American National Bank
and Trust Company of Chicago
LOAN AND SECURITY AGREEMENT
(Re: CIRCUIT SYSTEMS, INC.)
THIS AGREEMENT ("Agreement") dated November 21, 1997 and made
effective as of September 1, 1997, by and among CIRCUIT SYSTEMS OF
TENNESSEE, L.P., a Tennessee limited partnership ("Partnership"),
CIRCUIT SYSTEMS OF TENNESSEE, INC., a Tennessee corporation
("Circuit/Tennessee"), CIRCUIT SYSTEMS, INC., an Illinois corporation
(the "Company"; the Company, Circuit/Tennessee and the Partnership
are sometimes referred to individually as a "Borrower" and are
collectively referred to as "Borrowers") and AMERICAN NATIONAL BANK
AND TRUST COMPANY OF CHICAGO, a national banking
association ("Lender").
R E C I T A L S:
The Company is the sole limited partner of the Partnership, and
the sole shareholder of Circuit/Tennessee, which is the sole general
partner of the Partnership.
The Company and Lender, as assignee of NBD Bank, are parties to
that certain Secured Revolving Credit Agreement dated as of April 30,
1993, as amended April 29, 1994, August 23, 1994, August 31, 1995,
November 27, 1995, April 30, 1996 and August 30, 1996 (as amended
hereinafter referred to as the "Company Loan Agreement"), pursuant to
which Lender has made certain credit facilities available to the
Company (hereinafter the "Company Loan").
Pursuant to the terms of the Seventh Amendment to Revolving
Credit Agreement dated July 24, 1997, by and among Borrowers and
Lender, the Partnership assumed all obligations of the Company with
respect to the Company Loan, and certain terms of the Company Loan
were amended as provided therein (the "Company Loan Agreement," as
amended by the Seventh Amendment, is hereinafter referred to as the
"Existing Loan Agreement", and the Company Loan, as amended by the
Seventh Amendment and assumed by the Partnership, as co-maker with
the Company, is hereinafter referred to as the "Existing Loan").
Borrowers have requested that Lender extend the maturity date of
the Existing Loan, make certain amendments to the Existing Loan, and
make an additional credit facility available to Borrowers, as
hereinafter set forth, upon the terms and subject to the conditions
hereafter set forth.
As amended seven times, the Existing Loan Agreement has become
cumbersome, and the parties have agreed to amend and restate the
terms of the Existing Loan Agreement in their entirety, to extend the
maturity date of the Existing Loan, make certain other amendments and
modifications to the Existing Loan, and make an additional credit
facility available to Borrowers upon the terms and subject to the
conditions hereafter set forth.
ACCORDINGLY, in consideration of the foregoing, the mutual
covenants and agreements and of any extension of credit heretofore
now or hereafter made by Lender to Borrowers, and subject to the
terms and conditions hereof, the parties agree as follows:
1. DEFINITIONS. When used herein, the following terms shall
have the following meanings:
1.1 Account(s). All of each Borrower's now existing or
hereafter arising or acquired accounts, accounts receivable, and any
other rights to payment, however created, including, without
limitation, any right to payment for goods sold or leased, or for
services rendered, whether arising out of the sale of inventory or
otherwise and whether or not it has been earned by performance, and
any and all notes, drafts, acceptances, chattel paper, general
intangibles and other obligations arising out of or representing a
right to payment, however created.
1.2 Account Debtor. Any person and/or entity obligated on
an Account.
1.3 Additional Credit Facility Loan. That certain loan
not to exceed Five Million Dollars ($5,000,000.00) made by Lender to
Borrowers hereunder, and as further described in Article 2.
1.4 Additional Credit Facility Loan Maturity Date. The
earlier of (i) August 31, 1998, or (ii) the date upon which Lender
shall accelerate the due date of the Additional Credit Facility Loan,
whether as a result of the occurrence of an Event of Default or as
otherwise permitted hereunder or in the Additional Credit Facility
Note. On the Additional Credit Facility Loan Maturity Date, all of
the outstanding principal under the Additional Credit Facility Note,
together with all unpaid costs, fees and interest thereon, shall be
due and payable in full.
1.5 Additional Credit Facility Loan Note. The promissory
note which evidences the Additional Credit Facility Loan and which is
made jointly and severally by Borrowers payable to the order of
Lender in the principal amount of Five Million Dollars
($5,000,000.00) secured by, among other things, the Collateral and
delivered by Borrowers to Lender in the form attached hereto as
Exhibit D.
1.6 Affiliate. Any Person (a) directly or indirectly
controlling, controlled by or under common control with, any
Borrower, (b) directly or indirectly owning or holding five percent
(5%) or more of any equity interest in any Borrower or any general
partner of the Partnership, (c) five percent (5%) or more of whose
voting stock or other equity interest is owned directly or indirectly
or is held by any Borrower or any partner of the Partnership. For
the purpose of this definition, "control" means the possession,
directly or indirectly, of the power to direct or to cause the
direction of management and policies, whether through the ownership
of voting securities, by contract or otherwise.
1.7 Base Rate. The rate of interest announced or
published publicly from time to time by Lender as its prime or base
rate of interest.
1.8 Borrowers' Liabilities. All obligations and
liabilities of any Borrower to Lender (including, without limitation,
all debts, claims, and indebtedness under Article 3 hereof), whether
primary, secondary, direct, contingent, fixed or otherwise, including
Rate Hedging Obligations (as defined herein), heretofore, now and/or
from time to time hereafter owing, due or payable, however evidenced,
created, incurred, acquired or owing and however arising, whether
under this Agreement, the other Loan Documents or the Other
Agreements or by operation of law or otherwise.
1.9 Business Day. Any day of the year on which Lender is
open for business at its principal office in Chicago, Illinois.
1.10 Charges. All national, federal, state, county, city,
municipal and/or other governmental (or any instrumentality,
division, agency, body or department thereof, including without
limitation the Pension Benefit Guaranty Corporation) taxes, levies,
assessments, charges, liens, claims or encumbrances upon and/or
relating to the "Collateral" (as hereinafter defined), Borrower's
Liabilities, Borrower's business, Borrower's ownership and/or use of
any of its assets, and/or Borrower's income and/or gross receipts.
1.11 Closing. The date that the closing of the Loan shall
occur, whether or not any disbursement of the proceeds of the Loan
shall occur.
1.12 Collateral. Shall have the meaning set forth in
Article 5.
1.13 Debt. Any and all contingent and non-contingent
Indebtedness howsoever evidenced and/or arising and of any nature
whatsoever.
1.14 Debt Service Ratio. For any period, Net Income plus
depreciation divided by principal and interest payments payable with
respect to all Debt for such period.
1.15 Default Rate. See Paragraph 3.4.
1.16 Equipment. Collectively, equipment (as defined in the
UCC) now owned or hereafter acquired by any Borrower, including,
without limitation, all machinery, motor vehicles, trucks, trailers,
vessels, aircraft, rolling stock and all other tangible personal
property (except Inventory) and all parts thereof, and all additions
and accessories thereto and replacements thereof.
1.17 ERISA. The Employee Retirement Income Security Act of
1974, as amended.
1.18 Event of Default. Any of the events described as an
event of default in Article 11 hereof or in any of the other Loan
Documents.
1.19 Existing Litigation. The litigation disclosed by
Borrowers on Exhibit A attached hereto.
1.20 General Intangibles. All choses in action, causes of
action, and other intangible property of any Borrower of every kind
and nature now owned or hereafter acquired by such Borrower,
including, without limitation, partnership, corporate and other
business records, deposit accounts, inventions, designs, patents,
patent and trademark registrations and applications, trademarks,
tradenames, trade secrets, goodwill, copyrights, registrations,
licenses, franchises, deferred tax benefits, tax refund claims,
prepaid expenses, computer programs, covenants not to compete,
customer lists and mailing lists, contract rights, indemnification
rights, letters of credit, guaranty claims, security interests, or
other security held by or granted to such Borrower.
1.21 Indebtedness. All liabilities, obligations, and
indebtedness of any and every kind and nature, including, without
limitation, the Liabilities and all obligations to trade creditors,
whether heretofore, now or hereafter owing, arising, due, or payable
from either Borrower to any Person and howsoever evidenced, created,
incurred, acquired, or owing, whether primary, secondary, direct,
contingent, fixed, or others. Without in any way limiting the
generality of the foregoing, Indebtedness specifically includes (i)
all obligations or liabilities of any Person that are secured by any
lien, claim, encumbrance, or security interest upon property owned by
any Borrower, even though such Borrower has not assumed or become
liable for the payment thereof; (ii) all obligations or liabilities
created or arising under any lease of real or personal property or
conditional sale or other title retention agreement with respect to
property used or acquired by any Borrower, even though the rights and
remedies of the lessor, seller or lender thereunder are limited to
repossession of such property; (iii) obligations under direct or
indirect guarantees in respect of, and obligations (contingent or
otherwise) to purchase or otherwise acquire, or otherwise to assure a
creditor against loss in respect of, indebtedness or obligations of
others of the kinds referred to in clauses (i) or (ii) above; (iv)
all unfunded pension fund obligations and liabilities; and (v)
deferred taxes.
1.22 Interest Period. With respect to any Negotiated Rate
Loan, a period of thirty (30), sixty (60), or ninety (90) days
commencing on the LIBOR Business Day selected by Borrower pursuant to
Section 3.2 hereof. The end of each Interest Period is herein
referred to as a "Reversion Date."
1.23 Interest Rate. See Article 3.
1.24 Interest Rate Determination Date. The date on which
Lender determines the interest rate applicable to any Negotiated Rate
Loan pursuant to subsection 3.2 hereof, which shall be the second
LIBOR Business Day prior to the first day of the Interest Period
applicable to such Negotiated Rate Loan.
1.25 Inventory. Any inventory, stock, raw materials,
materials or supplies of any nature whatsoever, whether raw, finished
or partially finished, and possessed, held or owned by any Borrower
and all names or marks affixed to or to be affixed thereto for
purposes of selling same by the seller, manufacturers, lessor, or
licensor thereof.
1.26 Letter of Credit Obligations. Any and all existing
and future indebtedness, obligations and liabilities of every kind,
nature and character, direct or indirect, absolute or contingent, of
any Borrower to Lender, arising under, pursuant to or in connection
with any letter of credit issued under the Maximum Revolving
Facility.
1.27 Liabilities. Collectively, any and all obligations
under or in connection with this Agreement, the Revolving Credit
Note, the Additional Credit Facility Note, and the Loan Documents.
1.28 LIBOR Business Day. A day which is a Business Day and
on which dealings in United States dollar deposits may be carried out
in the London interbank market.
1.29 LIBOR Rate. For each Interest Period, a rate of
interest equal to
(a) the LIBOR Index Rate on the date which is two (2) LIBOR
Business Days prior to the first day of the Interest
Period, as published in The Wall Street Journal, if such
rate is available, and if the LIBOR Index Rate cannot be
determined by the method stated in (a), then (b) the rate
of interest at which deposits in U.S. Dollars in
immediately available funds are offered to Lender for the
relevant Interest Period by major banks in the interbank
Eurodollar market from time to time in the amount of the
relevant LIBOR Rate Loan at 11:00 a.m. (London time) on the
day which is two (2) LIBOR Business Days prior to the first
day of such Interest Period,
divided by
(b) a number equal to 1.00 minus the aggregate (but without
duplication) of the rates (expressed as a decimal fraction)
of reserve requirements in effect on the day which is
two (2) LIBOR Business Days prior to the beginning of such
Interest Period (including, without limitation, basic,
supplemental, marginal and emergency reserves under any
regulations of the Board of Governors of the Federal
Reserve System or other governmental authority having
jurisdiction with respect thereto, as now and from time to
time in effect) for Eurocurrency funding (currently
referred to as "Eurocurrency liabilities" in Regulation D
of such Board) which are required to be maintained by a
member bank of the Federal Reserve System;
such rate to be adjusted to the next higher one-sixteenth of one
percent (1/16 of 1%).
1.30 Loan. Collectively, the lending under the Revolving
Credit Loan and the Additional Credit Facility Loan.
1.31 Loan Documents. All agreements, instruments and
documents, including, without limitation, notes, guarantees,
mortgages, deeds of trusts, chattel mortgages, pledges, powers of
attorney, consents, assignments, contracts, notices, security
agreements, leases, financing statements, subordination agreements,
trust account agreements, and all other written matter whether
heretofore, now, or hereafter executed by or on behalf of Borrower or
delivered to Lender with respect to this Agreement, including,
without limitation, the Notes.
1.32 Loan Expenses. As defined in Article 3.
1.33 Loan Opening Date. The date on which the first
disbursement of all or any portion of the Loan is made by Lender to
Borrower.
1.34 Maturity Date. The Revolving Credit Loan Maturity
Date or the Additional Credit Facility Loan Maturity Date, as
applicable.
1.35 Maximum Revolving Facility. The maximum amount of the
Loans as evidenced by the Additional Credit Facility Loan Note and
the Revolving Credit Loan Note, which amount constitutes a ceiling on
the outstanding principal balance of Loans to be made by Lender
pursuant to this Agreement.
1.36 Net Operating Income. As of any date, the amount of
net operating income of Borrowers, on a consolidated basis,
determined in accordance with generally accepted accounting
principles.
1.37 Notes. Collectively, the Revolving Credit Note and
the Additional Credit Facility Note.
1.38 Other Agreements. All agreements, instruments and
documents, including, without limitation, guaranties, mortgages,
deeds of trust, notes, pledges, powers of attorney, consents,
assignments, contracts, notices, security agreements, leases,
subordination agreements, financing statements and all other written
matter heretofore, now and/or from time to time hereafter executed by
and/or on behalf of any Borrower and delivered to Lender.
1.39 Permitted Indebtedness. See Exhibit B attached hereto.
1.40 Permitted Liens. See Exhibit C attached hereto.
1.41 Person. Any individual, sole proprietorship,
partnership, joint venture, trust, unincorporated organization,
association, corporation, limited liability company, institution,
entity, party or government (whether national, federal, state,
county, city, municipal or otherwise, including without limitation,
any instrumentality, division, agency, body or department thereof).
1.42 Rate Hedging Obligations. Any and all obligations of
any Borrower, whether absolute or contingent and howsoever and
whenever created, arising, evidenced or acquired (including all
renewals, extensions and modifications thereof and substitutions
therefor), under (i) any and all agreements designed to protect such
Borrower from the fluctuations of interest rates, exchange rates or
forward rates applicable to such Person's assets, liabilities or
exchange transactions, including, but not limited to: interest rate
swap agreements, dollar-denominated or cross-currency interest rate
exchange agreements, forward currency exchange agreements, interest
rate cap, floor or collar agreements, forward rate currency
agreements or agreements relating to interest rate options, puts and
warrants, and (ii) any and all agreements relating to cancellations,
buy backs, reversals, terminations or assignments of any of the
foregoing.
1.43 Revolving Credit Loan. That certain loan, not to
exceed Ten Million Dollars ($10,000,000.00), made by Lender to
Borrowers hereunder, and as further described in Article 2. The
Revolving Credit Loan consolidates the Six Million Dollar
($6,000,000.00) Revolving Credit Loan and the Four Million Dollar
($4,000,000.00) Credit Facility Loan available under the Existing
Loan Agreement.
1.44 Revolving Credit Loan Maturity Date. The earlier of
(i) August 31, 1999, or (ii) the date upon which Lender shall
accelerate the due date of the Revolving Credit Loan, whether as a
result of the occurrence of an Event of Default or as otherwise
permitted hereunder or in the Revolving Credit Loan Note. On the
Revolving Credit Loan Maturity Date, all of the outstanding principal
under the Revolving Credit Loan Note, together with all unpaid costs,
fees and interest thereon shall be due and payable in full.
1.45 Revolving Credit Loan Note. The promissory note which
evidences the Revolving Credit Loan and which is made jointly and
severally by Borrowers payable to the order of Lender in the
principal amount of Ten Million Dollars ($10,000,000.00), secured by,
among other things, the Collateral and delivered by Borrowers to
Lender in the form attached hereto as Exhibit E.
1.46 Securities. Any stock, shares, voting trust
certificates, bonds, debentures, options, warrants, notes or other
evidences of indebtedness, secured or unsecured, convertible,
subordinated or otherwise, or in general any instruments commonly
known as "securities" or any certificate of interest, shares or
participation in temporary or interim certificates for the purchase
or acquisition of, or any right to subscribe to, purchase or acquire,
any of the foregoing.
1.47 SigmaTron Stock. Shares of common stock of SigmaTron
International, Inc., a Delaware corporation ("SigmaTron").
1.48 Tangible Net Worth. The value of the total assets of
Borrowers on a consolidated basis, as determined in accordance with
generally accepted accounting principles ("GAAP") after subtracting
therefrom the aggregate amount of any intangible assets of Borrowers
as determined in accordance with GAAP, including, without limitation,
prepaid expenses, deferred income taxes, other accounts receivable,
good will, franchises, licenses, patents, trademarks, trade names,
copyrights and brand names, minus the aggregate of all contingent and
non-contingent liabilities of Borrowers.
1.49 Unmatured Event of Default. Any event that has
occurred which with lapse of time or the giving of notice, or both,
could constitute an Event of Default hereunder.
All other terms contained in this Agreement, unless the
context indicates otherwise, shall have the meanings provided for
under the Uniform Commercial Code ("UCC") of the State of Illinois to
the extent the same are used or defined therein. Any accounting
terms used in this Agreement which are not specifically defined shall
have the meanings customarily given them in accordance with generally
accepted accounting principles.
