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EXHIBIT 10.22(i)
CREDIT AGREEMENT
THIS AGREEMENT is entered into as of August 26, 1999 by and between
HORIZON HIGH REACH, INC., a Delaware corporation ("Borrower"), and XXXXX FARGO
BANK, NATIONAL ASSOCIATION ("Bank").
RECITAL
Borrower has requested from Bank the credit accommodations described
below (each, a "Credit" and collectively, the "Credits"), and Bank has agreed to
provide the Credits to Borrower on the terms and conditions contained herein.
NOW, THEREFORE, for valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, Bank and Borrower hereby agree as follows:
ARTICLE I
THE CREDITS
SECTION 1.1. LINE OF CREDIT.
(a) Line of Credit. Subject to the terms and conditions of this
Agreement, Bank hereby agrees to make advances to Borrower from time to time up
to and including November 5, 2001, not to exceed at any time the aggregate
principal amount of Six Million Dollars ($6,000,000.00) ("Line of Credit"), the
proceeds of which shall be used for working capital requirements. Borrower's
obligation to repay advances under the Line of Credit shall be evidenced by a
promissory note substantially in the form of Exhibit A attached hereto ("Line of
Credit Note"), all terms of which are incorporated herein by this reference.
(b) Borrowing and Repayment. Borrower may from time to time during the
term of the Line of Credit borrow, partially or wholly repay its outstanding
borrowings, and reborrow, subject to all of the limitations, terms and
conditions contained herein or in the Line of Credit Note; provided however,
that the total outstanding borrowings under the Line of Credit shall not at any
time exceed the maximum principal amount available thereunder, as set forth
above.
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SECTION 1.2. TERM LOAN.
(a) Term Loan. Subject to the terms and conditions of this Agreement,
Bank hereby agrees to make a loan to Borrower in the principal amount of Thirty
Million Dollars ($30,000,000.00) ("Term Loan"), the proceeds of which shall be
used to paydown existing term debt owed to its parent company, X.X. Xxxxxxxxx
North America, Inc. ("Parent") Borrower's obligation to repay the Term Loan
shall be evidenced by a promissory note substantially in the form of Exhibit B
attached hereto ("Term Note"), all terms of which are incorporated herein by
this reference. Bank's commitment to grant the Term Loan shall terminate on
September 30, 1999.
(b) Repayment. The principal amount of the Term Loan shall be repaid in
accordance with the provisions of the Term Note.
(c) Prepayment. Borrower may prepay principal on the Term Loan solely in
accordance with the provisions of the Term Note.
SECTION 1.3. TERM COMMITMENT.
(a) Term Commitment. Subject to the terms and conditions of this
Agreement, Bank hereby agrees to make advances to Borrower from time to time up
to and including November 5, 2000, not to exceed the aggregate principal amount
of Ten Million Dollars ($10,000,000.00) ("Term Commitment"), the proceeds of
which shall be used to assist with the purchase of budgeted capital expenditures
for fiscal year 2000, and which shall be converted on November 5, 2000, to a
term loan, as described more fully below. Borrower's obligation to repay
advances under the Term Commitment shall be evidenced by a promissory note
substantially in the form of Exhibit C attached hereto ("Term Commitment Note"),
all terms of which are incorporated herein by this reference.
(b) Borrowing and Repayment. Borrower may from time to time during the
period in which Bank will make advances under the Term Commitment borrow and
partially or wholly repay its outstanding borrowings, and reborrow, subject to
all the limitations, terms and conditions contained herein; provided however,
that the total outstanding borrowings under the Term Commitment shall not at any
time exceed the maximum principal amount available thereunder, as set forth
above. The outstanding principal balance of the Term Commitment shall be due and
payable in full on November 5, 2000; provided however, that so long as Borrower
is in compliance on said date with all terms
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and conditions contained herein and in any other documents evidencing the
Credits, Bank agrees to restructure repayment of said outstanding principal
balance so that principal shall be amortized over 5 years and shall be repaid in
60 monthly installments, as set forth in the Term Commitment Note.
(c) Prepayment. Borrower may prepay principal on the Term Commitment
solely in accordance with the provisions of the Term Commitment Note.
SECTION 1.4. FOREIGN EXCHANGE FACILITY.
(a) Foreign Exchange Facility. Subject to the terms and conditions of
this Agreement, Bank hereby agrees to make available to Borrower a facility (the
"Foreign Exchange Facility") under which Bank, from time to time up to and
including November 5, 2001, will enter into foreign exchange contracts for the
account of Borrower for the purchase and/or sale by Borrower in United States
dollars or Danish Krone; provided however, that the maximum amount of all
outstanding foreign exchange contracts shall not at any time exceed an aggregate
of Seven Hundred Fifty Thousand United States Dollars (US$750,000.00). No
foreign exchange contract shall be executed for a term in excess of twelve (12)
months or for a term which extends beyond November 5, 2001. Borrower shall have
a "Delivery Limit" under the Foreign Exchange Facility not to exceed at any time
the aggregate principal amount of Two Hundred Seventy-five Thousand United
States Dollars (US$275,000.00), which Delivery Limit reflects the maximum
principal amount of Borrower's foreign exchange contracts which may mature
during any one (1) day period. All foreign exchange transactions shall be
subject to the additional terms of a Foreign Exchange Agreement, substantially
in the form of Exhibit D attached hereto ("Foreign Exchange Agreement"), all
terms of which are incorporated herein by this reference.
(b) Settlement. Each foreign exchange contract under the Foreign
Exchange Facility shall be settled on its maturity date by Bank's debit to any
demand deposit account maintained by Borrower with Bank.
SECTION 1.5. LIMITATION ON BORROWINGS.
