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CREDIT AGREEMENT
by and between
XXXXX, INCORPORATED, a Delaware corporation,
ADVANCED TECHNOLOGY SERVICES, INC., an Arizona corporation
and
IMPERIAL BANK, a California banking corporation
Dated as of
January 10, 2000
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TABLE OF CONTENTS
Page
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RECITALS.......................................................................1
ARTICLE 1 DEFINITION OF TERMS...............................................2
1.1 Definitions.......................................................2
1.2 References........................................................8
1.3 Accounting Terms..................................................8
ARTICLE 2 THE RLC...........................................................9
2.1 Commitment........................................................9
2.2 Revolving Line of Credit..........................................9
2.3 RLC Advances......................................................9
2.4 RLC Payments......................................................9
2.5 Principal Prepayments; Excess Balance Payment....................10
2.6 Method of Payment................................................10
2.7 Collection of Payment............................................10
2.8 Conditions.......................................................10
2.9 Other RLC Advances by Lender.....................................11
2.10 Assignment.......................................................11
2.11 Fees.............................................................11
ARTICLE 3 SECURITY.........................................................12
3.1 Security.........................................................12
3.2 Security Documents...............................................12
ARTICLE 4 CONDITIONS PRECEDENT.............................................13
4.1 Initial or Any Subsequent Advance................................13
4.2 No Event of Default..............................................14
4.3 No Material Adverse Effect.......................................14
4.4 Representations and Warranties...................................14
ARTICLE 5 REPRESENTATIONS AND WARRANTIES...................................15
5.1 Recitals.........................................................15
5.2 Organization and Good Standing...................................15
5.3 Authorization and Power..........................................15
5.4 Security Documents...............................................15
5.5 No Conflicts or Consents.........................................15
5.6 No Litigation....................................................15
5.7 Financial Condition..............................................16
5.8 Taxes............................................................16
5.9 No Stock Purchase................................................16
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5.10 Advances.........................................................16
5.11 Enforceable Obligations..........................................16
5.12 No Default.......................................................16
5.13 Significant Debt Agreements......................................16
5.14 ERISA............................................................17
5.15 Compliance with Law..............................................17
5.16 Solvent..........................................................17
5.17 Investment Borrower Act..........................................17
5.18 Title............................................................17
5.19 Survival of Representations, Etc.................................17
5.20 Environmental Matters............................................17
5.21 Licenses, Tradenames.............................................17
ARTICLE 6 AFFIRMATIVE COVENANTS............................................18
6.1 Financial Statements, Reports and Documents......................18
6.2 Maintenance of Existence and Rights; Conduct of Business;
Management.......................................................19
6.3 Operations and Properties........................................19
6.4 Authorizations and Approvals.....................................19
6.5 Compliance with Law..............................................19
6.6 Payment of Taxes and Other Indebtedness..........................19
6.7 Compliance with Significant Debt Agreements
and Other Agreements.............................................20
6.8 Compliance with Credit Documents.................................20
6.9 Notice of Default................................................20
6.10 Other Notices....................................................20
6.11 Books and Records; Access........................................20
6.12 ERISA Compliance.................................................20
6.13 Further Assurances...............................................20
6.14 Insurance........................................................21
6.15 Depository Accounts..............................................21
6.16 Equipment Located in United Kingdom..............................22
ARTICLE 7 NEGATIVE COVENANTS...............................................23
7.1 No Debt..........................................................23
7.2 Liens............................................................23
7.3 Existence........................................................23
7.4 Amendments to Organizational Documents...........................23
7.5 Margin Stock.....................................................23
7.6 Distributions....................................................24
7.7 Indebtedness; Payments...........................................24
7.8 Transfer Collateral..............................................24
7.9 Merger; Sale of Assets...........................................24
7.10 Financial Covenants..............................................24
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ARTICLE 8 EVENTS OF DEFAULT................................................25
8.1 Events of Default................................................25
8.2 Remedies Upon Event of Default...................................27
8.3 Performance by Lender............................................28
ARTICLE 9 MISCELLANEOUS....................................................29
9.1 Modification.....................................................29
9.2 Waiver...........................................................29
9.3 Payment of Expenses..............................................29
9.4 Notices..........................................................29
9.5 Governing Law; Jurisdiction, Venue; Waiver of Jury Trial.........30
9.6 Reference Provision..............................................31
9.7 Invalid Provisions...............................................32
9.8 Binding Effect...................................................32
9.9 Entirety.........................................................32
9.10 Headings.........................................................32
9.11 Survival.........................................................32
9.12 No Third Party Beneficiary.......................................32
9.13 Time.............................................................33
9.14 Schedules and Exhibits Incorporated..............................33
9.15 Counterparts.....................................................33
9.16 Equipment Located in United Kingdom..............................ii
EXHIBIT "A" Form of Advance Notice
EXHIBIT "B" Form of Compliance Certificate
EXHIBIT "C" Borrowing Base Certificate
EXHIBIT "D" Subordination Agreement
EXHIBIT "E" Pending Litigation
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CREDIT AGREEMENT
BY THIS CREDIT AGREEMENT (together with any amendments or modifications,
the "Credit Agreement"), entered into as of this 10th day of January, 2000 by
and between XXXXX, INCORPORATED, a Delaware corporation ("XXXXX"), ADVANCED
TECHNOLOGY SERVICES, INC., an Arizona corporation ("ATSI"; and together with
XXXXX, the "Borrower"), and IMPERIAL BANK, a California banking corporation (the
"Lender"), in consideration of the mutual promises herein contained and for
other valuable consideration, the parties hereto do hereby agree as follows:
RECITALS
A. Borrower has applied to Lender for a revolving line of credit facility
(the "RLC") in the principal amount of TWO MILLION AND NO/100 DOLLARS
($2,000,000.00) for the purpose of funding Borrower's working capital needs
related to trading cycles.
B. As a condition for extending such financial accommodations, Lender has
required that Borrower enter into this Credit Agreement, establishing the terms
and conditions thereof.
ARTICLE 1
DEFINITION OF TERMS
1.1 DEFINITIONS. For the purposes of this Credit Agreement, unless the
context otherwise requires, the following terms shall have the respective
meanings assigned to them in this Article 1 or in the Section hereof referred to
below:
"ACCOUNTS RECEIVABLE" means, at any time, the accounts receivable of
ATSI.
"ADVANCE" means an RLC Advance.
"AFFILIATE" of any Person means any Person which, directly or
indirectly, controls or is controlled by such Person. For the purposes of this
definition, "control" (including, with correlative meanings, the term
"controlled by"), as used with respect to any Person, shall mean the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of such Person, whether by contract or otherwise.
"APPROVED CUSTOMERS" means the following customers of ATSI (as
amended, from time to time, by Lender in its reasonable discretion): Xxxxxxxx,
Motorola, National Semiconductor, Samsung, Intel, Fujitsu, Siemens, ST
Microelectronics, Sony, AMCC, LSI Logic, Texas Instruments, On Semiconductor and
TSMC.
"ATSI": See the Preamble hereto.
"AUTHORIZED OFFICER" means one or more officers of Borrower duly
authorized (and so certified to Lender by the corporate secretary of Borrower
pursuant to a certificate of authority and incumbency from time to time
satisfactory to Lender in the exercise of Lender's reasonable discretion),
acting alone, to request Advances under the provisions of this Credit Agreement
and execute and deliver documents, instruments, agreements, reports, statements
and certificates in connection herewith.
"BANKING DAY" means a day of the year on which banks are not required
or authorized to close in Inglewood, California and Phoenix, Arizona.
"BORROWER": See the Preamble hereto.
"BORROWING BASE" means the sum of (i) the Eligible Accounts Amount
plus (ii) the Eligible Inventory Amount.
"BORROWING BASE CERTIFICATE" means a certificate substantially in the
form attached hereto as Exhibit "C".
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"CHANGE IN CONTROL" means the occurrence or existence of the following
events or conditions without the prior written consent of Lender, if different
than the state of affairs as of the Closing Date:
(a) the acquisition by any Person or two or more Persons acting
in concert of Control of the Borrower.
"CLOSING DATE" means the date of delivery of this Credit Agreement.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COLLATERAL" means all property subject to the Security Documents.
"CONTROL" when used with respect to any Person means the power,
directly or indirectly, to direct the management policies of such Person,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"CONTROLLED GROUP" means, severally and collectively, the members of
the group controlling, controlled by and/or in common control of Borrower,
within the meaning of Section 4001(b) of ERISA.
"CREDIT AGREEMENT": See the Preamble hereto.
"CREDIT DOCUMENTS" means this Credit Agreement, the Note (including
any renewals, extensions and refundings thereof), the Security Documents and any
written agreements, certificates or documents (and with respect to this Credit
Agreement and such other written agreements and documents, any amendments or
supplements thereto or modifications thereof) executed or delivered pursuant to
the terms of this Credit Agreement.
"DEFAULT RATE" means at any time five percent (5%) per annum over the
then applicable interest rate.
"DOLLARS" and the sign "$" mean lawful currency of the United States
of America.
"EBITDA" means Net Income, plus the sum of all amounts deducted for
interest expense, tax expense, depreciation and amortization, in computing such
Net Income.
"EBITDA RATIO" means EBITDA divided by Borrower's interest expense.
"ELIGIBLE ACCOUNTS" means those accounts receivable of ATSI
attributable to the Approved Customers and as Lender in its sole discretion
shall determine are eligible from time to time. Eligible Accounts shall not
include any of the following:
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(a) Account balances over ninety (90) calendar days from the due
date; provided, however, that in no event shall the due date be more
than thirty (30) days after the invoice date.
(b) Accounts with respect to which the account debtor is an
officer, director, shareholder, employee, subsidiary or affiliate of
Borrower.
(c) [Intentionally Deleted.]
(d) [Intentionally Deleted.]
(e) Unless the account debtor is an Approved Customer, accounts
with respect to international transactions unless insured by an
insurance company acceptable to Lender in its sole discretion or
covered by letters of credit issued or confirmed by a bank acceptable
to Lender or unless otherwise acceptable to Lender, in its sole and
absolute discretion.
(f) [Intentionally Deleted.]
