$45,000,000
CREDIT AGREEMENT
Dated as of September 30, 1997
by and among
EFTC CORPORATION, as Borrower
and
THE BANKS LISTED ON THE SIGNATURE PAGES HEREOF
and
BANK ONE, COLORADO, N.A., as Agent
Arranged by
Bank One Capital Markets
-----------------------------------------------------------------
October 3, 1997 10:35 am
TABLE OF CONTENTS
Page
Recitals..........................................................................................................1
Agreement.........................................................................................................1
ARTICLE I DEFINITIONS AND ACCOUNTING TERMS..........................................................1
SECTION 1.1 Definitions. ...................................................................1
SECTION 1.2 Accounting Terms and Determinations.............................................24
ARTICLE II COMMITMENT; AMOUNTS AND TERMS OF THE ADVANCES AND
LETTERS OF CREDIT........................................................................24
SECTION 2.1 Commitment......................................................................24
(a) Revolving Loans Commitment..............................................24
(b) Term Loan Commitment....................................................25
(c) Swing Loan Commitment...................................................25
SECTION 2.2 Advances........................................................................26
SECTION 2.3 Making the Advances.............................................................27
(a) Request for Advance, Revolving Loans and
Term Loan. ............................................................27
(b) Swing Loan Request......................................................27
(c) Request for Advance Irrevocable.........................................28
(d) Availability of Funds, Revolving Loans
and Term Loan...........................................................28
(e) Advances by Agent.......................................................28
SECTION 2.4 Letters of Credit...............................................................29
(a) Letter of Credit Commitment.............................................29
(b) Terms of Letters of Credit and
Applications............................................................29
(c) Renewals and Extensions.................................................29
(d) Issued on Business Day..................................................30
(e) Request for Letter of Credit............................................30
(f) Participations..........................................................30
(g) Notice of Draw..........................................................31
(h) Payment of Draw.........................................................31
(i) Participation in Draw...................................................31
(j) Obligations of Banks....................................................32
(k) Waiver of Liability; Indemnity..........................................33
SECTION 2.5 Fees............................................................................35
(a) Commitment Fee..........................................................35
(b) Letter of Credit Fees...................................................35
(c) Other Fees..............................................................36
SECTION 2.6 Reduction of the Revolving Loans
Commitment......................................................................36
SECTION 2.7 Repayment.......................................................................36
(a) Voluntary Repayment.....................................................36
(b) Installment Payments of Term Loan.......................................36
(c) Mandatory Repayment.....................................................37
(d) Repayment of Swing Loans................................................38
-i-
Page
(e) Application of Repayments...............................................38
SECTION 2.8 Distribution of Payments by the Agent...........................................38
SECTION 2.9 Promissory Notes................................................................39
(a) The Revolving Notes.....................................................39
(b) Term Notes..............................................................39
(c) Swing Loan Note.........................................................40
SECTION 2.10 Pro Rata Treatment..............................................................40
SECTION 2.11 Interest........................................................................40
(a) Prime Rate Loans........................................................40
(b) LIBOR Rate Loans........................................................40
(c) Default Rate Interest...................................................41
SECTION 2.12 Yield Protection................................................................41
(a) Increased Costs.........................................................41
(b) Additional Interest.....................................................41
(c) Increased Capital.......................................................42
(d) Breakage Costs..........................................................42
SECTION 2.13 Conversion of Loans; Change of Interest
Periods.........................................................................43
SECTION 2.14 Illegality, Etc.................................................................43
SECTION 2.15 Payments and Computations.......................................................44
SECTION 2.16 Effect of Letters of Credit on Revolving
Loans Commitment Utilization....................................................45
SECTION 2.17 Cash Collateralization of Letters of
Credit..........................................................................45
SECTION 2.18 Borrowing Base..................................................................45
ARTICLE III CONDITIONS OF LENDING....................................................................46
SECTION 3.1 Conditions Precedent to Initial Advance or
Issuance of Initial Letter of Credit............................................46
SECTION 3.2 Conditions Precedent to All Advances and
Issuance of All Letters of Credit...............................................50
ARTICLE IV REPRESENTATIONS AND WARRANTIES...........................................................51
SECTION 4.1 Representations and Warranties of the
Borrower........................................................................51
(a) Corporate Existence.....................................................51
(b) Powers, Etc.............................................................51
(c) Authorization; No Conflict..............................................52
(d) Approvals...............................................................52
(e) Enforceability..........................................................52
(f) Financial Statements....................................................53
(g) Litigation..............................................................53
(h) Federal Reserve Regulations.............................................53
(i) Investment Company Act..................................................54
(j) ERISA...................................................................54
(k) Compliance with Laws....................................................55
(l) Payment of Debts and Taxes..............................................55
(m) Indebtedness, Guaranties................................................55
(n) Material Agreements.....................................................56
-ii-
Page
(o) Properties, Inventory and Equipment.....................................56
(p) Financial Condition.....................................................56
(q) Insurance...............................................................57
(r) Full Disclosure.........................................................57
(s) No Default..............................................................58
(t) Status of Loans as Senior Debt..........................................58
(u) Swap Obligations........................................................58
ARTICLE V COVENANTS OF THE BORROWER................................................................58
SECTION 5.1 Affirmative Covenants...........................................................58
(a) Use of Proceeds.........................................................58
(b) Reporting and Notice Requirements.......................................59
(c) Maintenance of Existence, Etc...........................................61
(d) Compliance With Laws....................................................61
(e) Insurance...............................................................61
(f) Material Agreements.....................................................62
(g) Obligations and Taxes...................................................62
(h) Maintaining Records; Access to
Properties and Inspections..............................................62
(i) Environmental and Safety Matters........................................63
(j) Deposit Balances........................................................63
(k) Interest Rate Protection................................................64
(l) Surveys.................................................................64
(m) Audit of Accounts Receivable and
Inventory...............................................................64
(n) Acquisition of Tucson Real Property.....................................65
(o) AlliedSignal Acquisition Agreements.....................................65
(p) Greeley Phase I Environmental Assessment................................66
(q) Further Assurances......................................................66
SECTION 5.2 Negative Covenants..............................................................66
(a) Financial Covenants.....................................................66
(b) Prohibition of Fundamental Changes......................................69
(c) Limitation on Liens.....................................................69
(d) Debt....................................................................69
(e) Guarantees..............................................................70
(f) Investments, Loans, Advances, etc.......................................70
(g) Sales of Assets.........................................................71
(h) Transactions with Affiliates............................................71
(i) Modification of Certain Documents;
Performance of Material Agreements......................................71
(j) Dividends...............................................................72
(k) Accounting..............................................................72
(l) Subordinated Debt...........................................................72
(m) Change of Address; Business Name(s).........................................72
ARTICLE VI EVENTS OF DEFAULT........................................................................73
SECTION 6.1 Events of Default...............................................................73
(a) Payments under the Agreement and the
Notes...................................................................73
-iii-
Page
(b) Representations and Warranties..........................................73
(c) Other Loan Instrument Obligations.......................................73
(d) Other Debt..............................................................74
(e) Insolvency..............................................................74
(f) Judgments...............................................................75
(g) Termination of Certain Loan
Instruments.............................................................75
(h) Collateral Liens........................................................75
SECTION 6.2 Bank's Rights Upon an Event of Default..........................................75
ARTICLE VII THE AGENT................................................................................76
SECTION 7.1 Appointment and Powers..........................................................76
SECTION 7.2 Limitation on Agent's Liability.................................................76
SECTION 7.3 Defaults........................................................................77
SECTION 7.4 Rights as a Bank................................................................77
SECTION 7.5 Indemnification.................................................................77
SECTION 7.6 Non-Reliance on Agent and Other Banks...........................................78
SECTION 7.7 Execution and Amendment of Loan
Instruments on Behalf of the Banks..............................................78
SECTION 7.8 Resignation of the Agent........................................................79
ARTICLE VIII MISCELLANEOUS............................................................................79
SECTION 8.1 Amendments; Waivers.............................................................79
SECTION 8.2 Notices, Etc....................................................................80
SECTION 8.3 Remedies........................................................................81
SECTION 8.4 Costs, Expenses and Taxes.......................................................81
SECTION 8.5 Right of Set-off................................................................82
SECTION 8.6 Binding Effect..................................................................82
SECTION 8.7 Indemnity.......................................................................82
SECTION 8.8 Consent to Exclusive Jurisdiction...............................................83
SECTION 8.9 Waiver of Jury Trial and Certain Damages........................................83
SECTION 8.10 Governing Law...................................................................84
SECTION 8.11 Inconsistent Provisions.........................................................84
SECTION 8.12 Sharing of Recoveries...........................................................84
SECTION 8.13 Assignments and Participations..................................................85
(a) Assignments.............................................................85
(b) Participations..........................................................86
SECTION 8.14 Survival of Representations and
Warranties......................................................................87
SECTION 8.15 Counterparts....................................................................87
-iv-
Schedules
Schedule I Banks
Schedule 2.1 Banks; Address; Commitment
Percentages
Schedule 4.1(a) Borrower's and Guarantors' Capital
Structure and Shareholders
Schedule 4.1(b) Borrower's and Guarantors' Business
Names and Jurisdictions where
Qualified to do Business
Schedule 4.1(d) Approvals
Schedule 4.1(f) Financial Disclosures
Schedule 4.1(g) Litigation
Schedule 4.1(j) ERISA Disclosures
Schedule 4.1(m) Indebtedness; Guaranties
Schedule 4.1(n) Material Agreements
Schedule 4.1(o) Real Property; Inventory; Liens
Schedule 4.1(q) Insurance
-v-
Exhibits
Exhibit A-1 Form of Revolving Note
Exhibit A-2 Form of Term Note
Exhibit A-3 Form of Swing Loan Note
Exhibit B-1 Form of Request for Advance
Exhibit B-2 Form of Request for Letter of Credit
Exhibit B-3 Form of Interest Period/Conversion
Notice
Exhibit B-4 Form of Borrowing Base Certificate
Exhibit B-5 Form of Compliance Certificate
Exhibit C Form of Guaranty
Exhibit D Form of Pledge and Security Agreement
Exhibit E Form of Security Agreement and
Assignment
Exhibit F-1 Form of Deed of Trust
Exhibit F-2 Form of Collateral Assignment of Leases
Exhibit F-3 Landlord's Waiver and Consent
Exhibit F-4 Consent to Assignment of Contracts
Exhibit G-1 Form of Borrower's Omnibus
Certificate
Exhibit G-2 Form of Guarantor's Omnibus Certificate
Exhibit H-1 Form of Opinion of Counsel to Borrower
Exhibit H-2 Form of Opinion of Counsel to Guarantors
Exhibit H-3 Form of Opinion of Local Counsel
Exhibit I Form of Notice of Assignment
-vi-
CREDIT AGREEMENT
Dated as of September 30,1997
THIS CREDIT AGREEMENT (the "Agreement") is made and entered
into as of September 30, 1997 by and between EFTC CORPORATION, a Colorado
corporation,(the "Borrower") and the Banks listed on the attached Schedule I, as
revised from time to time (collectively the "Banks" and individually the
"Bank"); and BANK ONE, COLORADO, N.A.,as letter of credit issuing bank and in
its capacity as agent for the Banks hereunder(in such capacity, the "Agent").
Recitals
Pursuant and subject to the terms and conditions of this
Agreement, the Banks will make available to the Borrower (a) until September 30,
2000, a Senior Secured Revolving Line of Credit in the maximum amount of up to
$25,000,000 which shall include the issuance of Bank letters of credit up to
$5,000,000 and Swing Loans up to $2,500,000, and (b) until September 30, 2002, a
Senior Secured Term Loan of $20,000,000. Payment by the Borrower of the amounts
due hereunder will be secured by liens on and security interests in the real and
personal property of the Borrower.
Agreement
In consideration of the covenants contained herein the Parties
hereby agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.1 Definitions.
As used in this Agreement, the terms identified in
this Section 1.1 shall have the meanings specified below.
"Account Receivable" means any account (as such term is
defined in the Uniform Commercial Code as adopted in the State of Colorado) or
other right to payment for goods sold or services rendered of the Borrower and
its Subsidiaries.
-1-
"Advance" means an advance of funds by the Bank to the
Borrower as a Loan pursuant to a Request for Advance as provided in Section 2.2.
"Affiliate" means a Person that controls, is controlled by or
is under common control with another Person. For purposes hereof, "control"
means the practical power to direct the activities of a Person.
"Agent" means Bank One, Colorado, N.A., as agent for and
representative (within the meaning of Section 9-105(m) of the Uniform Commercial
Code) of the Banks under the Loan Instruments, and any successor Agent appointed
pursuant to Section 7.8.
"Agreement" means this Credit Agreement dated as of September
, 1997 between the Borrower and the Banks, together with all schedules and
exhibits hereto, and all modifications, amendments, supplements, renewals and
extensions hereof in the manner provided herein.
"Airhub Services " means, Airhub Services Group, LLC, a
Kentucky limited liability company, which is a wholly-owned subsidiary of the
Borrower and its Affiliates.
"AlliedSignal Acquisition" means the purchase of certain
assets and assumption of certain liabilities by the Borrower as provided for
under the AlliedSignal Acquisition Agreements.
"AlliedSignal Acquisition Agreements" means
collectively the License Agreement and the Master Agreement
Regarding Asset Purchase and Related Transactions by and between
AlliedSignal Avionics, Inc., AlliedSignal Inc. and the Borrower
dated as of July 15, 1997.
"Applicable Law" means,(a) all applicable common law and
principles of equity and (b) all applicable provisions of all (i) constitutions,
statutes, rules, regulations and orders of governmental bodies, (ii) approvals
of Government Authorities and (iii) orders, decisions, judgements and decrees of
all courts (whether at law or in equity or admiralty) and arbitrators.
"Applicable Margin" means such percentage for the Type of Loan
as set forth in the following table opposite the applicable ratio of Total Debt
to Trailing Four Quarter EBITDA determined as of the fiscal quarter immediately
preceding such period:
-2-
Greater Less Than Revolving Revolving Term Loan Term Loan
Than or Loan Loan LIBOR Prime +
Equal to LIBOR Prime + Base Rate
Base Rate +
+
3.75x - 2.750% 1.000% 3.250% 1.500%
3.25x 3.75x 2.500% 0.625% 3.000% 1.125%
2.75x 3.25x 2.250% 0.375% 2.750% 0.875%
- 2.75x 2.000% 0.00% 2.500% 0.500%
The ratio of Total Debt to Trailing Four Quarter EBITDA shall be computed by the
Borrower and such ratio and the Applicable Margin for each Type of Loan will be
set forth in the Compliance Certificate furnished under Section 5.1(b)(iv). The
Applicable Margin shall be subject to adjustment, if necessary, on a date fifty
(50) days after the end of each fiscal quarter of the Borrower ("Margin
Adjustment Date"). Any change in the Applicable Margin shall apply to all Loans
outstanding of any Type as of the Margin Adjustment Date. Notwithstanding the
foregoing, the Applicable Margin will be equal to:
Revolving Term Loan
Loan
LIBOR Base Rate LIBOR + 3.25%
+ 2.75% or
or Prime + 1.50%
Prime + 1.00%
as the case may be, from the Effective Date to fifty (50) days after the fiscal
quarter ended September 30, 1997, at which point the Applicable Margin will be
as set forth in the Compliance Certificate accompanying the financial statements
furnished under Section 5.1(b)(iv) for the fiscal quarter ended September 30,
1997. If the Borrower fails to furnish the Compliance Certificate and the
financial statements fifty (50) days after the end of any fiscal quarter, the
Applicable Margin shall be for the relevant fiscal quarter
Revolving Term Loan
Loan
LIBOR Base Rate LIBOR + 3.25%
+ 2.75% or
or Prime + 1.50%
Prime + 1.00%
-3-
"Arranger" shall mean Bank One Capital Markets, an
affiliate of Bank One, Colorado, N.A.
"Authorized Signatory" means such Person or Persons as may be
designated from time to time in the most recent certificate delivered to the
Bank by the Borrower as being authorized to execute and deliver certificates or
other documents required or permitted to be executed and delivered to the Bank
by the Borrower or other Persons pursuant to this Agreement or any other Loan
Instrument, and in any case shall include the President and the Chief Financial
Officer of the Borrower.
"Bank" and "Banks" means (a) the Agent and any Person listed
on the signature pages hereof following the Agent and (b) any Person that has
been assigned any or all of the rights or obligations of a Bank pursuant to
Section 8.13.
"Borrower" means EFTC Corporation, a Colorado
corporation.
"Borrower's Account" means a demand deposit account maintained
by the Borrower with the Agent.
"Borrower Loan Instruments" means, the Loan Instruments
to which the Borrower is a party.
"Borrower's Omnibus Certificate" means a certificate from the
Borrower substantially in the form of Exhibit G-1 hereto.
"Borrower's Real Property" has the meaning given
thereto in Section 4.1(o).
"Borrowing Base" shall have the meaning specified in
Section 2.18.
"Borrowing Base Certificate" shall mean a certificate to be
provided to the Bank by the Borrower from time to time in accordance with
Section 2.18 substantially in the form of Exhibit B-4 hereto.
"Xxxxxxxx Earn-Out Agreement" means the Earnout
Agreement dated as of July 9, 1997 by and among EFTC Corporation,
Xxxxx X. Xxxxxxxx, Xx. Revocable Living Trust, Circuit Test
International Limited Partnership and the Xxxxx X. Xxxxxxxx, Xx.
Living Trust.
"Business Day" means a day of the year other than Saturday or
Sunday on which banks are not authorized to close in Denver, Colorado and, if
the applicable Business Day relates to any LIBOR Rate Loans, on which dealings
are carried on in the London interbank market.
-4-
"Capital Expenditures" means amounts paid or indebtedness
incurred by the Borrower or any of its Subsidiaries in connection with the
acquisition, purchase or lease by such Borrower or any of its Subsidiaries of
capital assets that would be required to be capitalized (including the
applicable amount in respect of capitalized interest) and which amounts would be
shown as such capital expenditures on the consolidated statement of cash flow of
such Person in accordance with GAAP, provided, however, Capital Expenditures
shall not include (i) amounts paid with insurance proceeds or the proceeds of a
condemnation award within twelve (12) months after receipt by the Borrower or
its Subsidiaries, as the case may be, in connection with the purchase of capital
assets to replace the capital assets destroyed in the casualty loss giving rise
to such insurance proceeds or taken in the condemnation proceeding giving rise
to such condemnation proceeds, as the case may be, and (ii) amounts expended in
connection with the acquisition of the Drexel Road Property in accordance with
Section 5.1(n).
"Circuit Test" means, Circuit Test, Inc., a Florida
corporation, that is a wholly-owned subsidiary of the Borrower.
"Circuit Test Acquisition" means the acquisition by the
Borrower of the Persons identified in the Circuit Test Acquisition Agreement.
"Circuit Test Acquisition Agreement" means the Limited
Liability Company Unit Purchase Agreement among the Borrower,
CTLLC Acquisition Corp., Circuit Test International, L.C., Airhub
Services Group, L.C., and the Members of Airhub Services Group,
L.C. and Circuit Test International, L.C. dated as of July 9,
1997.
"Circuit Test International" means Circuit Test International,
L.C., a Florida limited liability company, that is wholly-owned by the Borrower
and its Affiliates.
"CMLTD" means, with respect to the Borrower or any Guarantor,
all principal amounts due and payable by the Borrower or such Guarantor during
the then-current month and during the following eleven months with respect to
Debt of such Person other than accounts payable, accrued expenses and income
taxes payable.
"Code" means the Internal Revenue Code of 1986, as amended,
and as the same may be supplemented, modified, amended or restated from time to
time, and the rules and regulations promulgated thereunder, or any corresponding
or succeeding provisions of applicable law.
"Collateral" shall mean all rights and interests of the
Borrower and of the Guarantors which are subject to the Collateral Documents.
-5-
"Collateral Documents" means the Deeds of Trust, the
Security Agreements, the Guaranties, the Landlord Consent and
Waiver, the Collateral Assignments of Leases, and the Pledge
Agreement.
"Commitment" means, with respect to each Bank, such Bank's
obligation to make Loans pursuant to the Revolving Loan Commitment and Term Loan
Commitment.
"Commitment Fee" has the meaning specified in
Section 2.5(a) hereof.
"Compliance Certificate" means, a certificate
substantially in the form of Exhibit B-5.
"Fixed Charges" means, as of any date of determination, the
following, determined with respect to the immediately preceding four fiscal
quarters of the Borrower and the Guarantors for which financial statements have
been delivered pursuant to Section 5.1, the sum of (a) CMLTD and (b) Interest
Expense for such period. There shall be included in the computation of Fixed
Charges for any period the pro-forma effect for such period of the financial
results of Current Electronics and Circuit Test for such period to the extent
that such financial results were included in the computation of EBITDA.
"Convert", "Conversion" and "Converted" each refers to a
conversion of a Loan of one Type into a Loan of another Type pursuant to Section
2.13 or 2.14.
"CTLLC Acquisition" means, CTLLC Acquisition Corp., a Florida
corporation, that is a wholly-owned subsidiary of the Borrower.
"Current Electronics" means, Current Electronics, Inc., an
Oregon corporation, that is a wholly-owned subsidiary of the Borrower.