2. LOAN: GENERAL TERMS.
2.1 Revolving Credit Loan. Subject to the terms and
conditions of this Agreement, Lender agrees to lend to Borrowers, or
any one of them, and Borrowers agree to borrow from Lender, at any
time or from time to time from the effective date hereof to and
including the Revolving Credit Maturity Date, such amounts as
Borrowers, or any one of them, may request, in an aggregate amount
not to exceed, at any one time outstanding, Ten Million Dollars
($10,000,000.00). Within the limits and provisions of this
Agreement, Borrowers may make such borrowings, repay such advances,
and make additional borrowings.
2.2 Additional Credit Facility Loan. At any time and from
time to time during the period from the effective date hereof to and
including the Additional Credit Facility Maturity Date, subject to
the terms and conditions of this Agreement, Borrowers, or any one of
them, may request additional borrowings from Lender, and Lender
agrees to lend such additional requested amounts to Borrowers, or any
one of them, in an aggregate amount not to exceed, at any one time
outstanding, Five Million Dollars ($5,000,000.00). Within the limits
and provisions of this Agreement, Borrowers may make such borrowings,
repay such advances, and make additional borrowings.
2.3 Evidence of Loan(s). Loans made by Lender to
Borrowers, or any one of them, pursuant to this Agreement shall be
evidenced by notes or other instruments issued or made jointly and
severally by Borrowers to Lender. Except as otherwise provided in
this Agreement or in any notes executed and delivered by Borrowers to
Lender in connection herewith, the principal portion of Borrower's
Liabilities shall be payable jointly and severally by Borrowers to
Lender on the maturity date(s) described in any such note(s) or other
instruments evidencing Borrower's Liabilities (as the same may be
amended, renewed or replaced).
2.4 Disbursements. Borrowers hereby authorize and direct
Lender to disburse for and on behalf of Borrowers and Borrowers'
account, the proceeds of Loans made by Lender to any Borrower,
pursuant to this Agreement, as any officer or director of the Company
shall direct, whether in writing or orally. Disbursements of the
proceeds of Loans made hereunder shall be made by Lender to the
Company's operating account, Account No. 5000184543; provided,
however, that the proceeds of any Loans made to pay Lender any fees
or expenses owed to it by any Borrower shall be disbursed directly to
Lender.
2.5 Revolving Credit. Within the limits of time and
amount set forth in this Agreement, and subject to the provisions of
this Agreement, each Borrower may borrow, repay and reborrow
hereunder, it being agreed that each Borrower shall be liable jointly
and severally for the Liabilities of any Borrower.
2.6 Availability. Provided that an Event of Default or
Unmatured Event of Default does not then exist or would not then be
created, Lender shall advance to Borrowers , or any one of them, on a
revolving credit basis up to the lesser of: (i) the Maximum Revolving
Facility minus any Letter of Credit Obligations, or (ii) the
Borrowing Base minus any Letter of Credit Obligations. As used
herein, "Borrowing Base" shall mean the sum of (a) eighty percent
(80%) of the face amount (less maximum discounts, credits or
allowances which may be taken by or granted to Account Debtors in
connection therewith) of all then existing Eligible Accounts (as
hereinafter defined) that are scheduled on the most recent Borrowing
Base Certificate delivered to Lender; (b) fifty percent (50%) of the
Value of Eligible Raw Materials Inventory valued at the lower of cost
or market, and in any event not to exceed Two Million Five Hundred
Thousand Dollars ($2,500,000.00), and (c) seventy-five percent (75%)
of the Value of Eligible Finished Goods Inventory (as hereinafter
defined) which are stored at Lucent Technologies and in any event not
to exceed Three Million Dollars ($3,000,000.00), all as set forth in
the Borrowing Base Certificate then most recently delivered by
Borrower to Lender, which amount shall be reduced by 100% of the
Value of any reductions in such Eligible Inventory made since the
date of such Borrowing Base Certificate.
Inventory Value shall mean the lesser of Borrower's cost
thereof calculated on a first-in, first-out basis or the wholesale
market value thereof.
Eligible Inventory shall mean any Inventory which meets
each of the following requirements: (a) it is in condition to be
sold in the ordinary course of Borrower's business, if Finished
Goods, or, if Raw Materials, is in condition to be sold as raw
materials outside of the ordinary course of Borrower's business; (b)
in case of goods held for sale or lease, it is (except as Lender may
otherwise consent in writing) new and unused; (c) it is subject to a
first priority, fully perfected security interest in favor of Lender;
(d) it is owned by any Borrower and is not subject to any other lien
or security interest whatsoever except for: (i) the security interest
in favor of Lender, (ii) tax liens for taxes not past due, and (iii)
warehouse liens for warehouse charges not past due; and (e) Lender
has reasonably determined, it is not unacceptable for any reason,
including, but without limitation, due to age, type, category and/or
quantity. Any Inventory which is at any time Eligible Inventory, but
which subsequently fails to meet any of the foregoing requirements
shall forthwith cease to be Eligible Inventory. Notwithstanding the
foregoing, "Eligible Inventory" shall not include:
____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
____________.
Notwithstanding any contrary provision contained herein, Lender
may elect at its option to at any time and upon fourteen (14) days
prior written notice to Borrowers change the foregoing method of
calculating the Borrowing Base by reducing the advances against
Eligible Accounts, or to deduct reserves from the Borrowing Base. If
at any time the unpaid principal amount of the Loans and any Letter
of Credit Obligations exceeds the lesser of : (i) the Maximum
Revolving Facility, or (ii) the Borrowing Base, the Borrowers shall
immediately make a prepayment of principal (plus all accrued and
unpaid interest thereon) of the Loan in an amount not less than the
amount of such excess.
2.7 Expiration of Commitment. Lender's commitment to lend
hereunder shall expire on the earlier of: (i) the date on which
Borrower's Liabilities mature under the terms of any note given by
Borrower to Lender, or (ii) the occurrence of an Event of Default
pursuant to Section 11 hereof.
2.8 All Advances to Constitute One Loan. All advances by
Lender to Borrowers, or any one of them, under the Loan shall
constitute one loan and one general obligation secured by Lender's
security interest in all the Collateral and by all other security
interests, liens, claims, and encumbrances heretofore, now, or at any
time hereafter granted by Borrowers, and/or any one of them, to
Lender. Each Borrower agrees that all of the rights of Lender set
forth in this Agreement shall apply to any amendment, modification of
or supplement to this Agreement and the Other Loan Documents.
2.9 Closing. The closing of the Loan to be made hereunder
shall take place at the offices of the Company, 0000 Xxxx Xxxx
Xxxxxx, Xxx Xxxxx Xxxxxxx, Xxxxxxxx 00000, on November 21, 1997, or
such other time or place as the parties may agree in writing
("Closing") and shall be deemed to have occurred when the Notes are
delivered by Borrower to Lender.
2.10 Representation and Warranty. Each loan or any
disbursement made by Lender to Borrowers, or any one of them,
hereunder shall constitute an automatic warranty and representation
by all Borrowers to Lender that (i) there does not then exist an
Event of Default or any Unmatured Event of Default hereunder or under
any of the other Loan Documents, and (ii) that such disbursement will
not cause the amount of the outstanding principal balance of the Loan
plus any Letter of Credit Obligations to exceed the lesser of the
Maximum Revolving Facility or the Borrowing Base.
2.11 Duration of Agreement. This Loan Agreement shall be
in effect until all of Borrower's Liabilities have been paid in full
and any and all commitments of Lender to make loans hereunder have
terminated.
3. INTEREST/FEES/COSTS. As consideration for Lender's
agreement to make the Loan to Borrower, Borrower shall be obligated
to pay to Lender certain fees, interest, costs and expenses as
provided for herein or in any of the Loan Documents, including,
without limitation, the following:
3.1 Loan Fee. Borrowers shall pay Lender quarterly, on
the first day of each calendar quarter during the term hereof, a fee
equal to one eighth percent (.125%) multiplied by the amount, if any,
by which Ten Million and No/100ths Dollars ($10,000,000.00) exceeds
the average outstanding daily principal balance during the preceding
calendar quarter on the Revolving Credit Loan.
3.2 Interest on the Revolving Credit Loan and the
Additional Credit Facility Loan.
(i) So long as no Event of Default or Unmatured Event of
Default has occurred, the Revolving Credit Loan and the
Additional Credit Facility Loan and all other obligations
hereunder shall bear interest from the date such Loans are
made or such other obligations are incurred until paid in
full at a rate per annum (meaning 360 days) at rates (the
"Interest Rate") determined by reference to the Base Rate
or the Negotiated Rate, as follows:
(a) the Revolving Credit Loan shall bear interest either
(x) at a floating rate equal to the Base Rate, or (y)
at a rate equal to the applicable LIBOR Rate plus one
and three-quarters percent (1.75%) (the "Negotiated
Rate");
(b) the Additional Credit Facility Loan shall bear
interest at a floating rate equal to the Base
Rate; and
(c) any other obligations hereunder shall bear interest at
a floating rate equal to the Base Rate.
(ii) The basis for determining the interest rate for all or part
of the Revolving Credit Loan may be changed from time to
time pursuant to this subsection 3.2. If on any day any
part of the Revolving Credit Loan is outstanding with
respect to which notice has not been timely received by
Lender in accordance with this Agreement specifying that
the Negotiated Rate shall be applicable thereto, then for
that day such Loan (or portion thereof) shall bear interest
at the applicable rate specified in subsection 3.2(i)
determined by reference to the Base Rate. Loans bearing
interest at rates determined by reference to the Base Rate
are herein sometimes referred to as "Prime Rate Loans" and
Loans bearing interest at rates determined by reference to
the LIBOR Rate are herein sometimes referred to as
Negotiated Rate Loans.
(iii) Borrower may elect from time to time to convert all or
part of the outstanding principal balance of the Revolving
Credit Loan from a Prime Rate Loan to a Negotiated Rate
Loan by giving Lender at least three (3) business days'
prior irrevocable notice of such an election; provided that
no Loan may be converted to a Negotiated Rate Loan while an
Unmatured Event of Default or an Event of Default has
occurred and is continuing. Borrower may also elect from
time to time to continue any outstanding Negotiated Rate
Loan (whether for a similar or a different Interest Period)
upon the expiration of the Interest Period then applicable
thereto by giving Lender at least three (3) LIBOR Business
Days' prior irrevocable notice of such continuation of such
Negotiated Rate Loan; provided that no Loan may be
continued as a Negotiated Rate Loan while an Unmatured
Event of Default or an Event of Default has occurred and is
continuing.
(iv) Each notice of election to convert to a Negotiated Rate
Loan or to continue a Negotiated Rate Loan shall be signed
by the President, Vice President or Treasurer of the
Company and shall specify (a) the proposed conversion or
continuation date; (b) the amount of the Loan to be
converted or continued; (c) the nature of the proposed
conversion or continuation; and (d) the requested Interest
Period, which shall be thirty (30), sixty (60), or ninety
(90) days, but in no event beyond the applicable Maturity
Date. Each such notice shall also certify that no
Unmatured Event of Default or Event of Default has occurred
and is then continuing.
(v) On the date upon which each conversion to a Negotiated Rate
Loan or continuation of a Negotiated Rate Loan is being
made pursuant to a notice given in accordance with this
Agreement, Lender shall take such actions as are necessary
to effect such conversion or continuation. Subject to the
limitations set forth in this subsection 3.2 and in the
definition of Interest Period, all or any part of the
Revolving Credit Loan may be converted into Negotiated Rate
Loans or continued as Negotiated Rate Loans as provided
herein, provided that partial conversions or continuations
of any Loan shall be in the minimum amount of $1,000,000,
and, if in excess thereof, in integral multiples of
$1,000,000.
3.3 Computation of Interest. Interest accruing on the
unpaid principal balance of the Loan shall be computed for the actual
number of days elapsed on the basis of a year consisting of 360 days
and shall be payable at the time or times provided in the Notes.
Interest payable pursuant to this Agreement shall be payable and
shall be charged in accordance with the applicable provisions hereof
and of the Notes, provided that, with respect to any payment of
interest which becomes due hereunder, at any and all times any Loan
is outstanding hereunder, Borrowers authorize and direct Lender to,
and Lender shall, cause such interest to be paid on such due date by
debiting the Company's operating account and, if insufficient funds
are available in such operating account, by charging any deficiency
in such payment as a Loan against the Revolving Credit Loan, and if
such charge would cause the amount of the Revolving Credit Loan to
exceed Ten Million and No/100ths Dollars ($10,000,000.00), such
excess shall be charged against the Additional Credit Facility Loan.
3.4 Default Rate/Late Charge. From and after such time as
an Event of Default occurs under this Agreement or any of the Loan
Documents, or if either Loan is not paid in full on or prior to its
Maturity Date, the unpaid balance outstanding under the Loan shall
bear interest at an interest rate equal to the applicable Interest
Rate, plus three percent (3%) (the "Default Rate"). Each Borrower
further agrees to pay a "Late Charge" of five percent (5%) of any
amount due hereunder if such amount is paid more than ten (10) days
after the due date thereof, to cover the extra expense involved in
handling delinquent payments. This provision shall not be deemed to
excuse a late payment or be deemed a waiver of any other rights
Lender may have, including the right to declare the entire principal
and interest immediately due and payable.
3.5 Fees and Costs. Borrowers shall pay all expenses,
charges, costs and fees of the Loan, including, without limitation,
Lender's reasonable attorneys' fees, in connection with the
negotiation, documentation, administration, servicing and enforcement
of the Loan, and any fees and costs charged by an appraiser, the cost
of any and all credit checks run by Lender, fees and costs of
accountants, field audits, UCC, tax and judgment lien searches, all
recording fees and charges, all title insurance charges and premiums,
escrow fees, survey costs and the costs of any bonds required by any
title company, and any and all other costs, expenses, charges, and
fees referred to in or necessitated by the terms of this Agreement
(collectively, the "Loan Expenses"). The Loan Expenses shall be paid
by Borrowers promptly upon Lender's demand or, alternatively, may be
paid by Lender at any time by disbursement of proceeds of the Loan.
The Loan Expenses shall be payable by Borrowers regardless of whether
there shall be any disbursements of the Loan. If not paid within
ten (10) days following Lender's demand, the Loan Expenses shall bear
interest until the date paid by Borrowers at the Default Rate.
3.6 Funding Losses. In the event any that Borrower fails
to borrow any LIBOR Rate Loan, or makes any payment on a LIBOR Rate
Loan on a date other than the last day of the applicable Interest
Period, Borrowers shall pay Lender, within ten (10) days following
Lender's demand therefor, any resulting loss or expense, including,
without limitation, any amount incurred in obtaining, liquidating or
employing deposits from third parties acquired or arranged to fund
such LIBOR Rate Loan.
4. PAYMENTS; APPLICATION; OFFSET.
4.1 Payments. All payments of principal or interest on
the Revolving Credit Note and the Additional Credit Facility Note,
and all payments of any other fees and costs due hereunder shall be
made in immediately available funds. All such payments shall be made
to Lender at its principal office in Chicago, Illinois, not later
than 2:00 p.m., Chicago time, on the date due, and funds received
after that hour shall be deemed to have been received by Lender on
its next following Business Day.
4.2 Loan Repayment/Additional Credit Facility Loan. The
Additional Credit Facility Loan shall be payable in monthly payments
of accrued interest at the applicable Interest Rate, in arrears, due
and payable commencing on the last day of the month in which
disbursement of the proceeds of the Additional Credit Facility Loan
shall occur and continuing on the last day of each month thereafter,
through and including the month in which the Additional Credit
Facility Loan Maturity Date occurs, at which time the outstanding
principal balance and all the then accrued and unpaid interest on the
principal balance of the Additional Credit Facility Loan shall be due
and payable.
4.3 Loan Repayment/Revolving Credit Loan. The Revolving
Credit Loan shall be payable in monthly payments of accrued interest
at the applicable Interest Rate, in arrears, due and payable
commencing on the last day of the month in which the disbursement of
the proceeds of the Revolving Credit Loan shall occur, and continuing
on the last day of each month thereafter, through and including the
Revolving Credit Loan Maturity Date, at which time the outstanding
principal balance and all then accrued and unpaid interest on the
principal balance of the Loan shall be due and payable.
4.4 Maturity Dates. The unpaid principal balance of the
Additional Credit Facility Loan and all accrued and unpaid interest
thereon and any fees and costs payable by Borrowers hereunder with
respect thereto, if not sooner paid or declared to be due in
accordance with the terms hereof, shall be due and payable in full on
the Additional Credit Facility Loan Maturity Date. The unpaid
principal balance of the Revolving Credit Loan and all accrued and
unpaid interest thereon and any fees and costs payable by Borrowers
with respect thereto, if not sooner paid or declared to be due in
accordance with the terms hereof, shall be due and payable in full on
the Revolving Credit Loan Maturity Date.
4.5 Statement of Account. Lender shall provide the
Company with a statement of account relating to the Loan on a monthly
basis. Each such statement of account shall be presumed correct and
accurate and shall, except for Lender's right to reapply payments,
constitute an account stated between Borrowers and Lender, unless
thereafter waived in writing by Lender or unless, within thirty (30)
days after the Company's receipt thereof, the Company delivers to
Lender, by certified mail, written objection thereto specifying the
error or errors contained therein.
