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LOAN AND SECURITY AGREEMENT
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among
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POWERWAVE TECHNOLOGIES, INC.,
as Borrower
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COMERICA BANK-CALIFORNIA,
not in its individual capacity,
but solely as Agent for the Lenders
and
The Financial Institutions
parties hereto from time to time,
as Lenders
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Dated as of September 30, 1998
TABLE OF CONTENTS
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Page
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1. DEFINITIONS........................................................... 1
2. CREDIT FACILITIES..................................................... 13
2.1 Term Loan...................................................... 13
2.2 Purpose Loan................................................... 13
2.3 Revolving Loan................................................. 14
2.4 Borrowing Procedure............................................ 14
2.5 Lenders' Records............................................... 14
3. PAYMENTS OF PRINCIPAL, INTEREST AND OTHER AMOUNTS..................... 15
3.1 Interest....................................................... 15
3.2 Interest Payments and Computations............................. 16
3.3 Principal Payments............................................. 16
3.4 LIBOR Lending Unlawful......................................... 17
3.5 Deposits Unavailable........................................... 17
3.6 Increased LIBOR Loan Costs, etc................................ 17
3.7 Funding Losses................................................. 17
3.8 Direct Debit Authorization..................................... 18
4. PLEDGE OF COLLATERAL.................................................. 18
4.1 Grant of Security Interest..................................... 18
4.2 Agent as Attorney-in-Fact...................................... 19
4.3 Performance of Borrower's Obligations.......................... 20
5. CONDITIONS PRECEDENT.................................................. 20
5.1 Initial Borrowing.............................................. 20
5.2 Subsequent Borrowings.......................................... 22
6. REPRESENTATIONS AND WARRANTIES........................................ 23
6.1 Existence and Authority........................................ 23
6.2 Authorization.................................................. 23
6.3 Binding Effect................................................. 23
6.4 Ownership Interests............................................ 23
6.5 Business Operations and Other Information; Financial Condition. 24
6.6 Subsidiaries................................................... 25
6.7 Litigation; No Violation of Governmental Orders or Laws........ 25
6.8 Outstanding Indebtedness; Investments.......................... 25
6.9 Consents, etc.................................................. 25
6.10 Title to Properties............................................ 25
6.11 Taxes.......................................................... 26
6.12 No Conflicts with Agreements, Etc.............................. 26
6.13 Related Documents.............................................. 27
6.14 Disclosure..................................................... 27
6.15 Broker's or Finder's Commissions............................... 27
6.16 Labor Matters.................................................. 27
6.17 Environmental Matters.......................................... 28
6.18 Possession of Franchises, Licenses, Etc........................ 29
6.19 Intellectual Property.......................................... 29
6.20 Margin Regulations; Use of Proceeds............................ 29
i
6.21 Compliance with ERISA.......................................... 30
6.22 Material Contracts............................................. 31
6.23 Insurance...................................................... 31
6.24 Solvency....................................................... 31
6.25 Status under Certain Laws...................................... 31
6.26 Places of Business............................................. 31
6.27 Other Names.................................................... 31
6.28 Account Warranties............................................. 31
6.29 Equipment...................................................... 32
6.30 Year 2000...................................................... 32
6.31 Reliance by Agent and Lenders; Cumulative...................... 32
7. COVENANTS............................................................. 32
7.1 Financial Statements and Information........................... 33
7.2 Payment of Principal, Interest and Fees; to Keep Books;
Reserves; Etc.................................................. 35
7.3 Payment of Taxes and Claims.................................... 35
7.4 Maintenance of Properties and Corporate Existence.............. 36
7.5 Insurance...................................................... 36
7.6 Further Assurances............................................. 37
7.7 Restrictions on Indebtedness................................... 37
7.8 Restrictions on Liens.......................................... 37
7.9 Operating Leases............................................... 38
7.10 Sale-Leaseback Transactions.................................... 39
7.11 Transactions with Affiliates................................... 39
7.12 Consolidation, Merger or Disposition of Assets; Acquisitions... 39
7.13 Sale or Discount of Receivables................................ 39
7.14 Certain Contracts.............................................. 39
7.15 Restricted Payments and Investments............................ 40
7.16 Financial Covenants............................................ 40
7.17 Acquisition of Margin Securities............................... 41
7.18 Collateral Locations........................................... 41
7.19 Negative Pledges, Restrictive Agreements, etc.................. 41
7.20 Deposit Account................................................ 41
7.21 Additional Collateral Matters.................................. 41
7.22 Future Subsidiaries............................................ 42
8. EVENTS OF DEFAULT; REMEDIES........................................... 42
8.1 Events of Default.............................................. 42
8.2 Remedies....................................................... 44
8.3 Remedies with Respect to Collateral............................ 44
9. THE AGENT............................................................. 45
9.1 Actions........................................................ 45
9.2 Funding Reliance, etc.......................................... 45
9.3 Exculpation.................................................... 46
9.4 Successor...................................................... 46
9.5 Loans and other Transactions by Comerica....................... 46
9.6 Credit Decisions............................................... 46
9.7 Copies, etc.................................................... 46
10. GENERAL PROVISIONS.................................................... 47
10.1 Notices........................................................ 47
10.2 Successors and Assigns......................................... 47
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10.3 Section Headings........................... 48
10.4 Interpretation............................. 48
10.5 Severability of Provisions................. 48
10.6 Amendments and Waivers..................... 48
10.7 Set-Offs................................... 49
10.8 Attorneys' Fees and Costs.................. 49
10.9 Indemnification............................ 50
10.10 Dissemination.............................. 50
10.11 Counterparts............................... 50
10.12 Integration................................ 50
10.13 No Waiver; Remedies Cumulative............. 50
10.14 GOVERNING LAW.............................. 51
10.15 WAIVER OF JURY TRIAL....................... 51
EXHIBITS
EXHIBIT A - Form of Term Note
EXHIBIT B - Form of Purpose Note
EXHIBIT C - Form of Revolving Note
EXHIBIT D - Form of Legal Opinion
EXHIBIT E - Form of Borrowing Base Certificate
EXHIBIT F - Form of Copyright Mortgage
EXHIBIT G - Form of Trademark Security Agreement
EXHIBIT H - Form of Patent Security Agreement
EXHIBIT I - Form of Landlord Waiver
EXHIBIT J - Form of Subsidiary Guarantee
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LOAN AND SECURITY AGREEMENT
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This LOAN AND SECURITY AGREEMENT (this "Agreement") is made and entered
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into as of September 30, 1998 by and among Powerwave Technologies, Inc., a
Delaware corporation (the "Borrower"), COMERICA BANK-CALIFORNIA, a California
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banking corporation, as agent for the Lenders (the "Agent"), and the various
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financial institutions that are (or may from time to time hereafter become)
parties hereto as lenders (each a "Lender" and collectively the "Lenders").
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RECITALS
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WHEREAS, Borrower has requested that the Lenders provide certain credit
facilities to Borrower; and
WHEREAS, the Lenders are willing to provide such credit facilities to
Borrower on the terms and conditions set forth herein; and
WHEREAS, the proceeds of the credit facilities herein provided shall be
used (i) to facilitate Borrower's acquisition from Hewlett-Packard Company of
certain assets, operations and business related to the design, manufacture and
marketing of radio frequency power amplifiers for use in the communication
infrastructure market (the "Business"), pursuant to that certain Asset Purchase
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Agreement, dated August 31, 1998 by and between Hewlett-Packard Company and the
Borrower (the "Acquisition Agreement") and (ii) for Borrower's working capital
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and general business purposes; and
WHEREAS, the Obligations shall be secured by a first-priority lien and
security interest in and to all of Borrower's personal property, as more
specifically provided herein;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
1. DEFINITIONS. As used in this Agreement, the following terms shall have the
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respective meanings (such meanings to be equally applicable to both the singular
and the plural forms of the terms defined) provided below in this Section 1:
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"Accountants" is defined in Section 7.1(B)(1).
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"Account Debtor" means the party who is obligated on or under an Account.
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"Accounts" of any Person means all of such Person's presently existing and
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hereafter arising or acquired accounts, accounts receivable, margin accounts,
futures positions, book debts, notes, drafts, acceptances, chattel paper, rights
under Contracts, rights to the payment of money and other forms of obligations
now or hereafter owned or held by or payable to such Person relating in any way
to Inventory or arising from the sale or other disposition of Inventory or the
rendering of services by such Person or howsoever otherwise arising, including
the right to payment of any interest or finance charges with respect thereto,
together with all goods represented by any of the Accounts; all such goods that
may be reclaimed or repossessed or returned to such Person; all of such Person's
rights as an unpaid vendor, including stoppage in transit, reclamation,
replevin, and sequestration; all pledged assets and all letters of credit,
guaranty claims, liens, and security interests held by or granted to such Person
to secure payment of any of
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the foregoing; all proceeds and products of all of the foregoing; and all
proceeds of insurance with respect thereto, including the proceeds of any
applicable credit insurance or fidelity bond, whether payable in cash or in
kind; and all customer lists, ledgers, books of account, records, computer
programs, computer disks or tape files, computer printouts, computer runs, and
other computer prepared information relating to any of the foregoing, and all
other records identifying or evidencing any of the foregoing.
"Accounts Trial Balance" is defined in Section 7.1(E).
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"Acquisition" means the Acquisition by Borrower from Seller of the Property
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associated with the Business, as contemplated by the Acquisition Agreement.
"Acquisition Agreement" is defined in the Recitals.
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"Advance" is defined in Section 2.3.
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"Affiliate" means, as to any Person, (a) any Person which, directly or
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indirectly, is in control of, is controlled by, or is under common control with
such Person, (b) any Person who is a director, officer, partner or principal (i)
of such Person, (ii) of any Subsidiary of such Person or (iii) of any Person
described in clause (a) above, or (c) any individual who is a relative of any
Person described in clause (a) or clause (b) above. For purposes of this
definition, "control" (including the terms "controlling", "controlled by" and
"under common control with") of a Person shall mean the power, direct or
indirect, (i) to vote or direct the voting of 10% or more of the securities
having ordinary voting power for the election of directors of such Person, or
(ii) to direct or cause the direction of the management and policies of such
Person whether by contract or otherwise. For the purposes of this Agreement,
neither Agent nor any Lender shall be deemed to be an Affiliate of Borrower or
any of its Subsidiaries.
"Agent" is defined in the preamble.
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"Applicable Base Rate Margin" means with respect to any Loan, the
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applicable percentage set forth below based upon Borrower's ratio of Funded Debt
at the date of determination to EBITDA for the most recently ended period of
four consecutive fiscal quarters (it being expressly understood and agreed that
the use of the Funded Debt/EBITDA ratios set forth in this definition is solely
for purposes of determining an interest rate margin and shall not be construed
to excuse any failure of Borrower to comply with any covenant of Borrower set
forth in this Agreement to maintain certain Funded Debt/EBITDA ratios as of
certain dates):
Funded Debt / EBITDA ratio Applicable Base Rate Margin
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More than 2.50 0.25%
2.50 or less 0.00%
"Applicable LIBOR Margin" means with respect to any Loan, the applicable
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percentage set forth below based upon Borrower's ratio of Funded Debt at the
date of determination to EBITDA for the most recently ended period of four
consecutive fiscal quarters (it being expressly understood and agreed that the
use of the Funded Debt/EBITDA ratios set forth in this definition is solely for
purposes of determining an interest rate margin and shall not be construed to
excuse any failure of Borrower to comply with any covenant of Borrower set forth
in this Agreement to maintain certain Funded Debt/EBITDA ratios as of certain
dates):
Funded Debt / EBITDA Ratio Applicable LIBOR Margin
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More than 2.50 2.25%
1.75 or more but not more than 2.50 1.75%
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Less than 1.75 1.50%
"Available Amount" means, at any time, an aggregate outstanding principal
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amount of Revolving Loans not in excess of the lesser of (i) the Borrowing Base
and (ii) the Revolving Commitment Limit.
"Base Rate" means a variable rate of interest per annum which is announced
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from time to time by Agent as the "prime rate," "reference rate," "base rate,"
or other similar rate. The Base Rate is a reference rate and does not
necessarily represent the lowest or best rate actually charged to any customer
by Agent.
"Borrowing Base" means an amount as of any time of determination equal to
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80% of the Eligible Accounts (or, in the case of foreign accounts receivable
that are deemed Eligible Accounts solely because they are backed by a letter of
credit as contemplated by clause (a) of the definition of Eligible Accounts, 25%
of such Eligible Accounts); provided, that at no time may (i) more than 50% of
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the Borrowing Base consist of Eligible Accounts owing from Northern Telecom
Limited and its Subsidiaries and Affiliates; (ii) more than 35% of the Borrowing
Base consist of Eligible Accounts owing from Lucent Technologies Inc. and its
Subsidiaries and Affiliates; and (iii) more than 35% of the Borrowing Base
consist of Eligible Accounts owing from LM Ericsson Telephone Company and its
Subsidiaries and Affiliates.
"Borrowing Base Certificate" has the meaning specified in Section 7.1(E).
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"Borrowing Request" is defined in Section 2.4.
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"Business" is defined in the Recitals.
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"Business Day" means any day on which members of the Federal Reserve system
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are not required to close, and, if such day relates to a borrowing of, a payment
or prepayment of principal of or interest on, or a Conversion of or into, or an
Interest Period for, a Loan bearing interest with reference to LIBOR or a notice
by Borrower with respect to any such Loan, a day which is also a day on which
dealings in Dollar deposits are carried out on the London interbank market.
"Capital Expenditures" means the expenditures of any Person which should be
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capitalized on the balance sheet of such Person in accordance with GAAP (but
only that portion of Capitalized Lease Obligations paid in cash during the
relevant period) and which are made in connection with the purchase,
construction, development or improvement of items properly classified on such
balance sheet as Property, plant, equipment or other fixed assets or
intangibles, provided that Capital Expenditures shall not include the portion of
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any such expenditures paid for with (a) the Net Cash Proceeds of any property
insurance or condemnation award or (b) the Net Cash Proceeds of a sale of
Property permitted hereunder to the extent used within the period provided under
Section 3.3(d) to purchase like or similar Property.
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"Capitalized Lease" means any lease of Property which in accordance with
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GAAP should be capitalized on the balance sheet of any Person or for which the
amount of the asset and liability thereunder as if so capitalized should be
disclosed in a note to such balance sheet.
"Capitalized Lease Obligation" means the amount of the liability of any
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Person which in accordance with GAAP should be capitalized or disclosed on the
balance sheet of such Person in respect of a Capitalized Lease.
"Change of Control" means any Person, or any group of Persons acting in
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concert, becoming the direct or indirect beneficial owner (within the meaning of
Rule 13d under the Exchange Act) of more than 30% of the outstanding shares of
Borrower's capital stock having ordinary voting power.
"Chattel Paper" of any Person means any of such Person's "chattel paper,"
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as such term is defined in Section 9105(1) (b) of the UCC, and shall include,
without limitation, all writings owned or held by
3
such Person which evidence both a monetary obligation and a security interest in
or a lease of specific goods; when a transaction is evidenced both by a security
agreement or a lease and by an Instrument or a series of Instruments, the group
of writings taken together constitutes Chattel Paper.
"Closing Date" means the date of the initial disbursement of Loans
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hereunder, which (subject to satisfaction of the applicable conditions set forth
herein) shall occur at 12:00 P.M. (Pacific time) on September 30, 1998, or such
other time and date as shall be mutually acceptable to Borrower and Agent and at
the offices of Manatt, Xxxxxx & Xxxxxxxx, LLP, 00000 Xxxx Xxxxxxx Xxxx., Xxx
Xxxxxxx, XX 00000, or at such other place as the parties may agree.
"Code" means the Internal Revenue Code of 1986, as amended.
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"Collateral" is defined in Section 4.1.
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"Commitment" means each commitment of a Lender under this Agreement to
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advance Loan funds to Borrower, as set forth on Schedule I.
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"Consolidated Current Assets" of any Person means all cash, marketable
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securities and net trade accounts receivable of such Person and its
Subsidiaries, determined on a consolidated basis in accordance with GAAP.
"Consolidated Current Liabilities" of any Person means all liabilities of
--------------------------------
such Person and its Subsidiaries on a consolidated basis maturing on demand or
within one year from the date as of which such liabilities are to be determined,
and such other liabilities (including, but not limited to, accrued taxes) as may
properly be classified as current liabilities in accordance with GAAP, and
including, in any event, the outstanding principal balance of the Revolving
Loan, but excluding, in any event, any principal balance under the Purpose Loan.
"Consolidated Interest Expense" of any Person means, for any period, total
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interest expense (including, but not limited to, that portion of any Capitalized
Lease Obligations attributable to interest expense in conformity with GAAP and
amortization of capitalized interest) paid or accrued with respect to all
outstanding Indebtedness of such Person and its Subsidiaries, including all
commissions, discounts and other fees and charges owed with respect to letter of
credit and bankers acceptance financing, prepayment charges, agency fees,
administrative fees, commitment fees, capitalized transaction costs allocated to
interest expense, payments owed under any interest rate hedging, cap or similar
agreement or arrangement, all as determined for such Person and its Subsidiaries
on a consolidated basis for such period in accordance with GAAP.
"Consolidated Net Income (Loss)" means, for any period, the net income (or
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loss) of Borrower and its Subsidiaries on a consolidated basis for such period
taken as a single accounting period, determined in accordance with GAAP (but in
any event without deduction of dividends paid or payable in respect of any
equity interest of Borrower); provided that in determining Consolidated Net
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Income (Loss) there shall be excluded (i) the income (or loss) of any Person
(other than a Subsidiary of Borrower) in which any Person other than Borrower or
any of its Subsidiaries has a joint interest or partnership interest, except to
the extent of the amount of dividends or other distributions actually paid to
Borrower or any of its Subsidiaries by such Person during such period, (ii) the
income (or loss) of any Person accrued prior to the date it becomes a Subsidiary
of Borrower or is merged into or consolidated with Borrower or any of its
Subsidiaries or that Person's assets are acquired by Borrower or any of its
Subsidiaries, (iii) the proceeds of any life insurance policy, (iv) gains and
losses from the sale, exchange, transfer or other disposition of Property or
assets not in the ordinary course of business, and related tax effects in
accordance with GAAP, (v) any other extraordinary or non-recurring gains and
losses, and related tax effects in accordance with GAAP, and (vi) the income of
any Subsidiary of Borrower to the extent that the declaration or payment of
dividends or similar distributions by that Subsidiary of that income is not at
the time permitted by operation of the terms of
4
its charter or of any agreement, instrument, judgment, decree, Order, statute,
rule or governmental regulation applicable to that Subsidiary.
"Continue", "Continuation" and "Continued" shall refer to the continuation
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pursuant to Section 3.1 hereof of a LIBOR Loan from one Interest Period to the
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next Interest Period.
"Contracts" of any Person means all contracts, undertakings, or other
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agreements (other than rights evidenced by Chattel Paper, Documents or
Instruments) in or under which such Person may now or hereafter have any right,
title or interest, including, without limitation, with respect to an Account,
any agreement relating to the terms of payment or the terms of performance
thereof.
"Convert", "Conversion" and "Converted" shall refer to a conversion
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pursuant to Section 3.1 hereof of (a) a LIBOR Loan into a Floating Rate Loan, or
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(b) a Floating Rate Loan into a LIBOR Loan.
"Default" means any event or condition which, with due notice or lapse of
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time or both, would become an Event of Default.
"Deposit Account" is defined in Section 5.1(j).
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"Document" means, with respect to any Person, any "document," of such
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Person, as such term is defined in Section 9105(1)(f) of the UCC, and shall
include, without limitation, any xxxx of lading, dock warrant, dock receipt,
warehouse receipt or order for the delivery of Inventory owned or held by such
Person, together with any other document or receipt which in the regular course
of business or financing is treated as adequately evidencing that the person in
possession of it is entitled to receive, hold and dispose of the document and
the goods it covers.
"EBITDA" means, for any period, Consolidated Net Income (Loss) for such
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period plus all amounts deducted in determining such Consolidated Net Income
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(Loss) on account of Consolidated Interest Expense (net of interest income),
taxes based on or measured by income, depreciation expense, amortization expense
and other non-cash items (including, without limitation, adjustments related to
the write-up in the book value of any assets arising out of the Transactions, to
the extent such adjustments are made pursuant to APB Nos. 16 and 17 and are
deducted in determining Consolidated Net Income (Loss) for such period, but
exclusive of extraordinary and non-recurring items), all as determined for
Borrower on a consolidated basis in accordance with GAAP.