Notwithstanding any other provision of this Agreement, the aggregate
amount of all outstanding borrowings under the Term Loan, the Term Commitment
and any other existing term debt of Borrower, including, without limitation, to
Parent, shall not at any time exceed a maximum of eighty-five percent (85%) of
the
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net book value of Borrower's inventory consisting of assets of the type
currently and historically reflected under the heading of "Rental Equipment" in
Borrower's financial statements, with the understanding that notwithstanding
such characterization as "equipment", the assets in question are Borrower's
inventory. Borrower shall repay principal under the Term Loan, Term Commitment
and/or other term debt upon demand by Bank to the extent of any such excess. Any
such repayment(s) to Bank shall be subject to applicable prepayment fee(s).
Further, notwithstanding any other provision of this Agreement, the
aggregate amount of all outstanding borrowings hereunder shall not at any time
exceed the maximum amount of aggregate indebtedness permitted to Borrower,
Parent, or any affiliate of Borrower or Parent (with, Borrower, Parent and any
affiliate of Borrower or Parent being, individually and collectively, the
"Companies") or any or all of them under any contract, obligation, indenture or
other instrument to which any of the Companies is a party or by which any of the
Companies may be bound, including, without limitation, any agreements or
obligations of any of the Companies related to or arising in connection with
Parent's 10 5/8% Senior Subordinated Notes due 2007 ("Parent Financing").
Borrower shall immediately repay principal under the applicable Credit in such
amount as may be necessary to prevent any such violation. Any such repayment(s)
to Bank shall be subject to applicable prepayment fee(s).
SECTION 1.6. INTEREST/FEES.
(a) Interest. The outstanding principal balance of the Line of Credit,
Term Loan and Term Commitment shall bear interest at the rate(s) of interest set
forth in, respectively, the Line of Credit Note, Term Note and Term Commitment
Note, (collectively, the "Notes").
(b) Computation and Payment. Interest shall be computed on the basis of
a 360-day year, actual days elapsed. Interest shall be payable at the times and
place set forth in the Notes.
SECTION 1.7. COLLECTION OF PAYMENTS. Borrower authorizes Bank to collect
all principal, interest and fees due under the Line of Credit, Term Loan and
Revolving Term Commitment by charging Borrower's demand deposit account number
4192-150217 with Bank, or any other demand deposit account maintained by
Borrower with Bank, for the full amount thereof. Should there be insufficient
funds in any such demand deposit account to pay all such sums when due, the full
amount of such deficiency shall be immediately due and payable by Borrower.
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SECTION 1.8. COLLATERAL.
As security for all indebtedness of Borrower to Bank under the Line of
Credit, Term Loan and Revolving Term Commitment, Borrower hereby grants to Bank
security interests of first priority in all Borrower's accounts receivable and
other rights to payment, general intangibles, equipment and inventory, and
subject only to Permitted Liens. "Permitted Liens" shall mean the following:
(a) Any liens existing as of the date hereof and consented to by Bank;
(b) Liens for taxes, fees, assessments or other government charges or
levies, either not delinquent or being contested in good faith by appropriate
proceeding;
(c) Liens of materialmen, mechanics, warehousemen, carriers, or
employees or other like liens arising in the ordinary course of business and
securing obligations either not delinquent or being contested in good faith by
appropriate proceedings;
(d) Any judgment, attachment or similar lien, unless the judgment it
secures is not fully covered by insurance and has not been discharged or
execution thereof effectively stayed and bonded against pending appeal within 30
days of the entry thereof;
(e) Easements, rights of way, servitudes or zoning or building
restrictions and other minor encumbrances on real or personal property and
irregularities in the title to such property that do not in the aggregate impair
the use or value of such property or risk the loss of forfeiture of title
thereto;
(f) Liens (i) upon or in any equipment acquired or held by the Borrower
or any of its subsidiaries to secure the purchase price of such equipment or
indebtedness incurred solely for the purpose of financing the acquisition of
such equipment where the aggregate amount of such liens does not exceed Two
Hundred Fifty Thousand Dollars ($250,000.00) or (ii) existing on such equipment
at the time of its transfer to Borrower from UpRight, Inc., provided that the
such lien is confined solely to the property so acquired and improvements
thereon; and
(g) Liens incurred in connection with the extension, renewal or
refinancing of the indebtedness secured by Liens of the type described in
clauses (a) and (f) above, provided that
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any extension, renewal or replacement lien shall be limited to the property
encumbered by the existing lien and the principal amount of the indebtedness
being extended, renewed or refinanced does not increase.
All of the foregoing shall be evidenced by and subject to the terms of such
security agreements, financing statements, deeds of trust and other documents as
Bank shall reasonably require, all in form and substance satisfactory to Bank.
Borrower shall reimburse Bank immediately upon demand for all costs and expenses
incurred by Bank in connection with any of the foregoing security, including
without limitation, filing and recording fees and costs of appraisals, audits
and title insurance.
SECTION 1.9. SUBORDINATION OF DEBT. All obligations of Borrower to any
other of the Companies (as defined in Section 2.3) shall be subordinated in
right of repayment to all obligations of Borrower to Bank, as evidenced by and
subject to the terms of subordination agreements in form and substance
satisfactory to Bank.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
Borrower makes the following representations and warranties to Bank,
which representations and warranties shall survive the execution of this
Agreement and shall continue in full force and effect until the full and final
payment, and satisfaction and discharge, of all obligations of Borrower to Bank
subject to this Agreement.
SECTION 2.1. LEGAL STATUS. Borrower is a corporation, duly organized and
existing and in good standing under the laws of the state of Delaware, and is
qualified or licensed to do business (and is in good standing as a foreign
corporation, if applicable) in all jurisdictions in which such qualification or
licensing is required or in which the failure to so qualify or to be so licensed
could have a material adverse effect on Borrower.
SECTION 2.2. AUTHORIZATION AND VALIDITY. This Agreement, the Notes, and
each other document, contract and instrument required hereby or at any time
hereafter delivered to Bank in connection herewith (collectively, the "Loan
Documents") have been duly authorized, and upon their execution and delivery in
accordance with the provisions hereof will constitute legal, valid and binding
agreements and obligations of Borrower or the
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party which executes the same, enforceable in accordance with their respective
terms.