"Debt" means (i) indebtedness for borrowed money, (ii)
obligations evidenced by bonds, debentures, notes or other similar instruments,
(iii) obligations to pay the deferred purchase price of property or services,
(iv) obligations as lessee under leases which shall have been or should be, in
accordance with generally accepted accounting principles, recorded as capital
leases, and (v) obligations under direct or indirect guaranties in respect of,
and obligations (contingent or otherwise) to purchase or otherwise acquire, or
otherwise to assure a creditor against loss in respect of, indebtedness or
obligations of others of the kinds referred to in clauses (i) through (iv)
above.
-6-
"Deed of Trust" and "Deeds of Trust" mean, respec tively, any
mortgage, deed of trust or other collateral security document pertaining to
non-leasehold interests in real property executed by the Borrower or any
Guarantor from time to time in favor of the Agent (on behalf of the
Banks)supporting or securing any of the Obligations, including the Deeds of
Trust substantially in the form of Exhibit F-1 hereto from the Borrower and
certain of the Guarantors, as the same may be supplemented, modified, amended or
restated from time to time in the manner provided therein.
"Default" means any event or state of affairs that, with the
giving of notice or the passage of time (or both) would constitute an Event of
Default.
"Default Rate" means an interest rate per annum equal to three
percent (3%) above the Prime Rate in effect with respect to Loans at the time of
occurrence of any Event of Default.
"Disposition" means any sale, assignment, transfer or other
disposition (including a ground lease or other long term obligation which under
GAAP is the equivalent of a sale of such asset) or any asset (whether now owned
or hereafter acquired) of any Person, other than inventory in the ordinary
course of business.
"Dollars", "dollars" and "$" means lawful money of the
United States of America.
"Draw" shall mean any payment by the Issuing Bank to a
beneficiary of a Letter of Credit pursuant to the terms of a Letter of Credit.
"EBITDA" means, with respect to the Borrower on a consolidated
basis, in a twelve-month period, an amount equal to earnings (determined in
accordance with GAAP)before deduction of interest expenses, taxes, depreciation
expenses and amortization, provided, however that for purposes of calculating
the financial covenants in Section 5.2 during the twelve (12) month period
following the Effective Date, EBITDA shall be calculated by also taking into
account during the relevant period, without duplication,(x) the results of
operations of Circuit Test and Current Electronics determined in accordance with
the financial statements of Circuit Test and Current Electronics as provided to
the Agent,(y) the amount imputed to the Allied Signal Acquisition described on
the Compliance Certificate to be furnished under Section 5.1(b)(iv) , and (z)
the results of operations of any other acquired Person as determined in
accordance with the financial statements of any such Person for such period as
provided to the Agent. Operations of such acquired Person shall be treated as if
it had been a Subsidiary of the Borrower for the preceding four fiscal quarters.
-7-
"Effective Date" means September 30, 1997.
"Eligible Account Receivable" means all Accounts Receivable of
the Borrower and its Subsidiaries which are subject to a first and prior Lien in
favor of the Agent on behalf of the Banks pursuant to the Collateral Documents
(reduced by the amount of any refund, rebate, allowance, discount or other
concession to the account debtor in connection therewith) except for the
following:
(i) Accounts Receivable with respect to which the
account debtor is an Affiliate of the Borrower or any
Guarantor, or a director, officer, employee or agent of
the Borrower or any Guarantor;
(ii) Accounts Receivable with respect to which goods are
placed on consignment, guaranteed sale, "sale or return" or
other terms by reason of which the payment of the account
debtor may be conditional;
(iii) Accounts Receivable which are subject to
dispute, counterclaim or set off;
(iv) Accounts Receivable with respect to which the
goods have not been shipped or the services rendered to
the account debtor;
(v) Accounts Receivable from account debtors whose financial
condition or creditworthiness of such account debtor is
unacceptable under the credit policy of the Borrower, which
credit policy shall be consistent with prudent industry
practice;
(vi) Accounts Receivable which are not due and
payable within 60 days after their invoice date;
(vii) Accounts Receivable which are more than 60 days
past their due date;
(viii) That portion of Accounts Receivable owed by a single
account debtor that exceeds (a) fifty percent (50%) of total
Eligible Accounts Receivable for an account debtor rated BBB-
by Standard & Poor's and Baa3 by Xxxxx'x Investor Services,
Inc., or higher ("Investment Grade Accounts Receivable") and
(b) twenty five percent (25%) for non-Investment Grade
Accounts Receivable.;
(ix) Accounts Receivable owing from a single account
debtor if twenty-five percent (25%) of its Accounts
-8-
Receivable with the Borrower and all Guarantors is more
than 60 days past due;
(x) Accounts Receivable from account debtors which do not
maintain their principal place of business in the United
States, unless they are supported by an irrevocable letter of
credit from a banking institution in the United States
acceptable to the Agent in its sole discretion;
(xi) Accounts Receivable from an account debtor which has
filed, or which has had filed against it, and is pending, a
petition in bankruptcy or an application for relief under any
provision of any state or federal bankruptcy, insolvency or
debtor-relief statute; or which has had appointed, and
continues to be appointed, a trustee, custodian or receiver
for the assets of such account debtor; or which has made, and
is pending, an assignment for the benefit of creditors or has
become, and remains, insolvent or has failed, and continues to
fail, generally to pay its debts (including its employee
payroll) as such debts become due;
(xii) Accounts Receivable with respect to which the account
debtor is the United States, or any department or agency
thereof (other than such Accounts Receivable in which the
Banks have been granted an enforceable assignment in
compliance with the provisions of 41 U.S.C. Section 15); and
(xiii) Accounts Receivable which are not subject to a Lien in
favor of the Agent, or which are subject to a Lien in favor of
a Person other than the Agent, whether or not such Lien is
junior to the Lien of the Agent other than Liens imposed by
any Governmental Authority for taxes, assessments or charges
not yet due or which are being contested in good faith and
with due diligence and with respect to which adequate
reserves, determined in the reasonable discretion of the
Agent, have been established and Liens which do not materially
and adversely affect the Banks' rights and interests in such
Accounts Receivable, the Collateral, or the collectibility of
the Accounts Receivable.
"Eligible Inventory" means Inventory of the Borrower and its
Subsidiaries subject to a first and prior Lien in favor of the Agent on behalf
of the Banks pursuant to the Collateral Documents, except for the following:
(i) any portion of Inventory consisting of work-in-
process that is not subject to an enforceable purchase
order or purchase agreement;
-9-
(ii) Inventory which is not subject to a Lien in favor of the
Bank or which is subject to a Lien in favor of a Person other
than the Banks, whether or not such Lien is junior to the Lien
of the Banks other than Liens imposed by any Governmental
Authority for taxes, assessments or charges not yet due or
which are being contested in good faith and with due diligence
and with respect to which adequate reserves, determined in the
reasonable discretion of the Agent, have been established and
Liens which do not materially and adversely affect the Banks'
rights and interests in such Inventory or the Collateral;
(iii) Finished goods that do not meet the
specifications of the purchase order for such goods;
(iv) Inventory situated at a premises leased by the Borrower
or a Subsidiary located in Ft. Lauderdale, Florida, or Oregon
for which there is no valid landlord waiver, mortgagees waiver
or warehouseman's or bailee's agreement, if appropriate, in
form and substance acceptable to the Agent in its sole
discretion except that such waivers for Inventory located on
leased premises in all other locations must be provided within
thirty (30) days after the Effective Date or they will be
excluded;
(v) Inventory produced in violation of the Fair
Labor Standards Act and in particular the provisions of
that statute contained in 29 U.S.C. ss.215(a)(i);
(vi) Inventory which is deemed to be obsolete, unsaleable,
damaged and unfit for further processing in accordance with
GAAP, provided that, if the Agent reasonably disagrees with
the valuation of such inventory it may, once annually, at
Borrower's expense, require a collateral audit to establish
the value of such; and
(vii) Inventory which is not located in the United
States.
"Environmental Claim" means: (a) any responsibility, liability
or unlawful act or omission under any Environmental Law (whether alleged or
otherwise); (b) any tortious act or omission or breach of contract pertaining to
any Environmental Substance (whether alleged or otherwise); or (c) any other
violation or claim under any Environmental Law or in respect of any Hazardous
Materials (whether alleged or otherwise).
-10-
"Environmental and Safety Laws" means any and all federal,
state, local and foreign statutes, laws, regulations, ordinances, codes and
similar provisions having the force or effect of law, all judicial and
administrative orders and determinations, all contractual obligations and common
law concerning public health or safety, worker health or safety or pollution of
protection of the environment, including without limitation those relating to
any emissions, discharges or releases of Hazardous Materials to ambient air,
surface water, ground water or land, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport, control,
clean-up or handling of Hazardous Materials.
"Equipment" means the Borrower's equipment.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and as the same may be supplemented, modified, amended or
restated from time to time, and the rules and regulations promulgated
thereunder, or any corresponding or succeeding provisions of applicable law.
"ERISA Affiliate" and "ERISA Affiliates" shall mean,
respectively, any one or more of any trade, business, person or persons that
together with the Borrower would be deemed to be a single employer within the
meaning of Section 4001(b)(1) of ERISA.
"ERISA Effect" means any material and adverse effect on (a)
any Plan, (b) the assets and properties of any Plan or (c) any funding or other
liability of any one or more of the Borrower or any ERISA Affiliate in respect
of any Plan (individually or in the aggregate).
"ERISA Event" means any (a) "accumulated funding deficiency"
(whether or not waived), "prohibited transaction," "reportable event" (other
than any event for which the 30-day notice requirement has been waived by
regulation), "disqualification," "partial withdrawal," involuntary "partial
termination" or "termination," "insolvency," "reorganization" or the imposition
of any "penalty" or "withdrawal liability" in respect of any Plan under (and as
such words and phrases are defined in" ERISA or the Code, as applicable), (b)
any other violation of ERISA, the Code or any other applicable law in respect of
any Plan (whether asserted or otherwise), (c) supplement or amendment to or
modification or restatement of any Plan that could have or has had an ERISA
Effect, or (d) imposition, increase or other adverse change in any funding
obligation or other liability of any one or more of the Borrower or any ERISA
Affiliate in respect of any Plan or to the Pension Benefit Guaranty Corporation
(individually or in the aggregate).
-11-
"Event of Default" shall have the meaning assigned thereto in
Section 6.1 hereof.
"Excess Cash Flow" means, for any fiscal period, the excess of
(a) EBITDA over (b) the sum of (i) Consolidated Fixed Charges for such
period,(ii) Capital Expenditures actually made during such period, (iii) cash
taxes for such period, and (iv) optional prepayments of principal of the Term
Loan made during such period.
"Existing Debt" means any Debt outstanding on the Effective
Date to the extent set forth on Schedule 4.1(m).
"Existing Loan Agreement" means the Business Loan Agreement,
dated as of February 24, 1997, between the Borrower and Bank One, Colorado, N.A.
"Existing Loan Instruments" means the Existing Loan Agreement,
and all notes, security agreements, deeds of trust, mortgages and other
collateral security documents, all financing statements relating thereto, and
all other instruments executed by the Borrower in connection with the Existing
Loan Agreement.
"Federal Funds Rate" means, for any day, the weighted average
of the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York or, if such rate is not so published for any
day that is a Business Day, the average of quotations for such day on such
transactions received by the Agent from three Federal funds brokers of
recognized standing selected by the Agent.
"Fees" means the Commitment Fee and the Letter of
Credit Fees.
"GAAP" means generally accepted accounting principals applied
in the United States and practices which are recognized as such by the American
Institute of Certified Public Accountants or successor organization.
"Governmental Authorities" means any federal, state, county,
municipal, local or foreign court or governmental agency, authority,
instrumentality or regulatory body.
"Guarantee" and "Guarantees" mean a guarantee, endorsement,
contingent agreement to purchase or furnish funds for the payment or maintenance
of, or otherwise to be or become contingently liable under or with respect to,
any indebtedness (including Debt) or other obligations of any Person, or a
guarantee of the payment of dividends or other distributions upon
-12-
the stock or other equity interests in any Person, or an agreement to purchase,
sell or lease (as lessee or lessor) real or personal property or services
primarily for the purpose of enabling a debtor to make payment of its
obligations or an agreement to assure a creditor against loss, and including,
without limitation, causing a bank to issue a letter of credit for the benefit
of another Person.
"Guarantor" and "Guarantors" means, respectively, any
one or more of Current, Circuit Test, Airhub Services, Circuit
Test International and CTLLC Acquisition.
"Guarantor Omnibus Certificate" means a certificate to be
provided to the Bank by each of the Guarantors, each substantially in the form
of Exhibit G-2 hereto.
"Guaranty" and "Guaranties" means, the Guaranty from each of
the Guarantors to the Bank substantially in the form of Exhibit C-1 hereto, as
the same may be supplemented, modified, amended or restated from time to time in
the manner provided therein.
"Hazardous Materials" means, collectively, any polychlorinated
biphenyls, petroleum or petroleum derived substance, friable asbestos, and any
toxic or otherwise hazardous waste, material or substance, including, without
limitation, all substances with respect to which liability or standards of
conduct may be imposed pursuant to the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended from time to time, the
Resource Conservation and Recovery Act of 1976, as amended from time to time, or
any other Environmental and Safety Law.
"Interest Expense" means, with respect to the Borrower, for
any fiscal year, the interest payable by the Borrower during such fiscal year in
cash. Expressly excluded from the definition of "Cash Interest Expense" is any
interest expense imputed to the Borrower by the Borrower's independent
accountants for GAAP accounting purposes, for purposes of federal or state
taxation, or for any other purposes.
"Interest Period" means, for each LIBOR Rate Loan, the period
commencing on the date of the Advance thereof or the date of the Conversion of
any Prime Rate Loan into such a LIBOR Rate Loan and ending on the last day of
the period selected by the Borrower pursuant to the provisions below and,
thereafter, each subsequent period commencing on the last day of the immediately
preceding Interest Period and ending on the last day of the period selected by
the Borrower pursuant to the provisions below. The duration of each such
Interest Period shall be 1, 3 or 6 months as the Borrower may, upon notice
received by the Bank not later than 10:00 a.m. (Denver, Colorado time) on the
third
-13-
Business Day prior to the first day of such Interest Period, select; provided,
however, that:
(i) whenever the last day of any Interest Period would
otherwise occur on a day other than a Business Day, the last
day of such Interest Period shall be extended to occur on the
next succeeding Business Day, provided, that if such extension
would cause the last day of such Interest Period to occur in
the next following calendar month, the last day of such
Interest Period shall occur on the next preceding Business
Day; and
(ii) no Interest Period applicable to a Term Loan or portion
thereof shall extend beyond any date upon which is due any
scheduled principal payment in respect of the Term Loans
unless the aggregate principal amount of Term Loans
represented by Prime Rate Loans or LIBOR Rate Loans having
Interest Periods that will expire on or before such date,
equals or exceeds the amount of such principal payment; and
(iii) no Interest Period for any Term Loan shall extend beyond
September 30, 2002 and no Interest Period for any Revolving
Loan shall extend beyond September 30, 2000.
"Interest Period/Conversion Notice" means a notice from the
Borrower to the Bank substantially in the form of Exhibit B-3 concerning
Conversions of Types of Advances, or concerning Interest Period elections.
"Interest Rate Protection Agreement" means any interest rate
protection agreement, future, option swap, cap or collar agreement or other
arrangement designed to fix interest rates or other wise hedge against
fluctuations in interest rates.
"Inventory" means all raw materials, work in process, finished
goods, merchandise, parts and supplies of every kind and description of the
Borrower, and of the Guarantors, and goods held for sale or lease or furnished
under contracts of service in which the Borrower or any Guarantor now has or
hereafter acquires any right, whether held by the Borrower or others, and all
documents of title, warehouse receipts, bills of lading, and all other documents
of every type covering all or any part of the foregoing. Inventory includes
inventory temporarily out of the Borrower's or any Guarantor's custody or
possession.
"Issuing Bank" means Bank One, Colorado, N.A. in its
capacity as issuer of one or more Letters of Credit hereunder
-14-
"Landlord Waiver and Consent" means the Landlord Waiver and
Consent pertaining to the lessor's interest the leasehold estates held by the
Borrower or its Subsidiaries in the of form of Exhibit F-2 hereto.
"Letter of Credit" and "Letters of Credit" means one or more
letters of credit issued by the Bank for the account of the Borrower as provided
in Section 2.4 hereto.
"Letter of Credit Fees" shall have the meaning
specified in Section 2.5(b).
"Letter of Credit Rate" means, the percentage set forth below
in the following table opposite the applicable ratio of Total Debt to Trailing
Four Quarter EBITDA determined as of the fiscal quarter immediately preceding
such period:
Greater Than or Less Than Letter of
Equal to Credit Rate
3.75x - 2.750%
3.25x 3.75x 2.500%
2.75x 3.25x 2.250%
- 2.75x 2.000%
The ratio of Total Debt to Trailing Four Quarter EBITDA shall be computed by the
Borrower and such ratio and the Letter of Credit Rate for the fiscal quarter
will be set forth in the Compliance Certificate furnished under Section
5.1(b)(iv). The Letter of Credit Rate shall be subject to adjustment, if
necessary, on a date fifty (50) days after the end of each fiscal quarter of the
Borrower. Notwithstanding the foregoing, the Letter of Credit Rate will be 2.75%
from the Effective Date to fifty (50) days after the fiscal quarter ended
September 30, 1997, at which point the Letter of Credit Rate will be as set
forth in the Compliance Certificate accompanying the financial statements
furnished under Section 5.1(b)(iv) for the fiscal quarter ended September 30,
1997.
"Letter of Credit Sublimit" means $5,000,000.
"LIBOR Base Rate" means, for any Interest Period for any LIBOR
Rate Loan, the offered rate for U.S. Dollar deposits of not less than
$1,000,000.00 as of 11:00 A.M. City of London, England time two London Business
Days prior to the first date of each Interest Period as shown on the display
designated as "British Bankers Assoc, Interest Settlement Rates" on the Telerate
System ("Telerate"), Page 3750 or Page 3740, or such other page or pages as may
replace such pages on Telerate for the
-15-
purpose of displaying such rate. Provided, however, that if such offered rate is
not available on Telerate then such offered rate shall be calculated by the
Agent by a substantially similar methodology as that theretofore used to
determine such offered rate in Telerate. "London Business Day" means any day
other than a Saturday, Sunday or a day on which banking institutions are
generally authorized or obligated by law or executive order to close in the City
of London, England.
"LIBOR Rate" means, for any LIBOR Rate Loan for any Interest
Period therefor, a rate per annum (expressed as a decimal, rounded upwards, if
necessary, to the nearest 1/100,000 of 1%) determined by the Agent to be equal
to the sum of (a) the LIBOR Base Rate for such Advance for such Interest Period,
plus (b) the Applicable Margin. The LIBOR Base Rate shall be adjusted
automatically as to all LIBOR Rate Loans outstanding as of the effective date of
any change in the Reserve Requirement.
"LIBOR Rate Loan" means a Loan which bears interest as
provided in Section 2.11(b).
"Lien" means any mortgage, deed of trust, lien, chattel
mortgage, conditional sale contract, pledge, charge, security interest or
encumbrance of any kind whatsoever.
"Loan" and "Loans" means, respectively, all funds Advanced by
the Banks to the Borrower pursuant to Requests for Advance submitted by the
Borrower to the Agent, all Swing Loans, all Draws under Letters of Credit, and
all other amounts paid or otherwise advanced by the Issuing Bank on behalf of
the Borrower pursuant hereto or pursuant to any other Loan Instrument, which
Loans will be evidenced by the Notes.
"Loan Instrument" and "Loan Instruments" means, respectively,
any one or more of this Agreement, the Notes, the Requests for Advance, the
Requests for Letter of Credit, the Letters of Credit, the Guaranties, the
Collateral Documents, and the various other deeds of trust, mortgages,
assignments, instruments and other documents creating or evidencing the Banks'
interest in any collateral securing or intended to secure anyone's obligations
under any of the foregoing, and all waivers, consents, agreements,
representations and warranties, reports, statements, certificates, schedules and
other documents executed by the requisite Person(s) pursuant to or in connection
with any of the foregoing and accepted or delivered by the Agent (whether prior
to, on or from time to time after the Effective Date), as each may be
supplemented, modified, amended or restated from time to time in the manner
provided therein.
"Material Adverse Effect" means any material and adverse
effect, whether individually or in the aggregate, upon (a) the assets, business,
operations, properties or condition,
-16-
financial or otherwise, of the Borrower and its wholly owned Subsidiaries, taken
as a whole, (b) the ability of the Borrower to make payment as and when due of
all or any part of the Obligations, or (c) the Collateral.
"Material Agreements" means all agreements of the Borrower
which are included in the Collateral, and all other agreements and contracts
(written or oral, now existing or hereafter entered into) to which the Borrower
is a party, or by which the Borrower, or the Collateral is bound, the
nonperformance of which by the Borrower, or by the Borrower's counter parties
thereto would have a Material Adverse Effect on the Borrower which Material
Agreements in effect on the date hereof are identified in Schedule 4.1(n)
hereto.
"Maturity Date" means, (a) with respect to the Revolving
Loans, the first to occur of (i) the Revolving Loans Scheduled Maturity Date and
(ii) the date on which the due date of the Loans has been accelerated and
payment demanded by the Bank by reason of an Event of Default pursuant to
Article VI; and (b) with respect to the Term Loans, the first to occur of (iii)
the Term Loans Scheduled Maturity Date and (iv) the date on which the due date
of the Loans has been accelerated and payment demanded by the Agent by reason of
an Event of Default pursuant to Article VI.