"Eligible Account" means each account receivable of Borrower or any of its
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Subsidiaries:
(a) that arises out of the sale by Borrower or such Subsidiary of
Inventory in the ordinary course of its business to an Account Debtor
located within the United States of America, provided that accounts
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receivable owed by Samsung Electronics Co. Ltd., Hyundai Electronics
Industries Co. and LG Information & Communications, Ltd. may be
considered Eligible Accounts to the extent backed by a letter of
credit in form and substance satisfactory to Agent and the Lenders and
issued by a bank acceptable to Agent and the Lenders and provided,
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further that this clause (a) shall not be construed to exclude, or to
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require a letter of credit in support of, Accounts owed by Northern
Telecom Limited and its Subsidiaries and Affiliates, Lucent
Technologies Inc. and its Subsidiaries and Affiliates, LM Ericsson
Telephone Company and its Subsidiaries and Affiliates or Siemens AG
and its Subsidiaries and Affiliates;
(b) that is the valid, binding and legally enforceable obligation of the
Account Debtor obligated thereon and such Account Debtor is not (i) an
Affiliate of Borrower or of any Subsidiary of Borrower, (ii) a
director, officer or employee of Borrower or of any Subsidiary or
Affiliate of Borrower, (iii) the United States of America or any
department, agency or instrumentality
5
thereof (or any state or municipality), (iv) a debtor under any
proceeding under the United States Bankruptcy Code or any other
comparable bankruptcy or insolvency law applicable under the law of
any other country or political subdivision thereof, or (v) an assignor
for the benefit of creditors;
(c) that is assignable and not evidenced by an instrument or chattel paper
unless the same has been endorsed and delivered to Agent;
(d) that is subject to a perfected, first priority Lien in favor of Agent,
for the benefit of the Lenders, and is free and clear of any other
Lien other than Permitted Liens;
(e) that is net of any credit or allowance given by Borrower or such
Subsidiary to such Account Debtor;
(f) for which Borrower or such Subsidiary is not and will not become
liable to the Account Debtor for goods sold or services rendered by
such Account Debtor to Borrower or such Subsidiary;
(g) that is not subject to any asserted offset, counterclaim or other
defense with respect thereto, provided, however, that this clause (g)
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shall not cause an Account to fail to be an Eligible Account to the
extent of the portion thereof, if any, that is not subject to any
asserted offset, counterclaim or other defense;
(h) that is not unpaid more than 90 days after earlier of (x) the date of
the applicable invoice and (y) the date of shipment;
(i) that is not owed by an Account Debtor who is obligated on accounts
owed to Borrower and its Subsidiaries more than 25% of the aggregate
unpaid balance of which have been past due for longer than either of
the relevant periods specified in clause (h) above unless Agent has
approved expressly in writing the continued eligibility thereof;
(j) to the extent that it would not cause the total Eligible Accounts
owing from any one Account Debtor or its Affiliates to exceed 20% (or
such other limitation that may otherwise be applicable to such Account
Debtor pursuant to the definition of "Borrowing Base") of all Eligible
Accounts owed to Borrower or any of its Subsidiaries; and
(k) that does not arise from a sale to an Account Debtor on a xxxx-and-
hold, guaranteed sale, sale-or-return, sale-on-approval, consignment
or any other repurchase or return basis.
"Environmental Laws" means the Comprehensive Environmental Response,
------------------
Compensation and Liability Act, the Resource Conservation and Recovery Act, the
Emergency Planning and Community Right to Know Act, the Safe Drinking Water Act,
the Hazardous Materials Transportation Act, the Clean Air Act, the Clean Water
Act, the Federal Insecticide, Fungicide and Rodenticide Act, the Noise Control
Act, Occupational Safety and Health Act, the Toxic Substances Control Act, any
so-called "Superfund" or "Superlien" Laws, any regulation promulgated under any
of the foregoing or any other Federal, state, or local statute, law, ordinance,
code, rule, regulation, order, decree, common law or other requirement of any
Governmental Body regulating, relating to or imposing liability or standards of
conduct concerning the environment, health and safety, siting, wetlands, coastal
zone management, air emissions, discharges to surface or ground water,
discharges to any sewer or septic system, noise emissions, solid waste disposal
or any Hazardous Material, or the generation, use, transportation or other
management of Hazardous Materials, all as now or at any time hereafter may be in
effect.
"Environmental Matter" means any claim, investigation, notice letter,
--------------------
information request, litigation,
6
administrative proceeding, cleanup or remediation order, whether pending or, to
the knowledge of Borrower, threatened, or judgment or Order, relating to any
Hazardous Materials, the release thereof, or any Environmental Law.
"Equipment" of any Person means all of such Person's now owned and
---------
hereafter acquired equipment (as defined in Section 9109(2) of the UCC)
including, but not limited to, all machinery, office equipment, furniture,
furnishings, fixtures, computers, office equipment and other tangible personal
Property, as well as purchase options with respect to all of such types of
Property leased by such Person; together with all present and future additions
and accessions thereto, replacements therefor, component and auxiliary parts and
supplies used or to be used in connection therewith, and all substitutes for any
of the foregoing, and all manuals, drawings, instructions, warranties and rights
with respect thereto, wherever any of the foregoing is located.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
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amended.
"ERISA Affiliate" means any corporation or other Person which is a member
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of the same controlled group (within the meaning of Section 414(b) of the Code)
of corporations or other Persons as Borrower or any of its Subsidiaries, or
which is under common control (within the meaning of Section 414(c) of the Code)
with Borrower or any of its Subsidiaries, or any corporation or other Person
which is a member of an affiliated service group (within the meaning of Section
414(m) of the Code) with Borrower or any of its Subsidiaries, or any corporation
or other Person which is required to be aggregated with Borrower or any of its
Subsidiaries pursuant to Section 414(o) of the Code or the regulations
promulgated thereunder, to the extent effective.
"Event of Default" is defined in Section 8.1.
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"Exchange Act" means the Securities Exchange Act of 1934, as amended, or
------------
any similar Federal statute then in effect, and a reference to a particular
section thereof shall include a reference to the comparable section, if any, of
any such similar Federal statute.
"Facilities" and "Facility" are defined in Section 2.
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"Fair Market Value" means the amount a willing buyer would pay to a willing
-----------------
seller for the assets in question, neither party being under compulsion to act
and both having reasonable knowledge of all relevant facts.
"Funded Debt" of any Person means all Indebtedness of such Person other
-----------
than Indebtedness of the types described in clauses (vii) and (viii) of the
definition of "Indebtedness" set forth herein.
"GAAP" means generally accepted accounting principles as in effect from
----
time to time in the United States of America, applied on a consistent basis as
to classification of items and amounts.
"General Intangibles" of any Person means all "general intangibles" of such
-------------------
Person, as such term is defined in Section 9106 of the UCC, and shall include,
without limitation, choses in action, causes of action and all other kinds of
intangible personal property of every kind or nature owned by such Person,
including, but not limited to, contract rights, (including rights pursuant to or
arising under the Acquisition Agreement) corporate or other business records,
inventions, designs, patents, patent applications, service marks, trademarks,
trademark applications, trade names, trade secrets, engineering drawings,
goodwill, registrations, copyrights, copyright applications, licenses,
franchises, leasehold interests in personal property, customer lists, tax refund
claims, business interruption insurance and proceeds thereof, property, casualty
or any similar type of insurance and any proceeds thereof, royalty, licensing
and product rights, rights to the retrieval from third parties of electronically
processed and recorded data pertaining to any Collateral and all rights to
payment under any judgment; and all customer lists, ledgers, books of account,
7
records, computer programs, computer disks or tape files, computer printouts,
computer runs, and other computer prepared information relating to any of the
foregoing.
"Governmental Body" means any Federal, state, county, city, town, village,
-----------------
municipal or other governmental department, commission, board, bureau, agency,
authority or instrumentality, domestic or foreign.
"Guaranty" means any guaranty or other contingent liability (other than
--------
any endorsement for collection or deposit in the ordinary course of business),
direct or indirect, with respect to any obligations of another Person, through
an agreement or otherwise, including, without limitation, (a) any other
endorsement or discount with recourse or undertaking substantially equivalent to
or having economic effect similar to a guarantee in respect of any such
obligations and (b) any agreement (i) to purchase, or to advance or supply funds
for the payment or purchase of, any such obligations, (ii) to purchase, sell or
lease Property, products, materials or supplies, or transportation or services,
in respect of enabling such other Person to pay any such obligation or to assure
the owner thereof against loss regardless of the delivery or nondelivery of the
Property, products, materials or supplies or transportation or services or (iii)
to make any loan, advance or capital contribution to or other investment in, or
to otherwise provide funds to or for, such other Person in respect of enabling
such Person to satisfy any obligation (including any liability for a dividend,
stock liquidation payment or expense) or to assure a minimum equity, working
capital or other balance sheet condition in respect of any such obligation. The
amount of any Guaranty shall be equal to the outstanding amount of the
obligations directly or indirectly guaranteed.
"Hazardous Material" and "Hazardous Materials" mean, and shall be deemed to
------------------ -------------------
refer to:
(1) any "hazardous substance" as defined in, or for purposes of, the
Comprehensive Environmental Response, Compensation and Liability Act,
42 U.S.C.A. (S)(S) 9601 & 9602, or any other so-called "superfund" or
"superlien" law and any judicial interpretation of any of the
foregoing;
(2) any "regulated substance" as defined pursuant to 40 C.F.R. Part 280;
(3) any "pollutant or contaminant" as defined in 42 U.S.C.A. (S) 9601(33);
(4) any "hazardous waste" as defined in, or for purposes of, the Resource
Conservation and Recovery Act;
(5) any "hazardous chemical" as defined in 29 C.F.R. Part 1910;
(6) any "hazardous material" as defined in, or for purposes of, the
Hazardous Materials Transportation Act; and
(7) any other substance, regardless of physical form, or form of energy or
pathogenic agent that is subject to any other past, present or future
law or requirement of any Governmental Body regulating, relating to,
or imposing obligations, liability, or standards of conduct concerning
the protection of human health, plant life, animal life, natural
resources, Property or the reasonable enjoyment of life or Property
from the presence in the environment of any solid, liquid, gas, odor,
pathogen or form of energy, from whatever source.
Without limiting the generality of the foregoing, the term "Hazardous
Material" thus includes, but is not limited to, any material, waste or substance
that contains petroleum or any fraction thereof, asbestos, or polychlorinated
biphenyls, or that is flammable, explosive or radioactive.
8
"Indebtedness" of any Person means, without duplication, (i) all
------------
indebtedness of such Person for borrowed money, (ii) any obligation incurred for
all or any part of the purchase price of Property or services, other than
accounts payable and accrued expenses included in current liabilities and
incurred in respect of Property or services purchased in the ordinary course of
business, (iii) indebtedness or obligations evidenced by bonds, debentures,
notes or similar written instruments, (iv) the face amount of all letters of
credit issued for the account of such Person and all drafts drawn thereunder,
(v) any obligation (whether or not such Person has assumed or become liable for
the payment of such obligation) secured by a Lien on any Property of such
Person, (vi) Capitalized Lease Obligations of such Person, (vii) all
indebtedness, contingent or otherwise, with respect to any interest rate
agreement, including without limitation any interest rate swap agreement,
interest rate cap agreement, interest rate collar agreement or other similar
agreement or arrangement designed to protect such Person against fluctuations in
interest rates; (viii) any indebtedness, contingent or otherwise, under any
foreign exchange contract, currency swap agreement or other similar agreement or
arrangement designed to protect such Person against fluctuations in currency
values; and (ix) all Guaranties of such Person in respect of any obligations of
the foregoing description of any other Person.
"Instrument" of any Person means any "instrument" of such Person, as such
----------
term is defined in Section 9105(1) (i) of the UCC, and shall include, without
limitation, any draft, check, certificate of deposit, note, xxxx of exchange,
security (including equity securities) or any other writing owned or held by
such person which evidences a right to the payment of money and is not itself a
security agreement or lease and is of a type which is transferred in the
ordinary course of business by delivery with any necessary endorsement or
assignment.
"Intellectual Property" is defined in Section 6.19.
----------------------- ------------
"Interest Period" means, with respect to any portion of the outstanding
---------------
principal of the Loans bearing interest from time to time with reference to
LIBOR, the period commencing on and including the date such principal is
advanced or is Converted from the Floating Rate to LIBOR, or the last day of the
immediately preceding Interest Period for such principal (if previously bearing
interest with reference to LIBOR), and ending on but excluding the 30th, 60th,
90th or 180th day thereafter; provided that if any Interest Period would end on
--------
a day that is not a Business Day, such Interest Period shall be extended to the
next day that is a Business Day (unless extending such Interest Period to the
next Business Day would cause the Interest Period to end in a different calendar
month, in which case the last day of such Interest Period shall be the
immediately preceding Business Day). In no event shall an Interest Period
extend beyond the Revolving Maturity Date; and if any Interest Period would
otherwise commence before and end after the Revolving Maturity Date, then the
LIBOR shall not be available hereunder for such period.
"Inventory" of any Person means any "inventory" of such Person, as such
---------
term is defined in Section 9109 (4) of the UCC, and shall include, without
limitation, any and all goods owned or held by or for the account of such
Person, for sale or lease, or for furnishing under a contract of service, or as
raw materials, work in process, materials incorporated in or consumed in the
production, packaging, delivery or shipping of any of the foregoing, supplies,
and all property the sale, lease or other disposition of which has given rise to
Accounts and which has been returned to such Person or repossessed by such
Person or stopped in transit, all substitutions and replacements therefor and
all additions and accessions thereto; and all customer lists, ledgers, books of
account, records, computer programs, computer disks or tape files, computer
printouts, computer runs, and other computer prepared information relating to
any of the foregoing.
"Investment" means with respect to any Person, any investment of such
----------
Person so classified under GAAP, and, whether or not so classified, includes (a)
any loan or advance made by such Person to any other Person, (b) any Guaranty,
and (c) any ownership or similar interest in any other Person; and the amount of
any Investment shall be the original principal or capital amount thereof less
all cash returns of principal or equity thereof (and without adjustment by
reason of the financial condition of such other
9
Person).
"LIBOR" means, with respect to any portion of the outstanding Loans for any
-----
Interest Period therefor, the offered rate per annum for deposits of Dollars for
a period equal to such Interest Period that appears on Telerate Page 3750 as of
11:00 A.M. (London, England time) two Business Days prior to the commencement of
such Interest Period. If no such offered rate exists, the rate in respect of
such Interest Period will be the rate of interest per annum, as determined by
Agent (rounded upwards, if necessary, to the nearest 1/16 of 1%) at which
deposits of Dollars in immediately available and freely transferable funds are
offered at 11:00 A.M. (London, England time) two Business Days prior to the
commencement of such Interest Period by major financial institutions reasonably
satisfactory to Agent in the London interbank market for a period equal to such
Interest Period and for an amount equal or comparable to such portion of the
principal amount of the Loans.
"LIBOR Rate" is defined in Section 3.1.
---------- -----------
"LIBOR Loan" is defined in Section 3.1.
---------- -----------
"Lien" means any security interest, mortgage, pledge, lien, claim, charge,
----
encumbrance of any kind, or any other type of preferential arrangement, title
retention agreement, any easement, right of way or other encumbrance on title to
real property, or lessor's interest under a Capitalized Lease or analogous
instrument.
"Loan" means each of the Revolving Loan, the Purpose Loan or the Term Loan,
----
or any portion thereof, and "Loans" means all of such loans collectively.
-----
"Loan Documents" means this Agreement, the Notes, each Subsidiary Guarantee
--------------
and all other documents, instruments and agreements (including financing
statements and certificates executed and delivered from time to time in
connection with or pursuant to this Agreement).
"Material Adverse Effect" means any change or changes or effect or effects
-----------------------
that individually or in the aggregate are or are reasonably likely to be
materially adverse to (i) the assets, business, operations, income, prospects or
condition (financial or otherwise) of Borrower and its Subsidiaries taken as a
whole, (ii) the Transactions, (iii) the ability of Borrower and its Subsidiaries
to perform their respective obligations under this Agreement, the Notes, and the
other Loan Documents to which they may be parties or (iv) the validity or
enforceability of any of the Loan Documents in any manner that would impair the
practical realization by the Agent or the Lenders of their respective rights,
benefits or remedies under thereof.
"Multiemployer Plan" means a multiemployer plan as defined in Section 3(37)
------------------
or Section 4001(a)(3) of ERISA or Section 414(f) of the Code contributed to by
Borrower or any of its ERISA Affiliates and which is subject to Title IV of
ERISA.
"Net Cash Proceeds" means, with respect to (a) the issuance and sale by the
-----------------
Borrower or any of its Subsidiaries of any of any equity interests or
Indebtedness (other than an issuance of equity by a Subsidiary of Borrower to
Borrower or to another Subsidiary), (b) any sale, lease, transfer or other
voluntary or involuntary disposition of any Property of Borrower or any of its
Subsidiaries (other than sales or other distributions of Inventory in the
ordinary course of business) or (c) any receipt of fire, property, casualty or
similar insurance proceeds or condemnation awards in respect of such Property or
other insurance proceeds received in respect of a loss incurred by Borrower or
any such Subsidiary, the aggregate amount of such cash consideration received by
Borrower or such Subsidiary in connection with such transaction after deduction
of (i) all fees, costs and expenses directly incurred by Borrower or such
Subsidiary in connection therewith, including, but not limited to, underwriting
discount, brokerage or selling commissions, if any, (ii) taxes paid or payable
in connection with such transaction, (iii) in the case of any sale, lease,
transfer or disposition of Property, the amount of Indebtedness secured by such
Property required to be
10
repaid in connection with such transaction, and (iv) the reasonable fees and
disbursements of counsel paid by Borrower or such Subsidiary in connection
therewith.
"Notes" means, collectively, the Term Notes, the Purpose Notes, and the
-----
Revolving Notes.
"Obligations" means all obligations (monetary or otherwise) of Borrower and
-----------
its Subsidiaries to Agent and the Lenders arising under or in connection with
this Agreement, the Notes and each other Loan Document to which any such Person
is or may be a party.
"Officer's Certificate" means with respect to any Person a certificate
---------------------
signed on such Person's behalf by the Chairman of the Board, the President, one
of the Vice Presidents, or the chief financial officer of the specified Person,
in the signer's capacity as such officer.
"Order" means any order, writ, injunction, decree, judgment, award,
-----
determination or written direction or demand of any court, arbitrator or
Governmental Body.
"Packaging" means, with respect to any Inventory, containers, wrapping and
---------
packaging materials used to store or ship such Inventory which does not
constitute a part of the product offered for sale.
"PBGC" means the Pension Benefit Guaranty Corporation, and any successor
----
agency or Governmental Body performing similar functions.
"Pension Plan" means an employee pension benefit plan, as defined in
------------
Section 3(2) of ERISA which is subject to Section 412 of the Code, Section 302
of ERISA or Title IV of ERISA, excluding a Multiemployer Plan, maintained by or
contributed to by Borrower or any of its ERISA Affiliates.
"Percentage" means, with respect to any Lender, the percentage of the
----------
aggregate Commitments of all Lenders represented by the Commitment of such
Lender.
"Permitted Investments" means, (i) marketable obligations issued or fully
---------------------
guaranteed by the United States of America or an instrumentality or agency
thereof maturing within 180 days after acquisition thereof, (ii) open market
commercial paper, maturing within 180 days after acquisition thereof, which has
a credit rating of a minimum of either A-1 by Standard & Poor's Corporation or
P-1 by Xxxxx'x Investors Service, Inc., (iii) U.S. dollar certificates of
deposit, time deposits or bankers acceptances maturing within 180 days after
acquisition thereof, issued or guaranteed by a commercial bank which is a member
of the Federal Reserve System and which has a credit rating of a minimum of
either A-1 by Standard & Poor's Corporation or P-1 by Xxxxx'x Investors Service,
Inc., and has capital and surplus and undivided profits in excess of
$1,000,000,000, and (iv) money market funds which provide for daily liquidation
and are rated not lower than the equivalent of either A-1 by Standard & Poor's
Corporation or P-1 by Xxxxx'x Investors Service, Inc.
"Permitted Liens" is defined in Section 7.8.
--------------- -----------
"Person" means any natural person, corporation, partnership, firm,
------
association, trust, government, governmental agency or any other entity, whether
acting in an individual, fiduciary or other capacity.
"Property" means, with respect to any Person, any interest of such Person
--------
in any kind of property or asset, whether real, personal, or mixed, tangible or
intangible.
"Purpose Loan" is defined in Section 2.2.
------------ -----------
"Purpose Note" is defined in Section 2.2.
------------ ------------
"Required Lenders" means, as of any date of determination, Lenders holding
----------------
Commitments comprising 100% or more of the aggregate Commitments of all of the
Lenders.
11
"Restricted Payment" means, with respect to any Person,
------------------
(a) the declaration or payment of any dividend or other distribution on,
or the incurrence of any liability to make any other payment in respect of,
capital stock or other equity interest of such Person (other than one payable
solely in the same class of capital stock of such Person),
(b) any payment or distribution on account of the purchase, redemption,
defeasance (including in-substance or legal defeasance) or other retirement of
any capital stock of such Person, or of any warrant, option or other right to
acquire such capital stock, or any other payment or distribution made in respect
thereof, and
(c) any payment or distribution by such Person on account of the principal
of or prepayment charge, if any, or interest or other amounts, with respect to
any Indebtedness of Borrower which is subordinated and subject in right of
payment to the prior payment of the Obligations.
The amount of any Restricted Payment made in the form of Property shall be
deemed to be the Fair Market Value of such Property as of the date of such
payment.
"Revolving Commitment Limit" is defined in Section 2.3.
-------------------------- -----------
"Revolving Loan" is defined in Section 2.3.
-------------- -----------
"Revolving Maturity Date" is defined in Section 2.3.
----------------------- -----------
"Revolving Note" is defined in Section 2.3.
-------------- -----------
"SEC" means the United States Securities and Exchange Commission and any
---
other agency or Governmental Body that may hereafter succeed to the functions
thereof.
"Securities Act" means the Securities Act of 1933, as amended, or any
--------------
similar Federal statute then in effect, and a reference to a particular section
thereof shall include a reference to the comparable section, if any, of any such
similar Federal statute.
"Solvent" means, when used with respect to any Person, that (A) the fair
-------
value of the property of such Person is greater than the total amount of
liabilities (including, without limitation, contingent liabilities) of such
Person, (B) the present fair salable value of the assets of such Person is not
less than the amount that will be required to pay the probable liabilities of
such Person on its debts as they become absolute and matured, (C) such Person
does not intend to, and does not believe that it will, incur debts or
liabilities beyond such Person's ability to pay as such debts and liabilities
mature, and (D) such Person is not engaged in business or a transaction, and is
not about to engage in business or a transaction, for which such Person's
property would constitute unreasonably small capital. For such purposes, any
contingent liability (including, but not limited to, pending litigation,
Guaranties, pension plan liabilities and claims for federal, state, local and
foreign taxes, if any) is valued at the amount that, in light of all the facts
and circumstances existing at such time, represents the amount that can
reasonably be expected to become an actual or matured liability.
"Subsidiary" means as to any Person (a) a corporation of which outstanding
----------
shares of stock having ordinary voting power (other than stock having such power
only by reason of the happening of a contingency) to elect a majority of the
Board of Directors of such corporation are at the time owned, directly or
indirectly through one or more intermediaries, or both, by such Person and (b)
any partnership, association, joint venture or other business entity the
controlling interest of which is at the time owned, directly or indirectly
through one or more intermediaries, or both, by such Person.