SECTION 2.3. NO VIOLATION. The execution, delivery and performance by
Borrower of each of the Loan Documents do not violate any provision of any law
or regulation, or contravene any provision of the Articles of Incorporation or
By-Laws of any of the Companies, or result in any breach of or default under any
contract, obligation, indenture or other instrument to which any of the
Companies is a party or by which any of the Companies may be bound, including,
without limitation, any agreements or obligations of any of the Companies
related to or arising in connection with the Parent Financing. Without limiting
the generality of the foregoing, the indebtedness and obligations of Borrower to
Bank arising hereunder, under the other Loan Documents, and under the
transactions contemplated hereby and thereby ("Bank Indebtedness") constitutes
indebtedness permitted under the Parent Financing in addition to the "Permitted
Indebtedness" defined in that certain indenture dated June 19, 1997 executed by
Parent in connection with such Parent Financing Financing (the "Indenture"), and
shall hereafter continue to constitute indebtedness permitted thereunder without
regard as to whether such Bank Indebtedness at any time would or would not fall
under the definition of "Permitted Indebtedness" under the Indenture.
SECTION 2.4. LITIGATION. There are no pending, or to the best of
Borrower's knowledge threatened, actions, claims, investigations, suits or
proceedings by or before any governmental authority, arbitrator, court or
administrative agency which could have a material adverse effect on the
financial condition or operation of Borrower other than those disclosed by
Borrower to Bank in writing prior to the date hereof.
SECTION 2.5. CORRECTNESS OF FINANCIAL STATEMENT. The financial statement
of Borrower dated June 27, 1999, a true copy of which has been delivered by
Borrower to Bank contemporaneously with the execution hereof (a) is complete and
correct and presents fairly the financial condition of Borrower, (b) discloses
all liabilities of Borrower that are required to be reflected or reserved
against under generally accepted accounting principles, whether liquidated or
unliquidated, fixed or contingent, and (c) has been prepared in accordance with
generally accepted accounting principles consistently applied. Since the date of
such financial statement there has been no material adverse change in the
financial condition of Borrower, nor has Borrower mortgaged, pledged, granted a
security interest
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in or otherwise encumbered any of its assets or properties except in favor of
Bank or as otherwise permitted by Bank in writing.
SECTION 2.6. INCOME TAX RETURNS. Borrower has no knowledge of any
pending assessments or adjustments of its income tax payable with respect to any
year.
SECTION 2.7. NO SUBORDINATION. There is no agreement, indenture,
contract or instrument to which Borrower is a party or by which Borrower may be
bound that requires the subordination in right of payment of any of Borrower's
obligations subject to this Agreement to any other obligation of Borrower.
SECTION 2.8. PERMITS, FRANCHISES. Borrower possesses, and will hereafter
possess, all permits, consents, approvals, franchises and licenses required and
rights to all trademarks, trade names, patents, and fictitious names, if any,
necessary to enable it to conduct the business in which it is now engaged in
compliance with applicable law.
SECTION 2.9. ERISA. Borrower is in compliance in all material respects
with all applicable provisions of the Employee Retirement Income Security Act of
1974, as amended or recodified from time to time ("ERISA"); Borrower has not
violated any provision of any defined employee pension benefit plan (as defined
in ERISA) maintained or contributed to by Borrower (each, a "Plan"); no
Reportable Event as defined in ERISA has occurred and is continuing with respect
to any Plan initiated by Borrower; Borrower has met its minimum funding
requirements under ERISA with respect to each Plan; and each Plan will be able
to fulfill its benefit obligations as they come due in accordance with the Plan
documents and under generally accepted accounting principles.
SECTION 2.10. OTHER OBLIGATIONS. Borrower is not in default on any
obligation for borrowed money, any purchase money obligation or any other
material lease, commitment, contract, instrument or obligation.
SECTION 2.11. ENVIRONMENTAL MATTERS. Except as disclosed by Borrower to
Bank in writing prior to the date hereof, Borrower is in compliance in all
material respects with all applicable federal or state environmental, hazardous
waste, health and safety statutes, and any rules or regulations adopted pursuant
thereto, which govern or affect any of Borrower's operations and/or properties,
including without limitation, the
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Comprehensive Environmental Response, Compensation and Liability Act of 1980,
the Superfund Amendments and Reauthorization Act of 1986, the Federal Resource
Conservation and Recovery Act of 1976, and the Federal Toxic Substances Control
Act, as any of the same may be amended, modified or supplemented from time to
time. None of the operations of Borrower is the subject of any federal or state
investigation evaluating whether any remedial action involving a material
expenditure is needed to respond to a release of any toxic or hazardous waste or
substance into the environment. Borrower has no material contingent liability in
connection with any release of any toxic or hazardous waste or substance into
the environment.
ARTICLE III
CONDITIONS
SECTION 3.1. CONDITIONS OF INITIAL EXTENSION OF CREDIT. The obligation
of Bank to grant any of the Credits is subject to the fulfillment to Bank's
satisfaction of all of the following conditions:
(a) Approval of Bank Counsel. All legal matters incidental to the
granting of each of the Credits shall be satisfactory to Bank's counsel.
(b) Documentation. Bank shall have received, in form and substance
satisfactory to Bank, each of the following, duly executed:
(i) This Agreement and the Notes
(ii) Continuing Security Agreement: Rights to Payment and Inventory
(iii) Security Agreement: Equipment
(iv) Foreign Exchange Agreement
(v) Corporate Borrowing Resolution
(vi) Certificate of Incumbency
(vii) Opinion of Borrower's Counsel
(viii) Articles of Incorporation
(ix) Subordination Agreement
(x) Such other documents as Bank may require under any other
Section of this Agreement.
(c) Financial Condition. Bank shall have received Borrower's annual FYE
1999 financial statements in from, detail and content acceptable to Bank. There
shall have been no material adverse change, as determined by Bank, in the
financial condition or business of Borrower, nor any material decline, as
determined by Bank, in the market value of any collateral
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required hereunder or a substantial or material portion of the assets of
Borrower.