(g) Accounts where the account debtor is a seller to Borrower,
whereby a potential offset (contra) exists, to the extent of the
offset.
(h) Consignment or guaranteed sales.
(i) [Intentionally Deleted.]
(j) Contracts receivable.
(k) Progress xxxxxxxx.
(l) Accounts with respect to installment sales to the extent of
amounts not yet due and payable or, if due and payable, balances that
are over sixty (60) calendar days from their due date.
"ELIGIBLE ACCOUNTS AMOUNT" means an amount equal to seventy-five
percent (75.0%) of the Eligible Accounts.
"ELIGIBLE INVENTORY" means that inventory of ATSI that consists of
finished goods and that is located in the United States, all of which shall be
valued at the lower of actual cost or market value in accordance with GAAP.
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"ELIGIBLE INVENTORY AMOUNT" means an amount equal to fifty percent
(50.0%) of the Eligible Inventory.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, together with all final and permanent regulations issued pursuant
thereto. References herein to sections and subsections of ERISA are deemed to
refer to any successor or substitute provisions therefor.
"EVENT OF DEFAULT": See Section 8.1.
"EXCHANGE ACT" means the Securities Exchange Act of 1934.
"FINANCIAL COVENANTS": See Section 7.10 hereof.
"GAAP" means those generally accepted accounting principles and
practices which are recognized as such by the American Institute of Certified
Public Accountants acting through its Accounting Principles Board or by the
Financial Accounting Standards Board or through other appropriate boards or
committees thereof and which are consistently applied for all periods after the
date hereof so as to properly reflect the financial condition, and the results
of operations and changes in the financial position, of Borrower, including
without limitation accounting rules promulgated pursuant to Regulations SX and
SK, except that any accounting principle or practice required to be changed by
the said Accounting Principles Board or Financial Accounting Standards Board (or
other appropriate board or committee of the said Boards) in order to continue as
a generally accepted accounting principle or practice may be so changed.
"GOVERNMENTAL AUTHORITY" means any government (or any political
subdivision or jurisdiction thereof), court, bureau, agency or other
governmental authority having jurisdiction over Borrower or any of its business,
operations or properties.
"INDEBTEDNESS" of a Person means each of the following (without
duplication): (a) obligations of that Person to any other Person for payment of
borrowed money, (b) capital lease obligations, (c) notes and drafts drawn or
accepted by that Person payable to any other Person, whether or not representing
obligations for borrowed money (but without duplication of indebtedness for
borrowed money), (d) any obligation for the purchase price of property the
payment of which is deferred for more than one year or evidenced by a note or
equivalent instrument, (e) guarantees of Indebtedness of third parties, and (f)
a recourse or nonrecourse payment obligation of any other Person that is secured
by a Lien on any property of the first Person, whether or not assumed by the
first Person, up to the fair market value (from time to time) of such property
(absent manifest evidence to the contrary, the fair market value of such
property shall be the amount determined under GAAP for financial reporting
purposes).
"LENDER": See the Preamble hereto.
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"LIEN" means any lien, mortgage, security interest, tax lien, pledge,
encumbrance, conditional sale or title retention arrangement, or any other
interest in property designed to secure the repayment of Indebtedness whether
arising by agreement or under any statute or law, or otherwise.
"LOAN" or "Loans" means the RLC.
"LOAN FEE": See Section 2.8 hereto.
"MATERIAL ADVERSE EFFECT" means any circumstance or event which (i)
has any material adverse effect upon the validity or enforceability of any
Credit Document, (ii) materially impairs the ability of Borrower to fulfill its
obligations under the Credit Documents, or (iii) causes an Event of Default or
any event which, with notice or lapse of time or both, would become an Event of
Default.
"NET INCOME" means, for any period, the net income of Borrower for
such period in accordance with GAAP, determined on a consolidated basis.
"NOTE" means that Revolving Promissory Note of even date herewith in
the amount of the RLC, executed by Borrower and delivered pursuant to the terms
of this Credit agreement, together with any renewals, extensions, modifications
or replacements thereof.
"OBLIGATION" means all present and future indebtedness, obligations
and liabilities of Borrower to Lender, and all renewals and extensions thereof,
or any part thereof, arising pursuant to this Credit Agreement or represented by
the Note, including without limitation the Loan and all interest accruing
thereon, and attorneys' fees incurred in the enforcement or collection thereof,
regardless of whether such indebtedness, obligations and liabilities are direct,
indirect, fixed, contingent, joint, several or joint and several; together with
all indebtedness, obligations and liabilities of Borrower evidenced or arising
pursuant to any of the other Credit Documents, and all renewals and extensions
thereof, or part thereof.
"PAYMENT DATE" with respect to a Loan means the tenth day of each
month, commencing the tenth day of the first month after the first Advance
applicable to such Loan shall have been made, provided that if any such day is
not a Banking Day, then such Payment Date shall be the next successive Banking
Day.
"PBGC" means the Pension Benefit Guaranty Corporation, and any
successor to all or substantially all of the Pension Benefit Guaranty
Corporation's functions under ERISA.
"PERMITTED LIENS" means:
(a) Liens in Lender's favor.
(b) Liens for taxes not delinquent.
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(c) Liens resulting from or hereafter arising from the TLD
Funding Credit Facility.
(d) Liens resulting from purchase money financing as to the
personal property so financed and any sales proceeds.
"PERSON" includes an individual, a corporation, a joint venture, a
partnership, a trust, a limited liability Borrower, an unincorporated
organization or a government or any agency or political subdivision thereof.
"PLAN" means an employee defined benefit plan or other plan maintained
by Borrower for employees of Borrower and covered by Title IV of ERISA, or
subject to the minimum funding standards under Section 412 of the Code.
"PLEDGE AGREEMENT": See Section 3.1(b) hereof.
"PRIME RATE" means the interest rate per annum publicly announced by
Lender, or its successors, as its "prime rate" as in effect from time to time.
Borrower acknowledges that the Prime Rate is not necessarily the best or lowest
rate offered by Lender and Lender may lend to its customers at rates that are
at, above or below its Prime Rate.
"QUARTERLY END DATE" means each March 31, June 30, September 30 and
December 31.
"REGULATION U" means Regulation U promulgated by the Board of
Governors of the Federal Reserve System, 12 C.F.R. Part 221, or any other
regulation hereafter promulgated by said Board to replace the prior Regulation U
and having substantially the same function.
"REPORTABLE EVENT" means any "reportable event" as described in
Section 4043(b) of ERISA with respect to which the thirty (30) day notice
requirement has not been waived by the PBGC.
"RLC" means that revolving line of credit made available by Lender to
Borrower pursuant to Article 2 hereof.
"RLC ADVANCE" means a disbursement of the proceeds of the RLC.
"RLC COMMITMENT" means Two Million And No/100 Dollars ($2,000,000.00).
"RLC FEE": See Section 2.11 hereof.
"RLC MATURITY DATE" means January 9, 2001.
"SECURITY AGREEMENT": See Section 3.1(a) hereof.
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"SECURITY DOCUMENTS": See Section 3.2 hereof.
"SIGNIFICANT DEBT AGREEMENT" means all documents, instruments and
agreements executed by Borrower, evidencing, securing or ensuring any
Indebtedness of Borrower or any guaranty in excess of $100,000.00 in outstanding
principal (or principal equivalent) amount.
"XXXXX": See the Preamble hereto.
"SUBORDINATED DEBT" means Indebtedness of Borrower subordinated to the
payment of the Obligation pursuant to written agreements acceptable to Lender.
"SUBORDINATION AGREEMENT" means a Subordination Agreement
substantially in form attached hereto as Exhibit "D".
"SUBSIDIARY" means any corporation of which more than 50% of the
outstanding shares of capital stock having general voting power under ordinary
circumstances to elect a majority of the board of directors of such corporation,
irrespective of whether or not at the time stock of any other class or classes
shall have or might have voting power by reason of the happening of any
contingency, is at the time directly or indirectly owned by the Borrower, by the
Borrower and one or more other Subsidiaries, or by one or more other
Subsidiaries.
"TLD FUNDING" means TLD Funding Group, Inc., an Arizona corporation.
"TLD FUNDING CREDIT FACILITY" means that certain credit facility
provided to Borrower by TLD Funding in an amount equal to $1,000,000.00 for the
purchase of equipment inventory.
"VARIABLE RATE" means the rate per annum equal to (i) the Prime Rate
per annum as in effect from time to time, plus (ii) four percent (4.0%). The
Variable Rate will change on each day that the "Prime Rate" changes.
1.2 REFERENCES. Capitalized terms shall be equally applicable to both the
singular and the plural forms of the terms therein defined. References to
"Credit Agreement," "this Agreement," "herein," "hereof," "hereunder," or other
like words mean this Credit Agreement as amended, supplemented, restated or
otherwise modified and in effect from time to time.
1.3 ACCOUNTING TERMS. Except as expressly provided to the contrary herein,
all accounting terms shall be interpreted and all accounting determinations
shall be made in accordance with GAAP, except as otherwise specifically provided
for herein. To the extent any change in GAAP affects any computation or
determination required to be made pursuant to this Credit Agreement, such
computation or determination shall be made as if such change in GAAP had not
occurred unless Borrower and Lender agree in writing on an adjustment to such
computation or determination to account for such change in GAAP.
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ARTICLE 2
THE RLC
2.1 COMMITMENT. Subject to the conditions herein set forth, Lender agrees
to make the RLC available to or for the benefit of Borrower, and Borrower agrees
to draw upon the RLC, in the manner and upon the terms and conditions herein
expressed, amounts that shall not exceed the lesser of the RLC Commitment or the
Borrowing Base.
2.2 REVOLVING LINE OF CREDIT.
(a) Subject to the terms and conditions set forth in this Credit
Agreement, the RLC shall be a revolving line of credit, against which RLC
Advances may be made to Borrower, repaid by Borrower and new RLC Advances
made to Borrower, as Borrower may request, provided that (i) no RLC Advance
shall be made if an Event of Default shall be continuing, (ii) no RLC
Advance shall be made that would cause the outstanding principal balance of
the RLC to exceed the lesser of the RLC Commitment or the Borrowing Base,
and (iii) no RLC Advance shall be made on or after the RLC Maturity Date.