12
"Subsidiary Guarantee" means a guaranty executed and delivered by a
--------------------
Subsidiary of Borrower pursuant to Section 7.22 in favor of Agent, for the
------------
benefit of the Lenders, substantially in the form of Exhibit J.
---------
"Term Loan" is defined in Section 2.1.
--------- -----------
"Term Note" is defined in Section 2.1.
--------- -----------
"Transactions" means the Loans and the other transactions contemplated by
------------
the Acquisition Agreement.
"UCC" means the Uniform Commercial Code as the same may, from time to time,
---
be in effect in the State of California; provided, however, in the event that,
by reason of mandatory provisions of law, any or all of the attachment,
perfection or priority of Agent's security interest in any Collateral is
governed by the Uniform Commercial Code as in effect in a jurisdiction other
than the State of California, the term "UCC" means the Uniform Commercial Code
as in effect in such other jurisdiction for purposes of the provisions hereof
relating to such attachment, perfection or priority and for purposes of
definitions related to such provisions.
2. CREDIT FACILITIES. Lenders shall provide the following three (3) credit
-----------------
facilities to Borrower (the Term Loan, the Purpose Loan and the Revolving Loan,
each as defined below, are sometimes referred to herein collectively as the
"Facilities" and individually as a "Facility"):
---------- --------
2.1 Term Loan. Lenders agree to provide Borrower with a term loan ("Term
--------- ----
Loan") in the principal amount of up to EIGHTEEN MILLION Dollars ($18,000,000),
----
which Term Loan shall be evidenced by one or more Term Notes, each substantially
in the form of Exhibit A hereto (each a "Term Note" and collectively the "Term
--------- --------- ----
Notes"). Subject to the terms and conditions of this Agreement, the Term Loan
shall be disbursed in a single advance at the Closing. In no event may Borrower
re-borrow any principal portion of the Term Loan that has been repaid. The Term
Loan proceeds shall be applied to pay a portion of the purchase price under the
Acquisition Agreement. Principal shall be payable as provided in Section 3.3,
-----------
and interest shall accrue and be payable as provided in Section 3.1.
-----------
2.2 Purpose Loan. Lenders agree to provide Borrower with an additional
------------
term loan ("Purpose Loan") in the principal amount of SEVEN MILLION Dollars
------------
($7,000,000) which Purpose Loan shall be evidenced by one or more Term Notes,
each substantially in the form of Exhibit B hereto (each a "Purpose Note" and
--------- ------------
collectively the "Purpose Notes"). Subject to the terms and conditions of this
-------------
Agreement, the Purpose Loan shall be disbursed in a single advance on the
Closing Date. In no event may Borrower re-borrow any principal portion of the
Purpose Loan that has been repaid. The Purpose Loan proceeds shall be applied
to pay that portion of the purchase price under the Acquisition Agreement
allocable to certain real property formerly owned and operated by Seller in
connection with the Business commonly known as 000 Xxxxxxxx Xxxx located in
Folsom, California. Principal of the Purpose Loan shall be payable as provided
in Section 3.3, and interest shall accrue and be payable as provided in Section
----------- -------
3.1.
---
2.3 Revolving Loan. Lenders agree to make available to the Borrower a
--------------
revolving line of credit ("Revolving Loan") in the maximum principal amount
----------------
outstanding at any one time of TEN MILLION Dollars ($10,000,000) (the "Revolving
---------
Commitment Limit"), which Revolving Loan shall be evidenced by one or more
----------------
Revolving Notes, each substantially in the form of Exhibit C hereto (each, a
---------
"Revolving Note" and collectively the "Revolving Notes"). Each Revolving Note
--------------
shall be registered in the name of a Lender and shall have a maximum principal
amount equal to such Lender's Commitment. The Revolving Loan shall mature and be
payable in full on April 30, 2001 (the "Revolving Maturity Date") as provided in
-----------------------
Section 3.3, and interest on the Revolving Loan shall accrue and be payable as
-----------
provided in Section 3.1. Borrower may
-----------
13
from time to time repay all or a portion of the amounts outstanding under the
Revolving Loan (together with accrued interest to the date of repayment on the
principal amount so repaid), which amounts may be re-borrowed (subject to the
Available Amount) so long as the Commitment of the Lenders to make Advances
under the Revolving Loan has not been terminated. With respect to each
disbursement of funds under the Revolving Loan (an "Advance"), each Lender is
-------
hereby authorized to record, on its books and records, the date and amount of
such Advance, the duration of each Interest Period therefor and the interest
rate applicable to such Interest Period. The information so recorded by each
Lender shall be conclusive and binding in the absence of manifest error.
Notwithstanding the foregoing, the failure by any Lender to record any such
information shall not impair the liability of Borrower to make any payment of
the Obligations when due. Notwithstanding any other provision of this Agreement,
Borrower shall have a minimum unused Available Amount of not less than
$5,000,000 at the Closing Date after giving effect to the initial Advance and
shall maintain such minimum unused Available Amount for a period of not less
than 30 consecutive days following the Closing Date.
2.4 Borrowing Procedure. Borrower may request an Advance pursuant to
-------------------
written notice or pursuant to telephonic notice confirmed in writing or by
facsimile (each a "Borrowing Request"). Each Borrowing Request shall be made not
-----------------
later than the applicable time and date specified in Section 3.1, and shall
-----------
specify the date and amount of the requested Advance, the initial Interest
Period therefor (in the case of a LIBOR Loan), and whether such Advance is to
bear interest with reference to LIBOR or the Floating Rate for such Interest
Period. All Borrowing Requests and confirmations thereof in writing or by
facsimile must be signed by an officer of Borrower who has been identified in
writing to Agent as an officer authorized to make Borrowing Requests on behalf
of Borrower. If there is any discrepancy between a telephonic notice and the
subsequent written confirmation thereof and Agent has already acted upon the
original telephonic notice, the terms of such telephonic notice shall be
determinative. Borrower indemnifies Agent, each Lender and their respective
officers, employees and agents, and holds each such Person harmless from all
liability, loss, cost and expense in connection with any act resulting from any
Borrowing Request (whether telephonic, written or by facsimile) which is
reasonably believed to have been made by an officer authorized to make Borrowing
Requests on behalf of Borrower. The foregoing indemnification shall survive the
termination of this Agreement.
2.5 Lenders' Records. With respect to each Loan, each Lender is hereby
----------------
authorized to xxxx the date, principal amount, interest rate and Interest Period
(if any) applicable thereto and any payments made thereon on its books and
records (either manually or by electronic entry) and/or on any schedule attached
to the applicable Note, which notations shall be conclusive evidence of the
information marked, in the absence of manifest error.
2.6 Up-front Fee. As an up-front fee for underwriting the Facilities
------------
provided hereunder, Borrower shall pay to Agent on or prior to the Closing Date,
for the ratable benefit of the Lenders, an amount equal to 0.50% of the sum of
the aggregate maximum principal amounts of the Facilities.
2.7 Commitment Fee. Borrower will to pay to Agent, for the ratable
--------------
benefit of the Lenders, an unused commitment fee on a quarterly basis in arrears
(accruing from the Closing Date), in an amount equal to the applicable
percentage set forth below (based upon Borrower's ratio of Funded Debt at the
end of the most recently ended fiscal quarter to EBITDA for the period of four
consecutive fiscal quarters ended on the last day of the most recently ended
fiscal quarter) of the daily average unused portion of the Revolving Commitment
Limit during such quarter:
Funded Debt / EBITDA ratio Commitment Fee
-------------------------- --------------
More than 2.50 0.500%
1.75 or more not more than 2.50 0.375%
Less than 1.75 0.250%
14
3. PAYMENTS OF PRINCIPAL, INTEREST AND OTHER AMOUNTS.
-------------------------------------------------
3.1 Interest. Amounts outstanding under the Loans shall bear interest
--------
based at the rate per annum equal to the sum of the Base Rate from time to time
plus the Applicable Base Rate Margin (the "Floating Rate") or, at Borrower's
election (which election shall not be available at any time when an Event of
Default is continuing) subject to the following provisions of this Section 3.1,
-----------
at the rate per annum equal to the sum of LIBOR plus the Applicable LIBOR Margin
(the "LIBOR Rate"); provided, that following the occurrence and during the
---------- --------
continuance of an Event of Default, all amounts outstanding under each Facility
shall, at the option of Agent, bear interest at the rate per annum equal to the
sum of the Floating Rate (computed at the highest Applicable Base Rate Margin)
plus 2%. A portion of principal outstanding hereunder bearing interest at the
Floating Rate shall be referred to as a "Floating Rate Loan"; and a portion of
------------------
principal outstanding hereunder bearing interest at the LIBOR Rate shall be
referred to as a "LIBOR Loan". With respect to any Floating Rate Loan, any
----------
Advance shall be requested upon at least one (1) Business Day's prior notice
given to the Agent prior to 12:00 noon California time (but Lenders will
consider Advancing, to the extent practicable, Floating Rate Loans on the same
day requested). With respect to any LIBOR Loan, Borrower may, at the end of the
applicable Interest Period (or, subject to Section 3.7, on any other Business
-----------
Day), Convert such loan to a Floating Rate Loan. Borrower may at any time
(subject to the following sentence) Convert a Floating Rate Loan into a LIBOR
Loan. At the time any Advance is requested to which Borrower desires the LIBOR
Rate to be applicable, and/or Borrower wishes to have the LIBOR Rate apply to
all or a portion of the outstanding principal of the Loans, and at the end of
any Interest Period for a LIBOR Loan which Borrower wishes to Continue as a
LIBOR Loan, Borrower shall give Agent notice (which notice shall be delivered
not less than three (3) Business Days prior to the first day of the Interest
Period) specifying (i) the interest rate option selected by Borrower, (ii) the
principal amount to be subject to such interest rate, and (iii) if the LIBOR
Rate is selected, the length of the applicable Interest Period. Any such notice
may be given by telephone so long as, in the case of LIBOR Loans, Agent received
written confirmation of such telephonic notice not later than three (3) Business
Days after such telephonic notice is given. Notwithstanding the foregoing,
Borrower may only request the LIBOR Rate for amounts of principal that are at
least $1,000,000 in the aggregate and integral multiples of $500,000, and no
more than five (5) LIBOR Loans may be outstanding at any time. If, upon any
request to have the LIBOR Rate apply to any portion of the Loans, Borrower does
not immediately accept the LIBOR Rate quoted by Agent, any subsequent acceptance
by Borrower shall be subject to a redetermination of the LIBOR Rate by Agent;
provided that if Borrower fails to accept any such quotation as given, then the
--------
quoted rate shall expire and Agent shall be under no obligation to permit
Borrower to select the LIBOR Rate on such day. With respect to any portion of
the Loans for which the LIBOR Rate has not been duly selected in accordance with
the foregoing provisions of this Section 3.1, Borrower will be deemed to have
-----------
selected the Floating Rate.
3.2 Interest Payments and Computations. Accrued interest on all
----------------------------------
outstanding Floating Rate Loans shall be due and payable on the last Business
Day of each month. Accrued interest on all outstanding LIBOR Loans shall be due
and payable on the last day of the applicable Interest Period, but in no event
later than 90 days following the commencement of such Interest Period. Interest
on LIBOR Loans shall be computed on the basis of a 360-day year and shall be
assessed for the actual number of days elapsed from the first day of the
applicable Interest Period, but excluding the last day of such period. Interest
on each Floating Rate Loan shall be computed on the basis of a 365- or 366-day
year and shall be assessed for the actual number of days elapsed.
3.3 Principal Payments. The outstanding principal of the Loans shall be
------------------
payable as follows:
(a) The principal of the Term Loan shall be payable in equal monthly
installments of $500,000 each, payable on the last Business Day of each month,
and the entire unpaid principal balance of the Term Loan shall be due and
payable on September 30, 2001.
(b) The outstanding principal of the Revolving Loan shall be payable
in full on the
15
Revolving Maturity Date.
(c) The outstanding principal of the Purpose Loan shall be payable in
full upon the first to occur of (i) January 5, 2000 and (ii) 10 days following
the close of escrow for the sale by Borrower of the real property located at 000
Xxxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxx as acquired by Borrower in connection with
the Acquisition.
(d) Not later than 30 days prior to each date on which Borrower or any
of its Subsidiaries is to receive any Net Cash Proceeds which would cause the
aggregate amount of Net Cash Proceeds received by Borrower and its Subsidiaries
during the current fiscal quarter to equal or exceed $250,000 (or promptly upon
becoming aware that any Net Cash Proceeds are to be received, if less than 30
days prior to the anticipated date of receipt), Borrower shall deliver to Agent
an officer's certificate setting forth in reasonable detail a description of the
transaction or event generating such Net Cash Proceeds, and stating the date
such transaction or event is expected to occur and the amount of the Net Cash
Proceeds expected to be received by Borrower or any of its Subsidiaries in
connection therewith. Unless within 30 days after receipt of such notice, Agent
(at the direction of the Required Lenders) shall deliver a written notice to
Borrower declining to accept such Net Cash Proceeds, concurrently with the
receipt by Borrower or any of its Subsidiaries of such Net Cash Proceeds, the
entire amount of such Net Cash Proceeds shall be paid to Agent (for the benefit
of the Lenders) in immediately available funds, together with unpaid interest
accrued on such amount to the date of such payment but without prepayment charge
or premium (it being understood that in the absence of an Event of Default
Borrower shall only be required to offer Net Cash Proceeds to the repayment of
the Obligations to the extent that they exceed $250,000 in any fiscal quarter or
$1,000,000 in any fiscal year). Notwithstanding the foregoing, in the case of
any such receipt of insurance proceeds or condemnation award, Borrower shall
have the option to apply all or any portion of such amount, (A) within 30 days
following the date of receipt thereof (the "Receipt Date") to replace the
------------
Property in respect of which such sums were received or to purchase other
Property to be used in the ordinary course of Borrower's business or (B) to
repair or restore such Property or other Property used in the ordinary course of
Borrower's business; provided, that (1) to the extent that Borrower so elects to
--------
restore or repair Property, it shall commence such repairs or restoration
promptly upon the receipt of insurance proceeds (and in no event later than 30
days after the Receipt Date) and shall diligently pursue at all times thereafter
such repair or restoration, which shall be completed not more than 60 days
following the Receipt Date, (2) pending the application of any such insurance
proceeds or condemnation award pursuant to clause (A) or (B) of this sentence,
any amounts to be so applied shall be retained and invested solely in Permitted
Investments, and (3) any portion of such insurance proceeds or condemnation
award that is not to be so applied shall be paid to Agent in accordance with the
second sentence of this subsection (d).
--------------
(e) Anything herein to the contrary notwithstanding, the aggregate
outstanding principal amount of the Revolving Loan shall not at any time exceed
the Available Amount as from time to time determined (in accordance with the
most recently delivered Borrowing Base Certificate), and no Advance may be
requested unless after giving effect thereto Borrower is in compliance with
foregoing requirement. In the event that the aggregate outstanding principal
amount of the Revolving Loan shall at any time and for any reason (including,
without limitation, a decrease in the amount of the Borrowing Base) exceed the
Available Amount then in effect, Borrower shall, without notice or demand, pay
not later than the Business Day after the date such excess is determined the
amount of such excess to Agent as a prepayment of the principal amount of the
Revolving Loan, together with all unpaid interest accrued on the amount of such
excess to such date but without prepayment charge or premium. Upon any
determination by Borrower that a prepayment of the Revolving Loan is required
pursuant to this Section 3.3(e), Borrower shall immediately notify Agent in
--------------
writing of such determination, specifying the amounts of principal and interest
required to be prepaid hereunder and the date on which such prepayment will
occur.
3.4 LIBOR Lending Unlawful. If any Lender shall determine in its
----------------------
reasonable discretion (which determination shall, upon notice thereof to
Borrower and Agent, be conclusive and binding on Borrower) that the introduction
of or any change in or in the interpretation of any law makes it unlawful, or
any central
16
bank or other Governmental Body asserts that it is unlawful, for such Lender to
make, continue or maintain any loan as, or to convert any loan into, a LIBOR
Loan, the obligations of such Lender to make, continue, maintain or convert any
such loans shall, upon such determination, forthwith be suspended until Lender
shall notify Borrower and Agent that the circumstances causing such suspension
no longer exist, and all LIBOR Loans shall automatically convert into Floating
Rate Loans at the end of the then current Interest Periods with respect thereto
or sooner, if required by such law or assertion.
3.5 Deposits Unavailable. If any Lender shall have determined in its
--------------------
reasonable discretion that by reason of circumstances affecting such Lender's
relevant market, adequate means do not exist for ascertaining the interest rate
applicable hereunder to LIBOR Loans, then, upon notice from such Lender to
Borrower, the obligations of such Lender to make or continue any loans as, or to
convert any loans into, LIBOR Loans shall forthwith be suspended until such
Lender shall notify Borrower and Agent that the circumstances causing such
suspension no longer exist.
3.6 Increased LIBOR Loan Costs, etc. Borrower agrees to reimburse each
-------------------------------
Lender for any increase in the cost to such Lender of, or any reduction in the
amount of any sum receivable by such Lender in respect of, making, continuing or
maintaining (or of its obligation to make, continue or maintain) any loans as,
or of converting (or of its obligation to convert) any loans into, LIBOR Loans.
Each Lender shall promptly notify Borrower and Agent in writing upon the earlier
of (i) Lender's determination that any such event is likely to occur and (ii)
the occurrence of any such event, which notice shall state, in reasonable
detail, the reasons therefor and the additional amount required fully to
compensate such Lender for such increased cost or reduced amount. Such
additional amounts shall be payable by Borrower directly to such Lender within
five days of its receipt of such notice, and such notice shall, in the absence
of manifest error, be conclusive and binding on Borrower.
3.7 Funding Losses. In the event that any Lender shall incur any loss or
--------------
expense (including any loss or expense incurred by reason of the liquidation or
reemployment of deposits or other funds acquired by such Lender to make,
Continue or maintain any portion of the principal amount of any loan as, or to
convert any portion of the principal amount of any loan into, a LIBOR Loan) as a
result of (a) any Conversion or repayment or prepayment of the principal amount
of any LIBOR Loan on a date other than the scheduled last day of the Interest
Period applicable thereto, for any reason, or (b) any loans not being made as
LIBOR Loans in accordance with Borrower's request therefor; then, upon the
written notice of such Lender to Borrower and Agent, Borrower shall, within five
days of its receipt thereof, pay directly to such Lender such amount as will (in
such Lender's reasonable determination) reimburse such Lender for such loss or
expense. Such written notice (which shall include calculations in reasonable
detail) shall, in the absence of manifest error, be conclusive and binding on
Borrower.
3.8 Direct Debit Authorization. Agent is hereby authorized, but shall not
--------------------------
be required, to deduct automatically from Borrower's account number 1891120121
maintained at Comerica Bank-California, scheduled payments of principal of and
interest on the Loans as and when the same shall become due and payable.
4. PLEDGE OF COLLATERAL.
--------------------
4.1 Grant of Security Interest. As collateral security for the prompt and
--------------------------
complete payment and performance when due (whether at stated maturity, by
acceleration or otherwise) of all the Obligations, Borrower hereby assigns,
conveys, mortgages, pledges, hypothecates and transfers to Agent, for the
benefit of the Lenders, a security interest in all of Borrower's right, title
and interest in, to and under the following, wherever located, whether now or
hereafter owned, existing or acquired (collectively, the "Collateral"):
----------
(a) all Inventory;
17
(b) all Accounts;
(c) all Chattel Paper and Instruments;
(d) all Documents;
(e) all Equipment;
(f) all General Intangibles (including, without limitation,
Intellectual Property);
(g) any and all balances, credits, deposits, accounts or moneys of or
in its name in the possession or control of, or in transit to, Agent or any
other financial institution (including, without limitation, the Deposit Account
and all sums on deposit therein from time to time and all securities,
instruments and accounts in which such sums are invested from time to time);
(h) all other rights to the payment of money, including, without
limitation, amounts due from any Person, amounts due from any shareholder, tax
refunds and insurance proceeds;
(i) all other goods and personal property of Borrower whether
tangible or intangible or whether now owned or hereafter acquired by Borrower
and wherever located;
(j) all books, correspondence, credit files, records, invoices, bills
of lading and other documents relating to any of the foregoing, including,
without limitation, all tapes, cards, computer runs, ledgers and other papers
and documents in the possession or control of Borrower or any computer bureau
from time to time acting for Borrower;
(k) all rights in, to and under all policies insuring the life of any
officer, director, stockholder or employee of Borrower; and
(l) all accessions to, substitutions for, and replacements, proceeds
and products of any of the foregoing, including, without limitation, all rights
in, to and under all policies of insurance, including, without limitation,
claims or rights to payments thereunder and proceeds therefrom, and any credit
insurance.
