS, as amended.
"Participant" has the meaning set forth in Section 11.5(d).
"Pay-Off Letters" means those certain letters, in form and substance
reasonably satisfactory to Agent, from Old Lenders respecting the amount
necessary to repay in full all of the obligations of Borrowers or any Subsidiary
owing to Old Lenders and obtain a termination or release of all of the Liens
existing in favor of Old Lenders in and to the Assets of Borrowers and such
Subsidiaries.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"Permitted Asset Sales" means (i) the Asset Sale of NTS' Largo
Division located at 0000 Xxxxx Xxxxx Xxxx, Xxxxx, Xxxxxxx, (ii) any sales in
11
connection with eminent domain proceedings affecting the Real Property
Collateral, (iii) the sale of a condominium owned by ETCR located at 00000
Xxxxxxxxxxx Xxxxx, Xxxx Xxxxxx, Xxxxxxxxxx, and (iv) the sale of the San Marcos
properties in Vista, California owned by ETCR (APN 000-000-00 and 217-161-08).
"Permitted Debt" means (i) Debt owing to Agent and Lenders in
accordance with the terms of this Agreement and the Loan Documents, (ii) Debt
listed on Schedule 5.6, (iii) Debt among all Borrowers up to a maximum aggregate
amount of One Million Dollars ($1,000,000) outstanding at any one time during
Parent's fiscal year ending January 31, 2002, or Two Million Dollars
($2,000,000) outstanding at any one time during any fiscal year thereafter, in
each case incurred in the ordinary course of business and secured by the Liens
described in clause (iv) of the definition of Permitted Liens hereinbelow, (iv)
trade payables incurred in the ordinary course of business described in clause
(iv) of the definition of "Debt" hereinabove, (v) unsecured Debt in an aggregate
amount not to exceed One Million Dollars ($1,000,000) outstanding at any time
among all Borrowers owing to officers and employees of any Borrower, and (vi)
the reimbursement obligations owing to Old Lenders respecting a letter of credit
in the face amount of JPY 20,000,000 for the account of XXCAL, in favor of Sanwa
Bank, Ltd., with an expiry date of December 10, 2001, provided that such letter
of credit shall not be renewed or extended.
"Permitted Liens" means (i) Liens for current taxes, assessments or
other governmental charges which are not delinquent or remain payable without
any penalty, or are being contested in good faith by appropriate proceedings,
provided that, if delinquent, adequate reserves have been set aside with respect
thereto as required by GAAP and, by reason of nonpayment, no property is subject
to a material risk of loss or forfeiture; (ii) Liens in favor of Agent, for the
ratable benefit of Lenders, in accordance with the Loan Documents, (iii)
statutory Liens, such as inchoate mechanics', inchoate materialmen's,
landlord's, warehousemen's, and carriers' liens, and other similar liens, other
than those described in clause (i) above, arising in the ordinary course of
business with respect to obligations which are not delinquent or are being
contested in good faith by appropriate proceedings, provided that, if
delinquent, adequate reserves have been set aside with respect thereto as
required by GAAP and, by reason of nonpayment, no property is subject to a
material risk of loss or forfeiture; (iv) Liens relating to Capital Lease
Obligations permitted hereunder and Liens securing any leases permitted in
Section 7.5, (v) judgment Liens that do not constitute an Event of Default under
Section 8.1(i), (vi) Liens, if they constitute such, of any true lease and
consignment UCC filings permitted hereunder, (vii) Purchase Money Liens, (viii)
Liens created by the eminent domain proceedings affecting the Real Property
Collateral, and (ix) the Liens encumbering the Real Property Collateral
disclosed in the preliminary report of title prepared by Chicago Title Company,
dated November 6, 2001.
"Person" means and includes natural persons, corporations, limited
partnerships, general partnerships, limited liability companies, limited
liability partnerships, joint stock companies, joint ventures, associations,
companies, trusts, banks, trust companies, land trusts, business trusts, or
other organizations, irrespective of whether they are legal entities, and
governments and agencies and political subdivisions thereof.
"Plan" means an employee benefit plan as defined in Section 3(3) of
ERISA in which any personnel of any member of the ERISA Group participate or
from which any such personnel may derive a benefit or with respect to which any
12
member of the ERISA Group may incur liability, excluding any Multiemployer Plan,
but including any plan either established or maintained by any member of the
ERISA Group or to which such Person contributes under the laws of any foreign
country.
"Prime Lending Rate" means the variable per annum rate equal to the
Prime Rate.
"Prime Lending Rate Portion" means any portion of any Loan
designated by Parent or a Borrower as bearing interest at the Prime Lending Rate
pursuant to Section 2.5 or 2.6.
"Prime Rate" means the variable rate of interest announced by Agent
at its corporate headquarters as its prime rate and which serves as the basis
upon which effective rates of interest are calculated for those loans making
reference thereto. The Prime Rate is determined by Agent from time to time as a
means of pricing credit extensions to some customers and is neither directly
tied to some external rate of interest or index nor necessarily the lowest rate
of interest charged by Agent at any given time for any particular class of
customers or credit extensions.
"Purchase Money Lien" means a Lien on any Asset of a Borrower;
provided that (i) such Lien attaches only to that Asset and (ii) the Debt
secured by such Asset does not exceed one hundred percent (100%) of the purchase
price of such Asset.
"Quick Ratio" means, as of the date of determination, the ratio of
(i) Borrowers' accounts receivable plus Borrowers' cash on hand and marketable
securities, to (ii) Current Liabilities.
"Real Property Collateral" means the real property of ETCR more
particularly described on Schedule 1.1R.
"Register" has the meaning given to such term in Section 10.13.
"Regulation D" means Regulation D of the Board of Governors of the
Federal Reserve System, as such regulation may be amended or supplemented from
time to time.
"Reimbursement Obligations" means the obligations of Borrowers to
reimburse Issuing Lender pursuant to Section 3.5 amounts drawn under Letters of
Credit.
"Reportable Event" means any of the events described in Section
4043(c) of ERISA other than a Reportable Event as to which the provision of 30
days notice to the PBGC is waived under applicable regulations.
"Responsible Officer" means either the Chief Executive Officer,
Chief Financial Officer or Controller of a Person, or such other officer,
employee, or agent of such Person designated by a Responsible Officer in a
writing delivered to Agent.
"Retiree Health Plan" means an employee welfare benefit plan within
the meaning of Section 3(1) of ERISA that provides benefits to individuals after
termination of their employment, other than as required by Section 601 of ERISA.
13
"Revolving Credit Commitment" means, with respect to any Revolving
Loan Lender, the amount indicated opposite such Lender's name on Schedule 1.1C
under the heading Revolving Credit Commitment or, in the case of any Lender that
is an assignee Lender pursuant to Section 11.5(c), the amount of the assigning
Lender's Revolving Credit Commitment assigned to such assignee Lender
(collectively, the "Revolving Credit Commitments").
"Revolving Credit Commitment Percentage" means, with respect to any
Revolving Loan Lender, the percentage indicated on Schedule 1.1C under the
heading Revolving Credit Commitment Percentage or, in the case of any Lender
that is an assignee Lender pursuant to Section 11.5(c), the percentage of the
assigning Lender's Revolving Credit Commitment assigned to such assignee Lender.
"Revolving Loans" has the meaning given to such term in Section 2.1.
"Revolving Loan Lender" means each of the Lenders indicated on
Schedule 1.1C under the heading Revolving Loan Lenders, and also means any
assignee of such Lender pursuant to Section 11.5(c).
"Revolving Loans Maturity Date" means August 1, 2003.
"SEC" means the U.S. Securities and Exchange Commission.
"Security Agreement (Borrowers)" means that certain Security
Agreement, dated as of even date herewith, among Borrowers and Agent, for the
ratable benefit of Lenders.
"Security Agreement (Guarantor)" means each Security Agreement now
or hereafter entered into between a Guarantor and Agent, for the ratable benefit
of Lenders.
"Shareholder" means a shareholder of any Borrower.
"Solvent" means, with respect to any Person on the date any
determination thereof is to be made, that on such date: (a) the present fair
valuation of the Assets of such Person is greater than such Person's probable
liability in respect of existing debts; (b) such Person does not intend to, and
does not believe that it will, incur debts beyond such Person's ability to pay
as such debts mature; and (c) such Person is not engaged in business or a
transaction, and is not about to engage in business or a transaction, which
would leave such Person with Assets remaining which would constitute
unreasonably small capital after giving effect to the nature of the particular
business or transaction. For purposes of this definition (i) the fair valuation
of any property or assets means the amount realizable within a reasonable time,
either through collection or sale of such Assets at their regular market value,
which is the amount obtainable by a capable and diligent Person from an
interested buyer willing to purchase such property or assets within a reasonable
time under ordinary circumstances; and (ii) the term debts includes any payment
obligation, whether or not reduced to judgment, equitable or legal, matured or
unmatured, liquidated or unliquidated, disputed or undisputed, secured or
unsecured, absolute, fixed or contingent.
"Stock Pledge Agreement" means each certain Security Agreement-Stock
Pledge now or hereafter entered into between a Borrower and Agent, for the
ratable benefit of Lenders.
14
"Subsidiary" means any corporation, limited liability company,
partnership, trust or other entity (whether now existing or hereafter organized
or acquired) of which any Borrower or one or more Subsidiaries of any Borrower
at the time owns or controls directly or indirectly 50% of the shares of stock
or partnership or other ownership interest having general voting power under
ordinary circumstances to elect a majority of the board of directors, managers
or trustees or otherwise exercising control of such corporation, limited
liability company, partnership, trust or other entity (irrespective of whether
at the time stock or any other form of ownership of any other class or classes
shall have or might have voting power by reason of the happening of any
contingency).
"Swaps" means payment obligations with respect to interest rate
swaps, currency swaps and similar obligations obligating a Person to make
payments, whether periodically or upon the happening of a contingency. For the
purposes of this Agreement, the amount of the obligation under any Swap shall be
the amount determined, in respect thereof as of the end of the then most
recently ended fiscal quarter of Borrowers, based on the assumption that such
Swap had terminated at the end of such fiscal quarter, and in making such
determination, if any agreement relating to such Swap provides for the netting
of amounts payable by and to each party thereto or if any such agreement
provides for the simultaneous payment of amounts by and to each party, then in
each such case, the amount of such obligation shall be the net amount so
determined.
"Taxes" has the meaning set forth in Section 9.1.
"Total Commitment Percentage" means, with respect to any Lender, the
percentage equal to such Lender's Revolving Loan Commitment, divided by the
Total Credit.
"Total Credit" means, initially, Sixteen Million Dollars
($16,000,000), as may be reduced from time to time pursuant to Section 2.14, and
also reduced by One Million Five Hundred Thousand Dollars ($1,500,000) effective
August 1, 2002, if the Consolidated Adjusted Net Income for the most recent
fiscal year is less than Two Million Dollars ($2,000,000).
"Transferee" has the meaning set forth in Section 11.5(e).
"UCC" means the California Uniform Commercial Code, as amended or
supplemented from time to time.
"Uniform Customs" means the Uniform Customs and Practice for
Documentary Credits (1993 Revision), International Chamber of Commerce
Publication No. 500, as the same may be amended from time to time.
"Unmatured Event of Default" means any condition or event which with
the giving of notice or lapse of time or both would, unless cured or waived,
become an Event of Default.
1.2 Accounting Terms and Determinations. Unless otherwise specified
herein, all accounting terms used herein shall be interpreted, all accounting
determinations hereunder shall be made, and all financial statements required to
be delivered hereunder shall be prepared in accordance with GAAP.
15
1.3 Computation of Time Periods. In this Agreement, with respect to
the computation of periods of time from a specified date to a later specified
date, the word from means from and including and the words to and until each
mean to but excluding. Periods of days referred to in this Agreement shall be
counted in calendar days unless otherwise stated.
1.4 Construction. Unless the context of this Agreement clearly
requires otherwise, references to the plural include the singular and to the
singular include the plural, references to any gender include any other gender,
the part includes the whole, the term including is not limiting, and the term or
has, except where otherwise indicated, the inclusive meaning represented by the
phrase and/or. References in this Agreement to determination by Agent include
good faith estimates by Agent (in the case of quantitative determinations), and
good faith beliefs by Agent (in the case of qualitative determinations). The
words hereof, herein, hereby, hereunder, and similar terms in this Agreement
refer to this Agreement as a whole and not to any particular provision of this
Agreement. Article, section, subsection, clause, exhibit and schedule references
are to this Agreement, unless otherwise specified. Any reference in this
Agreement or any of the Loan Documents to this Agreement or any of the Loan
Documents includes any and all permitted alterations, amendments, changes,
extensions, modifications, renewals, or supplements thereto or thereof, as
applicable.
1.5 Exhibits and Schedules. All of the exhibits and schedules
attached hereto shall be deemed incorporated herein by reference.
1.6 No Presumption Against Any Party. Neither this Agreement, any of
the Loan Documents, any other document, agreement, or instrument entered into in
connection herewith, nor any uncertainty or ambiguity herein or therein shall be
construed or resolved using any presumption against any party hereto, whether
under any rule of construction or otherwise. On the contrary, this Agreement,
the Loan Documents, and the other documents, instruments, and agreements entered
into in connection herewith have been reviewed by each of the parties and their
counsel and shall be construed and interpreted according to the ordinary
meanings of the words used so as to accomplish fairly the purposes and
intentions of all parties hereto.
1.7 Independence of Provisions. All agreements and covenants
hereunder, under the Loan Documents, and the other documents, instruments, and
agreements entered into in connection herewith shall be given independent effect
such that if a particular action or condition is prohibited by the terms of any
such agreement or covenant, the fact that such action or condition would be
permitted within the limitations of another agreement or covenant shall not be
construed as allowing such action to be taken or condition to exist.
ARTICLE II
TERMS OF THE CREDIT
-------------------
2.1 Revolving Loans. Provided that no Event of Default or Unmatured
Event of Default has occurred and is continuing, and subject to the other terms
and conditions hereof, each Revolving Loan Lender severally agrees to make
revolving loans ("Revolving Loans") to Borrowers, upon notice in accordance with
16
Section 2.5(b), from the Closing Date up to but not including the Revolving
Loans Maturity Date, the proceeds of which shall be used only for the purposes
allowed in Section 7.1(a), subject to the following conditions and limitations:
(a) the aggregate principal amount of Revolving Loans outstanding
made by any Revolving Loan Lender after giving effect to any proposed Borrowing
plus such Revolving Loan Lender's pro rata share of the Letter of Credit Usage
on such date shall not exceed the amount of such Lender's Revolving Credit
Commitment, as then in effect;
(b) the aggregate principal amount of Revolving Loans outstanding
made by all Revolving Loan Lenders after giving effect to any proposed Borrowing
plus the Letter of Credit Usage on such date shall not exceed the amount of the
Total Credit, as then in effect;
(c) Borrowers shall not be permitted to borrow, and Revolving Loan
Lenders shall not be obligated to make, any Revolving Loans to Borrowers, unless
and until all of the conditions for a Borrowing set forth in Section 4.2 have
been met to the reasonable satisfaction of Agent.
(d) If a reduction of the Total Credit (a "Total Credit Reduction")
occurs pursuant to the terms of this Agreement, then Borrowers shall, upon each
Total Credit Reduction, immediately pay to Agent for the account of each
Revolving Loan Lender, in cash, a principal reduction payment on the Revolving
Loans in order to reduce the outstanding Revolving Loans plus the Letter of
Credit Usage to an amount not greater than the Total Credit, as so reduced.
Borrowers may repay and, subject to the terms and conditions hereof, reborrow
Revolving Loans. All such repayments shall be made to Agent for the account of
each Revolving Loan Lender. All such repayments shall be without penalty or
premium except as otherwise required by Section 2.7(a) with respect to
repayments of LIBOR Lending Rate Portions. Borrowers shall give Agent at least
three (3) Business Days' prior written notice of any repayment of a Prime
Lending Rate Portion and at least three (3) LIBOR Business Days' prior written
notice of any repayment of a LIBOR Lending Rate Portion, upon receipt of which,
Agent shall promptly give notice to each Revolving Loan Lender. Upon receipt of
any such notice of a repayment, Agent shall promptly notify each Revolving Loan
Lender thereof. Agent shall, promptly following its receipt thereof, distribute
to each Revolving Loan Lender its pro rata share (based upon the principal
amounts outstanding) of all amounts received by Agent pursuant to this Section
2.1 for each such Revolving Loan Lender's respective account. On the Revolving
Loans Maturity Date, Borrowers shall pay to Agent for the account of each
Revolving Loan Lender, the entire unpaid principal balance of the Revolving
Loans together with all accrued but unpaid interest thereon.
2.2 [Intentionally Omitted].
2.3 [Intentionally Omitted].
2.4 Interest Rates; Payments of Interest.
(a) Interest Rate Options. Subject to the terms and conditions
hereof, all Loans, or portions thereof, may be outstanding as either Prime
Lending Rate Portions or LIBOR Lending Rate Portions, by designating, in
17
accordance with Sections 2.5(b) and 2.6(b), either the Prime Lending Rate or the
LIBOR Lending Rate to apply to all or any portion of the unpaid principal
balance of the Loans; provided, however, there shall be no more than three (3)
LIBOR Lending Rate Portions outstanding at any time. LIBOR Lending Rate Portions
shall be in minimum amounts each of One Million Dollars ($1,000,000). Each type
of Loan shall be made and maintained by each Lender at such Lender's Lending
Office for such type of Loan.
(b) Default Rate. Upon the occurrence and during the continuance of
an Event of Default, in addition to and not in substitution of any of Lenders'
other rights and remedies with respect to such Event of Default, the entire
unpaid principal balance of the Loans shall bear interest at the applicable
Lending Rate plus three hundred (300) basis points. In addition, interest,
Expenses, the Fees, and other amounts due hereunder not paid when due shall bear
interest at the Prime Lending Rate plus three hundred (300) basis points until
such overdue payment is paid in full.
(c) Computation of Interest. All computations of interest shall be
calculated on the basis of a year of three hundred sixty (360) days for the
actual days elapsed. In the event that the Prime Rate announced is, from time to
time, changed, adjustment in the rate of interest payable hereunder on all Prime
Lending Rate Portions shall be made as of 12:01 a.m. (Pacific time) on the
effective date of the change in the Prime Rate. Interest shall accrue from the
Closing Date to the date of repayment of the Loans in accordance with the
provisions of this Agreement; provided, however, if a Loan is repaid on the same
day on which it is made, then one (1) day's interest shall be paid on that Loan.
Any and all interest not paid when due shall thereafter be deemed to be a
Revolving Loan as a Prime Lending Rate Portion made under Section 2.1 and shall
bear interest thereafter as provided for in Section 2.4(b).
(d) Maximum Interest Rate. In no event shall the interest rate and
other charges hereunder exceed the highest rate permissible under any law which
a court of competent jurisdiction shall, in a final determination, deem
applicable hereto. In the event that such a court determines that Agent or any
Lender has received interest and other charges hereunder in excess of the
highest rate applicable hereto, 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 the provisions hereof shall be
deemed amended to provide for the highest permissible rate. If there are no
Obligations outstanding, Lenders shall refund to Borrowers such excess.
(e) Payments of Interest. All accrued but unpaid interest on the
Loans, calculated in accordance with this Section 2.4, shall be due and payable,
in arrears, on each and every Interest Payment Date.
2.5 Notice of Borrowing Requirements.
(a) Each Borrowing of a Prime Lending Rate Portion shall be made on
a Business Day and each Borrowing of a LIBOR Lending Rate Portion shall be made
on a LIBOR Business Day.