(b) The RLC shall be evidenced by the Note.
2.3 RLC ADVANCES. An RLC Advance shall be made by Lender to Borrower upon
written notice from Borrower in substantially the form attached hereto as
Exhibit "A" hereof from an Authorized Officer (which notice Borrower hereby
authorizes Lender to accept by telefacsimile) and shall include the date and the
amount of the requested RLC Advance. If such notice is received by Lender before
noon (Inglewood, California local time) on any Banking Day, Lender agrees to
make such RLC Advance no later than the next Banking Day.
2.4 RLC PAYMENTS. The RLC shall bear interest and be payable to Lender upon
the following terms and conditions:
(a) Interest on an RLC Advance shall accrue at the Variable Rate.
(b) All accrued interest on an RLC Advance shall be due and payable on
each Payment Date.
(c) If any payment of interest and/or principal is not received by
Lender when such payment is due, then in addition to the remedies conferred
upon the Lender under the Credit Documents, a late charge of five percent
(5%) of the amount of the installment due and unpaid will be added to the
delinquent amount to compensate the Lender for the expense of handling the
delinquency for any payment past due, regardless of any notice and cure
period.
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(d) Upon the occurrence of an Event of Default and after maturity,
including maturity upon acceleration, the unpaid principal balance, all
accrued and unpaid interest and all other amounts payable hereunder shall
bear interest at the Default Rate.
(e) The unpaid principal balance, all accrued and unpaid interest and
all other amounts payable hereunder with respect to the RLC shall be due
and payable in full on the RLC Maturity Date.
2.5 PRINCIPAL PREPAYMENTS; EXCESS BALANCE PAYMENT.
(a) Borrower may prepay the outstanding principal balance of the RLC
in whole or in part at any time prior to the RLC Maturity Date without
penalty or premium as stated in such notice by Borrower, provided that such
prepayment also includes accrued interest to the date of such prepayment on
the principal amount prepaid.
(b) There shall be due and payable from Borrower to Lender, and
Borrower shall repay to Lender, within five (5) days of written demand from
Lender, from time to time, any amount by which the outstanding principal
balance of the RLC exceeds the lesser of the RLC Commitment or the
Borrowing Base.
2.6 METHOD OF PAYMENT. All payments of principal of, and interest on, the
Note shall be made to Lender before 2:00 p.m. (Inglewood, California local
time), in immediately available funds. All payments made on the Note shall be
credited, to the extent of the amount thereof, in the following manner: (i)
first, to the payment of costs, fees or other charges incurred in connection
with the RLC; (ii) second, to the payment of accrued interest on the RLC; and
(iii) third, to the reduction of the principal balance of the RLC.
2.7 COLLECTION OF PAYMENT. Borrower authorizes Lender to collect all
interest, fees, costs and/or expenses due under this Agreement by charging
Borrower's demand deposit account with Lender 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.
2.8 CONDITIONS. Lender shall have no obligation to make any RLC Advance
unless and until all of the conditions and requirements of this Credit Agreement
are fully satisfied. However, Lender in its sole and absolute discretion may
elect to make one or more RLC Advances prior to full satisfaction of one or more
such conditions and/or requirements. Notwithstanding that such an RLC Advance or
RLC Advances are made, such unsatisfied conditions and/or requirements shall not
be waived or released thereby. Borrower shall be and continue to be obligated to
fully satisfy such conditions and requirements, and Lender, at any time, in
Lender's sole and absolute discretion, may stop making RLC Advances until all
conditions and requirements are fully satisfied.
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2.9 OTHER RLC ADVANCES BY LENDER. Lender, after giving fifteen (15) days
prior written notice to Borrower to allow for corrective action, from time to
time, may make RLC Advances in any amount in payment of (i) insurance premiums,
taxes, assessments, liens or encumbrances existing against property encumbered
by the Security Documents, (ii) interest accrued and payable upon the RLC, (iii)
any charges and expenses that are the obligation of Borrower under this Credit
Agreement or any Security Document, and (iv) any charges or matters necessary to
preserve the property encumbered by the Security Documents or to cure any still
existing Event of Default.
2.10 ASSIGNMENT. Borrower shall have no right to the proceeds of the Loan
other than to have the same disbursed by Lender in accordance with the
disbursement provisions contained in this Credit Agreement. Any assignment or
transfer, voluntary or involuntary, of this Credit Agreement or any right
hereunder shall not be binding upon or in any way affect Lender without its
written consent.
2.11 FEES. In connection with the Loan, Borrower agrees to pay to Lender on
the Closing Date a non-refundable fee in the amount of one and one-half percent
(1.50%) of the RLC Commitment (the "RLC Fee").
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ARTICLE 3
SECURITY
3.1 SECURITY. So long as any Loan is outstanding, Borrower shall cause such
Loan and Borrower's obligations under this Credit Agreement to be secured at all
times by the following:
(a) A valid and effective security agreement (the "Security
Agreement"), duly executed and delivered by or on behalf of Borrower,
granting Lender a valid and enforceable security interest in all of its
personal property as described therein, subject to no prior Liens except
for Permitted Liens.
(b) A pledge and irrevocable proxy security agreement from the
Borrower (the "Pledge Agreement"), assigning, transferring, pledging and
delivering to Lender and granting to Lender a security interest in all of
ATSI's common stock.
3.2 SECURITY DOCUMENTS. All of the documents required by this Article 3
shall be in form satisfactory to Lender and Lender's counsel, and, together with
any Financing Statements for filing and/or recording, and any other items
required by Lender to fully perfect and effectuate the liens and security
interests of Lender contemplated by the Security Agreement, and this Credit
Agreement, may heretofore or hereinafter be referred to as the "Security
Documents."
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ARTICLE 4
CONDITIONS PRECEDENT
The obligation of Lender to make any Loan and to make each and any Advance
hereunder is subject to the full prior satisfaction at each such time of each of
the following conditions precedent:
4.1 INITIAL OR ANY SUBSEQUENT ADVANCE. Prior to its making the initial
Advance or any subsequent Advance, Lender shall have received the following each
in form and substance satisfactory to Lender:
(a) THIS CREDIT AGREEMENT. This Credit Agreement, duly executed and
delivered to Lender by Borrower.
(b) THE NOTE. The Note, duly executed, drawn to the order of Lender
and otherwise as provided in Article 2 hereof.
(c) ORGANIZATIONAL DOCUMENTS. A copy of the current organizational
documents of Borrower, including all amendments thereto, certified as
current and complete by the appropriate authority of the state of its
formation, together with evidence of its good standing in its state of
formation.
(d) MEMBER AUTHORIZATION. An authorization signed by its members,
authorizing the RLC, the execution, delivery, and performance of this
Credit Agreement, the Note, the Credit Documents, and all advances of
credit hereunder.
(e) SECURITY AGREEMENT. The Security Agreement, duly executed and
delivered to Lender by Borrower.
(f) PLEDGE AGREEMENT. The Pledge Agreement, duly executed and
delivered to Lender by Borrower.
(g) LENDER'S FEES AND COSTS. Payment of the RLC Fee in the amount of
$30,000.00 plus Lender's other fees and costs.
(h) COMPLIANCE CERTIFICATE. A Compliance Certificate substantially in
the form of Exhibit "B" attached hereto, indicating that Borrower is in
compliance with the Financial Covenants as of September 30, 1999.
(i) FINANCING STATEMENTS. Financing Statements, duly executed and
delivered to Lender by Borrower.
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(j) ACCOUNTS RECEIVABLE. A listing and aging of the accounts
receivable of Borrower as of November 30, 1999.
(k) [INTENTIONALLY DELETED.]
(l) BORROWER'S FINANCIAL STATEMENTS. Borrower's 1999 fiscal year end
financial statements audited by a certified public accountant reasonably
acceptable to Lender.
(m) ADDITIONAL INFORMATION. Such other information and documents as
may reasonably be required by Lender or Lender's counsel.
4.2 NO EVENT OF DEFAULT. No Event of Default known to Borrower shall have
occurred and be continuing, or result from Lender's making of any Loan.
4.3 NO MATERIAL ADVERSE EFFECT. Since the date of the most recent financial
statements provided to Lender by Borrower, no change shall have occurred in the
business or financial condition of Borrower that could have a Material Adverse
Effect.
4.4 REPRESENTATIONS AND WARRANTIES. The representations and warranties
contained in Article 5 hereof shall be true and correct in all material
respects, with the same force and effect as though made on and as of the Closing
Date (other than those of such representations which by their express terms
speak to a date prior to that date, which representations shall, in all material
respects, be true and correct as of such respective date).
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ARTICLE 5
REPRESENTATIONS AND WARRANTIES
To induce Lender to make the Loans, Borrower represents and warrants to
Lender that:
5.1 RECITALS. The recitals and statements of intent appearing in this
Credit Agreement are true and correct.
5.2 ORGANIZATION AND GOOD STANDING. It is duly organized, validly existing
and in good standing in all states and/or countries in which the nature of its
business and property makes such qualifications necessary or appropriate. It has
the legal power and authority to own its properties and assets and to transact
the business in which it is engaged and is or will be qualified in those states
and/or countries wherein the nature of its proposed business and property will
make such qualifications necessary or appropriate in the future.
5.3 AUTHORIZATION AND POWER. It has the power and requisite authority to
execute, deliver and perform this Credit Agreement, the Note and the other
Credit Documents to be executed by it; it is duly authorized to, and has taken
all action, corporate or otherwise, necessary to authorize it to, execute,
deliver and perform this Credit Agreement, the Note and such other Credit
Documents and is and will continue to be duly authorized to perform this Credit
Agreement, the Note and such other Credit Documents.
5.4 SECURITY DOCUMENTS. The liens, security interests and assignments
created by the Security Documents will, when granted, be valid, effective and
enforceable liens, security interests and assignments, except to the extent (if
any) otherwise agreed in writing by Lender.