4.6 Prepayment. Borrowers may prepay any principal
outstanding under any Prime Rate Loan, at any time, and provided
Borrower extends one (1) business day's prior written notice to
Lender without premium or penalty. Negotiated Rate Loans may not be
repaid in whole or in part prior to the Reversion Date of each such
loan. Any prepayment of all or any portion of the outstanding
principal balance under the Notes shall include all fees, costs and
interest accrued to the date of such prepayment. Provided that at
the time of any such prepayment, an Event of Default or Unmatured
Event of Default exists hereunder, any prepayment of the Loan may be
applied by Lender at its discretion to either the Additional Credit
Facility Loan and/or the Revolving Credit Loan. In the event that at
any time during the term of the Loan, Borrowers and Lender agree to
fix the rate of all or any portion of the Loan, as a condition of
such agreement by Lender, Lender shall be entitled to charge, and
Borrowers shall pay, Lender's standard yield maintenance prepayment
premium in connection with the prepayment of any such fixed rate
loan.
4.7 Offset. In addition to and not in limitation of all
rights of offset that Lender or other holder of the Notes may have
under applicable law, Lender or other holder of such Note shall, upon
the occurrence of any Event of Default, or any Unmatured Event of
Default, have the right to appropriate and apply to the payment of
the Notes, any and all balances, credits, deposits, accounts or
monies of any Borrower then or thereafter with Lender or other
holder.
4.8 Final Release. At such time as Borrower's Liabilities
have been fully paid, Borrowers have complied with all requirements
of the Loan Documents, and there is no obligation of Lender to make
additional disbursements of the Loan, then the Notes shall be
canceled and returned to Borrowers and all other Loan Documents shall
be terminated and any liens created thereunder shall be released.
5. COLLATERAL SECURITY.
5.1 All Assets. To secure the prompt payment to Lender of
Borrower's Liabilities and the prompt, full and faithful performance
by Borrowers of all of the provisions to be kept, observed or
performed by Borrowers under this Agreement and/or the Loan
Documents, each Borrower has previously granted to Lender a security
interest in and to, and collaterally assigned to Lender, all of such
Borrower's property, wherever located, whether now or hereafter
existing, owned, licensed, leased (to the extent of such Borrower's
leasehold interest therein), consigned (to the extent of such
Borrower's ownership therein), arising and/or acquired, including
without limitation all of each Borrower's: (a) Accounts, chattel
paper, tax refunds, contract rights, leases, leasehold interests,
letters of credit, instruments, documents, documents of title,
patents, copyrights, trademarks, tradenames, licenses, goodwill,
beneficial interests and General Intangibles; (b) all goods whose
sale, lease or other disposition by such Borrower have given rise to
Accounts and have been returned to or repossessed or stopped in
transit by such Borrower; (c) all investment property, including but
not limited to certificated and uncertificated securities; (d) goods,
including without limitation all its consumer goods, machinery,
equipment, farm products, fixtures and Inventory; (e) liens,
guaranties and other rights and privileges pertaining to any of the
Collateral; (f) monies, reserves, deposits, deposit accounts and
interest or dividends thereon, cash or cash equivalents; (g) all
property now or at any time or times hereafter in the possession, or
under the control of Lender or its bailee; (h) all accessions to the
foregoing, all litigation proceeds pertaining to the foregoing and
all substitutions, renewals, improvements and replacements of and
additions to the foregoing; and (i) all books, records and computer
records in any way relating to the Collateral herein described. Any
security agreement, UCC financing statement or other document
evidencing and/or securing Lender's security interest in the
Collateral and heretofore delivered by any Borrower to Lender,
including, without limitation, the Security Agreement executed by the
Company dated as of April 1, 1992, the Security Agreement executed by
the Company dated as of April 30, 1993, and the Security Agreement
executed by the Partnership dated July 24, 1997, shall be and remain
in full force and effect, and shall continue to evidence and/or
secure Lender's security interest in the Collateral.
5.2 Collateral. All of the aforesaid property and
products and proceeds of the foregoing in Paragraph 5.1 above,
including without limitation, proceeds of insurance policies insuring
the foregoing are herein individually and collectively called the
"Collateral". The terms used herein to identify the Collateral shall
have the same meaning as are assigned to such terms as of the date
hereof in the Illinois Uniform Commercial Code.
5.3 Deliveries; Further Assurances. Each Borrower agrees
that it will, at its sole expense (i) upon request by Lender, within
five (5) days of demand, deliver or cause to be delivered to Lender
in due form for transfer, chattel paper, instruments and documents of
title, if any, at any time representing all or any of the Collateral,
(ii) without request by Lender, cause Lender's security interest
under the Loan Documents to be at all times duly noted on any
certificate of title issuable with respect to any of the Collateral
and forthwith deliver or cause to be delivered to Lender each such
certificate of title, and (iii) upon request of Lender, forthwith
execute and deliver or cause to be executed and delivered to Lender,
in due form for filing or recording (and pay the cost of filing or
recording the same in all public offices deemed necessary by Lender)
such assignments, security agreements, mortgages, deeds of trust,
pledge agreements, warehouse receipts, bailee letters, consents,
waivers, financing statements, stock or bond powers, and other
documents, and do such other acts and things, all as Lender may from
time to time reasonably request to establish and maintain to the
reasonable satisfaction of Lender a valid perfected security interest
in all of the Collateral (free of all other liens, claims and rights
of third parties whatsoever except the Permitted Liens) to secure
payment of the Loan. Each Borrower irrevocably hereby makes,
constitutes and appoints Lender (and all other persons designated by
Lender for that purpose) as such Borrower's true and lawful attorney
(and agent-in-fact) to sign the name of such Borrower on any such
agreements, instruments and documents referred to in clause (iii)
above and to deliver such agreements, instruments and documents to
such persons as Lender in its sole discretion may elect.
5.4 Verification of Collateral; Inspection; Audit. Any of
Lender's officers, employees or agents shall have the right, at any
reasonable time hereafter, during any Borrower's business hours in
Lender's name or in the name of any Borrower, to verify the validity,
amount or any other matter relating to any of the Collateral by mail,
telephone or otherwise. Lender (by any of its officers, employees or
agents) shall have the right, at any time during any Borrower's usual
business hours and upon not less than three (3) business day's prior
notice, to inspect the Collateral, all records related thereto (and
to make extracts from such records) and the premises upon which any
of the Collateral is located, and the right, at any reasonable time,
to discuss Borrower's affairs and finances and the Collateral with
any attorney, accountant, lessee, account debtor or other debtor or
creditor of any Borrower. Costs incurred by Lender in connection
with any audit of the Collateral shall be paid by Borrowers.
Notwithstanding the foregoing, the above restrictions as to
reasonable times during business hours and prior notice shall not
apply if an Event of Default or Unmatured Event of Default has
occurred or is continuing.
5.5 Records and Schedules. Each Borrower shall keep
accurate and complete records of its Accounts, Inventory and other
Collateral. By no later than the fifteenth (15th) day of each
calendar month, Borrowers shall each furnish to Lender a certificate
("Borrowing Base Certificate"), on Lender's standard form, with all
blanks appropriately completed, setting forth such information with
respect to such Borrower's Accounts, Inventory and other Collateral
as required therein, signed by the President, Chief Financial Officer
or Treasurer of the Company.
5.6 Location of Collateral. Each Borrower warrants and
represents to and covenants with Lender that: (a) Lender's security
interest in the Collateral is now and at all times hereafter shall be
perfected and have a first priority except as expressly agreed to in
writing by Lender; (b) the offices and/or locations where any
Borrower keeps the Collateral are specified at the end of this
Paragraph and no Borrower shall remove such Collateral therefrom
except as may occur in the ordinary course of business, and shall not
keep any of such Collateral at any other offices or locations unless
Borrowers give Lender written notice thereof at least thirty (30)
days prior thereto and the same is within the United States of
America; and (c) the addresses specified at the end of this Paragraph
include and designate each Borrower's principal executive office,
principal place of business and other offices and places of business
and are such Borrower's sole offices and places of business.
Borrowers, by written notice delivered to Lender at least thirty (30)
days prior thereto, shall advise Lender of any Borrower's opening of
any new office or place of business or its closing of any existing
office or place of business and any new office or place of business
shall be within the United States of America. Borrowers have places
of business at the address shown at the beginning of this Agreement
and at the locations listed below:
1) Circuit Systems, Inc., 0000 Xxxx Xxxx Xxxxxx, Xxx Xxxxx Xxxxxxx,
Xxxxxxxx 00000;
2) Circuit Systems, Inc., 0000 Xxxx Xxxx Xxxxxx, Xxx Xxxxx Xxxxxxx,
Xxxxxxxx 00000;
3) Circuit Systems, Inc., 0000 Xxxx Xxxx Xxxxxx, Xxx Xxxxx Xxxxxxx,
Xxxxxxxx 00000;
4) Circuit Systems, Inc., 0000 Xxxxxxxxx Xxxx, Xxx Xxxxx Xxxxxxx,
Xxxxxxxx 00000;
5) Circuit Systems, Inc., 000 Xxxxx Xxxxxx, Xxxxxxx,
Xxxxxxxx 00000;
6) Circuit Systems of Tennessee, L.P., 0000 Xxxxxxxxxx Xxxx,
Xxxxxxxxxxx, Xxxxxxxxx 00000.
All of the Collateral currently owned by Borrowers and all
of the Collateral hereafter acquired is, or will be held or stored at
the locations listed below:
1) Circuit Systems, Inc., 0000 Xxxx Xxxx Xxxxxx, Xxx Xxxxx Xxxxxxx,
Xxxxxxxx 00000;
2) Circuit Systems, Inc., 0000 Xxxx Xxxx Xxxxxx, Xxx Xxxxx Xxxxxxx,
Xxxxxxxx 00000;
3) Circuit Systems, Inc., 0000 Xxxx Xxxx Xxxxxx, Xxx Xxxxx Xxxxxxx,
Xxxxxxxx 00000;
4) Circuit Systems, Inc., 0000 Xxxxxxxxx Xxxx, Xxx Xxxxx Xxxxxxx,
Xxxxxxxx 00000;
5) Circuit Systems, Inc., 000 Xxxxx Xxxxxx, Xxxxxxx,
Xxxxxxxx 00000;
6) Circuit Systems of Tennessee, L.P., 0000 Xxxxxxxxxx Xxxx,
Xxxxxxxxxxx, Xxxxxxxxx 00000.
5.7 Trustee. At the request of Lender, each Borrower
shall receive, as the sole and exclusive property of Lender and as
trustee for Lender, all monies, checks, notes, drafts and all other
payments for and/or proceeds of Collateral which come into the
possession or under the control of such Borrower and immediately upon
receipt thereof, such Borrower shall remit the same (or cause the
same to be remitted), in kind, to Lender or at Lender's direction.
5.8 Lender's Endorsement. Upon demand or upon an Event of
Default, Lender may take control of, in any manner, and may endorse
any Borrower's name to any of the items of payment or proceeds
described in Paragraph 5.7 above and, pursuant to the provisions of
this Agreement, Lender shall apply the same to and on account of
Borrower's Liabilities.
5.9 Assignment. Lender may, at its option, at any time or
times hereafter, but shall be under no obligation to pay, acquire
and/or accept an assignment of any security interest, lien,
encumbrance or claim asserted by any Person against the Collateral.
5.10 Special Collateral. Immediately upon any Borrower's
receipt of that portion of the Collateral evidenced by an agreement,
instrument and/or document ("Special Collateral"), such Borrower
shall xxxx the same to show that such Special Collateral is subject
to a security interest in favor of Lender and shall deliver the
original thereof to Lender, together with appropriate endorsement
and/or specific evidence of assignment (in form and substance
acceptable to Lender) thereof to Lender.
5.11 Deposits. Regardless of the adequacy of any
Collateral securing Borrower's Liabilities hereunder, any deposits or
other sums at any time credited by or payable or due from Lender to
any Borrower, or any monies, cash, cash equivalents, securities,
instruments, documents or other assets of any Borrower in possession
or control of Lender or its bailee for any purpose may, upon demand
or an Event of Default or event or condition which with notice or
lapse of time would constitute an Event of Default, be reduced to
cash and applied by Lender to or setoff by Lender against Borrower's
Liabilities hereunder.
5.12 Lock Box. At the request of Lender, each Borrower
shall instruct the Account Debtors of its Accounts to make payments
directly to a lockbox or cash collateral account maintained by Lender
in the Company's name. All such collections shall be Lender's
property to be applied against Borrower's Liabilities, and not any
Borrower's property. Lender may endorse any Borrower's name to any
of the items of payment or proceeds described herein.
6. COLLATERAL: ACCOUNTS.
6.1 An "Eligible Account" is an Account of any Borrower
which meets each of the following requirements: (a) it arises from
the sale or lease of goods, such goods having been shipped or
delivered to the Account Debtor thereof, or from services rendered to
the Account Debtor; (b) it is a valid, legally enforceable obligation
of the Account Debtor thereunder, and is not subject to any offset,
counterclaim or other defense on the part of such Account Debtor
denying liability thereunder in whole or in part; (c) it is subject
to a perfected security interest in favor of Lender and is not
subject to any other lien or security interest whatsoever, except
those of Lender; (d) it is evidenced by an invoice (dated not later
than the date of shipment to the Account Debtor or performance and
having a due date not more than thirty (30) days after the date of
invoice) rendered to such Account Debtor, and is not evidenced by any
instrument or chattel paper; (e) it is payable in United States
dollars; (f) it is not owing by any Account Debtor residing, located
or having its principal activities or place of business outside the
United States of America or who is not subject to service of process
in the United States of America; (g) it is not owing by any Account
Debtor involved in any bankruptcy or insolvency proceeding; (h) it is
not owing by any affiliate of Borrower; (i) it is not unpaid more
than ninety (90) days after the date of such invoice; (j) it is not
owing by an Account Debtor which shall have failed to pay in full any
invoice evidencing any account within ninety (90) days after the date
of such invoice, unless the total invoice amounts of such Account
Debtor which have not been paid within ninety (90) days of the date
represents less than 25% of the total invoice amounts then
outstanding of such Account Debtor; and (k) it is not an Account as
to which Lender, at any time or times hereafter, determines, in good
faith, that the prospect of payment or performance by the Account
Debtor thereof is or will be impaired. Notwithstanding the foregoing,
Accounts with respect to which the Account Debtor is the United
States of America or any department, agency or instrumentality
thereof, shall not be included as an Eligible Account unless, with
respect to any such Account, Borrowers have complied to Lender's
satisfaction with the provisions of the Federal Assignment of Claims
Act of 1940, including, without limitation, executing and delivering
to Lender all statements of assignment and/or notification which are
in form and substance acceptable to Lender and which are deemed
necessary by Lender to effectuate the assignment to Lender of such
Accounts. An Account which is at any time an Eligible Account, but
which subsequently fails to meet any of the foregoing requirements,
shall forthwith cease to be an Eligible Account. Lender may in its
sole discretion at any time reduce the percentage set forth in clause
(j) above upon seven (7) days prior notice to Borrowers. Borrowers,
immediately upon demand from Lender, shall pay to Lender an amount of
money equal to the monies advanced by Lender to Borrowers upon an
Account that is no longer an Eligible Account.
6.2 With respect to Accounts, except as otherwise
disclosed by Borrowers to Lender in writing, each Borrower warrants
and represents to Lender that: (a) they 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 completed in
accordance with the terms and provisions contained in the invoices
and other documents delivered to Lender with respect thereto; (c) the
amounts shown on any Borrowing Base Certificate and/or all invoices
and statements delivered to Lender with respect thereto are actually
and absolutely owing to Borrower and are not in any way contingent;
(d) no payments have been made or shall be made thereon except
payments immediately delivered to Lender pursuant to this Agreement;
(e) there are no setoffs, counterclaims or disputes existing or
asserted with respect thereto and no Borrower has made any agreement
with any Account Debtor thereof for any deduction therefrom except a
regular discount allowed by Borrower in the ordinary course of its
business for prompt payment; (f) there are no facts, events or
occurrences which in any way impair the validity or enforcement
thereof or tend to reduce the amount payable thereunder, which may be
shown on any Borrowing Base Certificate and on all invoices, and
statements delivered to Lender with respect thereto; (g) to the best
of each Borrower's knowledge, all Account Debtors have the capacity
to contract and are solvent; (h) the services furnished and/or goods
sold or leased giving rise thereto are not subject to any lien,
claim, encumbrance or security interest except that of Lender; (i) no
Borrower has knowledge of any fact or circumstance which would impair
the validity or collectibility thereof; (j) to the best of each
Borrower's knowledge, there are no proceedings or actions which are
threatened or pending against any Account Debtor which might result
in any material adverse change in its financial condition; and (k)
Borrowers have filed a Notice of Business Activities Report or a
Certificate of Authority or similar report with the appropriate
office or department in states where Account Debtors are located and
where such reports are required as a condition to commencing or
maintaining an action in the courts of such states, or Borrowers have
demonstrated to Lender's satisfaction that it is exempt from any such
requirements under such state's law.
6.3 Any of Lender's officers, employees or agents shall
have the right, at any time or times hereafter, in Lender's name or
in the name of a nominee of Lender, to verify the validity, amount or
any other matter relating to any Accounts by mail, telephone,
facsimile or otherwise and to sign any Borrower's name on any
verification of Accounts and notices thereof to Account Debtors. All
costs, fees and expenses relating thereto incurred by Lender (or for
which Lender becomes obligated) shall be part of Borrower's
Liabilities, payable by Borrowers to Lender on demand.