(b) Each Borrowing shall be made upon telephonic notice given by a
Responsible Officer of a Borrower, followed by a Notice of Borrowing, given by
facsimile or personal service, delivered to Agent at the address set forth in
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the Notice of Borrowing. If for a Prime Lending Rate Portion, Agent shall be
given such notice no later than 11:00 a.m., Pacific time, one (1) Business Day
prior to the day on which such Borrowing is to be made, and, if for a LIBOR
Lending Rate Portion, Agent shall be given notice no later than 9:00 a.m.,
Pacific time, three (3) LIBOR Business Days prior to the day on which such
Borrowing is to be made, and such notice shall state the amount and purpose
thereof (subject to the provisions of Section 2.1). Upon receipt of any Notice
of Borrowing from a Borrower, (x) Agent shall promptly notify each Revolving
Loan Lender thereof, (y) each Revolving Loan Lender will make the amount of its
pro rata share of each Borrowing available to Agent for the account of Borrowers
at Agent's Lending Office for such Loans prior to 10:00 a.m., Pacific time, on
the date requested by a Borrower in funds immediately available to Agent and (z)
such Borrowing will then be made available to such Borrower by Agent crediting
the account of Borrowers on the books of such Lending Office with the aggregate
of the amounts made available to Agent by Revolving Loan Lenders and in like
funds as received by the Agent.
(c) Neither Agent nor any Lender shall incur any liability to
Borrowers in acting upon any telephonic notice which Agent believes in good
faith to have been given by a Responsible Officer of Borrower, or for otherwise
acting in good faith under this Section 2.5, and in making any Loans pursuant to
telephonic notice.
(d) So long as all of the conditions for a Borrowing of a Loan set
forth herein have been satisfied, Agent shall make the proceeds of such Loan
available to Borrowers on the applicable Borrowing date by transferring same day
funds, equal to the amount of such Loan, in accordance with written disbursement
instructions given by Borrowers to Agent, in form and substance satisfactory to
Agent and otherwise consistent with Section 7.1.
2.6 Conversion or Continuation Requirements.
(a) Parent shall have the option to: (i) convert, at any time, all
or any portion of any of the outstanding Loans, subject to the requirements of
Section 2.4(a), from a portion bearing interest at one of the interest rate
options available pursuant to Section 2.4(a) to another; or (ii) upon the
expiration of any Interest Period applicable to a LIBOR Lending Rate Portion, to
continue all or any portion of such LIBOR Lending Rate Portion as a LIBOR
Lending Rate Portion with the succeeding Interest Period(s) of such continued
LIBOR Lending Rate Portion commencing on the expiration date of the Interest
Period previously applicable thereto; provided, however, that a LIBOR Lending
Rate Portion may only be converted to a Prime Lending Rate Portion or continued
as a LIBOR Lending Rate Portion on the expiration date of the Interest Period
applicable thereto; provided further, however, that no outstanding Loan, or
portion thereof, may be continued as, or be converted into, a LIBOR Lending Rate
Portion in the event that, on the earlier of the date of the delivery of the
Notice of Conversion or Continuation or the telephonic notice in respect
thereof, any Event of Default or Unmatured Event of Default has occurred and is
continuing; provided further, however, that if Parent fails to deliver the
appropriate Notice of Conversion or Continuation or the telephonic notice in
respect thereof pursuant to the required notice period before the expiration of
the Interest Period of a LIBOR Lending Rate Portion, such LIBOR Lending Rate
Portion shall automatically be converted to a Prime Lending Rate Portion;
provided further, however, that no outstanding portion of a Loan may be
continued as, or be converted into, a LIBOR Lending Rate Portion in the event
that, after giving effect to any such conversion or continuation, there would be
more than three (3) LIBOR Lending Rate Portions outstanding.
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(b) Parent shall give telephonic notice of any proposed continuation
or conversion pursuant to this Section 2.6 followed by a Notice of Conversion or
Continuation, given by facsimile or personal service, delivered to Agent at the
address set forth in the Notice of Conversion or Continuation, no later than
11:00 a.m., Pacific time, on the Business Day which is the proposed conversion
date (in the case of a conversion to a Prime Lending Rate Portion) and no later
than 9:00 a.m., Pacific time, three (3) LIBOR Business Days in advance of the
proposed conversion or continuation date (in the case of a conversion to, or a
continuation of, a LIBOR Lending Rate Portion). If such Notice of Conversion or
Continuation is received by Agent not later than 11:00 a.m., Pacific time, on a
LIBOR Business Day, such day shall be treated as the first LIBOR Business Day of
the required notice period. In any other event, such notice will be treated as
having been received at the opening of business of the next LIBOR Business Day.
A Notice of Conversion or Continuation shall specify: (1) the proposed
conversion or continuation date (which shall be a Business Day or a LIBOR
Business Day, as applicable); (2) the amount of the Revolving Loan to be
converted or continued; (3) the nature of the proposed conversion or
continuation; and (4) in the case of a conversion to or continuation of a LIBOR
Lending Rate Portion, the requested Interest Period.
(c) Neither Agent nor any Lender shall incur any liability to
Borrowers in acting upon any telephonic notice referred to above which Agent
believes in good faith to have been given by a Responsible Officer of Parent or
for otherwise acting in good faith under this Section 2.6. Any Notice of
Conversion or Continuation (or telephonic notice in respect thereof) shall be
irrevocable and Borrowers shall be bound to convert or continue in accordance
therewith.
2.7 LIBOR Costs.
(a) Borrowers shall reimburse each Lender for any increase in such
Lender's costs (which shall include, but not be limited to, taxes, other than
taxes imposed on the overall net income of such Lender, fees or charges), or any
loss or expense (including, without limitation, any loss or expense incurred by
reason of the liquidation or re-employment of deposits or other funds acquired
by such Lender to fund or maintain outstanding the principal amount of the
Loans) incurred by it directly or indirectly resulting from the making of any
LIBOR Lending Rate Portion due to: (a) the modification, adoption, or enactment
of any law, rule, regulation or treaty or the interpretation thereof by any
governmental or other authority (whether or not having the force of law) which
becomes effective after the date hereof; (b) the modification or new application
of any law, regulation or treaty or the interpretation thereof by any
governmental or other authority (whether or not having the force of law) which
becomes effective after the date hereof; (c) compliance by such Lender with any
request or directive (whether or not having the force of law) of any monetary or
fiscal agency or authority which becomes effective after the date hereof; (d)
violations by Borrowers of the terms of this Agreement; or (e) any prepayment of
a LIBOR Lending Rate Portion at any time prior to the end of the applicable
Interest Period, including pursuant to Section 8.2.
(b) The amount of such costs, losses, or expenses shall be
determined solely by such Lender based upon the assumption that such Lender
funded one hundred percent (100%) of each LIBOR Lending Rate Portion in the
LIBOR market. In attributing such Lender's general costs relating to its
eurocurrency operations to any transaction under this Agreement or averaging any
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costs over a period of time, such Lender may use any reasonable attribution or
averaging methods which it deems appropriate and practical. Such Lender shall
notify Borrowers of the amount due such Lender pursuant to this Section 2.7 in
respect of any LIBOR Lending Rate Portion as soon as practicable but in any
event within forty-five (45) days after the last day of the Interest Period of
such LIBOR Lending Rate Portion, and Borrowers shall pay to such Lender the
amount due within fifteen (15) days of its receipt of such notice. A certificate
as to the amounts payable pursuant to the foregoing sentence together with
whatever detail is reasonably available to such Lender shall be submitted by
such Lender to Borrowers. Such determination shall, if not objected to within
ten (10) days, be conclusive and binding upon Borrowers in the absence of
manifest error. If such Lender claims increased costs, loss, or expenses
pursuant to this Section 2.7, then such Lender, if requested by Borrowers, shall
use reasonable efforts to take such steps that Borrowers reasonably request,
including designating different Lending Offices, as would eliminate or reduce
the amount of such increased costs, losses, or expenses, so long as taking such
steps would not, in the reasonable judgment of such Lender, otherwise be
disadvantageous to such Lender. Any recovery by such Lender or its Lending
Office of amounts previously borne by Borrowers pursuant to this Section 2.7
shall be promptly remitted, without interest (unless Agent received interest on
such recovered amounts), to Borrowers by such Lender.
2.8 Illegality; Impossibility. Notwithstanding anything herein to
the contrary, if any Lender determines (which determination shall be conclusive)
that any law, rule, regulation, treaty or directive, or any change therein, or
any change in the interpretation or administration thereof by any Governmental
Authority, central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by such Lender (or its Lending Office)
with any request or directive (whether or not having the force of law) of any
such authority, central bank or comparable agency shall make it unlawful or
impossible for such Lender (or its Lending Office) to fund or maintain a LIBOR
Lending Rate Portion in the LIBOR market or to continue such funding or
maintaining, then such Lender shall give notice of such circumstances to
Borrowers and (a) in the case of each and every LIBOR Lending Rate Portion which
is outstanding, Borrowers shall, if requested by such Lender, prepay such LIBOR
Lending Rate Portion(s) on or before the date specified in such request,
together with interest accrued thereon, and the date so specified shall be
deemed to be the last day of the Interest Period of that LIBOR Lending Rate
Portion, and concurrent with any such prepayment, such Lender shall make a Prime
Lending Rate Portion to Borrowers in the principal amount equal to the principal
amount of the LIBOR Lending Rate Portions so prepaid, and (b) such Lender shall
not be obligated to make any further LIBOR Lending Rate Portions until such
Lender determines that it would no longer be unlawful or impossible to do so.
2.9 Disaster. Notwithstanding anything herein to the contrary, if
any Lender determines (which determination shall be conclusive) that (a) such
Lender is unable to determine the LIBOR Lending Rate with respect to any Notice
of Borrowing or Notice of Conversion or Continuation selecting the LIBOR Lending
Rate because quotations of interest rates for the relevant deposits are not
being provided in the relevant amounts or for the relative maturities or (b) the
LIBOR Lending Rate will not adequately reflect the cost to such Lender of making
or funding LIBOR Lending Rate Portions, then (i) the right of Borrowers to
select the LIBOR Lending Rate shall be suspended until such Lender notifies
Borrowers that the circumstances causing such suspension no longer exist, and
(ii) Borrowers shall repay in full the then outstanding principal balance of all
LIBOR Lending Rate Portions, together with interest accrued thereon, on the last
day of the Interest Period applicable to each such LIBOR Lending Rate Portion,
and concurrent with any such prepayment, such Lender shall make a Prime Lending
21
Rate Portion to Borrower in the principal amount equal to the principal amount
of the LIBOR Lending Rate Portions so repaid.
2.10 Increased Risk-Based Capital Cost. If the amount of capital
required or expected to be maintained by any Lender or any Person directly or
indirectly owning or controlling such Lender (each a "Control Person"), shall be
affected by:
(a) the introduction or phasing in of any law, rule or regulation
after the date hereof;
(b) any change after the date hereof in the interpretation of any
existing law, rule or regulation by any central bank or United States or foreign
governmental authority charged with the administration thereof; or
(c) compliance by such Lender or such Control Person with any
directive, guideline or request from any central bank or United States or
foreign governmental authority (whether or not having the force of law)
promulgated or made after the date hereof, and such Lender shall have reasonably
determined that such introduction, phasing in, change or compliance shall have
had or will thereafter have the effect of reducing (x) the rate of return on
such Lender's or such Control Person's capital, or (y) the asset value to such
Lender or such Control Person of the Loans made or maintained by such Lender, in
either case to a level below that which such Lender or such Control Person could
have achieved or would thereafter be able to achieve but for such introduction,
phasing in, change or compliance (after taking into account such Lender's or
such Control Person's policies regarding capital), in either case by an amount
which Agent in its reasonable judgment deems material, then, on demand by such
Lender, Borrowers shall pay to such Lender or such Control Person such
additional amount or amounts as shall be sufficient to compensate such Lender or
such Control Person, as the case may be, for such reduction.
2.11 Notes; Statements of Obligations.
(a) Borrowers agree that, upon the request to Agent by any Lender
made on or prior to the Closing Date if and to the extent that such Lender has a
Commitment as of the Closing Date, or in connection with any assignment pursuant
to Section 11.5(c), to evidence such Lender's Loans, Borrowers will execute and
deliver to such Lender a promissory note substantially in the form of Exhibit
2.11(a), with appropriate insertions as to payee, date and principal amount
(each, as amended, supplemented, replaced or otherwise modified from time to
time, a "Note" and, collectively, the "Notes"), payable to the order of such
Lender and in a principal amount equal to the sum of such Lender's Revolving
Credit Commitment. Each Note shall (x) be dated the Closing Date, (y) be payable
as provided herein and (z) provide for the payment of interest in accordance
with Section 2.4.
(b) The Loans and Borrowers' obligation to repay the same shall be
evidenced by the Notes, this Agreement and the books and records of Lenders.
Agent shall maintain the Register pursuant to Section 10.13, and a subaccount
therein for each Lender, in which shall be recorded (i) the amount of each Loan
made hereunder, whether each such Loan is a LIBOR Lending Rate Portion or a
Prime Lending Rate Portion, or both, and each Interest Period, if any,
22
applicable thereto, (ii) the amount of any principal or interest due and payable
or to become due and payable from Borrowers to each Lender hereunder and (iii)
both the amount of any sum received by Agent hereunder from Borrowers and each
Lender's share thereof; provided, however, any failure by Agent to maintain the
Register or any such subaccount with respect to any Loan or continuation,
conversion or payment thereof shall not limit or otherwise affect Borrowers'
obligations hereunder or under the Notes.
(c) Agent shall render monthly statements of the Loans to Parent,
including statements of all principal and interest owing on the Loans, and all
Fees and Expenses owing, and such statements shall, absent manifest error, be
presumed to be correct and accurate and constitute an account stated between
Borrowers and Lenders unless, within thirty (30) days after receipt thereof by
Parent, Parent delivers to Agent, at the address specified in Section 11.1, with
a copy for each Lender, written objection thereof specifying the error or
errors, if any, contained in any such statement.
2.12 Holidays. Any principal or interest in respect of the Loans
(other than in respect of a LIBOR Lending Rate Portion) which would otherwise
become due on a day other than a Business Day, shall instead become due on the
next succeeding Business Day and such adjustment shall be reflected in the
computation of interest; provided, however, that in the event that such due date
shall, subsequent to the specification thereof by Agent, for any reason no
longer constitute a Business Day, Agent may change such specified due date in
accordance with this Section 2.12.
2.13 Time and Place of Payments.
(a) All payments due hereunder shall be made available to Agent for
the account of Lenders in immediately available Dollars, not later than 12:00
p.m., Pacific time, on the day of payment, to the following address or such
other address as Agent may from time to time specify by notice to Parent:
Comerica Bank-California
00000 Xxxxxx Xxxxxx
Xxxxxxxx Xxxxx, XX 00000
Attention: Xxxxx X. Xxxxx
(b) Borrowers hereby authorize Agent to charge Borrowers' demand
deposit account number 1891922443 with Agent, or any other demand deposit
account maintained by any Borrower with Agent, for the amount of any payment due
or past due hereunder or under any Loan Document, for the full amount thereof.
Should there be insufficient funds in any such demand deposit account to pay all
such sums when due, the full amount of such deficiency shall be immediately due
and payable in cash by Borrowers.
(c) In addition, Borrowers hereby authorize each Revolving Loan
Lender at its option, without prior notice to Borrowers, to advance a Revolving
Loan as a Prime Lending Rate Portion for any payment due or past due hereunder,
including principal and interest owing on the Loans, the Fees and all Expenses,
and to pay the proceeds of such Revolving Loan to Agent for application toward
such due or past due payment.
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2.14 Mandatory Principal Reductions.
(a) Asset Sales. Each Borrower shall pay to Agent for the account of
the Lenders, on the first Business Day following such Borrower's receipt
thereof, one hundred percent (100%) of the Net Cash Proceeds derived from each
and all of its Asset Sales; provided that so long as no Event of Default has
occurred and is continuing, Borrowers shall be permitted to retain the Net Cash
Proceeds derived from (i) the Permitted Asset Sales, and (ii) any other Asset
Sales not to exceed $300,000 in any transaction or series of transactions or
$500,000 in the aggregate in any fiscal year of Parent; provided, however, in
accordance with Section 7.7, Borrowers shall not conduct or consummate any Asset
Sales unless and until the prior written consent of Agent and the Majority
Lenders has been obtained, or unless such Asset Sale is otherwise permitted by
Section 7.7. Net Cash Proceeds required to be paid to Agent in accordance with
this Section 2.14(a) shall be applied FIRST toward accrued and unpaid Expenses,
SECOND toward accrued and unpaid interest on the Loans, and THIRD toward
outstanding Loans. In the event that any payments are applied toward outstanding
Revolving Loans pursuant to this Section, the Revolving Credit Commitments shall
be permanently reduced by the amount of such payments.
(b) Issuance of Subordinate Debt and/or Capital Stock. Borrowers
shall also pay to Agent for the account of the Lenders one hundred percent
(100%) of the net proceeds from the issuance of any subordinate Debt or Capital
Stock of Parent concurrent with any such issuance; provided that so long as no
Event of Default has occurred and is continuing, Parent shall be entitled to
retain the proceeds from the exercise of employee stock options not to exceed
$250,000 in the aggregate in any fiscal year; provided further that Parent shall
not issue any subordinate Debt without the prior written consent of Agent and
the Majority Lenders and execution and delivery of a subordination agreement
with respect thereto, in form and substance satisfactory to Agent and the
Majority Lenders in their sole and absolute discretion. Agent shall apply such
payment of proceeds FIRST toward accrued and unpaid Expenses, SECOND toward
accrued and unpaid interest on the Loans, and THIRD toward outstanding Loans. In
the event that any payments of proceeds of the issuance of subordinated Debt are
applied toward outstanding Revolving Loans pursuant to this Section, the
Revolving Credit Commitments shall be permanently reduced by the amount of such
payments.
2.15 Fees.
(a) Borrowers shall pay to Agent for the ratable account of the
Revolving Loan Lenders on a quarterly basis an unused commitment fee (the
"Unused Revolving Commitment Fee") in an aggregate amount equal to one-quarter
of one percent (0.25%) per annum times the difference of the aggregate Revolving
Credit Commitments minus the sum of (i) the average daily outstanding Revolving
Loans during the prior quarter plus (ii) the average daily Letter of Credit
Usage during the prior quarter. The Unused Commitment Fee shall begin to accrue
on the Closing Date and shall be due and payable, in arrears, on the first
Business Day of each and every December, March, June and September, and the
Revolving Loans Maturity Date. The Unused Commitment Fee shall be calculated on
the basis of a year of three hundred sixty (360) days for the actual days
elapsed. No Unused Revolving Commitment Fee will be payable for periods after
the Revolving Loans Maturity Date.
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(b) Borrowers shall pay to Agent for the ratable account of the
Lenders a fee (the "Closing Fee") in the amount of Eighty Thousand Dollars
($80,000). The Closing Fee shall be fully earned and nonrefundable, and shall be
due and payable on the Closing Date.
(c) Borrowers shall pay to Agent for the ratable account of the
Lenders a facility fee (the "Facility Fee") in an amount equal to the result of
(i) the Total Credit as in effect on November 30, 2002, multiplied by (ii) one
quarter of one percent (0.25%) multiplied by the result of (x) the number of
months (or fractions thereof) from November 30, 2002 through and including the
Revolving Loans Maturity Date divided by (y) 12. The Facility Fee shall be fully
earned and non-refundable, and shall be due and payable on November 30, 2002.
(d) If any payment due hereunder, whether for principal, interest,
or otherwise, is not paid on or before the tenth (10th) day after the date such
payment is due, in addition to and not in substitution of any of Lenders' other
rights and remedies with respect to such nonpayment, Borrowers shall pay to
Agent for the ratable account of Revolving Loan Lenders, a late payment fee (the
"Late Payment Fee") equal to five percent (5%) of the amount of such overdue
payment. The Late Payment Fee shall be due and payable on the eleventh (11th)
day after the due date of the overdue payment with respect thereto.