5.5 NO CONFLICTS OR CONSENTS. Neither the execution and delivery of this
Credit Agreement, the Note or the other Credit Documents to which it is a party,
nor the consummation of any of the transactions herein or therein contemplated,
nor compliance with the terms and provisions hereof or with the terms and
provisions thereof, (a) will materially contravene or conflict with: (i) any
provision of law, statute or regulation to which it is subject, (ii) any
judgment, license, order or permit applicable to it, (iii) any indenture, credit
agreement, mortgage, deed of trust, or other agreement or instrument to which it
is a party or by which it may be bound, or to which it may be subject, or (b)
will violate any provision of its organizational documents. No consent,
approval, authorization or order of any court or Governmental Authority or other
Person is required in connection with the execution and delivery by it of the
Credit Documents or to consummate the transactions contemplated hereby or
thereby, or if required, such consent, approval, authorization or order shall
have been obtained.
5.6 NO LITIGATION. Except for those matters disclosed in Exhibit "E"
attached hereto and by this reference incorporated herein, there are no actions,
suits or legal, equitable, arbitration or administrative proceedings pending, or
to its actual knowledge overtly threatened, against Borrower that would, if
adversely determined, have a Material Adverse Effect.
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5.7 FINANCIAL CONDITION. It has delivered to Lender copies of the
Borrower's most recent financial statements. Such financial statements, in all
material respects, fairly and accurately present the financial position of
Borrower as of such date, have been prepared in accordance with GAAP and neither
contain any untrue statement of a material fact nor fail to state a material
fact required in order to make such financial statement not misleading. Since
the date thereof, Borrower has not discovered any obligations, liabilities or
indebtedness (including contingent and indirect liabilities and obligations or
unusual forward or long-term commitments) which in the aggregate are material
and adverse to the financial position or business of Borrower that should have
been but were not reflected in such financial statements. No changes having a
Material Adverse Effect have occurred in the financial condition or business of
Borrower since the date of such financial statements.
5.8 TAXES. It has filed or caused to be filed all returns and reports which
are required to be filed by any jurisdiction, and has paid or made provision for
the payment of all taxes, assessments, fees or other governmental charges
imposed upon its properties, income or franchises, as to which the failure to
file or pay would have a Material Adverse Effect, except such assessments or
taxes, if any, which are being contested in good faith by appropriate
proceedings.
5.9 NO STOCK PURCHASE. No part of the proceeds of any financial
accommodation made by Lender in connection with this Credit Agreement will be
used to purchase or carry "margin stock," as that term is defined in Regulation
U, or to extend credit to others for the purpose of purchasing or carrying such
margin stock.
5.10 ADVANCES. Each request for an Advance or for the extension of any
financial accommodation by Lender whatsoever shall constitute an affirmation
that the representations and warranties contained herein are true and correct as
of the time of such request. All representations and warranties made herein
shall survive the execution of this Credit Agreement, all advances of proceeds
of the Loans and the execution and delivery of all other documents and
instruments in connection with the Loans and/or this Credit Agreement, so long
as Lender has any commitment to lend hereunder and until the Loans have been
paid in full and all of Borrower's obligations under this Credit Agreement, the
Note and all Security Documents have been fully discharged. Any investigation at
any time made by or on behalf of Lender shall not diminish Lender's right to
rely on the representations and warranties herein.
5.11 ENFORCEABLE OBLIGATIONS. This Credit Agreement, the Note and the other
Credit Documents are the legal, valid and binding obligations of Borrower,
enforceable against Borrower in accordance with their respective terms, except
as limited by bankruptcy, insolvency or other laws or equitable principles of
general application relating to the enforcement of creditors' rights.
5.12 NO DEFAULT. No event or condition has occurred and is continuing that
constitutes an Event of Default.
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5.13 SIGNIFICANT DEBT AGREEMENTS. It is not in default in any material
respect under any Significant Debt Agreement.
5.14 ERISA. (a) No Reportable Event has occurred and is continuing with
respect to any Plan; (b) PBGC has not instituted proceedings to terminate any
Plan; (c) neither the Borrower, any member of the Controlled Group, nor any
duly-appointed administrator of a Plan (i) has incurred any liability to PBGC
with respect to any Plan other than for premiums not yet due or payable or (ii)
has instituted or intends to institute proceedings to terminate any Plan under
Section 4041 or 4041A of ERISA; and (d) each Plan of Borrower has been
maintained and funded in all material respects in accordance with its terms and
in all material respects in accordance with all provisions of ERISA applicable
thereto. Neither the Borrower nor any of its Subsidiaries participates in, or is
required to make contributions to, any Multi-employer Plan (as that term is
defined in Section 3(37) of ERISA).
5.15 COMPLIANCE WITH LAW. It is in substantial compliance with all laws,
rules, regulations, orders, writs, injunctions and decrees that are applicable
to it, or its properties, noncompliance with which would have a Material Adverse
Effect.
5.16 SOLVENT. It (both before and after giving effect to the Loans
contemplated hereby) is solvent, has assets having a fair value in excess of the
amount required to pay its probable liabilities on its existing debts as they
become absolute and matured, and has, and will have, access to adequate capital
for the conduct of its business and the ability to pay its debts from time to
time incurred in connection therewith as such debts mature.
5.17 INVESTMENT BORROWER ACT. It is not, and is not directly or indirectly
controlled by, or acting on behalf of, any person which is, an "Investment
Borrower" within the meaning of the Investment Borrower Act of 1940, as amended.
5.18 TITLE. It has good and marketable title to the Collateral.
5.19 SURVIVAL OF REPRESENTATIONS, ETC. All representations and warranties
by Borrower herein shall survive the making of any Loan and the execution and
delivery of any Note; any investigation at any time made by or on behalf of
Lender shall not diminish Lender's right to rely on the representations and
warranties herein.
5.20 ENVIRONMENTAL MATTERS. Except as previously disclosed to Lender in
writing, it, to the best of its knowledge after due investigation, is in
compliance in all material respects with all applicable environmental, health
and safety statutes and regulations and Borrower does not have any material
contingent liability in connection with any improper treatment, disposal or
release into the environment of any hazardous or toxic waste or substance.
5.21 LICENSES, TRADENAMES. It, as of the date hereof, possesses all
necessary trademarks, tradenames, copyrights, patents, patent rights, and
licenses to conduct its business as now operated, without any known conflict
with valid trademarks, tradenames, copyright patents and license rights of
others.
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ARTICLE 6
AFFIRMATIVE COVENANTS
Until payment in full of the Loan and the complete performance of the
Obligation, Borrower agrees that:
6.1 FINANCIAL STATEMENTS, REPORTS AND DOCUMENTS. It shall deliver, or cause
to be delivered, to Lender each of the following:
(a) ANNUAL STATEMENTS OF BORROWER. As soon as available and in any
event within ninety (90) days after the close of each fiscal year of
Borrower, audited financial statements of Borrower, including its balance
sheet as of the close of such fiscal year and statements of income of
Borrower for such fiscal year, in each case setting forth in comparative
form the figures for the preceding fiscal year, all in reasonable detail
and accompanied by an unqualified opinion thereon of independent public
accountants of recognized national standing selected by Borrower and
acceptable to Lender, to the effect that such financial statements have
been prepared in accordance with GAAP.
(b) MONTHLY STATEMENTS OF BORROWER. As soon as available, and in any
event within thirty (30) days after the end of each month (except for that
at the close of the fiscal year), an aging report as to its accounts
payable as of the end of such month, copies of the balance sheet of
Borrower as of the end of such month and statement of income of Borrower
for that month and for the portion of the fiscal year ending with such
month, prepared on a consolidating and consolidated basis in each case
setting forth in comparative form the figures for the corresponding period
of the preceding fiscal year (commencing with the comparative report for
the month of April 2000), all in reasonable detail and fairly stated,
certified by Borrower and prepared by Borrower in accordance with GAAP.
(c) COMPLIANCE CERTIFICATE OF BORROWER. Within thirty (30) days after
the end of each quarter hereafter and ninety (90) days after the year of
each fiscal year of Borrower, a certificate signed by the chief financial
officer of the Borrower, substantially in the form of Exhibit "B" attached
hereto certifying that after a review of the activities of Borrower during
such period, Borrower has observed, performed and fulfilled each and every
obligation and covenant contained herein and no Event of Default exists
under any of the same or, if any Event of Default shall have occurred,
specifying the nature and status thereof, and stating that all financial
statements of Borrower delivered to Lender during the respective period
pursuant to Sections 6.1(a) and 6.1(b) hereof, to his/her knowledge, fairly
present in all material respect the financial position of the Borrower and
the results of its operations at the dates and for the periods indicated,
and have been prepared in accordance with GAAP, together with a calculation
of the Financial Covenants.
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(d) BORROWING BASE CERTIFICATE. Within ten (10) days after the end of
each month, a Borrowing Base Certificate substantially in the form attached
hereto as Exhibit "C".
(e) OTHER MONTHLY REPORTS. Within ten (10) days after the end of each
month, reports as to its accounts receivable and inventory located in the
United States, except Lender in its sole discretion may not require any of
these reports. Lender's waiver of this requirement for any particular month
shall not constitute a waiver for any subsequent month.
(f) OTHER INFORMATION. Such other information concerning the business,
properties (including customer lists and product detail) or financial
condition of Borrower as Lender shall reasonably request.
6.2 MAINTENANCE OF EXISTENCE AND RIGHTS; CONDUCT OF BUSINESS; MANAGEMENT.
It will preserve and maintain its existence and all of its rights, privileges,
licenses, permits, franchises and other rights necessary or desirable in the
normal conduct of its business, conduct its business in an orderly and efficient
manner consistent with good business practices and maintain professional
management of its business.
6.3 OPERATIONS AND PROPERTIES. It will keep in good working order and
condition, ordinary wear and tear excepted, all of its assets and properties
which are necessary to the conduct of its business.
6.4 AUTHORIZATIONS AND APPROVALS. It will maintain, at its own expense, all
such governmental licenses, authorizations, consents, permits and approvals as
may be required to enable it to comply with its obligations hereunder and under
the other Credit Documents and to operate its businesses as presently or
hereafter duly conducted.
6.5 COMPLIANCE WITH LAW. It will comply with all applicable laws, rules,
regulations, and all final, nonappealable orders of any Governmental Authority
applicable to it or any of its property, business operations or transactions,
including without limitation, any environmental laws applicable to it, a breach
of which could result in a Material Adverse Effect.