6.4 Unless Lender notifies Borrowers in writing that
Lender suspends any one or more of the following requirements, each
Borrower shall: (a) promptly upon such Borrower's learning thereof,
inform Lender, in writing, of any material delay in any Borrower's
performance of any of its obligations to any Account Debtor and of
any assertion of any claims, offsets or counterclaims by any Account
Debtor and of any allowances, credits and/or other monies granted by
such Borrower to any Account Debtor; (b) not permit or agree to any
extension, compromise or settlement with respect to Accounts which
constitute, in the aggregate, more than 5% of all Accounts then owing
to such Borrower; and (c) keep all goods returned by any Account
Debtor and all goods repossessed or stopped in transit by such
Borrower from any Account Debtor segregated from other property of
such Borrower, immediately notify Lender of any Borrower's possession
of such goods, and hold the same as trustee for Lender until
otherwise directed in writing by Lender.
6.5 Lender shall have the right, now and at any time or
times hereafter, at its option, without notice thereof to any
Borrower: (a) to notify any or all Account Debtors that the Accounts
and Special Collateral have been assigned to Lender and Lender has a
security interest therein; (b) to direct such Account Debtors to make
all payments due from them to any Borrower upon the Accounts and
Special Collateral directly to Lender; and (c) to enforce payment of
and collect, by legal proceedings or otherwise, the Accounts and
Special Collateral in the name of Lender and Borrower.
6.6 Each Borrower, irrevocably, hereby designates, makes,
constitutes and appoints Lender (and all Persons designated by
Lender) as such Borrower's true and lawful attorney (and agent-in-
fact), with power, upon an Event of Default, or any Unmatured Event
of Default, without notice to any Borrower and in such Borrower's or
Lender's name: (a) to demand payment of Accounts; (b) to enforce
payment of the Accounts by legal proceedings or otherwise; (c) to
exercise all of such Borrower's rights and remedies with respect to
the collection of the Accounts; (d) to settle, adjust, compromise,
discharge, release, extend or renew the Accounts; (e) to settle,
adjust or compromise any legal proceedings brought to collect the
Accounts; (f) to sell or assign the Accounts upon such terms, for
such amounts and at such time or times as Lender deems advisable; (g)
to prepare, file and sign such Borrower's name on any Notice of Lien,
Assignment or Satisfaction of Lien or similar document in connection
with the Accounts and Special Collateral; or (h) to prepare, file and
sign such Borrower's name on any Proof of Claim in Bankruptcy or
similar document against any Account Debtor.
7. WARRANTIES AND REPRESENTATIONS.
7.1 Warranties and Representations of the Borrower. To
induce Lender to enter into this Agreement and to make the Loan
hereunder, Borrowers each represent and warrant to Lender that:
(a) Organization. The Partnership is a limited
partnership duly organized, validly existing and in good
standing under the laws of the State of Tennessee and qualified
or licensed to do business in good standing in all states in
which the laws thereof require the Partnership to be so
qualified and/or licensed, except where the failure to be so
qualified could not reasonably be expected to have a material
adverse effect on Borrowers, the Collateral or Borrowers'
business. The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of
Illinois and qualified or licensed to do business and in good
standing in all states in which the laws thereof require the
Company to be so qualified and/or licensed, except where the
failure to be so qualified could not reasonably be expected to
have a material adverse effect on the Borrowers, the Collateral,
Borrowers' business or the Company. Circuit/Tennessee is a
corporation duly organized, validly existing and in good
standing under the laws of the State of Tennessee, and qualified
or licensed to do business and in good standing in all states in
which the laws thereof require Circuit/Tennessee to be so
qualified and/or licensed, except where the failure to be so
qualified could not reasonably be expected to have a material
adverse effect on the Borrowers, the Collateral, Borrowers'
business or Circuit/Tennessee. Circuit/Tennessee is the sole
general partner of the Partnership, holding a 1% partnership
interest therein, and the Company is the sole limited partner of
the Partnership, holding a 99% partnership interest therein.
The Company is the sole shareholder of Circuit/Tennessee holding
100% of the Securities in Circuit/Tennessee.
(b) Authorization; No Conflict. The execution and
delivery of this Agreement, the Notes and the Loan Documents,
any disbursements of the Loan hereunder and the performance by
the Borrowers of their respective obligations under this
Agreement, the Notes and the Loan Documents are within the each
of their respective powers, have been duly authorized by all
necessary action, and do not and will not contravene or conflict
with any provision of law or of the covenants and provisions of
the Agreement of Limited Partnership establishing the
Partnership or of any other agreement binding upon any Borrower,
the articles of incorporation establishing the Company, its
bylaws or any other agreement binding upon the Company, or the
articles of incorporation establishing Circuit/Tennessee, its
bylaws or any other agreement binding upon Circuit/Tennessee.
(c) Validity and Binding Nature. This Agreement is, and
the Credit Facility Note, the Revolving Credit Note, and the
Loan Documents, when duly executed and delivered, will be,
legal, valid and binding joint and several obligations of the
Borrowers, enforceable against each such party in accordance
with their respective terms. As security for the Borrower's
Liabilities, Lender has a valid perfected security interest in
all Collateral.
(d) Financial Statements. All balance sheets, statements
of operations, consolidated and/or unconsolidated statements,
audited or otherwise, and other financial data (other than
forecasts and/or projections) which have been or shall hereafter
be furnished to Lender for purposes of or in connection with
this Agreement and/or the making of the Loan (collectively,
"Financials"), do and will present fairly the financial
condition of the entities involved as of the date thereof and
the results of their operations for the period(s) covered
thereby. The Financials of Borrowers, copies of which have been
furnished to Lender, are complete in every respect, have been
prepared in conformity with generally accepted accounting
principles applied on a basis consistent with that of the
financial statements issued during the preceding fiscal year of
such entity, and accurately present the financial condition of
such entity, and as at such dates, and the results of its
operations for the periods then ended, and since such dates
there has been no material adverse change in any financial
conditions or operations contained therein.
(e) Litigation; Contracts and Contingent Liabilities.
Except for the Existing Litigation, as set forth on Exhibit A
attached hereto, no litigation (including, without limitation,
derivative actions), arbitration proceedings or governmental
proceedings are pending or threatened against any Borrower which
could, if adversely determined, materially and adversely affect
the financial condition or continued operations of such
Borrower. Borrowers each have no material contingent
liabilities not provided for or disclosed in the Financials and
no Borrower is a party to any agreement or subject to any
charge, restriction or other matter materially and adversely
affecting its business, property, assets, operations or
condition, financial or otherwise, and is not a party to any
labor dispute, and there are no pending or threatened strikes or
walkouts relating to any labor contract.
(f) Liens. Except for the security interests held by
Lender and the Permitted Liens as set forth on Exhibit C hereto,
none of the Collateral, or any of the assets of any Borrower is
subject to any mortgage, pledge, title retention lien, or other
lien, encumbrance or security interest, except (i) inchoate
liens for current taxes not delinquent or taxes being contested
in good faith and by appropriate proceedings in which a bond has
been posted for the amount contested; and (ii) liens arising in
the ordinary course of business for sums not due or sums being
contested in good faith and by appropriate proceedings, but not
involving any deposits or advances or borrowed money or the
deferred purchase price of property or services.
(g) Perfection and Priority of Collateral. Except for the
Permitted Liens, no financing statement (other than any which
may have been filed on behalf of Lender) covering any of the
Collateral is on file in any public office; each Borrower is and
will be the lawful owner of all of its Collateral, free and
clear of all liens, claims, and encumbrances whatsoever, except
for liens in favor of Lender; and Lender has or, upon the
execution of the Loan Documents, will have, and will continue to
have, as security for Borrower's Liabilities, a valid and
perfected lien on, and security interest in, all of the
Collateral, free and clear of all other liens, claims,
encumbrances and rights of third parties whatsoever, except for
the Permitted Liens.
(h) Existing Obligations. To each Borrower's knowledge,
no Borrower is in violation of any applicable statute,
regulation or ordinance of any governmental entity, or any
agency thereof, in any respect materially and adversely
affecting any of the Collateral or its business, property,
assets, operations or condition, financial or otherwise, and no
Borrower is in default with respect to any indenture, loan
agreement, mortgage, lease, deed or other similar agreement
relating to borrowing of monies to which it is a party or by
which it is bound. No Borrower has guaranteed the obligation of
any other person or entity, except as disclosed as a contingent
liability on Exhibit B hereto.
(i) Employee Benefit Plans. Any employee benefit plan as
to which any Borrower may have any liability, complies in all
material respects with all requirements of applicable law and
regulations. Each Borrower has met all applicable minimum
funding requirements in respect of its plans, and all required
contributions to any pension, profit-sharing and other employee
benefit plan have been made or accrued. No Reportable Event (as
defined in Paragraph 4043(b) of ERISA) has occurred, and to the
best knowledge of each Borrower, is not threatened or about to
occur with respect to any Employee Benefit Plan (as defined in
ERISA), and no notice of termination has been filed by the plan
administrator pursuant to Paragraph 4041 of ERISA, or issued by
the Pension Benefit Guaranty Corporation ("PBGC") pursuant to
Section 4042 of ERISA with respect to any pension plan subject
to ERISA. The present value of all benefits vested under all
Employee Benefit Plans maintained for the benefit of employees
of any Borrower does not exceed the value of the assets of such
plans allocable to such vested benefits. No Borrower is a party
to, bound by or subject to any Multiemployer Plan (as that term
is defined in Section 4001(a) (3) of ERISA). No Borrower is
(i) engaged in any Prohibited Transaction (as defined in Section
406 of ERISA, and Section 4975 of the Internal Revenue Code of
1986, as amended; (ii) a fiduciary for investments with respect
to any plan existing for the benefit of persons other than
employees; or (iii) completely or partially withdrawn from any
Multiemployer pension plan so as to incur liability under the
Multiemployer Pension Plan Amendments Act of 1980.
(j) Various Regulations. No Borrower's execution and
delivery of this Agreement and any of the Loan Documents
directly or indirectly violates or results in a violation of
Section 7 of the Securities and Exchange Act of 1934, as
amended, or any regulations issued pursuant thereto, including,
without limitation Regulations G, U, T and X of the Board of
Governors of the Federal Reserve System, and Borrower does not
own or intend to purchase or carry any "margin security" as
defined in said Regulations.
(k) Principal Place of Business. The chief executive
office and principal place of business of the Partnership, and
the offices where the Partnership maintains its books and
records, including, without limitation, computer programs,
printouts, and other computer materials and records concerning
any of the Collateral shall be deemed to be 0000 Xxxxxxxxxx
Xxxxx, Xxxxxxxxxxx, Xxxxxxxxx 00000. The chief executive office
and principal place of business of the Company, and the offices
where the Company maintains its books and records, including,
without limitation, computer programs, printouts, and other
computer materials and records concerning any of the Collateral
shall be deemed to be 0000 Xxxx Xxxx Xxxxxx, Xxx Xxxxx Xxxxxxx,
Xxxxxxxx 00000.
(l) Tax Returns; Reports. Each Borrower has filed, or
will file pursuant to any applicable extensions duly granted,
all federal, state and local tax returns and other reports it is
required by law to file and has paid, to the extent due and
payable, meaning all national, federal, state, county, city,
municipal and/or other governmental (or any instrumentality,
division, agency, body or department thereof, including without
limitation the Pension Benefit Guaranty Corporation) taxes,
levies, assessments, charges, liens, claims or encumbrances upon
and/or relating to the Collateral, the Liabilities, such
Borrower's employees, payroll, income and/or gross receipts,
such Borrower's ownership and/or use of any of its assets and
any other aspect of such Borrower's business.
(m) Names. No Borrower has, during the preceding five (5)
years, been known as or used any other corporate or fictitious
name, except as disclosed herein.
(n) Solvency; Capital. Each Borrower now has sufficient
capital to carry on all businesses and transactions in which it
now engages or is about to engage, is now solvent and will
continue to be solvent after the creation of the security
interest in the Collateral by this Agreement, and is able to pay
its debts as they mature, and if requested by Lender, each
Borrower shall deliver to Lender an affidavit regarding its
solvency and certain related matters in form reasonably
acceptable to Lender's counsel.
(o) Solvency; Personnel. Each Borrower has sufficient
personnel and possesses adequate assets to continue to conduct
its business.
(p) Use of Proceeds. Borrowers' use of the proceeds of
any advances and re-advances made by Lender pursuant to this
Agreement are, and shall continue to be, legal and proper
partnership uses duly authorized by the Boards of Directors of
the Company and Circuit/Tennessee, respectively, and such uses
are consistent with all applicable laws and statutes, as in
effect as of the date hereof.
(q) Intellectual Property Rights. Each Borrower owns (or,
in the case of the Partnership's use of certain intellectual
property rights and licenses of Philips Electronics North
America Corporation pursuant to that certain Intellectual
Property License Agreement dated July 24, 1997, has a valid and
enforceable right to use) all material licenses, patents, patent
applications, copyrights, service marks, trademarks, trademark
applications and trade names necessary to continue to conduct
its business as now conducted by it, each of which is listed,
together with Patent and Trademark Office Application or
Registration Numbers, where applicable, on Exhibit F attached
hereto. Each Borrower conducts its respective business without
infringement or claim of infringement of any license, patent,
copyright, service xxxx, trademark, trade name, trade secret or
other intellectual property rights of others. Except as set
forth on Exhibit F attached hereto, to the best knowledge of
each Borrower, there is no infringement or claim of infringement
by others of any material license, patent, copyright, service
xxxx, trademark, trade name, trade secret or other intellectual
property right of any Borrower.
(r) Complete Disclosure. No representation or warranty
made by any Borrower under this Agreement or any other Loan
Document and no statement made by any Borrower to Lender
pursuant to or in connection with this Agreement (including,
without limitation, in connection with the Existing Agreement)
is false or misleading in any material respect (including by
omission of material information necessary to make such
representation, warranty or statement not misleading).
7.2 Survival of Warranties and Representations. All
representations and warranties of Borrowers contained in this
Agreement and the Loan Documents shall survive the execution,
delivery and acceptance thereof by the parties thereto and the
closing of the transactions described therein or related thereto.
8. FINANCIAL COVENANTS.
8.1 Affirmative Covenants. Until all obligations of the
Borrowers hereunder, under the Notes and under the Loan Documents are
paid and performed in full, each Borrower agrees that, unless at any
time Lender shall otherwise expressly consent in writing, each
Borrower shall:
(a) Financials. Cause to be furnished to Lender the
following (all of the foregoing and following to be kept and
prepared in accordance with generally accepted accounting
principals applied on a consistent basis, unless any Borrower's
certified public accountants concur in any changes therein and
such changes are disclosed to Lender and are consistent with
then generally accepted accounting principles):
(i) Annual Reports. As soon as practicable, and in
any event within ninety (90) days of the close of each
fiscal year of Borrowers, the Company shall furnish or
cause to be furnished to Lender a copy of the consolidated
annual audit report of Borrowers, prepared in conformity
with GAAP applied on a basis consistent with that of the
preceding fiscal year (except for changes promulgated and
required by the Financial Accounting Standards Board
("FASB") and conforming thereto, certified without
qualification as to the scope of audit or the financial
condition of each Borrower as a going concern by Xxxxx
Xxxxxxxx, L.L.P. or other firm of certified public
accountants reasonably acceptable to Lender. Each balance
sheet furnished under this section shall be accompanied by
a schedule prepared and signed by the President, Vice
President or Treasurer of the Company categorizing the
assets and liabilities set forth in each such balance sheet
as either current assets or liabilities or long-term assets
or liabilities, as the case shall be.
(ii) Accountant's Certificate. Each set of year-end
audited consolidated and consolidating statements and
balance sheets delivered pursuant to paragraph (i) above
shall be accompanied by: (a) a statement from such
accountants in reasonable detail showing the calculations
used in determining the financial covenants under this
Article; (b) an unqualified statement of such accountants
that they have caused the provisions of this Agreement to
be reviewed and that in the course of their audit of
Borrowers, nothing has come to their attention to lead them
to believe that any Event of Default hereunder exists, it
being understood that the examination of such accountants
cannot be relied upon to give them knowledge of any Event
of Default except as it relates to accounting or auditing
matters, or, if anything has come to their attention to
cause them to believe that an Event of Default has
occurred, a description of such Event of Default which
occurred, and (c) a reliance certificate from such
accountants addressed to Borrowers, and with a copy thereof
addressed to Lender, acknowledging, in substance, that a
primary intent of Borrowers is for such financial
statements to benefit or influence Lender, and that Lender
will rely upon such financial statements.
(iii) Monthly Statements. As soon as practicable,
and in any event within fifteen (15) days after each month
end (except for each quarter end of any Borrower) of each
fiscal year of each Borrower, a copy of its unaudited
financial statement, similarly prepared, consisting of at
least a balance sheet as of the close of such month end and
a profit and loss statement and analysis of surplus for
such month end and for the period from the beginning of
such fiscal year to the close of such month end, and signed
by the President, Vice President or Treasurer of
the Company.