ARTICLE III
LETTERS OF CREDIT
-----------------
3.1 Letters of Credit.
(a) Provided that no Event of Default or Unmatured Event of Default
is continuing and subject to the other terms and conditions hereof, the Issuing
Lender, in reliance upon the agreements of the other L/C Participants set forth
in Section 3.4, agrees to issue letters of credit ("Letters of Credit") for the
account of Borrowers in such form as may be approved from time to time by
Issuing Lender, subject to the following limitations:
(i) The face amount of the Letter of Credit requested if and when
issued must not cause the sum of the aggregate principal amount outstanding of
all Revolving Loans plus the Letter of Credit Usage to exceed the Total Credit;
(ii) The face amount of the Letter of Credit requested if and when
issued must not cause the Letter of Credit Usage to exceed the Letter of Credit
Sublimit;
(iii) The Letter of Credit may not have an expiry date or draw
period which extends beyond the earlier of (x) 365 days following the date of
issuance, or (y) the date which is thirty (30) days prior to the Revolving Loans
Maturity Date; and
(iv) The conditions specified in Section 4.2 shall have been
satisfied on the date of issuance of such Letter of Credit.
(b) Each Letter of Credit shall (i) be denominated in Dollars, and
(ii) be a standby letter of credit issued to support obligations of a Borrower
or any Subsidiary, contingent or otherwise, to finance the working capital and
25
business needs of such Borrower or such Subsidiary in the ordinary course of
business.
(c) Each Letter of Credit shall be subject to the Uniform Customs
and, to the extent not inconsistent therewith, the laws of the State of
California.
(d) The Issuing Lender shall not at any time be obligated to issue
any Letter of Credit hereunder if such issuance would conflict with, or cause
the Issuing Lender or any L/C Participant to exceed any limits imposed by its
organizational or governing documents or by any applicable law, rule, regulation
or treaty or determination of an arbitrator or a court or other governmental
authority to which Issuing Lender or such L/C Participant is subject.
3.2 Procedure for Issuance of Letters of Credit. Any Borrower may
request that the Issuing Lender issue a Letter of Credit at any time prior to
the date which is thirty (30) days prior to the Revolving Loans Maturity Date by
delivering to the Issuing Lender a Letter of Credit Application at its address
for notices specified herein a Letter of Credit Application therefor, completed
to the satisfaction of the Issuing Lender, together with such other
certificates, documents and other papers and information as the Issuing Lender
may request. Upon receipt of any Letter of Credit Application, the Issuing
Lender will process such Letter of Credit Application and the certificates,
documents and other papers and information delivered to it in connection
therewith in accordance with its customary procedures and shall promptly issue
the Letter of Credit requested thereby (but in no event shall the Issuing Lender
be required to issue any Letter of Credit earlier than three (3) Business Days
after its receipt of the Letter of Credit Application therefor and all such
other certificates, documents and other papers and information relating thereto)
by issuing the original of such Letter of Credit to the beneficiary thereof or
as otherwise may be agreed by the Issuing Lender and such Borrower. The Issuing
Lender shall furnish a copy of such Letter of Credit to such Borrower promptly
following the issuance thereof.
3.3 Fees, Commissions and Other Charges.
(a) Borrowers shall pay to Agent, for the account of the Issuing
Lender and, subject to Section 3.3(b), the L/C Participants, a fee in an amount
equal to the face amount of each and every Letter of Credit times two percent
(2.0%) (the "Letter of Credit Fee"). The Letter of Credit Fee shall be due and
payable upon issuance of the applicable Letter of Credit and again on each
anniversary thereof.
(b) Issuing Lender shall be entitled to retain a fee from the L/C
Participants (the "Fronting Fee") in an amount equal to the face amount of each
and every Letter of Credit times one eighth of one percent (0.125%) from each
and every Letter of Credit Fee collected by Agent under Section 3.3(a). The
Fronting Fee shall be deducted from all Letter of Credit Fees collected under
Section 3.3(a).
(c) In addition to the foregoing, Borrowers shall pay or reimburse
the Issuing Lender for such normal and customary costs and expenses as are
reasonably incurred or charged by the Issuing Lender in issuing, effecting
payment under, amending or otherwise administering any Letter of Credit.
26
(d) Agent shall, promptly following its receipt thereof, distribute
to the Issuing Lender and the L/C Participants all fees received by Agent for
their respective accounts pursuant to this Section 3.3.
3.4 L/C Participations.
(a) The Issuing Lender irrevocably agrees to grant and hereby grants
to each L/C Participant and, to induce the Issuing Lender to issue Letters of
Credit hereunder, each L/C Participant, and each L/C Participant irrevocably
agrees to accept and purchase and hereby accepts and purchases from the Issuing
Lender, on the terms and conditions hereinafter stated, for such L/C
Participant's own account and risk an undivided interest equal to such L/C
Participant's Revolving Credit Commitment Percentage from time to time in effect
in the Issuing Lender's obligations and rights under each Letter of Credit
issued hereunder and the amount of each draft paid by the Issuing Lender
thereunder. Each L/C Participant unconditionally and irrevocably agrees with the
Issuing Lender that, if a draft is paid under any Letter of Credit for which the
Issuing Lender is not reimbursed in full by Borrowers in accordance with the
terms of this Agreement, such L/C Participant shall pay to the Issuing Lender
upon demand at the Issuing Lender's address for notices specified herein an
amount equal to such L/C Participant's Revolving Credit Commitment Percentage of
the amount of such draft, or any part thereof, which is not so reimbursed;
provided that, if such demand is made prior to 10:00 a.m., Pacific time, on a
Business Day, such L/C Participant shall make such payment to the Issuing Lender
prior to the end of such Business Day and otherwise such L/C Participant shall
make such payment on the next succeeding Business Day.
(b) If any amount required to be paid by any L/C Participant to the
Issuing Lender pursuant to Section 3.4(a) in respect of any unreimbursed portion
of any payment made by the Issuing Lender under any Letter of Credit is paid to
the Issuing Lender within three (3) Business Days after the date such payment is
due, such L/C Participant shall pay to the Issuing Lender on demand an amount
equal to the product of (i) such amount, times (ii) the daily average Federal
Funds Rate, during the period from and including the date such payment is
required to the date on which such payment is immediately available to the
Issuing Lender, times (iii) a fraction the numerator of which is the number of
days that elapse during such period and the denominator of which is 360. If any
such amount required to be paid by any L/C Participant pursuant to Section
3.4(a) is not made available to the Issuing Lender by such L/C Participant
within three (3) Business Days after the date such payment is due, the Issuing
Lender shall be entitled to recover from such L/C Participant, on demand, such
amount with interest thereon calculated from such due date at the rate per annum
applicable to Prime Lending Rate Portions hereunder. A certificate of the
Issuing Lender submitted to any L/C Participant with respect to any amounts
owing under this subsection shall be conclusive in the absence of manifest
error.
(c) Whenever, at any time after the Issuing Lender has made payment
under any Letter of Credit and has received from any L/C Participant its pro
rata share of such payment in accordance with Section 3.4(a), the Issuing Lender
receives any payment related to such Letter of Credit (whether directly from
Borrowers or otherwise, including proceeds of collateral applied thereto by the
Issuing Lender), or any payment of interest on account thereof, the Issuing
Lender will, if such payment is received prior to 10:00 a.m., Pacific time, on a
Business Day, distribute to such L/C Participant its pro rata share thereof
27
prior to the end of such Business Day and otherwise the Issuing Lender will
distribute such payment on the next succeeding Business Day; provided, however,
that in the event that any such payment received by the Issuing Lender shall be
required to be returned by the Issuing Lender, such L/C Participant shall return
to the Issuing Lender the portion thereof previously distributed by the Issuing
Lender to it.
3.5 Reimbursement Obligations.
(a) Borrowers agree to reimburse the Issuing Lender on the same
Business Day on which a draft is presented under any Letter of Credit and paid
by the Issuing Lender, provided that the Issuing Lender provides notice to
Parent prior to 11:00 a.m., Pacific time, on such Business Day and otherwise
Borrowers will reimburse the Issuing Lender on the next succeeding Business Day;
provided, further, that the failure to provide such notice shall not affect
Borrowers' absolute and unconditional obligation to reimburse the Issuing Lender
when required hereunder for any draft paid under any Letter of Credit. The
Issuing Lender shall provide notice to Parent on such Business Day as a draft is
presented and paid by the Issuing Lender indicating the amount of (i) such draft
so paid and (ii) any taxes, fees, charges or other costs or expenses incurred by
the Issuing Lender in connection with such payment. Each such payment shall be
made to the Issuing Lender at its address specified on the signature pages
hereof in lawful money of the United States of America and in immediately
available funds.
(b) Interest shall be payable on any and all amounts remaining
unpaid by Borrowers under this Section from the date such amounts become payable
(whether at stated maturity, by acceleration or otherwise) until payment in full
at the rate which would be payable on any outstanding Revolving Loans that are
(i) in the case of the first day on which such amounts become payable (except
where such amounts become payable by reason of the acceleration thereof), Prime
Lending Rate Portions which were not then overdue and (ii) in all cases to which
clause (i) is not applicable, Prime Lending Rate Portions which were then
overdue.
(c) Each drawing under any Letter of Credit shall constitute a
request by Borrowers to Agent for a Borrowing of a Revolving Loan as a Prime
Lending Rate Portion. The date of such drawing shall be deemed the date on which
such Borrowing is made.
3.6 Obligations Absolute.
(a) Borrowers' obligations under this Article III shall be absolute
and unconditional under any and all circumstances and irrespective of any
set-off, counterclaim or defense to payment which any Borrower may have or have
had against the Issuing Lender, any L/C Participant or any beneficiary of a
Letter of Credit.
(b) Borrowers also agree with the Issuing Lender that Borrowers'
Reimbursement Obligations under Section 3.5 shall not be affected by, among
other things, (i) the validity or genuineness of documents or of any
endorsements thereon, even though such documents shall in fact prove to be
invalid, fraudulent or forged, or (ii) any dispute between or among any Borrower
and any beneficiary of any Letter of Credit or any other party to which such
Letter of Credit may be transferred or (iii) any claims whatsoever of any
Borrower against the beneficiary of such Letter of Credit or any such
transferee.
28
(c) Neither the Issuing Lender nor any L/C Participant shall not be
liable for any error, omission, interruption or delay in transmission, dispatch
or delivery of any message or advice, however transmitted, in connection with
any Letter of Credit, except for errors or omissions caused by the Issuing
Lender's gross negligence or willful misconduct.
(d) Borrowers agree that any action taken or omitted by the Issuing
Lender under or in connection with any Letter of Credit or the related drafts or
documents, if done in the absence of gross negligence or willful misconduct and
in accordance with the standards of care specified in the Uniform Commercial
Code of the State of California, shall be binding on Borrowers and shall not
result in any liability of the Issuing Lender or any L/C Participant to
Borrowers.
3.7 Letter of Credit Payments. If any draft shall be presented for
payment under any Letter of Credit, the responsibility of the Issuing Lender to
Borrowers in connection with such draft shall, in addition to any payment
obligation expressly provided for in such Letter of Credit, be limited to
determining that the documents (including each draft) delivered under such
Letter of Credit in connection with such presentment are in conformity with such
Letter of Credit. In determining whether to pay under any Letter of Credit, only
the Issuing Lender shall be responsible for determining that the documents and
certificates required to be delivered under the Letter of Credit have been
delivered and that they comply on their face with the requirements of such
Letter of Credit.
ARTICLE IV
CONDITIONS PRECEDENT AND SUBSEQUENT
-----------------------------------
4.1 Conditions to Initial Loans or Letter of Credit. Each Lender's
obligation to make the initial Loans and the Issuing Lender's obligations to
issue the initial Letter of Credit is subject to and contingent upon the
fulfillment of each of the following conditions to the satisfaction of Agent and
its counsel:
(a) receipt by Agent, with a counterpart for each Lender, of this
Agreement and each of the Loan Documents, all duly executed by Borrowers and/or
the other Persons party thereto, acknowledged where required, and in form and
substance reasonably satisfactory to Agent in its sole and absolute discretion;
(b) receipt by Agent, with a counterpart for each Lender, of a duly
executed opinion of Borrowers' counsel, dated as of the Closing Date, covering
the matters set forth in Exhibit 4.1(b) and otherwise in form and substance
reasonably satisfactory to Agent in its sole and absolute discretion;
(c) with respect to each Borrower, receipt by Agent, with a
counterpart for each Lender, of a Certificate of the Secretary of Borrower,
dated as of the Closing Date, certifying (i) the incumbency and signatures of
the Responsible Officers of such Borrower who are executing this Agreement and
the Loan Documents on behalf of such Borrower; (ii) the By-Laws of such Borrower
and all amendments thereto as being true and correct and in full force and
effect; and (iii) the resolutions of the Board of Directors of such Borrower as
being true and correct and in full force and effect, authorizing the execution
and delivery of this Agreement and the Loan Documents, and authorizing the
transactions contemplated hereunder and thereunder, and authorizing the
29
Responsible Officers of such Borrower to execute the same on behalf of such
Borrower;
(d) receipt by Agent, with a copy for each Lender, of each
Borrower's Articles of Incorporation and all amendments thereto, certified by
the Secretary of State of its state of organization and dated a recent date
prior to the Closing Date;
(e) receipt by Agent, with a copy for each Lender, of a certificate
of status and good standing for each Borrower, dated a recent date prior to the
Closing Date, showing that such Borrower is in good standing under the laws of
the state of its state of organization;
(f) with respect to each Borrower, receipt by Agent, with a
counterpart for each Lender, of a certificate signed by the President or a Vice
President and/or Chief Financial Officer of such Borrower, dated as of the
Closing Date, certifying that (i) both immediately before and immediately after
giving effect to the transactions contemplated by this Agreement and the Loan
Documents, such Borrower is and will be Solvent; (ii) to the best of their
knowledge after due and diligent inquiry, the representations and warranties of
such Borrower contained in this Agreement and the Loan Documents are true and
correct in all material respects, and (iii) to the best of their knowledge after
due and diligent inquiry, both immediately before and immediately after giving
effect to the transactions contemplated by this Agreement and the Loan
Documents, no Event of Default or Unmatured Event of Default is continuing or
shall occur;
(g) receipt by Agent of Uniform Commercial Code and other public
record searches with respect to Borrowers, in each case reasonably satisfactory
to Agent;
(h) receipt by Agent for the ratable benefit of Lenders of the
original certificates evidencing one hundred percent (100%) of the issued and
outstanding Capital Stock of each Subsidiary (other than the Excluded
Subsidiaries), together with undated stock powers with respect thereto, duly
executed in blank, and in form and substance satisfactory to Agent;
(i) receipt by Agent of (i) the Closing Fee, (ii) $3,375 for the
initial Audit Fee, and (iii) all Expenses owing on the Closing Date (other than
Expenses in the form of fees and expenses of Chicago Title respecting the Real
Property Collateral, which shall be paid by First Bank); Parent authorizes Agent
to apply the $20,000 deposit previously paid to Agent against amounts owing
under this clause (i);
(j) no Material Adverse Effect shall have occurred, as determined by
Agent in its reasonable discretion;
(k) receipt by Agent, with a copy for each Lender, of copies of
insurance binders or insurance certificates evidencing Borrowers' having caused
to be obtained insurance in accordance with Section 6.5, including the lender's
loss payee endorsements required by such Section;
(l) receipt by Agent of Pay-Off Letters from the Old Lenders, and
such UCC-2 Termination Statements and other Lien releases as Agent shall
30
reasonably require, duly executed by such Old Lenders, all of the foregoing in
form and substance reasonably satisfactory to Agent;
(m) receipt by Agent, with a counterpart for each Lender, of such
other documents, instruments and agreements as Agent may reasonably request in
connection with the transactions contemplated hereunder or to perfect or protect
the liens and security interests granted to Agent for the ratable benefit of
Lenders in connection herewith; and
(n) the Closing Date shall have occurred on or before November 30,
2001.
4.2 Conditions to all Loans and Letters of Credit. Each Lender's
obligation hereunder to make any Loans to Borrowers (including the initial
Loans), and the Issuing Lender's obligation to issue any Letters of Credit
(including the initial Letter of Credit), is further subject to and contingent
upon the fulfillment of each of the following conditions to the satisfaction of
Agent:
(a) (i) in the case of a Borrowing, receipt by Agent of a Notice of
Borrowing as required by Section 2.5(b) and written disbursement instructions to
Agent consistent with Section 7.1, and (ii) in the case of a Letter of Credit,
receipt by Agent of a Letter of Credit Application and the other papers and
information required under Section 3.2;
(b) the fact that, immediately before and after such Borrowing or
issuance of Letter of Credit, as the case may be, no Event of Default or
Unmatured Event of Default shall have occurred or be continuing; and
(c) the fact that the representations and warranties of Borrowers
contained in this Agreement shall be true on and as of the date of such
Borrowing, or issuance of Letter of Credit, as the case may be (except for any
representations and warranties made as of a specific earlier date, which shall
remain true as of such date).
4.3 Conditions Subsequent to all Loans and Letters of Credit. Each
Lender's obligation hereunder to make any Loans to Borrowers, and the Issuing
Lender's obligation to issue any Letters of Credit, is further subject to and
contingent upon the receipt by Agent, with a copy for each Lender, of
certificates of foreign qualification and good standing for each Borrower, dated
a recent date prior to the Closing Date, or dated after the Closing Date,
showing that such Borrower is in good standing under the laws of the states
indicated in the table below opposite the name of such Borrower:
---------------------------------------------------------------------------------
NTS Technical Systems Arkansas, Arizona, Florida, Michigan, Texas
--------------------------------------------------------------------------------
XXCAL, INC. Texas
--------------------------------------------------------------------------------
Approved Engineering Test Laboratories, Inc. Virginia
--------------------------------------------------------------------------------
ETCR, Inc. Massachusetts
--------------------------------------------------------------------------------
31
--------------------------------------------------------------------------------
Acton Environmental Testing Corporation New Jersey
--------------------------------------------------------------------------------
Failure by Borrowers to satisfy the terms of this Section 4.3 on or before
January 21, 2002 shall constitute an Event of Default unless Borrowers have
demonstrated to the reasonable satisfaction of Agent that Borrowers have used
and shall continue to use their commercially reasonable best efforts to timely
satisfy the terms of this Section 4.3.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
------------------------------
In order to induce Lenders and the Issuing Lender to enter into this
Agreement and to make Loans and/or issue any Letters of Credit, each Borrower
represents and warrants to Lenders and the Issuing Lender that on the Closing
Date and on the date of each Borrowing or issuance of a Letter of Credit:
5.1 Legal Status. Each Borrower is a corporation duly organized and
existing under the laws of the state of its organization. Parent and each
Subsidiary Borrower has the power and authority to own its own Assets and to
transact the business in which it is engaged, and is properly licensed,
qualified to do business and in good standing in every jurisdiction in which it
is doing business where failure to so qualify could have a Material Adverse
Effect.
5.2 No Violation; Compliance.
(a) The execution, delivery and performance of this Agreement and
the Loan Documents to which each Borrower is a party are within such Borrower's
powers, are not in conflict with the terms of the Governing Documents of such
Borrower, and do not result in a breach of or constitute a default under any
contract, obligation, indenture or other instrument to which such Borrower is a
party or by which such Borrower is bound or affected, which breach or default
could reasonably be expected to have a Material Adverse Effect. To the best
knowledge of Borrowers, there is no law, rule or regulation (including
Regulations T, U and X of the Federal Reserve Board), nor is there any judgment,
decree or order of any court or Governmental Authority binding on any Borrower
which would be contravened by the execution, delivery, performance or
enforcement of this Agreement and the Loan Documents to which any Borrower is a
party.
