Exhibit (10)(x)
REVOLVING CREDIT AND TERM LOAN AGREEMENT
This Revolving Credit and Term Loan Agreement (the "Agreement" or the
"Credit Agreement") is made and entered into by and between Xxxxxx
Communications, Inc., a Minnesota corporation (the "Borrower") and Firstar Bank
of Minnesota, N.A. (the "Bank") as of the date set forth on the last page of
this Agreement. This Agreement amends and replaces in all respects that certain
Amended and Restated Loan Agreement dated as of March 31, 1995, as amended from
time to time by and between the Bank and the Borrower (the "Prior Loan
Agreement").
ARTICLE I. DEFINITIONS
For purposes of this Agreement, the following terms shall have the
following meanings (such meanings to be applicable to both the singular and
plural forms of the terms defined):
"ACCOUNT" and "ACCOUNT DEBTOR" shall have the meanings assigned to such
terms under the Uniform Commercial Code in the state where the Bank's main
office is located.
"ACQUISITION TERM LOAN AMOUNT" at any time shall mean the principal
balance of the Acquisition Term Note.
"ACQUISITION TERM NOTE" shall mean that certain term note of even date
herewith made payable jointly and severally by the Borrower to the order of the
Bank in the original principal amount of $2,800,000.00.
"ADVANCES" shall mean loans made by the Bank to the Borrower under this
Agreement, including readvances of funds previously advanced to the Borrower and
repaid to the Bank.
"AFFILIATE" shall include, with respect to any party, any Person which
directly or indirectly controls, is controlled by, or is under common control
with, such party, whether through the ownership of voting securities, by
contract or otherwise, including, without limitation, any Subsidiary, and, in
addition, in the case of the Borrower, each officer, director, shareholder,
joint venturer or partner of such Borrower.
"BORROWING BASE" shall mean an amount equal to the sum of (a) eighty
percent (80%) of all Eligible Accounts, plus (b) the lesser of (i) One Million
Seven Hundred Fifty Thousand Dollars ($1,750,000.00) or (ii) thirty-five percent
(35%) of Eligible Inventory, each as determined for the most recent calendar
month end.
"BORROWING BASE CERTIFICATE" shall mean the certificate in the form of
EXHIBIT A described in Section 7.16 hereof.
"BUSINESS DAY" shall mean any day on which the Bank is open for the
transaction of business of the kind contemplated by this Agreement.
"COMMERCIAL CODE" shall mean the Uniform Commercial Code as enacted in
the State of Minnesota, as amended from time to time.
"CURRENT ASSETS" shall mean the aggregate amount of assets of the
Borrower which in accordance with GAAP may be properly classified as current
assets, after deducting adequate reserves where proper, but in no event
including any real estate.
"CURRENT LIABILITIES" shall mean the amount of all liabilities which
under GAAP would appear as current liabilities on the balance sheet of the
Borrower, including all indebtedness payable on demand or maturing (whether by
reason of specified maturity, fixed prepayment, sinking funds or accruals of any
kind, or otherwise, within 12 months or less from the date of the relevant
statement and including customer advances and progress xxxxxxxx on contracts.
"CURRENT RATIO" shall mean the relationship, expressed as a numerical
ratio, between (i) Current Assets and (ii) Current Liabilities.
"DEBT COVERAGE RATIO" shall mean, as of the end of each fiscal quarter,
the relationship, expressed as a numerical ratio, between (i) Net Income plus
interest expense plus depreciation expense plus amortization expense, and (ii)
the sum of interest expense plus current maturities on long-term debt of the
Borrower (on a consolidated basis) as determined in accordance with GAAP during
the preceding twelve (12) month period before such month end and which shall
include payments on all capitalized leases.
"DEBT TO WORTH RATIO" shall mean the relationship, expressed as a
numerical ratio, between:
(i) the total of all liabilities of the Borrower that would appear on
a consolidated balance sheet of the Borrower in accordance with
GAAP; and
(ii) Tangible (on a consolidated basis).
"DEFAULT" shall mean any event which, with the giving of notice or
passage of time, or both, would constitute an Event of Default.
"ELIGIBLE ACCOUNTS" shall mean an Account owing to the Borrower that
meets the following requirements at the time it comes into existence and
continues to meet the same until it is collected in full:
(i) it has not been past due and unpaid more than ninety (90) days
past its invoice date, or thirty (30) days past its due date on an
Account with original terms of more than net 30 days (a "Dated
Account");
(ii) it is not a Dated Account with original terms of more than one
hundred eighty (180) days past its invoice date;
(iii) it is not an Account owing by an Affiliate or a Subsidiary of
either Borrower;
(iv) it is not subject to any prior assignment, claim, lien or security
interest whatsoever, other than the security interest of the Bank;
(v) it is a valid, legally enforceable obligation of an Account Debtor
satisfactory to the Bank;
(vi) it is not subject to setoff, counterclaim, credit allowance,
contra account or adjustment by the Account Debtor thereunder, or
to any claim by such Account Debtor denying liability thereunder
in whole or in part, and such Account Debtor has not refused to
accept and has not returned or offered to return any of the goods
which are subject to such Account;
(vii) it arose in the ordinary course of the Borrower's business and no
notice of the bankruptcy, insolvency or any event or circumstance
which could have a material adverse affect on the financial
condition of the Account Debtor thereunder has been received by
either Borrower.
(viii) it is not owing by an Account Debtor whose obligations on other
Accounts in excess of 25% of the total balance due the Borrower
are more than ninety (90) days past its invoice date or thirty
(30) days past due in the case of Dated Accounts; and
(ix) it is not an Account that arises from a sale to a United States
federal government entity or to an Account Debtor outside the
United States, unless the sale is on terms acceptable to the Bank
in its sole discretion.
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.
"ELIGIBLE INVENTORY" shall mean Inventory (as defined under the
Commercial Code) of the Borrower which meets the following requirements and
continues to meet the same until it is sold or otherwise disposed of:
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(a) it is not subject to any prior assignment, claim, lien or security
interest whatsoever, other than the interest of the Bank;
(b) it is not obsolete, is in good condition and is either currently
usable or saleable;
(c) it is not consignment inventory, scrap or packaging inventory,
book inventory reserves or work in process inventory.
(d) it is Inventory of the Borrower's Communications Division
comprised of audio and video broadcast equipment and duplication
inventory such as video tapes, shells, cases and cassettes held
for sale or lease;
(e) it is not Inventory of the Borrower's Product Division, including
Inventory of the Borrower doing business as Indian Arts and Crafts
or Bloom Brothers.
Inventory of the Borrower 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.
"ENVIRONMENTAL LAWS" shall have the meaning assigned to such term in
Section 7.5 hereof.
"EQUIPMENT" shall mean all equipment of the Borrower, whether now owned
or hereafter acquired and wherever located, and includes all of Borrower's Goods
(as defined in the Commercial Code) other than Inventory, all replacements and
substitutions therefor and all accessions thereto, and specifically includes,
without limitation, all present and future machinery, equipment, vehicles,
manufacturing equipment, shop Equipment, fixtures, parts, tools and all other
Goods (except Inventory) used or acquired for use by Borrower for any business
or enterprise.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as the same may from time to time be amended, and the rules and regulations
promulgated thereunder by any governmental agency or authority, as from time to
time in effect.
"ERISA AFFILIATE" shall mean any corporation, trade or business that is,
along with the Borrower, a member of a controlled group of corporations or a
controlled group of trades or businesses, as described in Sections 414(b) and
414(c), respectively, of the Internal Revenue Code of 1986, as amended.
"EVENT OF DEFAULT" shall mean any one or more of the Events of Default
set forth in Section 9.1 hereof.