"Maximum Revolving Credit Amount" means the lesser of (y)
$25,000,000 and (z) the Borrowing Base in effect from time to time, as such
$25,000,000 may be reduced by the Borrower pursuant to Section 2.6.
"Xxxxxxx Subordinated Notes" means the promissory note or
promissory notes issued by the Borrower to Xxxxxxx X. Xxxxxxx in the aggregate
face amount of $15,000,000 due December 31, 2002 that are subordinated to the
Revolving Loans, Term Loans and Swing Line Loans on terms and conditions
satisfactory to the Agent.
"Multiemployer Plan" of any Person shall mean a multiemployer
plan defined as such in Section 3(37) of ERISA to which contributions have been
made by such Person or any ERISA Affiliate of such Person and which is covered
by Title IV of ERISA.
"Net Income" means, for any computation period, with respect
to the Borrower on a consolidated basis, cumulative net income earned during
such period as determined in accordance with GAAP.
"Net Proceeds" means the proceeds received by the Borrower in
cash from the sale, lease, assignment or other disposition of any asset or
property (other than sales of assets
-17-
in the ordinary course of business, which, for purposes of this definition,
shall not include any disposition of assets in which the total consideration
received or receivable is in excess of $500,000), net of (a) reasonable and
customary fees, costs, commissions and expenses, including attorneys' fees,
incurred in connection with such sale, lease, assignment or other disposition
and payable by or on behalf of the seller or the transferor of the assets to
which sale or disposition relates, and (b) the amount of all foreign, Federal,
state and local taxes payable as a direct consequence of such sale, lease,
assignment or other disposition. For this purpose, all proceeds of insurance
paid on account of the loss of or damage to any such asset or property, or group
of assets or properties, and awards of compensation for any such asset or
property, or group of properties, taken by condemnation or eminent domain shall
be deemed to be Net Proceeds (provided that, in the case of proceeds from
insurance paid with respect to any loss or damage to any asset, such proceeds,
or any portion thereof, shall not constitute Net Proceeds if the Agent has
received notice from the Borrower of its intention to use such proceeds or
portion thereof at the time of such loss or damage, and such proceeds or portion
thereof are in fact so used within six months after the occurrence of such loss
or damage to repair, restore or replace such assets). With respect to the
issuance or sale of equity securities, Net Proceeds means the cash proceeds of
such issuance or sale net of attorneys' fees, accountants' fees, underwriters'
fees, discounts and commissions and other expenses actually incurred in
connection with such sale or issuance. Net Proceeds do not include the proceeds
from the exercise of (A) warrants issued to Xxxxxxx X. Xxxxxxx in connection
with the Xxxxxxx Subordinated Notes and (B) stock options issued pursuant to an
employee stock option plan described in the Borrower's proxy statements.
"Net Worth" means the net worth of a Person, determined
in accordance with GAAP.
"Notes" means, collectively, the Revolving Notes, the
Term Notes and the Swing Loan Notes.
"Obligations" means the obligations of the Borrower to repay
the balance of the Loans outstanding hereunder, together with accrued and unpaid
interest thereon, fees payable hereunder, and all other amounts payable or
obligations to be performed by the Borrower hereunder or under any other Loan
Instrument or under any Permitted Swap Obligations for which the counterparty is
a Bank.
"Permitted Lien" means:
(a) Liens imposed by any Governmental Authority for
taxes, assessments or charges not yet due or which are
being contested in good faith and with due diligence
-18-
and with respect to which adequate reserves have been
established;
(b) carriers', warehousemen's, mechanics', materialmen's,
repairmen's, or other like Liens arising in the ordinary
course of business not yet delinquent or which are being
contested in good faith and with due diligence and with
respect to which adequate reserves have been established;
(c) Liens (other than Liens imposed by ERISA) consisting of
pledges or deposits under workers' compensation, unemployment
insurance and other social security legislation;
(d) easements, rights-of-way, zoning restrictions and other
similar encumbrances of record on real property incurred in
the ordinary course of business which, in the aggregate, are
not material in dollar amount, and which do not in any case
interfere with the ordinary conduct of the business of the
Borrower or any Guarantor;
(e) Liens existing on the date hereof and disclosed in
Schedule 4.1(p) hereto;
(f) purchase money security interests securing payment by the
Borrower or any Guarantor of a portion of the purchase price
of any asset, provided that (i) any such Lien attaches to such
property concurrently with or within 20 days after the
acquisition thereof, (ii) such Lien attaches solely to the
property so acquired in such transaction, (iii) the principal
amount of the debt secured thereby does not exceed 100% of the
cost of such property, and (iv) the aggregate principal
outstanding of such purchase money security interest Liens
shall not at any one time exceed $2,500,000;
(g) Liens, deposits or pledges to secure the non-delinquent
performance of bids, tenders, contracts(other than contracts
for the payment of money), leases (permitted under this
Agreement), public or statutory obligations, surety, stay,
appeal, indemnity, performance or other similar bonds, or
other similar obligations arising in the ordinary course of
business; or
(h) any attachment or judgment Lien either in existence less
than 30 calendar days after the entry thereof, or with respect
to which execution has been stayed, or with respect to which
payment in full above any deductible is covered by insurance,
-19-
"Permitted Swap Obligations" means all obligations (contingent
or otherwise) of the Borrower or any Subsidiary existing or arising under Swap
Contracts with one or more creditworthy parties as the swap counterparty,
provided that such obligations are (or were) entered into by such Person in the
ordinary course of business for the purpose of directly mitigating risks
associated with liabilities, commitments or assets held or reasonably
anticipated by such Person and not for the purpose of speculation. For the
purposes of this definition, the term "creditworthy party" means any Bank, any
Affiliate of any Bank or any third party having a credit rating from Standard &
Poor's and Moodys Investor's Services, Inc. not less than that of the Bank with
the lowest credit rating. All Swap Contracts with counterparties who are not
Banks will be unsecured.
"Person" means any individual, corporation, company, voluntary
association, partnership, joint venture, limited liability company, limited
liability partnership, trust, unincorporated organization or government (or any
agency, instrumentality or political subdivision thereof).
"Plan" of a Person shall mean an employee benefit or other
plan established or maintained by such Person or any ERISA Affiliate of such
Person and which is covered by Title IV of ERISA, other than a Multiemployer
Plan of such Person.
"Pledge Agreement" means the Pledge and Security Agreement of
the Borrower pertaining to its interests and its other personal property
substantially in the form of Exhibit D hereto.
"Prime Rate" means, for any Interest Period or any other
period, a fluctuating interest rate per annum as shall be in effect from time to
time as announced publicly by the Agent in Denver, Colorado, from time to time,
as the Agent's prime rate. Such rate will not necessarily be the lowest interest
rate charged by the Agent for loans to its customers. The Prime Rate shall
change on each day on which the Agent announces a change in such Prime Rate.
"Prime Rate Loan" means an Advance or a Draw which bears
interest as provided in Section 2.11(a).
"Pro Rata Share" means, as to any Bank at any time, the
percentage equivalent (expressed as a decimal, rounded to the ninth decimal) at
such time of such Bank's Commitment divided by the combined Commitments of all
Banks.
"Real Property" shall mean Borrower's Real Property.
-20-
"Record" means the grid attached to a Note, or the
continuation of such grid, or any other similar record, including computer
records, maintained by any Bank with respect to any Loan referred to in such
Note.
"Regulations D, G, T, U and X" mean, respectively, Regulations
D, G, T, U and X of the Board of Governors of the Federal Reserve System (or any
successor), as the same may be amended or supplemented from time to time.
"Regulatory Change" means, with respect to the Banks, any
change enacted or adopted after the date of this Agreement in United States
federal or state law or regulations or any foreign law or regulations
(including, without limitation, Regulation D) or the adoption or publication
after the date of this Agreement of any interpretations, directives or requests
(whether or not having the force of law) applying to a class of banks, including
the Banks, by any court or governmental or monetary authority charged with the
interpretation or administration thereof.
"Request for Advance" means a written request by the Borrower
to the Agent for an Advance of funds as a Loan hereunder, which written request
will be in the form of Exhibit B-1 hereto.
"Request for Letter of Credit" means a written request by the
Borrower for the issuance of a Letter of Credit for the account of the Borrower
hereunder, which written request will be in the form of Exhibit B-2 hereto.
"Required Banks" means, at any particular time, those Banks
having 66 2/3% of the Loans or, if there are no Loans outstanding, at least 66
2/3% of the Commitments.
"Requirement of Law" means, as to any Person, any law
(statutory or common), ordinance, treaty, code, rule or regulation or
determination of an arbitrator or of a Governmental Authority, in each case
applicable to or binding upon the Person or any of its assets to which the
Person or any of assets is subject.
"Reserve Requirement" means, for any Interest Period for any
LIBOR Rate Loan, the average maximum rate at which reserves (including any
marginal, supplemental or emergency reserves) are required to be maintained
during such Interest Period under Regulation D by member banks of the Federal
Reserve System in New York City with deposits exceeding one billion dollars
against "Eurocurrency liabilities" (as such term is used in Regulation D).
Without limiting the effect of the foregoing, the Reserve Requirement shall
include any other reserves required to be maintained by such member banks by
reason of any Regulatory Change against (i) any category of liabilities which
includes
-21-
deposits by reference to which the LIBOR Base Rate is to be determined as
provided in the definition of "LIBOR Base Rate" in this Section 1.1, or (ii) any
category of extensions of credit or other assets which includes LIBOR Rate
Loans.
"Revolving Loans" means all Advances of funds by the Banks to
the Borrower pursuant to the Revolving Loans Commitment, and all Draws under
Letters of Credit, which Loans will be evidenced by the Revolving Note.
"Revolving Loans Commitment" means the commitment of the Banks
to Advance Revolving Loans and Swing Loans to the Borrower or to issue Letters
of Credit for the account of the Borrower from time to time in the aggregate
amount of $25,000,000.00 as provided in Section 2.1.
"Revolving Loans Scheduled Maturity Date" means
September 30, 2000.
"Revolving Note" means the promissory notes in the aggregate
principal amount of $25,000,000, made by the Borrower and payable to the order
of the Banks, substantially in the form of Exhibit A-1 hereto, as the same may
be supplemented, modified, amended or restated from time to time in the manner
provided herein.
"Revolving Note Record" means a Record with respect to
a Revolving Note.
"Secured Party" has the meaning ascribed to such term in the
Security Agreements, Pledge Agreements and the Deeds of Trust.
"Security Agreement" means a Security Agreement and Assignment
from certain Guarantors substantially in the form of Exhibit E hereto.
"Security Interest" means the Liens created, or
purported to be created, by the Loan Instruments.
"Senior Debt" means the Loans.
"Subordinated Debt" means (i) the Xxxxxxx Subordinated Notes
and (ii) any other Debt of the Borrower that is subordinated on terms and
conditions, and that is subject to other terms and conditions, satisfactory in
form and substance to the Required Banks.
"Subsidiary" or "Subsidiaries" of a Person means, any
corporation, association, partnership, limited liability company, joint venture
or other business entity of which more than 50% of the voting stock, membership
interests or other equity interest
-22-
(in the case of Persons other than corporations), is owned or controlled
directly or indirectly by the Person, or one or more of the Subsidiaries of the
Person, or a combination thereof. Unless the context otherwise clearly requires,
references herein to a "Subsidiary" refers to a Subsidiary of the Borrower.
"Swap Contract" means any agreement, whether or not in
writing, relating to any transaction that is a rate swap, basis swap, forward
rate transaction, commodity swap, commodity option, equity or equity index swap
or option, bond, note or xxxx option, interest rate option, forward foreign
exchange transaction, cap, collar or floor transaction, currency option or any
other, similar transaction ( including any option to enter into any of the
foregoing) or any combination of the foregoing, and, unless the context
otherwise clearly requires, any master agreement relating to or governing any or
all of the foregoing.
"Swing Loan" means an amount advanced by the Swing Loan Lender
pursuant to Section 2.2 hereof.
"Swing Loan Commitment" means the commitment of the Swing Loan
Lender to Advance Swing Loans to the Borrower from time to time as provided in
Section 2.1.
"Swing Loan Lender" means Bank One, Colorado, N.A.
"Swing Loan Note" means any promissory note in the form
of Exhibit A-3.
"Term Loan" means the Advance of funds by the Banks to the
Borrower pursuant to the Term Loan Commitment, which Loans will be evidenced by
the Term Notes.
"Term Loan Commitment" means the commitment of each Bank to
Advance the Term Loan to the Borrower in a single Advance, as provided in
Section 2.1.
"Term Note" means the promissory notes in the aggregate
principal amount of $20,000,000 evidencing the Term Loan, made by the Borrower
and payable to the order of the Banks, substantially in the form of Exhibit A-2
hereto, as the same may be supplemented, modified, amended or restated from time
to time in the manner provided herein.
"Term Loan Record" means a Record with respect to a
Term Loan.
"Term Loan Scheduled Maturity Date" means September 30,
2002.
"Total Debt" means, at any time, the Debt of the
Borrower and Subsidiaries on a consolidated basis for the
-23-
purposes of calculating the financial covenants in Section 5.2(a), the
Applicable Margin and the Letter of Credit Rate at such time.
"Trailing Four Quarter EBITDA" means, with respect to the
Borrower, the EBITDA for the immediately preceding four fiscal quarters of the
Borrower.
"Type" means a type of Advance, being a Prime Rate Loan or a
LIBOR Rate Loan, as the case may be.
"Uniform Commercial Code" means the Uniform Commercial Code as
in effect from time to time in the State of Colorado.
SECTION 1.2 Accounting Terms and Determinations. Except
-----------------------------------
as otherwise expressly provided herein, all accounting terms used herein shall
be interpreted, all calculations for purposes of determining compliance with the
terms of this Agreement shall be made, and all financial statements and
certificates and reports as to financial matters required to be delivered to the
Agent hereunder shall be prepared in accordance with GAAP applied for all
periods to the extent practicable on a basis consistent with that used in the
preparation of the financial statements identified in Section 4.1(f), so as to
fairly present the
--------------
financial condition and results of operations of the applicable
Person.
ARTICLE II
COMMITMENT; AMOUNTS AND TERMS OF THE ADVANCES AND
LETTERS OF CREDIT
SECTION 2.1 Commitment. Each Bank severally agrees, on the terms and
subject to the conditions contained in this Agreement and the Loan Instruments,
to make Loans to the Borrower for the account of the Borrower in accordance with
the provisions of this Section 2.1.
(a) Revolving Loans Commitment. Pursuant to the Revolving
Loans Commitment, from the Effective Date until the first to
occur of the Revolving Loans Scheduled Maturity Date and the
Maturity Date, each Bank severally agrees to Advance funds to
the Borrower as Revolving Loans and issue for the account of
the Borrower Letters of Credit up to the maximum face amount
of the Letter of Credit Sublimit, provided, however, that at
no time shall the Banks be required to Advance Revolving Loans
to the Borrower or to issue Letters of Credit for the account
of the Borrower if, after such Advance or issuance of such
Letter of Credit
-24-
the sum of the principal amount of Revolving Loans outstanding
plus the face amount of Letters of Credit outstanding is in
excess of the Maximum Revolving Credit Amount; and provided
further, that no Bank shall be required to Advance Revolving
Loans and participate in Letters of Credit in an aggregate
amount exceeding the Bank's Revolving Loan Commitment as
described on Schedule 2.1. All Draws honored by the Banks
shall constitute Revolving Loans. Subject to the terms of this
Agreement, the Borrower may borrow, repay and reborrow funds
Advanced to the Borrower as Revolving Loans.
(b) Term Loan Commitment. Pursuant to the Term Loan
Commitment, each Bank severally agrees to Advance, on
the Effective Date, a Term Loan to the Borrower, in a
single Advance, in a principal amount not exceeding the
Bank's Term Loan Commitment as described on Schedule
2.1.
(c) Swing Loan Commitment.
(i) Pursuant to the Swing Loan Commitment and subject to the
terms and conditions of this Agreement, the Swing Loan Lender
agrees to make, from time to time from the Effective Date to
the first to occur of the Revolving Loans Scheduled Maturity
Date or the Maturity Date, one or more Swing Loans to the
Borrower in an aggregate unpaid principal amount not to exceed
the lesser of (a) the Revolving Loans Commitment at such time
minus the sum of the aggregate unpaid principal amount of all
Revolving Loans and Swing Loans outstanding at such time and
the aggregate amount of the Letters of Credit outstanding at
such time and (b) $2,500,000.
(ii) Upon demand made to all of the Banks by the Swing Loan
Lender, which demand may be made before or after an Event of
Default, each Bank (other than the Swing Loan Lender) shall
irrevocably and unconditionally purchase from the Swing Loan
Lender, without recourse or warranty, an undivided interest
and participation in the Swing Loans then outstanding, by
paying to the Swing Loan Lender, without reduction or
deduction of any kind, including but not limited to reductions
or deductions for set-off, recoupment or counterclaim, in
Dollars immediately available to the Swing Loan Lender, an
amount equal to such Bank's Pro Rata Share of the principal
amount of all Swing Loans then outstanding, and thereafter,
except as otherwise provided in the second succeeding
sentence, the Banks' respective interests in such Swing Loans,
and the
-25-
remaining interest of the Swing Loan Lender in such Swing
Loans, shall in all respects be treated as Revolving Loans
under this Agreement, but such Swing Loans shall continue to
be evidenced by the Swing Note, and shall continue to be due
and payable by the Borrower in accordance with Section 2.7(d).
If any Bank does not pay any amount which it is required to
pay forthwith upon the Swing Loan Lender's demand therefor,
the Swing Loan Lender shall be entitled to recover such amount
on demand from such Bank, together with interest thereon, at
the Federal Funds Rate for the first three Business Days, and
thereafter at the Prime Rate, for each day from the date of
such demand, if made prior to 2:00 p.m. (Denver, Colorado
time) on any Business Day, and if made thereafter on any
Business Day, or made on any day that is not a Business Day,
from the next Business Day following the date of such demand,
until the date such amount is paid to the Swing Loan Lender by
such Bank. If such Bank does not pay such amount forthwith
upon the Swing Loan Lender's demand therefor, and until such
time as such Bank makes the required payment, the Swing Loan
Lender's remaining interest in the applicable Swing Loan shall
continue to include the amount of such unpaid participation
obligation.
SECTION 2.2 Advances.
(a) The Banks agree, on the terms and conditions set forth
herein, (a) to make Advances to the Borrower of Revolving Loans (as
LIBOR Rate Loans or as Prime Rate Loans) from time to time on any
Business Day from and after the Effective Date through the first to
occur of the Revolving Loans Scheduled Maturity Date and the Maturity
Date, (b) to make an Advance to the Borrower of the Term Loan (as a
LIBOR Rate Loan or a Prime Rate Loan) in a single Advance on the
Effective Date and each LIBOR Rate Loan shall be in an amount not less
than $1,000,000 or in integral multiples of $250,000 in excess thereof,
and each Prime Rate Loan shall be in an amount not less than $500,000
or in integral multiples of $100,000 in excess thereof, except that an
Advance of a Prime Rate Loan may be in an amount equal to the entire
unused Revolving Loans Commitment. The total number of individual LIBOR
Rate Loan Advances outstanding at any time shall not exceed three (3)
for the Revolving Loans and one (1) for the Term Loan.
(b) Pursuant to the Swing Loan Commitment, from the Effective
Date until the first to occur of the Revolving Loans Scheduled Maturity
Date or the Maturity Date, the Swing Loan Lender agrees to make Swing
Loan Advances in an amount not less than $50,000 or in integral
multiples of
-26-
$10,000 in excess thereof. All Swing Loan Advances shall be
made as Prime Rate Loans. All Swing Loans shall be credited
to the Borrower's Account.
SECTION 2.3 Making the Advances.
(a) Request for Advance, Revolving Loans and Term Loan. Each
Revolving Loan and Term Loan Advance shall be made after
delivery by the Borrower to the Agent of a Request for
Advance, duly executed by an Authorized Signatory, delivered
to the Agent (i) in the case of a Prime Rate Loan, not later
than 11:00 a.m.(Denver, Colorado time) on the Business Day
which is the date of the proposed Advance and (ii) in the case
of a LIBOR Rate Loan, not later than 11:00 a.m. (Denver,
Colorado time) on the third Business Day prior to the date of
the proposed Advance. The Request for Advance shall specify
(i) the date and amount of the Advance, (ii) whether a
Revolving Loan or Term Loan is requested, (iii) the Type of
Advance requested, and (iv) if a LIBOR Rate Loan is requested,
the initial Interest Period therefor. Promptly upon receipt of
such Request for Advance, the Agent shall notify the Banks
thereof and of their Pro Rata Share of such proposed Advance.
Not later than 2:00 p.m. (Denver, Colorado time) on the date
of such Advance, subject to fulfillment of the applicable
conditions set forth in Article III, the Agent will make such
Advance available to the Borrower in same day funds by
depositing such funds in the Borrower's Account.
(b) Swing Loan Request. Each Swing Loan Advance shall be made
after notice by the Borrower to the Swing Loan Lender ("Notice
of Swing Loan Request"). Each Notice of Swing Loan Request
shall be by telephone, telex or telecopier, confirmed
immediately in writing, specifying therein the requested (a)
date of such Swing Loan, (b) amount of such Swing Loan and (c)
the maturity of such Swing Loan (which maturity shall be no
later than the seventh Business Day after the requested date
of such Advance). Each Notice of Swing Loan Request shall
constitute a representation and warranty by the Borrower as of
the time of such notice that the conditions specified in
Sections 3.1 and 3.2 have been fulfilled at such time. The
Swing Loan Lender will make such Swing Loan Advance available
to the Borrower in same day funds by depositing such funds in
the Borrower's Account (i) not later than the close of
business on the date of such notice if such notice is given
not later than 11:00 a.m. (Denver, Colorado time) on the date
of the proposed Swing Loan Advance, or (ii) not later than the
close of business on the date after
-27-
such notice if such notice is given later than 11:00 a.m.