6.6 PAYMENT OF TAXES AND OTHER INDEBTEDNESS. It will pay and discharge (i)
all income taxes and payroll taxes, (ii) all taxes, assessments, fees and other
governmental charges imposed upon it or upon its income or profits, or upon any
property belonging to it, before delinquent, which become due and payable, (iii)
all lawful claims (including claims for labor, materials and supplies), which,
if unpaid, might become a Lien upon any of its property and (iv) all of its
Indebtedness as it becomes due and payable, except as prohibited hereunder;
provided, however, that it shall not be required to pay any such tax,
assessment, charge, levy, claims or Indebtedness if and so long as the amount,
applicability or validity thereof shall currently be contested in good faith by
appropriate actions and appropriate accruals and reserves therefor have been
established in accordance with GAAP.
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6.7 COMPLIANCE WITH SIGNIFICANT DEBT AGREEMENTS AND OTHER AGREEMENTS. It
will comply in all material respects with (i) all Significant Debt Agreements,
and (ii) all agreements and contracts to which it is a party, a breach of which
could result in a Material Adverse Effect.
6.8 COMPLIANCE WITH CREDIT DOCUMENTS. It will comply with any and all
covenants and provisions of this Credit Agreement, the Note and all other Credit
Documents.
6.9 NOTICE OF DEFAULT. It will furnish to Lender immediately upon becoming
actually aware of the existence of any event or condition that constitutes an
Event of Default, a written notice specifying the nature and period of existence
thereof and the action which it is taking or proposes to take with respect
thereto.
6.10 OTHER NOTICES. It will promptly notify Lender of (a) any Material
Adverse Effect, (b) any waiver, release or default under any Significant Debt
Agreement, (c) any claim not covered by insurance against Borrower or any of
Borrower's properties, and (d) the commencement of, and any material
determination in, any litigation with any third party or any proceeding before
any Governmental Authority affecting it, except litigation or proceedings which,
if adversely determined, would not have a Material Adverse Effect.
6.11 BOOKS AND RECORDS; ACCESS. Upon three (3) Banking Days notice from
Lender, it will give any authorized representative of Lender access during
normal business hours to, and permit such representative to examine, copy or
make excerpts from, any and all books, records and documents in its possession
of and relating to the Loan, and to inspect any of its properties. It will
maintain complete and accurate books and records of its transactions in
accordance with good accounting practices.
6.12 ERISA COMPLIANCE. With respect to its Plans, it shall (a) at all times
comply with the minimum funding standards set forth in Section 302 of ERISA and
Section 412 of the Code or shall have duly obtained a formal waiver of such
compliance from the proper authority; (b) at Lender's request, within thirty
(30) days after the filing thereof, furnish to Lender copies of each annual
report/return (Form 5500 Series), as well as all schedules and attachments
required to be filed with the Department of Labor and/or the Internal Revenue
Service pursuant to ERISA, in connection with each of its Plans for each year of
the plan; (c) notify Lender within a reasonable time of any fact, including, but
not limited to, any Reportable Event arising in connection with any of its
Plans, which constitutes grounds for termination thereof by the PBGC or for the
appointment by the appropriate United States District Court of a trustee to
administer such Plan, together with a statement, if requested by Lender, as to
the reason therefor and the action, if any, proposed to be taken with respect
thereto; and (d) furnish to Lender within a reasonable time, upon Lender's
request, such additional information concerning any of its Plans as may be
reasonably requested.
6.13 FURTHER ASSURANCES. It will make, execute or endorse, and acknowledge
and deliver or file or cause the same to be done, all such notices,
certifications and additional agreements, undertakings or other assurances, and
take any and all such other action, as Lender may, from time to time, deem
reasonably necessary or proper to fully evidence the Loan.
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6.14 INSURANCE. It shall maintain in full force and effect at all times all
insurance coverages required under the terms of this Credit Agreement and/or the
Security Documents to which it is a party. In addition, it shall maintain in
full force and effect at all times:
(a) Policies of all risk coverage insurance covering all tangible
personalty in which Lender has been granted or obtained a security interest
to secure the Obligation, in coverage amounts not less than, from time to
time, the fair market value thereof.
(b) Policies of insurance evidencing personal liability and property
damage liability coverages in amounts not less than $1,000,000.00 (combined
single limit for bodily injury and property damage), and an umbrella excess
liability coverage in an amount not less than $2,000,000.00 shall be in
effect with respect to Borrower.
(c) Policies of workers' compensation insurance in amounts and with
coverages as legally required.
Without limitation of the foregoing, it shall at all times maintain insurance
coverages in scope and amount not less than, and not less extensive than, the
scope and amount of insurance coverages customary in the trades or businesses in
which it is from time to time engaged. All of the aforesaid insurance coverages
shall be issued by insurers reasonably acceptable to Lender.
Copies of all policies of insurance evidencing such coverages in effect
from time to time and showing Lender as an additional insured and/or Lender's
loss payee, as required by Lender, shall be delivered to Lender within fifteen
(15) days of the Closing Date and upon reasonable notice upon issuance of new
policies thereafter. From time to time, promptly upon Lender's request, it shall
provide evidence satisfactory to Lender (i) that required coverage in required
amounts is in effect, and (ii) that Lender is shown as an additional insured
and/or Lender's loss payee, as required by Lender, with respect to all such
coverages, as Lender's interest may appear, by standard (non-attribution) loss
payable endorsement, additional insured endorsement, insurer's certificate or
other means acceptable to Lender in its reasonable discretion. At Lender's
option, it shall deliver to Lender certified copies of all such policies of
insurance in effect from time to time, to be retained by Lender so long as
Lender shall have any commitment to lend hereunder and/or any portion of the
Obligation shall be outstanding or unsatisfied. All such insurance policies
shall provide for at least thirty (30) days prior written notice of the
cancellation or modification thereof to Lender.
6.15 DEPOSITORY ACCOUNTS. Within thirty (30) days of the Closing Date,
Borrower shall establish and maintain its principal depository accounts (other
than payroll accounts) with and utilize cash management services provided by
Lender.
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6.16 EQUIPMENT LOCATED IN UNITED KINGDOM. Within one hundred twenty (120)
days of the Closing Date, it will provide evidence reasonably satisfactory to
Lender that all of the equipment inventory located in the United Kingdom has
been either transferred to the United States or sold. In the event Borrower
fails to comply with the requirements of the previous sentence, Borrower agrees
that it shall pay all reasonable costs and expenses of Lender (including,
without limitation, the attorneys' fees of Lender's legal counsel) incurred by
Lender in perfecting its security interest in the equipment inventory located in
the United Kingdom. Borrower further agrees that it shall execute all documents
reasonably necessary to perfect such security interest.
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ARTICLE 7
NEGATIVE COVENANTS
Until payment in full of the Loan and the performance of the Obligation,
Borrower shall not, without receiving the prior express written consent of
Lender:
7.1 NO DEBT. ATSI shall not become or remain obligated either directly or
as a guarantor or surety for any Indebtedness for borrowed money, or for any
Indebtedness incurred in connection with the acquisition of any property, real
or personal, tangible or intangible including, but not limited to, lease
purchase agreements, except:
(a) Indebtedness to the Lender.
(b) Leases and specific equipment financed by TLD Funding.
(c) Indebtedness secured by liens permitted under Section 7.2 hereof.
Notwithstanding anything contained herein, ATSI may obtain additional financing
for new equipment from TLD Funding pursuant to the TLD Funding Credit Facility
provided that ATSI shall inform Lender in writing of such new financing on the
date of such financing.
7.2 LIENS. On and after the date hereof, Borrower will not create or suffer
to exist Liens upon its property, real or personal, including without limitation
its patents, copyrights and trademarks, except (i) Liens, if any, for the
benefit of Lender, and (ii) Permitted Liens.
7.3 EXISTENCE. Dissolve or liquidate, or merge or consolidate with or into
any other entity, or turn over the management or operation of its property,
assets or business to any other Person or make any substantial change in the
character of its business.
7.4 AMENDMENTS TO ORGANIZATIONAL DOCUMENTS. Amend its organizational
documents if the result thereof could result in the occurrence directly or
indirectly of a Material Adverse Effect.
7.5 MARGIN STOCK. Use any proceeds of the Loans, or any proceeds of any
other or future financial accommodation from Lender for the purpose, whether
immediate, incidental or ultimate, of purchasing or carrying any "margin stock"
as that term is defined in Regulation U or to reduce or retire any indebtedness
undertaken for such purposes within the meaning of said Regulation U, and will
not use such proceeds in a manner that would involve Borrower in a violation of
Regulation U or of any other Regulation of the Board of Governors of the Federal
Reserve System, nor use such proceeds for any purpose not permitted by Section 7
of the Exchange Act, or any of the rules or regulations respecting the
extensions of credit promulgated thereunder.
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7.6 DISTRIBUTIONS. Declare or pay any dividends or make any distribution of
any kind, other than existing debt as of the Closing Date, not to exceed
$150,000.00.
7.7 INDEBTEDNESS; PAYMENTS. With respect to any new Indebtedness that is
not permitted Indebtedness under Section 7.1 herein, Borrower agrees that at
least five (5) Banking Days prior to incurring any such Indebtedness, Borrower
shall inform Lender in writing of any Indebtedness (i) with a Person that is not
an Affiliate of Borrower, or (ii) with a Person that is an Affiliate of Borrower
unless such Indebtedness consists of Subordinated Debt. Borrower shall not make
any payment on its Subordinated Debt in any month unless it is in full
compliance with all Financial Covenants and the Borrowing Base limitation
pursuant to Section 2.5(b), prior to and after giving effect to such payment.
Whenever Borrower incurs any debt with a Person that is an Affiliate of Borrower
which has not previously executed a Subordination Agreement for the benefit of
Lender, Borrower shall cause such Affiliate to execute and deliver to Lender a
Subordination Agreement.