(b) The execution, delivery and performance of the Loan Documents to
which each Guarantor is a party are within such Guarantor's powers, are not in
conflict with the terms of the Governing Documents of such Guarantor, and do not
result in a breach of or constitute a default under any contract, obligation,
indenture or other instrument to which such Guarantor is a party or by which
such Guarantor is bound or affected, which breach or default could reasonably be
expected to have a Material Adverse Effect. To the best knowledge of Borrowers,
there is no law, rule or regulation (including Regulations T, U and X of the
Federal Reserve Board), nor is there any judgment, decree or order of any court
or Governmental Authority binding on any Guarantor which would be contravened by
the execution, delivery, performance or enforcement of the Loan Documents to
which such Guarantor is a party.
32
5.3 Authorization; Enforceability.
(a) Each Borrower has taken all corporate action necessary to
authorize the execution and delivery of this Agreement and the Loan Documents to
which such Borrower is a party, and the consummation of the transactions
contemplated hereby and thereby. Upon their execution and delivery in accordance
with the terms hereof, this Agreement, and the Loan Documents to which each
Borrower is a party will constitute legal, valid and binding agreements and
obligations of such Borrower enforceable against such Borrower in accordance
with their respective terms, except as enforceability may be limited by
bankruptcy, insolvency, and similar laws and equitable principles affecting the
enforcement of creditors' rights generally.
(b) Each Guarantor has taken all corporate, partnership or limited
liability company action, as applicable, necessary to authorize the execution
and delivery of the Loan Documents to which such Guarantor is a party, and the
consummation of the transactions contemplated thereby. Upon their execution and
delivery in accordance with the terms hereof, the Loan Documents to which each
Guarantor is a party will constitute legal, valid and binding agreements and
obligations of such Guarantor enforceable against such Guarantor in accordance
with their respective terms, except as enforceability may be limited by
bankruptcy, insolvency, fraudulent conveyance, and similar laws and equitable
principles affecting the enforcement of creditors' rights generally.
5.4 Approvals; Consents. No approval, consent, exemption or other
action by, or notice to or filing with, any Governmental Authority is necessary
in connection with the execution, delivery, performance or enforcement of this
Agreement or the Loan Documents. All requisite Governmental Authorities and
third parties have approved or consented to the transactions contemplated by
this Agreement and Loan Documents, and all applicable waiting periods have
expired and there is no governmental or judicial action, actual or threatened,
that has or could have a reasonable likelihood of restraining, preventing or
imposing burdensome conditions on the transactions contemplated by this
Agreement and Loan Documents.
5.5 Liens. Each Borrower and each of the Subsidiaries (other than
the Excluded Subsidiaries) has good and marketable title to, or valid leasehold
interests in, all of its Assets, free and clear of all Liens or rights of
others, except for Permitted Liens.
5.6 Debt. Each Borrower and each of the Subsidiaries (other than the
Excluded Subsidiaries) has no Debt other than Permitted Debt.
5.7 Litigation. Except as set forth in Schedule 5.7, there are no
suits, proceedings, claims or disputes pending or, to the knowledge of
Borrowers, threatened, against or affecting any Borrower or any of any
Borrower's Assets, or any Subsidiary (other than the Excluded Subsidiaries) or
any of such Subsidiary's (other than the Excluded Subsidiaries) Assets, which
are not fully covered by applicable insurance and as to which no reservation of
rights has been taken by the insurer thereunder.
33
5.8 No Default. No Event of Default or Unmatured Event of Default
has occurred and is continuing or would result from the incurring of obligations
by any Borrower or any Subsidiary (other than the Excluded Subsidiaries) under
this Agreement or the Loan Documents.
5.9 Subsidiaries. Set forth in Schedule 5.9 is a complete and
accurate list of the Subsidiaries, showing the jurisdiction of incorporation of
each and showing the percentage of each Borrower's ownership of the Capital
Stock of each Subsidiary. All of the outstanding Capital Stock of each
Subsidiary has been validly issued, is fully paid and nonassessable, and is
owned by the Borrower indicated on Schedule 5.9 free and clear of all Liens
except Permitted Liens.
5.10 Taxes. All tax returns required to be filed by each Borrower
and each of the Subsidiaries (other than the Excluded Subsidiaries) in any
jurisdiction have in fact been filed, and all taxes, assessments, fees and other
governmental charges upon each Borrower and each of the Subsidiaries (other than
the Excluded Subsidiaries) or upon any of their Assets, income or franchises,
which are due and payable have been paid. The provisions for taxes on the books
of each Borrower and each of the Subsidiaries (other than the Excluded
Subsidiaries) are adequate for all open years, and for Borrower's and each
Subsidiary's (other than the Excluded Subsidiaries) current fiscal period.
5.11 Correctness of Financial Statements. Borrowers' internally
prepared Financial Statement as of their fiscal quarter ended July 31, 2001, and
all other information and data furnished by Borrowers to Agent in connection
therewith, are complete and correct in all material respects and accurately and
fairly present in all material respects the financial condition and results of
operations of Borrowers and the Subsidiaries as of their respective dates. Any
forecasts of future financial performance delivered by Borrowers to Agent have
been made in good faith and are based on reasonable assumptions and
investigations by Borrowers. Said internally prepared Financial Statements have
been prepared in accordance with GAAP. Since the date of such internally
prepared Financial Statements, there has been no change in any Borrower's or the
Subsidiaries' financial condition or results of operations sufficient to have a
Material Adverse Effect. No Borrower has any contingent obligations, liabilities
for taxes or other outstanding financial obligations which are material in the
aggregate, except as disclosed in such statements, information and data.
5.12 ERISA. Neither any Borrower nor any member of the ERISA Group
maintains or contributes to any Plan or Multiemployer Plan, other than those
listed on Schedule 5.12. Each Borrower and each member of the ERISA Group have
satisfied the minimum funding standards of ERISA and the Internal Revenue Code
with respect to each Plan and Multiemployer Plan to which it is obligated to
contribute. No ERISA Event has occurred nor has any other event occurred that
may result in an ERISA Event that reasonably could be expected to result in a
Material Adverse Effect. None of Borrowers, any member of the ERISA Group, or
any fiduciary of any Plan is subject to any direct or indirect liability with
respect to any Plan that could reasonably be expected to result in a Material
Adverse Effect (other than to make regularly scheduled required contributions
and to pay Plan benefits in the normal course) under any applicable law, treaty,
rule, regulation, or agreement. Neither Borrowers nor any member of the ERISA
Group is required to provide security to any Plan under Section 401(a)(29) of
the Internal Revenue Code. Each Plan will be able to fulfill its benefit
obligations as they come due in accordance with the Plan documents and under
GAAP.
34
5.13 Other Obligations. Neither any Borrower nor any Subsidiary
(other than any Excluded Subsidiaries) is in default on any (i) Debt in the
aggregate principal amount among all Borrowers in excess of $500,000 or (ii) any
other lease, commitment, contract, instrument or obligation which is material to
the operation of its business.
5.14 Public Utility Holding Company Act. No Borrower is a holding
company, or an affiliate of a holding company or a subsidiary company of a
holding company, within the meaning of the Public Utility Holding Company Act of
1935, as amended.
5.15 Investment Company Act. No Borrower is an investment company,
or a company controlled by an investment company, within the meaning of the
Investment Company Act of 1940, as amended.
5.16 Patents, Trademarks, Copyrights, and Intellectual Property,
etc. Each Borrower and each Subsidiary (other than any Excluded Subsidiaries)
has all necessary, patents, patent rights, licenses, trademarks, trademark
rights, trade names, trade name rights, copyrights, permits, and franchises in
order for it to conduct its business and to operate its Assets, without known
conflict with the rights of third Persons, and all of same are valid and
subsisting. The consummation of the transactions contemplated by this Agreement
will not alter or impair any of such rights of any Borrower or any Subsidiary
(other than any Excluded Subsidiaries). Each Borrower and each Subsidiary (other
than any Excluded Subsidiaries) has not been charged or, to the best of
Borrowers' knowledge, threatened to be charged with any infringement or, after
due inquiry, infringed on any, unexpired trademark, trademark registration,
trade name, patent, copyright, copyright registration, or other proprietary
right of any Person.
5.17 Environmental Condition. Except as set forth on Schedule 5.17,
(i) none of Borrower's or any Subsidiary's Assets has ever been used by any
Borrower or such Subsidiary or, to the knowledge of Borrower, by previous owners
or operators in the disposal of, or to produce, store, handle, treat, release,
or transport, any Hazardous Materials; (ii) none of any Borrower's or any
Subsidiary's Assets has ever been designated or identified in any manner
pursuant to any environmental protection statute as a Hazardous Materials
disposal site, or a candidate for closure pursuant to any environmental
protection statute; (iii) no Lien arising under any environmental protection
statute has attached to any revenues or to any real or personal property owned
or operated by any Borrower or any Subsidiary; and (iv) no Borrower nor any
Subsidiary has received a summons, citation, notice, or directive from the
Environmental Protection Agency or any other federal or state governmental
agency concerning any action or omission by any Borrower or any Subsidiary
resulting in the releasing or disposing of Hazardous Materials into the
environment.
5.18 Solvency. Parent and each Subsidiary Borrower is Solvent. No
transfer of property is being made by Parent or any Subsidiary Borrower and no
obligation is being incurred by Parent or any Subsidiary Borrower in connection
with the transactions contemplated by this Agreement or the Loan Documents with
the intent to hinder, delay, or defraud either present or future creditors of
Parent or any Subsidiary Borrower.
35
ARTICLE VI
AFFIRMATIVE COVENANTS
---------------------
Each Borrower covenants and agrees that from the Closing Date and
thereafter until the indefeasible payment, performance and satisfaction in full
of the Obligations, all of Agent's and Lenders' obligations hereunder have been
terminated and no Letters of Credit are outstanding, such Borrower shall:
6.1 Punctual Payments. Punctually pay the interest and principal on
the Loans, the Fees and all Expenses and any other fees and liabilities due
under this Agreement and the Loan Documents at the times and place and in the
manner specified in this Agreement or the Loan Documents.
6.2 Books and Records; Collateral Audits. Maintain, and cause each
of the Subsidiaries (other than the Excluded Subsidiaries) to maintain, adequate
books and records in accordance with GAAP, and permit any officer, employee or
agent of Agent and each Lender, at any time (upon one (1) Business Day's notice
unless an Event of Default has occurred and is continuing, in which event no
notice shall be required) and from time to time, to inspect, audit and examine
such books and records, and to make copies of the same. Agent (through any of
its officers, employees, or agents) shall have the right, from time to time
hereafter to audit the Accounts in order to verify such Borrower's financial
condition or the amount, quality, value, condition of, or any other matter
relating to, the Accounts. In connection therewith, Borrowers shall pay to
Agent, for the account of Lenders, Agent's standard audit fee ("Audit Fee") for
each audit plus all Expenses in connection therewith, payable upon demand. The
Audit Fee shall in no event exceed $1,500 per auditor per day.
6.3 Financial Statements. Deliver to Agent with a copy for each
Lender the following, all in form and detail satisfactory to Agent and in such
number of copies as Agent may request:
(a) as soon as available but not later than thirty (30) days after
the end of each month (provided that the following with respect to the months of
February and March shall be due not later than April 30 of the applicable year),
(i) a detailed summary of Borrowers' accounts receivable, and (ii) a Compliance
Certificate from the Chief Financial Officer of Parent, stating, among other
things, that he or she has reviewed the provisions of this Agreement and the
Loan Documents and that, to the best of his or her knowledge after due and
diligent inquiry there exists no Event of Default or Unmatured Event of Default,
and containing the calculations and other details necessary to demonstrate
compliance with Sections 7.12 and 7.15 (as applicable);
(b) (i) as soon as available but not later than forty-five (45) days
after the end of each fiscal quarter, (x) a detailed aging, by total, of
Borrowers' accounts receivable, (y) a summary listing, by vendor, of Borrowers'
accounts payable and any book overdraft, (ii) upon Agent's request, copies of
invoices in connection with Borrowers' accounts receivable, customer statements,
credit memos, remittance advices, reports and deposit slips, and (iii) on a
quarterly basis, a detailed list of Borrowers' customers;
(c) as soon as available but not later than the earlier to occur of:
(i) forty-five (45) days after the end of each fiscal quarter, and (ii) ten (10)
36
days after filing with the SEC, a consolidating and consolidated internally
prepared Financial Statement for Borrowers and the Subsidiaries which shall
include Borrowers' and the Subsidiaries' consolidating and consolidated
statement of income for such period and year to date, certified by the Chief
Financial Officer of Borrowers, to the best of his or her knowledge after due
and diligent inquiry, as being complete and correct and fairly presenting in all
material respects Borrowers' and its Subsidiaries' financial condition and
results of operations for such period;
(d) as soon as available but not later than sixty (60) days after
the end of each fiscal year, an annual operating budget for the following fiscal
year;
(e) as soon as available but not later than the earlier to occur of:
(i) one hundred twenty (120) days after the end of each fiscal year, and (ii)
ten (10) days after filing with the SEC, a complete copy of Borrowers' and the
Subsidiaries' consolidated and consolidating audited Financial Statement, which
shall include at least Borrowers' and the Subsidiaries' balance sheet as of the
close of such fiscal year, and Borrowers' and the Subsidiaries' statement of
income and retained earnings and statement of cash flow for such fiscal year,
certified by a certified public accountant selected by Borrowers and reasonably
satisfactory to Agent, which certificate shall not be qualified in any manner
whatsoever;
(f) promptly upon receipt by Borrowers, copies of any and all
reports and management letters submitted to Borrowers or any Subsidiary by any
certified public accountant in connection with any examination of Borrowers' or
any Subsidiary's financial records made by such accountant; and
(g) from time to time, operating statistics, operating plans and any
other information as Agent or any Lender may reasonably request, promptly upon
such request.
6.4 Existence; Preservation of Licenses; Compliance with Law.
Preserve and maintain, and cause each Subsidiary (other than the Excluded
Subsidiaries) to preserve and maintain, its corporate existence and good
standing in the state of its organization, qualify and remain qualified, and
cause each Subsidiary (other than the Excluded Subsidiaries) to qualify and
remain qualified, as a foreign corporation in every jurisdiction where the
failure to be so qualified could have a Material Adverse Effect; and preserve,
and cause each of the Subsidiaries (other than the Excluded Subsidiaries) to
preserve, all of its licenses, permits, governmental approvals, rights,
privileges and franchises required for its operations; and comply, and cause
each of the Subsidiaries (other than the Excluded Subsidiaries) to comply, with
the provisions of its Governing Documents; and comply, and cause each of the
Subsidiaries (other than the Excluded Subsidiaries) to comply, with the
requirements of all applicable laws, rules, regulations, orders of any
Governmental Authority having authority or jurisdiction over it, except for such
laws, rules and regulations where the failure to so comply could not have a
Material Adverse Effect, and comply, and cause each of the Subsidiaries to
comply, with all requirements for the maintenance of its business, insurance,
licenses, permits, governmental approvals, rights, privileges and franchises.
37
6.5 Insurance.
(a) Maintain and keep in force, and cause each Subsidiary (other
than the Excluded Subsidiaries) to maintain and keep in force, insurance of the
types and in amounts customarily carried by companies engaged in the same or
similar business, or similarly situated, including fire, extended coverage,
public liability, medical liability, business interruption, property damage and
workers' compensation insurance, and deliver to Agent with a copy for each
Lender from time to time at Agent's request schedules setting forth all
insurance then in effect. All insurance required herein shall be written by
companies which are authorized or qualified to do insurance business in the
State of California. All hazard insurance and such other insurance as Agent
shall specify, shall contain a California Form 000XXX (XX) endorsement, or an
equivalent endorsement reasonably satisfactory to Agent, showing Agent, for the
benefit of Lenders, as sole loss payee thereof, and shall contain a waiver of
warranties; provided, however, that Agent shall be listed as an additional
insured with respect to losses of any equipment or real estate which are subject
to a Purchase Money Lien or otherwise financed by a lender other than under this
Agreement. Every policy of insurance referred to in this Section 6.5 shall
contain an agreement by the insurer that it will not cancel such policy except
after thirty (30) days' prior written notice to Agent and that any loss payable
thereunder shall be payable notwithstanding any act or negligence of Borrowers,
Agent or any Lender which might, absent such agreement, result in a forfeiture
of all or a part of such insurance payment.
(b) Original policies or certificates thereof reasonably
satisfactory to Agent evidencing such insurance shall be delivered to Agent as
soon as available but in no event less than one (1) day prior to the expiration
of the existing or preceding policies. Borrowers shall give Agent prompt notice
of any loss covered by such insurance in excess of $500,000. Upon the occurrence
and during the continuance of an Event of Default, Agent, for the benefit of
Lenders, shall have the exclusive right to adjust all losses payable under any
such insurance policies without any liability to Borrowers whatsoever in respect
of such adjustments. Any monies received as payment for any loss under any
insurance policy including the insurance policies mentioned above, shall be paid
over to Agent, for the benefit of Lenders, to be applied at the option of Agent
either to the prepayment of the Obligations without premium, in such order or
manner as Agent may elect, or shall be disbursed to Borrowers under stage
payment terms satisfactory to Agent for application to the cost of repairs,
replacements, or restorations. In the event of any prepayment of the Obligations
pursuant to the foregoing prior to the Revolving Loans Maturity Date, the
Revolving Credit Commitments shall be permanently reduced pro rata by the amount
of such prepayment. All repairs, replacements, or restorations shall be effected
with reasonable promptness and shall be of a value at least equal to the value
of the items or property destroyed prior to such damage or destruction. Upon the
occurrence of an Event of Default, Agent shall have the right to apply all
prepaid premiums to the payment of the Obligations in such order or form as
Agent shall determine. Borrowers shall, concurrently with the annual Financial
Statements required to be delivered by Borrowers pursuant to Section 6.3(e),
deliver to Agent, as Agent may request, copies of certificates describing all
insurance of Borrower and the Subsidiaries then in effect.
6.6 Assets. Maintain, keep and preserve, and cause each Subsidiary
(other than the Excluded Subsidiaries) to maintain, keep and preserve, all of
its Assets (tangible or intangible) which are necessary to its business in good
38
repair and condition, and from time to time make necessary repairs, renewals and
replacements thereto so that such Assets shall be fully and efficiently
preserved and maintained.
6.7 Taxes and Other Liabilities. Pay and discharge when due, and
cause each Subsidiary (other than the Excluded Subsidiaries) to pay and
discharge when due, any and all assessments and taxes, both real or personal and
including federal and state income taxes, and any and all other Permitted Debt.
6.8 Notice to Agent and Lenders. Promptly, upon any Borrower
acquiring knowledge thereof, give written notice to Agent and each Lender of:
(a) all litigation affecting any Borrower or any Subsidiary (other
than the Excluded Subsidiaries) where the amount in controversy is in excess of
$500,000;
(b) any material dispute which may exist between any Borrower or any
Subsidiary (other than the Excluded Subsidiaries), on the one hand, and any
Governmental Authority, on the other;
(c) any labor controversy resulting in or threatening to result in a
strike against any Borrower or any Subsidiary (other than the Excluded
Subsidiaries);
(d) any proposal by any Governmental Authority to acquire the Assets
valued in the aggregate in excess of $500,000, or business of any Borrower or
any Subsidiary (other than the Excluded Subsidiaries), or to compete with any
Borrower or any Subsidiary (other than the Excluded Subsidiaries);
(e) any reportable event under Section 4043(c)(5), (6) or (13) of
ERISA with respect to any Plan, any decision to terminate or withdraw from a
Plan, any finding made with respect to a Plan under Section 4041(c) or (e) of
ERISA, the commencement of any proceeding with respect to a Plan under Section
4042 of ERISA, or any material increase in the actuarial present value of
unfunded vested benefits under all Plans over the preceding year;
(f) any Event of Default or Unmatured Event of Default; and
(g) any other matter which has resulted or could reasonably be
expected to result in a Material Adverse Effect.