(iv) Other Reports and Information. (1) Within ninety
(90) days after each fiscal year end of the Company, a copy
of its annual 10-K Report as filed with the Securities and
Exchange Commission; (2) within forty-five (45) days after
each quarter end (except the last quarter end) of each
fiscal year of the Company, a copy of its quarterly 10-Q
Report as filed with the Securities and Exchange
Commission; (3) within fifteen (15) days after the end of
each calendar month a listing of each Borrower's Accounts
Receivable, Accounts Payable, Inventory Valuation and past
due and delinquent accounts; (4) within fifteen (15) days
after the end of each calendar month a Borrowing Base
Certificate on Lender's standard form as of the last day of
the immediately preceding calendar month end, and signed by
a proper officer of the Company; (5) within ten (10) days
after the filing thereof with the Securities and Exchange
Commission, a copy of its 8-K Report; (6) within forty-five
(45) days after each quarter end (except the last quarter
end) of each fiscal year of SigmaTron, a copy of its
unaudited financial statements consisting of at least a
balance sheet as of the close of such quarter end and a
profit and loss statement and analysis of surplus for such
quarter end and for the period from the beginning of such
fiscal year to the close of such quarter end, and signed by
a proper accounting officer of SigmaTron; (7) within ninety
(90) days after each fiscal year end of SigmaTron,
financial statements prepared on at least a compilation
basis and in conformity with GAAP applied on a basis
consistent with that of the preceding fiscal year; and (8)
within five (5) days following receipt thereof by the
Company, a copy of the Demand/Consigned Summary Report
provided to the Company by Lucent Technologies.
(v) Other Information. Each Borrower will promptly
furnish or cause to be furnished to Lender such other
financial information and in such form as Lender may
reasonably request.
(b) Notice of Default, Adverse Information, Litigation.
Forthwith upon learning of the occurrence of any of the
following, furnish to Lender written notice thereof, describing
the same, and the steps being taken by Borrowers with respect
thereto: (i) the occurrence of an Event of Default or an
Unmatured Event of Default; (ii) the institution of, or any
adverse determination in, any litigation, arbitration proceeding
or governmental proceeding, pending or threatened, which is
material to any Borrower; or (iii) any other material
information relating to any adverse change in the financial
condition or which may materially and adversely affect the
operations, financial condition or business of any Borrower or
Lender's security interest in the Collateral.
(c) Books, Records and Inspections. Maintain complete and
accurate books and records; permit access upon notice by Lender
to such books and records and permit Lender to inspect the
properties and operations of such Borrower at its principal
place of business set forth herein upon three (3) business days'
prior notice; provided, however, such notice requirements shall
not apply if an Event of Default or Unmatured Event of Default
has occurred or is continuing under this Agreement or any of the
Loan Documents.
(d) Tax Returns. As soon as available, but not later than
thirty (30) days after the filing of same, Borrowers shall
provide Lender with copies of the federal, state, and local, if
any, income tax returns of Borrowers, in the form said returns
are filed, each certified as true, correct and complete by
Borrowers.
(e) Ratios. The Company and the Partnership will
maintain, on a consolidated basis, at all times from and after
the date hereof, (i) a minimum current ratio (excluding from
current liabilities, amounts payable with respect to equipment
purchased and held pending conversion into long-term financing
lease transactions) of not less than 1.25:1.00, measured
quarterly; and (ii) a maximum Debt to Tangible Net Worth ratio,
measured quarterly, not to exceed 2.50:1.00, all as determined
in conformity with GAAP. For purposes hereof, the term "Tangible
Net Worth" shall have the meaning set forth in paragraph 1.14
hereof.
(f) Tangible Net Worth. Borrowers will maintain, from and
after September 1, 1997, minimum Tangible Net Worth of not less
than $17,000,000.00, and from and after April 30, 1998, minimum
Tangible Net Worth of not less than $19,500,000.00. Such amount
shall be measured quarterly.
(g) Debt Service. Borrowers will maintain, at all times,
a Debt Service Ratio of not less than 1.10:1.00. Such ratio
shall be measured annually.
(h) Compliance Certificate. As soon as practicable, and
in any event within forty-five (45) days after the end of each
calendar quarter, Borrowers shall deliver or cause to be
delivered to Lender a certificate, on Lender's standard form,
dated as of the end of such calendar quarter, signed on behalf
of each Borrower by its Chairman, President, Chief Financial
Officer or Controller, stating that as of the date thereof, no
Event of Default or Unmatured Event of Default has occurred and
is continuing or exists, or, if an Event of Default or Unmatured
Event of Default has occurred and is continuing or exists,
specifying in detail the nature and period of existence thereof
and any action with respect thereto taken or contemplated to be
taken by the Borrowers, setting forth and certifying the
calculation of each of the financial covenants set forth in this
Section 8 and stating that the signer has personally reviewed
this Agreement and that the certificate is based on an
examination made by or under the supervision of the signer
sufficient to insure that such certificate is accurate.
8.2 Negative Covenants. Without Lender's prior written
consent, which Lender may or may not in its sole and absolute
discretion give, each Borrower covenants that:
(a) Dividends. Borrowers will not purchase, retire,
acquire or redeem any shares of its capital stock, declare or
pay any dividends, make any distributions to stockholders, or
set aside any funds for such purposes, except for dividends not
to exceed fifty percent (50%) of net income after taxes,
measured annually. Notwithstanding the foregoing, and provided
that any such redemption shall not cause the Company or any
Borrower to violate any covenant herein or otherwise be in
default hereunder, the Company may redeem such shares of its
capital stock as are necessary in order to reduce the total
shares outstanding to 4,600,000. At such time as the total
shares outstanding are reduced to 4,600,000, no further
redemptions shall take place without the prior written consent
of Lender.
(b) Leases and Capital Expenditures. Borrowers will not
make or incur any capital expenditures or enter any leases
which, in the aggregate, require the payment by Borrowers of
amounts therefor in excess of $3,120,000.00 for the fiscal years
ending April 30, 1998 or April 30, 1999.
(c) Investments. Except for the Company's stock
redemption described in paragraph 8.2(a) above, Borrowers will
not purchase or acquire any securities of, or make any loans or
advances to, or investments in, any Person, except (i)
obligations of the United States Government; (ii) open market
commercial paper rated one of the top two ratings by a rating
agency of recognized standing; (iii) certificates of deposit in
insured financial institutions; (iv) advances made to related
entities and/or investments in corporations or entities
fundamentally engaged in the same business and industry as
Borrower, provided such advances and investments (not including
the Company's existing investment in the Partnership and the
Company's existing ownership of SigmaTron stock) do not exceed,
in the aggregate, at any time, $1,000,000.00.
9. GENERAL COVENANTS.
9.1 Affirmative Covenants. Until all the obligations of
Borrowers hereunder, under the Notes, and under the Loan Documents
are paid and performed in full, each Borrower agrees that, unless at
any time Lender shall otherwise expressly consent in writing, each
Borrower shall:
(a) General Insurance. Maintain such insurance as may be
required by law and such other insurance, to such extent and
against such hazards and liabilities, as is customarily
maintained by companies similarly situated, and provide that all
such insurance shall contain a lender's loss payment clause
acceptable to Lender, naming Lender as lender's loss payee.
(b) Taxes and Liabilities. Pay when due, all Charges.
(c) Agreements. Provide Lender with copies of all
agreements between either Borrower and any Affiliate.
(d) Federal Assignment of Claims Act. If any of the
Collateral arises out of a contract with the United States of
America, or any department, agency, subdivision, or
instrumentality thereof, promptly notify Lender thereof in
writing and execute any instruments and take any other action
required or requested by Lender to perfect Lender's security
interest in such Collateral under the provisions of the Federal
Assignment of Claims Act.
(e) Maintenance of Collateral. Maintain the Collateral in
good operating condition and repair; make all necessary
replacements thereof so that the value and operating efficiency
thereof shall at all times be substantially maintained and
preserved; quarterly inform Lender of any material additions to
or deletions from the Collateral; take reasonable steps to
prevent any such Collateral from becoming a fixture to real
estate or accession to other personal property and keep the
Collateral adequately insured for full value and liability,
noting Lender's interest as secured party and naming Lender as
loss payee thereunder, as more specifically provided in
Paragraph 9.1(h) hereof.
(f) Bank Accounts. Continue to retain Lender as the main
bank of account for each Borrower. Lender shall handle all of
each Borrower's accounts, receipts, disbursements and related
services and Borrowers shall, at a minimum, maintain sufficient
balances to cover such services.
(g) Consents. Provide Lender with any consents of third
parties necessary or appropriate with respect to granting or
perfecting Lender's security interest in the Collateral.
(h) Insurance; Payment of Premiums. Each Borrower shall
keep and maintain the Collateral insured for its full insurable
value against loss or damage by fire, theft, explosion, and all
other hazards and risks ordinarily insured against by other
owners or users of such properties, assets, and/or accounts in
similar businesses and notify Lender promptly of any occurrence
causing a material loss or decline in value of the Collateral
and the estimated (or actual, if available) amount of such loss
or decline. All policies of insurance on the Collateral shall
be in form and with insurers recognized as adequate by prudent
business persons and all such policies shall be in such amounts
as may be reasonably satisfactory to Lender. Prior to Closing,
Borrowers shall deliver or cause to be delivered to Lender the
original (or certified copy) of each policy of insurance and
evidence of payment of all premiums therefor. Such policies of
insurance shall contain an endorsement showing loss payable to
Lender. Such endorsement shall provide that the insurance
companies will give Lender at least thirty (30) days prior
written notice before any such policy or policies of insurance
shall be canceled for any reason other than for non-payment of
premium, and in the event the policy or policies shall be
canceled for non-payment of premium, Lender will receive ten
(10) days prior written notice before such cancellation takes
effect. Furthermore, in the event an insurer elects not to
renew a policy providing coverage required herein, Lender shall
receive ten (10) days' prior written notice before the
expiration of such policy. No act or default of any Borrower or
any other person or entity, other than Lender's gross negligence
or willful misconduct, shall affect the right of Lender to
recover under such policy or policies of insurance in case of
loss or damage. Subject to the foregoing, each Borrower hereby
directs all insurers under such policies of insurance to pay all
proceeds payable thereunder directly to Lender. Each Borrower
irrevocably makes, constitutes and appoints Lender (and all
officers, employees or agents designated by Lender) as its true
and lawful attorney (and agent-in-fact) for the purpose of
making, settling and adjusting claims under such policies of
insurance, endorsing the name of Borrower on any check, draft,
instrument or other items of payment for the proceeds of such
policies of insurance and for making all determinations and
decisions with respect to such policies of insurance. In the
event Borrowers, at any time hereafter, shall fail to obtain or
maintain any of the policies of insurance required above or to
pay any premium in whole or in part relating thereto, then
Lender, without waiving or releasing any obligations or default
by any Borrower hereunder, may at any time thereafter (but shall
be under no obligation to) obtain and maintain such policies of
insurance and pay such premium and take any other action with
respect thereto which Lender deems advisable. All sums so
disbursed by Lender, including reasonable attorneys' fees, court
costs, expenses and other charges relating thereto, shall be
payable on demand, provided that Lender accompanies such demand
by a description of all such charges by Borrowers to Lender and
shall be additional Liabilities hereunder secured by the
Collateral.
(i) Covenants With Respect to Collateral. Until all
obligations of the Borrowers hereunder and under the Notes are
paid and performed in full, each Borrower shall furnish or cause
to be furnished to Lender, from time to time, such schedules,
certificates and reports with respect to all or any of the
Collateral then subject to the security interests of Lender
hereunder, and under the Loan Documents (including, without
limitation, schedules identifying all Collateral), all such
schedules, certificates and reports, to be executed by Borrowers
and to be in such form and detail as Lender may from time to
time specify.
(j) Organization and Control. Cause the Company to be the
sole limited partner of the Partnership, holding 99% of the
partnership interest therein, cause Circuit/Tennessee to be the
sole general partner of the Partnership, holding 1% of the
partnership interest therein, and cause the Company to be the
sole shareholder of Circuit/Tennessee, holding 100% of the
issued and outstanding Securities thereof. The Company shall
also maintain at least one of X.X. Xxxxx or Xxxxx X. Xxxxx in
the capacity of President, Chief Executive Officer or
Vice President.
9.2 Negative Covenants. Without Lender's prior written
consent, which Lender may or may not, in its sole and absolute
discretion, give, Borrowers covenant that each Borrower:
(a) Guaranties, Loans, or Advances. Shall not become or
be a guarantor or surety of, or otherwise become or be
responsible, in any manner (whether by agreement to purchase any
obligations, stock, assets, goods, or services , or to supply or
advance any funds, assets, goods, and services, or otherwise),
with respect to any undertaking of any other person or entity,
except for the endorsement, in the ordinary course of collection
of instruments payable to it or to its order.
(b) Mergers, Consolidations, Sales, and Dividends. Shall
not be a party to any merger or consolidation, or redeem,
retire, purchase, or otherwise acquire, directly or indirectly,
all or substantially all of the assets or any portion of stock
of any class of the Borrower, or any class of stock or
partnership or joint venture interest in, any other Person or
entity, or, except in the ordinary course of its business, sell,
transfer, convey, or lease all or any substantial part of its
assets, or sell or assign, with or without recourse, any
receivables or make or permit any change in such Borrower's
capital structure or in any of its business objectives,
purposes, or operations which might in any way materially and
adversely affect the repayment of the Liabilities, or declare or
pay any dividends upon any of such Borrower's stock; provided,
however, that Borrowers may pay dividends in respect of their
capital stock, provided that such dividends shall not
exceed fifty percent (50%) of net income, after taxes, measured
annually. Notwithstanding the foregoing, the Company may also
make the stock redemption described in paragraph 8.2(a) above.
(c) Other Matters. Shall not enter into any transaction
which materially and adversely affects the Collateral or any
Borrower's ability to repay Borrower's Liabilities, or permit or
agree to any extension, compromise, or settlement, or make any
materially adverse change or modification of any kind or nature
with respect to any agreement relating to the Collateral or
enter into any agreement containing any provision which would be
violated or breached by the performance of its obligations
hereunder or under any Loan Document.
(d) General Covenants. Borrowers shall not, without
Lender's prior written consent thereto: (i) grant a security
interest in or assign any of the Collateral to any Person or
permit, grant, or suffer a lien, claim or encumbrance upon any
of the Collateral; (ii) sell or transfer any of the Collateral
not in the ordinary course of business; (iii) enter into any
transaction not in the ordinary course of business which
materially and adversely affects the Collateral or Borrower's
ability to repay Borrower's Liabilities or Indebtedness; and
(iv) incur Indebtedness except: (A) unsecured trade debt in the
ordinary course of business; (B) renewals or extensions of
existing Indebtedness and interest thereon; (C) Indebtedness
that is unsecured and is to Persons who execute and deliver to
Lender in form and substance acceptable to Lender and its
counsel subordination agreements subordinating their claims
against Borrower therefor to the payment of Borrower's
Liabilities; and (D) Permitted Indebtedness as set forth on
Exhibit B hereto.
(e) Transactions With Affiliates. No Borrower shall enter
into or be a party to any transaction with any Affiliate of such
Borrower, except as not prohibited by this Agreement, and
otherwise in the ordinary course of and pursuant to the
reasonable requirements of such Borrower's business, provided
that such transaction is upon fair and reasonable terms which
are fully disclosed to Lender, and are no less favorable to such
Borrower than would be obtained in a comparable arm's-length
transaction with a Person not an Affiliate of such Borrower.
9.3 Survival of Obligations Upon Termination of Agreement.
Except as otherwise expressly provided for in this Agreement and in
any Loan Document, no termination or cancellation (regardless of
cause or procedure) of this Agreement or any agreements contained in
the Loan Documents shall in any way affect or impair the powers,
obligations, duties, rights, and Liabilities of Borrowers or Lender
relating to (a) any transaction or event occurring prior to such
termination or cancellation, or (b) the Collateral (so long as any
Borrower's Liabilities remain outstanding), or (c) any of the
undertakings, agreements, covenants, warranties, and representations
of Borrowers or Lender contained in this Agreement or in the Loan
Documents. All such undertakings, agreements, covenants, warranties,
and representations shall survive such termination or cancellation.
10. CONDITIONS PRECEDENT TO LOAN. The obligation of Lender to
disburse the Loan is subject to the following conditions precedent:
10.1 Execution and delivery of all of the following Loan
Documents:
(a) Additional Credit Facility Note. The Additional
Credit Facility Note duly executed by Borrowers.
(b) Revolving Credit Note. The Revolving Credit Note
duly executed by Borrowers.
(c) Financing Statements. Form UCC-1 Financing
Statements for the States of Tennessee and Illinois
executed by each Borrower.
(d) Resolutions and Certificates. (i) Certified
copies of resolutions of the Boards of Directors of the
Company and Circuit/Tennessee authorizing or ratifying the
execution, delivery and performance, respectively, of this
Agreement, the Revolving Credit Note, the Additional Credit
Facility Note, and the Loan Documents; (ii) certified
copies of the Articles of Incorporation and By-Laws and
Certificate of Good Standing recently issued by the
Secretary of State of the State of Illinois setting forth
that the Company is in good standing and has full authority
to transact business in Illinois and in any other
jurisdiction in which Borrowers maintain any part of
the Collateral; (iii) certified copies of the Articles of
Incorporation and By-Laws and Certificate of Good Standing
recently issued by the Secretary of State of Tennessee
setting forth that Circuit/Tennessee is in good standing
and has full authority to transact business in Tennessee
and in any jurisdiction in which Borrowers maintain any
part of the Collateral; and (iv) certified copies of the
Limited Partnership Agreement and Certificate of Limited
Partnership of the Partnership.