(Denver, Colorado time) on the date of the proposed Swing Loan
Advance. Within the limits of the Swing Loan Commitment, the
Borrower may borrow under this Section 2.3, repay pursuant to
Section 2.7 and reborrow under this Section 2.3.
(c) Request for Advance Irrevocable. Each Request for Advance
from the Borrower to the Agent shall be irrevocable and
binding on the Borrower. In the case of any request for a
LIBOR Rate Loan the Borrower shall indemnify the Banks against
any loss, cost or expense incurred by the Banks as a result of
any failure to fulfill on or before the date specified in such
notice for such Advance the applicable conditions set forth in
Article III, including, without limitation, any loss
(including loss of anticipated profits), cost or expense
incurred by reason of the liquidation or reemployment of
deposits or other funds acquired by the Banks to fund the
Advance when the Advance, as a result of such failure, is not
made on such date.
(d) Availability of Funds, Revolving Loans and Term Loan. Not
later than 2:00 p.m.(Denver, Colorado time)on the proposed day
of the Advance of any Revolving Loan, each of the Banks will
make available to the Agent, at its address referred to in
Section 8.2, in immediately available funds, the amount of
such Bank's Pro Rata Share of the requested Revolving Loan.
Upon receipt from each Bank of such amount and upon receipt of
the documents required by Sections 3.1 and 3.2 and the
satisfaction of the other conditions set forth therein, to the
extent applicable, the Agent will make available to the
Borrower the aggregate amount of such Revolving Loan made
available to the Agent by the Banks. The failure or refusal of
any Bank to make available to the Agent at the aforesaid time
and place the amount of its Pro Rata Share of the requested
Revolving Loan shall not relieve any other Bank from its
several obligation hereunder to make available to the Agent
the amount of such other Bank's Pro Rata Share of any
requested Revolving Loan Advance.
(e) Advances by Agent. The Agent may, unless notified
to the contrary by any Bank prior to an Advance,
reasonably assume that such Bank has made available to
the Agent on such day the amount of such Bank's Pro
Rata Share of the Revolving Loan to be made on such
day, and the Agent may (but it shall not be required
to), in reliance upon such assumption, make available
to the Borrower a corresponding amount. If any Bank
-28-
makes available to the Agent such amount on a date after such
day of Advance, such Bank shall pay to the Agent on demand an
amount equal to the product of (a) the Federal Funds Rate each
day included in such period, times (b) the amount of such
Bank's Pro Rata Share of such Revolving Loan, times (c) a
fraction, the numerator of which is the number of days that
elapse from and including such day of Advance to the date on
which the amount of such Bank's Pro Rata Share of such
Revolving Loan shall become immediately available to the
Agent, and the denominator of which is 360. A statement of the
Agent submitted to such Bank with respect to any amounts owing
under this paragraph shall be prima facie evidence of the
amount due and owing to the Agent by such Bank. If the amount
of such Bank's Pro Rata Share of such Revolving Loan is not
made within three (3) Business Days following such Advance,
the Agent shall be entitled to recover such amount from the
Borrower on demand, with interest thereon at the rate per
annum applicable to such Revolving Loan.
SECTION 2.4 Letters of Credit.
(a) Letter of Credit Commitment. Upon the terms and subject to
the conditions of this Agreement, the Issuing Bank shall, from
time to time during the period from the Effective Date through
the tenth Business Day preceding the Maturity Date, issue one
or more Letters of Credit for the account of the Borrower;
provided, that the aggregate principal amount of all Letters
of Credit shall not exceed at any time the lesser of (A) the
aggregate amount of the Revolving Loans Commitment at such
time minus the aggregate unpaid principal amount of all
Revolving Loans outstanding at such time and (B) the Letter of
Credit Sublimit.
(b) Terms of Letters of Credit and Applications. Applications
for each Letter of Credit shall be in a form and shall contain
such terms as shall be reasonably satisfactory to the Issuing
Bank. Each Letter of Credit that is issued, extended or
renewed shall be in a form and contain such terms as shall be
reasonably satisfactory to the Issuing Bank. Each such Letter
of Credit shall be subject to the Uniform Customs and Practice
for Documentary Credits (1993 Revision),International Chamber
of Commerce Publication No. 500 or any successor version.
(c) Renewals and Extensions. Each Letter of Credit
shall be denominated only in Dollars and shall expire
on or before the first anniversary of the issuance
thereof (provided, that, any Letter of Credit may
-29-
include terms that provide for the automatic renewal thereof
for successive one-year periods so long as such terms include
a provision whereby the Issuing Bank shall be entitled to
elect that any such renewal shall not occur if the conditions
set forth in Sections 3.1 and 3.2 could not be fulfilled at
such time, and the Issuing Bank shall give notice of such
election to the beneficiary thereof) and in any event not
later than the fifth Business Day preceding the Maturity Date.
Any extension of the expiry date, or automatic renewal, of a
Letter of Credit to a date beyond the first anniversary of the
issuance thereof shall constitute an "issuance" of such Letter
of Credit for all purposes hereof on, in the case of any such
extension, the date on which such extension shall have been
granted and, in the case of any such automatic renewal, on the
tenth Business Day preceding the last day on which the Issuing
Bank is entitled to give notice of its election that any such
renewal shall not occur.
(d) Issued on Business Day. Letters of Credit shall
be issued only on a Business Day, and shall be used for
the corporate purposes of the Borrower or the
Subsidiaries.
(e) Request for Letter of Credit. The Borrower shall request
the issuance of a Letter of Credit by furnishing to the Agent
and the Issuing Bank a Request for Letter of Credit or such
other notice as shall be reasonably satisfactory to the
Issuing Bank. The Request for Letter of Credit shall, among
other things, specify the date of the requested issuance of
the Letter of Credit. Subject to approval of the form and
terms of the Letter of Credit as requested and to the other
terms and conditions hereof, the Issuing Bank will issue the
Letter of Credit and make delivery thereof to the Borrower or
as the Borrower shall have instructed the Issuing Bank, on the
date of requested issuance, provided that the Issuing Bank
will not be required to issue the Letter of Credit prior to
(i) the close of business on the second Business Day after it
has received the Request for Letter of Credit, if the Request
for Letter of Credit is received by 11:00 a.m. (Denver,
Colorado time) of the date of receipt, or (ii) the close of
business on the third Business Day after it has received the
Request for Letter of Credit, if the Request for Letter of
Credit is received on or after 11:00 a.m. (Denver, Colorado
time) of the date of receipt.
(f) Participations. Upon the date of issuance of a
Letter of Credit, the Issuing Bank shall be deemed to
-30-
have granted to each Bank (other than the Issuing Bank), and
each Bank (other than the Issuing Bank) shall be deemed to
have acquired from the Issuing Bank without further action by
any party hereto, a participation in such Letter of Credit and
any Draw that may at any time be made thereunder, to the
extent of such Bank's Pro Rata Share thereof.
(g) Notice of Draw. The Issuing Bank shall promptly notify the
Borrower of its receipt of each Draw request with respect to a
Letter of Credit, stating the date and amount of the Draw
requested thereby and the date and amount of each Draw
disbursed pursuant to such request. The failure of the Issuing
Bank to give, or delay in giving, any such notice shall not
release or diminish the obligations hereunder of the Borrower
in respect of such Draw.
(h) Payment of Draw. The Borrower shall, on the day it
receives notice of each Draw, if such notice is received prior
to 11:00 a.m. (Denver, Colorado time) on such day, and on the
Business Day following the day it receives such notice, if
such notice is received after 11:00 a.m. (Denver, Colorado
time) on such day, reimburse such Draw by paying to the
Issuing Bank in immediately available funds the amount of the
payment made by the Issuing Bank with respect to such Draw,
together with interest thereon at a rate per annum equal to
the Letter of Credit Rate as in effect from time to time until
the day such reimbursement is made if such Draw is not
reimbursed on the day notice is received. In the event that
the Borrower shall fail to make any such payment when due and
for so long as such failure shall be continuing, the Issuing
Bank may give notice of such failure to the Agent and each
Bank, which notice shall include the amount of such Bank's Pro
Rata Share of such Draw, whereupon each such Bank (other than
the Issuing Bank) shall promptly remit such amount to the
Agent for the account of the Issuing Bank as provided in
Section 2.4(i).
(i) Participation in Draw. Each Bank (other than the Issuing
Bank) shall, in the event it receives the notice from the
Issuing Bank pursuant to Section 2.4(g) at or before 12:00
noon (Denver Time) on any Business Day, fund its participation
in any unreimbursed Draw by remitting to the Agent, no later
than 2:00 p.m. (Denver, Colorado Time) on such day, in
immediately available funds, its Pro Rata Share of the
reimbursement obligation in respect of each Draw. The Agent
shall, in the event it receives such funds from such Bank at
or before 2:00 p.m. (Denver, Colorado
-31-
Time) on any day, no later than 4:00 p.m. (Denver, Colorado
Time) on such day, make available the amount thereof to the
Issuing Bank, in immediately available funds. Any amount
payable by any Bank to the Agent for the account of the
Issuing Bank under this Section 2.4(i), and any amount payable
by the Agent to the Issuing Bank under this Section 2.4(i),
shall bear interest for each day from the date due (and
including such day if paid after 2:00 p.m. (Denver, Colorado
Time), in the case of any such payment by a Bank to the Agent,
or 4:00 p.m. (Denver, Colorado Time), in the case of any such
payment by the Agent to the Issuing Bank, on such day) in
accordance with this Section 2.4(i) until the date it is
received by the Issuing Bank at a rate equal to the Federal
Funds Rate until (and including) the third Business Day after
the date due and thereafter at the Prime Rate. Each Bank
shall, upon the demand of the Issuing Bank, reimburse the
Issuing Bank, to the extent the Issuing Bank has not been
reimbursed by the Borrower after demand therefor, for the
reasonable costs and expenses (including reasonable legal
fees) incurred by it (other than as a result of its willful
misconduct or gross negligence) in connection with the
collection of amounts due under, the administration of, and
the preservation and enforcement of any rights conferred by,
the Letters of Credit or the performance of the Issuing Bank's
obligations under this Agreement in respect thereof (other
than its obligation to make Loans in its capacity as a Bank),
to the extent of such Bank's Pro Rata Share (as of the time
such costs and expenses are incurred) of the amount of such
costs and expenses. The Issuing Bank shall refund any costs
and expenses reimbursed by such Bank that are subsequently
recovered from the Borrower in an amount equal to such Bank's
Pro Rata Share thereof.
(j) Obligations of Banks. The obligation of each Bank to make
available to the Issuing Bank the amounts set forth in this
Section 2.4 shall be absolute, unconditional and irrevocable
under any and all circumstances without reduction for any
set-off or counterclaim of any nature whatsoever, and may not
be terminated, suspended or delayed for any reason whatsoever,
shall not be subject to any qualification or exception and
shall be made in accordance with the terms and conditions of
this Agreement under all circumstances, including, without
limitation, any of the following circumstances:
(i) any lack of validity or enforceability of this
Agreement or any of the other Loan Instruments;
-32-
(ii) the existence of any claim, set off, defense or other
right which the Borrower or any Subsidiary may have at any
time against a beneficiary named in a Letter of Credit, any
transferee of any Letter of Credit (or any Person for whom any
such transferee may be acting), the Agent, the Issuing Bank,
any Bank or any other Person, whether in connection with this
Agreement, any Letter of Credit, the transactions contemplated
herein or any unrelated transactions (including any underlying
transaction between the Borrower or any Subsidiary and the
beneficiary named in any such Letter of Credit);
(iii) any draft, certificate or any other document presented
under any Letter of Credit proving to be forged, fraudulent or
invalid in any respect or any statement therein being untrue
or inaccurate in any respect;
(iv) the surrender or impairment of any security for
the performance or observance of any of the terms of
any of the Loan Instrument; or
(v) the occurrence of any Default.
(k) Waiver of Liability; Indemnity.
(i) Without affecting any rights the Banks may have under
Applicable Law, the Borrower agrees that none of the Banks,
the Issuing Bank, the Agent or their respective officers or
directors shall be liable or responsible for, and the
obligations of the Borrower to the Banks, the Issuing Bank and
the Agent hereunder shall not in any manner be affected by:
(A) the use that may be made of any Letter of Credit or the
proceeds thereof by the beneficiary thereof or any other
Person or any acts or omissions of such beneficiary or any
other Person; (B) the validity or genuineness of documents
presented in connection with any Draw, or of any endorsements
thereon, even if such documents should, in fact, prove to be
in any or all respects, invalid, fraudulent or forged; or (C)
any other circumstances whatsoever in making or failing to
make payment under any Letter of Credit or any other action
taken or omitted to be taken by any Person under or in
connection with any Letter of Credit, except that the Borrower
shall have a claim against the Issuing Bank and the Issuing
Bank shall be liable to the Borrower, in each case to the
extent and only to the extent of any damages suffered by the
Borrower that are caused by (1) the Issuing Bank's willful
misconduct or
-33-
gross negligence (as determined by a court of competent
jurisdiction) in determining whether documents presented under
any Letter of Credit issued by the Issuing Bank complied with
the terms of such Letter of Credit or (2) the Issuing Bank's
willful failure (as determined by a court of competent
jurisdiction) to pay under such Letter of Credit after the
presentation to it of documents strictly complying with the
terms and conditions of such Letter of Credit. In furtherance
and not in limitation of the foregoing, in determining whether
to pay under any Letter of Credit, the Issuing Bank shall not
have any obligation relative to the other Banks other than to
determine that any documents required to be delivered under
such Letter of Credit appear to have been delivered and that
they appear to comply on their face with the requirements of
such Letter of Credit, regardless of any notice or information
to the contrary. Any action taken or omitted to be taken by
the Issuing Bank under or in connection with any Letter of
Credit, if taken or omitted in the absence of gross negligence
or willful misconduct, shall not create for the Issuing Bank
any resulting liability to any Bank.
(ii) In addition to any other amounts payable under this
Agreement, the Borrower agrees to protect, indemnify, pay and
hold the Issuing Bank harmless from and against any and all
claims, costs, charges and expenses (including reasonable
attorneys' fees) which the Issuing Bank may incur or be
subject to as a consequence, direct or indirect, of the
issuance of, or payment of any Draw under, any Letter of
Credit, other than as a result of the gross negligence or
willful misconduct of the Issuing Bank as determined by a
court of competent jurisdiction.
(iii) The Issuing Bank shall not be responsible for:
(A) the validity, accuracy, genuineness or
legal effect of any document submitted
by any party in connection with the
issuance of Letters of Credit,
(B) the validity of any instrument
transferring or assigning or purporting
to transfer or assign a Letter of Credit
or the rights or benefits thereunder or
proceeds thereof in whole or in part,
(C) errors, omissions, interruptions or
delays in transmissions or delivery of
-34-
any messages, by mail, cable, telecopy,
telex or otherwise,
(D) the misapplication by the beneficiary of
any Letter of Credit of the proceeds of
any Draw under such Letter of Credit,
and
(E) any consequence arising from causes
beyond the control of the Issuing Bank,
including, without limitation, any
governmental acts.
SECTION 2.5 Fees.
(a) Commitment Fee. The Borrower agrees to pay to the Agent a
commitment fee (the "Commitment Fee") on the average daily
unused portion of the Revolving Loans Commitment at the rate
of one-half of one percent (1/2%) per annum, payable in
arrears on the last day of each fiscal quarter of the
Borrower, and payable on the Maturity Date. The Commitment Fee
payable with respect to the Revolving Loans will be calculated
for the period from the Effective Date through the first to
occur of the Revolving Loans Scheduled Maturity Date and the
Maturity Date, and shall be based upon the amount by which the
daily average of the aggregate principal amount of Revolving
Loans and Swing Loans outstanding and face amount of Letters
of Credit outstanding is less than $25,000,000 or such lesser
amount as may have been established by the Borrower pursuant
to Section 2.6.
(b) Letter of Credit Fees. Upon issuance, extension
or renewal of each Letter of Credit, the Borrower will
promptly pay the Issuing Bank, in advance,
(i) with respect to, standby Letters of Credit a fee equal to
the product of the Letter of Credit Rate, then in effect,
times the aggregate face amount of the Letter of Credit, and
(ii) with respect to documentary Letters of Credit a fee equal
to the product of .50% times the Letter of Credit Rate, then
in effect, times the aggregate face amount of the Letter of
Credit.
A portion of such fee equal to 0.25% of such face amount to be
for the account of the Issuing Bank and the remainder shall be
distributed to each Bank in accordance with its Pro Rata
Share. Such fee will not be refunded if the Letter of Credit
is terminated by
-35-
agreement prior to the date of expiration thereof, or if a
Draw occurs under the Letter of Credit. The Borrower will also
pay the Issuing Bank, for its own account, its usual and
customary issuance, modification, negotiation, transfer and
similar processing and administration fees and charges for
documentary letters of credit as are in effect from time to
time.
(c) Other Fees. The Borrower shall pay certain
Underwriting, Administrative and other fees as required
by the letter agreement ("Fee Letter") among the
Borrower, the Arranger and the Agent dated June 24,
1997.
SECTION 2.6 Reduction of the Revolving Loans Commitment.
The Borrower shall have the right at any time, upon at least
three (3) Business Days' notice to the Agent, to terminate in whole or reduce in
part the unused portion of the Revolving Loans Commitment, provided that each
partial reduction of the Revolving Loans Commitment shall be in the amount of
not less than $1,000,000 or an integral multiple thereof. Any such termination
or reduction of the Commitment shall be irrevocable and permanent. Promptly
after receiving such notice from the Borrower, the Agent will notify the Banks
of the substance thereof. The Revolving Loans Commitments of the Banks shall be
reduced pro rata pursuant to the notice or, as the case may be, terminated.
SECTION 2.7 Repayment.
(a) Voluntary Repayment. The Borrower may repay the principal
amount of the Loans at any time, at its election, (i) in the
case of a Prime Rate Loan, on any Business Day, without prior
notice, and (ii) in the case of LIBOR Rate Loans, upon not
less than three (3) Business Days prior notice to the Agent,
subject to Breakage Costs provided for in Section 2.12. Any
such voluntary repayment of the Loans shall be in the
principal amount of not less than (y) $500,000 for Prime Rate
Loans and in integral multiples of $100,000 thereafter and
(z)$1,000,000 for LIBOR Rate Loans and in integral multiples
of $250,000 thereafter. Any voluntary repayment of the Term
Loan shall be accompanied by payment of all accrued but unpaid
interest applicable to the principal amount of the Term Loan
so repaid.
(b) Installment Payments of Term Loan. The Borrower
will repay the Term Loan in quarterly installment
payments of principal, commencing on March 31, 1998 and
on the last day of each quarter thereafter, in
-36-
accordance with the following:
Quarterly
Repayment Principal
Date Payment Amount
March 31, 1998 $675,000
June 30, 1998 $675,000
September 30, 1998 $875,000
December 31, 1998 $875,000
March 31, 1999 $875,000
June 30, 1999 $875,000
September 30, 1999 $1,070,000
December 31, 1999 $1,070,000
March 31, 2000 $1,070,000
June 30, 2000 $1,070,000
September 30, 2000 $1,070,000
December 31, 2000 $1,200,000
March 31, 2001 $1,200,000
June 30, 2001 $1,200,000
September 30, 2001 $1,200,000
December 31, 2001 $1,250,000
March 31, 2002 $1,250,000
June 30, 2002 $1,250,000
September 30, 2002 $1,250,000
(c) Mandatory Repayment.
(i) The Borrower will repay the Loans in full on demand upon
the acceleration of the due date of any of the Loans by the
Agent pursuant to Article VI hereof.
(ii) Within not more than five (5) Business Days after notice
by the Agent to the Borrower that the principal amount of
Revolving Loans and face amount of Letters of Credit
outstanding exceed the Borrowing Base, the Borrower will repay
the applicable Loan in an amount sufficient to eliminate the
excess.
(iii) The Borrower shall pay to the Agent Net Proceeds within
not more than five (5) Business Days after the Borrower shall
receive Net Proceeds from(x) Dispositions, (y) any equity
securities issuance or sale, provided that payment of amounts
due under the Xxxxxxxx Earn Out Agreement(which payment shall
not exceed $6,000,000)may be made if Net Proceeds of such
issuance or sale exceed $20,000,000, or (z) insurance
recoveries and condemnation and eminent domain awards.
Collateral shall be released from the liens of the
Collateral Documents upon any Disposition of such Collateral,
-37-
provided that (i) no Event of Default has occurred and (ii) the Borrower shall
have made the mandatory repayment required under the terms of this Section 2.7.
(iv) On or before the fifth Business Day following the
Borrower's delivery of the Compliance Certificate for the
fiscal year ending December 31, 1998 and annually thereafter
the Borrower will pay to the Agent 50% of the Excess Cash
Flow.