4.2 Agent as Attorney-in-Fact.
-------------------------
(a) Borrower hereby irrevocably constitutes and appoints Agent and any
officer or agent thereof, with full power of substitution, as its true and
lawful attorney-in-fact with full irrevocable power and authority in the place
and stead of Borrower and in the name of Borrower or in its own name, without
notice to or assent by Borrower, to do the following:
(i) upon the occurrence and during the continuation of an Event of
Default, to ask, demand, collect, receive and give acquittances and
receipts for any and all moneys due and to become due under any Collateral
and, in the name of Borrower or its own name or otherwise, to take
possession of and endorse and collect any checks, drafts, notes,
acceptances or other Instruments for the payment of moneys due under any
Collateral and to file any claim or to take any other action or proceeding
in any court of law or equity or otherwise deemed appropriate by Borrower
for the purpose of collecting any and all such moneys due under any
Collateral whenever payable;
(ii) upon the occurrence and during the continuation of an Event of
Default, to pay or discharge taxes or Liens levied or placed on or
threatened against the Collateral, to effect any repairs or any insurance
called for by the terms of this Agreement and to pay all or any part of the
18
premiums therefor and the costs thereof;
(iii) upon the occurrence and during the continuation of an Event of
Default, (A) to direct any party liable for any payment under any of the
Collateral to make payment of any and all moneys due, and to become due
thereunder, directly to Agent or as Agent shall direct; (B) to receive
payment of and receipt for any and all moneys, claims and other amounts
due, and to become due at any time, in respect of or arising out of any
Collateral; (C) to sign and endorse any invoices, freight or express bills,
bills of lading, storage or warehouse receipts, drafts against debtors,
assignments, verifications and notices in connection with Accounts and
other Documents constituting or relating to the Collateral; (D) to settle
and adjust any claims under all policies of insurance covering the
Collateral; (E) to commence and prosecute any suits, actions or proceedings
at law or in equity in any court of competent jurisdiction to collect the
Collateral or any part thereof and to enforce any other right in respect of
any Collateral; (F) to defend any suit, action or proceeding brought
against Borrower with respect to any Collateral; (G) to settle, compromise
or adjust any suit, action or proceeding described above and, in connection
therewith, to give such discharges or releases as Agent may deem
appropriate; (H) to license or, to the extent permitted by an applicable
license, sublicense, whether general, special or otherwise, and whether on
an exclusive or non-exclusive basis, any patent, copyright or trademark,
throughout the world for such term or terms, on such conditions, and in
such manner, as Agent shall in its sole discretion determine; (I) to
receive and open Borrower's mail, and to appropriate therefrom any payment
in respect of Accounts or otherwise constituting Collateral and apply the
same to the Obligations (in furtherance of which Agent shall be entitled to
direct any party, including the U.S. Postal Service, to send Borrower's
mail to Agent) and (K) generally to sell, transfer, pledge, make any
agreement with respect or otherwise deal with any of the Collateral as
fully and completely as though Agent were the absolute owner thereof for
all purposes, and to do, at Agent's option, at any time, or from time to
time, all acts and things which Agent reasonably deems necessary to
protect, preserve or realize upon the Collateral and Agent's Lien therein,
in order to effect the intent of this Agreement, all as fully and
effectively as Borrower might do; and
(iv) at any time and from time to time, to take any and all
appropriate action and to execute and deliver any and all documents and
instruments which may be necessary or desirable to perfect or maintain
Agent's Liens against any of the Collateral.
(b) Borrower hereby ratifies, to the extent permitted by law, all
that said attorneys shall lawfully do or cause to be done by virtue hereof,
except for their respective gross negligence or willful misconduct and for
failure to exercise reasonable care with respect to any Collateral under their
respective possession or control. The power of attorney granted pursuant to this
Section 4.3 is a power coupled with an interest and shall be irrevocable until
-----------
the Obligations are indefeasibly paid in full.
(c) The powers conferred on Agent hereunder are solely to protect
Agent's interests in the Collateral and shall not impose any duty upon Agent to
exercise any such powers. Agent shall be accountable only for amounts that it
actually receives as a result of the exercise of such powers and neither it nor
any of its officers, directors, employees or agents shall be responsible to
Borrower for any act or failure to act, except for its or their respective gross
negligence or willful misconduct and for failure to exercise reasonable care
with respect to any Collateral under its or their respective possession or
control.
(d) Borrower also authorizes Agent, at any time and from time to time
upon the occurrence and during the continuation of any Event of Default, (i) to
communicate in its own name with any party to any Contract with regard to the
assignment of the right, title and interest of Borrower in and under the
Contracts hereunder and other matters relating thereto and (ii) to execute, in
connection with the sale provided for in Section 8.3, any endorsements,
-----------
assignments or other instruments of conveyance or transfer with respect to the
Collateral.
19
4.3 Performance of Borrower's Obligations. If Borrower fails to perform or
-------------------------------------
comply with any of its agreements contained herein and Agent, as provided for by
the terms of this Agreement, shall itself perform or comply, or otherwise cause
performance or compliance, with such agreement, the reasonable expenses of Agent
incurred in connection with such performance or compliance, together with
interest thereon at the rate then in effect in respect of the Loans, shall be
payable by Borrower to Agent on demand and shall constitute Obligations secured
hereby.
5. CONDITIONS PRECEDENT.
--------------------
5.1 Initial Borrowing. The obligations of the Lenders to disburse the Term
-----------------
Loan, to make the initial loan under the Purpose Line and to make the initial
Advance under the Revolving Loan are subject to the fulfillment, to the
satisfaction of Agent, the Lenders and their counsel, of each of the following
conditions:
(a) Proceedings Satisfactory; Due Diligence. All corporate and other
---------------------------------------
proceedings taken or to be taken in connection with the transactions
contemplated hereby and all documents incident thereto shall be reasonably
satisfactory in form and substance to Agent and its counsel, and Lenders and
their counsel shall have received all such counterpart originals or certified or
other copies of such documents as they may reasonably request. Agent shall have
completed its due diligence review of Borrower and the Collateral (including,
without limitation, the status of any litigation), the results of which shall be
satisfactory to Agent in all respects. Agent shall have received appraisals to
its satisfaction of all inventory and other Property of Borrower, including all
Property being acquired by Borrower pursuant to the Acquisition. In addition,
Agent shall have received a statement of the sources and uses of all funds being
transferred on the Closing Date in connection with the Transaction, all in
reasonable detail and satisfactory to Agent.
(b) Delivery of Notes. There shall have been delivered to each Lender
-----------------
such Lender's respective Term Note, Purpose Note and Revolving Note, each duly
executed by Borrower and dated the Closing Date, in the respective principal
amounts, having the required maturity date and as otherwise provided herein.
(c) Opinion of Borrower's Counsel. Agent and the Lenders shall have
-----------------------------
received from Xxxxxxxxx Xxxxx Xxxxxxx & Xxxxx, counsel for Borrower, legal
opinions addressed to Agent and the Lenders and dated the Closing Date
substantially to the effect of the matters set forth in Exhibit D. Agent and
---------
the Lenders shall also have received such opinions of local or special counsel
as they may reasonably request.
(d) Initial Borrowing Base Certificate. Prior to the Closing Date,
----------------------------------
Borrower shall have delivered to Agent a duly completed and executed Borrowing
Base Certificate and Accounts Trial Balance as at September 27, 1998,
satisfactory in form and substance to Agent. Agent shall be satisfied that
Borrower will have, after giving effect to the Transactions, an unused Available
Amount of not less than $5,000,000.
(e) Representations and Warranties True, Etc.; Certificates. The
-------------------------------------------------------
representations and warranties contained in Section 6 and elsewhere in this
---------
Agreement and the representations and warranties contained in the other Loan
Documents shall be true in all material respects on and as of the Closing Date
with the same effect as if such representations and warranties had been made on
and as of the Closing Date, except that any such representation or warranty
which is expressly made only as of a specified date need be true only as of such
date. Borrower shall have performed all material agreements on its part
required to be performed under this Agreement and the other Loan Documents on or
prior to the Closing Date; there shall exist on the Closing Date no Default or
Event of Default; Borrower shall have delivered to Agent an officer's
certificate, dated the Closing Date, to such effect and to the effects specified
in subsections (f), (g), (h) and (i) below, inclusive; and Agent shall have
received such certificates or other
20
evidence as Agent may request to establish that the proceeds of the Loans made
on the Closing Date will be applied as contemplated by this Agreement.
(f) Acquisition and Other Transactions. Concurrently with the
----------------------------------
disbursement of the Loans, the Acquisition shall have been duly consummated in
accordance with the provisions of the Acquisition Agreement, and the Acquisition
shall become effective in accordance with the provisions of the Acquisition
Agreement, and Agent and the Lenders shall have received such certificates,
opinions and other evidence with respect to the foregoing as they shall request.
(g) Absence of Material Adverse Effect, Etc. Since December 28,
----------------------------------------
1997, except as disclosed in Borrower's periodic reports filed with the SEC, no
change or changes shall have occurred to the business, operations, Properties,
assets, income, prospects or condition, financial or otherwise, of Borrower
which Agent reasonably believes constitutes or is likely to have a Material
Adverse Effect.
(h) Consents and Approvals. All necessary consents, approvals and
----------------------
authorizations of, and declarations, registrations and filings with,
Governmental Bodies and nongovernmental Persons required in order to consummate
the Acquisition, the Loans and the other Transactions shall have been obtained
or made and shall be in full force and effect.
(i) Absence of Litigation, Orders, Etc. Except as disclosed on
-----------------------------------
Schedule 6.7, there shall not be pending or, to the knowledge of Borrower,
------------
threatened, any action, suit, proceeding, governmental investigation or
arbitration against or affecting Borrower or the respective assets or Property
of any of such Persons which seeks to enjoin or restrain any of the Transactions
or which Agent reasonably believes in good faith is likely to have a Material
Adverse Effect. No Order of any court, arbitrator or Governmental Body shall be
in effect which purports to enjoin or restrain any of the Transactions or which
Agent reasonably believes in good faith constitutes or is likely to have a
Material Adverse Effect.
(j) Deposit Account. Borrower shall have established a deposit
---------------
account with Agent (the "Deposit Account"), and Borrower shall have supplied
---------------
Agent with evidence of the filing of the appropriate financing statements and
other documents under the provisions of the UCC or under applicable foreign,
domestic or local laws, rules or regulations in each of the offices where such
filing is necessary or appropriate, and shall have taken all other action as may
be necessary or appropriate to grant Agent valid, enforceable, first priority
perfected Liens in the Deposit Account.
(k) Financing Statements; Assignments. On or prior to the Closing
---------------------------------
Date, Borrower shall have duly executed, delivered, and caused to be filed (or
permitted Agent to file) UCC financing statements identifying Borrower as
"debtor" and Agent, for the benefit of the Lenders, as "secured party" and
containing an adequate description of the Collateral, in all places deemed
necessary or desirable by Agent in order to perfect the security interest
granted pursuant to this Agreement. Borrower shall have executed and delivered
to Agent a Copyright Mortgage substantially in the form of Exhibit F, a
---------
Trademark Security Agreement substantially in the form of Exhibit G and a Patent
---------
Security Agreement substantially in the form of Exhibit H, in each case to the
---------
extent applicable to Borrower's Intellectual Property. In addition, Agent shall
have received such other assignments, endorsements and instruments as may be
necessary to perfect Agent's security interest in any Collateral).
(l) Constituent Documents. Agent shall have received copies of (i)
---------------------
the Articles or Certificate of incorporation of Borrower, certified as of a
recent date by the Secretary of State of the State of its incorporation, and
(ii) Borrower's By-Laws certified as of the Closing Date by the Secretary of
Borrower.
(m) Resolutions; Incumbency. Agent shall have received certified
-----------------------
resolutions of the Board of Directors of Borrower with respect to this Agreement
and the other Loan Documents, together with a certificate identifying Borrower's
incumbent President, Chief Executive Officer and Chief Financial Officer and
setting for specimen signatures of such officers.
21
(n) Borrowing Request. Agent shall have received a Borrowing Request
-----------------
conforming to the requirements of Section 2.4.
-----------
(o) Discharge and Release of Other Obligations. Agent shall have
------------------------------------------
received evidence to its satisfaction that all existing Indebtedness and Liens
of Borrower that are not permitted to remain outstanding pursuant to Section 7.7
-----------
or Section 7.8 have been repaid, terminated and discharged.
-----------
(p) Fees Payable at Closing. Borrower shall have paid (i) Agent's
-----------------------
initial administrative fee as set forth in that certain letter agreement between
Borrower and Agent and (ii) the fees of Agent's counsel for the legal fees and
expenses incurred in their representation of Agent in connection with the
preparation and negotiation of this Agreement and the other Loan Documents and
the consummation of transactions contemplated hereby, to the extent invoiced in
reasonable detail at least two (2) days prior to the Closing Date.
(q) Insurance. Agent shall have received policies or certificates of
---------
insurance satisfactory to Agent demonstrating that Borrower has obtained
insurance as required by this Agreement.
(r) Syndication of Loans. Agent shall have received commitments from
--------------------
Lenders in aggregate amounts sufficient to fund the maximum principal amount of
the Facilities.
5.2 Subsequent Borrowings. The obligation of Lenders to make any Advance
---------------------
hereunder is further subject to the fulfillment, to the satisfaction of Agent,
the Lenders and their counsel, of each of the following conditions:
(a) Compliance with Warranties, No Default, etc. Both before and
-------------------------------------------
after giving effect to any Advance, (i) each of the representations and
warranties set forth in Section 6 shall be true and correct in all material
---------
respects with the same effect as if then made, except that any such
representation or warranty which is expressly made only as of a specified date
need be true only as of such date, (ii) there shall exist no Default or Event of
Default, and (iii) no condition shall exist and no event shall have occurred
which has had or could have a Material Adverse Effect.
(b) Borrowing Request. Agent shall have received a Borrowing Request
-----------------
conforming to the requirements of Section 2.4. The delivery of each Borrowing
-----------
Request shall constitute a representation and warranty by Borrower that on the
date of such Advance (both immediately before and after giving effect to such
Advance) the statements made in the foregoing subsection (a) are true and
correct.
(c) Available Amount Not Exceeded. The aggregate outstanding
-----------------------------
principal amount of the Revolving Loan, after giving effect to such Advance,
shall not exceed the Available Amount.
(d) Satisfactory Legal Form. All documents executed or submitted
-----------------------
pursuant hereto by or on behalf of Borrower shall be satisfactory in form and
substance to Agent, the Lenders and their counsel; Agent, the Lenders and their
counsel shall have received all information, approvals, opinions, documents or
instruments as they may reasonably request.
6. REPRESENTATIONS AND WARRANTIES. Borrower hereby makes the following
------------------------------
representations and warranties to Agent and each Lender, it being understood
that for purposes of this Section 6 all references to Property of Borrower shall
be deemed to include any Property being acquired by Borrower in connection with
the Acquisition.
6.1 Existence and Authority. Borrower and each of its Subsidiaries (a) is
-----------------------
a corporation duly
22
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization and is duly qualified to do business in each
additional jurisdiction where the failure to so qualify would have a Material
Adverse Effect and (b) has all requisite power to own its Properties and to
carry on its business as now being conducted and as proposed to be conducted,
and to execute, deliver and perform its obligations under this Agreement and the
other Loan Documents to which it is a party to execute, issue, sell, deliver and
perform its obligations under the Notes (in the case of Borrower) and to engage
in the respective transactions contemplated by this Agreement and the Loan
Documents to which it is a party.
6.2 Authorization. The execution, delivery and performance by Borrower
-------------
and its Subsidiaries of this Agreement, the Notes and the Loan Documents to
which it is a party, are within its powers and have been duly authorized by all
necessary corporate action.
6.3 Binding Effect. This Agreement and the Loan Documents to which
--------------
Borrower and each of its Subsidiaries is a party are the legal, valid and
binding obligations of Borrower or such Subsidiary (as the case may be), and the
Notes when issued and delivered against payment therefor as herein provided will
be the legal, valid and binding obligations of Borrower and each of its
Subsidiaries, enforceable in accordance with their respective terms, except, in
each case, as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, or other laws relative to or affecting
the enforcement of creditors' rights generally in effect from time to time and
by general principles of equity.
6.4 Ownership Interests. Except as set forth on Schedule 6.4A, Borrower
------------------- -------------
will not have outstanding any equity or ownership interests or other securities
convertible into or exchangeable for any of its equity or ownership interests,
nor will there be outstanding any rights to subscribe for or to purchase, or any
options or warrants for the purchase of, or any agreements (contingent or
otherwise) providing for the issuance of, or any calls, commitments or claims of
any character relating to, any of its equity or ownership interests or any
securities convertible into or exchangeable for any of its equity or ownership
interests. After giving effect to the Transactions, Borrower will not be subject
to any obligation (contingent or otherwise) to repurchase or otherwise acquire
or retire any of its equity interests.
6.5 Business Operations and Other Information; Financial Condition.
--------------------------------------------------------------
(a) Borrower has delivered to Agent and the Lenders true and complete
copies of (i) the audited consolidated balance sheets of Borrower as of December
29, 1996 and December 28, 1997, and the related audited statements of operations
and earnings (or deficit) and cash flows for each of the fiscal years then
ended, together with the notes thereto and the reports thereon of Deloitte &
Touche, LLP (the "Audited Financial Statements"), and (ii) the unaudited balance
----------------------------
sheets of Borrower as of March 29 and June 28, 1998, and the respective related
unaudited statements of operations and earnings and cash flows for the portions
of Borrower's fiscal year then ended (the "Unaudited Financial Statements" which
------------------------------
Audited Financial Statements and Unaudited Financial Statements are true and
correct; the Audited Financial Statements and the Unaudited Financial Statements
are sometimes hereinafter collectively referred to as the "Financial
---------
Statements"). True and complete copies of the Financial Statements are attached
hereto as Schedule 6.5A. The Financial Statements have been prepared in
-------------
accordance with GAAP (except as noted thereon) consistently applied throughout
the periods involved, and present fairly, in all material respects, the
financial position of Borrower as at each of the dates of the balance sheets
contained therein and the respective results of operations and cash flows of
Borrower for each of the respective periods then ended, subject, in the case of
the Unaudited Financial Statements, to non-material year-end audit adjustments
and absence of the notes required by GAAP. As of the date of each of the
balance sheets included in the Financial Statement Borrower had no Indebtedness
or liability, absolute or contingent, liquidated or unliquidated, except
Indebtedness and liabilities reflected or reserved against on such respective
balance sheets or described in the notes thereto.
(b) Except as contemplated herein or in the Loan Documents, or as
disclosed in Schedule 6.5B or in Borrower's periodic reports filed with the SEC,
-------------
since December 28, 1997, Borrower has not:
23
(1) written off or been required by GAAP to write off any Accounts or
Inventory other than in the ordinary course of business in
accordance with its past practices; or
(2) suffered any Material Adverse Effect or any event or condition
which could reasonably be expected to result in a Material
Adverse Effect.
(c) Borrower has delivered to Agent and the Lenders its latest (as of
the Closing Date) projections of the income and cash flow (assuming completion
of the Transactions) for fiscal year 1999. Such projections have been prepared
in good faith by management of Borrower on the basis of assumptions, set forth
therein, which such management reasonably believes are fair and reasonable in
light of the historical financial performance of Borrower and the Business and
of current and reasonably foreseeable business conditions.
(d) Borrower has delivered to Agent and the Lenders a pro forma
balance sheet for Borrower as at the Closing Date after giving effect to the
Transactions, prepared by Borrower in good faith on the basis of the historical
balance sheets of Borrower as of September 30, 1998, and the historical
financial performance of the Business (the "Pro Forma Balance Sheet"). The Pro
-----------------------
Forma Balance Sheet fairly presents in all material respects the consolidated
financial position of Borrower as of the close of business on such date on a pro
forma basis after giving effect to the Transactions, and contains all pro forma
adjustments necessary in order to fairly reflect such assumption.
6.6 Subsidiaries. Except as set forth on Schedule 6.6, Borrower does not
------------ ------------
have (a) any Subsidiaries or (b) any capital stock or other equity interest in
any other Person or any option, warrant or right to purchase or acquire any such
capital stock or other equity interest. None of Borrower's Subsidiaries owns any
material assets or conducts any material business.
6.7 Litigation; No Violation of Governmental Orders or Laws.
-------------------------------------------------------
(a) Except as set forth in Schedule 6.7(a), there are no actions,
---------------
suits or proceedings pending, or, to the best knowledge of Borrower after due
inquiry, threatened against or affecting Borrower and each of its Subsidiaries
or against any officer or director of Borrower and each of its Subsidiaries
which is reasonably likely to individually or in the aggregate, a Material
Adverse Effect; or which seek to enjoin, or otherwise prevent the consummation
of, any of the Transactions in any court or before any arbitrator of any kind or
before or by any Governmental Body.
(b) Except as set forth in Schedule 6.7(b), Borrower and each of its
---------------
Subsidiaries will not be, after or as a result of giving effect to the
Transactions, in default under or in violation of any Order of any court,
arbitrator or Governmental Body or any statute or law or any rule or regulation
of any Governmental Body, which default or violation has or might have a
Material Adverse Effect; and none of them is subject to or a party to any Order
of any court or Governmental Body arising out of any action, suit or proceeding
under any statute or other law respecting antitrust, monopoly, restraint of
trade, unfair competition or similar matters.
6.8 Outstanding Indebtedness; Investments.
-------------------------------------
(a) Schedule 6.8A sets forth a correct and complete list and
-------------
description of each item of Indebtedness in excess $100,000 of Borrower and all
Liens securing such Indebtedness, now outstanding or existing, or which will be
outstanding or existing on the Closing Date after giving effect to the
Transactions.
(b) Schedule 6.8B sets forth a correct and complete list of each item
-------------
of Investments of
24
Borrower which is now outstanding or existing, or which will be outstanding or
existing on the Closing Date after giving effect to the Transactions.
6.9 Consents, etc. No consent, approval or authorization of or
--------------
declaration, registration or filing with any Governmental Body or any
nongovernmental Person (including, without limitation, any creditor or
stockholder of Borrower, and also including, without limitation, any consent,
approval, authorization, declaration or filing or the expiration of any waiting
period under the Xxxx-Xxxxx-Xxxxxx Anti-Trust Improvements Act of 1976, as
amended) is required in connection with the execution or delivery of this
Agreement, the Notes or any of the other Loan Documents by the respective
parties thereto or the performance by such parties of their respective
obligations thereunder, or in connection with the consummation of the
Transactions hereunder, or as a condition to the legality, validity or
enforceability of this Agreement, the Notes or any of the other Loan Documents,
except for such consents, approvals, authorizations, declarations, registrations
or filings as are listed in Schedule 6.9, all of which have been or will on or
------------
prior to the Closing Date be obtained and are or will then be in full force and
effect. The Acquisition is exempt from all applicable bulk sale and bulk
transfer laws.