(d) Insurance. Borrower shall have delivered to Bank evidence of
insurance coverage on all Borrower's property, in form, substance, amounts,
covering risks and issued by companies satisfactory to Bank, and where required
by Bank, with loss payable endorsements in favor of Bank.
SECTION 3.2. CONDITIONS OF EACH EXTENSION OF CREDIT. The obligation of
Bank to make each extension of credit requested by Borrower hereunder shall be
subject to the fulfillment to Bank's satisfaction of each of the following
conditions:
(a) Compliance. The representations and warranties contained herein and
in each of the other Loan Documents shall be true on and as of the date of the
signing of this Agreement and on the date of each extension of credit by Bank
pursuant hereto, with the same effect as though such representations and
warranties had been made on and as of each such date, and on each such date, no
Event of Default as defined herein, and no condition, event or act which with
the giving of notice or the passage of time or both would constitute such an
Event of Default, shall have occurred and be continuing or shall exist.
(b) Documentation. Bank shall have received all additional documents
which may be required in connection with such extension of credit.
ARTICLE IV
AFFIRMATIVE COVENANTS
Borrower covenants that so long as Bank remains committed to extend
credit to Borrower pursuant hereto, or any liabilities (whether direct or
contingent, liquidated or unliquidated) of Borrower to Bank under any of the
Loan Documents remain outstanding, and until payment in full of all obligations
of Borrower subject hereto, Borrower shall, unless Bank otherwise consents in
writing:
SECTION 4.1. PUNCTUAL PAYMENTS. Punctually pay all principal, interest,
fees or other liabilities due under any of the Loan Documents at the times and
place and in the manner specified therein.
SECTION 4.2. ACCOUNTING RECORDS. Maintain adequate books and records in
accordance with generally accepted accounting principles consistently applied,
and permit any representative
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of Bank, at any reasonable time, to inspect, audit and examine such books and
records, to make copies of the same, and to inspect the properties of
Borrower.
SECTION 4.3. FINANCIAL STATEMENTS. Provide to Bank all of the following,
in form and detail satisfactory to Bank:
(a) not later than 90 days after and as of the end of each fiscal year,
an audited financial statement of Borrower, prepared by an independent certified
public accountant acceptable to Bank, to include balance sheet, income
statement, and footnotes;
(b) not later than 45 days after and as of each fiscal quarter-end, a
financial statement of Borrower, prepared by Borrower, to include a balance
sheet and income statement;
(c) contemporaneously with each borrowing requested under the Term
Commitment and at the end of each quarter, contemporaneously with the delivery
of the financial statement of Borrower required hereby, a certificate of the
president or chief financial officer of Borrower that said financial statements
are accurate, that there exists no Event of Default nor any condition, act or
event which with the giving of notice or the passage of time or both would
constitute an Event of Default, and that there does not exist, and any borrowing
then being requested would not, after giving effect thereto, result in, any
violation or any breach of or default under any contract, obligation, indenture
or other instrument to which any of the Companies is a party or by which any of
the Companies may be bound, including, without limitation, the Indenture and any
other agreements or obligations of any of the Companies related to or arising in
connection with the Parent Financing.
(d) not later than 45 days after each fiscal quarter-end, a schedule of
Borrower's equipment utilization on its rental fleet, in the form attached as
Exhibit E hereto;
(e) not later than 45 days after each fiscal quarter-end, a schedule of
assets sold during that quarter including the net book value and the sales
amount;
(f) not later than ten (10) days after the filing thereof, copies of all
proxy statements, financial statements, reports, and notices sent or made
available generally by Parent to its security holders or to any holders of its
debt and all regular, periodic and special reports, and all registration
statements filed with the Securities and Exchange Commission or any
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governmental authority that may be substituted therefor, or with any national
securities exchange; and
(g) from time to time such other information as Bank may reasonably
request.
SECTION 4.4. COMPLIANCE. Preserve and maintain all licenses, permits,
governmental approvals, rights, privileges and franchises necessary for the
conduct of its business; and comply with the provisions of all documents
pursuant to which Borrower is organized and/or which govern Borrower's continued
existence and with the requirements of all laws, rules, regulations and orders
of any governmental authority applicable to Borrower and/or its business.
SECTION 4.5. INSURANCE. Maintain and keep in force insurance of the
types and in amounts customarily carried in lines of business similar to that of
Borrower, including but not limited to fire, extended coverage, public
liability, flood, property damage and workers' compensation, with all such
insurance carried with companies and in amounts satisfactory to Bank, and
deliver to Bank from time to time at Bank's request schedules setting forth all
insurance then in effect.
SECTION 4.6. FACILITIES. Keep all properties useful or necessary to
Borrower's business in good repair and condition, and from time to time make
necessary repairs, renewals and replacements thereto so that such properties
shall be fully and efficiently preserved and maintained.
SECTION 4.7. TAXES AND OTHER LIABILITIES. Pay and discharge when due any
and all indebtedness, obligations, assessments and taxes, both real or personal,
including without limitation federal and state income taxes and state and local
property taxes and assessments, except such (a) as Borrower may in good faith
contest or as to which a bona fide dispute may arise, and (b) for which Borrower
has made provision, to Bank's satisfaction, for eventual payment thereof in the
event Borrower is obligated to make such payment.
SECTION 4.8. LITIGATION. Promptly give notice in writing to Bank of any
litigation pending or threatened against Borrower with a claim in excess of
$500,000.00.
SECTION 4.9. FINANCIAL CONDITION. Maintain Borrower's financial
condition as follows using generally accepted accounting principles consistently
applied and used consistently
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with prior practices (except to the extent modified by the definitions herein):
(a) Tangible Net Worth not less than $27,000,000.00 as of June 27, 1999,
then as of each fiscal quarter-end thereafter Tangible Net Worth not less than
the sum of (i) $27,000,000.00 plus (ii) 50% of Borrower's cumulative net income
after tax provision including every quarter ending after June 27, 1999 and
specifically excluding any quarter-end in which net income is negative. For
purposes of this Agreement, "Tangible Net Worth" shall be defined as the
aggregate of total stockholders' equity less any intangible assets measured at
and as of each fiscal quarter-end.