6.9 Employee Benefits.
(a) (i) Promptly, and in any event within ten (10) Business Days
after Parent knows or has reason to know that an ERISA Event has occurred that
reasonably could be expected to result in a Material Adverse Effect, deliver or
cause to be delivered a written statement of the Chief Financial Officer of
Parent describing such ERISA Event and any action that is being taken with
respect thereto by Borrowers or any member of the ERISA Group, and any action
taken or threatened by the Internal Revenue Service, Department of Labor, or
PBGC. Parent shall (i) be deemed to know all facts known by the administrator of
any Plan of which any Borrower is the plan sponsor; (ii) promptly and in any
event within three (3) Business Days after the filing thereof with the Internal
39
Revenue Service, deliver or cause to be delivered a copy of each funding waiver
request filed with respect to any Plan and all communications received by any
Borrower or, to the knowledge of Borrowers, any member of the ERISA Group with
respect to such request; and (iii) promptly and in any event within three (3)
Business Days after receipt by Borrowers, or, to the knowledge of Borrowers, any
member of the ERISA Group, of the PBGC's intention to terminate a Plan or to
have a trustee appointed to administer a Plan, copies of each such notice.
(b) Cause to be delivered to Agent with a copy for each Lender, upon
Agent's request, each of the following: (i) a copy of each Plan (or, where any
such plan is not in writing, complete description thereof) (and if applicable,
related trust agreements of other funding instruments) and all amendments
thereto, all written interpretations thereof and written descriptions thereof
that have been distributed to employees or former employees of any Borrower or
any member of the ERISA Group; (ii) the most recent determination letter issued
by the IRS with respect to each Plan; (iii) for the three (3) most recent Plan
years, annual reports on Form 5500 Series required to be filed with any
governmental agency for each Plan; (iv) all actuarial reports prepared for the
last three (3) Plan years for each Plan; (v) a listing of all Multiemployer
Plans, with the aggregate amount of the most recent annual contributions
required to be made by any Borrower or any member of the ERISA Group to each
such plan and copies of the collective bargaining agreements requiring such
contributions; (vi) any information that has been provided to any Borrower or
any member of the ERISA Group regarding withdrawal liability under any
Multiemployer Plan; and (vii) the aggregate amount of the most recent annual
payments made to former employees of Borrower or any member of the ERISA Group
under any Retiree Health Plan.
6.10 Further Assurances. Execute and deliver, or cause to be
executed and delivered, upon the request of Agent and at Borrowers' expense,
such additional documents, instruments and agreements as Agent may reasonably
determine to be necessary or advisable to carry out the provisions of this
Agreement and the Loan Documents, and the transactions and actions contemplated
hereunder and thereunder.
6.11 Bank Accounts. Except as otherwise permitted in the next
sentence, maintain, and cause each Subsidiary (other than the Excluded
Subsidiaries) to maintain, its cash on hand and cash equivalent investments in
deposit accounts at Comerica. Notwithstanding the foregoing, Borrowers shall be
permitted to maintain cash in deposit accounts at the financial institutions
listed on Schedule 6.11 provided that (i) such cash deposits do not exceed
$1,000,000 in the aggregate at any time, and (ii) upon Agent's request,
Borrowers shall promptly deliver to Agent such agreements, instruments or
documents, fully executed, as Agent shall reasonably require to perfect Agent's
security interest in such deposit accounts and otherwise in form and substance
reasonably satisfactory to Agent.
6.12 Environment. Be and remain, and cause each Subsidiary and each
operator of any of any Borrower's or any Subsidiary's Assets to be and remain,
in compliance with the provisions of all federal, state and local environmental,
health and safety laws, codes and ordinances, and all rules and regulations
issued thereunder; notify Agent and Lenders immediately of any notice of a
hazardous discharge or environmental complaint received from any Governmental
Authority or any other Person; notify Agent and each Lender immediately of any
hazardous discharge from or affecting its premises; immediately contain and
remove the same, in compliance with all applicable laws; promptly pay any fine
40
or penalty assessed in connection therewith; permit Agent and each Lender to
inspect the premises, to conduct tests thereon, and to inspect all books,
correspondence, and records pertaining thereto; and at Agent's request, and at
Borrowers' expense, provide a report of a qualified environmental engineer,
satisfactory in scope, form and content to Agent, and such other and further
assurances reasonably satisfactory to Agent that the condition has been
corrected.
6.13 Additional Collateral. With respect to any Assets (or any
interest therein) acquired after the Closing Date by any Borrower or any
Subsidiary (other than the Excluded Subsidiaries) that are of a type covered by
the Lien created by any of the Loan Documents but which are not so subject,
promptly (and in any event within thirty (30) days after the acquisition
thereof): (i) execute and deliver, or cause such Subsidiary to execute and
deliver, to Agent such amendments to the relevant Loan Documents or such other
documents as Agent shall deem necessary or advisable to grant to Agent, for the
ratable benefit of Lenders a Lien on such Assets (or such interest therein),
(ii) take all actions, or cause such Subsidiary (other than the Excluded
Subsidiaries) to take all actions, necessary or advisable to cause such Lien to
be duly perfected in accordance with all applicable law, including, without
limitation, the filing of financing statements in such jurisdictions as may be
requested by Agent, (iii) if requested by Agent, deliver to Agent legal opinions
relating to the matters described in the immediately preceding clauses (i) and
(ii), which opinions shall be in form and substance, and from counsel,
reasonably satisfactory to Agent, and (iv) if requested by Agent, deliver to
Agent evidence of insurance as required by Section 6.5.
6.14 Guarantors. Cause each and every now existing and hereafter
acquired or formed Subsidiary (other than the Subsidiary Borrowers and the
Excluded Subsidiaries) to execute and deliver to Agent a Guaranty and Security
Agreement (Subsidiary), in form and substance satisfactory to Agent.
6.15 Stock Pledge Agreements. Execute and deliver to Agent a Stock
Pledge Agreement from time to time with respect to all present and future
Subsidiaries (other than the Excluded Subsidiaries), in form and substance
satisfactory to Agent in its sole discretion; and in connection therewith
deliver to Agent the original stock certificates evidencing one hundred percent
(100%) of the issued and outstanding Capital Stock of the applicable
Subsidiaries, together with undated stock powers with respect thereto, duly
executed in blank, each in form and substance satisfactory to Agent.
ARTICLE VII
NEGATIVE COVENANTS
------------------
Each Borrower further covenants and agrees that from the Closing
Date and thereafter until the indefeasible payment, performance and satisfaction
in full of the Obligations, all of Agent's, Lenders' and Issuing Lender's
obligations hereunder have been terminated and no Letters of Credit are
outstanding, such Borrower shall not:
41
7.1 Use of Funds; Margin Regulation.
(a) Use any proceeds of the Revolving Loans for any purpose other
than (i) to repay in full all amounts owing to Old Lenders in accordance with
the Payoff Letters, and (ii) for working capital; or
(b) Use any portion of the proceeds of the Loans in any manner which
might cause the Loans, the application of the proceeds thereof, or the
transactions contemplated by this Agreement to violate Regulation T, U, or X of
the Board of Governors of the Federal Reserve System, or any other regulation of
such board, or to violate the Securities and Exchange Act of 1934, as amended or
supplemented.
7.2 Debt. Create, incur, assume or suffer to exist, or permit any
Subsidiary (other than an Excluded Subsidiary) to create, incur, assume or
suffer to exist, any Debt except Permitted Debt.
7.3 Liens. Create, incur, assume or suffer to exist, or permit any
Subsidiary (other than an Excluded Subsidiary) to create, incur, assume or
suffer to exist, any Lien (including the lien of an attachment, judgment or
execution) on any of its Assets, whether now owned or hereafter acquired, except
Permitted Liens; or sign or file, or permit any Subsidiary (other than an
Excluded Subsidiary) to sign or file, under the UCC as adopted in any
jurisdiction, a financing statement which names any Borrower or any Subsidiary
(other than an Excluded Subsidiary) as a debtor, except with respect to
Permitted Liens, or sign, or permit any Subsidiary (other than an Excluded
Subsidiary) to sign, any security agreement authorizing any secured party
thereunder to file such a financing statement, except with respect to Permitted
Liens.
7.4 Merger, Consolidation, Transfer of Assets. Wind up, liquidate or
dissolve, reorganize, reincorporate, merge or consolidate with or into any other
Person, or acquire all or substantially all of the Assets or the business of any
other Person, or permit any Subsidiary (other than an Excluded Subsidiary) to do
so; provided, however, upon prior written notice to Agent, any Subsidiary may
merge into or consolidate with or transfer Assets to any other Borrower.
7.5 Leases. Create, incur, assume or suffer to exist, or permit any
Subsidiary (other than an Excluded Subsidiary) to create, incur, assume or
suffer to exist, any obligation as a lessee for the rental or hire of any real
or personal property, other than (i) leases that have been or should be
capitalized in accordance with GAAP and (ii) leases (other than Capital Leases)
that do not in the aggregate require payments (including taxes, insurance,
maintenance, and similar expenses which any Borrower or any Subsidiary is
required to pay under the terms of any lease) in excess of One Million Dollars
($1,000,000) on a consolidated basis for Borrowers and the Subsidiaries (other
than an Excluded Subsidiary) in any fiscal year of Borrowers.
7.6 Sales and Leasebacks. Sell, transfer, or otherwise dispose of,
or permit any Subsidiary (other than an Excluded Subsidiary) to sell, transfer,
or otherwise dispose of, any real or personal property to any Person, and
thereafter directly or indirectly leaseback the same or similar property.
42
7.7 Asset Sales. Conduct any Asset Sale, or permit any Subsidiary
(other than an Excluded Subsidiary) to do so, other than (i) dispositions of
obsolete, worn or nonfunctional equipment (ii) sales of inventory in the
ordinary course of business, (iii) any Asset Sale or series of related Asset
Sales that generate Net Cash Proceeds of less than Five Hundred Thousand Dollars
($500,000), and (iv) the Permitted Asset Sales.
7.8 Investments.
(a) Make, any loans or advances to, or any investment in, any
Person, except for loans made in the ordinary course of business to or for the
benefit of employees in respect of travel expenses, relocation expenses and
similar expenses; or acquire, or permit any Subsidiary (other than an Excluded
Subsidiary) to acquire, any Capital Stock, Assets, obligations, or other
securities of, make any contribution to, or otherwise acquire any interest in,
any Person; or acquire or form or permit any Subsidiary (other than an Excluded
Subsidiary) to acquire or form, any new Subsidiary; or participate, or permit
any Subsidiary (other than an Excluded Subsidiary) to participate, as a partner
or joint venturer with any other Person.
(b) Notwithstanding the terms of Section 7.8(a), any Borrower may
acquire or form, and permit any Subsidiary to acquire or form, any new
Subsidiary provided that (i) Borrowers shall have obtained the prior written
consent of Agent, and (ii) in connection therewith, Borrowers shall have
complied with Sections 6.13, 6.14 and 6.15.
(c) Notwithstanding the terms of Section 7.8(a), Parent may make
loans or advances to National Quality Assurance, Inc. and/or its subsidiaries,
and/or request Letters of Credit for the benefit of National Quality Assurance,
Inc. and/or its subsidiaries, subject to the terms and conditions of Article
III, provided that the aggregate amount of such loans and advances together with
the face amount of such Letters of Credit does not exceed $1,000,000 outstanding
at any time.
7.9 Character of Business. Engage in any business activities or
operations substantially different from or unrelated to its present business
activities and operations, or permit any Subsidiary (other than an Excluded
Subsidiary) to do so.
7.10 Distributions.
(a) Except as otherwise permitted in Section 7.10(b), declare or pay
any Distributions; or purchase, redeem, retire, or otherwise acquire for value
any of its Capital Stock now or hereafter outstanding; or make any distribution
of Assets to its Shareholders, whether in cash, Assets, or in obligations of any
Borrower; or allocate or otherwise set apart any sum for the payment of any
Distribution on, or for the purchase, redemption or retirement of, any of its
Capital Stock; or make any other distribution by reduction of capital or
otherwise in respect of any of its Capital Stock; or permit any Subsidiary
(other than an Excluded Subsidiary) to purchase or otherwise acquire for value
any Capital Stock of any Borrower or any other Subsidiary.
(b) Notwithstanding the terms of Section 7.10(a), (i) any Subsidiary
Borrower may declare and pay Distributions to its parent, and (ii) provided that
no Event of Default has occurred and is continuing or will result therefrom,
Parent may declare and pay Distributions for each fiscal year, and acquire
43
Capital Stock of Parent, in an aggregate amount not to exceed seventy-five
percent (75%) of the Consolidated Adjusted Net Income for such fiscal year.
7.11 Guaranty. Assume, guaranty, endorse (other than checks and
drafts received by a Borrower in the ordinary course of business so long as an
Event of Default has not occurred), or otherwise be or become directly or
contingently responsible or liable, or permit any Subsidiary (other than an
Excluded Subsidiary) to assume, guaranty, endorse, or otherwise be or become
directly or contingently responsible or liable (including, any agreement to
purchase any obligation, stock, Assets, goods, or services or to supply or
advance any funds, Assets, goods, or services, or any agreement to maintain or
cause such Person to maintain, a minimum working capital or net worth, or
otherwise to assure the creditors of any Person against loss) for the
obligations of any other Person other than Borrowers; or pledge or hypothecate,
or permit any Subsidiary (other than an Excluded Subsidiary) to pledge or
hypothecate, any of its Assets as security for any liabilities or obligations of
any other Person.
7.12 Capital Expenditures. Make, or permit any Subsidiary (other
than an Excluded Subsidiary) to make, any Capital Expenditures, or any
commitments therefor, in excess of Three Million Two Hundred Fifty Thousand
Dollars ($3,250,000) in the aggregate, on a consolidated basis, in any fiscal
year.
7.13 Transactions with Affiliates. Enter into any transaction,
including borrowing or lending and the purchase, sale, or exchange of property
or the rendering of any service (including management services), with any
Affiliate, or permit any Subsidiary (other than an Excluded Subsidiary) to enter
into any transaction, including borrowing or lending and the purchase, sale, or
exchange of property or the rendering of any service (including management
services), with any Affiliate, other than in the ordinary course of and pursuant
to the reasonable requirements of such Borrower's or such Subsidiary's business
and upon fair and reasonable terms no less favorable to such Borrower or such
Subsidiary than would obtain in a comparable arm's length transaction with a
Person not an Affiliate.
7.14 Stock Issuance. Permit any Subsidiary (other than an Excluded
Subsidiary) to issue any Capital Stock.
7.15 Financial Condition. Permit or suffer:
(a) Consolidated Effective Tangible Net Worth, measured as of the
end of each fiscal quarter, at any time to be less than $23,500,000 plus an
amount equal to twenty-five percent (25%) of the Consolidated Adjusted Net
Income for each fiscal year, commencing with the fiscal year ending January 31,
2002 (but in no event less than zero with respect to any fiscal year).
(b) the Consolidated Total Liabilities to Consolidated Effective
Tangible Net Worth Ratio, measured as of the end of each fiscal quarter, at any
time to exceed the ratio indicated in the table below opposite the applicable
period:
44
Minimum Debt to Effective
Period Tangible Net Worth Ratio
-------------------------------------------------
Closing Date - 1/30/02 1.75:1.0
1/31/02 and thereafter 1.50:1.0
(c) the Quick Ratio, measured as of the end of each month, at any
time to be less than 0.8:1.0.
(d) Consolidated Adjusted Net Income to be less than: (i) - $300,000
in either of the fiscal quarters ending October 31, 2001 and January 31, 2002,
(ii) - $600,000 during the fiscal year ending January 31, 2002, (iii) $0 during
any consecutive fiscal quarters, commencing with the fiscal quarter ending April
30, 2002, and (iv) $500,000 during any fiscal year, commencing with the fiscal
year ending January 31, 2003.
(e) the Debt Service Coverage Ratio, measured as of the end of each
fiscal quarter, at any time to be less than 1.35:1.0.
7.16 Transactions Under ERISA. Directly or indirectly:
(a) engage, or permit any member of the ERISA Group to engage, in
any prohibited transaction which is reasonably likely to result in a civil
penalty or excise tax described in Sections 406 of ERISA or 4975 of the Internal
Revenue Code for which a statutory or class exemption is not available or a
private exemption has not been previously obtained from the Department of Labor;
(b) permit to exist with respect to any Plan any accumulated funding
deficiency (as defined in Sections 302 of ERISA and 412 of the Internal Revenue
Code), whether or not waived;
(c) fail, or permit any member of the ERISA Group to fail, to pay
timely required contributions or installments due with respect to any waived
funding deficiency to any Plan;
(d) terminate, or permit any member of the ERISA Group to terminate,
any Plan where such event would result in any liability of any Borrower or any
member of ERISA Group under Title IV of ERISA;
(e) fail, or permit any member of the ERISA Group to fail, to make
any required contribution or payment to any Multiemployer Plan;
(f) fail, or permit any member of the ERISA Group to fail, to pay to
a Plan or Multiemployer Plan any required installment or any other payment
required under Section 412 of the Internal Revenue Code on or before the due
date for such installment or other payment;
(g) amend, or permit any member of the ERISA Group to amend, a Plan
resulting in an increase in current liability for the plan year such that either
45
of any Borrower or any member of the ERISA Group is required to provide security
to such Plan under Section 401(a)(29) of the Internal Revenue Code; or
(h) withdraw, or permit any member of the ERISA Group to withdraw,
from any Multiemployer Plan where such withdrawal is reasonably likely to result
in any liability of any such entity under Title IV of ERISA;
which, individually or in the aggregate, results in or reasonably would be
expected to result in a claim against or liability of any Borrower or any member
of the ERISA Group in excess of $500,000.