7.8 TRANSFER COLLATERAL. Assign, transfer or convey any of its right, title
and interest in the Collateral; provided, however, that ATSI may transfer cash
to any Subsidiary of Borrower solely for the purpose of funding normal operating
expenses of such Subsidiary provided that no Event of Default and no event, that
with the giving of notice or the passage of time, or both, would be an Event of
Default (including, but not limited to, the failure to make Principal Payments
as provided herein and in the Note), shall have occurred and be continuing on
the date of such transfer of cash.
7.9 MERGER; SALE OF ASSETS. (i) Sell, lease, transfer or dispose of
substantially all of the Collateral to another entity; or (ii) consolidate with
or merge the Collateral into another entity, or permit any transfer of the
ownership of the Collateral, permit any other entity to merge into it or
consolidate with it, or permit any transfer of the ownership or power to
control, Borrower.
7.10 FINANCIAL COVENANTS.
(a) NET INCOME. Permit Borrower's Net Income for any two (2)
consecutive fiscal months for any fiscal year to be less than zero (i.e.
net loss).
(b) INTEREST COVERAGE RATIO. Commencing on March 31, 2000, permit
Borrower's EBITDA Ratio to be less than 3.0 to 1.0 at the end of any
quarter, measured on a rolling four (4) quarter basis.
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ARTICLE 8
EVENTS OF DEFAULT
8.1 EVENTS OF DEFAULT. An "Event of Default" shall exist if any one or more
of the following events (herein collectively called "Events of Default") shall
occur and be continuing:
(a) Borrower shall fail to pay any principal of, or interest on, the
Note when the same shall become due or payable and such failure continues
for five (5) Banking Days after notice thereof to Borrower.
(b) Any failure or neglect to perform or observe any of the covenants,
conditions, provisions or agreements of Borrower contained herein, or in
any of the other Credit Documents (other than a failure or neglect
described in one or more of the other provisions of this Section 8.1) and
such failure or neglect either cannot be remedied or, if it can be
remedied, it continues unremedied for a period of fifteen (15) days after
written notice thereof to Borrower.
(c) Any warranty, representation or statement contained in this Credit
Agreement or any of the other Credit Documents, or which is contained in
any certificate or statement furnished or made to Lender pursuant hereto or
in connection herewith or with the Loan, shall be or shall prove to have
been false when made or furnished.
(d) The occurrence of any material "event of default" or "default" by
Borrower under any Credit Document, or any agreement, now or hereafter
existing, to which Lender or an Affiliate of Lender, and Borrower or an
Affiliate of Borrower are a party.
(e) Borrower shall (i) fail to pay any Indebtedness of Borrower (other
than the Note) due under any Significant Debt Agreement, or any interest or
premium thereon, when due (whether by scheduled maturity, required
prepayment, acceleration, demand, or otherwise) or within any applicable
grace period, (ii) fail to perform or observe any term, covenant, or
condition on its part to be performed or observed under any agreement or
instrument relating to such Indebtedness, within any applicable grace
period when required to be performed or observed, if the effect of such
failure to perform or observe is to accelerate the maturity of such
Indebtedness, or any such Indebtedness shall be declared to be due and
payable, or required to be prepaid (other than by a regularly scheduled
prepayment), prior to the stated maturity thereof, or (iii) allow the
occurrence of any material event of default with respect to such
Indebtedness.
(f) Any one or more of the Credit Documents shall have been determined
to be invalid or unenforceable against Borrower executing the same in
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accordance with the respective terms thereof, or shall in any way be
terminated or become or be declared ineffective or inoperative, so as to
deny Lender the substantial benefits contemplated by such Credit Document
or Credit Documents.
(g) Borrower shall (i) apply for or consent to the appointment of a
receiver, trustee, custodian, intervenor or liquidator of itself or of all
or a substantial part of its assets, (ii) file a voluntary petition in
bankruptcy or admit in writing that it is unable to pay its debts as they
become due, (iii) make a general assignment for the benefit of creditors,
(iv) file a petition or answer seeking reorganization of an arrangement
with creditors or to take advantage of any bankruptcy or insolvency laws,
(v) file an answer admitting the material allegations of, or consent to, or
default in answering, a petition filed against it in any bankruptcy,
reorganization or insolvency proceeding, or (vi) take corporate action for
the purpose of effecting any of the foregoing
(h) An involuntary petition or complaint shall be filed against
Borrower, seeking bankruptcy or reorganization of Borrower, or the
appointment of a receiver, custodian, trustee, intervenor or liquidator of
Borrower, or all or substantially all of its assets, and such petition or
complaint shall not have been dismissed within sixty (60) days of the
filing thereof; or an order, order for relief, judgment or decree shall be
entered by any court of competent jurisdiction or other competent authority
approving a petition or complaint seeking reorganization of Borrower,
appointing a receiver, custodian, trustee, intervenor or liquidator of
Borrower, or all or substantially all of its assets, and such order,
judgment or decree shall continue unstayed and in effect for a period of
sixty (60) days.
(i) Any final judgment(s) (excluding those the enforcement of which is
suspended pending appeal) for the payment of money in excess of the sum of
$100,000 in the aggregate (other than any judgment covered by insurance
where coverage has been acknowledged by the insurer) shall be rendered
against Borrower, and such judgment or judgments shall not be satisfied,
settled, bonded or discharged at least ten (10) days prior to the date on
which any of its assets could be lawfully sold to satisfy such judgment.
(j) Either (i) proceedings shall have been instituted to terminate, or
a notice of termination shall have been filed with respect to, any Plans
(other than a Multi-Employer Pension Plan as that term is defined in
Section 4001(a)(3) of ERISA) by Borrower, any member of the Controlled
Group, PBGC or any representative of any thereof, or any such Plan shall be
terminated, in each case under Section 4041 or 4042 of ERISA, and such
termination shall give rise to a liability of the Borrower or the
Controlled Group to the PBGC or the Plan under ERISA having an effect in
excess of $100,000 or (ii) a Reportable Event, the occurrence of which
would cause the imposition of a lien in excess of $100,000 under Section
4062 of ERISA, shall have occurred with respect to any Plan (other than a
Multi-Employer Pension Plan as that term is defined in Section 4001(a)(3)
of ERISA) and be continuing for a period of sixty (60) days.
-26-
(k) Any of the following events shall occur with respect to any Multi-
Employer Pension Plan (as that term is defined in Section 4001(a)(3) of
ERISA) to which Borrower contributes or contributed on behalf of its
employees and Lender determines in good faith that the aggregate liability
likely to be incurred by Borrower, as a result of any of the events
specified in Subsections (i), (ii) and (iii) below, will have an effect in
excess of $100,000; (i) Borrower incurs a withdrawal liability under
Section 4201 of ERISA; (ii) any such plan is "in reorganization" as that
term is defined in Section 4241 of ERISA; or (iii) any such Plan is
terminated under Section 4041A of ERISA.
(l) The occurrence of a change in the Control of Borrower without the
written consent of Lender, which will not be unreasonably withheld.
(m) The dissolution, liquidation, sale, transfer, lease or other
disposal of all or substantially all of the assets or business of Borrower.
(n) Any failure to observe any of the Financial Covenants.
(o) A substantial change in the duties, responsibilities and/or
authority of either Xxx X. Xxxxxxx or Xxxxxx X. Xxxxx.
(p) The occurrence of any adverse change in the financial condition of
Borrower that Lender in its reasonable discretion deems material, or if
Lender in good faith shall believe that the prospect of payment or
performance of the Loans is impaired.
8.2 REMEDIES UPON EVENT OF DEFAULT. If an Event of Default shall have
occurred and be continuing, then Lender may, at its sole option, exercise any
one or more of the following rights and remedies, and any other remedies
provided in any of the Credit Documents, as Lender in its sole discretion may
deem necessary or appropriate, all of which remedies shall be deemed cumulative,
and not alternative:
(i) Cease making Advances or extensions of financial
accommodations in any form to or for the benefit of Borrower,
(ii) Declare the principal of, and all interest then accrued on,
the Note and any other liabilities hereunder to be forthwith due and
payable, whereupon the same shall become immediately due and payable
without presentment, demand, protest, notice of default, notice of
acceleration or of intention to accelerate or other notice of any kind
all of which Borrower hereby expressly waives, anything contained
herein or in the Note to the contrary notwithstanding,
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(iii) Reduce any claim to judgment, and/or
(iv) Without notice of default or demand, pursue and enforce any
of Lender' rights and remedies under the Credit Documents, or
otherwise provided under or pursuant to any applicable law or
agreement; provided, however, that if any Event of Default specified
in Sections 8.1(g) and 8.1(h) shall occur, the principal of, and all
interest on, the Note and other liabilities hereunder shall thereupon
become due and payable concurrently therewith, without any further
action by Lender and without presentment, demand, protest, notice of
default, notice of acceleration or of intention to accelerate or other
notice of any kind, all of which Borrower hereby expressly waives.
Upon the occurrence and during the continuance of any Event of Default,
Lender is hereby authorized at any time and from time to time, with five (5)
days notice to Borrower, to setoff and apply any and all moneys, securities or
other property of Borrower and the proceeds therefrom, now or hereafter held or
received by or in transit to Lender or its agents, from or for the account of
Borrower, whether for safe keeping, custody, pledge, transmission, collection or
otherwise, and also upon any and all deposits (general or special) and credits
of Borrower, and any and all claims of Borrower against Lender at any time
existing. Lender agrees promptly to notify Borrower prior to and after any such
setoff and application, provided that the failure to give such notice shall not
affect the validity of such setoff and application. The rights of Lender under
this Section 8.2 are in addition to other rights and remedies (including,
without limitation, other rights of setoff) which Lender may have.
8.3 PERFORMANCE BY LENDER. Should Borrower fail to perform any covenant,
duty or agreement with respect to the payment of taxes, obtaining licenses or
permits, or any other requirement contained herein or in any of the Credit
Documents within the period provided herein, if any, for correction of such
failure, Lender may, with five (5) days prior notice, at its option, perform or
attempt to perform such covenant, duty or agreement on behalf of Borrower. In
such event, Borrower shall, at the request of Lender, promptly pay any amount
expended by Lender in such performance or attempted performance to Lender at its
office in Inglewood, California, together with interest thereon at the Default
Rate, from the date of such expenditure until paid. Notwithstanding the
foregoing, it is expressly understood that Lender does not assume any liability
or responsibility for the performance of any duties of Borrower hereunder or
under any of the Credit Documents or other control over the management and
affairs of Borrower.