(b) Modified EBITDA Coverage Ratio not less than 1.00 to 1.00 as of each
fiscal quarter-end up to and including Borrower's fiscal quarter ending December
26, 1999; then not less than 1.10 to 1.00 as of each fiscal quarter-end ending
after December 26, 1999 and up to and including the fiscal quarter ending June
25, 2000; then not less than 1.25 to 1.00 as of each fiscal quarter-end ending
after June 25, 2000. The foregoing covenant shall be calculated on a trailing
four quarter basis with "Modified EBITDA" defined as earnings before interest,
taxes, depreciation, and amortization, minus dividends and taxes paid, and with
"Modified EBITDA Coverage Ratio" during Borrower's fiscal year 2000 defined as
Modified EBITDA divided by the aggregate of total interest expense plus the
current period current maturity of long-term debt and the current period current
maturity of subordinated debt, and "Modified EBITDA Coverage Ratio" for every
period after Borrower's fiscal year 2000 defined as Modified EBITDA divided by
the aggregate of total interest expense plus the prior period current maturity
of long-term debt and the prior period current maturity of subordinated debt.
(c) Ratio of Funded Debt to EBITDA not greater than 3.50 to 1.0 up to
and including the end of Borrower's fiscal year 2001 and not greater than 3.00
to 1.00 at all times thereafter, with Funded Debt defined as the aggregate
amount of all outstanding indebtedness of Borrower, excluding accruals and trade
payables and current liabilities incurred in the ordinary course of business,
and with "EBITDA" defined as net profit before tax plus interest expense (net of
capitalized interest expense), depreciation expense and amortization expense),
measured at the end of each fiscal quarter, on a trailing four quarter basis.
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SECTION 4.10. NOTICE TO BANK. Promptly (but in no event more than five
(5) days after the occurrence of each such event or matter) give written notice
to Bank in reasonable detail of: (a) the occurrence of any Event of Default, or
any condition, event or act which with the giving of notice or the passage of
time or both would constitute an Event of Default; (b) any change in the name or
the organizational structure of Borrower, or any action, claim, investigation,
suit or proceeding pending or asserted by or before any governmental authority,
arbitrator, court or administrative agency challenging or denying Borrower's
qualification for tax treatment as if it were a partnership for income tax
purposes; (c) the occurrence and nature of any Reportable Event or Prohibited
Transaction, each as defined in ERISA, or any funding deficiency with respect to
any Plan; or (d) any termination or cancellation of any insurance policy which
Borrower is required to maintain, or any uninsured or partially uninsured loss
through liability or property damage, or through fire, theft or any other cause
affecting Borrower's property in excess of an aggregate of $500,000.00.
SECTION 4.11. YEAR 2000 COMPLIANCE. Perform all acts reasonably
necessary to ensure that Borrower and any business in which Borrower holds a
substantial interest become Year 2000 Compliant in a timely manner. Such acts
shall include, without limitation, performing a comprehensive review and
assessment of all of Borrower's systems and adopting a detailed plan, with
itemized budget, for the remediation, monitoring and testing of such systems. As
used herein, "Year 2000 Compliant" shall mean, in regard to any entity, that all
software, hardware, firmware, equipment, goods or systems utilized by or
material to the business operations or financial condition of such entity, will
properly perform date sensitive functions before, during and after the year
2000. Borrower shall, immediately upon request, provide to Bank such
certifications or other evidence of Borrower's compliance with the terms hereof
as Bank may from time to time require.
ARTICLE V
NEGATIVE COVENANTS
Borrower further covenants that so long as Bank remains committed to
extend credit to Borrower pursuant hereto, or any liabilities (whether direct or
contingent, liquidated or unliquidated) of Borrower to Bank under any of the
Loan Documents remain outstanding, and until payment in full of all obligations
of Borrower subject hereto, Borrower will not without Bank's prior written
consent:
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SECTION 5.1. USE OF FUNDS. Use any of the proceeds of any of the Credits
except for the purposes stated in Article I hereof.
SECTION 5.2. CAPITAL EXPENDITURES. Make any additional investment in
fixed assets in fiscal year 2000 in excess of an aggregate of $20,000,000.00,
and not in excess of $20,000,000.00 in fiscal year 2001 and each fiscal year
thereafter.
SECTION 5.3. OTHER INDEBTEDNESS. Create, incur, assume or permit to
exist any indebtedness or liabilities resulting from borrowings, loans or
advances, whether secured or unsecured, matured or unmatured, liquidated or
unliquidated, joint or several, except (a) the liabilities of Borrower to Bank,
and (b) any other liabilities of Borrower existing as of, and disclosed to Bank
prior to, the date hereof except for (i) existing indebtedness disclosed to the
Bank, (ii) indebtedness to trade creditors incurred in the ordinary course of
business; (iii) indebtedness with respect to capital leases which do not
otherwise exceed the aggregate limitations set forth in Section 5.2 hereunder
and indebtedness secured by Permitted Liens; (iv) indebtedness consisting of
guaranties (and other credit support) of the obligations of vendors and
suppliers of Borrower with respect to transactions entered into in the ordinary
course of business, provided that such guaranties (and other credit support) do
not exceed an aggregate of Fifty Thousand Dollars ($50,000.00); (v) indebtedness
subordinated to the obligations of Borrower to Bank pursuant to subordination
agreements in form and substance satisfactory to Bank; (vi) indebtedness not
otherwise authorized hereunder not exceeding Two Hundred Fifty Thousand Dollars
($250,000.00) in the aggregate outstanding at any time; and (vii) extensions of
any of the foregoing items listed in the foregoing clauses (i) through (v).