ARTICLE VIII
EVENTS OF DEFAULT AND REMEDIES
------------------------------
8.1 Events of Default. The occurrence of any one or more of the
following events, acts or occurrences shall constitute an event of default (an
"Event of Default") hereunder:
(a) Borrowers fail to pay when due any payment of principal due on
the Loans, or Borrowers fail to pay within three (3) days of the due date
thereof any interest due on the Loans, the Fees, any Expenses, or any other
amount payable hereunder or under any Loan Document;
(b) Borrowers fail to observe or perform any of the covenants and
agreements set forth in Article VII;
(c) Borrowers or any Guarantor fails to observe or perform any
covenant or agreement set forth in this Agreement or the Loan Documents (other
than those covenants and agreements described in Sections 8.1(a) and 8.1(b)),
and such failure continues for fifteen (15) days after the earlier to occur of
(i) Borrowers obtaining knowledge of such failure or (ii) Agent's dispatch of
notice to Borrowers of such failure;
(d) Any representation, warranty or certification made by any
Borrower or any Guarantor or any officer or employee of any Borrower or any
Guarantor in this Agreement or any Loan Document, in any certificate, financial
statement or other document delivered pursuant to this Agreement or any Loan
Document proves to have been misleading or untrue in any material respect when
made or if any such representation, warranty or certification is withdrawn;
(e) Any Borrower or any Guarantor fails to pay when due any payment
in respect of its Debt in the aggregate principal amount in excess of $500,000
(other than under this Agreement);
(f) Any event or condition occurs that: (i) results in the
acceleration of the maturity of any of any Borrower's or any Guarantor's Debt in
the aggregate principal amount in excess of $500,000; or (ii) permits (or, with
the giving of notice or lapse of time or both, would permit) the holder or
holders of such Debt or any Person acting on behalf of such holder or holders to
accelerate the maturity thereof;
46
(g) Any Borrower or any Guarantor commences a voluntary Insolvency
Proceeding seeking liquidation, reorganization or other relief with respect to
itself or its Debt or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official over it or any substantial part
of its property, or consents to any such relief or to the appointment of or
taking possession by any such official in an involuntary Insolvency Proceeding
or fails generally to pay its Debt as it becomes due, or takes any action to
authorize any of the foregoing;
(h) An involuntary Insolvency Proceeding is commenced against any
Borrower or any Guarantor seeking liquidation, reorganization or other relief
with respect to it or its Debt or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar official of it or any
substantial part of its property and any of the following events occur: (i) the
petition commencing the Insolvency Proceeding is not timely controverted; (ii)
the petition commencing the Insolvency Proceeding is not dismissed within
forty-five (45) calendar days of the date of the filing thereof; (iii) an
interim trustee is appointed to take possession of all or a substantial portion
of the Assets of, or to operate all or any substantial portion of the business
of, such Borrower or such Guarantor; or (iv) an order for relief shall have been
issued or entered therein;
(i) Any Borrower or any Guarantor suffers (i) one or more money
judgments in excess of $500,000 in the aggregate over applicable insurance
coverage or (ii) one or more writs, warrants of attachment, or similar process
involving Assets valued in the aggregate in excess of $500,000, and any of the
foregoing shall continue in effect for a period of thirty (30) days without
being vacated, discharged, satisfied, stayed or bonded pending appeal;
(j) A judgment creditor obtains possession of any of the Assets
valued in the aggregate in excess of $500,000 of any Borrower or any Guarantor
by any means, including levy, distraint, replevin, or self-help, or any order,
judgment or decree is entered decreeing the dissolution of any Borrower or any
Guarantor, or any Guarantor dies;
(k) Any Change of Control occurs;
(l) Any of the Loan Documents fails to be in full force and effect
for any reason, or Agent, for the ratable benefit of Lenders, fails to have a
perfected, first priority Lien in and upon all of the collateral assigned or
pledged to Agent thereunder, or a breach, default or an event of default occurs
under any Loan Document; or
(m) Any other Material Adverse Effect occurs.
8.2 Remedies. Upon the occurrence of any Event of Default described
in Section 8.1(g) or 8.1(h), each Lender's obligation hereunder to make Loans to
Borrowers and Issuing Lender's obligation to issue Letters of Credit shall
immediately terminate and the Obligations shall become immediately due and
payable without any election or action on the part of Agent, Issuing Lender or
Lenders without presentment, demand, protest or notice of any kind, all of which
each Borrower hereby expressly waives. Upon the occurrence and continuance of
any other Event of Default, either or both of the following actions may be
taken: (i) with the consent of the Majority Lenders, Agent may or upon the
request of the Majority Lenders, Agent shall, without notice of its election and
without demand, immediately terminate the Revolving Credit Commitments,
whereupon Lenders' obligation to make Loans to Borrowers and Issuing Lender's
47
obligation to issue Letters of Credit shall immediately cease; and (ii) with the
consent of the Majority Lenders, Agent may, or upon the request of the Majority
Lenders, Agent shall, without notice of its election and without demand, declare
the Obligations to be due and payable, whereupon the Obligations shall become
immediately due and payable, without presentment, demand, protest or notice of
any kind, all of which each Borrower hereby expressly waives.
8.3 Appointment of Receiver or Trustee. Borrowers hereby irrevocably
agree that Agent, for the ratable benefit of Lenders, has the right under this
Agreement, upon the occurrence of an Event of Default, to seek the appointment
of a receiver, trustee or similar official over Borrowers to effect the
transactions contemplated by this Agreement, and that Agent is entitled to seek
such relief. Borrowers hereby irrevocably agree not to object to such
appointment on any grounds.
8.4 Remedies Cumulative. The rights and remedies of Agent, Issuing
Lender and Lenders herein and in the Loan Documents are cumulative, and are not
exclusive of any other rights, powers, privileges, or remedies, now or hereafter
existing, at law, in equity or otherwise.
ARTICLE IX
TAXES
-----
9.1 Taxes on Payments. All payments in respect of the Obligations
shall be made free and clear of and without any deduction or withholding for or
on account of any present and future taxes, levies, imposts, deductions,
charges, withholdings, assessments or governmental charges, and all liabilities
with respect thereto, imposed by the United States of America, any foreign
government, or any political subdivision or taxing authority thereof or therein,
excluding any taxes imposed on any Lender under the Internal Revenue Code or
similar state and local laws and determined by such Lender's net income, and any
franchise taxes imposed on such Lender by any state (or any political
subdivision thereof) (all such non-excluded taxes, levies, imposts, deductions,
charges, withholdings, assessments, charges and liabilities being hereinafter
referred to as "Taxes"). If any Taxes are imposed and required by law to be
deducted or withheld from any amount payable to any Lender or its Lending
Office, then Borrowers shall (i) increase the amount of such payment so that
such Lender will receive a net amount (after deduction of all Taxes) equal to
the amount due hereunder, and (ii) pay such Taxes to the appropriate taxing
authority for the account of such Lender prior to the date on which penalties
attach thereto or interest accrues thereon; provided, however, if any such
penalties or interest shall become due, Borrowers shall make prompt payment
thereof to the appropriate taxing authority.
9.2 Indemnification For Taxes. Borrowers shall indemnify each Lender
for the full amount of Taxes (including penalties, interest, expenses and Taxes
arising from or with respect to any indemnification payment) arising therefrom
or with respect thereto, whether or not the Taxes were correctly or legally
asserted. This indemnification shall be made on demand. If Borrowers make a
payment under Section 9.1 or this Section 9.2 for account of any Lender and such
Lender reasonably determines that it has received or been granted a credit
against or relief or remission for, or repayment of, any Tax paid or payable by
48
it in respect of or calculated with reference to the deduction or withholding
giving rise to such payment, such Lender shall, to the extent that it can do so
without prejudice to the retention of the amount of such credit, relief,
remission or repayment, pay to Borrowers such amount as such Lender shall have
reasonably determined to be attributable to such deduction or withholding. The
amount paid by a Lender to Borrowers pursuant to the immediately preceding
sentence shall not exceed: (x) in the case of a refund of cash, the amount of
cash refunded to such Lender with respect to such Tax; or (y) in the case of a
refund taking the form of a credit against Tax, the economic benefit to such
Lender with respect to the amount received as credit with respect to such Tax.
Borrowers further agree promptly to return to a Lender the amount of any credit
or refund actually paid to Borrowers by such Lender if the Lender which received
such credit or refund is required to repay it.
9.3 Evidence of Payment. Within thirty (30) days after the date of
payment of any Taxes, Borrowers shall furnish to each Lender the original or a
certified copy of a receipt evidencing payment thereof. If no Taxes are payable
in respect of any payment due hereunder or under the Notes, Borrowers shall
furnish to each Lender a certificate from each appropriate taxing authority, or
an opinion of counsel acceptable to each Lender, in either case stating that
such payment is exempt from or not subject to Taxes.
9.4 Certain Withholding Taxes. Each Lender organized under the laws
of a jurisdiction outside the United States, on or prior to the date of its
execution and delivery of this Agreement in the case of each initial Lender and
on the date of any assignment pursuant to which it becomes a Lender in the case
of each other Lender, and subsequently from time to time if requested in writing
by Borrowers (but only if at such subsequent time such Lender remains lawfully
able to do so), shall provide Borrowers with Internal Revenue Service form
W-8BEN or W-8ECI, as appropriate, or any successor form prescribed by the
Internal Revenue Service, certifying that such Lender is entitled to benefits
under an income tax treaty to which the United States is a party which reduces
the rate of withholding tax on payments of interest or certifying that the
income receivable pursuant to this Agreement is effectively connected with the
conduct of a trade or business in the United States. During the term of this
Agreement, each Lender shall file such additional Forms W-8BEN or W-8ECI as the
case may be, as may be required by law or reasonably requested by Borrowers.
Each Lender, upon becoming aware of the occurrence of any event requiring a
change in its prior certificate, shall promptly deliver to Agent for delivery to
Borrowers duly executed certificates to the effect that (as the case may be):
(i) such Lender is not capable of receiving future payments hereunder without or
at the same rate of deduction or withholding of United States federal income
tax; or (ii) such Lender is capable of receiving all payments hereunder without
or at a reduced rate of deduction or withholding of United States federal income
tax, pursuant to a treaty to which the United States is a party, pursuant to an
Internal Revenue Code Section 1441(c), or pursuant to an exemption certificate
received from the Internal Revenue Service, in which case two executed copies of
Internal Revenue Service Forms W-8BEN or W-8ECI, as appropriate, or any
successor form prescribed by the Internal Revenue Service, or such legally
required number of copies of such exemption certificate shall be attached to
such certificates. United States federal income taxes properly withheld pursuant
to Sections 1441 et seq. of the Internal Revenue Code and such forms as may be
provided by a Lender shall be considered excluded from Taxes as defined in
Section 9.1.
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ARTICLE X
AGENT AND LENDERS
-----------------
10.1 Appointment of Agent.
(a) Each Lender hereby designates Comerica as Agent to act as herein
specified. Each Lender hereby irrevocably authorizes, and each holder of any
Note by the acceptance of a Note shall be deemed irrevocably to authorize, Agent
to take such action on its behalf under the provisions of this Agreement and the
Notes and the other Loan Documents and to exercise such powers and to perform
such duties hereunder and thereunder as are specifically delegated to or
required of Agent by the terms hereof and thereof and such other powers as are
reasonably incidental thereto. Agent shall hold all collateral and all payments
of principal, interest, and Fees received pursuant to this Agreement or any Loan
Document for the benefit of Lenders to be distributed as provided herein. Agent
may perform any of its duties hereunder by or through its agents or employees.
(b) The provisions of this Article X are solely for the benefit of
Agent and Lenders, and neither Borrowers nor any other Person shall have any
rights as a third party beneficiary of any of the provisions hereof (other than
Section 10.9). In performing its functions and duties under this Agreement and
the Loan Documents, Agent shall act solely as agent of Lenders and does not
assume and shall not be deemed to have assumed any obligation toward or
relationship of agency or trust with or for Borrowers or any other Person.
10.2 Nature of Duties of Agent. Agent shall have no duties or
responsibilities except those expressly set forth in this Agreement and the Loan
Documents. Neither Agent nor any of its officers, directors, employees or agents
shall be liable for any action taken or omitted by it as such hereunder or in
connection herewith, unless caused by its or their gross negligence or willful
misconduct. The duties of Agent shall be mechanical and administrative in
nature; Agent shall not have by reason of this Agreement or the Loan Documents a
fiduciary relationship in respect of any Lender; and nothing in this Agreement
or the Loan Documents, expressed or implied, is intended to or shall be so
construed as to impose upon Agent any obligations in respect of this Agreement
or the Loan Documents except as expressly set forth herein or therein.
10.3 Lack of Reliance on Agent.
(a) Independently and without reliance upon Agent, each Lender, to
the extent it deems appropriate, has made and shall continue to make (i) its own
independent investigation of the financial or other condition and affairs of
Borrowers and the Guarantors in connection with the taking or not taking of any
action in connection herewith and (ii) its own appraisal of the creditworthiness
of Borrowers and the Guarantors, and, except as expressly provided in this
Agreement, Agent shall have no duty or responsibility, either initially or on a
continuing basis, to provide any Lender with any credit or other information
with respect thereto, whether coming into its possession before the making of
the Loans or at any time or times thereafter.
50
(b) Agent shall not be responsible to any Lender for any recitals,
statements, information, representations or warranties herein or in any
document, certificate or other writing delivered in connection herewith or for
the execution, effectiveness, genuineness, validity, enforceability,
collectibility, priority or sufficiency of this Agreement, the Loan Documents,
or the Notes or the financial or other condition of Borrowers, any Guarantor or
any other Person. Agent shall not be required to make any inquiry concerning
either the performance or observance of any of the terms, provisions or
conditions of this Agreement, the Loan Documents, or the Notes or the financial
condition of Borrowers, any Guarantor or any other Person, or the existence or
possible existence of any Unmatured Event of Default or Event of Default, unless
specifically requested to do so in writing by any Lender.
10.4 Certain Rights of Agent. Agent shall have the right to request
instructions from Lenders at any time. If Agent shall request instructions from
Lenders with respect to any act or action (including the failure to act) in
connection with this Agreement, Agent shall be entitled to refrain from such act
or taking such action unless and until Agent shall have received instructions
from all Lenders, and Agent shall not incur liability to any Person by reason of
so refraining. Without limiting the foregoing, no Lender shall have any right of
action whatsoever against Agent as a result of Agent acting or refraining from
acting hereunder in accordance with the instructions of all Lenders.
10.5 Reliance by Agent. Agent shall be entitled to rely, and shall
be fully protected in relying, upon any note, writing, resolution, notice,
statement, certificate, telex, teletype or telecopier message, cablegram,
radiogram, order or other documentary, teletransmission or telephone message
believed by it to be genuine and correct and to have been signed, sent or made
by the proper person. Agent may consult with legal counsel (including counsel
for Borrowers with respect to matters concerning Borrowers and the
Subsidiaries), independent public accountants and other experts selected by it
and shall not be liable for any action taken or omitted to be taken by it in
good faith in accordance with the advice of such counsel, accountants or
experts.
10.6 Indemnification of Agent. To the extent Agent is not reimbursed
and indemnified by Borrowers, each Lender will reimburse and indemnify Agent, in
proportion to its respective share of the Obligations for and against any and
all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses (including counsel fees and disbursements) or
disbursements of any kind or nature whatsoever (including all Expenses) which
may be imposed on, incurred by or asserted against Agent in performing its
duties hereunder, in any way relating to or arising out of this Agreement or the
Loan Documents, provided that no Lender shall be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting from Agent's gross negligence or
willful misconduct.
10.7 Agent in its Individual Capacity. With respect to its
obligation to lend or issue Letters of Credit under this Agreement, the Loans
made by it, the Notes issued to it and the Letters of Credit issued by it, Agent
shall have the same rights and powers hereunder as any other Lender or holder of
a Note or participation interests and may exercise the same as though it was not
performing the duties specified herein; and the terms Lenders, holders of Notes,
or any similar terms shall, unless the context clearly otherwise indicates,
include Agent in its individual capacity. Agent may accept deposits from, lend
money to, acquire equity interests in, and generally engage in any kind of
banking, trust, financial advisory or other business with Borrowers or any of
51
the Subsidiaries or any Affiliates of Borrower as if it were not performing the
duties specified herein, and may accept fees and other consideration from
Borrowers or any of the Subsidiaries for services in connection with this
Agreement and the Loan Documents and otherwise without having to account for the
same to Lenders.
10.8 Holders of Notes. Agent may deem and treat the payee of any
Note as the owner thereof for all purposes hereof unless and until a written
notice of the assignment or transfer thereof shall have been filed with Agent.
Any request, authority or consent of any Person who, at the time of making such
request or giving such authority or consent, is the holder of any Note, shall be
conclusive and binding on any subsequent holder, transferee or assignee of such
Note or of any Note or Notes issued in exchange therefor.
10.9 Successor Agent.
(a) Agent may, upon twenty (20) Business Days' notice to Lenders and
Borrowers, resign at any time (effective upon the appointment of a successor
Agent pursuant to the provisions of this Section 10.9) by giving written notice
thereof to Lenders and Borrower. Upon any such resignation, Lenders shall have
the right, upon five (5) days' notice and approval by Borrower (which approval
shall not be unreasonably withheld or delayed), to appoint a successor Agent. If
no successor Agent (i) shall have been so appointed by Lenders, and (ii) shall
have accepted such appointment within forty five (45) days after the retiring
Agent's giving of notice of resignation, then, upon five (5) days' notice to
Lenders and Borrowers, the retiring Agent may, on behalf of Lenders, appoint a
successor Agent.
(b) Upon the acceptance of any appointment as Agent hereunder by a
successor Agent, such successor Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring Agent,
and the retiring Agent shall be discharged from its duties and obligations under
this Agreement. After any retiring Agent's resignation hereunder as Agent, the
provisions of this Article X shall inure to its benefit as to any actions taken
or omitted to be taken by it while it was Agent under this Agreement.
(c) In the event of a material breach by Agent of its duties
hereunder, Agent may be removed by Lenders for cause and the provisions of this
Section 10.9 shall apply to the appointment of a successor Agent.
10.10 Collateral Matters.
(a) Each Lender authorizes and directs Agent to enter into the Loan
Documents for the benefit of Lenders. Each Lender hereby agrees, and each holder
of any Note by the acceptance thereof will be deemed to agree, that, except as
otherwise set forth herein, any action taken by Agent in accordance with the
provisions of this Agreement or the Loan Documents, and the exercise by Agent of
the powers set forth herein or therein, together with such other powers as are
reasonably incidental thereto, shall be authorized and binding upon all Lenders.
Agent is hereby authorized on behalf of all Lenders, without the necessity of
any notice to or further consent from any Lender, from time to time, to take any
action with respect to any collateral or Loan Documents which may be necessary
52
to perfect and maintain perfected the Liens upon the collateral granted pursuant
to the Loan Documents.
(b) Lenders hereby authorize Agent, at its option and in its
discretion, to release any Guarantor or any Lien granted to or held by Agent
upon any collateral (i) upon termination of Lenders' and Issuing Lender's
obligations hereunder, and payment and satisfaction of all of the Obligations at
any time arising under or in respect of this Agreement or the Loan Documents or
the transactions contemplated hereby or thereby, (ii) constituting property
being sold or disposed of in compliance with the terms of this Agreement upon
receipt of the Net Cash Proceeds of such sale by Agent to the extent required by
the terms of this Agreement if Borrower certifies to Agent that the sale or
disposition is made in compliance with the terms hereof (and Agent may rely
conclusively on any such certificate, without further inquiry), or (iii) if
approved, authorized or ratified in writing by all Lenders. Upon request by
Agent at any time, Lenders will confirm in writing Agent's authority to release
particular types or items of collateral pursuant to this Section 10.10.
(c) Upon any sale and transfer of collateral which is permitted
pursuant to the terms of this Agreement, or consented to in writing by all
Lenders, and upon at least five (5) Business Days' prior written request by
Borrowers, Agent shall (and is hereby irrevocably authorized by all Lenders to)
execute such documents as may be necessary to evidence the release of the Liens
granted to Agent for the benefit of Lenders herein or pursuant hereto upon the
collateral that was sold or transferred; provided that (i) Agent shall not be
required to execute any such document on terms which, in Agent's opinion, would
expose 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 upon (or obligations of Borrowers in respect of) all interests
retained by Borrowers, including (without limitation) the proceeds of the sale,
all of which shall continue to constitute part of the collateral. In the event
of any sale or transfer of collateral, or any foreclosure with respect to any of
the collateral, Agent shall be authorized to deduct all Expenses incurred by
Agent from the proceeds of any such sale, transfer or foreclosure.
(d) Agent shall have no obligation whatsoever to Lenders or to any
other Person to assure that the collateral exists or is owned by Borrowers or
any of the Subsidiaries or is cared for, protected or insured or that the Liens
granted to Agent herein or pursuant hereto have been properly or sufficiently or
lawfully created, perfected, protected or enforced or are entitled to any
particular priority, or to exercise or to continue exercising at all or in any
manner or under any duty of care, disclosure or fidelity any of the rights,
authorities and powers granted or available to Agent in this Section 10.10 or in
any of the Loan Documents, it being understood and agreed that in respect of the
collateral, or any act, omission or event related thereto, Agent may act in any
manner it may deem appropriate, in its sole discretion, given Agent's own
interest in the collateral as one of Lenders and that Agent shall have no duty
or liability whatsoever to Lenders, except for its gross negligence or willful
misconduct.