(d) Repayment of Swing Loans. Swing Loans shall be paid in
full by the Borrower on or before the seventh Business Day
after the date of the Swing Loan Advance. Swing Loan
repayments shall be made by the Borrower directly to the Swing
Loan Lender. Such repayments shall be for the account of the
Swing Loan Lender. Outstanding Swing Loans may be repaid from
the proceeds of Revolving Loans Advances. Any repayment of a
Swing Loan shall be in a minimum amount of $50,000 or integral
multiples of $10,000 in excess thereof(or such lesser amount
as may be agreed to by the Swing Loan Lender).
(e) Application of Repayments. All voluntary Loan repayments
received by the Agent from the Borrower will be applied to the
Revolving Loans and Term Loans as the Borrower shall instruct
the Agent in writing concurrently with the payment, and in the
absence of such written instructions, will be applied first to
repayment of the Revolving Loans. All mandatory Loan
repayments will be applied to reduce the Term Loans until the
Term Loans are paid in full, then to the repayment of the
Revolving Loans. All repayments of the Term Loans will be
applied to the installment payments due with respect to the
Term Loans in inverse order of maturity.
SECTION 2.8 Distribution of Payments by the Agent.
-------------------------------------
The Agent shall promptly distribute to each Bank its Pro Rata Share of
each payment received by the Agent under the Loan Instruments for the account of
the Banks by credit to an account of such Bank at the Agent's Office or by wire
transfer to an account of such Bank.
Unless the Agent shall have received notice from the Borrower prior to
the date on which any payment is due to the Banks under the Loan Instruments
that the Borrower will not make such payment in full, the Agent may assume that
the Borrower has made such payment in full to the Agent on such date and the
Agent in its sole discretion may, in reliance upon such assumption, cause to be
distributed to each Bank on such due date a
-38-
corresponding amount with respect to the amount then due such Bank. If and to
the extent the Borrower shall not have so made such payment in full to the Agent
and the Agent shall have so distributed to any Bank a corresponding amount, such
Bank shall, on demand, repay to the Agent the amount so distributed together
with interest thereon, for each day from the date such amount is distributed to
such Bank until the date such Bank repays such amount to the Agent at the Prime
Rate.
SECTION 2.9 Promissory Notes.
(a) The Revolving Notes. The Revolving Loans shall be
evidenced by promissory notes of the Borrower in substantially
the form of Exhibit A-1 hereto (each a "Revolving Note"),
dated as of the Effective Date and completed with appropriate
insertions. One Revolving Note shall be payable to the order
of each Bank in a principal amount equal to such Bank's
Revolving Loans Commitment or, if different, the outstanding
amount of all Revolving Loans made (or held) by such Bank,
plus interest accrued thereon, as set forth below. The
Borrower irrevocably authorizes each Bank to make or cause to
be made, at or about the time of an Advance of any Revolving
Loan or at the time of receipt of any payment of principal on
such Bank's Revolving Note, an appropriate notation on such
Revolving Note Record reflecting the making of such Revolving
Loan or (as the case may be) the receipt of such payment. The
outstanding amount of the Revolving Loans set forth on such
Bank's Revolving Note Record shall be prima facie evidence of
the principal amount thereof owing and unpaid to such Bank,
but the failure to record, or any error in so recording, any
such amount shall not affect the obligation of the Borrower
hereunder or under any Revolving Note to make payments of
principal of or interest on any Revolving Note when due.
(b) Term Notes. The Term Loans shall be evidenced by
promissory notes of the Borrower in substantially the form of
Exhibit A-2 hereto (each a "Term Note"), dated the Effective
Date and completed with appropriate insertions. One Term Note
shall be payable to the order of each Bank in a principal
amount equal to such Bank's Term Loan Commitment and
representing the obligation of the Borrower to pay to such
Bank such principal amount or, if less, the outstanding amount
of such Bank's Term Loan Commitment, plus interest accrued
thereon, as set forth below. The Borrower irrevocably
authorizes each Bank to make or cause to be made a notation on
such Bank's Term Note Record reflecting the original principal
amount of such Bank's Term Loan Commitment and, at or about
the time of such Banks'
-39-
receipt of any principal payment on such Bank's Term Note, an
appropriate notation on such Bank's Term Note Record
reflecting such payment. The aggregate unpaid amount set forth
on such Bank's Term Note Record shall be prima facie evidence
of the principal amount thereof owing and unpaid to such Bank,
but the failure to record, or any error in so recording, any
such amount on such Bank's Term Note Record shall not affect
the obligation of the Borrower hereunder or under any Term
Note to make payments of principal of and interest on any Term
Note when due.
(c) Swing Loan Note. The Swing Loans shall be evidenced by
promissory notes of the Borrower in substantially the form of
Exhibit A-3 hereto (each a "Swing Loan Note"), dated the
Effective Date and completed with appropriate insertions.
SECTION 2.10 Pro Rata Treatment. Except to the extent otherwise
provided herein, (a) Loans shall be made by the Banks pro rata in accordance
with their respective Commitments, (b) Loans of the Banks shall be converted and
continued pro rata in accordance with their respective amounts of Loans of the
Type and, in the case of LIBOR Rate Loans, having the Interest Period being so
converted or continued, (c) each reduction in the Revolving Loans Commitment and
the Term Loan Commitment shall be made pro rata in accordance with the
respective amounts thereof and (d) each payment of the principal of or interest
on the Loans, reimbursement of a Draw under Letters of Credit or of Commitment
or Letter of Credit Fees shall be made for the account of the Banks pro rata in
accordance with their respective amounts thereof then due and payable.
SECTION 2.11 Interest. The Borrower shall pay interest on the unpaid
principal amount of each Loan from the date of the Advance thereof or the date
of the Draw comprising such Loan until such principal amount has been repaid in
full, at the following rates per annum:
(a) Prime Rate Loans. During such periods as such Loan is a
Prime Rate Loan, at a rate per annum equal at all times to the
Prime Rate plus Applicable Margin or the Default Rate,
whichever is applicable. Prime Rate Interest plus the
Applicable Margin shall be payable monthly in arrears, on the
first day of each month. Interest accruing at the Default Rate
shall be payable on demand.
(b) LIBOR Rate Loans. During such periods as such Loan is a
LIBOR Rate Loan, at a rate per annum during the Interest
Period for such Loan equal to the LIBOR Rate plus the
Applicable Margin or the Default Rate,
-40-
whichever is applicable. LIBOR Rate interest plus the
Applicable Margin will be payable on termination of the
Interest Period applicable to the Loan, and, if such Interest
Period is longer than 3 months, then every 3 months. Interest
accruing at the Default Rate shall be payable on demand.
(c) Default Rate Interest. Subject to the provisions
of Section 6.2, all outstanding Loans will bear
interest at the Default Rate during all periods when an
Event of Default has occurred and remains outstanding
hereunder.
SECTION 2.12 Yield Protection. In order to protect the yield of the
Banks in connection with the Advances to be made hereunder, the Borrower agrees
as follows.
(a) Increased Costs. If, due to either (i) the introduction of
or any change in or in the interpretation of any law or
regulation, or (ii) the compliance with any guideline or
request from any central bank or other governmental authority
(whether or not having the force of law), there shall be any
increase in the cost to the Banks of agreeing to make or
making, funding or maintaining LIBOR Rate Loans, then the
Borrower shall from time to time, upon demand by a Bank, pay
to such Bank additional amounts sufficient to compensate the
Bank for such increased cost. A certificate as to the amount
of such increased cost, shall be submitted to the Borrower by
Agent. Such certificate shall show in reasonable detail the
Bank's computations of its increased costs. Notwithstanding
the foregoing, there shall be no duplication of costs to the
Borrower as the result of the application of Section 2.12(b).
Such certificate of increased costs shall be conclusive and
binding for all purposes, absent manifest error.
(b) Additional Interest. The Borrower shall pay to the Banks,
so long as the Banks shall be required under regulations of
the Board of Governors of the Federal Reserve System to
maintain reserves with respect to liabilities or assets
consisting of or including Eurocurrency liabilities (as such
term is defined in Regulation D of the Board of Governors of
the Federal Reserve System, as in effect from time to time),
additional interest on the unpaid principal amount of each
LIBOR Rate Loan, from the date of the Advance thereof until
the principal amount thereof is paid in full, at an interest
rate per annum equal at all times to the remainder obtained by
subtracting (i) the LIBOR Rate for the Interest Period for
such Loan from
-41-
(ii) the rate obtained by dividing such LIBOR Rate by a
percentage equal to 100% minus the reserve percentage
applicable during such Interest Period (or if more than one
such percentage shall be so applicable, the daily average of
such percentages for those days in such Interest Period during
which any such percentage shall be so applicable) under
regulations issued from time to time by the Board of Governors
of the Federal Reserve System (or any successor) for
determining the maximum reserve requirement (including,
without limitation, any emergency, supplemental or other
marginal reserve requirement) for the Banks with respect to
liabilities or assets consisting of or including Eurocurrency
liabilities having a term equal to such Interest Period,
payable on each date on which interest is payable on such
Loan. Such additional interest shall be determined by the
Agent and notified to the Borrower.
(c) Increased Capital. If a Bank determines that compliance
with any law or regulation or any guideline or request from
any central bank or other governmental authority (whether or
not having the force of law) affects or would affect the
amount of capital required or expected to be maintained by the
Bank or any corporation controlling the Bank and that the
amount of such capital is increased by or based upon the
existence of the Bank's commitment to lend hereunder and other
commitments of this type, then, upon demand by the Bank, the
Borrower shall immediately pay to the Bank, from time to time
as specified by the Bank, additional amounts sufficient to
compensate the Bank or such corporation in the light of such
circumstances, to the extent that the Bank reasonably
determines such increase in capital to be allocable to the
existence of the Bank's commitment to lend hereunder. A
certificate as to such amounts submitted to the Borrower by
the Agent or a Bank, shall be conclusive and binding for all
purposes, absent manifest error. Such certificate shall show
in reasonable detail the Agent's or the Bank's computations.
(d) Breakage Costs. If any payment of principal of any LIBOR
Rate Loan is made other than on the last day of the Interest
Period for such Loan as a result of acceleration of the
maturity of the Loans and the Notes pursuant to Section 6.2 or
for any other reason, the Borrower shall, upon demand, pay to
the Bank any amounts required to compensate the Bank for
additional losses, costs or expenses which it may reasonably
incur as a result of such payment, including, without
limitation, any loss (including loss of anticipated
-42-
profits), cost or expense incurred by reason of the
liquidation or reemployment of deposits or other funds
acquired by the Bank to fund or maintain such Advance.
SECTION 2.13 Conversion of Loans; Change of Interest Periods. At any
time, with respect to Prime Rate Loans, and at any time not less than three (3)
Business Days prior to the end of the then current Interest Period for any LIBOR
Rate Loan, the Borrower may elect, by delivery to the Bank of an Interest
Period/Conversion Notice in the form of Exhibit B-3 duly executed by an
Authorized Signatory, to Convert the Type of Advance or, with respect to LIBOR
Rate Loans, to select an Interest Period for such Advance as permitted herein.
If the Borrower fails to select the duration of any Interest Period for any
LIBOR Rate Loan in the foregoing manner, such Advance will automatically, on the
last day of the then existing Interest Period therefor, Convert into a Prime
Rate Loan.
SECTION 2.14 Illegality, Etc.
(a) Notwithstanding any other provision of this Agreement, if
the Agent or a Bank shall notify the Borrower that the
introduction of or any change in or in the interpretation of
any law or regulation makes it unlawful, or any central bank
or other governmental authority asserts that it is unlawful,
for a Bank to perform its obligations hereunder to make LIBOR
Rate Loans or to fund LIBOR Rate Loans hereunder, (i) the
obligation of the Bank to make, or to Convert Loans into LIBOR
Rate Loans shall be suspended until the Bank shall notify the
Borrower that the circumstances causing such suspension no
longer exist and (ii) the Borrower shall prepay in full all
LIBOR Rate Loans of the Bank then outstanding, together with
interest accrued thereon, either on the last day of the
Interest Period thereof if the Banks may lawfully continue to
maintain LIBOR Rate Loans to such day, or immediately, if the
Banks may not lawfully continue to maintain LIBOR Rate Loan,
unless the Borrower, within five (5) Business Days of notice
from the Bank, Converts all LIBOR Rate Loans of the Bank then
outstanding into Prime Rate Loans in accordance with Section
2.13.
(b) If, with respect to any LIBOR Rate Loan, a Bank notifies
the Borrower that the LIBOR Rate for any Interest Period for
such Advance will not adequately reflect the cost to the Bank,
in the Bank's reasonable judgement, of making, funding or
maintaining such LIBOR Rate Loan for such Interest Period,
such LIBOR Rate Loan will automatically, on the last day of
the then existing Interest Period therefor, Convert into a
Prime Rate Loan, and the obligation of the Bank to make, or
-43-
to Convert Advances into, LIBOR Rate Loans shall be suspended
until the Bank shall notify the Borrower that the
circumstances causing such suspension no longer exist. Upon
receipt of such notice, the Borrower may revoke any Request
for Advance or Interest Period/Conversion Notice then
submitted by it. If the Borrower does not revoke such request
or notice, the Bank shall make, convert or continue the Loan,
as proposed by the Borrower, in the amount specified in the
applicable request or notice submitted by the Borrower, but
such Loan shall be made, converted or continued as a Prime
Rate Loan instead of a LIBOR Rate Loan.
SECTION 2.15 Payments and Computations.
(a) The Borrower shall make each payment under any Loan
Instrument not later than 12:00 noon (Denver, Colorado time)
on the day when due in Dollars to the Agent at its address
referred to in Section 8.2 in same day funds.
(b) The Borrower hereby authorizes the Agent, if and to the
extent payment is not made when due, subject to the expiration
of applicable grace periods, under any Loan Instrument, to
charge from time to time against the Borrower's Account or any
or all other accounts of the Borrower with the Agent any
amount so due.
(c) All computations of interest and of Fees shall be made by
the Agent on the basis of a year of 360 days, in each case for
the actual number of days (including the first day but
excluding the last day) occurring in the period for which such
interest or Commitment Fees are payable. Each determination by
the Agent of an interest rate hereunder shall be conclusive
and binding for all purposes, absent manifest error, on the
Borrower and the Banks.
(d) Whenever any payment under any Loan Instrument shall be
stated to be due on a day other than a Business Day, such
payment shall be made on the next succeeding Business Day, and
such extension of time shall in such case be included in the
computation of payment of interest or the Commitment Fee, as
the case may be; provided, however, if such extension would
cause payment of interest on or principal of LIBOR Rate Loans
to be made in the next following calendar month, such payment
shall be made on the next preceding Business Day.
-44-
SECTION 2.16 Effect of Letters of Credit on Revolving Loans Commitment
Utilization. For purposes of determining whether any additional Advances may be
made to the Borrower under the Revolving Loans Commitment, or whether any
additional Letters of Credit may be issued for the account of the Borrower, and
for purposes of establishing the unused portion of the Revolving Loans
Commitment in order to calculate the Commitment Fee, the face amount of each
Letter of Credit shall be added to the outstanding principal amount of all
outstanding Revolving Loans to determine whether any portion of the Maximum
Revolving Credit Amount then in effect remains unutilized.
SECTION 2.17 Cash Collateralization of Letters of Credit. If the due
date for payment of the Loans is accelerated by the Banks pursuant to Section
6.2, the Borrower will immediately deliver to the Issuing Bank in immediately
available funds an amount equal to the undrawn amount of all Letters of Credit
outstanding. Such funds shall be maintained in a blocked interest bearing
account at the Issuing Bank. By such delivery, the Borrower will pledge such
funds to the Issuing Bank and grant to the Issuing Bank a security interest in
such funds, and in all interest which may be earned thereon while held by the
Issuing Bank, to secure payment of all Draws under any such Letters of Credit.
Upon expiration of each Letter of Credit, the Issuing Bank will refund to the
Borrower a portion of such funds in an amount equal to the undrawn amount of the
expiring Letter of Credit. Upon expiration of the last outstanding Letter of
Credit, the Issuing Bank will refund to the Borrower all remaining funds so
delivered to the Issuing Bank, and all interest earned thereon while such funds
were held by the Issuing Bank, less all Draws.
SECTION 2.18 Borrowing Base. Not later than the initial Advance or
initial issuance of a Letter of Credit, and thereafter not later than 25 days
after the conclusion of each month, the Borrower will deliver to the Agent a
Borrowing Base Certificate, in the form of Exhibit B-4, duly executed by an
Authorized Signatory, which Borrowing Base Certificate will set forth the
information contained therein as of the end of the preceding month. The Banks
will have the right to request and the Borrower will promptly provide reasonable
additional information concerning the information set forth in the Borrowing
Base Certificate. Within five (5) days after receipt of the Borrowing Base
Certificate, the amount set forth therein as the Borrowing Base shall become the
Borrowing Base under this Agreement unless prior to the end of such period the
Banks shall have given notice to the Borrower that a different amount is
effective as the Borrowing Base. The Borrowing Base so established shall remain
effective until the Bank elects to redetermine the Borrowing Base, subject to
the terms of this Agreement, whether based upon the next monthly Borrowing Base
Certificate submitted by the Borrower to the Bank, or at any other time, in the
Bank's sole
-45-
discretion. For purposes of determining the applicable Borrowing Base, (i)
Eligible Accounts Receivable shall be valued at eighty percent (80%) of the
amount thereof and (ii) Eligible Inventory shall be valued at sixty percent
(60%) of the amount thereof. The value of Eligible Inventory shall be determined
on a first in, first out basis, and shall be the cost thereof except for
finished goods, which will be valued at the lesser of cost or wholesale sale
price thereof. During the construction of the Borrower's plant in Oregon, the
Borrowing Base Certificate shall reflect a reserve, equal to the remaining
projected construction cost of the plant, that shall be a deduction from the
Borrowing Base. The amount of the reserve shall be satisfactory to the Agent.
Upon provision of evidence satisfactory to the Agent by the Borrower of the
payment of expenses budgeted for the construction of the plant, the reserve for
the construction of the plant will be reduced on the Borrowing Base Certificate.
ARTICLE III
CONDITIONS OF LENDING
SECTION 3.1 Conditions Precedent to Initial Advance or Issuance of
Initial Letter of Credit. The obligation of the Banks to make its initial
Advance of the Loans or issue the initial Letter of Credit is subject to the
satisfaction (or waiver by the Banks in their sole discretion) of the following
conditions precedent:
(a) that the Agent shall have received on or before the day of
such Advance or issuance of such Letter of Credit the
following, each dated as of the Effective Date, in form and
substance satisfactory to the Agent:
(i) The Notes, duly executed by Authorized
Signatories on behalf of the Borrower.
(ii) The Guaranties, duly executed by the
Guarantors.
(iii) A Deed of Trust from and duly executed by Authorized
Signatories on behalf of the Borrower pertaining to all of
Borrower's owned Real Property.
(iv) A Security Agreement from and duly executed by Authorized
Signatories on behalf of the Borrower, pertaining to the
Borrower's Equipment, Accounts Receivable, Inventory and all
other personal property of the Borrower.
-46-
(v) A Collateral Assignment of Leases in the form of Exhibit
F-2 duly executed by Authorized Signatories on behalf of the
Borrower pertaining to the portion of Borrower's owned Real
Property consisting of leasehold interests.
(vi) The Pledge Agreement, duly executed by the Borrower,
pertaining to Borrower's shares of stock in Guarantors
together with the original stock certificates subject thereto
and stock powers therefor, and pertaining to Borrower's
Equipment and the Borrower's Accounts Receivable and Inventory
and all the other personal property of the Borrower except the
personal property subject to other Collateral Documents.
(vii) A Deed of Trust from and duly executed by each Guarantor
pertaining to the Real Property owned by such Guarantor.
(viii) A Security Agreement from and duly executed by each
Guarantor pertaining to such Guarantor's portion of
Guarantors' Equipment, such Guarantor's Accounts Receivable,
such Guarantor's Inventory and all other personal property of
each such Guarantor except the personal property subject to
other Collateral Documents.
(ix) Uniform Commercial Code Financing Statements pertaining
to the Security Agreements, the Pledge Agreement and the
Collateral Assignments of Leases, duly executed by the
Borrower and the Guarantors, respectively, as the Agent may
request.
(x) Title insurance commitments in ALTA form pertaining to
Borrower's owned Real Property, in form and content and issued
by a title insurance company or companies reasonably
acceptable to the Agent, in an amount equal to the fair market
value of such Real Property insuring the Agent's first and
prior Lien on all such parcels established pursuant to the
Deeds of Trust and Collateral Assignments of Leases, together
with a revolving credit endorsement and such other
endorsements and affirmative coverages as the Agent may
request, subject only to Permitted Liens and other Liens and
exceptions approved by the Banks in their sole discretion, in
all cases constituting the unconditional commitment of such
title insurance company or companies to issue title insurance
policies in favor of the Agent on the terms of such title
insurance commitments promptly after the recording by
-47-
such title insurance company or companies of the Deeds of
Trust and Collateral Assignments of Leases.
(xi) Lien searches of the appropriate public offices
demonstrating that no Lien is of record with respect to the
Borrower or any Guarantor except (i) Liens which will be
terminated or released upon the consummation of the Circuit
Test Acquisition or upon repayment of the Borrower's
obligations under the Existing Loan Agreement and (ii)
Permitted Liens.
(xii) Certificates of insurance, in form and substance
satisfactory to the Agent from an independent insurance broker
dated as of the Effective Date, identifying insurers, types of
insurance, insurance limits, policy terms, and identifying the
Agent (on behalf of the Banks) as additional insured and loss
payee.