"EXISTING TERM NOTES" shall mean those term loans from the Bank to
Borrower existing as of the date hereof.
"FLOATING RATE" shall at any time mean the rate publicly announced by the
Bank as its prime rate. Borrower acknowledges that the Floating Rate may not be
the lowest rate made available by the Bank to its customers and that the Bank
may lend to its customers at rates that are at, above or below the Floating
Rate.
"GAAP" shall mean generally accepted accounting principles (as in effect
from time to time) consistently applied and maintained throughout the period
indicated and consistent with the audited financial statements delivered to the
Bank. Whenever any accounting term is used herein which is not otherwise
defined, it shall be interpreted in accordance with GAAP.
"GUARANTIES" shall mean those certain Continuing Guaranties of even date
herewith executed by the Guarantors and delivered to the Bank, and any other
guaranties previously executed by any Person and delivered to the Bank.
"GUARANTORS" shall mean Centercom, Inc., a Wisconsin corporation and
Centercom-South, Inc., a Florida corporation, and any other Person guarantying
payment of the Obligations hereunder.
"GENERAL INTANGIBLES" shall mean all General Intangibles (as defined in
the Commercial Code) of the Borrower, whether now owned or hereafter acquired,
including (without limitation) all present and future domestic
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and foreign patents, patent applications, trademarks, trademark applications,
copyrights, trade names, trade secrets, patent and trademark licenses (whether
Borrower is licensor or licensee), shop drawings, engineering drawings,
blueprints, specifications, parts lists, manuals, operating instructions,
customer and supplier lists, licenses, permits, franchises, the right to use
each Borrower's corporate name and the goodwill of each Borrower's business.
"GOVERNMENTAL AUTHORITY" shall mean the government of the United States
or any foreign government or any state, province, municipality or other
political subdivision thereof or therein or any court, agency, instrumentality,
regulatory authority or commission of any of the foregoing, including any taxing
authority.
"GOVERNMENTAL REGULATIONS" shall mean any and all laws, statutes,
ordinances, rules, regulations, judgments, writs, injunctions, decrees,
orders, awards and standards, or any similar requirement, of any Governmental
Authority.
"HAZARDOUS SUBSTANCES" shall have the meaning assigned to such term in
Section 7.5 hereof.
"INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS" shall mean any firm of
independent certified public accountants which are acceptable to the Bank
including the firm currently retained by the Borrower.
"INVENTORY" shall mean all inventory of the Borrower (valued at the lower
of cost or fair market value), whether now owned or hereafter acquired and
wherever located. "Inventory" includes all Goods (as defined in Article 9 of
the Commercial Code) intended for sale or lease or to be furnished under
contracts of service, all raw materials and work in process therefor, all
finished goods thereof, all materials and supplies of every nature used or
usable or consumed or consumable in connection with the manufacture, packing,
shipping, advertising, selling, leasing or furnishing of such Goods, and all
accessories thereto and all documents of title therefor evidencing the same.
"LETTERS OF CREDIT" shall mean any and all letters of credit issued by
the Bank on behalf of Borrower as customer, now or in the future.
"L/C AMOUNT" shall at any time mean the aggregate of amounts available to
be drawn on the Letters of Credit plus any outstanding and unpaid drafts
presented under the Letters of Credit.
"L/C REIMBURSEMENT AGREEMENT" shall mean a letter of credit application
and reimbursement agreement executed to by the Borrower in a form acceptable to
the Bank in its sole discretion.
"LOAN DOCUMENT(S)" shall mean individually or collectively, as the case
may be, this Agreement, the Revolving Note, the Equipment Term Notes, the
Acquisition Term Note, the Existing Term Notes, the Security Agreements, the
Pledge Agreements, the Guaranties and any and all other documents held,
executed, delivered or referred to herein, as originally executed and as
amended, revised and supplemented from time to time.
"NET INCOME" for any period shall mean after-tax net income for such
period, determined in accordance with GAAP excluding, however, (1) extraordinary
gains, and (2) gains whether or not extraordinary from sales or other
dispositions of assets other than the sale of Inventory in the ordinary course
of Borrower's business.
"NOTES" collectively or individually, as the context shall require, the
Revolving Note, the Equipment Term Notes, the Acquisition Term Note and the
Existing Term Notes.
"OBLIGATIONS" shall mean all present and future sums loaned or advanced
by the Bank to the Borrower and all other obligations now or hereafter
chargeable to the Borrower hereunder or under any L/C Reimbursement Agreement,
and all other obligations and liabilities of any and every kind of the Borrower
to the Bank, due or to become due, direct or indirect, absolute or contingent,
joint or several, howsoever created, arising or evidenced, now existing or
hereafter at any time created, arising or incurred including, without
limitation, amounts owed under the Notes.
"PERSON" shall mean any natural person, corporation, firm, partnership,
association, government, governmental agency or any other entity, whether acting
in an individual, fiduciary or other capacity.
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"PLAN" shall mean each employee benefit plan or other class of benefits
covered by Title I or IV of ERISA, in either case whether now in existence or
hereafter instituted, of Borrower.
"REMEDIAL ACTION" shall have the meaning assigned to such term in Section
7.5 hereof.
"REVOLVING NOTE" shall mean the Revolving Credit Note of even date
herewith made payable by the Borrower to the order of the Bank in the original
principal amount of $17,000,000.
"SECURITY AGREEMENTS" shall mean that certain Business Security
Agreements of even date herewith executed by Borrower, as debtor, in favor of
the Bank, as secured party, those certain Third Party Business Security
Agreements of even date herewith executed by each Guarantor, as debtor, in favor
of the Bank, as secured party, and any security agreements previously entered
into by Borrower or either Guarantor, in favor of the Bank, including without
limitation, Security Agreements dated June 30, 1993 and August 10, 1995.
"SECURITY INTEREST" shall mean any lien, pledge, mortgage, encumbrance,
charge or security interest of any kind whatsoever (including, without
limitation, the lien or retained security title of a conditional vendor) whether
arising under a security instrument or as a matter of law, judicial process or
otherwise or the agreement by either Borrower to grant any lien, security
interest or pledge, mortgage or encumber any asset.
"SUBSIDIARY" OR "SUBSIDIARIES" shall mean, with respect to any Person, a
corporation of which such Person and/or its other Subsidiaries own, directly or
indirectly, such number of outstanding shares of capital stock as have more than
50% of the ordinary voting power for the election of directors.
"TANGIBLE NET WORTH" shall mean the total of all assets properly
appearing on the consolidated balance sheet of Borrower in accordance with GAAP,
less the sum of the following:
(a) the book amount of all such assets which would be treated as
intangibles under GAAP, including, without limitation, all such
items as goodwill, trademark rights, trade names, trade-name
rights, brands, copyrights, patents, patent rights, licenses,
prepaid expenses, deferred charges and unamortized debt discount
and expense:
(b) any write-up in the book value of any such assets resulting from a
revaluation thereof subsequent to January 31, 1997;
(c) all reserves, including reserves for depreciation, obsolescence,
depletion, insurance, and inventory valuation;
(d) the amount, if any, at which any shares of stock of Borrower
appears on the asset side of such balance sheet;
(e) all liabilities of the Borrower shown on such balance sheet; and
(f) all investments in and amounts due from any Affiliates.
"TERM LOAN AMOUNT" at any time shall mean the aggregate principal
balance of the Acquisition Term Note, the Equipment Term Note and the Existing
Term Notes.