(e) Consents. Certified copies of all documents
evidencing any necessary corporate action, consents and
governmental approvals, if any, with respect to this
Agreement, the Revolving Credit Note, the Additional Credit
Facility Note, and the Loan Documents.
(f) Incumbency and Signatures. A certificate of the
Secretary or an Assistant Secretary of each of the Company
and Circuit/Tennessee, certifying the names of the officers
and directors of the Company and Circuit/Tennessee, which
are authorized to execute and deliver this Agreement, the
Additional Credit Facility Note, the Revolving Credit Note,
any of the Loan Documents, and any other documents provided
for in this Agreement to be executed and delivered by
Borrowers, together with a sample of his true signature.
(g) Other Documents. Such other documents,
assignments, certificates and opinions that shall be
reasonably required by Lender or Lender's counsel.
Each of the Loan Documents shall be in form and substance
prescribed by Lender. Without limiting the foregoing, each of the
Loan Documents, where applicable, shall contain a provision stating
that the occurrence of an Event of Default under this Agreement or
the occurrence of a default under any of the other Loan Documents or
the occurrence of an Event of Default under any loan made or
participated in by Lender in which any Borrower or an entity
affiliated with any Borrower is a party.
10.2 Evidence of Insurance Coverage. Evidence of the
insurance required to be maintained by Borrowers hereunder naming
Lender as an additional insured party and loss payee on standard
clauses as follows:
AMERICAN NATIONAL BANK AND TRUST
COMPANY OF CHICAGO, its Successors
and/or Assignees
00 Xxxxx Xxxxxxx Xxxxxx
Xxx Xxxxx Xxxxxxx, Xxxxxxxx 00000
and containing a prohibition against cancellation or modification
without giving at least 30 days prior written notice thereof to
Lender. Borrowers must furnish a copy of such policy prior to the
Loan Opening Date for final approval and the actual original
insurance policy or certificate must be presented at closing.
10.3 UCC, Tax and Judgment Searches. Currently dated
Uniform Commercial Code, Federal, Tennessee and Illinois Tax Lien
Searches, Judgment Searches and Pending Suit searches, covering each
Borrower, disclosing no matters which are objectionable to Lender.
Such searches must be dated within ninety (90) days of the
disbursement of the Loan.
10.4 Attorney's Opinion. An opinion of an attorney
acceptable to Lender to the effect that:
(a) The Partnership is a duly formed limited
partnership under the laws of the State of Tennessee and
such entity is validly existing and fully qualified to do
business in the State of Tennessee. Circuit/Tennessee is a
duly formed corporation under the laws of the State of
Tennessee and such entity is existing and fully qualified
to do business in the State of Tennessee. The Company is a
duly formed corporation under the laws of the State of
Illinois and such entity is validly existing and fully
qualified to do business in the States of Tennessee
and Illinois;
(b) This Agreement and the Loan Documents have been
duly authorized, executed and delivered by each Borrower
and constitute the legal, valid and binding obligations of
Borrowers, enforceable in accordance with their respective
terms, subject only to applicable bankruptcy, solvency and
other laws effecting creditor's rights;
(c) The Loan is not usurious under the laws of the
States of Illinois or Tennessee;
(d) The execution and delivery of the Loan Documents
or any of them and the carrying out of the transactions
contemplated thereby will not violate, conflict with, or
constitute a default under any agreement to which any
Borrower is a party or by which any of them may be bound;
(e) There are no actions, suits or proceedings
pending or, to said counsel's knowledge, threatened against
any Borrower or the Collateral, either at law or in equity
or before or by any governmental authority; and there are
no other matters which would substantially impair the
ability of Borrowers to pay when due any amounts which may
become payable under the Loan or otherwise perform the
obligations of Borrowers under the Loan Documents; and
(f) Any other matters which Lender may reasonably
request.
10.5 Warranties and Representations. The warranties and
representations set forth in this Agreement and the Loan Documents
are true and correct.
10.6 No Default. No Event of Default or Unmatured Event of
Default has occurred and is continuing.
11. EVENTS OF DEFAULT. The occurrence of any one or more of
the following shall constitute and "Event of Default" for purposes of
this Agreement:
11.1 Payment. Failure to pay within five (5) days after
the date when due any installment of principal or interest, or
failure to pay, within ten (10) days after written notice from
Lender, any other amount payable pursuant to either Note, this
Agreement or any of the other Loan Documents.
11.2 Performance. Failure by any Borrower to promptly
perform any other obligation or observe any other condition,
covenant, term, agreement or provision required to be performed or
observed by such Borrower under this Agreement, either Note, or any
other Loan Document, after thirty (30) days notice thereof from
Lender.
11.3 Misrepresentation. Any inaccuracy, untruth or failure
to perform in any material respect of any representation, covenant or
warranty contained in this Agreement or any other Loan Documents, or
of any statement or certification as to facts delivered to Lender
pursuant hereto.
11.4 Material Change. A material adverse change in the
financial condition of any Borrower.
11.5 Voluntary Bankruptcy. At any time, any Borrower files
a bankruptcy petition, or is adjudicated a bankrupt or insolvent, or
institutes (by petition, application, answer, consent or otherwise)
any bankruptcy, insolvency, reorganization, arrangement, composition,
readjustment, dissolution, liquidation or similar proceedings under
any present or future Federal, state or other statute or law, or
admits in writing its inability to pay his or its debts as they
mature, or makes an assignment for the benefit of its creditors, or
seeks or consents to the appointment of any receiver, trustee or
similar officer for all or any substantial part of its property.
11.6 Involuntary Bankruptcy. The commencement of any
involuntary petition in bankruptcy against any Borrower, or the
institution against any Borrower of any reorganization, arrangement,
composition, readjustment, dissolution, liquidation or similar
proceedings under any present or future Federal, state or other
statute or law, or the appointment of a receiver, trustee or other
officer for all or any substantial part of the property of such
Borrower, which shall remain undismissed or undischarged for a period
of sixty (60) days.
11.7 Receiver. The attachment, seizure, levy upon or
taking of possession by any receiver, custodian, or assignee for the
benefit of creditors of a substantial portion of any Borrower's
property.
11.8 Sale or Transfer. Any sale, transfer, lease,
assignment, conveyance, lien or encumbrance made in violation of the
terms hereof.
11.9 Injunction. Failure of any Borrower for a period of
thirty (30) days after Lender's demand to procure the dismissal or
disposition to Lender's satisfaction of any proceedings seeking to
enjoin or otherwise prevent or declare invalid or unlawful the
occupancy, maintenance or operation of any facility maintained by any
Borrower, or any portion thereof, as called for by the terms of this
Agreement, or of any proceedings which could or might affect the
validity or priority of the security for the Loan or which could
materially affect any Borrower's ability to perform its obligations
under this Agreement.
11.10 Cross Default. The occurrence of a default under
any of the other loans made or participated in by Lender in which
Borrower, or an entity affiliated with Borrower, Beneficiary or any
Guarantor is a party.
11.11 Non-Payment of Other Indebtedness for Borrowed
Money. Default in the payment when due (subject to any applicable
cure period), whether by acceleration or otherwise, of any other
indebtedness for borrowed money of, or guaranteed by, any Borrower or
default in the performance or observance of any obligation or
condition with respect to any such other indebtedness if the effect
of such default is to accelerate the maturity of any such
indebtedness, or to permit the holder or holders thereof, or any
trustee or agent for such holders, to cause such indebtedness to
become due and payable prior to its expressed maturity date.
11.12 Other Material Obligations. Default in the
payment when due (subject to any applicable cure period), or in the
performance or observance of, any material obligation of, or
condition agreed to by any Borrower with respect to any material
purchase or lease of goods and services (except only to the extent
that the existence of any such default is being contested by such
Borrower in good faith and by appropriate proceedings).
11.13 Employee Benefit Plans. If a contribution
failure occurs with respect to any pension plan maintained by any
Borrower or any corporation, trade or business that is, along with
such Borrower, a member of a controlled group of corporations or
controlled group of trades or businesses (as defined in Sections
414(b) and (c) of the Internal Revenue Code of 1986 or Section 4001
of ERISA) sufficient to give rise to a lien under Section 302(f) of
ERISA.
11.14 Security. If Lender is reasonably insecure.
Upon the occurrence of an Event of Default, all Borrower's
Liabilities then outstanding shall become immediately due and
payable, in full and all without notice of any kind, but with such
adjustments, if any, with respect to interest or other charges as may
be provided for herein or in the Notes, the Loan Documents, or any
other written agreements between Borrowers and Lender; and, in the
case of any other Event of Default, Lender may declare the Notes and
all other Liabilities then outstanding to be due and payable. Lender
shall promptly advise Borrowers of any such declaration, but failure
to do so shall not impair the effect of such declaration.
12. REMEDIES.
12.1 Lender's Rights and Remedies. Lender shall have
available to it all rights and remedies available herein and/or under
the Loan Documents, including, without limitation, the following
rights and remedies:
(a) Right to Assign. Lender may assign this Agreement
upon prior written notice to Borrowers (but such notice shall
not imply that any consent from any Borrower is necessary to
effect any such assignment), and if Lender does assign this
Agreement, the assignee shall be entitled to the performance of
all of Borrowers' agreements and obligations under this
Agreement, and the assignee shall be entitled to all the rights
and remedies of Lender under this Agreement, and each Borrower
expressly agrees that it will assert no claims or defenses it
may have against Lender against the assignee except those
available to it in this Agreement.
(b) Right to Discharge Borrower's Obligations. Lender
may, at its option, discharge taxes, liens or security interests
or other encumbrances at any time levied or placed on the
Collateral, may remedy or cure any default of any Borrower under
the terms of any lease, rental agreement, or other document
which in any way pertains to or affects Borrower's title to or
interest in any of the Collateral, may pay for insurance on the
Collateral, and may pay for the maintenance and preservation of
the Collateral, and each Borrower agrees to reimburse Lender, on
demand, for any payment made or any expense incurred by Lender,
including reasonable attorneys' fees, pursuant to the foregoing
authorization, together with interest at the Default Rate from
the date so paid or incurred by Lender, which payments, expenses
and interest shall be secured by the security intended to be
afforded by this Agreement and/or by the Security Agreements and
the Collateral.
(c) Right of Enforcement. Lender shall have and may
exercise any and all rights of enforcement and remedies before
or after default afforded to a bank under the UCC together with
any and all other rights and remedies otherwise provided and
available to Lender at law or in equity as of the date of this
Agreement or the date of such Borrower's default; and, in
conjunction with, in addition to, or substitution for those
rights and remedies, at Lender's discretion, Lender may:
(i) To the extent permitted by law, enter upon any
Borrower's premises to take possession of, assemble and
collect the Collateral or to render it or any portion of
the Collateral unusable; and/or
(ii) Remedy any default in any reasonable manner,
without waiving its rights and remedies upon default and
without waiving any other prior or subsequent default.
(d) Right of Sale.
(i) Each Borrower agrees that should it fail to make
payments as provided in the Notes or the other Loan
Documents, or if a default be made on any obligation or
promise of any Borrower contained herein or hereby secured
or contained in or secured by the Notes or the other Loan
Documents, then Lender may, at its option, sell or dispose
of the Collateral at public or private sale without any
previous demand of performance or notice to Borrowers of
any such sale whatsoever, except as provided under the UCC,
and from the proceeds of sale retain: (A) all costs and
charges incurred by Lender in taking and causing the
removal and sale of said property, including such
reasonable attorneys' fees as shall have been incurred by
Lender; (B) all sums due pursuant to the Notes, the Loan
Documents, and this Agreement, and all accrued interest
thereon; and (C) all monies due from Borrowers to Lender
under any other indebtedness or obligation and all accrued
interest thereon. Any surplus of such proceeds remaining
shall be paid to Borrowers.
(ii) At any sale or sales made pursuant to this
Agreement or in a suit to foreclose the same, the
Collateral may be sold en masse or separately, at the same
or at different times, at the option of Lender or its
assigns. Such sale may be public or private, with notice
as required by the UCC, and the Collateral need not be
present at the time or place of sale. At any such sale,
Lender or the holder of the Notes hereby secured may bid
for and purchase any of the property sold, notwithstanding
that such sale is conducted by Lender or its attorneys,
agents, or assigns, and no irregularity in the manner of
sale or of giving notice shall operate to preclude Lender
from recovering the Indebtedness.
(iii) If any notification of intended sale or other
disposition of the Collateral or any part thereof is
required under the UCC or other law, such notification, if
mailed, shall be deemed reasonably and properly given if
mailed to Borrowers at least ten (10) days before such sale
or disposition.
(e) Upon an Event of Default, each Borrower, immediately
upon demand by Lender, shall assemble the Collateral and make it
available to Lender at a place or places to be designated by
Lender which is reasonably convenient to Lender and such
Borrower. Each Borrower recognizes that in the event any
Borrower fails to perform, observe or discharge any of its
obligations or liabilities under this Agreement or the Other
Agreements, no remedy of law will provide adequate relief to
Lender, and agrees that Lender shall be entitled to temporary
and permanent injunctive relief in any such case without the
necessity of proving actual damages.
(f) Upon an Event of Default, without notice, demand or
legal process of any kind, Lender may take possession of any or
all of the Collateral (in addition to Collateral of which it
already has possession), wherever it may be found, and for that
purpose may pursue the same wherever it may be found, and may
enter into any Borrower's premises where any of the Collateral
may be or is supposed to be, and search for, take possession of,
remove, keep and store any of the Collateral until the same
shall be sold or otherwise disposed of, and Lender shall have
the right to store the same in any Borrower's premises without
cost to Lender.
(g) Upon an Event of Default, each Borrower agrees that
Lender may, if Lender deems it reasonable, postpone or adjourn
any such sale of the Collateral from time to time by an
announcement at the time and place of sale or by announcement at
the time and place of such postponed or adjourned sale, without
being required to give a new notice of sale. Borrowers agree
that Lender has no obligation to preserve rights against prior
parties to the Collateral. Further, to the extent permitted by
law, each Borrower waives and releases any cause of action and
claim against Lender as a result of Lender's possession,
collection or sale of the Collateral, any liability or penalty
for failure of Lender to comply with any requirement imposed on
Lender relating to notice of sale, holding of sale or reporting
of sale of the Collateral, and any right of redemption from such
sale.
(h) Miscellaneous. Lender shall have the right at all
times to enforce the provisions of this Agreement in strict
accordance with the terms hereof, notwithstanding any conduct or
custom on the part of Lender in refraining from so doing at any
time or times. The failure of Lender at any time or times to
enforce its rights under said provisions strictly in accordance
with the same shall not be construed or operate as a waiver of
any of the rights and remedies granted Lender hereunder or as
having created a custom in any way or manner contrary to the
specific provisions of this Agreement or as having in any way or
manner modified the same. All rights and remedies of Lender are
cumulative and concurrent, and the exercise of one right or
remedy by Lender shall not be deemed a waiver or release of any
other right or remedy. Except as otherwise specifically
required herein, notice of the exercise of any right, remedy or
power granted to Lender by this Agreement is not required to be
given.
13. MISCELLANEOUS.
13.1 All payments of principal and interest on the Loan
shall be made to Lender in immediately available funds not later than
2 p.m. Chicago time on the date such payments are to be made.
13.2 If any advances or payments made by Lender pursuant to
this Agreement or any other Loan Document, together with
disbursements of the Loan, shall exceed the face amount of the Notes,
all such advances and payments shall constitute additional
indebtedness secured by the Loan Documents, and shall bear interest
at the Default Rate from the date advanced until paid.
13.3 Each Borrower shall, upon request, execute and deliver
such further instruments and documents and do such further acts and
things as may be required to provide to Lender the evidence of and
security for the Loan contemplated by this Agreement.
13.4 In the event of any inconsistency between any
provision of this Agreement and any provision of any other Loan
Document, the provision of this Agreement shall govern.
13.5 If any Borrower fails to perform any obligation of any
Borrower under this Agreement or any other Loan Document, or if any
Event of Default shall occur hereunder or under any other Loan
Document, Lender may, but shall not be obligated to, perform such
obligation or cure such default, and all amounts expended in so
doing, all Loan Expenses and all other amounts paid or advanced by
Lender pursuant to the Loan Documents, and all other amounts advanced
by Lender in connection with construction or preserving any security
for the Loan, shall constitute additional advances of the Loan, shall
be secured by all Loan Documents, and shall bear interest at the
Default Rate from the date advanced until paid.
13.6 This Agreement may only be amended, modified or
supplemented by the written agreement of Borrowers and Lender. No
waiver of any provision of this Agreement or any other Loan Documents
shall be effective unless set forth in writing signed by Lender, and
any such waiver shall be effective only to the extent therein set
forth. Failure by Lender to insist upon full and prompt performance
of any provisions of this Agreement or any other Loan Documents, or
to take action in the event of any breach of any such provision or
Event of Default, shall not constitute a waiver of any rights of
Lender, and Lender may at any time thereafter while such breach or
Event of Default remains uncured exercise all rights specified herein
or provided by applicable law with respect to such breach or Event of
Default.
13.7 Any notice which any party hereto gives to any other
party hereunder shall be in writing and shall be deemed given when
delivered in person to a representative of the party, or two business
days after deposited in the United States certified or registered
mail, return receipt requested, addressed to the party, at the
address of such party set forth below, or at such other address as
the party to whom notice is to be given has specified by notice
hereunder to the party seeking to give such notice:
Borrower c/o Circuit Systems, Inc.