(xiii) The Borrower's Omnibus Certificate, duly
executed by Authorized Signatories on behalf of the
Borrower.
(xiv) A Guarantor's Omnibus Certificate, on behalf of each of
the Guarantors, duly executed by Authorized Signatories on
behalf of each of such Persons.
(xv) The favorable opinion of Holme Xxxxxxx & Xxxx LLP, legal
counsel to the Borrower and the Guarantors, substantially in
the form of Exhibit H-1 and H-2 hereto and local counsel
opinions, substantially in form of Exhibit H-3 and otherwise
satisfactory to the Banks and the Agent, with respect to
matters involving the laws of Oregon, Kentucky and Florida .
(xvi) Certificates from the Colorado, Oregon, Kentucky and
Florida Secretaries of State of recent date pertaining to the
Borrower and to the Guarantors incorporated in such states,
(a) confirming that each of such Persons is duly incorporated
and in good standing in the state of its incorporation, and in
such other states as the Agent may request.
(xvii) A Borrowing Base Certificate August 31,1997 and
Compliance Certificate, effective as of June 30, 1997, with
respect to Eligible Accounts Receivable and Eligible
Inventory, duly executed by the Borrower. These certificates
shall include applicable information from Circuit Test,
Circuit Test International and Airhub Services effective as of
August 30, 1997 and certified as true and correct by the
Borrower.
-48-
(xviii) Phase I Environmental Assessments of all of Borrower's
owned Real Property and Guarantors' owned Real Property and
the AlliedSignal leased premises(excluding such parcels as the
Agent may approve in its sole discretion), in form and content
and prepared by consultants, reasonably acceptable to the
Agent, indicating the absence of conditions which would
warrant a Phase II Environmental Assessment of such Real
Property, provided, however that this condition will be waived
with respect to the AlliedSignal leased premises when the
Agent receives evidence satisfactory to it that the Banks will
be indemnified under the AlliedSignal Acquisition Agreements
against Environmental Claims relating to such leased premises.
(xix) A Landlord's Waiver and Consent for each of the
Borrower's or Guarantor's leased business premises
located in Ft. Lauderdale, Florida and Oregon (101. 115
and 000 Xxxxx Xxxxxx Xxxx leases only) executed by the
landlord for such premises.
(xx) Such other documents as the Agent and the Banks may
reasonably request to effect the purposes of this Agreement
and the other Loan Instruments.
(b) The Deeds of Trust identified in (a)(iii) and (a)(vii)
shall have been duly recorded and the Uniform Commercial Code
Financing Statements identified in (a)(ix) above shall have
been duly filed except that such Deeds of Trust and Uniform
Commercial Code Financing Statements pertaining to the Persons
to be acquired pursuant to the Circuit Test Acquisition shall
be delivered to the Agent in recordable form and duly
executed.
(c) The Agent shall have received evidence satisfactory to it
that all amounts due from the Borrower to the lender under the
Existing Loan Agreement have been paid in full out of the
proceeds of the Loans on the Effective Date, or provision for
payment thereof in a manner acceptable to the Agent in its
sole discretion, shall have been made by the Borrower and
approved by the Agent, and the Agent shall have received
executed termination statements, in form satisfactory for
filing, evidencing the termination of the security interests
in the Borrower's properties which secured the Existing Loan
Agreement.
(d) The Agent and Banks shall have received evidence
satisfactory to them, in their sole discretion, that the
transactions contemplated by the Circuit Test
-49-
Acquisition Agreement shall be ready for closing in accordance
with the terms of such agreement and that all parties thereto
have agreed to complete the closing thereof promptly after the
Initial Advance is made or the initial Letter of Credit is
issued,
(e) All conditions precedent to the advance of any portion of
the loan contemplated by the Xxxxxxx Subordinated Notes shall
have been satisfied, or this condition shall have been waived
by the Required Banks.
(f) The Borrower shall have paid to the Agent the Fees, the
applicable Letter of Credit Fees, and all fees and expenses
set forth in Section 8.4, including, without limitation, all
accrued and unpaid legal fees and disbursements and the
reasonable estimate of the Agent of the attorneys fees and
disbursements incurred by it through the closing (provided
that such estimate shall not thereafter preclude final
settling of accounts between the Agent and the Borrower with
respect to attorneys fees and disbursements incurred by the
Agent hereunder).
SECTION 3.2 Conditions Precedent to All Advances and Issuance of All
Letters of Credit. The obligation of the Banks to make each Advance (including
the initial Advance) and to issue each Letter of Credit shall be subject to the
satisfaction (or written waiver by the Required Banks in their sole discretion)
of the following further conditions precedent that on the date of such Advance:
(a) the following statements shall be true:
(i) Except as provided in Section 3.2(a)(ii), the
representations and warranties contained in Section 4.1 of
this Agreement and in the Guaranties, are correct on and as of
the date of such Advance, before and after giving effect to
such Advance and to the application of the proceeds therefrom,
or before and after issuance of such Letter of Credit, as the
case may be, as though made on and as of such date,
(ii) The information contained in the Schedules to this
Agreement is correct, except that the Borrower may amend such
Schedules at the time of a Request for Advance if such
amendment to the Schedule does not disclose an Event of
Default or a Material Adverse Effect,
(iii) No event has occurred and is continuing, or would result
from such Advance or from the application of the proceeds
therefrom, or would result from the
-50-
issuance of such Letter of Credit, which constitutes a
Default or an Event of Default hereunder, and
(iv) No change shall have occurred in the financial condition
or business of the Borrower or any Guarantor which would
constitute a Material Adverse Effect (other than any such
changes resulting from the closing of the Circuit Test
Agreement and Allied Signal Agreements); and
(b) the Agent shall have received a Request for Advance or a
Request for Letter of Credit, as applicable, with respect to
the Advance or Letter of Credit and such other approvals,
opinions or documents as the Agent may reasonably request.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.1 Representations and Warranties of the
Borrower. The Borrower represents and warrants as follows:
(a) Corporate Existence. The Borrower is a corporation duly
incorporated, validly existing and in good standing under the
laws of the State of Colorado. Each of Current, Circuit Test
and CT LLC Acquisition is a corporation duly incorporated,
validly existing and in good standing under the laws of the
State of its incorporation. Airhub Services and CT
International are limited liability companies duly
incorporated, validly existing and in good standing under the
laws of Kentucky and Florida, respectively. The capital
structure and shareholders of the Borrower and the Guarantors
are set forth in Schedule 4.1(a).
(b) Powers, Etc. The Borrower and each of the Guarantors (a)
has the power and authority to carry on its business as now
conducted and to own or hold under lease the assets and
properties it purports to own or hold under lease; (b) is duly
qualified, licensed or registered to transact its business and
is in good standing in every jurisdiction in which failure to
be so qualified, licensed or registered could have a Material
Adverse Effect; (c) has the power and authority to execute and
deliver this Agreement and each of the other Loan Instruments
to which it is or will be a party and to perform all of its
obligations hereunder and thereunder; and (d) conducts its
business
-51-
under the names (and only the names) set forth in Schedule
4.1(b) hereto; and (e) is qualified to do business in each of
the states listed on Schedule 4.1(b).
(c) Authorization; No Conflict. The execution, delivery and
performance by the Borrower of each Loan Instrument to which
it is or will be a party are within the Borrower's powers,
have been duly authorized by all necessary corporate action,
and do not contravene (i) the Borrower's Articles of
Incorporation or Bylaws, (ii) any law or judgement, order,
writ, injunction, decree or consent of any court binding on or
affecting the Borrower, (iii) any contract to which the
Borrower is a party, or by which the Borrower or its
properties are bound; and (iv) do not result in or require the
creation of any lien, security interest or other charge or
encumbrance (other than pursuant hereto) upon or with respect
to any of its properties. The execution, delivery and
performance by each of the Guarantors of each Loan Instrument
to which such Person is or will be a party are within the such
Person's respective corporate powers, have been duly
authorized by all necessary corporate or limited liability
company, as applicable, action by such Person, and do not
contravene (i) such Person's articles of incorporation or
by-laws, or (ii) any law or any contractual restriction
binding on or affecting such Person, and do not result in or
require the creation of any lien, security interest or other
charge or encumbrance (other than pursuant hereto) upon or
with respect to any of such Person's properties.
(d) Approvals. No authorization or approval or other action
by, and no notice to or filing with, any governmental
authority or regulatory body is required for the due
execution, delivery and performance by the Borrower or the
Guarantors of any Loan Instrument to which any such Person is
or will be a party except as indicated in Schedule 4.1(d), all
of which have been duly obtained and are in full force and
effect.
(e) Enforceability. This Agreement is, and each other Loan
Instrument to which the Borrower will be a party when
delivered hereunder will be, the legal, valid and binding
obligation of the Borrower enforceable against the Borrower in
accordance with its terms. Each Loan Instrument to which each
Guarantor will be a party when delivered hereunder will be the
legal, valid and binding obligation of each such Person,
enforceable against such Persons, respectively, in accordance
with its terms.
-52-
(f) Financial Statements. The unaudited pro forma consolidated
balance sheets of the Borrower and the Guarantors as at
December 31, 1996, and the related consolidated statements of
income and retained earnings of the Borrower and the
Guarantors for the fiscal year then ended, as disclosed in the
proxy statement mailed to the Borrower's shareholders in
connection with the Circuit Test Acquisition, and the
unaudited balance sheets of the Borrower and the Guarantors as
at June 30, 1997, and the related consolidated statements of
income and retained earnings of the Borrower and Guarantors
for the fiscal quarter then ended, copies of which have been
furnished to the Banks, fairly present the financial condition
of the Borrower and the Guarantors as at such date and the
results of the operations of the Borrower and the Guarantors
for the period ended on such date, all in accordance with
Regulation S-X promulgated under the Securities Exchange Act
of 1934, and since December 31, 1996, there has been no
material adverse change in such condition or operations except
as disclosed in Schedule 4.1(f) hereto.
(g) Litigation. Except as set forth in Schedule 4.1(g) hereto,
there is no pending, or to the Borrower's knowledge,
threatened action or proceeding affecting the Borrower or any
of its properties or business activities or any of the
Guarantors or their respective properties or business
activities, before any court, governmental agency or
arbitrator, in which there is a reasonable possibility of a
Material Adverse Effect or which purports to affect the
legality, validity or enforceability of this Agreement or any
Loan Instrument to which the Borrower or any Guarantor will be
a party.
(h) Federal Reserve Regulations. None of the Advances to be
provided to the Borrower hereunder will be used in violation
of Regulations G, T, U or X. The Borrower is not engaged in
the business of extending credit for the purpose, whether
immediate, incidental or ultimate, of buying or carrying
Margin Stock (within the meaning of Regulations G, T, U and
X). No part of the proceeds of any extension of credit
hereunder, whether directly or indirectly, and whether
immediately, incidentally or ultimately, will be used (i) to
purchase or carry Margin Stock or to extend credit to others
for the purpose of purchasing or carrying Margin Stock or to
refund indebtedness originally incurred for such purpose, or
(ii) for any purpose which entails a violation of, or which is
inconsistent with, the
-53-
provisions of the Regulations of the Board of governors of the
Federal Reserve system, including Regulations G, T, U or X.
(i) Investment Company Act. The Borrower is not an
"investment company' or a company "controlled" by an
"investment company" within the meaning of the
Investment Company Act of 1940, as amended.
(j) ERISA.
(i) The Borrower and Guarantors neither maintain nor
contribute to any Employee Benefit Plan or Multiemployer Plan
other than those specified in Schedule 4.1(j).
(ii) The Borrower and the Guarantors are in compliance in all
material respects with all applicable provisions of ERISA and
the Code with respect to all Employee Benefit Plans. Each
Employee Benefit Plan that is intended to be qualified under
Section 401(a) of the Code has been determined by the Internal
Revenue Service to be so qualified, and each trust related to
such Plan has been determined to be exempt from federal income
tax under Section 501(a) of the Code. The actuarial present
value of all accumulated benefit obligations under each Plan,
as disclosed in the most recent actuarial report with respect
to such Plan, do not exceed the fair market value of the
assets of such Plan. No material liability has been insured by
the Borrower, any Guarantor or any of their ERISA Affiliates
which remains unsatisfied for any taxes, penalties or other
amount (other than contributions in the ordinary course) with
respect to any Employee Benefit Plan or any Multiemployer
Plan, and to the best knowledge of the Borrower no such
material liability is expected to be incurred.
(iii) The Borrower and the Guarantors have not (a) engaged in
a nonexempt prohibited transaction described in Section 406 of
ERISA or Section 4975 of the Code; (b) incurred any liability
to the Pension Benefit Guaranty Corporation which remains
outstanding other than the payment of premiums and there are
no premium payments which are due and unpaid; (c) failed to
make a required contribution or payment to a Multiemployer
Plan; or (d) failed to make a required installment or other
required payment under Section 412 of the Code.
(iv) No ERISA Event has occurred or is reasonably
expected to occur with respect to any Plan or
-54-
Multiemployer Plan maintained or contributed to by the
Borrower or any Guarantor.
(v) No material proceeding, claim (other than routine claims
for benefits) lawsuit and/or investiga tion is existing or, to
the Borrower's knowledge, threatened concerning or involving
any Employee Benefit Plan or Multiemployer Plan maintained or
contributed to by the Borrower or any Guarantor.
(k) Compliance with Laws. The Borrower and the Guarantors are
in compliance with all applicable laws, ordinances, treaties,
rules, regulations and orders of, and all applicable
restrictions imposed by, all Governmental Authorities in
respect of the conduct of their respective businesses and the
ownership of their respective properties, except such
noncompliance as would not, individually or in the aggregate,
have a Material Adverse Effect on the Borrower or a
Guarantor's Adverse Effect on any Guarantor.
(l) Payment of Debts and Taxes.
(i) The Borrower and each Guarantor: (a) has filed all
required federal and material state and local tax returns with
appropriate taxing authorities respecting its operations,
assets and properties; and (b) has paid or caused to be paid
all taxes shown on those returns to the extent due, and has
paid all tax or other assessments imposed by Governmental
Authorities, except in either case taxes which are being
contested in good faith and for which adequate bonds or other
sureties as required by law have been posted by the Borrower
or Guarantor.
(ii) The Borrower and each Guarantor is current in its payment
of Debts (other than Debt in an aggregate amount not to exceed
$1,000,000.00) and performance of material obligations under
Material Agreements (other than taxes) except those being
contested in good faith.
(m) Indebtedness, Guaranties.
(i) Schedule 4.1(m), Part I contains a complete and accurate
list of all Debt of the Borrower and each of the Guarantors,
whether individual, joint, several or otherwise, and whether
fixed or contingent, including commitments, lines of credit
and other credit availabilities, identifying with respect to
each the respective parties, amounts and maturities.
-55-
(ii) Schedule 4.1(m), Part II contains a complete and accurate
list of all guarantees or other surety arrangements or
undertakings of the Borrower and each of the Guarantors for
obligations of any other Person (except for negotiable
instruments endorsed for collection or deposit in the ordinary
course of business), whether individual, joint, several or
otherwise, identifying with respect to each of the parties,
amounts and maturities.
(n) Material Agreements. Except as set forth in Schedule
4.1(n), and except for the Loan Instruments, the Borrower and
the Guarantors are not a party to any Material Agreements. The
Borrower and each Guarantor is in material compliance with all
Material Agreements and has not received any notices from
counter parties thereto asserting violations of any such
Material Agreements by the Borrower or any Guarantor or
asserting rights to terminate or modify any of such Material
Agreements.
(o) Properties, Inventory and Equipment. The Borrower owns or
leases the real property identified in Part I of Schedule
4.1(o) (the "Borrower's Real Property") and owns the Equipment
and Inventory in the states identified in Schedule 4.1(o). The
Guarantors own or lease the real property identified in Part
II of Schedule 4.1(o) (the "Guarantors' Real Property") and
own the Equipment and Inventory in the states identified in
Schedule 4.1(o). The Borrower's Equipment and Inventory is
located in the states set forth in Part I of Schedule 4.1(o).
The Guarantors' Equipment and Inventory is located in the
states listed in Part II of Schedule 4.1(o). The Borrower has
good, marketable and insurable title to, or valid leasehold
interests in, all of Borrower's owned Real Property and good
title to Borrower's Equipment and the other assets of the
Borrower, free and clear of all Liens, other than the Liens
identified in Part III of Schedule 4.1(o) and other Permitted
Liens. The Guarantors have good, marketable and insurable
title to, or valid leasehold interests in, all of Guarantors'
Real Property and good title to Guarantors' Equipment and the
other assets of the Guarantors, free and clear of all Liens,
other than the Liens identified in Part IV of Schedule 4.1(o)
and other Permitted Liens.
(p) Financial Condition. Neither the Borrower nor any
Guarantor is entering into the arrangements contem
plated by this Agreement and the other Loan Instruments
with actual intent to hinder, delay or defraud either
present or future creditors of the Borrower or any
-00-
Xxxxxxxxx. Xx and as of the date of execution hereof by the
Borrower, and on and as of the date of each Advance hereunder
by the Banks, on a pro forma basis after giving effect to the
transactions contemplated by the Loan Instruments and to all
indebtedness (including Debt) incurred or to be created in
connection herewith:
(i) the present fair saleable value of the assets of the
Borrower and each Guarantor, respectively, (on a going concern
basis) will exceed the probable liability of the Borrower and
each Guarantor, respectively, on its indebtedness (including
Debt and contingent obligations);
(ii) the Borrower and each Guarantor, respectively, has not
incurred, nor does Borrower intend to or believe it will
incur, nor will Borrower permit any Guarantor to incur
indebtedness (including Debt and contingent obligations)
beyond its ability to pay such indebtedness as such
indebtedness matures (taking into account the timing and
amounts of cash to be received from any source, and of amounts
to be payable on or in respect of such indebtedness); and the
amount of cash available to the Borrower and Guarantors after
taking into account all other anticipated uses of funds is
anticipated to be sufficient to pay all such amounts on or in
respect of its respective indebtedness (including Debt and
contingent liabilities) when such amounts are required to be
paid; and
(iii) the Borrower and each Guarantor will have sufficient
capital with which to conduct its present and proposed
business, and the assets of the Borrower and each Guarantor,
respectively, do not constitute unreasonably small capital
with which to conduct its present or proposed business.
(q) Insurance. The Borrower and each of the Guarantors
currently maintains with financially sound and reputable
insurers insurance concerning its assets and business, with
such deductibles and retentions and having coverages against
risks, losses or damages as are customarily carried by
reputable companies in the same or similar businesses, such
insurance being in amounts no less than those amounts which
are customary for such companies under similar circumstances,
which third-party insurance coverages are identified in
Schedule 4.1(q).
(r) Full Disclosure. No representation or warranty
contained in this Agreement or in any other Loan
Instrument to which the Borrower is a party, or in any
-57-
other document furnished from time to time by the Borrower to
the Bank pursuant to this Agreement, contains any untrue
statement of a material fact or omits to state any material
fact necessary to make the statements herein or therein not
misleading in any material respect as of the date made or
deemed to be made. Except as may be set forth herein or in any
of the Schedules hereto, there is no fact known to the
Borrower which has had, or is reasonably expected to have, a
Material Adverse Effect.
(s) No Default. No Default or Event of Default has
occurred and is continuing.
(t) Status of Loans as Senior Debt. All Debt of the Borrower
to the Banks and the Agent in respect of the Loans constitutes
"Senior Debt" or "Senior Indebtedness" (or the analogous term
used therein) under the terms of the Xxxxxxx Subordinated
Notes or of any other instrument evidencing or pursuant to
which there is issued indebtedness which purports to be
Subordinate Debt of the Borrower.
(u) Swap Obligations. Neither the Borrower nor any of its
Subsidiaries has incurred any outstanding obligations under
any Swap Contracts, other than Permitted Swap Obligations. The
Borrower has undertaken its own independent assessment of its
consolidated assets, liabilities and commitments and has
considered appropriate means of mitigating and managing risks
associated with such matters and has not relied on any swap
counterparty or any Affiliate of any swap counterparty in
determining whether on not to enter into any Swap Contract.
ARTICLE V
COVENANTS OF THE BORROWER
SECTION 5.1 Affirmative Covenants. So long as any of the Notes shall
remain unpaid or any Letter of Credit remains outstanding, or the Banks shall
have any Commitment hereunder, or any obligation of the Borrower or any
Guarantor hereunder or under any Loan Instrument has not been fully performed,
the Borrower will, unless the Required Banks shall otherwise consent in writing:
(a) Use of Proceeds. Subject to compliance by the
Borrower with all of the terms and conditions hereof,
use the Advances exclusively to pay amounts due under
-58-
the Existing Loan Agreement, to perform its obligations under
the Circuit Test, Inc Agreement and the Allied Signal
Agreement and for any corporate purpose of the Borrower or any
Guarantor. Letters of Credit issued hereunder may be for any
corporate purpose of the Borrower or any Guarantor.