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ARTICLE 9
MISCELLANEOUS
9.1 MODIFICATION. All modifications, consents, amendments or waivers of any
provision of any Credit Document, or consent to any departure by Borrower
therefrom, shall be effective only if the same shall be in writing and accepted
by Lender.
9.2 WAIVER. No failure to exercise, and no delay in exercising, on the part
of Lender, any right hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise thereof preclude any other further exercise thereof
or the exercise of any other right. The rights of Lender hereunder and under the
Credit Documents shall be in addition to all other rights provided by law. No
modification or waiver of any provision of this Credit Agreement, the Note or
any Credit Documents, nor consent to departure therefrom, shall be effective
unless in writing and no such consent or waiver shall extend beyond the
particular case and purpose involved. No notice or demand given in any case
shall constitute a waiver of the right to take other action in the same, similar
or other instances without such notice or demand.
9.3 PAYMENT OF EXPENSES. Borrower shall pay all costs and expenses of
Lender (including, without limitation, the attorneys' fees of Lender's legal
counsel) incurred by Lender in connection with the documentation of the Loans,
and the preservation and enforcement of Lender's rights under this Credit
Agreement, the Note, and/or the other Credit Documents; provided, however, that
notwithstanding the aforesaid, with respect to any legal action between the
parties hereto that is pursued to judgment the prevailing party only shall be
reimbursed by the other party for all costs and expenses (including, without
limitation, reasonable attorneys' fees and costs) incurred in connection with
the preservation and enforcement of its rights under this Credit Agreement, the
Note and/or other Credit Documents. In addition, Borrower shall pay all costs
and expenses of Lender in connection with the negotiation, preparation,
execution and delivery of any and all amendments, modifications and supplements
of or to this Credit Agreement, the Note or any other Credit Document. Borrower
shall receive a written estimate of all legal fees and related legal costs and
will have an opportunity to review all such estimates prior to its approval,
which shall not be unreasonably withheld.
9.4 NOTICES. Except for telephonic notices permitted herein, any notices or
other communications required or permitted to be given by this Credit Agreement
or any other documents and instruments referred to herein must be (i) given in
writing and personally delivered or mailed by prepaid certified or registered
mail or sent by overnight delivery service, or (ii) made by telefacsimile
delivered or transmitted, to the party to whom such notice or communication is
directed, to the address of such party as follows:
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Borrower: XXXXX, Incorporated
0000 Xxxx 0xx Xxxxxx
Xxxxx, Xxxxxxx 00000
Attention: Xxxxxx Xxxxx - CFO
Telecopier: (602) __________
with a copy to: Xxxxxx X. Xxxxxxxx, Esq.
Xxxxxxx & Xxxxx
Xxx Xxxx Xxxxxxxxx Xxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Telecopier: (602) __________
Lender: Imperial Bank
0000 Xxxxx Xx Xxxxxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Lending Services
Telecopier: (000) 000-0000
With a copy to: Imperial Bank
000 Xxxx Xxx Xxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxx Xxxxxx
Telecopier: (000) 000-0000
Any notice to be personally delivered may be delivered to the
principal offices (determined as of the date of such delivery) of the
party to whom such notice is directed. Any such notice or other
communication shall be deemed to have been given (whether actually
received or not) on the day it is personally delivered as aforesaid;
or, if mailed, on the third day after it is mailed as aforesaid; or,
if transmitted by telefacsimile, on the day that such notice is
transmitted as aforesaid. Any party may change its address for
purposes of this Credit Agreement by giving notice of such change to
the other parties pursuant to this Section 9.4.
9.5 GOVERNING LAW; JURISDICTION, VENUE; WAIVER OF JURY TRIAL. The Loan
Documents shall be governed by and construed in accordance with the substantive
laws (other than conflict laws) of the State of California, except to the extent
Lender has greater rights or remedies under Federal law, whether as a national
bank or otherwise, in which case such choice of California law shall not be
deemed to deprive Lender of any such rights and remedies as may be available
under Federal law. Subject to the provisions of Section 9.6 hereof, each party
consents to the personal jurisdiction and venue of the state courts located in
Los Angeles, State of California in connection with any controversy related to
this Agreement, waives any argument that venue in any such forum is not
convenient and agrees that any litigation initiated by any of them in connection
-30-
with this Agreement shall be venued in the Superior Court of Los Angeles County,
California. The parties waive any right to trial by jury in any action or
proceeding based on or pertaining to this Agreement or any of the Credit
Documents.
9.6 REFERENCE PROVISION.
(a) Each controversy, dispute or claim ("Claim") between the parties
arising out of or relating to this Agreement and/or any of the Credit
Documents, which is not settled in writing within ten days after the "Claim
Date" (defined as the date on which a party gives written notice to all
other parties that a controversy, dispute or claim exists), will be settled
by a reference proceeding in Los Angeles, California, in accordance with
the provisions of Section 638 ET SEQ. of the California Code of Civil
Procedure, or their successor section ("CCP"), which shall constitute the
exclusive remedy for the settlement of any Claim, including whether such
Claim is subject to the reference proceeding and the parties waive their
rights to initiate any legal proceedings against each other in any court or
jurisdiction other than the Superior Court of Los Angeles (the "Court").
The referee shall be a retired Judge selected by mutual agreement of the
parties, and if they cannot so agree with in thirty days (30) after the
Claim Date, the referee shall be selected by the Presiding Judge of the
Court. The referee shall be appointed to sit as a temporary judge, as
authorized by law. The referee shall (a) be requested to set the matter for
hearing within sixty (60) days after the Claim Date and (b) try any and all
issues of law or fact and report a statement of decision upon them, if
possible, within ninety (90) days of the Claim Date. Any decision rendered
by the referee will be final, binding and conclusive and judgment shall be
entered pursuant to CCP 644 in the Court. All discovery permitted by this
Agreement shall be completed no later than fifteen (15) days before the
first hearing date established by the referee. The referee may extend such
period in the event of a party's refusal to provide requested discovery for
any reason whatsoever, including, without limitation, legal objections
raised to such discovery or unavailability of a witness due to absence or
illness. No party shall be entitled to "priority" in conducing discovery.
Depositions may be taken by either party upon seven (7) days written
notice, and, request for production of inspection of documents shall be
responded to within ten (10) days after service. All disputes relating to
discovery which cannot be resolved by the parties shall be submitted to the
referee whose decision shall be final and binding upon the parties.
(b) The referee shall be required to determine all issues in
accordance with existing case law and the statutory laws of the State of
California. The rules of evidence applicable to proceedings at law in the
State of California will be applicable to the reference proceeding. The
referee shall be empowered to enter equitable as well as legal relief, to
provide all temporary and/or provisional remedies and to enter equitable
orders that will be binding upon the parties. The referee shall issue a
single judgment at the close of the reference proceeding which shall
-31-
dispose of all of the claims of the parties that are the subject to the
reference. The parties hereto expressly reserve the right to contest or
appeal from the final judgment or any appealable order or appealable
judgment entered by the referee. The parties expressly reserve the right to
findings of fact, conclusions of law, a written statement of decision, and
the right to move for a new trial or a different judgment, which new trial,
if granted, is also to be a reference proceeding under this provision.
(c) No provision of Paragraphs (a) or (b) of this Section 9.6,
however, shall limit the right of Lender to bring action for possession of
any collateral in any jurisdiction, wherever located, in accordance with
the provisions of the Security Documents.
9.7 INVALID PROVISIONS. If any provision of any Credit Document is held to
be illegal, invalid or unenforceable under present or future laws during the
term of this Credit Agreement, such provision shall be fully severable; such
Credit Document shall be construed and enforced as if such illegal, invalid or
unenforceable provision had never comprised a part of such Credit Document; and
the remaining provisions of such Credit Document shall remain in full force and
effect and shall not be affected by the illegal, invalid or unenforceable
provision or by its severance from such Credit Document. Furthermore, in lieu of
each such illegal, invalid or unenforceable provision there shall be added as
part of such Credit Document a provision mutually agreeable to Borrower and
Lender as similar in terms to such illegal, invalid or unenforceable provision
as may be possible and be legal, valid and enforceable.
9.8 BINDING EFFECT. The Credit Documents shall be binding upon and inure to
the benefit of Borrower and Lender and their respective successors, assigns and
legal representatives; provided, however, that Borrower may not, without the
prior written consent of Lender, assign any rights, powers, duties or
obligations thereunder.
9.9 ENTIRETY. The Credit Documents embody the entire agreement between the
parties and supersede all prior agreements and understandings, if any, relating
to the subject matter hereof and thereof.
9.10 HEADINGS. Section headings are for convenience of reference only and
shall in no way affect the interpretation of this Credit Agreement.
9.11 SURVIVAL. All representations and warranties made by Borrower herein
shall survive delivery of the Note and the making of the Loan.
9.12 NO THIRD PARTY BENEFICIARY. The parties do not intend the benefits of
this Credit Agreement to inure to any third party, nor shall this Credit
Agreement be construed to make or render Lender liable to any materialman,
supplier, contractor, subcontractor, purchaser or lessee of any property owned
by Borrower, or for debts or claims accruing to any such persons against
Borrower. Notwithstanding anything contained herein or in the Note, or in any
other Credit Document, or any conduct or course of conduct by any or all of the
-32-
parties hereto, before or after signing this Credit Agreement or any of the
other Credit Documents, neither this Credit Agreement nor any other Credit
Document shall be construed as creating any right, claim or cause of action
against Lender, or any of its officers, directors, agents or employees, in favor
of any materialman, supplier, contractor, subcontractor, purchaser or lessee of
any property owned by Borrower, nor to any other person or entity other than
Borrower.
9.13 TIME. Time is of the essence hereof.
9.14 SCHEDULES AND EXHIBITS INCORPORATED. All schedules and exhibits
attached hereto, if any, are hereby incorporated into this Credit Agreement by
each reference thereto as if fully set forth at each such reference.
9.15 COUNTERPARTS. This Credit Agreement may be executed in multiple
counterparts, each of which, when so executed, shall be deemed an original but
all such counterparts shall constitute but one and the same agreement.