6.10 Title to Properties.
-------------------
(a) Borrower and each of its Subsidiaries has (i) good and marketable
fee simple title to its respective real Properties (other than real Properties
which are leased from others), subject to no Lien of any kind except Liens
permitted by Section 7.8 and (ii) good title to all of its Equipment and other
-----------
personal Property and assets (other than Properties and assets leased from
others), subject to no Lien of any kind except Liens permitted by Section 7.8.
-----------
Schedule 6.10(a) sets forth a true and complete list and brief description of
----------------
all real Property owned or leased by Borrower and each of its Subsidiaries on
the Closing Date (after giving effect to the Acquisition), together with a true
and complete list of all leases of real Property to which Borrower and each of
its Subsidiaries is a party, identifying the parties to each such lease and the
Property to which it relates. True and complete copies of all such leases,
together with all amendments, modifications and supplements thereto to the date
hereof, have been delivered to Agent. Borrower and each of its Subsidiaries
enjoys peaceful and undisturbed possession under all such leases to which it is
a party, none of which contains any unusual or burdensome provisions which might
reasonably be expected to have a Material Adverse Effect, and all such leases
are valid and subsisting and in full force and effect. Borrower and each of its
Subsidiaries are not in breach or violation of the terms of any of such leases
(except for such breaches and violations as could not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect), and after
due inquiry Borrower knows of no breach or violation of any of such leases by
any party other than Borrower and each of its Subsidiaries. None of the
personal Property owned or to be owned by Borrower or any such Subsidiary is
located or stored on sites other than those listed on Schedule 6.10(a). Except
----------------
as set forth in Schedule 6.10(a), as of the Closing Date the tangible Properties
----------------
of Borrower are and will be reasonably fit for the use for which they are being
put by each of such Persons in the ordinary course of its business and are in
reasonably sufficient and satisfactory condition to operate the business of each
of such Persons as presently conducted except for such tangible Properties with
respect to which the failure to be so fit or to be in such condition could not
reasonably be expected to give rise to a Material Adverse Effect. Schedule
--------
6.10(a) also contains a true, complete and correct list and brief descriptions
-------
of all items of Equipment having a value of $10,000 or more owned or leased by
each of such Persons on the Closing Date.
(b) Except as disclosed in Schedule 6.10(b), the real Property of
----------------
Borrower is not in violation of any law or any building, zoning or other
ordinance, code, rule, order, requirement or regulation, except for violations
which, individually and in the aggregate, would not have a Material Adverse
Effect; all licenses and certificates of occupancy which are material to the
ownership or operation of such real Property have been obtained and are usable
by such respective Persons, and are transferable, if necessary, or consent to
such transfer will be obtained before the Closing Date (without cost or penalty
to Agent); and there is no pending or, to the best knowledge of Borrower after
due inquiry, threatened litigation, administrative action or examination, claim
or demand relating to such real Property.
25
6.11 Taxes. Except as disclosed on Schedule 6.11, as of the Closing Date
----- -------------
Borrower and each of its Subsidiaries, and each Person required to file any tax
or informational return in respect of any consolidated group of which any of
them is or has been a member, as the case may be, has prepared and timely filed
or on behalf of each of such Persons there have been filed, all required
federal, state, local and foreign tax returns which are required to have been
filed by or on behalf of such Persons, which returns were prepared on a basis
consistent with its financial records and all taxes shown thereon to be due have
been timely paid in full. To the best of Borrower's knowledge, as of the Closing
Date no tax liens have been filed and no claims are being asserted with respect
to any such taxes. Except as disclosed on Schedule 6.11, as of the Closing Date
-------------
no tax assessment against any such Person has been proposed and all of their
respective tax liabilities are adequately provided for on their respective books
and financial statements in accordance with GAAP.
6.12 No Conflicts with Agreements, Etc. Neither the execution and
----------------------------------
delivery of this Agreement, the Notes or any other Loan Document nor the
fulfillment of or compliance with the terms and provisions hereof or thereof,
will conflict with, or result in a breach or violation of any of the terms,
conditions or provisions of, or constitute a default under, the charter or by-
laws of Borrower or any contract, agreement, mortgage, indenture, lease,
instrument, Order, statute, law, rule or regulation to which any of them or any
of their respective assets is subject, or (except pursuant to the Loan
Documents) result in the creation of any Lien on any Properties of Borrower and
each of its Subsidiaries, which conflict, breach, violations, defaults or Liens,
could reasonably be expected to have a Material Adverse Effect, or require for
its validity any authorization, consent, approval, exemption or other action by
or notice to any Governmental Body or any of the equity holders of any of them,
except for such authorizations, consents, approvals, exemptions or other actions
as have been taken or obtained prior to or on the Closing Date and are in full
force and effect on such date. Neither Borrower nor any of its Subsidiaries is
in violation of, or in default under, any (i) Order, law or administrative
regulation binding upon it or any of its Properties or (ii) any contract,
mortgage, indenture, lease, instrument or agreement binding upon it or any of
its Properties, which breach, conflict, violation or default could reasonably be
expected to have, individually or in the aggregate with all other such breaches,
conflicts, violations and defaults, a Material Adverse Effect.
6.13 Related Documents. Borrower has delivered to Agent and its counsel
-----------------
true and correct copies of the Acquisition Agreement and each of the other
documents executed and delivered in connection therewith (including all Exhibits
and Schedules thereto) as now in effect, including all amendments, modifications
and supplements thereto, and of each document, certificate or statement required
to be executed or delivered by any party thereunder (there being no amendments
or modifications to the Acquisition Agreement or any of such other documents,
and no waiver of any rights thereunder by Borrower, nor of any condition to the
obligations of Borrower under any thereof, except as heretofore disclosed to
Agent in writing).
6.14 Disclosure. Neither this Agreement nor any other document,
----------
certificate or statement furnished to Agent in writing by or on behalf of
Borrower and each of its Subsidiaries in connection herewith, including the
Acquisition Agreement, contained, as of its respective date, or now contains,
any untrue statement of a material fact or as of any such date omitted, or now
omits, to state a material fact necessary in order to make the statements
contained herein and therein not misleading. There is no fact known to Borrower
(other than matters disclosed in Borrower's annual and quarterly reports filed
with the SEC pursuant to the Exchange Act and matters of a general economic or
political nature) which now has or could reasonably be expected to have a
Material Adverse Effect.
6.15 Broker's or Finder's Commissions. Except as set forth on Schedule
--------------------------------
6.15, no broker's or finder's fee or commission will be payable by Borrower with
respect to any of the Transactions. Borrower agrees to indemnify Agent and hold
Agent harmless against any loss, cost, claim or liability (including, without
limitation, reasonable attorneys' fees and disbursements for the investigation
and defense of claims) arising out of or relating to any such actual or alleged
fee or commission.
26
6.16 Labor Matters.
-------------
(a) Borrower and each of its Subsidiaries is in compliance with all
applicable laws respecting employment and employment practices, terms and
conditions of employment and wages and hours (except for such instances of non-
compliance as could not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect), and none of such Persons is engaged in
any unlawful labor or employment practice nor has received any notice of a
complaint, charge or allegation to the contrary (except for such instances of
the foregoing description as could not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect). There is no labor
strike, dispute, slowdown or work stoppage pending or, to Borrower's best
knowledge after due inquiry, threatened against or affecting Borrower and each
of its Subsidiaries. No material grievance or arbitration proceeding arising
out of or under any collective bargaining agreement to which Borrower and each
of its Subsidiaries is a party or subject is pending. To Borrower's best
knowledge after due inquiry, no present or former employee of Borrower and each
of its Subsidiaries has any claim for wrongful discharge (except for such claims
as could not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect).
(b) During the five year period ending on the Closing Date, no present
or former employee or independent contractor of Borrower and each of its
Subsidiaries has any pending or threatened claim for (A) overtime pay, other
than overtime pay for the current period; (B) wages, salaries or profit sharing
(excluding wages, salaries or profit sharing for the current payroll period);
(C) vacations, time off or pay in lieu of vacation or time off, other than
vacation or time off (or pay in lieu thereof) earned in respect of the
employer's current fiscal year; (D) any violation of any statute, ordinance,
contract or regulation relating to minimum wages or maximum hours of work; (E)
discrimination against employees on any basis; (F) unlawful or wrongful
employment or termination practices; (G) unlawful retirement, termination or
labor relations practices, breach of contract or other claim arising under a
collective bargaining agreement, individual, express or implied contract, or
policy, practice or procedure manual or statement; (H) any violation of
occupational safety or health standards, or any violation of the Worker
Adjustment Retraining and Notification Act ("WARN"), except for such claims that
could not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect.
6.17 Environmental Matters. Except as set forth in Schedule 6.17, as of
--------------------- -------------
the Closing Date:
(a) there is no pending Environmental Matter relating to Borrower and
each of its Subsidiaries or any of its Properties, and after due inquiry
Borrower is aware of no facts that could result in any such Environmental
Matter. None of such Persons has agreed to assume by contract or otherwise any
liability of any other Person for cleanup, compliance, or required capital
expenditures in connection with any Environmental Matter arising prior to the
date hereof;
(b) the Properties used, owned, leased, operated, managed or
controlled at any time by Borrower and each of its Subsidiaries are free of
contamination from Hazardous Materials, including, without limitation, any
contamination of the associated air, soil, groundwater or surface waters, and
are free of any other potentially injurious chemical or physical conditions;
(c) Borrower and each of its Subsidiaries is in compliance with all
applicable Environmental Laws (except for such instances of non-compliance as
could not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect), has cured any past violations or alleged violations of
Environmental Laws to the satisfaction of Governmental Bodies, is not currently
in receipt of any notice of violation, is not currently in receipt of any notice
of any potential liability for cleanup of Hazardous Materials and is not now
subject to any investigation or information request by a Governmental Body
concerning Hazardous Materials or any Environmental Laws. Borrower and each of
its Subsidiaries holds and is in compliance with all governmental permits,
licenses, and authorizations necessary to operate
27
their businesses that relate to siting, wetlands, coastal zone management, air
emissions, discharges to surface or ground water, discharges to any sewer or
septic system, noise emissions, solid waste disposal or the generation, use,
transportation or other management of Hazardous Materials (except for such
instances of non-compliance as could not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect). To the best
knowledge of Borrower after due inquiry, such Persons have at all times
generated, manufactured, refined, recycled, discharged, emitted, released,
buried, processed, produced, reclaimed. stored. treated. transported and
disposed of Hazardous Materials in material compliance with all applicable laws
and regulations, including permit requirements;
(d) no real Property of Borrower or any of its Subsidiaries is (i)
listed or, to the best of Borrower's knowledge, proposed for listing on the
National Priorities List under the Comprehensive Environmental Response,
Compensation and Liability Act or is (ii) listed in the Comprehensive
Environmental Response, Compensation, Liability Information System List
promulgated pursuant to the Comprehensive Environmental Response, Compensation
and Liability Act, or on any comparable list maintained by any Governmental
Body;
(e) no Properties of Borrower and each of its Subsidiaries is subject
to any Lien or claim for Lien in favor of any Person as a result of any
Environmental Matter or response thereto;
(f) to the best knowledge of Borrower after due inquiry, no Hazardous
Materials, including leachate and effluents, generated, disposed of,
transported, managed or released by Borrower and each of its Subsidiaries have
caused or will cause in whole or in party any contamination or injury to the
environment, any person, any natural resource or any Property, including,
without limitation, Property through which or to which such materials were
shipped. To the best knowledge of Borrower after due inquiry, neither Borrower
nor any of its Subsidiaries has handled, transported, disposed of or managed any
Hazardous Material in any manner that may form the basis for any present or
future Environmental Matter, and no such Person has any material liabilities,
absolute or contingent, on the date hereof with respect thereto; and
(g) to the best knowledge of Borrower after due inquiry, all
facilities where any Person has treated, stored, disposed of, reclaimed, or
recycled any Hazardous Material on behalf of Borrower are in compliance in all
material respects with all applicable Environmental Laws.
6.18 Possession of Franchises, Licenses, Etc. Borrower and each of its
----------------------------------------
Subsidiaries is in possession of all material permits, licenses or other
authorizations of Governmental Bodies required for the conduct of its business
and the ownership of its respective Properties, and their respective businesses
are being conducted in accordance with the material requirements of such
permits, licenses or other authorizations of Governmental Bodies in effect on
the date hereof, and after due inquiry Borrower is not aware of any condition
that would prevent the renewal of such permits, licenses or other authorizations
or cause it to incur any material costs to renew such permits, licenses or other
authorizations.
6.19 Intellectual Property. Borrower is the sole owner of, or has the
---------------------
right to use, free from any restrictions, claims, rights, encumbrances or
burdens (including without limitation restrictions as to time or geography and
rights of reversion) which would limit or interfere in any material respect with
Borrower's use thereof in the ordinary course of its business, all patents,
copyrights, trademarks, trade names, service marks, registrations of and
applications for registration of any of the foregoing, inventions, trade
secrets, technology, data, documentation, computer programs, source codes,
object code and all other intellectual property or proprietary rights
(collectively, "Intellectual Property"), including each portion thereof, that
---------------------
are necessary for the operation of its business (including the Business as
heretofore conducted by Seller and as proposed to be conducted by Borrower),
other than computer software which is commercially available from third parties
and which is used solely for the internal operations of Borrower). All of the
applications for registration included in the Intellectual Property are still
pending in good standing and have not been abandoned. Schedule 6.19 identifies
-------------
any Intellectual Property as to which Borrower has any obligation to
28
pay royalties or any other fees which are unpaid as of, or which may become due
after, the date of this Agreement, except for obligations which individually or
in the aggregate do not have a Material Adverse Effect. Adequate steps have been
taken to protect the confidentiality of any trade secrets or other confidential
information included in the Intellectual Property. All of Borrower's right,
title and interest in, to and under the Intellectual Property is freely
transferable, and is free and clear of any encumbrances, options, distribution
rights and restrictions except to the extent expressly set forth on Schedule
--------
6.19 hereto. Borrower has not granted any licenses to the Intellectual Property
----
to third parties. Except as identified on Schedule 6.7(a), there are no pending
---------------
or, to the best of Borrower's knowledge, threatened, claims, actions, suits,
proceedings, judgments, decrees or orders (whether or not purportedly on behalf
of Borrower) affecting or relating to the Intellectual Property, Borrower's
right, title and interest therein or the validity, use, transfer or potential
transfer of Borrower's right, title and interest therein, or alleging that the
Intellectual Property conflicts with, violates or infringes the proprietary or
contractual rights of others, which constitute, individually or in the
aggregate, a Material Adverse Effect, nor, to the best of Borrower's knowledge,
are there any existing grounds on which any such claim might be made or such
action, suit or proceeding might be commenced.
6.20 Margin Regulations; Use of Proceeds. Borrower neither owns nor now
-----------------------------------
intends to acquire any "margin stock" as defined in Regulation U of the Board of
Governors of the Federal Reserve System (12 CFR 207). The proceeds of the Loans
will be used as provided in the Recitals. No part of the proceeds of the Loans
--------
will be used directly or indirectly, for the purpose of buying or carrying any
margin stock within the meaning of Regulation U of the Board of Governors of the
Federal Reserve System (12 CFR 207), or for the purpose of buying or carrying or
trading in any securities under such circumstances as to involve Borrower in a
violation of Regulation X of said Board (12 CFR 224) or to involve any broker or
dealer in a violation of Regulation T of said Board (12 CFR 220). As used in
this Section, the term "purpose of buying or carrying" has the meaning assigned
thereto in the aforesaid Regulation U.
6.21 Compliance with ERISA.
---------------------
(a) No Pension Plan which is subject to Part 3 of Subtitle B of Title
1 of ERISA or Section 412 of the Code had an accumulated funding deficiency (as
such term is defined in Section 302 of ERISA or Section 412 of the Code),
whether or not waived, as of the last day of the most recent fiscal year of such
Pension Plan heretofore ended;
(b) neither Borrower nor any ERISA Affiliate maintains or has
maintained, contributes to or has contributed to, or has any liability or
contingent liability with respect to a Pension Plan subject to Title IV of
ERISA;
(c) neither Borrower nor any ERISA Affiliate maintains or has
maintained, contributes to or has contributed to, or has any liability or
contingent liability with respect to a Multiemployer Plan;
(d) neither Borrower nor any ERISA Affiliate has any contingent
liability with respect to any post-retirement benefit under a welfare plan (as
such term is defined in Section 3(1) of ERISA) other than liability for
continuation coverage described in Part 6 of Title 1 of ERISA;
(e) Borrower and all Plans contributed to or maintained by any of
them are in compliance in all material respects with all applicable provisions
of ERISA and the Code and with the applicable law and administrative
requirements of any relevant jurisdiction and the regulations and published
interpretations thereunder, including, without limitation, the provisions of
ERISA and the Code requiring continuation coverage under Plans which are group
health plans subject to the Consolidated Omnibus Budget Reconciliation Act of
1985 or similar law;
(f) neither Borrower nor any of its ERISA Affiliates is a party in
interest with respect to any employee benefit plan (as defined in Section 3(3)
of ERISA) other than a Plan;
29
(g) neither Borrower nor any of its ERISA Affiliates has breached any
of the responsibilities, obligations or duties imposed upon any of such Persons
by the Code or ERISA which breach has given rise, or could reasonably be
expected to give rise in the future to any obligation to pay money that would
have a Material Adverse Effect on any of such Persons;
(h) there are no actions, suits or claims other than for routine
claims for benefits pending or threatened, involving the Plans that would have a
Material Adverse Effect; and
(i) all required reports and descriptions of the Plans of Borrower or
its ERISA Affiliates (including but not limited to Form 5500 Annual Reports,
Summary Annual Reports and Summary Plan Descriptions) have been timely filed and
distributed, and any notices required by ERISA or the Code or the law of any
other applicable jurisdiction or any ruling or regulation of any administrative
agency of any applicable jurisdiction with respect to such Plans, including but
not limited to any notices required by Section 204(h) or Section 606 of ERISA or
Section 4980B of the Code have been appropriately given.
6.22 Material Contracts. Schedule 6.22 contains a list of all written
------------------ -------------
supply agreements, requirements contracts, customer agreements, franchise
agreements, license agreements, distribution agreements, joint venture
agreements, asset purchase agreements, stock purchase agreements, merger
agreements, agency or advertising agreements and other contracts, agreements and
commitments (other than purchase orders entered into in the ordinary course of
business, leases of real Property listed on Schedule 6.10, and other than this
-------------
Agreement, the Acquisition Agreement and the other Loan Documents, or any
agreement, instrument or document executed and delivered pursuant thereto) to
which Borrower or any of its Subsidiaries is now, or will be on the Closing Date
after giving effect to the Transactions, a party and which are now or will then
be material to the business, assets or operations of such Persons ("Material
--------
Contracts"). True and complete copies of each of the Material Contracts, with
---------
all material amendments, modifications and supplements thereto to the date
hereof, have previously been furnished by Borrower to Agent or its
representatives. Each of the Material Contracts is, and on the Closing Date
after giving effect to the Transactions will be, valid, subsisting and in full
force and effect, neither Borrower nor any of its Subsidiaries is in default
under any of the Material Contracts, nor has any such default under any of the
Material Contracts been asserted by any other party thereto, and there has not
occurred any event which, with the giving of notice or the passage of time, or
both, would constitute such a default. On the Closing Date, after giving effect
to the Transactions, neither Borrower nor any of its Subsidiaries will be a
party to any Material Contract or be subject to any restriction which has or is
reasonably likely to have a Material Adverse Effect.
6.23 Insurance. Schedule 6.23 sets forth a true and complete list, in all
--------- -------------
material respects, and brief descriptions of all policies of workers
compensation, general liability, fire, property, casualty, marine, business
interruption, errors and omissions, flood, earthquake and other insurance
carried by Borrower and its Subsidiaries, true and complete copies of which
policies have been previously delivered to Agent to the extent requested. Such
policies are in full force and effect on the date hereof, and none of such
Persons has received notice of cancellation with respect to any such policy. All
premiums payable with respect to such policies have been paid through the
Closing Date or otherwise will be paid in the ordinary course of business.
6.24 Solvency. Borrower and its Subsidiaries will be Solvent on the
--------
Closing Date after giving effect to the Transactions and the application of the
net proceeds of the Loans.
6.25 Status under Certain Laws. Neither Borrower nor any of its
-------------------------
Subsidiaries is an "investment company" or a "person directly or indirectly
controlled by or acting on behalf of an investment company" within the meaning
of the Investment Company Act of 1940, as amended, or a "holding company", or a
"subsidiary company" of a "holding company", or an "affiliate" of a "holding
company" or of a "subsidiary company" of a "holding company", within the meaning
of the Public Utility Company Holding Act of 1935, as
30
amended. Borrower is not subject to regulation as a "common carrier" or
"contract carrier" or any similar classification under applicable state or
Federal laws.
6.26 Places of Business. The principal place of business and the chief
------------------
executive office of Borrower is, and on the Closing Date after giving effect to
the Transactions will be, located at 0000 XxXxx Xxxxxx, Xxxxxx, Xxxxxxxxxx
00000. The books and records (including, without limitation, all records of
Accounts) of Borrower are, and on the Closing Date after giving effect to the
Transactions all will be, located at the location set forth above.
6.27 Other Names. The business conducted by Borrower has not been
-----------
conducted under any corporate, trade or fictitious name other than those names
listed on Schedule 6.27.