ARTICLE II. TERM LOANS
2.1 ACQUISITION TERM LOAN. Subject to the terms and conditions
hereof, the Bank agrees to make a term loan to the Borrower in the amount of
$2,800,000, the proceeds of which shall be applied to repay the principal amount
of the Revolving Advances under the Prior Loan Agreement that was used to enable
Borrower to purchase certain assets and liabilities of Certified Media
Corporation, a California corporation.
(a) The Acquisition Term Loan shall be evidenced by a single
promissory note of the Borrower to the order of the Bank in the
principal amount of $2,800,000 and dated as of the date hereof
(the "Acquisition Term Note").
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(b) The Acquisition Term Loan shall bear interest at either (i) the
Floating Rate, or (ii) at the Borrower's option, a fixed rate of
2.375% per annum plus the highest published "Ask Yield" of any
U.S. Treasury Bond having a maturity date closest to the maturity
date of the Acquisition Term Note, as set forth in the most recent
edition of THE WALL STREET JOURNAL published prior to the date on
which such rate is fixed (the "Fixed Rate"). Upon the occurrence
of an Event of Default, the principal balance of the Acquisition
Term Loan shall bear interest at one percent (1%) in excess of the
otherwise applicable rate.
(c) Interest on the Acquisition Term Loan shall be paid monthly in
arrears on the first day of each month beginning October 1, 1997.
The principal balance of the Acquisition Term Loan shall be paid
quarterly in twenty (20) installments of $140,000 each, commencing
on October 1, 1997 and continuing on the last day of January,
April, July and October.
(d) So long as the Borrower has not fixed the rate of the Acquisition
Term Loan, the Borrower may at any time and from time to time
prepay all or a portion of the Acquisition Term Loan without
premium or penalty. If, however, the Borrower has fixed the rate
of the Acquisition Term Loan, then Borrower shall pay to Bank the
Prepayment Indemnity (as defined below) on the principal to be
prepaid, plus interest accrued under the Note through Bank's
receipt of such Prepayment Indemnity. In the event of a partial
prepayment, the principal component of the Prepayment Indemnity
shall be applied against the scheduled principal payments in the
inverse order of their maturities.
The "PREPAYMENT INDEMNITY" shall be equal to the aggregate of the
principal payments to be prepaid, plus: (a) the sum of the
following: the interest that would have been payable (on the
originally scheduled interest payment dates) with respect to those
principal payments to be prepaid, discounted in each case to its
present value at the applicable Discount Rate; MINUS (b) the sum
of the following: each amount of interest (calculated on the same
dates as in subsection (a) above) that would accrue on the prepaid
principal if such principal were reinvested at the Reinvestment
Rate, discounted in each case to its present value at the
applicable Discount Rate; but in no event shall the Prepayment
Indemnity be less than the principal amount of the Note to be
prepaid.
The terms "DISCOUNT RATE" and "REINVESTMENT RATE" shall mean a
rate per annum equal to: the highest published Ask Yield of any
U.S. Treasury Bond, Note or Xxxx set forth in THE WALL STREET
JOURNAL, Treasury Bonds, Notes and Bills section, one business day
prior to the date of prepayment, having a maturity closest to the
originally scheduled payment date of the principal or interest (as
applicable) to be prepaid (and if two maturity dates are equally
close to the originally scheduled payment date, the maturity date
having the highest published Ask Yield shall be used).
Borrower agrees (i) the Prepayment Indemnity constitutes
liquidated damages, and is a reasonable method of measuring Bank's
out-of-pocket loss in the event of prepayment of the Note and is
not a penalty; (ii) Bank's reinvestment of the Prepayment
Indemnity in U.S. Treasury Bonds, Notes or Bills is reasonable as
these investments are the only readily available investments to
Bank for the Prepayment Indemnity having a guaranteed rate of
interest over the term of the originally scheduled payment(s)
necessary to liquidate the Bank's future damages for a prepayment;
and (iii) Bank's determination of the Prepayment Indemnity (in the
absence of manifest error) shall be conclusive, final and binding
on Borrower.
2.2 EQUIPMENT TERM LOANS. Subject to the terms and conditions
hereof, and provided no Event of Default has occurred and is continuing, the
Bank agrees to make term loans to the Borrower from the date hereof through May
31, 1998, to enable the Borrower to acquire new equipment acceptable to the Bank
(the "Equipment Term Loans").
(a) The maximum amount of Equipment Term Loans to be made by the Bank
to the Borrower shall be the lesser of (i) $2,000,000 or (ii)
ninety percent (90%) of the original cost of the new equipment
acquired with the proceeds of the Equipment Term Loans. The
Equipment Term Loans shall be evidenced by separate term notes in
a form acceptable to and prepared by the Bank (the "Equipment Term
Notes"). No Equipment Term Loan shall be made in an amount less
than $250,000.
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(b) Each Equipment Term Note shall provide for up to a five-year
straight-line amortization, with equal quarterly principal
payments and interest payments monthly in arrears on the last day
of each calendar month. Each Equipment Term Loan shall bear
interest at the Floating Rate or at the Borrower's option, at a
Fixed Rate calculated in the manner set forth in paragraph 2.1(b),
subject to the Prepayment Indemnity set forth in paragraph 2.1(d).
Upon the occurrence of an Event of Default, the principal balance
of each Equipment Term Loan shall bear interest at one percent
(1%) in excess of the otherwise applicable rate.
(c) Each Equipment Term Loan shall be secured by a first priority
purchase money security interest on the equipment purchased with
the proceeds thereof, in addition to the collateral described in
Section 8.1 hereof. Requests for Equipment Term Loans shall be
made in writing and shall be accompanied by equipment invoices and
executed copies of financing statements and all other documents
reasonably requested by the Bank to perfect the Bank's first
priority purchase money security interest in the equipment.
ARTICLE III. EXISTING TERM LOANS
3.1 EXISTING TERM LOAN. As of the date hereof, Borrower acknowledges
that it is indebted to the Bank under the Existing Term Notes in the principal
amount of $3,216,666.71 and that notwithstanding the execution of this
Agreement, the Existing Term Notes remain in full force and effect according to
their original terms. Borrower acknowledges that no events, conditions or
circumstances have arisen or exist as of the date hereof which would give
Borrower the right to assert a defense, counterclaim and/or setoff to any claim
by Bank for payment of such Borrower's obligations under the Existing Term
Notes, and if any so exist as of the date hereof, whether known or unknown,
absolute or contingent, liquidated or unliquidated, the same are hereby waived.
Borrower further acknowledges the Existing Term Notes constitute Obligations
that are subject to the terms and conditions of this Agreement.
ARTICLE IV. REVOLVING LOAN
4.1 NATURE OF LOAN COMMITMENT/MAXIMUM OF ADVANCES. Subject to the
terms and conditions of this Agreement, the Bank shall make Advances to the
Borrower from time to time in an aggregate principal amount not to exceed at any
time the lesser of (i) Seventeen Million Dollars ($17,000,000) less the sum of
(a) the Term Loan Amount plus (b) the L/C Amount; or (ii) the Borrowing Base
less the sum of (aa) the Acquisition Term Loan Amount plus (bb) the L/C Amount
(the "Revolving Credit Commitment"). All Advances pursuant to the revolving
Credit Commitment shall be evidenced by the Revolving Note; provided that the
Borrower shall be obligated to pay only the amount that is actually disbursed
hereunder, together with accrued interest on the outstanding balance at the
rates provided in Section 4.3 hereof. The Borrower may borrow, prepay and
reborrow within such limit pursuant to this Agreement and the Revolving Note.
4.2 PURPOSE FOR ADVANCES. Except with the prior written consent of
the Bank, all Advances under Article IV shall be used exclusively for the
Borrower's working capital and other general business purposes.