(b) Reporting and Notice Requirements. Provide to each
Bank:
(i) as soon as available, and in any event within 90 days
after the end of each fiscal year of the Borrower, audited
consolidated statements of income, retained earnings and cash
flow for the Borrower and the Guarantors for such fiscal year
and the related audited consolidated balance sheets of the
Borrower and the Guarantors as of the end of such fiscal year,
setting forth in comparative form the corresponding
consolidated figures for such fiscal year and the prior fiscal
year, each accompanied by a report of the Borrower's
independent public accountants (who shall be a nationally
recognized firm or otherwise satisfactory to the Agent), which
reports shall state that such consolidated financial
statements fairly present the consolidated financial condition
and results of operations of the Borrower in accordance with
GAAP without material qualification;
(ii) simultaneously with the delivery of the annual financial
statements referred to in Section 5.1(b)(i) above, a report of
the independent auditors who audited such statements stating
that, in connection with their audit of such statements (and
without conducting any procedures other than those customarily
conducted in a year-end audit), such auditors have obtained no
knowledge of any condition or event which constitutes a
Default or Event of Default hereunder, or if such auditors
have obtained knowledge of any such condition or event,
specifying in such report each such condition or event of
which they have knowledge and the nature and status thereof;
provided, however, that such auditors shall not be liable to
the Banks by reason of any failure to obtain knowledge of any
condition or event which constitutes a Default or Event of
Default that would not be disclosed in the course of their
audit examination;
(iii) as soon as available, and in any event within 90 days
after the end of each fiscal year of the Borrower, a
consolidated budget for the Borrower and the Guarantors for
the following fiscal year, and an operating plan for the
Borrower and the Guarantors for
-59-
the then current fiscal year and the two following
fiscal years, in a form and at a level of detail
reasonably acceptable to the Agent;
(iv) within 45 days after the conclusion of each fiscal
quarter of the Borrower, a Compliance Certificate signed by
the chief executive officer or chief financial officer of the
Borrower, in the form of Exhibit B-5, (i) to the effect that
no Default or Event of Default is in existence, (ii)setting
forth in reasonable detail the computations necessary to
demonstrate compliance by the Borrower with the financial
covenants set forth in Section 5.2(a), (iii) the computations
in reasonable detail of the Total Debt to Trailing Four
Quarter EBITDA ratio referred to in the definitions of
Applicable Margin and Letter of Credit Rate and (iv)(if
applicable) reconciliations to reflect any relevant changes in
GAAP since the Effective Date.
(v) as soon as available, and in any event within 45 days
after the end of each fiscal quarter, (A) a Form 10-Q filed by
the Borrower with the Securities and Exchange Commission; and
(B) a backlog summary report in form and substance reasonably
satisfactory to the Agent;
(vi) within 25 days after the end of each month, (A) a
Borrowing Base Certificate;(B) a listing and aging of all
Accounts Receivable of the Borrower and the Guarantors (with
all of the foregoing to be in form and at a level of detail
reasonably acceptable to the Agent) and (C) an inventory
summary report in form and substance reasonably satisfactory
to the Agent;
(vii) promptly upon receipt thereof, copies of all
"management letters" received by the Borrower from the
Borrower's independent accountants;
(viii) as soon as possible, and in any event within
35 days after the Borrower knows or has reason to know
thereof, notice of any ERISA Event;
(ix) promptly upon the occurrence thereof, notice of any
Default or Event of Default describing the same in reasonable
detail, together with a report concerning the steps which the
Borrower is taking or will take to remedy such Default or
Event of Default;
(x) promptly on the occurrence thereof, notice of
any Material Adverse Effect describing the same in
reasonable detail, together with a report concerning
-60-
the steps which the Borrower is taking or will take to
eliminate such Material Adverse Effect;
(xi) promptly after receipt of written request from the Agent
or the Required Banks, such other information concerning the
Borrower or any of the Guarantors, and concerning their
respective businesses, operations, assets or financial
condition (including accounts payable listings and agings,
fixed asset schedules and information concerning leases) as
the Agent or Required Banks may reasonably request; provided
that so long as no Event of Default has occurred, such request
for information shall be limited to one request per month and
(xii) promptly upon the occurrence thereof, notice of
all changes in the articles of incorporation or by laws
of the Borrower or any of the Guarantors, or in the
following executive officers of the Borrower or
Guarantors, Xxxx Xxxxxxxx, Xxxxx X. Xxxxxxxx, Xx. or
Xxxxxx Xxxxxxxxxx; and
(xiii) promptly after the furnishing thereof to the
shareholders of the Borrower copies of all financial
statements, reports and proxy statements so furnished;
and
(xiv) promptly upon the filing thereof, copies of all
registration statements and annual, quarterly, monthly or
other regular reports which the Borrower or any of its
Subsidiaries files with the Securities and Exchange
Commission.
(c) Maintenance of Existence, Etc. Except as provided in
Section 5.2(b), maintain its corporate existence and cause
each Guarantor to maintain its corporate existence, and
maintain and cause each Guarantor to maintain their respective
material rights, privileges and franchises.
(d) Compliance With Laws. Comply and cause each Guarantor to
comply in all material respects with all Requirements of Law
of any Governmental Authority having jurisdiction over each
such Person or their respective business, except where the
failure to comply would not have a Material Adverse Effect.
(e) Insurance.
(i) Maintain the third-party insurance identified
in Schedule 4.1(q), provided, however, that in no event
-61-
shall such insurance be for an amount less than the the
replacement cost of the assets so insured.
(ii) Without limiting the obligations of the Borrower under
this Section 5.1(e), in the event the Borrower fails to
maintain the insurance required by the foregoing provisions of
this Section 5.1(e), then the Banks may, but shall have no
obligation to, procure insurance covering the interests of the
Banks, in such amounts and against such risks as the Banks
shall deem appropriate, and the Borrower will reimburse the
Banks in respect of any premiums paid by the Banks as provided
in Section 8.4.
(f) Material Agreements. Perform, and cause
Guarantors to perform, all of each such Person's
obligations under the Material Agreements in
substantial compliance with all terms and conditions
thereof.
(g) Obligations and Taxes. Pay and cause Guarantors to pay
each such Person's Debt in excess of $1,000,000 and other
obligations in accordance with their terms and pay and
discharge promptly all Federal and material State and local
taxes, and all material governmental assessments and charges
or levies imposed upon any such Person or upon such Person's
income or profits or in respect of its assets or business, or
in any event before the same shall become delinquent or in
default, as well as all lawful claims for labor, materials and
supplies or otherwise which, if unpaid, might give rise to a
Lien upon such properties or any part thereof; provided,
however, that such payment and discharge shall not be required
so long as the validity or amount thereof shall be contested
in good faith by appropriate proceedings and the Borrower or
such Guarantor, as applicable, shall have set aside on its
books adequate reserves in accordance with GAAP with respect
thereto.
(h) Maintaining Records; Access to Properties and Inspections.
Maintain, and cause all Guarantors to maintain, all financial
records in accordance with GAAP and permit, and cause all
Guarantors to permit, after two weeks notice unless an Event
of Default has occurred, any Bank employees or other
representatives approved by the Borrower (which approval shall
not be unreasonably withheld) designated by the Agent or the
Required Banks to visit and inspect the properties of the
Borrower or of any Guarantor, and to inspect their respective
financial and business records and make extracts therefrom and
copies thereof, all at reasonable times and in a manner so as
not to
-62-
unreasonably disrupt the operations of the Borrower or of such
Guarantors and as often as reasonably requested, and permit,
and cause Guarantors to permit, any such employees or
representatives to discuss the affairs, finances and condition
of the Borrower and Guarantors with the officers and other
representatives thereof, including the Borrower's independent
accountants if a representative of the Borrower is present and
if the Agent has notified the Borrower not less than 24 hours
prior to such meeting of the issues that will be discussed.
(i) Environmental and Safety Matters.
(i) Comply and cause Guarantors to comply with all
Environmental and Safety Laws applicable to the Borrower and
the Guarantors, respectively, in all material respects.
(ii) Keep its properties and facilities and cause Guarantors
to keep their facilities and properties free from any Liens
arising under any applicable Environmental and Safety Laws.
(iii) If the Banks at any time have reason to believe that any
property or facility owned or operated by the Borrower or any
Guarantor has been or may be operated in violation of any
Environmental or Safety Laws applicable thereto or
contaminated with any Hazardous Materials in excess of levels
allowed by Environmental or Safety Laws or subject to any
government-imposed obligation to conduct any environmental
investigation or clean-up, any of which in the good faith
judgement of the Banks may impair in any material respect the
ability of the Borrower or any Guarantor to satisfy any
obligations of the Borrower hereunder or under any Loan
Instrument, the Borrower shall, upon the written request of
the Banks, at the Borrower's sole cost and expense, conduct
such investigation or study, through retention of a consulting
firm reasonably satisfactory to the Banks, as is necessary in
the good faith judgment of the Banks to demonstrate that no
such impairment could reasonably be expected to have a
Material Adverse Effect.
(j) Deposit Balances. Maintain, and cause the
Guarantors to maintain, their respective primary
operating, payroll and investment deposit account
balances with the Bank One, Colorado, N.A. or its
Affiliates, except for accounts maintained in locations
where the Agent and its Affiliates have no bank.
-63-
(k) Interest Rate Protection. The Borrower will on or prior to
a date that is (a) 30 days after the Effective Date, and
thereafter until the date that is 180 days after the Effective
Date maintain in full force and effect in accordance with the
terms thereof, Interest Rate Protection Agreements in form and
substance satisfactory to the Agent with respect to a notional
principal amount not less than $15,000,000 and (b) 180 days
after the Effective Date, and thereafter maintain in full
force and effect in accordance with the terms thereof,
Interest Rate Protection Agreements in form and substance
satisfactory to the Agent with respect to a notional principal
amount not less than $20,000,000.
(l) Surveys. In the event that the Borrower has not completed
the issuance or sale of its equity securities in an amount in
excess of $20,000,000 by December 31, 1997, the Borrower, at
its expense shall provide to the Agent, on or before March 31,
1998, a current ALTA/ACSM survey of the real property
described in the Deeds of Trust prepared by a surveyor
acceptable to the Agent showing the legal description of the
land, the location of all improvements thereon, the location
of any recorded easements or other restrictions affecting the
land, the flood plain status of the land and a description and
the date of the map or maps reviewed,
(m) Audit of Accounts Receivable and Inventory.
(A) Engage an accounts receivable and
inventory field auditor,
satisfactory to the Required Banks,
to commence and complete within the
thirty (30) day period immediately
after the Effective Date, a field
examination and audit, in scope
satisfactory to the Required Banks,
and to permit such auditor to copy
all of the Borrower's and the
Guarantors' financial books,
records, journals and other records
and data relating to the Collateral
to the extent that the Agent deems
necessary in regard to the Banks'
rights under the Loan Instruments.
(B) After the field examination and audit
described above has been completed, at
the request of the Agent or the Required
Banks, no more often than annually, so
long as there is no Event of Default,
the Borrower shall permit, and cause the
Guarantors to permit, the Agent or
representatives of the Agent to conduct
during regular business hours a field
-64-
examination and inspection of the
Collateral, including the Eligible
Accounts Receivable and the Eligible
Inventory and to audit and copy all
of the Borrower's and the
Guarantors' financial books,
records, journals and other records
and data relating to the Collateral
to the extent that the Agent deems
necessary in regard to the Banks'
rights under the Loan Instruments.
(C) Borrower shall promptly pay or
reimburse the Agent for the actual
cost of all field examinations and
audits including all out of pocket
expenses for travel, food and
lodging.
(n) Acquisition of Tucson Real Property. At the earlier of an
Event of Default or March 13, 1998 Borrower shall acquire good
and marketable title to that 20.5 acre parcel of real property
commonly known as 0000 Xxxx Xxxxxx Xxxx, Xxxxxx, Xxxxxxx (the
"Drexel Road Property"). Immediately upon acquisition of the
Drexel Road Property, Borrower shall grant to the Agent a Deed
of Trust on such real property, and at its expense, provide to
the Agent an ALTA form title insurance policy, in form and
content satisfactory to the Agent, issued by a title insurance
company acceptable to the Agent. The title insurance policy
shall insure the Agent's first and prior lien in the Drexel
Road Property, subject only to Permitted Liens or such other
Liens approved by the Agent, and shall contain such
endorsements as the Agent may request. The title insurance
policy shall be in such amount as the Agent may reasonably
require. If the Borrower does not acquire the Drexel Road
Property on or before March 13, 1998, then at Agent's request,
Borrower shall immediately assign to the Agent its rights in
the Property Acquisition Agreement dated September 23, 1997
between the Borrower and Granite Properties Incorporated and
its rights in the account held by Asset Preservation Inc.
relating to the purchase of the Drexel Road Property (the
"Escrow"). Borrower shall not amended, modify, assign or
terminate its rights in such Property Acquisition Agreement or
the Escrow without the prior written consent of the Agent.
(o) AlliedSignal Acquisition Agreements. On or before December
31, 1997, Borrower shall furnish to the Agent the written
Consent to Assignment of Contracts with respect to the
AlliedSignal Acquisition Agreements from AlliedSignal and its
Affiliates, as applicable, provided, however, this covenant
shall be waived if the
-65-
Borrower receives Net Proceeds in excess of $20,000,000.00
from an issuance or sale of its equity securities.
(p) Greeley Phase I Environmental Assessment. On or before
thirty (30) Business Days after the Effective Date, Borrower
shall furnish to the Agent, in form and content and prepared
by consultants, reasonably acceptable to the Agent, a Phase I
Environmental Assessment for Borrower's owned Real Property in
Greeley, Colorado, indicating the absence of conditions which
would warrant a Phase II Environmental Assessment of such Real
Property.
(q) Further Assurances. Execute and deliver such further
documents and do such other acts and things as the Banks may
reasonably request in order to effect fully the purposes of
this Agreement and each of the other Loan Instruments and to
provide for payment of the Loans and all other amounts due
hereunder within the scope of this Agreement.
SECTION 5.2 Negative Covenants. So long as any of the Notes shall
remain unpaid or any Letter of Credit remains outstanding, or the Banks shall
have any Commitment hereunder, or any obligation of the Borrower or any
Guarantor hereunder or under any Loan Instrument has not been fully performed,
the Borrower will not, unless the Required Banks shall otherwise consent in
writing:
(a) Financial Covenants.
(i) Maximum Senior Debt to EBITDA Ratio. As of the
end of any Fiscal Quarter, fail to maintain on a
consolidated basis a ratio of (y) Senior Debt to
(z) EBITDA of not greater than
Measured as of the
quarter ending Maximum Ratio
------------------ ---------------------
09/30/97 3.00
12/31/97 3.00
03/31/98 2.50
06/30/98 2.50
09/30/98 2.50
12/31/98 2.25
03/31/99 2.25
06/30/99 2.25
09/30/99 2.25
12/31/99 2.00
03/31/00 2.00
06/30/00 2.00
-66-
09/30/00 2.00
12/31/00 1.75
03/31/01 1.75
06/30/01 1.75
09/30/01 1.75
12/31/01 1.75
(ii) Maximum Total Debt to EBITDA Ratio. As of the
end of any Fiscal Quarter fail to maintain on a
consolidated basis a ratio of (y) Total Debt to (z)
EBITDA of not greater than
Measured as of the
quarter ending Maximum Ratio
------------------ ---------------------
09/30/97 4.00
12/31/97 4.00
03/31/98 3.50
06/30/98 3.50
09/30/98 3.50
12/31/98 3.25
03/31/99 3.25
06/30/99 3.25
09/30/99 3.25
12/31/99 3.00
03/31/00 3.00
06/30/00 3.00
09/30/00 3.00
12/31/00 2.75
03/31/01 2.75
06/30/01 2.75
09/30/01 2.75
12/31/01 2.75
(iii) Minimum Fixed Charge Coverage Ratio. Fail to
maintain Trailing Four Quarter EBITDA to Fixed Charges
of not less than
Measured as of the
quarter ending Maximum Ratio
------------------ ---------------------
09/30/97 N/A
12/31/97 1.75
03/31/98 1.75
06/30/98 1.75
09/30/98 1.75
12/31/98 1.75
03/31/99 1.75
06/30/99 1.75
09/30/99 1.75
-67-
12/31/99 2.00
03/31/00 2.00
06/30/00 2.00
09/30/00 2.00
12/31/00 2.00
03/31/01 2.00
06/30/01 2.00
09/30/01 2.00
12/31/01 2.00
(iv) Minimum EBITDA to Interest Expense As of the end of any
Fiscal Quarter fail to maintain on a consolidated basis a
ratio of (y) EBITDA to (z) Interest Expense of not less than
Measured as of the
quarter ending Maximum Ratio
12/31/97 3.5
03/31/98 350
06/30/98 .50
09/30/98 3.50
12/31/98 3.50
03/31/99 3.50
06/30/99 3.50
09/30/99 3.50
12/31/99 4.50
03/31/00 4.50
06/30/00 4.50
09/30/00 4.50
12/31/00 4.50
03/31/01 4.50
06/30/01 4.50
09/30/01 4.50
12/31/01 4.50
(v) Minimum Net Worth. For each fiscal year
identified below, fail to maintain a minimum Net Worth
of the Borrower and all Subsidiaries on a consolidated
basis in an amount equal to the following:
Measured at each 12/31 Minimum Net Worth equal to
fiscal year end("FYE")
(A) For FYE 12/31/98 $26,613,000 plus 75% of FYE
12/31/97's Net Income
-68-
(B) For FYE 12/31/99 (A) above plus 75% of FYE
12/31/98's Net Income
(C)For FYE 12/31/00 (B) above plus 75% of FYE
12/31/99's Net Income
For FYE 12/31/01 (C) above plus 75% of FYE
12/31/00's Net Income
(vi) Maximum Annual Capital Expenditures. For each
fiscal year identified below, make Capital Expenditures
for the Borrower and all Subsidiaries on a consolidated
basis in excess of the following:
Measured as of the
fiscal year ending Maximum Amount
FYE 12/31/98 $8,500,000
FYE 12/31/99 $7,250,000
FYE 12/31/00 $6,500,000
FYE 12/31/01 $7,750,000
(b) Prohibition of Fundamental Changes. Effect, or permit to
be effected with respect to any Guarantor, any transaction of
merger, consolidation, recapitaliza tion, reorganization,
liquidation or dissolution except any Subsidiary may merge,
consolidate or reorganize with, or liquidate and transfer its
assets to,(i) the Borrower, provided that the Borrower is the
continuing or surviving corporation or (ii) any Subsidiary
provided that if any transaction shall be between a Guarantor
and a Subsidiary, the Guarantor shall be the continuing or
surviving corporation, and except for any such transactions if
the Borrower survives and there is no Default or Event of
Default or Material Adverse Effect. Nothing herein shall
prohibit any sales or purchases of stock and assets that are
contemplated by the Circuit Test Acquisition Agreement, the
AlliedSignal Acquisition Agreements and the Xxxxxxxx Earn-Out
Agreement.
(c) Limitation on Liens. Create or suffer to exist, or permit
any Guarantor to create or suffer to exist, any Liens on any
assets of any such Person, except for (A) Permitted Liens and
(B) purchase money Liens in an aggregate amount of
$2,500,000.00 for assets acquired by such Persons, provided
that any such purchase money Liens are limited to the asset(s)
acquired.
(d) Debt. Create, incur or suffer to exist, or permit
any Guarantor to create, incur or suffer to exist, any
Debt except, (i) Debt hereunder, (ii) intercompany Debt
-69-
(iii) Debt of such Persons in effect on the date hereof as
reflected in the financial statements identified in Section
4.1(f), (iv) Debt consisting of trade payables incurred in the
ordinary course of business and (v) other Debt in the
aggregate principal amount of $2,500,000.00, of which purchase
money security interest Liens may not exceed $2,500,000.00.
(e) Guarantees. Create or become liable, directly or
indirectly, or permit any Guarantor to create or become
liable, directly or indirectly, with respect to any guarantee
of the obligation of any other Person except, (i) guarantees
resulting from the endorsement of instruments for collection
in the ordinary course of business,(ii) guarantees in effect
on the date hereof and disclosed in the financial statements
identified in Section 4.1(f), (iii) the Guaranties of the
Guarantors in favor of the Bank as contemplated hereby and
(iv) guarantees of performance or obligations of any
Subsidiary by the Borrower, if such Obligations were directly
incurred or maintained by the Borrower would not violate any
provision of any Loan Instrument.
(f) Investments, Loans, Advances, etc. The Borrower shall not
directly or indirectly purchase or otherwise acquire, hold or
invest in the securities of any Person, acquire control of any
Person, make loans or advances or enter into any agreement or
other arrangement for the purpose of providing funds or credit
to any Person (other than guaranties permitted hereunder), or
enter into any partnership, joint venture or other entity or
business arrangement with or make any equity investment in any
Person, or offer or agree to do so, and will not permit any
Guarantor to do so except for: (i) loans or advances between
the Borrower and any wholly owned Subsidiary; (ii) securities
issued or guarantied by the United States of America; (iii)
except as provided in Section 5.1(j), and except for deposit
accounts for payment of ordinary course of business expenses
by the Borrower and Guarantors, with respect to which no
limits concerning the deposit bank apply, deposits in domestic
commercial banks that have, or are members of a group of
domestic commercial banks that has, consolidated total assets
of not less than one billion dollars, or investments in the
certificates of deposit, commercial paper or other permissible
market rate instruments offered by any such bank, the holding
company of any such bank or subsidiary of any such holding
company; (iv) normal business banking accounts in federally
insured institutions in amounts not exceeding the limits of
such insurance; (v) commercial
-70-
paper or other short-term debt securities rated not less than
"A" or its equivalent by Standard & Poor's Corporation or
Xxxxx'x Investors Service, Inc.; (vi) investments constituting
Permitted Swap Obligations or payments or advances under Swap
Contracts relating to Permitted Swap Obligations; (vii)
acquisition of the Drexel Road Property pursuant to Section
5.1(n) and (viii) other investments not exceeding $500,000 in
the aggregate at any one time in Persons that are not
Affiliates of the Borrower or any Guarantor.