10.11 Actions with Respect to Defaults. In addition to Agent's right
to take actions on its own accord as permitted under this Agreement, Agent shall
take such action with respect to an Unmatured Event of Default or Event of
Default as shall be directed by the Majority Lenders; provided that until Agent
shall have received such directions, Agent may (but shall not be obligated to)
53
take such action, or refrain from taking such action, with respect to such
Unmatured Event of Default or Event of Default as it shall deem advisable and in
the best interests of Lenders.
10.12 Delivery of Information. Agent shall use its commercially
reasonable best efforts to deliver to Lenders copies of any material documents,
instruments, notices, communications or other information received by Agent from
Borrowers, any Lender or any other Person under or in connection with this
Agreement or any Loan Document; provided that Agent's failure to do so shall not
constitute a breach of Agent's obligations hereunder or excuse any Lender from
performance of all of such Lenders' obligations hereunder.
10.13 Register. Agent, on behalf of Borrowers, shall maintain at the
address of Agent referred to in Section 2.13 a register (the "Register") for the
recordation of the names and addresses of the Lenders and the Commitments of,
and principal amounts of the Loans owing to, and any Notes evidencing the Loans
owned by, each Lender from time to time. Notes and the Loans evidenced thereby
may be assigned or otherwise transferred in whole or in part only by
registration of such assignment or transfer on the Register (and each Note shall
expressly so provide). Any assignment or transfer of all or part of such Loan(s)
and the Note(s) evidencing the same shall be registered on the Register only
upon surrender for registration of assignment or transfer of the Note(s)
evidencing such Loan(s), accompanied by a duly executed agreement effecting the
assignment, and thereupon one or more new Note(s) in the same aggregate
principal amount shall be issued to the designated Assignee Lender(s) and the
old Note(s) shall be returned by Agent to Borrowers marked cancelled. The
entries in the Register shall be conclusive, in the absence of manifest error,
and Borrowers, Agent and Lenders shall treat each Person whose name is recorded
in the Register as the owner of a Loan or other obligation hereunder (whether or
not evidenced by a Note) as the owner thereof for all purposes of this Agreement
and the other Loan Documents, notwithstanding any notice to the contrary. Any
assignment of any Loan or other obligation hereunder (whether or not evidenced
by a Note) shall be effective only upon appropriate entries with respect thereto
being made in the Register.
10.14 Issuing Lender. The provisions of this Article X shall apply
to the Issuing Lender in its capacity as such to the same extent that such
provisions apply to Agent.
10.15 Sharing of Payments, Etc. If any Lender or the Issuing Lender
shall obtain any payment whether voluntary, involuntary, through the exercise of
any right of setoff, or otherwise in excess of its ratable share of payments on
account of the Loans or Reimbursement Obligations owing to all Lenders, Issuing
Lender and the L/C Participants, then such Lender or the Issuing Lender, as the
case may be, shall forthwith purchase from the other Lenders such participations
in the Loans or Reimbursement Obligations owing to them as shall be necessary to
cause such purchasing Lender or the Issuing Lender, as the case may be, to share
the excess payment ratably with each of them; provided, however, that if all or
any portion of such excess payment is thereafter recovered from such purchasing
Lender or the Issuing Lender, as the case may be, such purchase from each Lender
shall be rescinded and such Lender or the Issuing Lender, as the case may be,
shall repay to the purchasing Lender or the Issuing Lender, as the case may be,
the purchase price to the extent of such recovery, together with an amount equal
to such Lender's ratable share (according to the proportion of (i) the amount of
such Lender's required repayment to (ii) the total amount so recovered from the
purchasing Lender) of any interest or other amount paid or payable by the
54
purchasing Lender or the Issuing Lender, as the case may be, in respect of the
total amount so recovered. Each Borrower agrees that any Lender or the Issuing
Lender, as the case may be, purchasing a participation from another Lender
pursuant to this Section, may, to the fullest extent permitted by law, exercise
all its rights of payment (including the right of setoff) with respect to such
participation as fully as if such Lender or the Issuing Lender, as the case may
be, were the direct creditor of the Borrowers in the amount of such
participation.
10.16 Replacement of Affected Lenders. If any Lender (other than
Agent) (x) is owed a material amount of increased costs under Section 2.7 or
ceases to be obligated to make LIBOR Lending Rate Loans as a result of the
operation of Sections 2.8 or 2.9, (y) refuses to consent to certain proposed
changes, waivers, discharges or terminations with respect to this Agreement
which have been approved pursuant to Section 11.4 by the Majority Lenders, the
Revolving Loan Lenders the Revolving Credit Commitment Percentage of which
aggregate more than 66.67%; or (z) is in default of its obligations hereunder,
then 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:
(a) at the time of any replacement pursuant to this Section 10.16,
the Replacement Lender shall enter into one or more assignment agreements
pursuant to Section 11.5(c) pursuant to which the Replacement Lender shall
acquire all of the Commitments and outstanding Loans 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) Agent, the registration and processing fee set forth in
Section 11.5(c);
(b) all obligations of Borrower owing to the Replaced Lender (other
than those specifically described in preceding clause (a) in respect of which
the assignment purchase price has been, or is concurrently being, paid) shall be
paid by Borrowers in full to such Replaced Lender concurrently with such
replacement; and
(c) upon the execution of the respective assignment documentation
pursuant to preceding clause (a) and the payment of amounts referred to in
preceding clauses (a) and (b), 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.
ARTICLE XI
MISCELLANEOUS
-------------
11.1 Notices. All notices, requests and other communications to any
party hereunder shall be in writing (including facsimile transmission or similar
writing) and shall be given to such party at its address or facsimile number set
forth on the signature pages hereof or such other address or facsimile number as
55
such party may hereafter specify by notice to the other party in accordance with
this Section 11.1. Each such notice, request or other communication shall be
deemed given on the second (2nd) business day after mailing; provided that
actual notice, however and from whomever given or received, shall always be
effective on receipt; provided further that notices to Agent pursuant to Article
II and notices to Issuing Lender pursuant to Article III shall not be effective
until received by a Responsible Officer of Agent or Issuing Lender, as the case
may be; provided further that notices sent by Agent in connection with Agent's
exercise of its enforcement rights against any of its collateral shall be deemed
given when deposited in the mail or personally delivered, or, where permitted by
law, transmitted by facsimile.
11.2 No Waivers. No failure or delay by Agent, Issuing Lender or any
Lender in exercising any right, power or privilege hereunder or under any Loan
Document shall operate as a waiver thereof nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise
of any other right, power or privilege.
11.3 Expenses; Documentary Taxes; Indemnification.
(a) Borrowers shall pay all Expenses on demand.
(b) Borrowers shall pay all and indemnify Agent and Lenders against
any and all transfer taxes, documentary taxes, assessments, or charges made by
any Governmental Authority and imposed by reason of the execution and delivery
of this Agreement, any of the Loan Documents, or any other document, instrument
or agreement entered into in connection herewith.
(c) Each Borrower shall and hereby agrees to indemnify, protect,
defend and hold harmless Agent, Issuing Lender and each Lender and their
respective directors, officers, agents, employees and attorneys (collectively,
the "Indemnified Persons" and individually, an "Indemnified Person") from and
against (i) any and all losses, claims, damages, liabilities, deficiencies,
judgments, costs and expenses (including attorneys' fees and attorneys' fees
incurred pursuant to proceedings arising under the Bankruptcy Code) incurred by
any Indemnified Person (except to the extent that it is finally judicially
determined to have resulted from the gross negligence or willful misconduct of
any Indemnified Person) arising out of or by reason of any litigations,
investigations, claims or proceedings (whether administrative, judicial or
otherwise), including discovery, whether or not Agent, Issuing Lender or any
Lender is designated a party thereto, which arise out of or are in any way
related to (1) this Agreement, the Loan Documents or the transactions
contemplated hereby or thereby, (2) any actual or proposed use by Borrowers of
the proceeds of the Loans, or (3) Agent's, Issuing Lender's and Lenders'
entering into this Agreement, the Loan Documents or any other agreements and
documents relating hereto; (ii) any such losses, claims, damages, liabilities,
deficiencies, judgments, costs and expenses arising out of or by reason of the
use, generation, manufacture, production, storage, release, threatened release,
discharge, disposal or presence on, under or about any Borrower's operations or
property or property leased by any Borrower of any material, substance or waste
which is or becomes designated as Hazardous Materials; and (iii) any such
losses, claims, damages, liabilities, deficiencies, judgments, costs and
expenses incurred in connection with any remedial or other action taken by any
Borrower or Agent, Issuing Lender or any Lender in connection with compliance by
any Borrower with any federal, state or local environmental laws, acts, rules,
regulations, orders, directions, ordinances, criteria or guidelines (except to
the extent that it is finally judicially determined to have resulted from the
56
gross negligence or willful misconduct of any Indemnified Person). If and to the
extent that the obligations of Borrowers hereunder are unenforceable for any
reason, Borrowers hereby agree to make the maximum contribution to the payment
and satisfaction of such obligations to Agent and Lenders which is permissible
under applicable law.
(d) Borrowers' obligations under this Section 11.3 and under Section
9.2 shall survive any termination of this Agreement and the Loan Documents and
the payment in full of the Obligations, and are in addition to, and not in
substitution of, any other of its obligations set forth in this Agreement.
11.4 Amendments and Waivers. Neither this Agreement nor any Loan
Document, nor any terms hereof or thereof may be amended, supplemented or
modified except in accordance with the provisions of this Section 11.4. Lenders
may (by action of the Majority Lenders), or, with the written consent of the
Majority Lenders, Agent may, on behalf of the Lenders, from time to time, (a)
enter into with Borrowers or any other Person written amendments, supplements or
modifications hereto and to the Loan Documents or (b) waive, on such terms and
conditions as the Majority Lenders or Agent, as the case may be, may specify in
such instrument, any of the requirements of this Agreement or the Loan Documents
or any Event Default or Unmatured Event of Default and its consequences, if, but
only if, such amendment, supplement, modification or waiver is in writing and is
signed by the party asserted to be bound thereby (or, with respect to the
Lenders, by the Majority Lenders, or, with the written consent of the Majority
Lenders, Agent), and then such amendment, supplement, modification or waiver
shall be effective only in the specific instance and specific purpose for which
given; provided, however, that no such waiver and no such amendment, supplement
or modification shall:
(i) reduce the amount or extend the scheduled date of maturity of
any Loan or any installment thereof or any Reimbursement Obligation or reduce
the stated rate of any interest or fee payable hereunder or extend the scheduled
date of any payment thereof or increase the amount or extend the expiration date
of any Commitment of any Lender in each case without the consent of each Lender
affected thereby; or
(ii) amend, modify or waive any provision of this Section 11.4 or
reduce the percentage specified in the definition of Majority Lenders, or
consent to the assignment or transfer by Borrowers of any of their rights and
obligations under this Agreement and the Loan Documents or (except in connection
with a transaction covered by Section 10.10(b)) release all or substantially all
of the Guarantors or all or substantially all of the Collateral, in each case
without the written consent of all the Lenders; or
(iii) amend, modify or waive any provision of Article X without the
written consent of the then Agent; or
(iv) amend, modify or waive any provision of this Agreement
regarding the allocation of prepayment amounts to the Revolving Loans or the
application of such prepayment amounts to the respective installments of
principal under the respective Revolving Loans without the written consent of
the Revolving Loan Lenders the Revolving Loan Commitment Percentages of which
aggregate more than 66.67%; or
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(v) subject to clause (i) of this Section 11.4 as it relates to
reducing the amount or extending the scheduled date of maturity of any Loan or
any installment thereof, amend, modify or waive any provision of Section 2.1 or
Section 2.11 (to the extent it relates to Revolving Loans) without the written
consent of Revolving Loan Lenders the Revolving Loan Commitment Percentages of
which aggregate more than 66.67%; or
(vi) subject to clause (i) of this Section 11.4 as it relates to
reducing the amount or extending the scheduled date of maturity of any
Reimbursement Obligation, Article III without the written consent of the
Revolving Loan Lenders the Revolving Credit Commitment Percentages of which
aggregate more than 66.67%; or
(vii) amend, modify or waive the provisions of any Letter of Credit,
any Letter of Credit Application or Article III without the written consent of
the Issuing Lender; or
(viii) amend, modify or waive any provision of any Loan Document
that provides for the ratable sharing by the Lenders under such Loan Document of
the proceeds of any realization on the Collateral to provide for a non-ratable
sharing thereof, without the consent of the Majority Lenders.
Any such waiver and any such amendment, supplement or modification
shall apply equally to each of the Lenders and shall be binding upon Borrowers,
Lenders, Agent and all future holders of the Loans. In the case of any waiver,
Borrowers, Lender and Agent shall be restored to their former positions and
rights hereunder and under the Loan Documents, and any Event of Default or
Unmatured Event of Default waived shall be deemed to be cured and not
continuing; no such waiver shall extend to any subsequent or other Event of
Default or Unmatured Event of Default or impair any right consequent thereon.
Borrowers may, from time to time, with the consent of Agent and the
Majority Lenders, prospectively amend any Schedule hereto or to any Loan
Document. No such amendment shall be evidence, in and of itself, that the
representations and warranties in the corresponding section of the applicable
agreement previously made are no longer true and correct in all material
respects, nor shall any such amendment cure any Event of Default caused by a
misrepresentation previously made.
11.5 Successors and Assigns; Participations; Disclosure.
(a) This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns, except that
Borrowers may not assign or transfer any of their rights or obligations under
this Agreement without the prior written consent of all Lenders and any such
prohibited assignment or transfer by Borrowers shall be void.
(b) Each Lender may make, carry or transfer the Loans at, to or for
the account of, any of its branch offices or the office of an Affiliate of such
Lender or to any Federal Reserve Bank, all without Borrowers' consent.
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(c) Each Lender may, at its own expense, assign to one or more
Eligible Assignees all or a portion of its rights (including voting rights) and
obligations under this Agreement and the Loan Documents with the prior written
consent of Agent and Issuing Lender, which consent shall not be unreasonably
withheld, pursuant to an Assignment and Acceptance; provided, however, that
notwithstanding any provision in this Agreement to the contrary, so long as no
Event of Default has occurred and is continuing, without the written consent of
Parent, no assignment shall be made which would, directly or indirectly,
decrease Comerica's Revolving Credit Commitment Percentage to less than fifty
percent (50%) or increase the number of Lenders to more than three (3). In the
event of any permitted assignment by any Lender pursuant to this Section
11.5(c), such Lender's obligations under this Agreement arising after the
effective date of such assignment shall be released and concurrently therewith,
transferred to and assumed by such Lender's assignee to the extent provided for
in the Assignment and Acceptance. Upon its receipt of an Assignment and
Acceptance effecting an assignment pursuant to and in accordance with this
Section 11.5(c) duly executed by an assigning Lender and an assignee Lender (and
by Agent), together with payment by the assigning Lender or the assignee Lender
to Agent of a registration and processing fee of Three Thousand Five Hundred
Dollars ($3,500), Agent shall promptly accept such assignment and, on the
effective date determined pursuant thereto, record the information contained
therein in the Register and give notice of such acceptance and recordation to
Lenders and Borrowers. For avoidance of doubt, the parties to this Agreement
acknowledge that the provisions of this Section 11.5 concerning assignments of
Loans and Notes relate only to absolute assignments (whether or not arising as
the result of foreclosure of a security interest) and that such provisions do
not prohibit assignments creating security interests, including, without
limitation, any pledge or assignment by a Lender of any Loan or Note to any
Federal Reserve Bank in accordance with applicable law.
(d) Each Lender may at any time sell to one or more banks or other
financial institutions (each a "Participant") participating interests in the
Loans, the Letters of Credit and in any other interest of such Lender hereunder.
In the event of any such sale by a Lender of a participating interest to a
Participant, such Lender's obligations under this Agreement shall remain
unchanged, such Lender shall remain solely responsible for the performance
thereof, and Borrower shall continue to deal solely and directly with such
Lender in connection with such Lender's rights and obligations under this
Agreement. Each Borrower agrees that each Participant shall, to the extent
provided in its participation agreement, be entitled to the benefits of Article
IX with respect to its participating interest.
(e) Each Borrower authorizes each Lender to disclose to any assignee
under Section 11.5(c) or any Participant (either, a "Transferee") and any
prospective Transferee any and all financial information in such Lender's
possession concerning Borrowers which has been delivered to such Lender by any
Borrower pursuant to this Agreement or which has been delivered to such Lender
by Borrowers in connection with such Lender's credit evaluation prior to
entering into this Agreement; provided that such Transferee or prospective
Transferee has first agreed to be bound by the provisions of Section 11.6.
(f) Each Borrower agrees that each Lender may use Borrowers' and the
Subsidiaries' name(s) in advertising and promotional materials, and in
conjunction therewith, each Lender may disclose the amount of the Loans and the
purpose thereof.
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11.6 Confidentiality. Agent and each Lender agrees to keep
confidential any information relating to Borrowers and the Subsidiaries
previously delivered or delivered from time to time by Borrowers hereunder;
provided that nothing herein shall prevent Agent or any Lender from disclosing
such information: (a) to any Affiliate of Agent or such Lender or any actual or
potential Transferee that agrees to be bound by this Section 11.6, (b) upon
order, subpoena, or other process of any court or administrative agency, (c)
upon the request or demand of any regulatory agency or authority having
jurisdiction over Agent or any Lender, (d) which has been publicly disclosed
(other than by Agent or any Lender or any Transferee unless such disclosure was
otherwise permitted hereunder), (e) which has been obtained from any Person that
is not a party hereto or an Affiliate of any such party, (f) in connection with
the exercise of any remedy, or the resolution of any dispute, hereunder or under
any Loan Document, (g) to the legal counsel or certified public accountants for
Agent or any Lender or (h) as otherwise permitted by Borrowers or as expressly
contemplated by this Agreement.
11.7 Counterparts; Effectiveness; Integration. This Agreement may be
signed in any number of counterparts, each of which shall be an original, with
the same effect as if the signatures thereto and hereto were upon the same
instrument. This Agreement shall be effective when executed by each of the
parties hereto. This Agreement constitutes the entire agreement and
understanding among the parties hereto and supersedes any and all prior
agreements and understandings, oral or written, relating to the subject matter
hereof.
11.8 Severability. The provisions of this Agreement are severable.
The invalidity, in whole or in part, of any provision of this Agreement shall
not affect the validity or enforceability of any other of its provisions. If one
or more provisions hereof shall be declared invalid or unenforceable, the
remaining provisions shall remain in full force and effect and shall be
construed in the broadest possible manner to effectuate the purposes hereof.
11.9 CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.
(a) THE VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS
(UNLESS EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER LOAN DOCUMENT IN RESPECT
OF SUCH OTHER LOAN DOCUMENT), THE CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT
HEREOF AND THEREOF, AND THE RIGHTS OF THE PARTIES HERETO AND THERETO WITH
RESPECT TO ALL MATTERS ARISING HEREUNDER OR THEREUNDER OR RELATED HERETO OR
THERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH
THE INTERNAL LAWS OF THE STATE OF CALIFORNIA, WITHOUT REGARD FOR PRINCIPLES OF
CONFLICTS OF LAWS.
(b) THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN
CONNECTION WITH THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE TRIED AND
LITIGATED ONLY IN THE STATE AND FEDERAL COURTS LOCATED IN THE COUNTY OF LOS
ANGELES, STATE OF CALIFORNIA, PROVIDED, HOWEVER, THAT ANY SUIT SEEKING
ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT AGENT'S
OPTION, IN THE COURTS OF ANY JURISDICTION WHERE AGENT ELECTS TO BRING SUCH
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ACTION OR WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND. THE BORROWERS,
LENDERS, AND AGENT WAIVE, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY
RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT
TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION
11.9.