0000 Xxxx Xxxx Xxxxxx
Xxx Xxxxx Xxxxxxx, Xxxxxxxx 00000
Attention: Xx. Xxxxx X. Xxxx
Copy to: Xxxxx and Xxxxxx
00 Xxxx Xxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxxxx X. Xxxxxxx
Lender: American National Bank and Trust
Company of Chicago
00 Xxxxx Xxxxxxx Xxxxxx
Xxx Xxxxx Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxx, Vice President
Copy to: Xxxxxxx, Xxxxxxx & Xxxxxx
0000 Xxxx Xxxxxxxxx Xxxx
Xxxxx 000
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxxxxx
13.8 The rights, powers and remedies of Lender under this
Agreement shall inure to the benefit of Lender, its successors and
assigns. Lender shall have the absolute right to assign all or any
portion of its rights, powers and remedies under this Agreement.
13.9 This Agreement shall be governed by and construed in
accordance with the substantive laws of the State of Illinois,
without regard to the conflicts of laws rules thereof.
13.10 Except as arises out of Lender's gross negligence
or willful misconduct, each Borrower agrees to indemnify, defend and
hold Lender harmless from and against any and all liabilities,
obligations, losses, damages, claims, costs and expenses (including
reasonable attorneys' fees and court costs) of whatever kind or
nature which may be imposed on, incurred by or asserted against
Lender at any time which relate to or arise from the making of the
Loan by Lender, including, without limitation, any brokerage
commissions or finder's fees asserted against Lender with respect to
the making of the Loan and any damages incurred by Lender by reason
of the construction of Borrowers and Lender as having the
relationship of joint venturers or partners or Borrowers or Lender
being deemed to have acted as agent for the other.
13.11 This Loan Agreement is based primarily on the
credit worthiness and representation of Borrowers to whom it is made.
The rights and obligations of Borrowers under this Agreement may not
be assigned, assumed nor transferred and any other purported action
by any Borrower shall be null and void. It is further understood and
agreed that, except as specifically provided herein, the ownership,
stock, or control of Circuit/Tennessee, or any partnership interest
in any Borrower, or a substantial portion of any Borrower's assets
may not be transferred, conveyed, or alienated in any form, without
the written consent of Lender.
13.12 The titles and headings of the articles and
paragraphs of this Agreement have been inserted as a matter of
convenience of reference only and shall not control or affect the
meaning or construction of any of the terms or provisions of this
Agreement.
13.13 Lender, by executing and performing this
Agreement, does not become a partner or joint venturer with any
Borrower and all inspections of the Collateral herein provided for
are for the sole benefit of Lender.
13.14 Time is of the essence of the payment of all
amounts due Lender under this Agreement and performance and
observance by Borrowers of each covenant, agreement, provision and
term of this Agreement.
13.15 In the event any one or more of the provisions
contained in this Agreement or in any of the Loan Documents shall for
any reason be held to be invalid, illegal or unenforceable in any
respect by a court of competent jurisdiction, such invalidity,
illegality or unenforceability shall at the option of Lender, not
affect any other provision of this Agreement or any such Loan
Document, and this Agreement and any such Loan Document shall be
construed as if such invalid, illegal or unenforceable provision had
never been contained herein or therein.
13.16 Should a claim ("Recovery Claim") be made upon
Lender at any time for recovery of any amount received by Lender in
payment of Borrower's Liabilities (whether received from any Borrower
or otherwise) and should Lender repay all or part of said amount by
reason of (1) any judgment, decree or order of any court or
administrative body having jurisdiction over Lender or any of its
property; or (2) any settlement or compromise of any such Recovery
Claim effected by Lender with the claimant (including any Borrower),
this Agreement and the security interests granted Lender hereunder
shall continue in effect with respect to the amount so repaid to the
same extent as if such amount had never originally been received by
Lender, notwithstanding any prior termination of this Agreement, the
return of this Agreement to Borrowers, or the cancellation of any
note or other instrument evidencing Borrower's Liabilities. Borrower
may not sell, assign or transfer this Agreement, or the Other
Agreements or any portion thereof.
13.17 Lender's failure to require strict performance by
any Borrower of any provision of this Agreement shall not waive,
affect or diminish any right of Lender thereafter to demand strict
compliance and performance therewith. Any suspension or waiver by
Lender of an Event of Default by any Borrower under this Agreement or
the Other Agreements shall not suspend, waive or affect any other
Event of Default by any Borrower under this Agreement or the Other
Agreements, whether the same is prior or subsequent thereto and
whether of the same or of a different type. None of the
undertakings, agreements, warranties, covenants and representations
of any Borrower contained in this Agreement or the Other Agreements
and no Event of Default by any Borrower under this Agreement or the
Other Agreements shall be deemed to have been suspended or waived by
Lender unless such suspension or waiver is by an instrument in
writing signed by an officer of Lender and directed to such Borrower
specifying such suspension or waiver.
13.18 Each Borrower hereby appoints Lender as such
Borrower's agent and attorney-in-fact for the purpose of carrying out
the provisions of this Agreement and taking any action and executing
any agreement, instrument or document which Lender may reasonably
deem necessary or advisable to accomplish the purposes hereof which
appointment is irrevocable and coupled with an interest. All monies
paid for the purposes herein, and all costs, fees and expenses paid
or incurred in connection therewith, shall be part of Borrower's
Liabilities, payable by Borrowers to Lender on demand.
13.19 This Agreement, or a carbon, photographic or
other reproduction of this Agreement or of any Uniform Commercial
Code financing statement covering the Collateral or any portion
thereof, shall be sufficient as a Uniform Commercial Code financing
statement and may be filed as such.
13.20 Except as otherwise provided in the Other
Agreements, if any provision contained in this Agreement is in
conflict with, or inconsistent with, any provision in the Other
Agreements, the provision contained in this Agreement shall govern
and control.
13.21 Except as otherwise specifically provided in this
Agreement, each Borrower waives any and all notice or demand which
such Borrower might be entitled to receive by virtue of any
applicable statute or law, and waives presentment, demand and protest
and notice of presentment, protest, default, dishonor, non-payment,
maturity, release, compromise, settlement, extension or renewal of
any and all agreements, instruments or documents at any time held by
Lender on which any Borrower may in any way be liable.
13.22 Until Lender is notified by Borrowers to the
contrary in writing by registered or certified mail directed to
Lender's principal place of business, the signature upon this
Agreement or upon any of the Loan Documents of any partner, manager,
employee or agent of the Borrowers, or of any other Person designated
in writing to Lender by any of the foregoing, shall bind such
Borrower and be deemed to be the duly authorized act of such
Borrower.
13.23 If at any time or times hereafter, whether or not
Borrower's Liabilities are outstanding at such time, Lender: (a)
employs counsel for advice or other representation, (i) with respect
to the Collateral, this Agreement, the Other Agreements or the
administration of Borrower's Liabilities, (ii) to represent Lender in
any litigation, arbitration, contest, dispute, suit or proceeding or
to commence, defend or intervene or to take any other action in or
with respect to any litigation, arbitration, contest, dispute, suit
or proceeding (whether instituted by Lender, any Borrower or any
other Person) in any way or respect materially relating to the
Collateral, this Agreement, the Other Agreements, or any Borrower's
affairs, or (iii) to enforce any rights of Lender against any
Borrower or any other Person which may be obligated to Lender by
virtue of this Agreement or the Other Agreements; (b) takes any
action with respect to administration of Borrower's Liabilities or to
protect, collect, sell, liquidate or otherwise dispose of the
Collateral; and/or (c) attempts to or enforces any of Lender's rights
or remedies under this Agreement or the Other Agreements, including,
without limitation, Lender's rights or remedies with respect to the
Collateral, the reasonable costs and expenses incurred by Lender in
any manner or way with respect to the foregoing, shall be part of
Borrower's Liabilities, payable by Borrowers to Lender on demand.
13.24 EACH BORROWER IRREVOCABLY AGREES THAT, SUBJECT TO
LENDER'S SOLE AND ABSOLUTE ELECTION, ALL ACTIONS OR PROCEEDINGS IN
ANY WAY, MANNER OR RESPECT, ARISING OUT OF OR FROM OR RELATED TO THIS
AGREEMENT, THE LOAN DOCUMENTS, OR THE COLLATERAL SHALL BE LITIGATED
ONLY IN COURTS HAVING SITUS WITHIN EITHER THE CITY OF CHICAGO, STATE
OF ILLINOIS OR THE CITY OF GREENEVILLE, STATE OF TENNESSEE. EACH
BORROWER HEREBY CONSENTS AND SUBMITS TO THE JURISDICTION OF ANY
LOCAL, STATE OR FEDERAL COURT LOCATED WITHIN SAID CITIES AND STATE.
EACH BORROWER HEREBY WAIVES ANY RIGHT IT MAY HAVE TO TRANSFER OR
CHANGE THE VENUE OF ANY LITIGATION BROUGHT AGAINST EACH BORROWER BY
LENDER IN ACCORDANCE WITH THIS PARAGRAPH.
13.25 EACH BORROWER HEREBY IRREVOCABLY WAIVES ANY RIGHT
TO TRIAL BY JURY IN ANY ACTION, SUIT, COUNTERCLAIM OR PROCEEDING (I)
TO ENFORCE OR DEFEND ANY RIGHTS UNDER OR IN CONNECTION WITH THIS
AGREEMENT, THE LOAN DOCUMENTS, OR ANY AMENDMENT, INSTRUMENT, DOCUMENT
OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN
CONNECTION HEREWITH OR THEREWITH, OR (II) ARISING FROM ANY DISPUTE OR
CONTROVERSY ARISING IN CONNECTION WITH OR RELATED TO THIS AGREEMENT,
THE LOAN DOCUMENTS, OR ANY SUCH AMENDMENT, INSTRUMENT, DOCUMENT OR
AGREEMENT, AND AGREES THAT ANY SUCH ACTION, SUIT, COUNTERCLAIM OR
PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.
13.26 Notwithstanding anything herein contained to the
contrary, Lender will not be required to make any disbursement or
perform any other act under this Agreement if as a result thereof,
Lender will violate any law, statute, ordinance, rule, regulation or
judicial decision applicable thereto. This Agreement may be executed
and delivered by any party hereto by way of counterpart, which, when
taken together with all executed counterparts hereof shall constitute
a single agreement; provided, however, that any counterpart, when
taken separately from other counterparts shall be fully binding and
enforceable as against the party signatory thereto, without respect
to the other counterparts.
Dated: November 21, 1997
LENDER:
AMERICAN NATIONAL BANK AND
TRUST COMPANY OF CHICAGO
By: Xxxxx X. Xxxxx
Its: Vice President
BORROWER:
CIRCUIT SYSTEMS OF TENNESSEE, L.P.,
a Tennessee limited partnership
By: CIRCUIT SYSTEMS OF
TENNESSEE, INC., its general partner
By: Xxxxx X. Xxxx
Its: Vice President
CIRCUIT SYSTEMS OF TENNESSEE, INC.,
a Tennessee corporation
By: Xxxxx X. Xxxx
Its: Vice President
CIRCUIT SYSTEMS, INC.,
an Illinois corporation
By: Xxxxx X. Xxxx
Its: Vice President
SCHEDULE OF EXHIBITS
Exhibit A Existing Litigation
Exhibit B Permitted Indebtedness
Exhibit C Permitted Liens
Exhibit D Additional Credit Facility Note
Exhibit E Revolving Credit Note
Exhibit F Patents and Trademarks
EXHIBIT A
EXISTING LITIGATION
None.
EXHIBIT B
PERMITTED INDEBTEDNESS
None.
EXHIBIT C
PERMITTED LIENS
None.
EXHIBIT D
ADDITIONAL CREDIT FACILITY NOTE
EXHIBIT E
REVOLVING CREDIT NOTE
EXHIBIT F
PATENTS AND TRADEMARKS
EXHIBIT D
American National Bank
and Trust Company of Chicago
ADDITIONAL CREDIT FACILITY NOTE
Due: August 31, 1998 $5,000,000.00
Note No. ____________ Date: November 21, 1997
PROMISE TO PAY: On or before August 31, 1998, for value received,
the undersigned, Circuit Systems, Inc., an Illinois corporation
("Circuit/Illinois"), Circuit Systems of Tennessee, Inc., a Tennessee
corporation ("Circuit/Tennessee") and Circuit Systems of Tennessee,
L.P., a Tennessee limited partnership ("the Partnership"; the
Partnership, Circuit/Illinois and Circuit/Tennessee are hereinafter
sometimes individually referred to as a "Borrower" and collectively,
jointly and severally referred to as the "Company"), promise to pay
to American National Bank and Trust Company of Chicago (the "Bank")
or order, at the Bank's main office in Xxxxxxx, Xxxxxxxx 00000 or at
any office of the Bank in the State of Illinois, the sum of Five
Million and No/100 Dollars ($5,000,000.00), or such lesser sum as is
indicated on the Bank's records, plus interest computed on the basis
of the actual number of days elapsed in a year of 360 days at the
rate announced from time to time by the Bank as its "prime" rate,
which rate may not be the lowest rate charged by the Bank to any of
its customers (the "Note Rate"), until maturity, whether by
acceleration or otherwise, and at a rate of 3% per annum above the
Note Rate on overdue principal from the date when due until paid.
Each change in the "prime" rate will immediately change the Note Rate
in effect hereunder.
In no event shall the interest rate exceed the maximum rate
allowed by law; any interest payment which would for any reason be
deemed unlawful under applicable law shall be applied to principal.
Interest will be computed on the unpaid principal balance hereof
from the date of each borrowing.
Until maturity, the Company will pay consecutive monthly
installments of interest only commencing November 30, 1997, and on
the last day of each calendar month thereafter.
The Company acknowledges and agrees (i) that this Note evidences
a business loan for the purpose of financing a commercial enterprise
carried on for the purpose of investment or profit within the purview
of Section 205/4, Chapter 815, of the Illinois Compiled Statutes and
is not subject to any usury law or limitation of the State of
Illinois, and ii) the obligation evidenced by this Note is an exempt
transaction under the Federal Truth-in-Lending Act, 15 U.S.C.,
Section 1601, et seq.
The Bank has approved a credit facility to the Company in a
principal amount not to exceed the face amount of this Note. The
credit facility is in the form of advances made from time to time by
the Bank to the Company. This Note evidences the Company's
obligation to repay those advances. The aggregate principal amount
of debt evidenced by this Note shall be the amount reflected from
time to time in the records of the Bank but shall not exceed the face
amount of this Note. Until maturity, the Company may borrow, pay
down and reborrow under this Note so long as the aggregate principal
amount outstanding at any one time does not exceed the face amount of
this Note.
This Note evidences a debt under the terms of a Loan and
Security Agreement of even date herewith, which amends and restates
in its entirety that certain Secured Revolving Credit Agreement
between the Bank and the Company dated as of April 30, 1993, as
amended April 29, 1994, August 23, 1994, August 31, 1995, November
27, 1995, April 30, 1996, August 30, 1996 and July 24, 1997 (the
"Agreement"), and is entitled to the benefits of and subject to the
provisions of the Agreement. The Agreement, among other things,
contains provisions for acceleration of the maturity of this Note
upon the happening of certain stated events and also for prepayments
on account of the principal hereof prior to the maturity hereof upon
the terms and conditions specified in the Agreement as may be amended
from time to time.
To secure the payment of this Note, Borrower's Liabilities (as
defined in the Agreement) and any other present or future liability
of the Company to the Bank, whether several, joint, or joint and
several, the Company has previously pledged and granted to the Bank a
continuing security interest in the following described property and
all of its additions, substitutions, increments, proceeds and
products, whether now owned or later acquired ("Collateral"): all
securities and other property of the Company in the custody,
possession or control of the Bank (other than property held by the
Bank solely in a fiduciary capacity); all property or securities
declared or acknowledged to constitute security for any past, present
or future liability of the Company to the Bank; all balances of
deposit accounts of the Company with the Bank; and the following
additional property of the Company: all Inventory, Accounts,
Accounts Receivable, General Intangibles and Equipment as described
in those Security Agreements executed by Circuit/Illinois dated as of
April 1, 1992 and April 30, 1993, and the Security Agreement executed
by the Partnership and dated July 24, 1997, as provided to the Bank
in connection therewith. The terms used to identify the Collateral
shall have the respective meanings assigned to such terms as of the
date hereof in the Illinois Uniform Commercial Code.
Regardless of the adequacy of the Collateral, any deposits or
other sums at any time credited by or payable or due from Bank to any
Borrower, or any monies, cash, cash equivalents, securities,
instruments, documents or other assets of any Borrower in the
possession or control of Bank or its bailee for any purpose, may be
reduced to cash and applied by Bank to or set off by Bank against the
amounts due hereunder.
Each Borrower agrees to deliver to Bank immediately upon Bank's
demand, such additional collateral as Bank may request from time to
time should the value of the Collateral (in Bank's sole and exclusive
opinion) decline, deteriorate, depreciate or become impaired, or
should Bank deem itself insecure for any reason whatsoever,
including, without limitation, a change in the financial condition of
any Borrower or any party liable with respect to Borrower's
Liabilities, and does hereby grant to Bank a continuing security
interest in such other collateral, which shall be deemed to be a part
of the Collateral. Each Borrower shall execute and deliver to Bank,
at any time upon Bank's demand, all agreements, instruments,
documents and other written matter that Bank may request, in form and
substance acceptable to Bank, to perfect and maintain perfected
Bank's security interest in the Collateral or any additional
collateral. Each Borrower agrees that a carbon, photographic or
photostatic copy, or other reproduction, of this Note or of any
financing statement, shall be sufficient as a financing statement.