SECTION 5.4. MERGER, CONSOLIDATION, TRANSFER OF ASSETS. Merge into or
consolidate with any other entity; make any substantial change in the nature of
Borrower's business as conducted as of the date hereof; acquire all or
substantially all of the assets of any other entity; nor sell, lease, transfer
or otherwise dispose of all or a substantial or material portion of Borrower's
assets except in the ordinary course of its business.
SECTION 5.5. GUARANTIES. Guarantee or become liable in any way as
surety, endorser (other than as endorser of negotiable instruments for deposit
or collection in the ordinary course of business), accommodation endorser or
otherwise for, nor pledge or hypothecate any assets of Borrower as security
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for, any liabilities or obligations of any other person or entity, except any of
the foregoing in favor of Bank, and except for Borrower's subordinated guaranty
of the Parent Financing.
SECTION 5.6. LOANS, ADVANCES, INVESTMENTS. Make any loans or advances to
or investments in any person or entity, except any of the foregoing existing as
of, and disclosed to Bank prior to, the date hereof.
SECTION 5.7. DIVIDENDS, DISTRIBUTIONS. Declare or pay any dividend or
distribution during the period commencing upon the date of this Agreement and
continuing up to and including the date that this Agreement terminates either in
cash, stock or any other property on Borrower's stock now or hereafter
outstanding in excess of 50% of Borrower's cumulative net income after taxes for
the period commencing with Borrower's fiscal year 2000 and continuing thereafter
until the termination of this Agreement (with such cumulative net income after
taxes determined at and as of the time of such dividend or distribution), nor
redeem, retire, repurchase or otherwise acquire any shares of any class of
Borrower's stock now or hereafter outstanding; provided however, that
notwithstanding the foregoing provision and so long as no default or Event of
Default has occurred under this Agreement or the other Loan Documents, Borrower
may declare or pay a dividend or distribution (in addition to the amounts
otherwise payable under the limits described above) on Borrower's stock now or
hereafter outstanding in an amount not to exceed any additional paid in capital
which is invested in Borrower after the date of this Agreement.
SECTION 5.8. PLEDGE OF ASSETS. Mortgage, pledge, grant or permit to
exist a security interest in, or lien upon, all or any portion of Borrower's
assets now owned or hereafter acquired, except any of the foregoing in favor of
Bank or which is existing as of, and disclosed to Bank in writing prior to, the
date hereof.
ARTICLE VI
EVENTS OF DEFAULT
SECTION 6.1. The occurrence of any of the following shall constitute an
"Event of Default" under this Agreement:
(a) Borrower shall fail to pay when due any principal, interest, fees or
other amounts payable under any of the Loan Documents.
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(b) Any financial statement or certificate furnished to Bank in
connection with, or any representation or warranty made by Borrower or any other
party under this Agreement or any other Loan Document shall prove to be
incorrect, false or misleading in any material respect when furnished or made.
(c) Any default in the performance of or compliance with any obligation,
agreement or other provision contained herein or in any other Loan Document
(other than those referred to in subsections (a) and (b) above), and with
respect to any such default which by its nature can be cured, such default shall
continue for a period of twenty (20) days from its occurrence.
(d) Any default in the payment or performance of any obligation, or any
defined event of default, under the terms of any contract or instrument (other
than any of the Loan Documents) pursuant to which Borrower has incurred any debt
or other liability to any person or entity, including Bank.
(e) With respect to judgments in excess of $100,000 in amount or
judgments issued after the date of this Agreement which when in the aggregate
with all other judgments issued after the date of this Agreement exceed the
cumulative sum of $250,000: (i) the filing of a notice of judgment lien against
Borrower; or (ii) the recording of any abstract of judgment against Borrower in
any county in which Borrower has an interest in real property; or (iii) the
service of a notice of levy and/or of a writ of attachment or execution, or
other like process, against the assets of Borrower; or (iv) the entry of a
judgment against Borrower.
(f) Borrower shall become insolvent, or shall suffer or consent to or
apply for the appointment of a receiver, trustee, custodian or liquidator of
itself or any of its property, or shall generally fail to pay its debts as they
become due, or shall make a general assignment for the benefit of creditors;
Borrower shall file a voluntary petition in bankruptcy, or seeking
reorganization, in order to effect a plan or other arrangement with creditors or
any other relief under the Bankruptcy Reform Act, Title 11 of the United States
Code, as amended or recodified from time to time ("Bankruptcy Code"), or under
any state or federal law granting relief to debtors, whether now or hereafter in
effect; or any involuntary petition or proceeding pursuant to the Bankruptcy
Code or any other applicable state or federal law relating to bankruptcy,
reorganization or other relief for debtors is filed or commenced against
Borrower, or Borrower shall file an answer admitting the
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jurisdiction of the court and the material allegations of any involuntary
petition; or Borrower shall be adjudicated a bankrupt, or an order for relief
shall be entered against Borrower by any court of competent jurisdiction under
the Bankruptcy Code or any other applicable state or federal law relating to
bankruptcy, reorganization or other relief for debtors.
(g) There shall exist or occur an event or condition which has or is
substantially likely to have a material adverse effect on (i) the business,
assets, operations, prospects or financial or other condition of Borrower; (ii)
the ability of Borrower to pay or perform any of its obligations under any of
the Loan Documents; or (iii) the rights or remedies of Bank under this Agreement
or the other Loan Documents.
(h) The dissolution or liquidation of Borrower; or Borrower or any of
its directors, stockholders or members, shall take action seeking to effect the
dissolution or liquidation of Borrower.
(i) Any change in ownership during the term of this Agreement of an
aggregate of twenty-five percent (25%) or more of the common stock of Borrower.