4.3 COMPUTATION OF INTEREST. The Advances under the Revolving Credit
Commitment shall bear interest on the unpaid principal amount thereof at a
fluctuating rate per annum equal to the Floating Rate. All interest payable on
Advances shall be computed on the basis of actual days elapsed and a year of 360
days. Upon the occurrence of an Event of Default, the principal balance of all
Advances shall bear interest at one percent (1%) in excess of the otherwise
applicable rate.
4.4 MATURITY. The Revolving Note shall be expressed to mature on the
earlier of: (i) May 31, 1998 or (ii) upon the occurrence of an Event of
Default. All amounts outstanding under the Revolving Note shall be immediately
due and payable at maturity (whether by acceleration or otherwise).
4.5 RECORDKEEPING. Bank shall record in its records, the date and
amount of each Advance made thereon by Bank, and each repayment thereof. The
aggregate unpaid principal amount so recorded shall be presumptive evidence of
the principal amount of the Advances owing and unpaid by the Borrower thereon.
The failure to so record any such amount or any error in so recording any such
amount shall not, however, limit or otherwise affect
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the Obligations of the Borrower hereunder or under the Revolving Note to repay
the principal amount of the Advances together with all interest accrued thereon.
4.6 NON-USE FEES. The Borrower agrees to pay the Bank a fee equal to
one-quarter percent (1/4%) per annum times the average daily unused portion of
the Revolving Credit Commitment (as reduced by the L/C Amount and the Term Loan
Amount), payable quarterly, in arrears, as of each March 31, June 30, September
30 and December 31, and as of the maturity date of the Revolving Note.
4.7 LETTERS OF CREDIT. The Bank shall not be obligated to issue any
Letters of Credit for the benefit of either Borrower except pursuant to a
separate L/C Reimbursement Agreement in form acceptable to the Bank, and in any
event, the aggregate amount of such Letters of Credit shall not exceed
$1,000,000 and shall reduce dollar for dollar the amount available to Borrower
under the Revolving Loan Commitment by such L/C Amount. All Letters of Credit
shall expire on or before May 31, 1998.
ARTICLE V. DISBURSEMENT OF REVOLVING CREDIT COMMITMENT ADVANCES
5.1 REQUESTS FOR ADVANCES. The Borrower and the Lender have entered
into that certain Loan Sweep Agreement dated August 29,1997 (the "Sweep
Agreement"), pursuant to which Lender may initiate "Loan Transactions" and
"Repayment Transactions" as defined in the Sweep Agreement for the purpose of
Advances and payments. Except as otherwise provided in the Sweep Agreement, the
Borrower shall give notice to the Bank in writing or by telephone of each
proposed Advance under the Revolving Credit Commitment (a "Revolving Advance")
not later than 12:00 p.m., St. Xxxx time. Subject to the terms and conditions
of this Agreement and the Sweep Agreement, the proceeds of each Advance shall be
made available to the Borrower by delivery of the proceeds thereof, in
immediately available funds, to an account maintained by the Borrower at the
Bank pursuant to written wiring instructions to be delivered by the Borrower to
the Lender.
ARTICLE VI. PAYMENTS AND PREPAYMENTS OF ADVANCES
6.1 PRINCIPAL PAYMENTS UNDER REVOLVING CREDIT COMMITMENT.
(a) OPTIONAL PREPAYMENT. The Borrower may at any time and from
time to time prepay all or a portion of the Revolving Advances without
premium or penalty.
(c) MANDATORY PREPAYMENT; APPLICATION. If at any time the
aggregate outstanding principal amount of the Revolving Note shall exceed
the Revolving Credit Commitment, then the Borrower shall immediately pay
to the Bank an amount not less than the amount of any such excess for
application to the outstanding principal amount of the Revolving Note.
(d) APPLICATION OF PAYMENTS AND PREPAYMENTS. Unless the
Borrower shall direct the Bank in writing to apply any payments or
prepayments of principal in a different manner, all such payments and
prepayments on the Revolving Note shall be applied first to collection
costs and other amounts due under the Loan Documents (excluding payments
of principal and interest) and second against interest and principal of
all Revolving Advances.
(e) INTEREST. The Borrower shall also pay to the Bank,
together with any payments or prepayments of principal, all accrued
interest to the date of payment on any Advances so paid or prepaid.
6.3 PAYMENT METHOD AND RELATED MATTERS.
(a) PAYMENTS BY BORROWER. All payments to be made by the
Borrower hereunder will be made in U.S. Dollars and in immediately
available funds to the Bank not later than 12:00 p.m. St. Xxxx time on
which such payment shall become due. Payments received after 12:00 p.m.
St. Xxxx time shall be deemed to be payments made prior to 12:00 p.m. St.
Xxxx time on the next succeeding Business Day.
(b) AUTHORIZATION OF PAYMENTS/ADVANCES. If the Borrower shall
not otherwise have made payment of any of the Obligations as provided in
this Agreement, the Bank is expressly authorized to
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charge any such Obligations, when due, to either Borrower's demand
deposit account maintained with the Bank or, if any such account shall
not contain sufficient funds, to any other account maintained by either
Borrower with the Bank or any of its affiliates, or in lieu thereof, the
Bank may extend an additional Advance to the Borrower under the Revolving
Credit Commitment without further direction or action by the Borrower.
6.4 NO SETOFF OR DEDUCTION. All payments of principal and interest on
the Advances and other Obligations shall be paid by the Borrower without setoff,
counterclaim or other deduction.
6.5 PAYMENT ON NON-BUSINESS DAY. Except as otherwise provided in this
Agreement, whenever any installment of principal of, or interest on, any Advance
or any other Obligation becomes due and payable on a day which is not a Business
Day, the maturity thereof shall be extended to the next succeeding Business Day
and, in the case of any installment of principal, interest shall be payable
thereon at the rate per annum determined in accordance with this Agreement
during such extension.
ARTICLE VII. WARRANTIES AND COVENANTS
During the term of this Agreement, and while any part of the credit
granted the Borrower is available or any obligations under any of the Loan
Documents are unpaid or outstanding, Borrower warrants and agrees as follows:
7.1 ACCURACY OF INFORMATION. All information, certificates or
statements given to the Bank pursuant to this Agreement and the other Loan
Documents will be true and complete when given.
7.2 ORGANIZATION AND AUTHORITY; LITIGATION. Borrower is a validly
existing corporation in good standing under the laws of its state of Minnesota,
and has all requisite power and authority, corporate or otherwise, and possesses
all licenses necessary, to conduct its business and own its properties. The
execution, delivery and performance of this Agreement and the other Loan
Documents (i) are within the Borrower's power; (ii) have been duly authorized by
proper corporate action; (iii) do not require the approval of any governmental
agency; and (iv) will not violate any law, agreement or restriction by which
Borrower is bound. This Agreement and the other Loan Documents are the legal,
valid and binding obligations of Borrower, enforceable against Borrower in
accordance with their terms. There is no litigation or administrative
proceeding threatened or pending against either Borrower which would, if
adversely determined, have a material adverse effect on either Borrower's
financial condition or its property. "Material" shall be generally defined as
greater than or equal to 5% of the Borrower's Net Worth.
7.3 CORPORATE EXISTENCE; BUSINESS ACTIVITIES; ASSETS. Borrower will
(i) preserve its corporate or partnership (as applicable) existence, rights and
franchises; (ii) carry on its business activities in substantially the manner
such activities are conducted as of the date of this Agreement; (iii) not
liquidate, dissolve, merge or consolidate with or into another entity (except
that the Borrower agrees to merge with the Guarantors within thirty (30) days
following the date of this Agreement); and (iv) not sell, lease, transfer or
otherwise dispose of any or all of its assets, except for sales of Inventory in
the ordinary course of business.