(c) THE BORROWERS, LENDERS AND AGENT EACH HEREBY WAIVE THEIR
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS AGREEMENT OR ANY OF THE LOAN DOCUMENTS OR ANY OF THE
TRANSACTIONS CONTEMPLATED HEREIN OR THEREIN, INCLUDING CONTRACT CLAIMS, TORT
CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS.
BORROWER, AGENT, ISSUING BANK AND THE LENDERS REPRESENT THAT EACH HAS REVIEWED
THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS
FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, A COPY OF
THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
ARTICLE XII
JOINT AND SEVERAL LIABILITY; SINGLE LOAN ACCOUNT
------------------------------------------------
12.1 Joint and Several Liability. Each Borrower agrees that it is
jointly and severally, directly and primarily liable to Agent and Lenders for
payment, performance and satisfaction in full of the Obligations and that such
liability is independent of the duties, obligations, and liabilities of the
other Borrower. Agent and Lenders may bring a separate action or actions on
each, any, or all of the Obligations against any Borrower, whether action is
brought against the other Borrowers or whether the other Borrowers are joined in
such action. In the event that any Borrower fails to make any payment of any
Obligations on or before the due date thereof, the other Borrowers immediately
shall cause such payment to be made or each of such Obligations to be performed,
kept, observed, or fulfilled.
12.2 Primary Obligation; Waiver of Marshalling. This Agreement and
the Loan Documents to which Borrowers are a party are a primary and original
obligation of each Borrower, are not the creation of a surety relationship, and
are an absolute, unconditional, and continuing promise of payment and
performance which shall remain in full force and effect without respect to
future changes in conditions, including any change of law or any invalidity or
irregularity with respect to this Agreement or the Loan Documents to which
Borrowers are a party. Each Borrower agrees that its liability under this
Agreement and the Loan Documents which Borrowers are a party shall be immediate
and shall not be contingent upon the exercise or enforcement by Agent and
Lenders of whatever remedies they may have against the other Borrowers, or the
enforcement of any lien or realization upon any security Agent and Lenders may
at any time possess. Each Borrower consents and agrees that Agent and Lenders
shall be under no obligation to marshal any assets of any Borrower against or in
payment of any or all of the Obligations.
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12.3 Financial Condition of Borrowers. Each Borrower acknowledges
that it is presently informed as to the financial condition of the other
Borrowers and of all other circumstances which a diligent inquiry would reveal
and which bear upon the risk of nonpayment of the Obligations. Each Borrower
hereby covenants that it will continue to keep informed as to the financial
condition of the other Borrowers, the status of the other Borrowers and of all
circumstances which bear upon the risk of nonpayment. Absent a written request
from any Borrower to Agent and Lenders for information, each Borrower hereby
waives any and all rights it may have to require Agent and Lenders to disclose
to such Borrower any information which Agent and Lenders may now or hereafter
acquire concerning the condition or circumstances of the other Borrowers.
12.4 Continuing Liability. The liability of each Borrower under this
Agreement and the Loan Documents to which Borrowers are a party includes
Obligations arising under successive transactions continuing, compromising,
extending, increasing, modifying, releasing, or renewing the Obligations,
changing the interest rate, payment terms, or other terms and conditions
thereof, or creating new or additional Obligations after prior Obligations have
been satisfied in whole or in part. To the maximum extent permitted by law, each
Borrower hereby waives any right to revoke its liability under this Agreement
and Loan Documents as to future indebtedness, and in connection therewith, each
Borrower hereby waives any rights it may have under Section 2815 of the
California Civil Code.
12.5 Additional Waivers. Each Borrower absolutely, unconditionally,
knowingly, and expressly waives:
(a) (1) notice of acceptance hereof; (2) notice of any Loans or
other financial accommodations made or extended under this Agreement and the
Loan Documents to which Borrowers are a party or the creation or existence of
any Obligations; (3) notice of the amount of the Obligations, subject, however,
to each Borrower's right to make inquiry of Agent and Lenders to ascertain the
amount of the Obligations at any reasonable time; (4) notice of any adverse
change in the financial condition of the other Borrowers or of any other fact
that might increase such Borrower's risk hereunder; (5) notice of presentment
for payment, demand, protest, and notice thereof as to any instruments among the
Loan Documents to which Borrowers are a party; (6) notice of any Unmatured Event
of Default or Event of Default; and (7) all other notices (except if such notice
is specifically required to be given to Borrowers hereunder or under the Loan
Documents to which Borrowers are a party) and demands to which such Borrower
might otherwise be entitled.
(b) its right, under Sections 2845 or 2850 of the California Civil
Code, or otherwise, to require Agent and Lenders to institute suit against, or
to exhaust any rights and remedies which Agent and Lenders has or may have
against, the other Borrowers or any third party, or against any collateral for
the Obligations provided by the other Borrowers, or any third party. Each
Borrower further waives any defense arising by reason of any disability or other
defense (other than the defense that the Obligations shall have been fully and
finally performed and indefeasibly paid) of the other Borrowers or by reason of
the cessation from any cause whatsoever of the liability of the other Borrowers
in respect thereof.
(c) (1) any rights to assert against Agent and Lenders any defense
(legal or equitable), set-off, counterclaim, or claim which such Borrower may
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now or at any time hereafter have against the other Borrowers or any other party
liable to Agent and Lenders; (2) any defense, set-off, counterclaim, or claim,
of any kind or nature, arising directly or indirectly from the present or future
lack of perfection, sufficiency, validity, or enforceability of the Obligations
or any security therefor; (3) any defense such Borrower has to performance
hereunder, and any right such Borrower has to be exonerated, provided by
Sections 2819, 2822, or 2825 of the California Civil Code, or otherwise, arising
by reason of: the impairment or suspension of Agent and Lenders' rights or
remedies against the other Borrowers; the alteration by Agent and Lenders of the
Obligations; any discharge of the other Borrowers' obligations to Agent and
Lenders by operation of law as a result of Agent and Lenders' intervention or
omission; or the acceptance by Agent and Lenders of anything in partial
satisfaction of the Obligations; and (4) the benefit of any statute of
limitations affecting such Borrower's liability hereunder or the enforcement
thereof, and any act which shall defer or delay the operation of any statute of
limitations applicable to the Obligations shall similarly operate to defer or
delay the operation of such statute of limitations applicable to such Borrower's
liability hereunder.
(d) Each Borrower absolutely, unconditionally, knowingly, and
expressly waives any defense arising by reason of or deriving from (i) any claim
or defense based upon an election of remedies by Agent and Lenders including any
defense based upon an election of remedies by Agent and Lenders under the
provisions of Sections 580a, 580b, 580d, and 726 of the California Code of Civil
Procedure or any similar law of California or any other jurisdiction; or (ii)
any election by Agent and Lenders under Section 1111(b) of the Bankruptcy Code
to limit the amount of, or any collateral securing, its claim against the
Borrowers. Pursuant to California Civil Code Section 2856(b):
Each Borrower waives all rights and defenses arising out of an
election of remedies by the creditor, even though that election of remedies,
such as a nonjudicial foreclosure with respect to security for a guaranteed
obligation, has destroyed such Borrower's rights of subrogation and
reimbursement against the other Borrowers by the operation of Section 580(d) of
the California Code of Civil Procedure or otherwise.
Each Borrower waives all rights and defenses that such Borrower
may have because the Obligations are secured by real property. This means, among
other things: (1) Agent and Lenders may collect from such Borrower without first
foreclosing on any real or personal property collateral pledged by the other
Borrowers; and (2) if Agent and Lenders foreclose on any real property
collateral pledged by the other Borrowers: (A) the amount of the Obligations may
be reduced only by the price for which that collateral is sold at the
foreclosure sale, even if the collateral is worth more than the sale price; and
(B) Agent and Lenders may collect from such Borrower even if Agent and Lenders,
by foreclosing on the real property collateral, has destroyed any right such
Borrower may have to collect from the other Borrowers.
This is an unconditional and irrevocable waiver of any rights and
defenses each Borrower may have because the Obligations are secured by real
property. These rights and defenses include, but are not limited to, any rights
or defenses based upon Section 580a, 580b, 580d, or 726 of the California Code
of Civil Procedure.
If any of the Obligations at any time are secured by a mortgage or
deed of trust upon real property, Agent and Lenders may elect, in its sole
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discretion, upon a default with respect to the Obligations, to foreclose such
mortgage or deed of trust judicially or nonjudicially in any manner permitted by
law, before or after enforcing this Agreement and the Loan Documents, without
diminishing or affecting the liability of any Borrower hereunder except to the
extent the Obligations are repaid with the proceeds of such foreclosure. Each
Borrower understands that (a) by virtue of the operation of California's
antideficiency law applicable to nonjudicial foreclosures, an election by Agent
and Lenders nonjudicially to foreclose such a mortgage or deed of trust probably
would have the effect of impairing or destroying rights of subrogation,
reimbursement, contribution, or indemnity of such Borrower against the other
Borrowers or other guarantors or sureties, and (b) absent the waiver given by
such Borrower, such an election would prevent Agent and Lenders from enforcing
this Agreement and the Loan Documents to which Borrowers are a party against
such Borrower. Understanding the foregoing, and understanding that such Borrower
is hereby relinquishing a defense to the enforceability of this Agreement and
the Loan Documents to which Borrowers are a party, such Borrower hereby waives
any right to assert against Agent and Lenders any defense to the enforcement of
this Agreement and the Loan Documents to which Borrowers are a party, whether
denominated "estoppel" or otherwise, based on or arising from an election by
Agent and Lenders nonjudicially to foreclose any such mortgage or deed of trust.
Each Borrower understands that the effect of the foregoing waiver may be that
each Borrower may have liability hereunder for amounts with respect to which
such Borrower may be left without rights of subrogation, reimbursement,
contribution, or indemnity against the other Borrower or other guarantors or
sureties. Each Borrower also agrees that the "fair market value" provisions of
Section 580a of the California Code of Civil Procedure shall have no
applicability with respect to the determination of such Borrower's liability
under this Agreement and the Loan Documents to which Borrowers are a party.
Each Borrower hereby absolutely, unconditionally, knowingly, and
expressly waives: (i) any right of subrogation such Borrower has or may have as
against the other Borrowers with respect to the Obligations; (ii) any right to
proceed against the other Borrowers or any other Person, now or hereafter, for
contribution, indemnity, reimbursement, or any other suretyship rights and
claims, whether direct or indirect, liquidated or contingent, whether arising
under express or implied contract or by operation of law, which such Borrower
may now have or hereafter have as against the other Borrowers with respect to
the Obligations; and (iii) any right to proceed or seek recourse against or with
respect to any property or asset of the other Borrowers.
WITHOUT LIMITING THE GENERALITY OF ANY OTHER WAIVER OR OTHER
PROVISION SET FORTH IN THIS AGREEMENT, EACH BORROWER HEREBY ABSOLUTELY,
KNOWINGLY, UNCONDITIONALLY, AND EXPRESSLY WAIVES AND AGREES NOT TO ASSERT ANY
AND ALL BENEFITS OR DEFENSES ARISING DIRECTLY OR INDIRECTLY UNDER ANY ONE OR
MORE OF CALIFORNIA CIVIL CODE SECTIONS 2799, 2808, 2809, 2810, 2815, 2819, 2820,
2821, 2822, 2825, 2839, 2845, 2848, 2849, AND 2850, CALIFORNIA CODE OF CIVIL
PROCEDURE SECTIONS 580a, 580b, 580c, 580d, AND 726, CALIFORNIA UNIFORM
COMMERCIAL CODE SECTIONS 3116, 3118, 3119, 3419, 3605, 9504, 9505, AND 9507, AND
CHAPTER 2 OF TITLE 14 OF PART 4 OF DIVISION 3 OF THE CALIFORNIA CIVIL CODE.
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12.6 Settlements or Releases. Each Borrower consents and agrees
that, without notice to or by such Borrower, and without affecting or impairing
the liability of such Borrower hereunder, Agent and Lenders may, by action or
inaction:
(a) compromise, settle, extend the duration or the time for the
payment of, or discharge the performance of, or may refuse to or otherwise not
enforce this Agreement and the Loan Documents, or any part thereof, with respect
to the other Borrowers or any Guarantor;
(b) release the other Borrowers or any Guarantor or grant other
indulgences to the other Borrowers or any Guarantor in respect thereof;
(c) amend or modify in any manner and at any time (or from time to
time) this Agreement or any of the Loan Documents; or
(d) release or substitute any Guarantor, if any, of the Obligations,
or enforce, exchange, release, or waive any security for the Obligations or any
other guaranty of the Obligations, or any portion thereof.
12.7 No Election. Agent and Lenders shall have the right to seek
recourse against each Borrower to the fullest extent provided for herein, and no
election by Agent and Lenders to proceed in one form of action or proceeding, or
against any party, or on any obligation, shall constitute a waiver of Agent and
Lenders' right to proceed in any other form of action or proceeding or against
other parties unless Agent and Lenders has expressly waived such right in
writing. Specifically, but without limiting the generality of the foregoing, no
action or proceeding by Agent and Lenders under this Agreement and the Loan
Documents shall serve to diminish the liability of any Borrower under this
Agreement and the Loan Documents to which Borrowers are a party except to the
extent that Agent and Lenders finally and unconditionally shall have realized
indefeasible payment by such action or proceeding.
12.8 Indefeasible Payment. The Obligations shall not be considered
indefeasibly paid unless and until all payments to Agent and Lenders are no
longer subject to any right on the part of any Person, including any Borrower,
any Borrower as a debtor in possession, or any trustee (whether appointed
pursuant to the Bankruptcy Code, or otherwise) of any Borrower's Assets to
invalidate or set aside such payments or to seek to recoup the amount of such
payments or any portion thereof, or to declare same to be fraudulent or
preferential. Upon such full and final performance and indefeasible payment of
the Obligations, Agent and Lenders shall have no obligation whatsoever to
transfer or assign its interest in this Agreement and the Loan Documents to any
Borrower. In the event that, for any reason, any portion of such payments to
Agent and Lenders is set aside or restored, whether voluntarily or
involuntarily, after the making thereof, then the obligation intended to be
satisfied thereby shall be revived and continued in full force and effect as if
said payment or payments had not been made, and any Borrower shall be liable for
the full amount Agent and Lenders is required to repay plus any and all costs
and expenses (including attorneys' fees and attorneys' fees incurred in
proceedings brought under the Bankruptcy Code) paid by Agent and Lenders in
connection therewith.
65
12.9 Single Loan Account. At the request of Borrowers to facilitate
and expedite the administration and accounting processes and procedures of the
Loans and Borrowings, Agent and Lenders have agreed, in lieu of maintaining
separate loan accounts on Agent and Lenders' books in the name of each of the
Borrowers, that Agent and Lenders may maintain a single loan account under the
name of all of both Borrowers (the "Loan Account"). All Loans shall be made
jointly and severally to Borrowers and shall be charged to the Loan Account,
together with all interest and other charges as permitted under and pursuant to
this Agreement. The Loan Account shall be credited with all repayments of
Obligations received by Agent and Lenders, on behalf of Borrowers, from either
Borrower pursuant to the terms of this Agreement.
12.10 Apportionment of Proceeds of Loans. Each Borrower expressly
agrees and acknowledges that Agent and Lenders shall have no responsibility to
inquire into the correctness of the apportionment or allocation of or any
disposition by any of Borrowers of (a) the Loans or any Borrowings, or (b) any
of the expenses and other items charged to the Loan Account pursuant to this
Agreement. The Loans and all such Borrowings and such expenses and other items
shall be made for the collective, joint, and several account of Borrowers and
shall be charged to the Loan Account.
12.11 Agent and Lenders Held Harmless. Each Borrower agrees and
acknowledges that the administration of this Agreement on a combined basis, as
set forth herein, is being done as an accommodation to Borrowers and at their
request, and that Agent and Lenders shall incur no liability to Borrowers as a
result thereof. To induce Agent and Lenders to do so, and in consideration
thereof, each Borrower hereby agrees to indemnify and hold Agent and Lenders
harmless from and against any and all liability, expense, loss, damage, claim of
damage, or injury, made against Agent and Lenders by Borrowers or by any other
person or entity, arising from or incurred by reason of such administration of
the Agreement.
12.12 Borrowers' Integrated Operations. Each Borrower represents and
warrants to Agent and Lenders that the collective administration of the Loans is
being undertaken by Agent and Lenders pursuant to this Agreement because
Borrowers are integrated in their operation and administration and require
financing on a basis permitting the availability of credit from time to time to
Borrowers. Each Borrower will derive benefit, directly and indirectly, from such
collective administration and credit availability because the successful
operation of each Borrower is enhanced by the continued successful performance
of the integrated group.
* * *
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* * *
66
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed by their respective authorized officers as of the day and
year first above written.
NATIONAL TECHNICAL SYSTEMS, INC.
By
----------------------------------
Xxxxx Xxxxxxx, Senior Vice President, Chief
Financial Officer, Treasurer and Assistant
Secretary
Address for notices:
00000 Xxxxxxx Xxxxxxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Attn: Chief Financial Officer
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
NTS TECHNICAL SYSTEMS dba
NATIONAL TECHNICAL SYSTEMS
By
----------------------------------
Xxxxx Xxxxxxx, Senior Vice President, Chief
Financial Officer, Treasurer and Assistant
Secretary
Address for notices:
00000 Xxxxxxx Xxxxxxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Attn: Chief Financial Officer
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
67
XXCAL, INC.
By
----------------------------------
Xxxxx Xxxxxxx, Vice President, Treasurer and
Assistant Secretary
Address for notices:
00000 Xxxxxxx Xxxxxxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Attn: Chief Financial Officer
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
APPROVED ENGINEERING TEST
LABORATORIES, INC.
By
----------------------------------
Xxxxx Xxxxxxx, Vice President, Treasurer and
Assistant Secretary
Address for notices:
00000 Xxxxxxx Xxxxxxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Attn: Chief Financial Officer
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
68
ETCR, INC.
By
----------------------------------
Xxxxx Xxxxxxx, Vice President, Treasurer and
Assistant Secretary
Address for notices:
00000 Xxxxxxx Xxxxxxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Attn: Chief Financial Officer
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
ACTON ENVIRONMENTAL TESTING
CORPORATION
By
----------------------------------
Xxxxx Xxxxxxx, Vice President, Treasurer and
Assistant Secretary
Address for notices:
00000 Xxxxxxx Xxxxxxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Attn: Chief Financial Officer
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
69
COMERICA BANK-CALIFORNIA, in its
capacities as Agent, Issuing Lender and a Lender
By
----------------------------------
Xxxx Xxxxxx, Senior Vice President
Address for notices and Lending Office:
Comerica Bank-California
00000 Xxxxxx Xxxxxx
Xxxxxxxx Xxxxx, Xxxxxxxxxx 00000
Attn: Xxxxx X. Xxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
FIRST BANK & TRUST, in its capacity as a Lender
By
----------------------------------
Xxxxx X. Xxxxxx, Vice President
Address for notices:
First Bank & Trust
0000 Xxxxxx Xxxxxx
Xxxxxxxx Xxxxx, XX 00000
Attn: Xxxxx X. Xxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
70
Schedule 1.1C
Schedule of Commitments
--------------------------------------------------------------------------------
Revolving Loan Lender Revolving Credit Commitment Revolving Credit
Commitment Percentage
--------------------------------------------------------------------------------
Comerica $9,600,0001 60%
First Bank & Trust $6,400,0002 40%
--------------------------------------------------------------------------------
--------
1 As may be reduced from time to time pursuant to Section 2.14, and also reduced
by $900,000 effective August 1, 2002, if the Consolidated Net Income for the
most recent fiscal year is less than Two Million Dollars ($2,000,000).
2 As may be reduced from time to time pursuant to Section 2.14, and also reduced
by $600,000 effective August 1, 2002, if the Consolidated Net Income for the
most recent fiscal year is less than Two Million Dollars ($2,000,000).