IN WITNESS WHEREOF, the undersigned have executed this Credit Agreement as
of the day and year first above written.
XXXXX, INCORPORATED, a Delaware
corporation
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
ADVANCED TECHNOLOGY SERVICES, INC.,
an Arizona corporation
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
IMPERIAL BANK, a California banking
corporation
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
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EXHIBIT "A"
FORM OF ADVANCE NOTICE
Imperial Bank
000 Xxxx Xxx Xxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxx Xxxxxx Date:______________
Telecopier: (000) 000-0000
Time:______________
Dear Ladies and Gentlemen:
The undersigned ("Borrower") refers to the Credit Agreement dated as of
January 10, 2000 (as it may hereafter be amended, modified, extended or restated
from time to time, the "Credit Agreement"), between XXXXX, Incorporated, a
Delaware corporation and Advanced Technology Services, Inc., an Arizona
corporation (together, the "Borrower"), and Imperial Bank. Capitalized terms
used herein and not otherwise defined herein shall have the meanings assigned to
such terms in the Credit Agreement.
The Borrower hereby gives notice that it requests an Advance pursuant to
Section 2.3 of the Credit Agreement and sets forth below the terms of such
requested Advance:
A. Date of Advance
--------------------
B. Principal Amount of Advance
--------------------
Sincerely,
XXXXX INCORPORATED, a Delaware
corporation
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
ADVANCED TECHNOLOGY SERVICES, INC.,
an Arizona corporation
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
EXHIBIT "B"
COMPLIANCE CERTIFICATE
FOR PERIOD ENDING
------------------
("REPORTING PERIOD")
Imperial Bank Arizona
000 Xxxx Xxx Xxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxx Xxxxxx
Telecopier: (000) 000-0000 Date:_____________(1)
Dear Ladies and Gentlemen:
This Compliance Certificate refers to the Credit Agreement dated as of
January 10, 2000 (as it may hereafter be amended, modified, extended or restated
from time to time, the "Credit Agreement"), between XXXXX, Incorporated, a
Delaware corporation and Advanced Technology Services, Inc., an Arizona
corporation (together, the "Borrower") and Imperial Bank, a California banking
corporation. Capitalized terms used and not otherwise defined herein shall have
the meanings assigned to such terms in the Credit Agreement.
Pursuant to Section 6.1 of the Credit Agreement, the undersigned, hereby
certifies that:
1. To the best of the undersigned's knowledge, after a review of the
activities of Borrower during the Reporting Period, Borrower has observed,
performed and fulfilled each and every obligation and covenant contained in the
Credit Agreement and no "Event of Default" thereunder exists [or if so,
specifying the nature and extent thereof and any corrective actions taken or to
be taken].
----------
(1) To be submitted within 30 days after the end of each quarter.
2. All financial statements of Borrower delivered to Lender during the
Reporting Period, to the undersigned's knowledge, fairly present in all material
respect the financial position of the Borrower and the results of its operations
at the dates and for the periods indicated and have been prepared in accordance
with GAAP.
3. As of the last Reporting Period, the computations below were true and
correct:
Section 7.10 - Financial Covenants
(a) INTEREST COVERAGE RATIO.
Numerator: EBITDA A $_______
Denominator: Interest Expense B $_______
A divided by B equals A/B _______x
Minimum 3.0 to 1.0x
(b) NET INCOME. The Borrower _____ satisfies _____ does not satisfy
the requirement that the Borrower not incur a net loss in any two (2)
consecutive quarters or any fiscal year.
XXXXX, INCORPORATED, a Delaware
corporation
By:
------------------------------------
Name:
----------------------------------
Its:
-----------------------------------
ADVANCED TECHNOLOGY SERVICES, INC.,
an Arizona corporation
By:
------------------------------------
Name:
----------------------------------
Its:
-----------------------------------
-2-
EXHIBIT "C"
BORROWING BASE CERTIFICATE
EXHIBIT "D"
SUBORDINATION AGREEMENT
TO: IMPERIAL BANK
The undersigned ("We") are interested in the financial success of XXXXX,
INCORPORATED, a Delaware corporation and ADVANCED TECHNOLOGY SERVICES, INC., an
Arizona corporation (together, the "Borrower"), and agree that financial
accommodations from IMPERIAL BANK ("Bank" or "You") to Borrower pursuant to that
Credit Agreement dated as of January 10, 2000 (the "Credit Agreement") are
necessary, and we accordingly request that you grant to or renew for Borrower
such financial accommodation as you may deem proper, and for the purpose of
inducing you to grant, renew or extend such financial accommodation, we hereby
severally agree as follows:
All claims of each of the undersigned against Borrower now or hereafter
existing, whether matured or not (subject to the maximum if specified below),
are and shall be at all times subordinate and subject to any and all claims on
your part against Borrower now or hereafter existing, whether matured or not, so
long as any such claim on your part against Borrower shall remain unpaid, in
whole or in part, and each of the undersigned agrees not to xxx upon, or to
collect, or to receive payment upon, by setoff or in any other manner, any claim
or claims on his/hers or its part against Borrower now or hereafter existing,
nor to sell, assign, transfer, pledge, or give a security interest in the same
(except subject expressly to this Agreement), nor to enforce or apply any
security now or hereafter existing, nor to join in any petition in bankruptcy or
any assignment for the benefit of creditors or any creditors agreement, nor to
take any lien or security on any of Borrower's property, real or personal, nor
to incur any obligation to nor receive any loans, advances or gifts from
Borrower, so long as any such claim on your part against Borrower shall exist or
so long as you are committed or otherwise obligated to make any loans to, or
grant any credit to, Borrower. In addition, so long as any claim on your part
against Borrower shall remain unpaid, in whole or in part, Bank shall have a
prior security interest in the assets of Borrower consisting of Collateral (as
defined in the Credit Agreement), now owned or hereafter acquired by Borrower
and each of the undersigned hereby subordinates any security interest, including
without limitation any purchase money security interest, which each of the
undersigned now has or hereafter acquires in the Collateral to all security
interests which Bank now has or hereafter acquires in the Collateral.
All claims on your part against Borrower now or hereafter existing shall be
first paid by Borrower before any payment shall be made by Borrower to any of
the undersigned unless Borrower is in full compliance with all Financial
Covenants (as defined in the Credit Agreement) contained in the Credit
Agreement, prior to and after giving effect to such payment. Said priority of
payment shall apply during the ordinary course of Borrower's business and in
case of any assignment by Borrower for the benefit of Borrower's creditors, and
in case of any bankruptcy proceedings instituted by or against Borrower, and in
case of the appointment of any receiver for Borrower or Borrower's business or
assets, and in case of any dissolution or other winding up of the affairs of
Borrower, or of Borrower's business, and in all such cases respectively, the
officers of Borrower and any assignee, trustee in bankruptcy, receiver, and
other person or persons in charge, are hereby directed to pay to you the full
amount of your claims against Borrower before making any payment to any of the
undersigned, and so far as may be necessary for that purpose, each of the
undersigned hereby transfers and assigns to you all of his/her or its rights to
any payment or distribution which might otherwise be coming to him/her or it.
You are hereby irrevocably constituted and appointed the attorney-in-fact of
each of the undersigned to file any and all proofs of claim and any other
documents and to take all other action, either in your name, or in the name of
the undersigned, or any of them, which in your opinion is necessary or desirable
to enable you to obtain all such payments.
Each of the undersigned agrees that if part or all of any claim of the
undersigned shall be evidenced by a promissory note or other instrument, the
undersigned shall cause to be placed thereon a legend stating that the payment
thereof is subordinate to the payment of all claims on your part against
Borrower pursuant to the terms of this Subordination Agreement, and each of the
undersigned agrees to xxxx all books of account in such manner to indicate that
payment thereof is subordinated pursuant to the terms of this Subordination
Agreement.
Each of the undersigned further agrees that in case he, she or it should
take or receive any security interest in, or lien by way of attachment,
execution, or otherwise on any of the property, real or personal, of Borrower,
or should take or join in any other measure or advantage contrary to this
Agreement, while any claim exists on your part against Borrower, you shall be
entitled to have the same vacated, dissolved and set aside by such proceedings
at law, or otherwise, as you may deem proper, and this Agreement shall be and
constitute full and sufficient ground therefor and shall entitle you to be and
become a party to any proceedings at law, or otherwise, initiated by you or by
any other party, in or by which you may deem it proper to protect your interest
hereunder, and the party so violating this Agreement shall be liable to you for
all loss and damage sustained by you by reason of such breach, including
attorney's fees in any such legal action.
If the undersigned, or any of them, shall receive any payment or property
in violation of this Agreement, such payment of property shall be received by
such undersigned in trust for you and forthwith will be delivered and
transferred to you.
No subordination of obligations of Borrower to the undersigned have
previously been executed by the undersigned for the benefit of anyone else, and
any such subordinations hereafter executed will be, and shall be expressed to be
subject and subordinate to the effect hereof. This Agreement shall be continuing
in effect, it shall not be cancelled or otherwise rendered ineffective by the
payment or discharge at any time of all of Borrower's obligations to you, and it
shall apply to any and all financial accommodations subsequently granted,
-2-
renewed or extended by you for Borrower, unless the undersigned shall deliver to
you a written notice of revocation as to future transactions, at a time when
Borrower is no longer obligated to you in any way, and while you are not
committed or otherwise obligated to make any loans to, or grant any credit to,
Borrower.
----------------------------------------
----------------------------------------
By:
------------------------------------
Name:
----------------------------------
Its:
-----------------------------------
-3-
ACCEPTANCE OF SUBORDINATION AGREEMENT BY BORROWER
The undersigned, being the Borrower named in the foregoing Subordination
Agreement, hereby accepts and consents thereto and agrees to be bound by all of
the provisions thereof and to recognize all priorities and other rights granted
thereby to IMPERIAL BANK, and to pay said Bank in accordance therewith.
Dated ________________________
XXXXX, INCORPORATED, a Delaware
corporation
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
ADVANCED TECHNOLOGY SERVICES, INC.,
an Arizona corporation
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
-4-