7.4 USE OF PROCEEDS; MARGIN STOCK; SPECULATION. Advances by the Bank
hereunder shall be used exclusively by the Borrower for working capital and
other regular and valid purposes. The Borrower will not use any of the loan
proceeds to purchase or carry "margin" stock (as defined in Regulation U of the
Board of Governors of the Federal Reserve System). No part of any of the
proceeds shall be used for speculative investment purposes, including, without
limitation, speculating or hedging in the commodities and/or futures market.
7.5 ENVIRONMENTAL MATTERS. Except as disclosed by a schedule attached
to this Agreement as Schedule 7.5, to the Borrower's knowledge there exists no
uncorrected violation by Borrower (which if uncorrected could have a material
adverse effect on either Borrower and for purposes hereof, a violation shall be
deemed to be material if it shall impose a liability on either Borrower in
excess of $50,000) of any federal, state or local laws (including statutes,
regulations, ordinances or other governmental restrictions and requirements)
relating to the discharge of air pollutants, water pollutants or process waste
water or otherwise relating to the environment or Hazardous Substances, whether
currently existing or enacted in the future (collectively "ENVIRONMENTAL LAWS")
(if no such Schedule 7.5 is attached, the Borrower warrants that no such
uncorrected violation exists). The term "HAZARDOUS SUBSTANCES" will mean any
hazardous or toxic wastes, chemicals or other substances, the generation,
possession or
9
existence of which is prohibited or governed by any Environmental Laws.
Neither Borrower is subject to any judgment, decree, order or citation, or a
party to (or threatened with) any litigation or administrative proceeding, which
asserts that either Borrower (i) has violated any Environmental Laws; (ii) is
required to clean up, remove or take remedial or other action with respect to
any Hazardous Substances (collectively "REMEDIAL ACTION"); or (iii) is required
to pay all or a portion of the cost of any Remedial Action, as a potentially
responsible party. To the Borrower's knowledge, there are not now, nor have
there ever been during the periods that the Borrower owned or occupied such real
estate, any Hazardous Substances (or tanks or other facilities for the storage
of Hazardous Substances) stored, deposited, recycled or disposed of on, under or
at any real estate owned or occupied by the Borrower which if present on the
property or in soils or ground water, could require Remedial Action except for
Hazardous Substances used in the ordinary course of the Borrower's business in
accordance with applicable Environmental Laws. To the Borrower's knowledge,
there are no proposed or pending changes in Environmental Laws which would
adversely affect the Borrower or its business, and there are no conditions
existing currently or likely to exist while the Loan Documents are in effect
which would subject the Borrower to Remedial Action or other liability. The
Borrower currently complies with and will continue to timely comply with all
applicable Environmental Laws; and will provide the Bank, immediately upon
receipt, copies of any correspondence, notice, complaint, order or other
document from any source asserting or alleging any circumstance or condition
which requires or may require a financial contribution by the Borrower or
Remedial Action or other response by or on the part of the Borrower under
Environmental Laws, or which seek damages or civil, criminal or punitive
penalties from the Borrower for an alleged violation of Environmental Laws.
7.6 ENVIRONMENTAL PERMITS. The Borrower has all permits, licenses
and approvals required under Environmental Laws, all of which are listed in
schedule attached hereto as Schedule 7.6 (if no Schedule 7.6 is attached, the
Borrower warrants that no permits are necessary).
7.7 COMPLIANCE WITH LAWS. The Borrower has complied with all laws
applicable to its business and its properties, and has all permits, licenses and
approvals required by such laws, copies of which have been provided to the Bank.
7.8 PENSION PLANS. Each Plan as to which the Borrower or any ERISA
Affiliate may have any liability complies in all material respects with all
applicable requirements of law and regulations, and (i) no Reportable Event has
occurred with respect to any Plan sponsored by the Borrower or any ERISA
Affiliate which will have the effect of creating a liability of the Borrower or
any ERISA Affiliate which will be material to the Borrower and its Subsidiaries
on a consolidated basis; (ii) neither the Borrower nor any ERISA Affiliate has
withdrawn from or terminated any Plan or initiated steps to do so, except in
accordance with applicable requirements of law and regulations and in a manner
which will not create a liability of the Borrower or any ERISA Affiliate which
would be material to the Borrower and its Subsidiaries on a consolidated basis;
(iii) during the twelve consecutive months prior to any date on which this
representation may be made or remade, no contribution failure has occurred with
respect to any Plan sufficient to give rise to the lien under Section 302(f)(l)
of ERISA, (iv) the assets of each Plan exceed the accrued liability of all
accrued benefits payable under each Plan, and (v) no Plan has been amended so as
to require the Borrower or any ERISA Affiliate to provide security as under 26
U.S.C. Section 401(a)(28). The Borrower has no continued liability with
respect to any post-retirement benefits under a Plan other than liability for
continuance coverage described in Part 6 of Title I of ERISA.
7.9 RESTRICTION ON INDEBTEDNESS. The Borrower will not create,
incur, assume or have outstanding any indebtedness for borrowed money exceeding
$50,000 in the aggregate except (i) any indebtedness owing to the Bank; (ii) a
$1,000,000 line of credit for Xxxxxx Products Division at Seafirst Bank,
Seattle, Washington, for the purpose of issuing letters of credit; (iii) any
other indebtedness outstanding on the date hereof and shown on the Borrower's
financial statements; or (iv) purchase money indebtedness otherwise permitted
under this Agreement.
7.10 RESTRICTION ON LIENS. The Borrower will not create, incur,
assume or permit to exist any mortgage, pledge, encumbrance or other lien or
levy upon or security interest in any Collateral (as that term is defined in the
Security Agreement) now owned or hereafter acquired, except (i) taxes and
assessments which are either not delinquent or which are being contested in good
faith with adequate reserves provided; (ii) liens in favor of the Bank; (iii)
the security interest of Seafirst Bank, Seattle, Washington, on inventory and
proceeds of inventory purchased using its letter of credit (iv) other liens
disclosed in writing to the Bank prior to the date hereof; and (v) purchase
money liens in connection with the acquisition of equipment provided that no
portion of the purchase price of such equipment has been funded by the trade-in
or available proceeds of any then-owned equipment of the Borrower.
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7.11 RESTRICTION ON CONTINGENT LIABILITIES. The Borrower will not
guarantee or become a surety or otherwise contingently liable for any
obligations of others, except pursuant to the deposit and collection of checks
and similar matters in the ordinary course of business.
7.12 CAPITAL EXPENDITURES. The Borrower shall not pay or incur, or
commit to pay or incur, any capital expenditures (including, without limitation,
capital expenditures permitted under Section 7.21 hereof and any capital lease
obligations) in excess of $3,500,000 in the aggregate during any calendar or
fiscal year.
7.13 STATUS OF GUARANTORS. Borrower owns 100% of the issued and
outstanding capital stock of each Guarantor. Borrower represents that the
operations of each of the Guarantors have been merged into the Borrower's
operations and that neither of the Guarantors operates under its own corporate
name. Borrower further represents that neither Guarantor owns any material
assets. Borrower will not sell, dispose of, transfer or assign any stock of
either Guarantor or any material asset of either Guarantor, except as otherwise
permitted under this Agreement.
7.14 INSURANCE. The Borrower will maintain insurance to such extent,
covering such risks and with such insurers as is usual and customary for
businesses operating similar properties, and as is satisfactory to the Bank,
including insurance for fire and other risks insured against by extended
coverage, public liability insurance and workers' compensation insurance; and
designate the Bank as "Mortgagee" (if applicable) and "Lender's Loss Payee" on
such policies and take such other action as the Bank may reasonably request to
ensure that the Bank will receive (subject to no other interests) the insurance
proceeds on the Bank's collateral.