-------------
6.28 Account Warranties. With respect to Eligible Accounts scheduled,
------------------
listed or referred to in any Accounts Trial Balance delivered to Agent pursuant
to the terms hereof, Borrower represents and warrants that, except as disclosed
in the applicable Accounts Trial Balance, as of the date of each such Accounts
Trial Balance: (a) the Accounts are genuine, are in all respects what they
purport to be, and are not evidenced by a judgment; (b) they represent
undisputed, bona fide transactions; (c) the amounts shown on the applicable
Accounts Trial Balance and on Borrower's books and records and all invoices and
statements which may be delivered to Agent with respect thereto are actually and
absolutely owing solely to Borrower or one of Borrower's Subsidiaries and are
not contingent; (d) no payments have been made thereon; (e) there are no
material set-offs, counterclaims or disputes asserted or, to the best knowledge
of Borrower, existing with respect thereto and Borrower has not made any
agreement with any Account Debtor for any deduction therefrom except for
discounts or allowances allowed by Borrower and its Subsidiaries in the ordinary
course of business for prompt payment; (f) to the best of Borrower's knowledge,
there are no facts, events or occurrences which impair in any material respect
the validity or enforcement thereof or tend to reduce the amount payable
thereunder as shown on the respective Borrowing Base Certificate, Borrower's and
its Subsidiaries' books and records and all invoices and statements delivered to
Agent with respect thereto; (g) to the best of Borrower's knowledge, all Account
Debtors have the capacity to contract and are Solvent; except, as to Solvency,
for such Eligible Accounts as will not, in the aggregate, give rise to a
Material Adverse Effect; and (h) the services furnished and/or goods sold giving
rise thereto are not subject to any Lien except for the first and valid fully
perfected security interest granted to Agent hereunder, and except for Permitted
Liens.
6.29 Equipment. After giving effect to the Transactions, (a) Borrower has
---------
good, indefeasible and merchantable title to its respective Equipment, except as
set forth on Schedule 6.29; (b) the Equipment is located only on the premises
-------------
set forth on Schedule 6.10; (c) the Equipment is not subject to any Lien
-------------
whatsoever except for the first and valid fully perfected security interest
granted to Agent pursuant to the terms hereof, and except for Permitted Liens;
(d) the Equipment is in good condition and repair except for such Equipment, the
failure of which to be no good condition and repair, would not cause a Material
Adverse Effect, ordinary wear and tear excepted, and is currently used or usable
in Borrower's businesses.
6.30 Year 2000. Borrower has undertaken a detailed review and assessment
---------
of all areas within the business and operations of itself and its Subsidiaries
that could be adversely affected by the risk that computer applications may be
unable to recognize and perform properly date-sensitive functions involving
certain dates prior to, and any date subsequent to, December 31, 1999 (such risk
being referred to as the "Year 2000 Problem"). Borrower's disclosure with
------------------
respect to the Year 2000 Problem set forth in its Quarterly Report on Form 10-Q
for the period ended June 28, 1998, is accurate in all material respects.
Borrower and its Subsidiaries expect to be able properly to perform, on a timely
basis, date-sensitive functions for all dates prior or subsequent to January 1,
2000 (that is, to be "Year 2000 Compliant"). The cost to Borrower and its
--------------------
Subsidiaries of becoming Year 2000 Compliant will not have a Material Adverse
Effect.
6.31 Reliance by Agent and Lenders; Cumulative. Each warranty and
-----------------------------------------
representation contained
31
in this Agreement shall be automatically deemed repeated with each Advance and
shall be conclusively presumed to have been relied on by Agent and the Lenders
regardless of any investigation made or information possessed by Agent and the
Lenders. The warranties and representations set forth herein shall be cumulative
and in addition to any and all other warranties and representations that
Borrower shall now or hereinafter give, or cause to be given, to Agent and the
Lenders.
7. COVENANTS. Borrower covenants and agrees that, so long as any credit
---------
hereunder shall be available and until payment in full of the Obligations,
Borrower shall, and shall cause each of its Subsidiaries to comply with the
following provisions of this Section 7, it being understood that "causing" any
---------
Subsidiary to comply with such covenants shall require Borrower to prevent any
Subsidiary from taking any action that is prohibited hereunder:
7.1 Financial Statements and Information. So long as any of the
------------------------------------
Obligations shall be outstanding, Borrower will furnish to Agent (with
sufficient copies for each Lender):
(A) as soon as available and in any event within 30 days after the end
of each fiscal month, copies of the consolidated balance sheets of Borrower and
its Subsidiaries as of the end of such fiscal month, and of the related
consolidated statements of operations and cash flows for such month and for the
portion of the fiscal year of Borrower ended with the last day of such fiscal
month, all in reasonable detail, all such statements being certified by the
chief financial officer of Borrower;
(B) as soon as available and in any event within 100 days after the
end of each fiscal year of Borrower, copies of the audited consolidated and (to
the extent requested by Agent) consolidating balance sheets of Borrower and its
Subsidiaries as of the end of such fiscal year, and of the related audited
consolidated (and, if requested, consolidating) statements of operations,
earnings and cash flows for such fiscal year, together with the notes thereto,
all in reasonable detail and stating in comparative form the respective audited
consolidated (and, if requested, consolidating) figures as of the end of and for
the previous fiscal year, (x) in the case of such audited consolidated financial
statements, accompanied by a report thereon of Deloitte & Touche LLP, or other
independent public accountants selected by Borrower and acceptable to Agent (the
"Accountants"), which report shall be unqualified as to going concern and scope
-----------
of audit and shall state that such consolidated financial statements present
fairly the consolidated financial position of Borrower and its Subsidiaries as
at the end of such fiscal year and the consolidated results of their operations
and cash flows for such fiscal year in conformity with GAAP applied on a basis
consistent with prior years and that the examination by the Accountants in
connection with such consolidated financial statements has been made in
accordance with generally accepted auditing standards, and (y) in the case of
any consolidating financial statements, Certified by the chief financial officer
of Borrower;
(C) within 30 days after the end of each fiscal quarter, an Officer's
Certificate of Borrower (1) setting forth calculations in reasonable detail
demonstrating whether or not as at the end of such fiscal quarter Borrower was
in compliance with Sections 7.7, 7.8, 7.9 and 7.16 of this Agreement and (2)
-------------------------------
stating that, based upon such examination or investigation and review of this
Agreement and other Loan Documents as in the opinion of the signer is necessary
to enable the signer to express an informed opinion with respect thereto, no
default by Borrower or any of its Subsidiaries in the fulfillment of any of the
terms, covenants, provisions or conditions of this Agreement or any of the Loan
Documents exists or has existed during such period or, if such a default shall
exist or have existed, the nature and period of existence thereof and what
action Borrower (or the applicable Subsidiary) has taken, is taking or proposes
to take with respect thereto;
(D) promptly after the same are available and in any event within 7
days of filing, copies of all such proxy statements, financial statements,
notices and reports as Borrower or any Subsidiary shall send or make available
generally to any of its securityholders, and copies of all regular and periodic
32
reports (including without limitation annual reports on Form 10-K and quarterly
reports on Form 10-Q), all reports on Form 8-K and all registration statements
which Borrower or any Subsidiary may file with the SEC or with any securities
exchange;
(E) within 15 days after the last Business Day of each fiscal month,
Borrower shall deliver to Agent and each Lender (i) a certificate in the form of
Exhibit E hereto ("Borrowing Base Certificate") showing the Borrowing Base as of
--------- --------------------------
the close of business on the last day of the immediately preceding fiscal month,
and (ii) an aged trial balance of all Accounts of Borrower and its Subsidiaries
as of such date ("Accounts Trial Balance"), indicating which Accounts are
----------------------
current, up to 90 days, and more than 90 days past the invoice date, in each
case certified as complete and correct on behalf of Borrower by an authorized
officer of Borrower;
(F) within 30 days after the commencement of each fiscal year,
Borrower shall deliver to Agent a copy of a consolidated business plan for
Borrower and its Subsidiaries for such fiscal year, which business plan shall
contain a summary annual consolidated budget of Borrower and its Subsidiaries
for such fiscal year, consolidated balance sheets as well as consolidated
projections of sales, cash flow and borrowing needs for such fiscal year, on a
quarterly basis, and Borrower shall deliver to Agent any material revision to
any such budget promptly upon the adoption thereof;
(G) at any time when an Event of Default shall have occurred and be
continuing, upon the request of Agent, Borrower shall provide Agent with a
Borrowing Base Certificate with such frequency as Agent shall specify. Upon
request by Agent, Borrower shall furnish copies of any other material reports,
documents or information, in a form and with such specificity as is reasonably
satisfactory to Agent (to the extent such reports, documents and information can
be produced or furnished without unreasonable cost), concerning Accounts
included, described or referred to in such Borrowing Base Certificates,
including without limitation, copies of all invoices prepared in connection with
such Accounts;
(H) promptly after the receipt thereof by Borrower and in any event
within 3 Business Days thereof, copies of any final reports as to material
inadequacies in accounting controls (including reports as to the absence of any
such inadequacies) submitted to Borrower by the Accountants in connection with
any audit of such corporation made by the Accountants;
(I) promptly (and in any event within 3 Business Days) after becoming
aware of (1) the existence of any Default or Event of Default, an officer's
certificate of Borrower specifying the nature and period of existence thereof
and what action Borrower (or any of its Subsidiaries) is taking or proposes to
take with respect thereto; or (2) any Indebtedness of Borrower or of any of its
Subsidiaries in excess of $100,000 in the aggregate being declared due and
payable before its expressed maturity, or any holder of such Indebtedness having
the right to declare such Indebtedness due and payable before its expressed
maturity, because of the occurrence of any default (or any event which, with
notice and/or the lapse of time, shall constitute any such default) under such
Indebtedness, an officer's certificate of Borrower describing the nature and
status of such matters and what action Borrower (or any of its Subsidiaries) is
taking or proposes to take with respect thereto;
(J) promptly and in any event within 3 Business Days after Borrower
knows or, in the case of a Pension Plan has reason to know, that a Reportable
Event with respect to any Pension Plan has occurred, that any Pension Plan or
Multi Employer Plan is or reasonably may be terminated, reorganized, partitioned
or declared insolvent under Title IV of ERISA, or Borrower or any of its ERISA
Affiliates will or reasonably may incur any material liability to or on account
of a Pension Plan or Multi Employer Plan under Title IV of ERISA or any other
liability under ERISA which could reasonably have a Material Adverse Effect has
been asserted against Borrower or any of its ERISA Affiliates, an officer's
certificate of Borrower setting forth information as to such occurrence and what
action, if any, Borrower or an ERISA Affiliate is required or proposes to take
with respect thereto, together with any notices concerning such occurrences
which are (a) required to be filed by Borrower or an ERISA Affiliate or the plan
administrator of any such Pension Plan
33
controlled by Borrower or such ERISA Affiliate with the Internal Revenue Service
or the PBGC, or (b) received by Borrower or such ERISA Affiliate from any plan
administrator of a Pension Plan not under their control or from a Multi Employer
Plan;
(K) promptly after becoming aware of any Material Adverse Effect with
respect to which notice is not otherwise required to be given pursuant to this
Section 7.1, an officer's certificate of Borrower setting forth the details of
-----------
such Material Adverse Effect and stating what action Borrower has taken or
proposes to take with respect thereto;
(L) promptly (and in any event within 7 days) after Borrower knows of
(a) the institution of, or reasonably credible threat of, any action, suit,
proceeding, governmental investigation or arbitration against or affecting
Borrower or any of its Property, or (b) any material development in any such
action, suit, proceeding, governmental investigation or arbitration, which, in
either case, if adversely determined, is likely to have a Material Adverse
Effect, an Officer's Certificate of Borrower describing the nature and status of
such matter in reasonable detail;
(M) at least once in each fiscal year of Borrower, (i) an Officer's
Certificate setting forth all material insurance coverage maintained by Borrower
as of the date of such certificate and of all insurance planned to be maintained
by such Persons in such fiscal year, and (ii) certificates evidencing renewals
of such insurance;
(N) Agent shall conduct, on behalf of the Lenders and at Borrower's
expense, an audit of the Accounts and Inventory of Borrower and its Subsidiaries
within 30 days following the Closing Date and, thereafter, not less than once in
each calendar year, Agent shall conduct, on behalf of the Lenders and at
Borrower's expense, an audit of the Accounts and Inventory of Borrower and its
Subsidiaries, the results of which audits shall be reasonably satisfactory to
Agent and the Lenders in form and substance and shall be performed by Persons
reasonably acceptable to Agent and the Lenders, provided that at any time when
an Event of Default shall have occurred and be continuing Agent shall be
entitled to conduct such additional audits as it may require, at Borrower's sole
cost and expense; and
(O) any other information, including financial statements and
computations, relating to the performance of obligations arising under this
Agreement and/or the affairs of Borrower that Agent or any Lender may from time
to time reasonably request and which is capable of being obtained, produced or
generated without unreasonable cost by Borrower or of which Borrower has
knowledge.
7.2 Payment of Principal, Interest and Fees; to Keep Books; Reserves; Etc.
---------------------------------------------------------------------
Borrower will duly and punctually pay the principal of and interest and
fees on the Loans in accordance with the terms of the Notes and this Agreement.
Borrower will comply with all of the covenants, agreements and conditions
contained in this Agreement and the other Loan Documents to which it is a party.
Borrower's fiscal year end is the Sunday closest to December 31, and Borrower
will maintain the same fiscal year at all times. Borrower will keep proper
books of record and account and set aside appropriate reserves, all in
accordance with GAAP. Borrower will, and will cause each of its Subsidiaries
to, at all times from and after June 30, 1999, be Year 2000 Compliant (as
defined in Section 6.30).
------------
7.3 Payment of Taxes and Claims. Borrower will pay before they become
---------------------------
delinquent:
(A) all taxes (including excise taxes), assessments and governmental
charges or levies imposed upon it or its income or profits or upon its Property,
real, personal or mixed, or upon any part thereof;
(B) all claims for labor, materials and supplies which, if unpaid,
might result in the creation of a Lien upon its Property; and
34
(C) all claims, assessments, or levies required to be paid by any of
them pursuant to any agreement, contract, law, ordinance or governmental rule or
regulation governing any pension, retirement, profit-sharing or any similar
plan;
provided, that, with respect to Property, items of the foregoing description
--------
need not be paid while being diligently contested in good faith and by
appropriate proceedings so long as (i) adequate book reserves have been
established with respect thereto and (ii) Borrower's title to and right to use
its Property is not materially adversely affected by such non-payment. Borrower
will timely file all Federal and state tax returns and informational returns
required to be filed in connection with the payment of taxes and claims required
by this Section 7.3.
-----------
7.4 Maintenance of Properties and Corporate Existence. Borrower will:
-------------------------------------------------
(A) maintain its Property in good condition and make all necessary
renewals, repairs, replacements, additions, betterments, and improvements
thereto consistent with the historical practices of such Persons;
(B) keep true books of records and accounts in all material respects
in which entries will be made of all its business transactions that are full and
correct in all material respects and will reflect in its financial statements
adequate accruals and appropriations to reserves;
(C) do or cause to be done all things necessary to preserve and keep
in full force and effect its corporate existence, rights and powers and
franchises including, without limitation thereof, any necessary qualification or
licensing in any foreign jurisdiction, except for such licenses and
qualifications the absence of which could not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect;
(D) comply with (i) all applicable statutes, regulations, franchises,
and Orders of, and all applicable restrictions imposed by, any Governmental
Body, in respect of the conduct of its business and the ownership of its
Properties (including, without limitation, all Environmental Laws and all
applicable statutes, rules, ordinances, regulations and Orders relating to fair
labor standards, equal employment opportunities and occupational health and
safety) and (ii) all terms of any material mortgage, indenture, contract,
agreement or instrument, applicable to Borrower or any of its Properties, except
for such instances of non-compliance as could not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect; and
(E) keep any Property it owns or operates free of contamination from
Hazardous Materials and any other potentially harmful chemical or physical
conditions. If Borrower or any Subsidiary receives notice of any Environmental
Matter or contamination with Hazardous Materials that relates to any of them or
their respective Properties, then Borrower agrees, upon request of Agent, to
provide Agent with such reports, certificates, engineering studies or other
written material or data as Agent may require so as to satisfy Agent that
Borrower is in compliance with its obligations under this Agreement. Borrower
covenants and agrees to cooperate fully with such consultant in any such audits,
including, without limitation, by providing such access to Borrower's books,
records, Properties, employees and agents and by furnishing such written and
oral information as such consultant may reasonably request in connection with
any such audits.
7.5 Insurance. Borrower will carry and maintain in full force and effect
---------
at all times with financially sound and reputable insurers, rated A or better by
AM Best & Co., provided that if the rating of such insurer is lowered so that it
--------
no longer complies with this provision, Borrower shall have 30 days to replace
(or to cause the applicable Subsidiary to replace) such insurance with other
insurance satisfying the requirements of this Section 7.5 (or, as to workers'
-----------
compensation or similar insurance, in an insurance fund or by self-insurance
authorized by the jurisdiction in which its operations are carried on): (i) all
workers'
35
compensation or similar insurance as may be required under the laws of any
jurisdiction, (ii) business interruption insurance covering risk of loss as a
result of the cessation for all or any part of one year of all or any
substantial part of the business conducted by it, (iii) insurance against such
other risks as are usually insured against by corporations of established
reputation engaged in the same or similar businesses and similarly situated,
including, without limitation, fire, casualty, flood, public liability, products
liability insurance, and (iv) with respect to any Collateral consisting of
insurable Property, insurance against loss by fire, explosion, theft and such
other casualties as may be reasonably satisfactory to Agent and insurance
insuring Borrower against liability for personal injury and property damage
relating to such Collateral, in the forms and amounts required hereunder.
Insurance specified in clauses (ii) and (iii) shall be maintained in such
amounts (and with co-insurance, deductibles and self-insured retention, if any)
as such insurance is usually carried by corporations of established reputation
engaged in the same or similar businesses and similarly situated. Insurance
specified in clause (iv) shall (A) be maintained in such form and amounts and
having such coverage as may be reasonably satisfactory to Agent, (B) provide
that no cancellation, material reduction in amount or material change in
coverage thereof shall be effective until at least 30 days after receipt by
Agent of written notice thereof, (C) name Agent (for the benefit of the Lenders)
as loss payee or additional insured, as its interests may appear, and (D) be
reasonably satisfactory to Agent in all other respects.
7.6 Further Assurances. Borrower shall, and shall cause each of its
------------------
Subsidiaries to use all reasonable efforts to perfect all of their respective
interests in all material Intellectual Property rights by appropriate filings in
the U.S. Copyright Office or the U.S. Patent and Trademark Office (as
applicable) and any applicable state or local filing office (to the extent that
any such interest is registrable in any such office) and shall so perfect all
such interests hereafter acquired or created concurrently with the acquisition
or creation thereof, and shall cause all such perfected interests to be
subjected to a Copyright Mortgage, a Trademark Security Agreement or a Patent
Security Agreement, as applicable, in the respective forms referred to in
Section 5.1(k), in favor of Agent, duly recorded in the applicable
--------------
filing office. Promptly upon reasonable request by Agent, Borrower shall (1)
promptly upon request by Agent, correct any material defect or error that may be
discovered in any Loan Document or in the execution, acknowledgment or
recordation thereof, and (2) promptly upon request by Agent, do, execute,
acknowledge, deliver, record, re-record, file, re-file, register and re-register
any and all such further acts, deeds, conveyances, pledge agreements, mortgages,
deeds of trust, trust deeds, assignments, estoppel certificates, financing
statements and continuations thereof, termination statements, notices of
assignment, transfers, certificates, assurances, powers, proxies and other
instruments as Agent may reasonably require from time to time in order (A) to
carry out more effectively the purposes of this Agreement or any other Loan
Document, (B) to subject to the Liens and security interests created by any of
the Loan Documents any of its Properties, rights or interests covered or now or
hereafter intended to be covered by any of the Loan Documents, (C) to perfect
and maintain the validity, effectiveness and priority of any of the Security
Documents and the Liens and security interests intended to be created thereby
and (iv) better to assure, convey, grant, assign, transfer, preserve, protect
and confirm to Agent the rights granted or now or hereafter intended to be
granted to it under any Loan Document or under any other instrument executed in
connection with or pursuant to any Loan Document.
7.7 Restrictions on Indebtedness. Borrower will not incur, create, assume
----------------------------
or suffer to exist any Indebtedness, other than the following:
(A) Indebtedness incurred pursuant to this Agreement and the other
Loan Documents;
(B) Accounts payable and other accrued liabilities arising in the
ordinary course of business;
(C) Indebtedness in addition to the Obligations in an aggregate
principal amount not to exceed $2,000,000 in at any one time outstanding; and
36
(D) without duplication of any of the foregoing, Indebtedness secured
by Liens permitted under Section 7.8.
-----------
7.8 Restrictions on Liens. Borrower will not create, assume or suffer to
---------------------
exist any Lien upon any of its Properties (including without limitation any real
Property), whether now owned or hereafter acquired, except the following (herein
collectively referred to as "Permitted Liens"):
---------------
(A) Liens for taxes, assessments or governmental charges or claims the
payment of which is not at the time required by Section 7.3;
-----------
(B) Statutory Liens of landlords and Liens of carriers, warehousemen,
mechanics, materialmen and other Liens imposed by law incurred in the ordinary
course of business for sums not yet delinquent or being diligently contested in
good faith, if such reserve or other appropriate provision, if any, as shall be
required by GAAP shall have been made therefor;
(C) Liens (other than any Lien imposed by ERISA) incurred or deposits
made in the ordinary course of business in connection with workers'
compensation, unemployment insurance and other types of social security, or to
secure the performance of tenders, statutory obligations, surety and appeal
bonds, bids, leases, government contracts, performance and return-of-money bonds
and other similar obligations (exclusive of obligations for the payment of
borrowed money), provided that the amount of Liens of Borrower referred to in
--------
this Subsection (C) outstanding at any time shall not exceed $100,000 in the
aggregate;
(D) Any attachment or judgment Lien (including judgment or appeal
bonds) which , within 30 days after the entry thereof, shall have been
discharged or bonded, or the execution thereof shall have been stayed pending
appeal;
(E) Leases or subleases granted to others not interfering with the
ordinary conduct of business;
(F) Easements, rights-of-way, restrictions and other similar charges
or encumbrances which do not, individually or in the aggregate, materially
interfere with the ordinary conduct of business;
(G) Any interest, title or Lien of a lessor under any permitted
operating lease;
(H) Liens in favor of customs and revenue authorities arising as a
matter of law to secure payment of customs duties in connection with the
importation of goods;
(I) Liens incurred pursuant to the Loan Documents;
(J) Liens (including Capitalized Leases) in respect of Property
acquired or constructed or improved by Borrower after the Closing Date, which
Liens exist or are created at the time of acquisition or completion of
construction or improvement of such Property or within 60 days thereafter, but
any such Lien shall cover only the Property so acquired or constructed and any
improvements thereto (and any real Property on which such Property is located,
if such Property is a building, improvement or fixture), provided that the
--------
aggregate principal amount of all Indebtedness secured by Liens incurred
pursuant to this Subsection (J) in any fiscal year, together with any
Indebtedness incurred pursuant to Section 7.7(C), shall not exceed $2,000,000;
--------------
and
(K) Liens existing on the Closing Date after giving effect to the
Transactions and listed on Schedule 7.8(K).