SECTION 6.2. REMEDIES. Upon the occurrence of any Event of Default: (a)
all indebtedness of Borrower under each of the Loan Documents, any term thereof
to the contrary notwithstanding, shall at Bank's option and without notice
become immediately due and payable without presentment, demand, protest or
notice of dishonor, all of which are hereby expressly waived by each Borrower;
(b) the obligation, if any, of Bank to extend any further credit under any of
the Loan Documents shall immediately cease and terminate; and (c) Bank shall
have all rights, powers and remedies available under each of the Loan Documents,
or accorded by law, including without limitation the right to resort to any or
all security for any of the Credits and to exercise any or all of the rights of
a beneficiary or secured party pursuant to applicable law. All rights, powers
and remedies of Bank may be exercised at any time by Bank and from time to time
after the occurrence of an Event of Default, are cumulative and not exclusive,
and shall be in addition to any other rights, powers or remedies provided by law
or equity.
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ARTICLE VII
MISCELLANEOUS
SECTION 7.1. NO WAIVER. No delay, failure or discontinuance of Bank in
exercising any right, power or remedy under any of the Loan Documents shall
affect or operate as a waiver of such right, power or remedy; nor shall any
single or partial exercise of any such right, power or remedy preclude, waive or
otherwise affect any other or further exercise thereof or the exercise of any
other right, power or remedy. Any waiver, permit, consent or approval of any
kind by Bank of any breach of or default under any of the Loan Documents must be
in writing and shall be effective only to the extent set forth in such writing.
SECTION 7.2. NOTICES. All notices, requests and demands which any party
is required or may desire to give to any other party under any provision of this
Agreement must be in writing delivered to each party at the following address:
BORROWER: HORIZON HIGH REACH, INC.
0000 X. Xxxx, Xxxxx 000
Xxxxxx, XX 00000
BANK: XXXXX FARGO BANK, NATIONAL ASSOCIATION
Fresno regional Commercial Banking office
0000 X. Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, XX 00000
or to such other address as any party may designate by written notice to all
other parties. Each such notice, request and demand shall be deemed given or
made as follows: (a) if sent by hand delivery, upon delivery; (b) if sent by
mail, upon the earlier of the date of receipt or three (3) days after deposit in
the U.S. mail, first class and postage prepaid; and (c) if sent by telecopy,
upon receipt.
SECTION 7.3. COSTS, EXPENSES AND ATTORNEYS' FEES. Borrower shall pay to
Bank immediately upon demand the full amount of all payments, advances, charges,
costs and expenses, including reasonable attorneys', fees (to include outside
counsel fees and all allocated costs of Bank's in-house counsel), expended or
incurred by Bank in connection with (a) the negotiation and preparation of this
Agreement and the other Loan Documents, Bank's continued administration hereof
and thereof, and the preparation of any amendments and waivers hereto and
thereto, (b) the enforcement of Bank's rights and/or the collection of any
amounts which become due to Bank under any
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of the Loan Documents, and (c) the prosecution or defense of any action in any
way related to any of the Loan Documents, including without limitation, any
action for declaratory relief, whether incurred at the trial or appellate level,
in an arbitration proceeding or otherwise, and including any of the foregoing
incurred in connection with any bankruptcy proceeding (including without
limitation, any adversary proceeding, contested matter or motion brought by Bank
or any other person) relating to any Borrower or any other person or entity.
SECTION 7.4. SUCCESSORS, ASSIGNMENT. This Agreement shall be binding
upon and inure to the benefit of the heirs, executors, administrators, legal
representatives, successors and assigns of the parties; provided however, that
Borrower may not assign or transfer its interest hereunder without Bank's prior
written consent. Bank reserves the right to sell, assign, transfer, negotiate or
grant participations in all or any part of; or any interest in, Bank's rights
and benefits under each of the Loan Documents. In connection therewith, Bank may
disclose all documents and information which Bank now has or may hereafter
acquire relating to any of the Credits, Borrower or its business, [any guarantor
hereunder or the business of such guarantor,] or any collateral required
hereunder.
SECTION 7.5. ENTIRE AGREEMENT; AMENDMENT. This Agreement and the other
Loan Documents constitute the entire agreement between Borrower and Bank with
respect to the Credits and supersede all prior negotiations, communications,
discussions and correspondence concerning the subject matter hereof. This
Agreement may be amended or modified only in writing signed by each party
hereto.
SECTION 7.6. NO THIRD PARTY BENEFICIARIES. This Agreement is made and
entered into for the sole protection and benefit of the parties hereto and their
respective permitted successors and assigns, and no other person or entity shall
be a third party beneficiary of, or have any direct or indirect cause of action
or claim in connection with, this Agreement or any other of the Loan Documents
to which it is not a party.
SECTION 7.7. TIME. Time is of the essence of each and every provision of
this Agreement and each other of the Loan Documents.
SECTION 7.8. SEVERABILITY OF PROVISIONS. If any provision of this
Agreement shall be prohibited by or invalid under applicable law, such provision
shall be ineffective only to the extent of such prohibition or invalidity
without invalidating
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the remainder of such provision or any remaining provisions of this Agreement.
SECTION 7.9. COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each of which when executed and delivered shall be deemed to be
an original, and all of which when taken together shall constitute one and the
same Agreement.
SECTION 7.10. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of California.
SECTION 7.11. ARBITRATION.
(a) Arbitration. Upon the demand of any party, any Dispute shall be
resolved by binding arbitration (except as set forth in (e) below) in accordance
with the terms of this Agreement. A "Dispute" shall mean any action, dispute,
claim or controversy of any kind, whether in contract or tort, statutory or
common law, legal or equitable, now existing or hereafter arising under or in
connection with, or in any way pertaining to, any of the Loan Documents, or any
past, present or future extensions of credit and other activities, transactions
or obligations of any kind related directly or indirectly to any of the Loan
Documents, including without limitation, any of the foregoing arising in
connection with the exercise of any self-help, ancillary or other remedies
pursuant to any of the Loan Documents. Any party may by summary proceedings
bring an action in court to compel arbitration of a Dispute. Any party who fails
or refuses to submit to arbitration following a lawful demand by any other party
shall bear all costs and expenses incurred by such other party in compelling
arbitration of any Dispute.