Bank may take, and each Borrower hereby waives notice of, any
action from time to time that Bank may deem necessary or appropriate
to maintain or protect the Collateral, and Bank's security interest
therein, and in particular Bank may at any time (i) transfer the
whole or any part of the Collateral into the name of Bank or its
nominee; (ii) collect any amounts due on Collateral directly from
persons obligated thereon; (iii) take control of any proceeds and
products of Collateral; and/or (iv) xxx or make any compromise or
settlement with respect to any Collateral. Each Borrower hereby
releases Bank from any and all causes of action or claims which any
Borrower may now or hereafter have for any asserted loss or damage to
such Borrower claimed to be caused by or arising from: (a) Bank's
taking any action permitted by this paragraph; (b) any failure of
Bank to protect, enforce or collect in whole or in part any of the
Collateral; and/or (c) any other act or omission to act on the part
of Bank, its officers, agents or employees, except for willful
misconduct.
Upon the occurrence of an Event of Default, at Bank's option,
without notice by Bank to or demand by Bank of the Company: (i) all
of Borrower's Liabilities shall be immediately due and payable; (ii)
Bank may exercise any one or more of the rights and remedies accruing
to a secured party under the Uniform Commercial Code of the relevant
jurisdiction and any other applicable law upon default by a debtor;
(iii) Bank may enter, with or without process of law and without
breach of the peace, any premises where the Collateral is or may be
located, and may seize or remove the Collateral from said premises
and/or remain upon said premises and use the same for the purpose of
collecting, preparing and disposing of the Collateral; and/or
(iv) Bank may sell or otherwise dispose of the Collateral at public
or private sale for cash or credit; provided, however, that the
Company shall be credited with the net proceeds of any such sale only
when the same are actually received by Bank.
Company shall be liable for any deficiency remaining after
disposition of any Collateral. The Company is liable to the Bank for
all reasonable costs and expenses of every kind incurred in the
making or collection of this Note, including, without limitation,
reasonable attorneys' fees and court costs. These costs and expenses
shall include, without limitation, any costs or expenses incurred by
the Bank in any bankruptcy, reorganization, insolvency or other
similar proceeding.
Each endorser and any other party liable on this Note severally
waives demand, presentment, notice of dishonor and protest, and
consents to any extension or postponement of time of its payment
without limit as to the number or period, to any substitution,
exchange or release of all or any part of the Collateral, to the
addition of any party, and to the release or discharge of, or
suspension of any rights and remedies against, any person who may be
liable for the payment of this Note. No delay on the part of the
Bank in the exercise of any right or remedy shall operate as a
waiver. No single or partial exercise by the Bank of any right or
remedy shall preclude any other future exercise of it or the exercise
of any right or remedy. No waiver or indulgence by the Bank of any
default shall be effective unless in writing and signed by the Bank,
nor shall a waiver on one occasion be construed as a bar to or waiver
of that right on any future occasion.
This Note shall be binding on each Borrower and its successors,
and shall inure to the benefit of the Bank, its successors and
assigns. Any reference to the Bank shall include any holder of this
Note. This Note is delivered in the State of Illinois and governed
by Illinois law. This Note and any related loan documents embody the
entire agreement between the Company and the Bank regarding the terms
of the loan evidenced by this Note and supersede all oral statements
and prior writings relating to that loan.
TO INDUCE BANK TO ACCEPT THIS NOTE, EACH BORROWER IRREVOCABLY
AGREES THAT, SUBJECT TO BANK'S SOLE AND ABSOLUTE ELECTION, ALL
ACTIONS OR PROCEEDINGS IN ANY WAY, MANNER OR RESPECT, ARISING OUT OF
OR FROM OR RELATED TO THIS NOTE SHALL BE LITIGATED IN COURTS HAVING
SITUS WITHIN THE CITY OF CHICAGO, STATE OF ILLINOIS.
EACH BORROWER HEREBY WAIVES ANY RIGHT IT MAY HAVE TO TRANSFER OR
CHANGE THE VENUE OF ANY LITIGATION BROUGHT AGAINST ANY BORROWER BY
BANK IN ACCORDANCE WITH THIS PARAGRAPH.
WAIVER OF JURY TRIAL: The Bank and the Company, after consulting or
having had the opportunity to consult with counsel, knowingly,
voluntarily and intentionally waive any right either of them may have
to a trial by jury in any litigation based upon or arising out of
this Note or any related instrument or agreement or any of the
transactions contemplated by this Note or any course of conduct,
dealing, statements, whether oral or written, or actions of either of
them. Neither the Bank nor the Company shall seek to consolidate, by
counterclaim or otherwise, any such action in which a jury trial has
been waived with any other action in which a jury trial cannot be or
has not been waived. These provisions shall not be deemed to have
been modified in any respect or relinquished by either the Bank or
the Company except by a written instrument executed by both of them.
Address: CIRCUIT SYSTEMS, INC.
0000 Xxxx Xxxx Xxxxxx
Xxx Xxxxx Xxxxxxx, Xxxxxxxx 00000
By: Xxxxx X. Xxxx
Its: Vice President
CIRCUIT SYSTEMS OF TENNESSEE, L.P.
a Tennessee limited partnership
By: Circuit Systems of Tennessee, Inc.,
its general partner
By: Xxxxx X. Xxxx
Its: Vice President
CIRCUIT SYSTEMS OF TENNESSEE, INC.
By: Xxxxx X. Xxxx
Its: Vice President
EXHIBIT E
American National Bank
and Trust Company of Chicago
REVOLVING CREDIT NOTE
Due: August 31, 1999 $10,000,000.00
Note No. ____________ Date: November 21, 1997
Effective September 1, 1997
PROMISE TO PAY: On or before August 31, 1999, for value received,
the undersigned, Circuit Systems, Inc., an Illinois corporation
("Circuit/Illinois"), Circuit Systems of Tennessee, Inc., a Tennessee
corporation ("Circuit/Tennessee") and Circuit Systems of Tennessee,
L.P., a Tennessee limited partnership ("the Partnership"; the
Partnership, Circuit/Illinois and Circuit/Tennessee are hereinafter
sometimes individually referred to as a "Borrower" and collectively,
jointly and severally referred to as the "Company"), promise to pay
to American National Bank and Trust Company of Chicago, as assignee
of NBD Bank (the "Bank") or order, at the Bank's main office in
Xxxxxxx, Xxxxxxxx 00000 or at any office of the Bank in the State of
Illinois, the sum of Ten Million and No/100 Dollars ($10,000,000.00),
or such lesser sum as is indicated on the Bank's records, plus
interest computed on the basis of the actual number of days elapsed
in a year of 360 days at the Company's option at either (i) the rate
announced from time to time by the Bank as its "prime" rate, which
rate may not be the lowest rate charged by the Bank to any of its
customers, or (ii) the Negotiated Rate as stated in the Agreement (as
hereinafter defined) (the "Note Rate"), until maturity, whether by
acceleration or otherwise, and at a rate of 3% per annum above the
Note Rate on overdue principal from the date when due until paid.
The Negotiated Rate may be greater or lesser than the prime rate, and
each change in the "prime" rate will immediately change the Note Rate
if such rate is chosen and in effect hereunder.
In no event shall the interest rate exceed the maximum rate
allowed by law; any interest payment which would for any reason be
deemed unlawful under applicable law shall be applied to principal.
Interest will be computed on the unpaid principal balance hereof
from the date of each borrowing.
Until maturity, the Company will pay consecutive monthly
installments of interest only commencing September 30, 1997, and on
the last day of each calendar month thereafter.
The Company acknowledges and agrees (i) that this Note evidences
a business loan for the purpose of financing a commercial enterprise
carried on for the purpose of investment or profit within the purview
of Section 205/4, Chapter 815, of the Illinois Compiled Statutes and
is not subject to any usury law or limitation of the State of
Illinois, and ii) the obligation evidenced by this Note is an exempt
transaction under the Federal Truth-in-Lending Act, 15 U.S.C.,
Section 1601, et seq.
The Bank has approved a credit facility to the Company in a
principal amount not to exceed the face amount of this Note. The
credit facility is in the form of advances made from time to time by
the Bank to the Company. This Note evidences the Company's
obligation to repay those advances. The aggregate principal amount
of debt evidenced by this Note shall be the amount reflected from
time to time in the records of the Bank but shall not exceed the face
amount of this Note. Until maturity, the Company may borrow, pay
down and reborrow under this Note so long as the aggregate principal
amount outstanding at any one time does not exceed the face amount of
this Note.
This Note evidences a debt under the terms of a Loan and
Security Agreement of even date herewith, which amends and restates
in its entirety that certain Secured Revolving Credit Agreement
between the Bank and the Company dated as of April 30, 1993, as
amended April 29, 1994, August 23, 1994, August 31, 1995, November
27, 1995, April 30, 1996, August 30, 1996 and July 24, 1997 (the
"Agreement"), and is entitled to the benefits of and subject to the
provisions of the Agreement. This Note consolidates the loans
evidenced by, and amends and restates in their entirety, the Credit
Facility Note in the original principal amount not to exceed
$4,000,000.00 dated July 24, 1997 and the Revolving Credit Note in
the original principal amount not to exceed $6,000,000.00 dated July
24, 1997. The Agreement, among other things, contains provisions for
acceleration of the maturity of this Note upon the happening of
certain stated events and also for prepayments on account of the
principal hereof prior to the maturity hereof upon the terms and
conditions specified in the Agreement as may be amended from time to
time.
To secure the payment of this Note, Borrower's Liabilities (as
defined in the Agreement) and any other present or future liability
of the Company to the Bank, whether several, joint, or joint and
several, the Company has previously pledged and granted to the Bank a
continuing security interest in the following described property and
all of its additions, substitutions, increments, proceeds and
products, whether now owned or later acquired ("Collateral"): all
securities and other property of the Company in the custody,
possession or control of the Bank (other than property held by the
Bank solely in a fiduciary capacity); all property or securities
declared or acknowledged to constitute security for any past, present
or future liability of the Company to the Bank; all balances of
deposit accounts of the Company with the Bank; and the following
additional property of the Company: all Inventory, Accounts,
Accounts Receivable, General Intangibles and Equipment as described
in those Security Agreements executed by Circuit/Illinois dated as of
April 1, 1992 and April 30, 1993, and the Security Agreement executed
by the Partnership and dated July 24, 1997, as provided to the Bank
in connection therewith. The terms used to identify the Collateral
shall have the respective meanings assigned to such terms as of the
date hereof in the Illinois Uniform Commercial Code.
Regardless of the adequacy of the Collateral, any deposits or
other sums at any time credited by or payable or due from Bank to any
Borrower, or any monies, cash, cash equivalents, securities,
instruments, documents or other assets of any Borrower in the
possession or control of Bank or its bailee for any purpose, may be
reduced to cash and applied by Bank to or set off by Bank against the
amounts due hereunder.
Each Borrower agrees to deliver to Bank immediately upon Bank's
demand, such additional collateral as Bank may request from time to
time should the value of the Collateral (in Bank's sole and exclusive
opinion) decline, deteriorate, depreciate or become impaired, or
should Bank deem itself insecure for any reason whatsoever,
including, without limitation, a change in the financial condition of
any Borrower or any party liable with respect to Borrower's
Liabilities, and does hereby grant to Bank a continuing security
interest in such other collateral, which shall be deemed to be a part
of the Collateral. Each Borrower shall execute and deliver to Bank,
at any time upon Bank's demand, all agreements, instruments,
documents and other written matter that Bank may request, in form and
substance acceptable to Bank, to perfect and maintain perfected
Bank's security interest in the Collateral or any additional
collateral. Each Borrower agrees that a carbon, photographic or
photostatic copy, or other reproduction, of this Note or of any
financing statement, shall be sufficient as a financing statement.
Bank may take, and each Borrower hereby waives notice of, any
action from time to time that Bank may deem necessary or appropriate
to maintain or protect the Collateral, and Bank's security interest
therein, and in particular Bank may at any time (i) transfer the
whole or any part of the Collateral into the name of Bank or its
nominee; (ii) collect any amounts due on Collateral directly from
persons obligated thereon; (iii) take control of any proceeds and
products of Collateral; and/or (iv) xxx or make any compromise or
settlement with respect to any Collateral. Each Borrower hereby
releases Bank from any and all causes of action or claims which any
Borrower may now or hereafter have for any asserted loss or damage to
such Borrower claimed to be caused by or arising from: (a) Bank's
taking any action permitted by this paragraph; (b) any failure of
Bank to protect, enforce or collect in whole or in part any of the
Collateral; and/or (c) any other act or omission to act on the part
of Bank, its officers, agents or employees, except for willful
misconduct.
Upon the occurrence of an Event of Default, at Bank's option,
without notice by Bank to or demand by Bank of the Company: (i) all
of Borrower's Liabilities shall be immediately due and payable; (ii)
Bank may exercise any one or more of the rights and remedies accruing
to a secured party under the Uniform Commercial Code of the relevant
jurisdiction and any other applicable law upon default by a debtor;
(iii) Bank may enter, with or without process of law and without
breach of the peace, any premises where the Collateral is or may be
located, and may seize or remove the Collateral from said premises
and/or remain upon said premises and use the same for the purpose of
collecting, preparing and disposing of the Collateral; and/or
(iv) Bank may sell or otherwise dispose of the Collateral at public
or private sale for cash or credit; provided, however, that the
Company shall be credited with the net proceeds of any such sale only
when the same are actually received by Bank.
Company shall be liable for any deficiency remaining after
disposition of any Collateral. The Company is liable to the Bank for
all reasonable costs and expenses of every kind incurred in the
making or collection of this Note, including, without limitation,
reasonable attorneys' fees and court costs. These costs and expenses
shall include, without limitation, any costs or expenses incurred by
the Bank in any bankruptcy, reorganization, insolvency or other
similar proceeding.
Each endorser and any other party liable on this Note severally
waives demand, presentment, notice of dishonor and protest, and
consents to any extension or postponement of time of its payment
without limit as to the number or period, to any substitution,
exchange or release of all or any part of the Collateral, to the
addition of any party, and to the release or discharge of, or
suspension of any rights and remedies against, any person who may be
liable for the payment of this Note. No delay on the part of the
Bank in the exercise of any right or remedy shall operate as a
waiver. No single or partial exercise by the Bank of any right or
remedy shall preclude any other future exercise of it or the exercise
of any right or remedy. No waiver or indulgence by the Bank of any
default shall be effective unless in writing and signed by the Bank,
nor shall a waiver on one occasion be construed as a bar to or waiver
of that right on any future occasion.
This Note shall be binding on each Borrower and its successors,
and shall inure to the benefit of the Bank, its successors and
assigns. Any reference to the Bank shall include any holder of this
Note. This Note is delivered in the State of Illinois and governed
by Illinois law. This Note and any related loan documents embody the
entire agreement between the Company and the Bank regarding the terms
of the loan evidenced by this Note and supersede all oral statements
and prior writings relating to that loan.
TO INDUCE BANK TO ACCEPT THIS NOTE, EACH BORROWER IRREVOCABLY
AGREES THAT, SUBJECT TO BANK'S SOLE AND ABSOLUTE ELECTION, ALL
ACTIONS OR PROCEEDINGS IN ANY WAY, MANNER OR RESPECT, ARISING OUT OF
OR FROM OR RELATED TO THIS NOTE SHALL BE LITIGATED IN COURTS HAVING
SITUS WITHIN THE CITY OF CHICAGO, STATE OF ILLINOIS.
EACH BORROWER HEREBY WAIVES ANY RIGHT IT MAY HAVE TO TRANSFER OR
CHANGE THE VENUE OF ANY LITIGATION BROUGHT AGAINST ANY BORROWER BY
BANK IN ACCORDANCE WITH THIS PARAGRAPH.
WAIVER OF JURY TRIAL: The Bank and the Company, after consulting or
having had the opportunity to consult with counsel, knowingly,
voluntarily and intentionally waive any right either of them may have
to a trial by jury in any litigation based upon or arising out of
this Note or any related instrument or agreement or any of the
transactions contemplated by this Note or any course of conduct,
dealing, statements, whether oral or written, or actions of either of
them. Neither the Bank nor the Company shall seek to consolidate, by
counterclaim or otherwise, any such action in which a jury trial has
been waived with any other action in which a jury trial cannot be or
has not been waived. These provisions shall not be deemed to have
been modified in any respect or relinquished by either the Bank or
the Company except by a written instrument executed by both of them.
Address: CIRCUIT SYSTEMS, INC.
0000 Xxxx Xxxx Xxxxxx
Xxx Xxxxx Xxxxxxx, Xxxxxxxx 00000
By: Xxxxx X. Xxxx
Its: Vice President
CIRCUIT SYSTEMS OF TENNESSEE, L.P.
a Tennessee limited partnership
By: Circuit Systems of Tennessee, Inc.,
its general partner
By: Xxxxx X. Xxxx
Its: Vice President
CIRCUIT SYSTEMS OF TENNESSEE, INC.
By: Xxxxx X. Xxxx
Its: Vice President