---------------
7.9 Operating Leases. Borrower will not, and will not permit to, enter
----------------
into (as lessee) any lease
37
of real or personal Property (other than Capitalized Leases) having a term
greater than one year (including options to renew or extend any term, whether or
not exercised) if, after giving effect thereto, the aggregate amount of rentals
and other payments required to be made by Borrower on a consolidated basis
during any fiscal year under all such leases would be greater than $3,000,000.
7.10 Sale-Leaseback Transactions. Borrower will not enter into any
---------------------------
arrangements with any lender or investor or to which such lender or investor is
a party providing for the leasing by Borrower of real or personal Property which
has been or is to be sold or transferred by Borrower to such lender or investor
or to any Person to whom funds have been or are to be advanced by such lender or
investor on the security of such Property or rental obligations of Borrower.
7.11 Transactions with Affiliates. Borrower will not directly or
----------------------------
indirectly, enter into or permit to exist any transaction (including, without
limitation, the purchase, sale, lease or exchange of any Property or the
rendering of any service), with any Affiliate except in the ordinary course of
business and on terms that are not less favorable to Borrower or such Subsidiary
than those that would be obtainable at the time in an arm's-length transaction
with any Person who is not such an Affiliate; provided that Borrower shall be
permitted to enter into the transaction described on Schedule 7.12 with the
-------------
Affiliate referred to on such Schedule in the manner contemplated thereon.
7.12 Consolidation, Merger or Disposition of Assets; Acquisitions.
------------------------------------------------------------
Borrower will not enter into any transaction of merger or consolidation, or
liquidate, wind up or dissolve itself (or suffer any liquidation or
dissolution), or convey, sell, lease, transfer or otherwise dispose of, in one
transaction or a series of transactions, all or any part of its business,
Property or fixed assets, whether now owned or hereafter acquired, or acquire by
purchase or otherwise all or substantially all of the business, Property or
fixed assets of, or stock or other evidence of beneficial interest in any
Person, except:
(A) Borrower may in the ordinary course of its business sell or
otherwise dispose of Inventory;
(B) Borrower may sell or otherwise dispose of, in the ordinary course
of business, Property that is worn out or obsolete or no longer used in its
business; and
(C) Borrower may consummate the transaction described on Schedule 7.12
-------------
as contemplated on such Schedule;
provided that this Section 7.12 shall not be construed to prohibit the sale of
-------- ------------
the property located at 000 Xxxxxxxx Xxxx located in Folsom, California as
otherwise contemplated in this Agreement.
7.13 Sale or Discount of Receivables. Borrower will not directly or
-------------------------------
indirectly, sell with or without recourse, or discount or otherwise sell any of
its notes or accounts receivable, other than discounts granted on accounts in
the ordinary course of business in a manner consistent with past practices.
7.14 Certain Contracts. Borrower will not enter into or be a party to,
-----------------
except pursuant to, or as otherwise permitted by, the Loan Documents,
(A) any contract providing for the making of loans, advances (other
than advances in the ordinary course of business to employees of Borrower with
respect to expenses expected to be incurred by such employees in connection with
their duties as employees) or capital contributions to any Person, or for the
purchase of any Property from any Person in each case primarily in order to
enable such Person to maintain working capital, net worth or any other balance
sheet condition or to pay debts, dividends or expenses, or
(B) any contract for the purchase of materials, supplies or other
Property or services if
38
such contract (or any related document) requires that payment for such
materials, supplies or other Property or services shall be made regardless of
whether or not delivery of such materials, supplies or other Property or
services is ever made or tendered, or
(C) any contract to rent or lease (as lessee) any real or personal
Property if such contract (or any related document) requires that the lessee
purchase or otherwise acquire securities or obligations of the lessor, or
(D) any contract for the sale or use of materials, supplies or other
Property, or the rendering of services, if such contract (or any related
document) requires that payment for such materials, supplies or other Property,
or the use thereof, or payment for such services, shall be subordinated to any
Indebtedness (of the purchaser or user of such materials, supplies or other
Property or the Person entitled to the benefit of such services) owed or to be
owed to any Person, or
(E) any Guarantee or contract which, in economic effect, is
substantially equivalent to a Guarantee.
7.15 Restricted Payments and Investments. Borrower will not directly or
-----------------------------------
indirectly, make any Restricted Payment or any Investment other than Permitted
Investments and Investments existing on the Closing Date and listed on Schedule
--------
6.8B. Notwithstanding the foregoing, so long as no Default or Event of Default
----
would exist after giving effect thereto, Borrower may (subject to compliance
with applicable laws) make open-market repurchases of up to 190,000 shares of
its capital stock for an aggregate purchase price not to exceed $3,000,000.
7.16 Financial Covenants. All financial covenants are determined for
-------------------
Borrower and its Subsidiaries on a consolidated basis in accordance with GAAP.
(A) Funded Debt/EBITDA Ratio. Borrower will maintain a ratio of (i)
------------------------
Funded Debt as at the last day of each fiscal quarter to (ii) EBITDA for the
period of four consecutive fiscal quarters ended on such date of not more than
the ratio set forth below opposite the period in which the date of determination
occurs:
Period Funded Debt/EBITDA Ratio
------ ------------------------
Closing Date through April 4, 1999 3.0
July 4, 1999 through January 2, 2000 2.50
Following January 2, 2000 1.75
(B) Fixed Charge Coverage Ratio. Borrower will maintain, as at the
---------------------------
last day of each fiscal quarter for the period of four consecutive fiscal
quarters then ended, a ratio (the "Fixed Charge Coverage Ratio") of (i) EBITDA
---------------------------
to (ii) the sum of scheduled principal payments on Indebtedness (including
without limitation principal payments due under the Term Loan during such
period, but excluding in any event the principal of the Purpose Loan),
Consolidated Interest Expense, Capital Expenditures made in cash during such
period (and not financed) and cash taxes due and payable during such period, of
not less than the ratio set forth below opposite the period in which the date of
determination occurs:
Period Fixed Charge Coverage Ratio
------ ---------------------------
Closing Date through January 3, 1999 1.0
April 4, 1999 through October 3, 1999 1.25
Following October 3, 1999 1.50
(C) Profitability. Commencing with the 1999 fiscal year, Borrower's
-------------
Consolidated Net Income (Loss) for each fiscal year and each fiscal quarter
shall be a positive number; provided that
--------
39
Borrower shall be permitted to have negative Consolidated Net Income (Loss) in
any one fiscal quarter during any fiscal year, not to exceed $2,000,000, so long
as Borrower remains in compliance with the annual requirement under this
Subsection (C).
(D) Quick Ratio. Borrower shall have a ratio of Consolidated Current
-----------
Assets to Consolidated Current Liabilities of not less than (i) 1.0 : 1.0 as at
the end of each fiscal quarter through and including the fiscal quarter ending
July 4, 1999 and (ii) 1.25 : 1.0 as at the end of each fiscal quarter
thereafter.
(E) Capital Expenditures. Borrower covenants that it will not make
--------------------
or incur any Capital Expenditure or any contractual commitment with respect to
any Capital Expenditure in any fiscal year if, after giving effect thereto, the
aggregate amount of all Capital Expenditures by the Borrower during such fiscal
year would exceed $5,000,000; provided that Borrower may make additional Capital
--------
Expenditures during fiscal year 1999 of not more than $1,000,000 for the sole
purpose of contructing improvements to its facility at 0000 XxXxx Xxxxxx,
Xxxxxx, Xxxxxxxxxx. This restriction is annual and non-cumulative.
(F) 1998 Charges. Borrower shall not permit its charges taken in
------------
fiscal year 1998 in respect of in-process research and development costs related
to the Acquisition to exceed $25,000,000 in the aggregate
7.17 Acquisition of Margin Securities. Borrower will not, and will not
--------------------------------
permit any Subsidiary to, own, purchase or acquire (or enter into any contract
to purchase or acquire) any "margin security" as defined by any regulation of
the Board of Governors of the Federal Reserve System as now in effect or as the
same may hereafter be in effect unless, prior to any such purchase or
acquisition or entering into any such contract, Agent shall have received an
opinion of counsel satisfactory to it to the effect that such purchase or
acquisition will not cause this Agreement or the Loans to be in violation of
Regulations G, T, U or X or any other regulation of such Board then in effect.
7.18 Collateral Locations. Neither the location of the principal place of
--------------------
business and chief executive office of Borrower nor the location of any
Collateral shall be changed nor shall there be established additional places of
business or additional locations at which Collateral is stored, kept or
processed except in compliance with the applicable provisions of this Agreement,
provided that Borrower shall be permitted to have test equipment (having an
aggregate value that is not material to Borrower's business) located at customer
sites for trials in the ordinary course of business.
7.19 Negative Pledges, Restrictive Agreements, etc. Borrower will not
---------------------------------------------
enter into any agreement (excluding the Loan Documents) prohibiting the creation
or assumption of any lien upon any of the Collateral, whether now owned or
hereafter acquired, or the ability of Borrower or any Subsidiary to amend or
otherwise modify any Loan Document to which it is a party.
7.20 Deposit Account. Borrower will use commercially reasonable efforts to
---------------
cause all of its receipts, income, receivables and other cash to be deposited in
the Deposit Account.
7.21 Additional Collateral Matters. Borrower will: (a) cause the lessor of
-----------------------------
its facility at 0000 XxXxx Xxxxxx, Xxxxxx, Xxxxxxxxxx to execute and deliver to
Agent a landlord waiver substantially in the form of Exhibit I by not later than
---------
30 days after the Closing Date; (b) use best efforts have the lessors of its
other real Properties at which any material Collateral is located to execute and
deliver to Agent a landlord waiver substantially in the form of Exhibit I, and
---------
shall not enter into any new lease of real Property unless the lessor thereof
executes and delivers such a landlord waiver; (c) not open or suffer to exist
any banking or depositary account unless such account is either maintained with
Agent or made subject to a first priority security interest in favor of Agent
pursuant to an account take-over letter in form and substance satisfactory to
Agent executed by the institution at which such account is maintained; and (d)
notify warehousemen, bailees, processors and other third parties holding
Property having an aggregate Fair Market Value in
40
excess of $250,000 of the Liens created in favor of Agent and the Lenders and
instruct such Person to hold such Property for Agent's account subject to
Agent's instructions.
7.22 Future Subsidiaries. Notwithstanding any other provision of this
-------------------
Agreement or the other Loan Documents, Borrower will not, and not permit any of
its Subsidiaries to, create or acquire any other Subsidiary (a "New Subsidiary")
--------------
unless (a) such New Subsidiary is an entity organized under the laws of the
United States (or such other jurisdictions as may be approved by Agent and the
Lenders, subject to such terms and conditions as they may reasonably require in
order to preserve, protect and perfect their rights and interests under the Loan
Documents, including without limitation, effective and enforceable Liens on the
Property of such New Subsidiary), (b) such New Subsidiary executes and delivers
a Subsidiary Guarantee and such other documentation as Agent may require in
order to receive a perfected, first priority Lien in and to all of such New
Subsidiary's Property, upon substantially the same terms as those provided in
this Agreement with respect to the Property of Borrower, (c) the ownership
interests in such New Subsidiary are pledged to Agent pursuant to a pledge
agreement satisfactory to Agent in form and substance, (d) Agent and the Lenders
receive, to the extent they shall request, an opinion of counsel to such
Subsidiary addressing, with respect to such New Subsidiary and its Loan
Documents, the matters addressed with respect to Borrower's on the Closing Date
in the opinion attached hereto as Exhibit D, and (e) after giving effect to the
---------
creation or acquisition of such New Subsidiary, no Default or Event of Default
shall have occurred and be continuing (for purposes of determining compliance
with this clause (e), Borrower shall deliver an Officer's Certificate in the
form required by Section 7.1(C) which shall set forth calculations of the
--------------
specified covenants on a pro-forma basis at last day of Borrower's most recently
ended fiscal quarter as if the New Subsidiary had been a Subsidiary of Borrower
during such fiscal quarter). Agent shall also be entitled to require the items
set forth in this Section 7.22 with respect to any Subsidiary of Borrower in
------------
existence on the Closing Date as to which Agent determines that the
representations and warranties set forth in the last sentence of Section 6.6 are
-----------
no longer true.
8. EVENTS OF DEFAULT; REMEDIES.
---------------------------
8.1 Events of Default. Any one or more of the following events shall
-----------------
constitute an Event of Default by Borrower under this Agreement.
(a) If Borrower fails to make any payment of all or any portion of the
Obligations when due and payable or when declared due and payable (whether
interest, fees or otherwise, including any interest which, but for the
provisions of the United States Bankruptcy Code, would have accrued on any of
the Obligations);
(b) If Borrower defaults in the performance or observance of any term,
provision, condition, covenant, or agreement contained in Section 7.1, 7.2, 7.5,
----------- --- ---
7.7, 7.8, 7.9, 7.10, 7.11, 7.12, 7.13, 7.14, 7.15, 7.16, 7.17, 7.18, 7.19, or
--- --- --- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
7.22;
----
(c) If Borrower fails or neglects to perform, keep, or observe any
term, provision, condition, covenant, or agreement contained in this Agreement,
in any of the other Loan Documents other than as specified in subsections (a)
and (b) above and such failure or neglect continues unremedied for 30 days;
(d) If any material portion of the Properties of Borrower is attached,
seized, subjected to a writ or distress warrant, or is levied upon, or comes
into the possession of any judicial officer or assignee, and the foregoing has
not been vacated, discharged, stayed, satisfied or bonded pending appeal within
thirty (30) days from the entry thereof;
(e) If any bankruptcy, reorganization, receivership, liquidation,
assignment for the benefit of creditors or other insolvency proceeding (each, an
"Insolvency Proceeding") is commenced by
---------------------
41
Borrower or any Subsidiary;
(f) If an Insolvency Proceeding is commenced against Borrower or any
Subsidiary and not dismissed within 60 calendar days;
(g) If Borrower is enjoined, restrained, or in any way prevented by
court order from continuing to conduct all or any material part of its business
affairs and such injunction or other order is not released to the satisfaction
of Agent within 10 calendar days of the entry of such injunction, restraint or
order;
(h) If a notice of lien, levy, or assessment is filed of record with
respect to any Property of Borrower by any Governmental Body, or if any taxes or
debts owing at any time hereafter to any one or more of such entities becomes a
Lien, whether xxxxxx or otherwise, upon any of Borrower's Property and the same
is not paid on the payment date thereof, unless the same is being contested in
good faith by appropriate proceedings and with appropriate reserves and no Lien
has attached in respect thereof;
(i) If a judgment or other claim becomes a Lien upon any material
portion of Borrower's Property and is not being contested in good faith by
Borrower, execution on which has been stayed pending such contest;
(j) If Agent's Lien in any Collateral shall cease or fail to be a
valid, perfected first-priority Lien;
(k) If any Loan Document shall cease to be valid and enforceable
against Borrower, Borrower shall so assert;
(l) If any Change of Control shall occur;
(m) If there is a default in any agreement to which Borrower or any
Subsidiary is a party with third parties resulting in a right by such third
parties, whether or not exercised, to accelerate the maturity of any
Indebtedness of Borrower or any such Subsidiary in an aggregate principal amount
of $250,000 or more;
(n) any Reportable Event shall occur which could reasonably be
expected to constitute grounds for termination by the PBGC of any Pension Plan
or for the appointment by the appropriate United States District Court of a
trustee to administer any Pension Plan and such Reportable Event is not
corrected and such determination is not revoked within thirty (30) days after
the administrator of any Pension Plan (if Borrower or any of its ERISA
Affiliates is the administrator) or Borrower or any of its ERISA Affiliates, as
the case may be, has knowledge thereof; or any proceedings shall be instituted
by the PBGC to terminate any Pension Plan or to appoint a trustee to administer
any Pension Plan; or a trustee shall be appointed by the appropriate United
States District Court to administer any Pension Plan; or any Pension Plan shall
be terminated by its sponsor; or there shall occur a complete or partial
withdrawal from any Multiemployer Plan by Borrower or any of its ERISA
Affiliates (including any transaction described in, and meeting the requirements
of, Section 4204 of ERISA); and
(o) If any representation, warranty, certification or statement made
by or on behalf of Borrower or any of its Subsidiaries or any officer of any of
them in this Agreement, any other Loan Document or in any certificate,
instrument, financial statement or other document now or hereafter delivered
hereunder or pursuant to or in connection with any provision hereof shall prove
to be false or incorrect or breached in any material respect on the date as of
which made.
8.2 Remedies. If any Event of Default described in clause (d) (e) or (f)
-------- ---------- --- ---
of Section 8.1 shall occur, the Facilities (if not theretofore terminated) shall
-----------
automatically terminate and the outstanding principal amount of all outstanding
Obligations shall automatically be and become immediately due and
42
payable, without notice or demand. If any other Event of Default shall occur for
any reason, whether voluntary or involuntary, and be continuing, Agent may, by
notice to Borrower, declare all or any portion of the outstanding principal
amount of the Obligations to be due and payable and/or the Loans and the
Commitment (if not theretofore terminated) to be terminated, whereupon the full
unpaid amount of such Obligations which shall be so declared due and payable
shall be and become immediately due and payable, without further notice, demand
or presentment, and/or, as the case may be, the Loans and the Facilities shall
terminate. In addition, upon any Event of Default, Agent shall have the right to
exercise any and all remedies available to it at law or in equity as well as any
rights or remedies specified in any the Loan Documents.
8.3 Remedies with Respect to Collateral.
-----------------------------------
(a) In addition to the foregoing, if any Event of Default shall occur
and be continuing, Agent may exercise, in addition to all other rights and
remedies granted to it in this Agreement or by law, all rights and remedies of a
secured party under the UCC. Without limiting the generality of the foregoing,
Borrower expressly agrees that in any such event Agent may, without demand of
performance or other demand, advertisement, legal process or notice of any kind
(except as may be required by law or provided herein) to or upon Borrower or any
other Person (all and each of which demands, advertisements and/or notices are
hereby expressly waived to the maximum extent permitted by the UCC and other
applicable law), (i) at any time or times enter Borrower's premises and take
physical possession of the Collateral and maintain such possession on Borrower's
premises, without any obligation to pay rent or other compensation to Borrower,
(ii) remove the Collateral or any part thereof, to such other places as Agent
may desire, (iii) forthwith collect, receive, appropriate and realize upon the
Collateral, or any part thereof, and/or (iv) forthwith sell, lease, assign, give
an option or options to purchase, or sell or otherwise dispose of and deliver
said Collateral (or contract to do so), or any part thereof, in one or more
parcels at public or private sale or sales, at any exchange or broker's board or
at any of Agent's offices or elsewhere at such prices and on such terms as Agent
may deem commercially reasonable (irrespective of the impact of any such sales
on the market price of the Collateral), for cash or on credit or for future
delivery. Any such purchaser (including, without limitation, Agent and any
other Lender) of Collateral sold pursuant to this Section 8.3 shall purchase the
-----------
same absolutely free from any claim or right on the part of Borrower and
Borrower does hereby waive (to the maximum extent permitted by the UCC and other
applicable law) all rights of redemption, stay, and appraisal which Borrower now
has or may at any time in the future have under any rule of law or statute now
existing or hereafter enacted. Borrower further agrees, at Agent's request to
assemble the Collateral and make it available to Agent at places which Agent
shall reasonably select, whether at Borrower's premises or elsewhere. To the
maximum extent permitted by applicable law, Borrower waives all claims, damages,
and demands against Agent arising out of the repossession, retention or sale of
the Collateral except such as may arise out of the gross negligence or willful
misconduct of Agent or the failure of Agent to exercise reasonable care in the
custody and preservation of Collateral in its possession or under its control as
provided in Section 4.3. Borrower agrees that, to the extent notice of sale
-----------
shall be required by law, Agent need not give more than ten (10) days' notice of
the time and place of any public sale or of the time after which a private sale
may take place and that such notice shall constitute reasonable notification
within the meaning of Section 9504(3) of the UCC.
(b) Borrower also agrees to pay all reasonable costs of Agent and
Lenders, including, without limitation, reasonable attorneys' fees, incurred in
connection with the enforcement of any of its rights and remedies hereunder,
including, without limitation, reasonable fees for attorneys employed by Agent
or any Lenders to collect any deficiency existing after the application of
proceeds from any sale of Collateral pursuant to this Section 8.3.
-----------
(c) Borrower hereby waives presentment, demand, protest or any notice
(to the maximum extent permitted by applicable law) of any kind in connection
with this Agreement or any Collateral.
(d) The proceeds of any disposition of any Collateral obtained
pursuant to this Section
-------
43
8.3 shall be applied as follows:
---
(i) first, to the payment of any and all expenses and fees
(including reasonable attorney's fees) incurred by Agent in foreclosing on
and disposing of the Collateral;
(ii) next, any surplus then remaining to the payment of the
Obligations (whether matured or unmatured) in such order as Agent may
determine in its sole discretion; and
(iii) thereafter, if no other Obligations are outstanding, any
surplus then remaining shall be paid to Borrower or to such other person
legally entitled to same; it being understood that Borrower will remain
liable to Agent to the extent of any deficiency between the amount of the
Obligations and the aggregate of all amount realized from Collateral.