(b) Governing Rules. Arbitration proceedings shall be administered by
the American Arbitration Association ("AAA") or such other administrator as the
parties shall mutually agree upon in accordance with the AAA Commercial
Arbitration Rules. All Disputes submitted to arbitration shall be resolved in
accordance with the Federal Arbitration Act (Title 9 of the United States Code),
notwithstanding any conflicting choice of law provision in any of the Loan
Documents. The arbitration shall be conducted at a location in California
selected by the AAA or other administrator. If there is any inconsistency
between the terms hereof and any such rules, the terms and procedures set forth
herein shall control. All statutes of limitation applicable to any Dispute shall
apply to any arbitration proceeding. All discovery activities shall be expressly
limited to matters directly relevant to the Dispute
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being arbitrated. Judgment upon any award rendered in an arbitration may
be entered in any court having jurisdiction; provided however, that nothing
contained herein shall be deemed to be a waiver by any party that is a bank of
the protections afforded to it under 12 U.S.C. Section 91 or any similar
applicable state law.
(c) No Waiver; Provisional Remedies, Self-Help and Foreclosure. No
provision hereof shall limit the right of any party to exercise self-help
remedies such as setoff, foreclosure against or sale of any real or personal
property collateral or security, or to obtain provisional or ancillary remedies,
including without limitation injunctive relief, sequestration, attachment,
garnishment or the appointment of a receiver, from a court of competent
jurisdiction before, after or during the pendency of any arbitration or other
proceeding. The exercise of any such remedy shall not waive the right of any
party to compel arbitration or reference hereunder.
(d) Arbitrator Qualifications and Powers; Awards. Arbitrators must be
active members of the California State Bar or retired judges of the state or
federal judiciary of California, with expertise in the substantive laws
applicable to the subject matter of the Dispute. Arbitrators are empowered to
resolve Disputes by summary rulings in response to motions filed prior to the
final arbitration hearing. Arbitrators (i) shall resolve all Disputes in
accordance with the substantive law of the state of California, (ii) may grant
any remedy or relief that a court of the state of California could order or
grant within the scope hereof and such ancillary relief as is necessary to make
effective any award, and (iii) shall have the power to award recovery of all
costs and fees, to impose sanctions and to take such other actions as they deem
necessary to the same extent a judge could pursuant to the Federal Rules of
Civil Procedure, the California Rules of Civil Procedure or other applicable
law. Any Dispute in which the amount in controversy is $5,000,000 or less shall
be decided by a single arbitrator who shall not render an award of greater than
$5,000,000 (including damages, costs, fees and expenses). By submission to a
single arbitrator, each party expressly waives any right or claim to recover
more than $5,000,000. Any Dispute in which the amount in controversy exceeds
$5,000,000 shall be decided by majority vote of a panel of three arbitrators;
provided however, that all three arbitrators must actively participate in all
hearings and deliberations.
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(e) Judicial Review. Notwithstanding anything herein to the contrary, in
any arbitration in which the amount in controversy exceeds $25,000,000, the
arbitrators shall be required to make specific, written findings of fact and
conclusions of law. In such arbitrations, the arbitrators shall not have the
power to make any award which is not supported by substantial evidence or which
is based on legal error, (ii) an award shall not be binding upon the parties
unless the findings of fact are supported by substantial evidence and the
conclusions of law are not erroneous under the substantive law of the state of
California, and (iii) the parties shall have in addition to the grounds referred
to in the Federal Arbitration Act for vacating, modifying or correcting an award
the right to judicial review of (A) whether the findings of fact rendered by the
arbitrators are supported by substantial evidence, and (B) whether the
conclusions of law are erroneous under the substantive law of the state of
California. Judgment confirming an award in such a proceeding may be entered
only if a court determines the award is supported by substantial evidence and
not based on legal error under the substantive law of the state of California.
(f) Real Property Collateral; Judicial Reference. Notwithstanding
anything herein to the contrary, no Dispute shall be submitted to arbitration if
the Dispute concerns indebtedness secured directly or indirectly, in whole or in
part, by any real property unless (i) the holder of the mortgage, lien or
security interest specifically elects in writing to proceed with the
arbitration, or (ii) all parties to the arbitration waive any rights or benefits
that might accrue to them by virtue of the single action rule statute of
California, thereby agreeing that all indebtedness and obligations of the
parties, and all mortgages, liens and security interests securing such
indebtedness and obligations, shall remain fully valid and enforceable. If any
such Dispute is not submitted to arbitration, the Dispute shall be referred to a
referee in accordance with California Code of Civil Procedure Section 638 et
seq., and this general reference agreement is intended to be specifically
enforceable in accordance with said Section 638. A referee with the
qualifications required herein for arbitrators shall be selected pursuant to the
AAA's selection procedures. Judgment upon the decision rendered by a referee
shall be entered in the court in which such proceeding was commenced in
accordance with California Code of Civil Procedure Sections 644 and 645.
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(g) Miscellaneous. To the maximum extent practicable, the AAA, the
arbitrators and the parties shall take all action required to conclude any
arbitration proceeding within 180 days of the filing of the Dispute with the
AAA. No arbitrator or other party to an arbitration proceeding may disclose the
existence, content or results thereof, except for disclosures of information by
a party required in the ordinary course of its business, by applicable law or
regulation, or to the extent necessary to exercise any judicial review rights
set forth herein. If more than one agreement for arbitration by or between the
parties potentially applies to a Dispute, the arbitration provision most
directly related to the Loan Documents or the subject matter of the Dispute
shall control. This arbitration provision shall survive termination, amendment
or expiration of any of the Loan Documents or any relationship between the
parties.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first written above.
XXXXX FARGO BANK,
HORIZON HIGH REACH, INC. NATIONAL ASSOCIATION
By: /s/ Xxxxxxx XxXxx, CFO By: /s/ Xxx Xxxxxx
--------------------------- ------------------------------
Xxx Xxxxxx
Title: CFO Vice President
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