7.15 TAXES AND OTHER LIABILITIES. Borrower will pay and discharge,
when due, all of its taxes, assessments and other liabilities, except when the
payment thereof is being contested in good faith by appropriate procedures which
will avoid foreclosure of liens securing such items, and with adequate reserves
provided therefor.
7.16 FINANCIAL STATEMENTS AND REPORTING. The financial statements and
other information previously provided to the Bank or provided to the Bank in the
future are or will be complete and accurate and prepared in accordance with
generally accepted accounting principles. There has been no material adverse
change in the Borrower's financial condition since such information was provided
to the Bank. The Borrower will (i) maintain accounting records in accordance
with generally recognized and accepted principles of accounting consistently
applied throughout the accounting periods involved; (ii) provide the Bank with
such information concerning its business affairs and financial condition
(including insurance coverage) as the Bank may reasonably request; and (iii)
without request, provide the Bank with the following:
- annual audited consolidated financial statements of the Borrower
prepared and certified without qualification by an accounting firm
acceptable to the Bank within 90 days after the end of each fiscal
year;
- monthly consolidated management-prepared financial statements of
the Borrower within 30 days after the end of each calendar month;
- all reports and other information filed with or provided to the
Securities and Exchange Commission or any Borrower's shareholders
and such other financial information as the Bank may reasonably
request;
- within 30 days after the end of each calendar month, provide the
Bank with a completed Borrowing Base Certificate in the form of
EXHIBIT A, together with an accounts receivable aging, and a
Covenant Compliance Certificate in the form of EXHIBIT B, each
certified as correct by the Borrower's chief financial officer;
and
- such additional financial information including but not limited to
job status reports and accounts payable agings and inventory
reports, within 10 days after request by the Bank.
7.17 INSPECTION OF PROPERTIES AND RECORDS; FISCAL YEAR. The Borrower
will permit representatives of the Bank to visit and inspect any of the
properties and examine any of the books and records of the Borrower at any
reasonable time and as often as the Bank may reasonably desire. The Borrower
will not change its fiscal year except with the prior written consent of the
Bank, which will not be unreasonably withheld.
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7.18 FINANCIAL STATUS. The Borrower will maintain on a consolidated
basis as of each calendar month-end (unless otherwise provided below):
(i) Debt Coverage Ratio of not less than 1.25 to 1.00.
(ii) Debt to Worth Ratio of not more than 2.50 to 1.00.
(iii) Tangible Net Worth of at least $10,000,000; provided that at each
fiscal year end beginning January 31, 1998, the Tangible Net Worth
requirement shall increase by seventy-five percent (75%) of the
Net Income for that fiscal year.
(iv) Net Income of at least $300,000 for each of the Borrower's fiscal
quarters.
7.19 CAPITAL ADEQUACY.
(a) In the event the Bank shall have determined that the adoption of
any generally applicable law, rule or regulation regarding capital
adequacy, or any generally applicable change therein or in the
interpretation or application thereof or compliance by the Bank with any
requests are directive regarding capital adequacy (whether or not having
the force of law) from any central bank or Governmental Authority, does
or shall have the effect of reducing the rate of return on the Bank's
capital as a consequence of its obligations hereunder to a level below
that which the Bank could have achieved but for such adoption, change or
compliance (taking into consideration the Lender's policies with respect
to capital adequacy) by an amount deemed by the Bank, in its sole
reasonable discretion, to be material, then from time to time, after
submission by the Bank to Borrower of a written demand therefor, the
Borrower shall pay to the Bank such additional amount or amounts as will
compensate the Bank for such reduction.
(b) A certificate of the Bank claiming entitlement to payment as set
forth above shall be conclusive in the absence of manifest error. Such
certificate shall set forth the nature of the occurrence giving right to
such payment, the additional amount or amounts to be paid to the Bank,
and the method by which such amounts were determined. In determining
such amounts, the Bank may use any reasonable averaging and attribution
method.
(c) In no contingency or event whatsoever shall the aggregate of all
amounts payable by Borrower to the Bank pursuant to this Section 7.19
exceed the highest rate of interest permissible under any law which a
court of competent jurisdiction shall, in a final determination, deem to
be applicable hereto. To the full extent permitted under applicable law,
Borrower and the Bank shall characterize any payments made pursuant to
this Section as an expense, fee or premium rather than as interest.
(d) The benefits of this Section shall run in favor of any
Participant.
7.20 REAFFIRMATION WITH ADVANCES. Each representation and warranty
set forth in this Article VII shall be deemed to be restated and reaffirmed by
the Borrower to the Bank on and as of the date of each Advance under this
Agreement, except that (i) any reference to the financial statements referred to
in Subsection 7.16 shall be deemed to refer to the financial statements then
most recently delivered to the Bank pursuant to said Section.
7.21 ACQUISITIONS, LOAN, INVESTMENTS. Without the written consent of
the Bank, the Borrower shall not (i) enter into any new business or joint
venture or purchase substantially all the assets of any other Person; or (ii)
make any loans to any Person, the cost of which, when aggregated with all other
such transactions, would exceed $500,000 during any calendar or fiscal year of
the Borrower. The Borrower shall not purchase any shares of stock of, or make
any capital contribution to or investment in any other Person.
7.22 CHANGE NAME OR OFFICE. The Borrower shall not change their names
(nor use any other name),the location of the Borrower's chief executive office
or the place where it keeps its books and records, without the prior written
consent of the Bank.
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7.23 CHANGE IN NATURE OF BUSINESS. The Borrower shall not make any
material change in the nature of the Borrower's business, taken as a whole, as
carried on as of the date hereof, without the prior written consent of the Bank.
7.24 NOTICE OF MATERIAL EVENTS. The Borrower agrees to immediately
notify the Bank of any material event affecting Borrower, its operations or its
assets, including, without limitation, the loss of any key customer or key
personnel.
7.25 DIVIDENDS. The Borrower shall not declare or pay any dividends
or make any other distributions, whether in cash or in property, with respect to
its capital stock, now or hereafter outstanding, or purchase, redeem retire or
otherwise acquire for value any shares of the Borrower's capital stock, warrants
or options thereof now or hereafter outstanding, except for those distribution
required pursuant to the terms and conditions of that certain Stock Put
Redemption Agreement dated August 27, 1986, between Borrower and X. X. Xxxxxxxx,
as amended on June 24, 1992, copies of which have been delivered to the Bank,
not to exceed $1,500,000.
7.26 BANK ACCOUNTS. Borrower shall maintain each of its primary bank
accounts at the Bank.
ARTICLE VIII. COLLATERAL AND GUARANTIES
8.1 COLLATERAL. This Agreement and the Notes are secured by any and
all security interests, pledges, mortgages or liens now or hereafter in
existence granted to the Bank to secure indebtedness of the Borrower to the
Bank, including without limitation as described in the following documents:
(a) The Security Agreements;
(b) the Pledge Agreements; and
(c) the Guaranties.
8.2 CREDIT BALANCES; SETOFF. As additional security for the payment
of the Obligations, Borrower hereby grants the Bank a security interest in, a
lien on and an express contractual right to set off against all depository
account balances, cash and any other property of the Borrower now or hereafter
in the possession of the Bank. The Bank may, at any time upon the occurrence of
a Default hereunder (notwithstanding any notice requirements or grace/cure
periods under this or other agreements between Borrower and the Bank) set off
against Obligations WHETHER OR NOT THE OBLIGATIONS (INCLUDING FUTURE
INSTALLMENTS) ARE THEN DUE OR HAVE BEEN ACCELERATED, ALL WITHOUT ANY ADVANCE OR
CONTEMPORANEOUS NOTICE OR DEMAND OF ANY KIND TO BORROWER, SUCH NOTICE AND DEMAND
BEING EXPRESSLY WAIVED.