9. THE AGENT
---------
9.1 Actions. Each Lender hereby appoints COMERICA BANK-CALIFORNIA
-------
("Comerica") as its Agent under and for purposes of this Agreement and each
--------
other Loan Document. Each Lender authorizes Agent to act on behalf of such
Lender under this Agreement and each other Loan Document and, in the absence of
other written instructions from the Required Lenders received from time to time
by Agent (with respect to which Agent agrees that it will comply, except as
otherwise provided in this Section or as otherwise advised by counsel), to
exercise such powers hereunder and thereunder as are specifically delegated to
or required of Agent by the terms hereof and thereof, together with such powers
as may be reasonably incidental thereto. Each Lender hereby indemnifies (which
indemnity shall survive any termination of this Agreement) Agent, pro rata
--- ----
according to such Lender's Percentage, from and against any and all liabilities,
obligations, losses, damages, claims, costs or expenses of any kind or nature
whatsoever which may at any time be imposed on, incurred by, or asserted
against, Agent in any way relating to or arising out of this Agreement and any
other Loan Document, including reasonable attorneys' fees, and as to which Agent
is not reimbursed by Borrower; provided, however, that no Lender shall be liable
-------- -------
for the payment of any portion of such liabilities, obligations, losses,
damages, claims, costs or expenses which are determined by a court of competent
jurisdiction in a final proceeding to have resulted solely from Agent's gross
negligence or wilful misconduct. Agent shall not be required to take any action
hereunder, or under any other Loan Document, or to prosecute or defend any suit
in respect of this Agreement or any other Loan Document, unless it is
indemnified hereunder to its satisfaction. If any indemnity in favor of Agent
shall be or become, in Agent's determination, inadequate, Agent may call for
additional indemnification from the Lenders and cease to do the acts indemnified
against hereunder until such additional indemnity is given.
9.2 Funding Reliance, etc. Unless Agent shall have been notified by
---------------------
telephone, confirmed in writing, by any Lender by 12:00 p.m., Los Angeles,
California time, on the day prior to any Advance or disbursement that such
Lender will not make available the amount which would constitute its Percentage
of such Advance or disbursement on the date specified therefor, Agent may assume
that such Lender has made such amount available to Agent and, in reliance upon
such assumption, make available to Borrower a corresponding amount. If and to
the extent that such Lender shall not have made such amount available to Agent,
such Lender agrees to repay Agent forthwith on demand such corresponding amount
together with interest thereon, for each day from the date Agent made such
amount available to Borrower to the date such amount is repaid to Agent, at the
interest rate applicable at the time to the portion of the Loans comprising such
Advance or disbursement, as the case may be.
9.3 Exculpation. Neither Agent nor any of its directors, officers,
-----------
employees or agents shall be liable to any Lender for any action taken or
omitted to be taken by it under this Agreement or any other Loan Document, or in
connection herewith or therewith, except for its own wilful misconduct or gross
negligence, nor responsible for any recitals or warranties herein or therein,
nor for the effectiveness, enforceability, validity or due execution of this
Agreement or any other Loan Document, nor for the creation,
44
perfection or priority of any Liens purported to be created by any of the Loan
Documents, or the validity, genuineness, enforceability, existence, value or
sufficiency of any collateral security, nor to make any inquiry respecting the
performance by Borrower or any of its Subsidiaries of their respective
obligations under the Loan Documents. Any such inquiry which may be made by
Agent shall not obligate it to make any further inquiry or to take any action.
Agent shall be entitled to rely upon advice of counsel concerning legal matters
and upon any notice, consent, certificate, statement or writing which Agent
believes to be genuine and to have been presented by a proper Person.
9.4 Successor. Agent may resign as such at any time upon at least 30
---------
days' prior notice to Borrower and all Lenders. If Agent at any time shall
resign, the Required Lenders may appoint another Lender as a successor Agent
which shall thereupon become Agent hereunder. If no successor Agent shall have
been so appointed by the Required Lenders, and shall have accepted such
appointment, within 30 days after the retiring Agent's giving notice of
resignation, then the retiring Agent may, on behalf of the Lenders, appoint a
successor Agent, which shall be one of the Lenders or a commercial banking
institution organized under the laws of the U.S. (or any State thereof) or a
U.S. branch or agency of a commercial banking institution, and having a combined
capital and surplus of at least $500,000,000. Upon the acceptance of any
appointment as Agent hereunder by a successor Agent, such successor Agent shall
be entitled to receive from the retiring Agent such documents of transfer and
assignment as such successor Agent may reasonably request, and shall thereupon
succeed to and become vested with all rights, powers, privileges and duties of
the retiring Agent, and the retiring Agent shall be discharged from its duties
and obligations under this Agreement. After any retiring Agent's resignation
hereunder as Agent, the provisions of this Section 9 shall inure to its benefit
---------
as to any actions taken or omitted to be taken by it while it was Agent under
this Agreement; and Sections 10.8 and 10.9 shall continue to inure to its
------------- ----
benefit.
9.5 Loans and other Transactions by Comerica. Comerica shall have the
----------------------------------------
same rights and powers with respect to (x) the Revolving Loan made by it or any
of its Affiliates, and (y) the Notes held by it or any of its Affiliates as any
other Lender and may exercise the same as if it were not Agent. Comerica and its
Affiliates may accept deposits from, lend money to, and generally engage in any
kind of business with Borrower, any of its Subsidiaries or any of their
Affiliates as if Comerica were not Agent hereunder.
9.6 Credit Decisions. Each Lender acknowledges that it has, independently
----------------
of Agent and each other Lender, and based on such Lender's review of the
financial information of Borrower and its Subsidiaries, this Agreement, the
other Loan Documents (the terms and provisions of which being satisfactory to
such Lender) and such other documents, information and investigations as such
Lender has deemed appropriate, made its own credit decision to extend its
Commitment. Each Lender also acknowledges that it will, independently of Agent
and each other Lender, and based on such other documents, information and
investigations as it shall deem appropriate at any time, continue to make its
own credit decisions as to exercising or not exercising from time to time any
rights and privileges available to it under this Agreement or any other Loan
Document.
9.7 Copies, etc. Agent shall give prompt notice to each Lender of each
-----------
notice or request required or permitted to be given to Agent by Borrower
pursuant to the terms of this Agreement (unless concurrently delivered to the
Lenders by Borrower). Agent will distribute to each Lender each document or
instrument received for its account and copies of all other communications
received by Agent from Borrower for distribution to the Lenders by Agent in
accordance with the terms of this Agreement.
10. GENERAL PROVISIONS
------------------
10.1 Notices. All communications provided for hereunder shall be in
-------
writing and delivered by hand or sent by first class mail or sent by telecopy
(with such telecopy to be confirmed promptly in writing sent by first class
mail), sent (i) if to any Lender or Agent, to:
Comerica Bank-California
45
000 Xxxxx Xxxxxxxxx
Xxxxx Xxxx, XX 00000-0000
Attention: Xxxxxx X. Xxxx
Telecopy Number: 000-000-0000
or to such other address or telecopy number as Agent or such Lender may have
designated to Borrower in writing; and (ii) if to Borrower, to:
Powerwave Technologies, Inc.
0000 XxXxx Xxxxxx
Xxxxxx, XX 00000
Attention: Mr. Xxxxx Xxxxxxxx
Telecopy Number: 000-000-0000
or to such other address or addresses or telecopy number or numbers as Borrower
may most recently have designated in writing to Agent and the Lenders by such
notice. All such communications shall be deemed to have been given or made when
so delivered by hand or sent by or telecopy, or three Business Days after being
so mailed.
10.2 Successors and Assigns. This Agreement shall bind and inure to the
----------------------
benefit of the respective successors and assigns of each of the parties;
provided, however, that Borrower may not assign this Agreement or any rights or
-------- -------
duties hereunder without Agent's prior written consent and any prohibited
assignment shall be absolutely void. No consent by Agent to an assignment by
Borrower shall release Borrower from its obligations. Each Lender may assign, or
sell participations in, its Commitment to one or more other Persons in
accordance with the following provisions of this Section 10.2; provided that any
------------ --------
assignment must be allocated ratably between the assigning Lender's Percentage
of the Revolving Loan, the Purpose Loan and the Term Loan.
(a) Assignments. Subject to the foregoing limitations, any Lender may
-----------
at any time, with notice to Borrower and Agent, assign and delegate to one or
more commercial banks or other financial institutions acceptable to Agent (each
Person to whom such assignment and delegation is to be made, being hereinafter
referred to as an "Assignee Lender"), all or any fraction of such Lender's
---------------
Commitment (which assignment and delegation shall be of a constant, and not a
varying, percentage of all the assigning Lender's Commitment and shall be
allocated ratably among the Revolving Loan, the Purpose Loan and the Term Loan);
provided, however, that Borrower and Agent shall be entitled to continue to deal
-------- -------
solely and directly with such Lender in connection with the interests so
assigned and delegated to an Assignee Lender until (i) written notice of such
assignment and delegation, together with payment instructions, addresses and
related information with respect to such Assignee Lender, shall have been given
to Borrower and Agent by such Lender and such Assignee Lender; and (ii) Agent
shall have received its customary processing fee from such Lender or Assignee
Lender and an executed assignment agreement in form and substance satisfactory
to Agent.
From and after the date that an assignment becomes effective as
provided in the preceding paragraph, (x) the Assignee Lender thereunder shall be
deemed automatically to have become a party hereto and to the extent that rights
and obligations hereunder have been assigned and delegated to such Assignee
Lender in connection with such assignment, shall have the rights and obligations
of a Lender hereunder and under the other Loan Documents, and (y) the assignor
Lender, to the extent that rights and obligations hereunder have been assigned
and delegated by it in connection with such assignment, shall be released from
its obligations hereunder and under the other Loan Documents. Within 5 Business
Days after its receipt of notice of such assignment and the surrender of the
assignor Lender's Note(s), Borrower shall execute and deliver to Agent (for
delivery to the relevant Assignee Lender) new Notes evidencing such Assignee
Lender's assigned Commitment and, if the assignor Lender has retained a
Commitment hereunder, replacement Notes each in the principal amount of the
applicable Loan retained by the assignor
46
Lender hereunder (each such Note to be in exchange for, but not in payment of,
the Note then held by such assignor Lender). Each such replacement Note shall be
dated the date of the predecessor Note. Accrued interest on that part of the
predecessor Note evidenced by the replacement Note, and accrued fees, shall be
paid as provided in the documentation effecting the Assignment. Accrued interest
on that part of the predecessor Note evidenced by the Revolving Note shall be
paid to the assignor Lender. Accrued interest and accrued fees shall be paid at
the same time or times provided in the predecessor Note and in this Agreement.
Any attempted assignment and delegation not made in accordance with this Section
-------
10.2(a) shall be null and void.
-------
(b) Participations. Any Lender may at any time sell to one or more
--------------
commercial banks or other Persons (each of such commercial banks and other
Persons being herein called a "Participant") participating interests in any its
-----------
Commitment; provided, however, that
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(i) no participation contemplated in this Section 10.2(b) shall
---------------
relieve such Lender from its Commitment or its other obligations hereunder
or under any other Loan Document;
(ii) such Lender shall remain solely responsible for the
performance of its Commitment and such other obligations;
(iii) Borrower and Agent shall continue to deal solely and directly
with such Lender in connection with such Lender's rights and obligations
under this Agreement and each of the other Loan Documents;
(iv) no Participant, unless such Participant is itself a Lender,
shall be entitled to require such Lender to take or refrain from taking any
action hereunder or under any other Loan Document.
10.3 Section Headings. Headings and numbers have been set forth herein
----------------
for convenience only. Unless the contrary is compelled by the context,
everything contained in each paragraph applies equally to this entire Agreement.
10.4 Interpretation. Neither this Agreement nor any uncertainty or
--------------
ambiguity herein shall be construed or resolved against Agent, any Lender or
Borrower, whether under any rule of construction or otherwise. On the contrary,
this Agreement has been reviewed by all parties (each of which has had the
benefit of advice from legal counsel) and shall be construed and interpreted
according to the ordinary meaning of the words used so as to fairly accomplish
the purposes and intentions of all parties hereto.
10.5 Severability of Provisions. Each provision of this Agreement shall
--------------------------
be severable from every other provision of this Agreement for the purpose of
determining the legal enforceability of any specific provision.
10.6 Amendments and Waivers. No amendment, modification, termination, or
----------------------
waiver of any provision of this Agreement, the other Loan Documents, or any
other document or instrument executed in connection herewith, or consent to any
departure by Borrower therefrom, shall in any event be effective without the
written concurrence of the Required Lenders; provided, however, that no such
-------- -------
amendment, modification or waiver which would:
(a) modify any requirement hereunder that any particular action be
taken by all the Lenders shall be effective unless consented to by each
Lender;
(b) modify this Section 10.6, change the definition of "Required
------------ --------
Lenders", increase the Commitment of any Lender, reduce any fees payable to
-------
Agent or the Lenders, release any Collateral, except as otherwise
specifically provided in any Loan Document or extend the Maturity
47
Date shall be effective without the consent of each Lender;
(c) extend the due date for, or reduce the amount of, any scheduled
repayment or prepayment of principal of or interest on any portion of any
Loan (or reduce the principal amount of or rate of interest on any Loan)
shall be effective without the consent of the holder of that Note
evidencing such portion of the applicable Loan; or
(d) affect adversely the interests, rights or obligations of Agent
qua Agent shall be effective without consent of Agent.
---
10.7 Set-Offs. Upon the occurrence and during the continuance of any
--------
Event of Default, Agent and each Lender is hereby authorized at any time and
from time to time, without notice to Borrower (any such notice being expressly
waived by Borrower), to set off and apply to the payment of the Obligations
(whether or not then due and regardless of whether Agent shall have made any
demand therefor), and (as security for such Obligations) Borrower hereby grants
to Agent (for the benefit of the Lenders) a continuing security interest in, any
and all balances, credits, deposits, accounts or moneys of Borrower then or
thereafter maintained with Agent or any Lender (whether general or special, time
or demand, provisional or final). Agent and each Lender agrees promptly to
notify Borrower after set-off and application made by Agent or any Lender, as
the case may be, provided that the failure to give such notice shall not affect
--------
the validity of such set-off and application. The provisions of this Section
-------
10.7 are in addition to other rights and remedies (including, without
----
limitation, other rights of set-off) which Agent may have.
10.8 Attorneys' Fees and Costs. Borrower agrees to pay, whether or not
-------------------------
the transactions contemplated hereby are consummated, all reasonable expenses of
Agent (including the reasonable fees and out-of-pocket expenses of counsel to
Agent, of local counsel, if any, who may be retained by Agent or its counsel,
and allocated costs of in-house counsel to Agent), in each case promptly
following receipt of an invoice therefor in reasonable detail, in connection
with
(a) the negotiation, preparation, execution and delivery of this
Agreement and of each other Loan Document, including schedules and
exhibits, and any amendments, waivers, consents, supplements or other
modifications to this Agreement or any other Loan Document as may from time
to time hereafter be required, whether or not the transactions contemplated
hereby are consummated, and
(b) the preparation and review of the form of any document or
instrument relevant to this Agreement or any other Loan Document.
Borrower further agrees to pay, and to save Agent harmless from all liability
for, any stamp or other taxes (other than income taxes) which may be payable in
connection with the execution or delivery of this Agreement, the Borrowings
hereunder, or the issuance of the Notes or any other Loan Documents. Borrower
also agrees to reimburse Agent upon demand for all reasonable out-of-pocket
expenses (including attorneys' fees and legal expenses) incurred by Agent and
the Lenders in connection with (x) the negotiation of any restructuring or
"work-out", whether or not consummated, of any Obligations and (y) the
enforcement of any Obligations and any Lien in favor of Agent.
10.9 Indemnification. In consideration of the execution and delivery of
---------------
this Agreement by Agent and Lenders and Lenders' agreement to provide the Loans
hereunder, Borrower hereby indemnifies, exonerates and holds Agent, each Lender
and each of their respective parents, officers, directors, employees, equity
holders and agents (collectively, the "Indemnified Parties") free and harmless
-------------------
from and against any and all actions, causes of action, suits, losses, costs,
liabilities and damages, and expenses incurred in connection therewith
(irrespective of whether any such Indemnified Party is a party to the action for
which indemnification hereunder is sought), including reasonable attorneys' fees
and disbursements (collectively, the "Indemnified Liabilities"), incurred by the
-----------------------
Indemnified Parties or any of them as a result of,
48
or arising out of, or relating to any transaction financed or to be financed in
whole or in part, directly or indirectly, with the proceeds of the Loans; except
for any such Indemnified Liabilities arising for the account of a particular
Indemnified Party by reason of the relevant Indemnified Party's gross negligence
or wilful misconduct. If and to the extent that the foregoing undertaking may be
unenforceable for any reason, Borrower hereby agrees to make the maximum
contribution to the payment and satisfaction of each of the Indemnified
Liabilities which is permissible under applicable law.
10.10 Dissemination. Agent or any Lender obtaining non-public financial
-------------
or other information pursuant to this Agreement which is designated in writing
as such by Borrower shall hold all such information confidential, in accordance
with its customary procedures for handling confidential information of this
nature, unless such information shall be publicly disclosed or become publicly
available other than by an action of such Person that violates the provisions of
this sentence; provided, however, that Agent or any Lender may make such
-------- -------
disclosures (i) as may be consistent with such Persons's customary business
practices to its parents, subsidiaries, affiliates and service providers
(provided that the recipient thereof agrees in writing to hold such information
confidential in a similar fashion), (ii) as may be reasonably required by that
Person in connection with the contemplated transfer of any Note or of any
interest therein or in the Loan Documents (provided that the potential
transferee thereof agrees in writing to hold such information confidential in a
similar fashion), or (iii) as required or requested by any court, arbitrator,
Governmental Body or regulatory authority. Borrower acknowledges that Agent and
the Lenders may provide information regarding Borrower and the Loans to each of
their respective parents, Subsidiaries, Affiliates, attorneys and accountants
who agree to be bound by the terms of this Section 10.10.
-------------
10.11 Counterparts. This Agreement may be executed in any number of
------------
counterparts and by different parties on separate counterparts, each of which,
when executed and delivered, shall be deemed to be an original, and all of
which, when taken together, shall constitute but one and the same Agreement.
10.12 Integration. This Agreement, together with the other Loan
-----------
Documents, reflects the entire understanding of the parties with respect to the
transactions contemplated hereby and shall not be contradicted, modified, or
qualified by any other agreement, oral or written, whether before or after the
date hereof.
10.13 No Waiver; Remedies Cumulative. Agent and the Lenders shall not by
------------------------------
any act, delay, omission or otherwise be deemed to have waived any of its rights
or remedies hereunder, and no waiver shall be valid unless in writing, signed by
Agent and the Lenders and then only to the extent expressly provided therein. A
waiver by Agent and the Lenders of any right or remedy hereunder on any one
occasion shall not be construed as a bar to any right or remedy which Agent and
the Lenders would otherwise have had on any future occasion. No failure to
exercise nor any delay in exercising on the part of Agent and the Lenders, any
right, power or privilege hereunder, shall operate as a waiver thereof, nor
shall any single or partial exercise of any right, power or privilege hereunder
preclude any other or future exercise thereof or the exercise of any other
right, power or privilege. The rights and remedies hereunder provided are
cumulative and may be exercised singly or concurrently, and are not exclusive of
any rights and remedies provided by law.
10.14 GOVERNING LAW. THIS AGREEMENT, THE NOTES AND ALL OTHER LOAN
-------------
DOCUMENTS SHALL BE CONSTRUED IN ACCORDANCE WITH AND SHALL BE GOVERNED BY THE
LAWS OF THE STATE OF CALIFORNIA (WITHOUT GIVING EFFECT TO THE CHOICE OF LAW
PRINCIPLES OF SUCH STATE).
10.15 WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO ACKNOWLEDGES THAT
--------------------
THE RIGHT TO TRIAL BY JURY IS A CONSTITUTIONAL ONE, BUT THAT IT MAY BE WAIVED.
EACH OF THE PARTIES HERETO HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY
WAIVES (AFTER CONSULTING OR HAVING THE OPPORTUNITY TO CONSULT WITH COUNSEL OF
THEIR CHOICE) ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION
49
BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF
DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF ANY PARTY HERETO.
EACH OF THE PARTIES ACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED FULL AND
SUFFICIENT CONSIDERATION FOR THIS PROVISION (AND EACH OTHER PROVISION OF EACH
OTHER LOAN DOCUMENT TO WHICH IT IS A PARTY) AND THAT THIS PROVISION IS A
MATERIAL INDUCEMENT FOR AGENT AND EACH LENDER TO ENTER INTO THIS AGREEMENT AND
EACH SUCH OTHER LOAN DOCUMENT.
[remainder of page intentionally left blank; signatures follow]
50
IN WITNESS WHEREOF, the parties hereto have executed this Loan and Security
Agreement as of the date first set forth above.
Borrower: POWERWAVE TECHNOLOGIES, INC.
--------
By: /s/ XXXXX XXXXXXX
-----------------------------------
Print Name: Xxxxx X. Xxxxxxx
---------------------------
Title: President and Chief Executive
--------------------------------
Officer
--------------------------------------
By: /s/ XXXXX XXXXXXXX
-----------------------------------
Print Name: Xxxxx X. Xxxxxxxx
---------------------------
Title: Vice President, Finance & Chief
--------------------------------
Financial Officer
--------------------------------------
Agent: COMERICA BANK-CALIFORNIA
-----
By: /s/ XXXXXX X. XXXX
-----------------------------------
Print Name: Xxxxxx X. Xxxx
---------------------------
Title: Vice President/Regional Manager
--------------------------------
Lenders: COMERICA BANK-CALIFORNIA
-------
By: /s/ XXXXXX X. XXXX
-----------------------------------
Print Name: Xxxxxx X. Xxxx
---------------------------
Title: Vice President/Regional Manager
--------------------------------
FLEET NATIONAL BANK
By: /s/ XXXXXXX X. XXXXXXX
-----------------------------------
Print Name: Xxxxxxx X. Xxxxxxx
---------------------------
Title: Vice President
--------------------------------