The information in this Article VIII is for information only and the
omission of any reference to an agreement shall not affect the validity or
enforceability thereof. The rights and remedies of the Bank outlined in this
Agreement and the documents identified above are intended to be cumulative.
ARTICLE IX. DEFAULTS
9.1 EVENTS OF DEFAULT. NOTWITHSTANDING ANY CURE PERIODS DESCRIBED
BELOW, THE BORROWER WILL IMMEDIATELY NOTIFY THE BANK IN WRITING WHEN BORROWER
OBTAINS KNOWLEDGE OF THE OCCURRENCE OF ANY EVENT OF DEFAULT SPECIFIED BELOW. It
shall be an Event of Default if:
(a) NONPAYMENT. Borrower shall fail to pay (i) any interest due on
the Notes or under any L/C Reimbursement Agreement, or any fees, charges,
costs, expenses or other amounts under the Loan Document by five (5) days
after the same becomes due; or (ii) any principal amount due on the Notes
when due.
(b) NONPERFORMANCE. Borrower shall fail to perform or observe any
agreement, term, provision, condition, or covenant (other than a default
occurring under (a), (c), (d), (e), (f), (g), (h) or (i) of this Section
9.1) required to be performed or observed by Borrower hereunder or under
any other Loan Document or other agreement with or in favor of the Bank.
13
(c) MISREPRESENTATION. Any financial information, statement,
certificate, representation or warranty given to the Bank by Borrower (or
any of their representatives) in connection with entering into this
Agreement or the other Loan Documents and/or any borrowing thereunder, or
required to be furnished under the terms thereof, shall prove untrue or
misleading in any material respect (as determined by the Bank in the
exercise of its reasonable judgment) as of the time when given.
(d) DEFAULT ON OTHER OBLIGATIONS. Borrower shall be in default under
the terms of any loan agreement, promissory note, lease, conditional sale
contract or other agreement, document or instrument evidencing governing
or securing any indebtedness owing by Borrower to the Bank or any
indebtedness in excess of $10,000 owing by Borrower to any third party,
and the period of grace, if any, to cure said default shall have passed.
(e) JUDGMENT. Any judgment shall be obtained against Borrower, which,
together with all other outstanding unsatisfied judgments against
Borrower, shall exceed the sum of $200,000 and shall remain unvacated,
unbonded or unstayed for a period of 30 days following the date of entry
thereof.
(f) INABILITY TO PERFORM; BANKRUPTCY/INSOLVENCY. (i) Borrower shall
cease to exist; or (ii) any Guarantor shall attempt to revoke any
guaranty of the Obligations described herein, or any guaranty becomes
unenforceable in whole or in part for any reason; or (iii) any
bankruptcy, insolvency or receivership proceedings, or an assignment for
the benefit of creditors, shall be commenced under any federal or state
law by or against Borrower or any Guarantor; or (iv) Borrower or any
Guarantor shall become the subject of any out-of-court settlement with
its creditors; or (v) Borrower or any Guarantor is unable or admits in
writing its inability to pay its debts as they mature.
(g) OVERADVANCE. The outstanding balance of the Revolving Note plus
the sum of the L/C Amount and the Acquisition Term Loan Amount shall
exceed the Borrowing Base and the Borrower shall fail promptly (a) to pay
down the balance of the Revolving Note such that it no longer exceeds the
Borrowing Base or (b) with respect to the L/C Amount, to deposit cash or
cash equivalents with the Bank in an amount equal to such excess.
(h) GARNISHMENTS/LEVIES. Any property of Borrower shall be
garnished, levied upon or attached in any proceeding and such garnishment
or attachment shall remain undischarged for a period of ten (10) days
during which execution has not been effectively stayed.
(i) ADVERSE CHANGE; INSECURITY. (i) there is a material adverse
change in the business, properties, financial condition or affairs of the
Borrower or any guarantor, or in any collateral securing the Obligations
(a "Material Adverse Change"); or (ii) the Bank in good xxxxx xxxxx
itself insecure.
9.2 TERMINATION OF LOANS; ADDITIONAL BANK RIGHTS. Upon the
occurrence of any of the events identified in Section 9.1, the Bank may at any
time (notwithstanding any notice requirements or grace/cure periods under this
or other agreements between Borrower and the Bank) (i) immediately terminate its
obligation, if any, to make additional Advances to Borrower; (ii) set off;
and/or (iii) take such other steps to protect or preserve the Bank's interest in
any collateral, including without limitation, notifying account debtors to make
payments directly to the Bank, advancing funds to protect any collateral and
insuring collateral at the Borrower's expense; all without demand or notice of
any kind, all of which are hereby waived.
9.3 ACCELERATION OF OBLIGATIONS. Upon the occurrence of any of the
events identified in Sections 9.1 (excluding Section 9.1(f) and the passage of
any applicable cure period, the Bank may at anytime thereafter, by written
notice to the Borrower, declare the unpaid principal balance of any Obligations,
together with the interest accrued thereon and other amounts accrued hereunder
and under the other Loan Documents, to be immediately due and payable; and the
unpaid balance shall thereupon be due and payable, all without presentation,
demand, protest or further notice of any kind, all of which are hereby waived,
and notwithstanding anything to the contrary contained herein or in any of the
other Loan Documents. Upon the occurrence of any event under Section 9.1(f),
then the unpaid principal balance of any Obligations, together with all interest
accrued thereon and other amounts accrued hereunder and under the other Loan
Documents, shall thereupon be immediately due and payable, all without
presentation, demand, protest or notice of any kind, all of which are hereby
waived, and notwithstanding anything to the contrary contained herein or in any
of the other Loan Documents. NOTHING CONTAINED IN SECTION 9.1, SECTION
14
9.2 OR THIS SECTION WILL LIMIT THE BANK'S RIGHT TO SET OFF AS PROVIDED IN
SECTION 8.2 OR OTHERWISE IN THIS AGREEMENT.
9.4 OTHER REMEDIES. Nothing in this Article IX is intended to
restrict the Bank's rights under any of the Loan Documents or at law, and the
Bank may exercise all such rights and remedies as and when they are available.
ARTICLE X. CONDITIONS PRECEDENT TO CLOSING AND BORROWING
10.1 CONDITIONS TO BORROWING. The Bank shall not be obligated to make
(or continue to make) Advances hereunder unless (i) the Bank has received
executed copies of the Notes and Loan Documents, each in form and content
satisfactory to the Bank; (ii) if the loan(s) are secured, the Bank has received
confirmation satisfactory to it that the Bank has a properly perfected security
interest, mortgage and/or lien, with the proper priority; (iii) the Bank has
received certified copies of the Borrower's Articles of Incorporation and
By-Laws, certification of corporate status satisfactory to the Bank and all
other relevant documents; (iv) the Bank has received a certified copy of a
resolution or authorization in form and content satisfactory to the Bank
authorizing the loan and all acts contemplated by this Agreement and all related
documents, and confirmation of proper authorization of all guaranties and other
acts of third parties contemplated hereunder, (v) the Bank has been provided
with an Opinion of the Borrower's counsel in form and content satisfactory to
the Bank confirming the matters outlined in Section 7.2 and such other matters
as the Bank requests; (vi) no Default or Event of Default exists under this
Agreement or under any other Loan Documents, or under any other agreements by
and between Borrower and the Bank; and (vii) all proceedings taken in connection
with the transactions contemplated by this Agreement (including any required
environmental assessments), and all instruments, authorizations and other
documents applicable thereto, shall be satisfactory to the Bank and its counsel.
ARTICLE XI. MISCELLANEOUS
11.1 EXPENSES AND ATTORNEYS' FEES. In addition to any other fees
payable by the Borrower under this Agreement and/or any other Loan Documents,
the Borrower will reimburse the Bank for all attorneys' fees and all other
costs, fees and out-of-pocket disbursements (including fees and disbursements of
both inside counsel and outside counsel) incurred by the Bank in connection with
the preparation, execution, delivery, administration, defense and enforcement of
this Agreement or any of the other Loan Documents (defined below), including
fees and costs related to any waivers or amendments with respect thereto
(examples of costs and fees include but are not limited to fees and costs for:
filing, perfecting or confirming the priority of the Bank's lien, title searches
or insurance, appraisals, environmental audits and other reviews relating to
Borrower, any collateral or the loans, if requested by the Bank). The Borrower
will also reimburse the Bank for all costs of collection before and after
judgment, and the costs of preservation and/or liquidation of any collateral
(including fees and disbursements of both inside and outside counsel).
11.2 DELAY; CUMULATIVE REMEDIES. No delay on the part of the Bank
in exercising any right, power or privilege hereunder or under any of the
other Loan Documents shall operate as a waiver thereof, nor shall any single
or partial exercise of any right, power or privilege hereunder preclude other
or further exercise thereof or the exercise of any other right, power or
privilege. The rights and remedies herein specified are cumulative and are
not exclusive of any rights or remedies which the Bank would otherwise have.
11.3 RELATIONSHIP TO OTHER DOCUMENTS. The warranties, covenants and
other obligations of the Borrower (and the rights and remedies of the Bank) that
are outlined in this Agreement and the other Loan Documents are intended to
supplement each other. In the event of any inconsistencies in any of the terms
in the Loan Documents, all terms shall be cumulative so as to give the Bank the
most favorable rights set forth in the conflicting documents, except that if
there is a direct conflict between any preprinted terms and specifically
negotiated terms (whether included in an addendum or otherwise), the
specifically negotiated terms will control.
11.4 SUCCESSORS. The rights, options, powers and remedies granted in
this Agreement shall extend to the Bank and to its successors and assigns, shall
be binding upon Borrower and its successors and assigns and shall be applicable
hereto and to all renewals and/or extensions hereof.
15
11.5 INDEMNIFICATION. Except for harm arising from the Bank's willful
misconduct or gross negligence, Borrower hereby indemnifies and agrees to defend
and hold the Bank harmless from any and all losses, costs, damages, claims and
expenses of any kind suffered by or asserted against the Bank relating to claims
by third parties arising out of the financing provided under the Loan Documents
or related to any collateral (including, without limitation, the Borrower's
failure to perform its obligations relating to Environmental Matters described
in Section 7.5 above). This indemnification and hold harmless provision will
survive the termination of the Loan Documents and the satisfaction of the
Obligations due the Bank.
11.6 NOTICE OF CLAIMS AGAINST BANK; LIMITATION OF CERTAIN DAMAGES. In
order to allow the Bank to mitigate any damages to Borrower from the Bank's
alleged breach of its duties under the Loan Documents or any other duty, if any,
to Borrower, Borrower agrees to give the Bank immediate written notice of any
claim or defense it has against the Bank, whether in tort or contract, relating
to any action or inaction by the Bank under the Loan Documents, or the
transactions related thereto, or of any defense to payment of the Obligations
for any reason. The requirement of providing timely notice to the Bank
represents the parties' agreed-to standard of performance regarding claims
against the Bank. Notwithstanding any claim that Borrower may have against the
Bank, and regardless of any notice Borrower may have given the Bank, THE BANK
WILL NOT BE LIABLE TO BORROWER FOR CONSEQUENTIAL AND/OR SPECIAL DAMAGES ARISING
THEREFROM, EXCEPT THOSE DAMAGES ARISING FROM THE BANK'S WILLFUL MISCONDUCT.
11.7 NOTICES. Although any notice required to be given hereunder or
under any of the other Loan Documents might be accomplished by other means,
notice will always be deemed given when place in the United States Mail, with
postage prepaid, or sent by overnight delivery service, or sent by telex or
facsimile, in each case to the address set forth below or as amended.
11.8 PAYMENTS. Payments due under the Notes and other Loan Documents
shall be made in lawful money of the United States, and the Bank is authorized
to charge payments due under the Loan Documents against any account of Borrower.
11.9 APPLICABLE LAW AND JURISDICTION; INTERPRETATION; JOINT AND SEVERAL
LIABILITY. This Agreement and all other Loan Documents shall be governed by
and interpreted in accordance with the laws of the State of Minnesota, except to
the extent superseded by Federal law. Invalidity of any provision of this
Agreement shall not affect the validity of any other provision. Borrower HEREBY
CONSENTS TO THE EXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL COURT SITUATED IN
HENNEPIN COUNTY, MINNESOTA AND WAIVES ANY OBJECTION BASED ON FORUM NON
CONVENIENS, WITH REGARD TO ANY ACTIONS, CLAIMS, DISPUTES OR PROCEEDINGS RELATING
TO THIS AGREEMENT, THE NOTES, THE COLLATERAL, ANY OTHER LOAN DOCUMENT, OR ANY
TRANSACTIONS ARISING THEREFROM, OR ENFORCEMENT AND/OR INTERPRETATION OF ANY OF
THE FOREGOING. Nothing herein shall affect the Bank's rights to serve process
in any manner permitted by law, or limit the Bank's right to bring proceedings
against the Borrower in the competent courts of any other jurisdiction or
jurisdictions. This Agreement, the other Loan Documents and any amendments
hereto (regardless of when executed) will be deemed effective and accepted only
at the Bank's offices, and only upon the Bank's receipt of the executed
originals thereof. If there is more than one Borrower, the liability of the
Borrower will be joint and several, and the reference to "Borrower" will be
deemed to refer to all Borrowers. Without limitation of the foregoing, Borrower
acknowledges that its obligations to the Bank are primary obligations and that
neither intend merely to be a surety or accommodation party. Borrower expressly
waives all defenses against the Bank for payment of the Obligations except
payment in full, including any anti-deficiency defense, single action rule or
procedural limitation on the rights of the Bank against Borrower.
11.10 COPIES; ENTIRE AGREEMENT; MODIFICATION. Borrower hereby
acknowledges the receipt of a copy of this Agreement and all other Loan
Documents. The provisions of the Loan Documents shall not be altered, amended
or waived without the express written consent of the Bank (and the Borrower,
when appropriate).
11.11 WAIVER OF JURY TRIAL. BORROWER AND THE BANK HEREBY JOINTLY AND
SEVERALLY WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING
RELATING TO ANY OF THE LOAN DOCUMENTS, THE OBLIGATIONS THEREUNDER, AND
COLLATERAL SECURING THE OBLIGATIONS OR ANY TRANSACTION ARISING THEREFROM OR
CONNECTED THERETO. THE BORROWER AND THE BANK EACH REPRESENTS TO THE OTHER THAT
THIS WAIVER IS KNOWINGLY, WILLINGLY AND VOLUNTARILY GIVEN.
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IN WITNESS WHEREOF, the undersigned have executed this REVOLVING CREDIT
AND TERM LOAN AGREEMENT as of August 29, 1997.
XXXXXX COMMUNICATIONS, INC.
By: \s\ M. Xxxxxxx Xxxxxxxx
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Its: Secretary
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FIRSTAR BANK OF MINNESOTA, N.A.
By:
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Its:
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