(g) Sales of Assets. Make any Disposition of assets of the
Borrower, or permit any Guarantor to make any Disposition of
assets of such Guarantor other than (i) sales of inventory in
the ordinary course of business or (ii) Dispositions of
obsolete or surplus equipment or other assets or (iii) up to
$1,000,000 in fair market value of other Dispositions each
fiscal year or (iv) Dispositions provided for under the
AlliedSignal Acquisition Agreement or (v)Dispositions of its
assets to the Borrower or a Subsidiary.
(h) Transactions with Affiliates. Except for transactions
existing on the Effective Date, enter into or permit any
Subsidiary to enter into any transaction or series of
transactions, whether or not related or in the ordinary course
of business of the Borrower, with any Affiliate of the
Borrower or any Subsidiary (except for transactions between
the Borrower and its Subsidiaries and between wholly owned
subsidiaries of the Borrower and a Subsidiary), other than
pursuant to the reasonable requirements of the Borrower's or
such Subsidiaries's business and on terms and conditions no
less favorable to the Borrower or any Subsidiary than would be
obtainable by the Borrower or any Subsidiary at the time in a
comparable arm's-length transaction with a Person not an
Affiliate of the Borrower or any Subsidiary.
(i) Modification of Certain Documents; Performance of Material
Agreements. Amend its articles of incorporation or bylaws in a
manner adverse to the Bank; or amend, modify, cancel,
terminate, waive any default under or breach of, in any manner
any Material Agreement other than in the ordinary course of
business or permit any Guarantor to do any of the foregoing;
or enter into any new agreement that is inconsistent with the
obligations of the Borrower or Guarantor under any Loan
Instrument to which such Person is a party, without the prior
written consent of the Required Banks, which consent shall not
be unreasonably withheld. The Borrower further agrees that it
will not
-71-
be in default under, or otherwise fail to perform and will not
permit any Guarantor to be in default under or otherwise fail
to perform all of its material obligations under any of the
Material Agreements to which any such Person is a party.
(j) Dividends. Declare or pay or permit any Guarantor to
declare or pay cash or stock dividends or other distributions
with respect to the Borrower's stock or Guarantor's stock,
except that any Guarantor may declare and pay dividends and
make distributions to the Borrower.
(k) Accounting. Change, or permit any Guarantor to change its
respective fiscal years or accounting methods or practices
(except to conform to changes in GAAP). If any preparation of
the financial statements referred to in Section 4.1(f),
hereafter occasioned by the promulgation of rules,
regulations, pronouncements and opinions by or required by the
Financial Accounting Standards Board or the American Institute
of Certified Public Accountants (or successors thereto or
agencies with similar functions) result in a material change
in the method of calculation of financial covenants, standards
or terms found in this Agreement, the Borrower will, and will
cause each Guarantor to, enter into good faith negotiations
with the Bank in order to amend such provisions so as to
equitably reflect such changes with the desired result that
the criteria for evaluating the Borrower's consolidated
financial condition shall be the same after such changes as if
such changes had not been made. Unless and until such
provisions have been so amended, the provisions of this
agreement shall govern and the financial covenants hereunder
shall be calculated using GAAP as in effect prior to such
changes.
(l) Subordinated Debt. The Borrower shall not, and shall not
permit any Subsidiary, to amend, waive, terminate or otherwise
modify any Subordinated Debt or any Subordinated Debt loan
instrument, or directly or indirectly, voluntarily prepay,
defease or in substance defease, purchase, redeem, retire or
otherwise acquire, any Subordinated Debt or other Debt.
(m) Change of Address; Business Name(s). Except upon not less
than 30 days prior written notice to the Agent, change or
permit any Guarantor to change the address at which the
Borrower or such Guarantor maintains its chief executive
offices and principal place of business; nor conduct its
business activities under any names other than those set forth
-72-
Schedule 4.1(b) hereto unless the Borrower notifies the Agent
of any such new name not less than 30 days prior to beginning
use of such new name, except that no more than seven days
notice shall be required in the case of a new name resulting
from an acquisition of a business or assets by the Borrower.
ARTICLE VI
EVENTS OF DEFAULT
SECTION 6.1 Events of Default. Each of the following events shall
constitute an Event of Default hereunder:
(a) Payments under the Agreement and the Notes. The Borrower
shall fail to pay any principal of, or interest on, the Notes
when the same become due and payable or the Borrower shall
fail to pay any Fees or other amount due the Bank from the
Borrower hereunder and such failure, in the case of a payment
other than a payment of principal shall continue for five (5)
Business Days.
(b) Representations and Warranties. Any representa tion or
warranty made by the Borrower or any of the Guarantors (or any
of their respective officers, if applicable) under or in
connection with any Loan Instrument shall prove to have been
incorrect in any material respect when made.
(c) Other Loan Instrument Obligations. (i) The Borrower shall
fail to perform or observe any term, covenant or agreement
contained in Section 5.2, or (ii) the Borrower shall fail to
perform or observe any term, covenant or agreement contained
in any Loan Instrument to which it is a party (other than any
such failures addressed by subsections (a), (b) and (c)(i)
above in this Section 6.1) and such failure continues
unremedied for a period of 15 days after the Borrower receives
notice or otherwise has actual knowledge thereof, or (iii) any
Guarantor shall fail to perform or observe any term, covenant
or agreement contained in any Loan Instrument to which they
are a party, and such failure under clause (i), (ii) or (iii)
continues unremedied for a period of 15 Business Days after
the chief executive officer, chief financial officer,
controller or treasurer of any such Person receives notice or
otherwise has actual knowledge thereof.
-73-
(d) Other Debt. The Borrower or any Guarantor shall fail to
pay any principal of or premium or interest on any Debt which
is outstanding in a principal amount of at least $1,000,000 in
the aggregate (but excluding Debt evidenced by the Notes) of
such Person, when the same becomes due and payable (whether by
scheduled maturity, required prepayment, acceleration, demand
or otherwise), and such failure shall continue after the
applicable grace period, if any, specified in the agreement or
instrument relating to such Debt; or any other event shall
occur or condition shall exist under any agreement or
instrument relating to any such Debt and shall continue after
the applicable grace period, if any, specified in such
agreement or instrument, if the effect of such event or
condition is to accelerate, or to permit the acceleration of,
the maturity of such Debt; or any such Debt shall be declared
to be due and payable, or required to be prepaid (other than
by a regularly scheduled required prepayment), redeemed,
purchased or defeased, or an offer to prepay, redeem, purchase
or defease such Debt shall be required to be made, in each
case prior to the stated maturity thereof.
(e) Insolvency. The Borrower or any of the Guarantors shall
generally not pay its debts as such debts become due, or shall
admit in writing its inability to pay its debts generally, or
shall make a general assignment for the benefit of creditors;
or any proceeding shall be instituted by or against the
Borrower or any of the Guarantors seeking to adjudicate it a
bankrupt or insolvent, or seeking liquidation, winding up,
reorganization, arrangement, adjustment, protection, relief,
or composition of it or its debts under any law relating to
bankruptcy, insolvency or reorganization or relief of debtors,
or seeking the entry of an order for relief or the appointment
of a receiver, trustee, custodian or other similar official
for it or for any substantial part of its property and, in the
case of any such proceeding instituted against it (but not
instituted by it), either such proceeding shall remain
undismissed or unstayed for a period of 30 days, or any of the
actions sought in such proceeding (including, without
limitation, the entry of an order for relief against, or the
appointment of a receiver, trustee, custodian or other similar
official for, it or for any substantial part of its property)
shall occur; or Borrower or any Guarantor shall take any
corporate action to authorize any of the actions set forth
above in this subsection (e).
-74-
(f) Judgments. Any non-interlocutory judgment or order for the
payment of money which is not covered by existing insurance in
excess of $1,000,000 shall be rendered against the Borrower or
any Guarantor and either (i) enforcement proceedings shall
have been commenced by any creditor upon such judgment or
order or (ii) there shall be any period of 30 consecutive days
during which a stay of enforcement of such judgment or order,
by reason of a pending appeal or otherwise, shall not be in
effect.
(g) Termination of Certain Loan Instruments. Any provision of
this Agreement, the Notes, the Deeds of Trust, the Security
Agreements, the Guaranties, the Pledge Agreement or the
Collateral Assignment of Leases shall for any reason cease to
be valid and binding on the Borrower or Guarantors (as the
case may be), or the Borrower or any of the Guarantors shall
so state in writing.
(h) Collateral Liens. The Deeds of Trust, Security Agreements,
Pledge Agreement or Collateral Assignment of Leases shall,
after delivery thereof pursuant hereto, for any reason (other
than pursuant to the terms thereof) cease to create a valid
and perfected first priority security interest in any of the
collateral purported to be covered thereby.
SECTION 6.2 Bank's Rights Upon an Event of Default. Upon
--------------------------------------
the occurrence and during the continuation of any Event of Default the Agent (i)
may, by notice to the Borrower, declare the obligation of the Banks to make
Advances and to issues Letters of Credit to be terminated, whereupon the same
shall forthwith terminate, (ii) may, by notice to the Borrower, declare the
Notes, all accrued interest on the Loans and all other amounts payable under
this Agreement, the Notes and any other Loan Instrument to be forthwith due and
payable, whereupon the Notes, all such interest and all such amounts shall
become and be forthwith due and payable, without presentment, demand, protest,
or further notice of any kind, all of which are hereby expressly waived by the
Borrower, (iii) with respect to outstanding Letters of Credit as to which drafts
or demands for payment have not been presented, may, by notice to the Borrower,
require the Borrower to provide cash collateral in the face amount of such
Letters of Credit in accordance with Section 2.17 hereof and (iv) may
------------
exercise the Banks rights and remedies under the Loan Instruments and such other
rights and remedies as may be available to the Banks at law or in equity;
provided, however, that in the event
-------- -------
of an actual or deemed entry of an order for relief with respect to the Borrower
or any of the Guarantors under the Federal Bankruptcy Code, (A) the obligation
of the Banks to make Advances and to issue Letters of Credit shall automatically
be terminated
-75-
and (B) the Advances, the Notes, all such interest and all such amounts shall
automatically become and be due and payable, without presentment, demand,
protest or any notice of any kind, all of which are hereby expressly waived by
the Borrower.
ARTICLE VII
THE AGENT
SECTION 7.1 Appointment and Powers. Each Bank hereby irrevocably
appoints and authorizes Bank One, Colorado, N.A., and Bank One, Colorado, N.A.
hereby agrees, to act as the agent for and representative (within the meaning of
Section 9-105(m) of the Uniform Commercial Code) of such Bank under the Loan
Instruments with such powers as are delegated to the Agent and the Secured Party
by the terms thereof, together with such other powers as are reasonably
incidental thereto. The Agent's duties shall be purely ministerial and it shall
have no duties or responsibilities except those expressly set forth in the Loan
Instruments. The Agent shall not be required under any circumstances to take any
action that, in its judgment, (a) is contrary to any provision of the Loan
Instruments or Applicable Law or (b) would expose it to any Liability or expense
against which it has not been indemnified to its satisfaction. The Agent shall
not, by reason of its serving as the Agent, be a trustee or other fiduciary for
any Bank.
SECTION 7.2 Limitation on Agent's Liability. Neither the Agent nor any
of its directors, officers, employees or agents shall be liable or responsible
for any action taken or omitted to be taken by it or them under or in connection
with the Loan Instruments, except for its or their own gross negligence, willful
misconduct or knowing violations of law. The Agent shall not be responsible to
any Bank for (a) any recitals, statements, representations or warranties
contained in the Loan Instruments or in any certificate or other document
referred to or provided for in, or received by any of the Banks under, the Loan
Instruments, (b) the validity, effectiveness or enforceability of the Loan
Instruments or any such certificate or other document, (c) the value or
sufficiency of the Collateral or (d) any failure by the Borrower or other
parties to the Loan Instruments to perform any of their obligations under the
Loan Instruments. The Agent may employ agents and attorneys-in-fact and shall
not be responsible for the negligence or misconduct of any such agents or
attorneys-in-fact so long as the Agent was not grossly negligent in selecting or
directing such agents or attorneys-in-fact. The Agent shall be entitled to rely
upon any certification, notice or other communication (including any thereof by
telephone, telex, telecopier, telegram or cable) believed by it to be genuine
and correct and to have been signed or given by or on behalf of the proper
Person or Persons, and
-76-
upon advice and statements of legal counsel, independent accountants and other
experts selected by the Agent. As to any matters not expressly provided for by
the Loan Instruments, the Agent shall in all cases be fully protected in acting,
or in refraining from acting, under the Loan Instruments in accordance with
instructions signed by the Required Banks, and such instructions of the Required
Banks and any action taken or failure to act pursuant thereto shall be binding
on all of the Banks.
SECTION 7.3 Defaults. The Agent shall not be deemed to have knowledge
of the occurrence of a Default (other than the non-payment to it of principal of
or interest on Loans or fees) unless the Agent has received notice from a Bank
or the Borrower specifying such Default and stating that such notice is a
"Notice of Default." In the event that the Agent has knowledge of such a
non-payment or receives such a notice of the occurrence of a Default, the Agent
shall give prompt notice thereof to the Banks. In the event of any Default, the
Agent shall (a) in the case of a Default that constitutes an Event of Default,
take any or all of the actions referred to in Section 6.2 if so directed by the
Required Banks and (b) in the case of any Default, take such other action with
respect to such Default as shall be reasonably directed by the Required Banks.
Unless and until the Agent shall have received such directions, in the event of
any Default, the Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default as it shall deem
advisable in the best interests of the Banks.
SECTION 7.4 Rights as a Bank. Each Person acting as the Agent that is
also a Bank shall, in its capacity as a Bank, have the same rights and powers
under the Loan Instruments as any other Bank and may exercise the same as though
it were not acting as the Agent, and the term "Bank" or "Banks" shall include
such Person in its individual capacity. Each Person acting as the Agent (whether
or not such Person is a Bank) and its Affiliates may (without having to account
therefor to any Bank) accept deposits from, lend money to and generally engage
in any kind of banking, trust or other business with the Borrower and other
parties to the Loan Instruments and their Affiliates as if it were not acting as
the Agent, and such Person and its Affiliates may accept fees and other
consideration from the Borrower and other parties to the Loan Instruments and
their Affiliates for services in connection with the Loan Instruments or
otherwise without having to account for the same to the Banks.
SECTION 7.5 Indemnification. The Banks agree to indemnify the Agent (to
the extent not reimbursed by the Borrower and other parties to the Loan
Instruments under the Loan Instruments), ratably on the basis of the respective
principal amounts of the Loans outstanding made by the Banks (or, if no Loans
are at the time outstanding, ratably on the basis of their
-77-
respective Commitments), for any and all Liabilities, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind and nature whatsoever that may be imposed on, incurred by or asserted
against the Agent (including the costs and expenses that the Borrower and other
parties to the Loan Instruments are obligated to pay under the Loan Instruments)
in any way relating to or arising out of the Loan Instruments or any other
documents contemplated thereby or referred to therein or the transactions
contemplated thereby or the enforcement of any of the terms thereof or of any
such other documents, provided that no Bank shall be liable for any of the
foregoing to the extent they arise from gross negligence, willful misconduct or
knowing violations of law by the Agent.
SECTION 7.6 Non-Reliance on Agent and Other Banks. Each Bank agrees
that it has made and will continue to make, independently and without reliance
on the Agent or any other Bank, and based on such documents and information as
it deems appropriate, its own credit analysis of the Borrower, its own
evaluation of the Collateral and its own decision to enter into the Loan
Instruments and to take or refrain from taking any action in connection
therewith. The Agent shall not be required to keep itself informed as to the
performance or observance by the Borrower or other parties to the Loan
Instruments of the Loan Instruments or any other document referred to or
provided for therein or to inspect the properties or books of the Borrower or
any Subsidiary thereof or the Collateral. Except for notices, reports and other
documents and information expressly required to be furnished to the Banks by the
Agent under the Loan Instruments, the Agent shall have no obligation to provide
any Bank with any information concerning the business, status or condition of
the Borrower or any other party to the Loan Instruments or any Subsidiary
thereof, the Loan Instruments or the Collateral that may come into the
possession of the Agent or any of its Affiliates.
SECTION 7.7 Execution and Amendment of Loan Instruments on Behalf of
the Banks. Each Bank hereby authorizes the Agent to (a) execute and deliver, in
the name of and on behalf of such Bank, (i) the Security Agreements, the
Guaranty Agreements, the Deeds of Trust and the Pledge Agreement, (ii) all
Uniform Commercial Code financing and continuation statements and other
documents the filing or recordation of which are, in the determination of the
Agent, necessary or appropriate to create, perfect or maintain the existence or
perfected status of the Security Interest and (iii) any other Loan Instrument
requiring execution by or on behalf of such Bank, and (b) release Collateral
from the Security Interest to the extent that such Collateral has been disposed
of in accordance with Section 5.2(g). The Agent shall consent to any amendment
of any term, covenant, agreement or condition of the Security Agreements, the
Guaranty Agreements, the Deeds of Trust and the
-78-
Pledge Agreement, or to any waiver of any right thereunder, if, but only if, the
Agent is directed to do so in writing by the Required Banks; provided, however,
that (i) the Agent shall not be required to consent to any such amendment or
waiver that affects its rights or duties and (ii) the Agent shall not, unless
directed to do so in writing by each Bank, (A) consent to any assignment by any
Bank of any of its rights or obligations under any such agreement or (B) release
any Collateral from the Security Interest, except as specified in clause (b)
above.
SECTION 7.8 Resignation of the Agent. The Agent may at any time give
notice of its resignation to the Banks and the Borrower. Upon receipt of any
such notice of resignation, the Required Banks may, with the consent of the
Borrower which shall not be unreasonably withheld, appoint a successor Agent. If
no successor Agent shall have been so appointed by the Required Banks and shall
have accepted such appointment within 30 days after the resigning Agent's giving
of notice of resignation, then the resigning Agent may, on behalf of the Banks
and after consultation with the Borrower, appoint a successor Agent. Upon the
acceptance by any Person of its appointment as a successor Agent, (a) such
Person shall thereupon succeed to and become vested with all the rights, powers,
privileges, duties and obligations of the resigning Agent and the resigning
Agent shall be discharged from its duties and obligations as Agent under the
Loan Instruments and (b) the resigning Agent shall promptly transfer all
Collateral within its possession or control to the possession or control of the
successor Agent and shall execute and deliver such notices, instructions and
assignments as may be necessary or desirable to transfer the rights of the Agent
with respect to the Collateral to the successor Agent. After any resigning
Agent's resignation as Agent, the provisions of this Article VII shall continue
in effect for its benefit in respect of any actions taken or omitted to be taken
by it while it was acting as the Agent.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.1 Amendments; Waivers. Any term, covenant, agreement or
condition of the Borrower Loan Instruments may be amended, and any right under
the Borrower Loan Instruments may be waived, if, but only if, such amendment or
waiver is in writing and is signed by (a) in the case of an amendment or waiver
with respect to the Borrower Loan Instruments referred to in Section 7.7(a), the
Agent, (b) in the case of an amendment or waiver with respect to any other
Borrower Loan Instrument, the Required Banks and, if the amendment or waiver
would affect the rights and duties of the Agent, by the Agent, and(c) in the
case
-79-
of an amendment with respect to any Borrower Loan Instrument, by the Borrower;
provided, however, that no amendment or waiver shall be effective, unless in
writing and signed by each Bank affected thereby, to the extent it (i) changes
the amount of such Bank's Commitment, (ii) reduces the principal of or the rate
of interest on such Bank's Loans or Note, the amount of such Bank's Letter of
Credit Participations or any fees payable to such Bank hereunder, (iii)
postpones any date fixed for any reduction of the Revolving Loan Commitments or
any payment of principal of or interest on such Bank's Loans, Note, Letter of
Credit Participations or any fees payable to such Bank hereunder, (iv) except as
provided in this Agreement, releases any Collateral from the Security Interest,
or (v) amends Section 2.10, this Section 8.1, the definition of "Required Banks"
contained in Section 1.1 or any other provision of this Agreement requiring the
consent or other action of all of the Banks. Unless otherwise specified in such
waiver, a waiver of any right under the Borrower Loan Instruments shall be
effective only in the specific instance and for the specific purpose for which
given. No election not to exercise, failure to exercise or delay in exercising
any right, nor any course of dealing or performance, shall operate as a waiver
of any right of the Agent or any Bank under the Borrower Loan Instruments or
Applicable Law, nor shall any single or partial exercise of any such right
preclude any other or further exercise thereof or the exercise of any other
right of the Agent or any Bank under the Borrower Loan Instruments or Applicable
Law.
SECTION 8.2 Notices, Etc. All notices and other communications provided
for hereunder shall be in writing (including telecopier, telegraphic, telex or
cable communication) and mailed, telecopied, telegraphed, telexed, cabled or
delivered,
if to the Borrower, at its address at:
EFTC Corporation
0000 Xxxxx Xxxxxx
Horizon Terrace 0xx Xxxxx
Xxxxxx, Xxxxxxxx
Attn: Xxxxxx X. Xxxxxxxxxx
Vice President and CFO
Telecopy: (000)000-0000
-80-
with a copy to:
Xxxxxx Xxxxxx Xxxxxxx, Esq.
Holme Xxxxxxx & Xxxx LLP
0000 Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Telecopy: (000)000-0000
and if to the Agent, at its address at:
Bank One, Colorado, N.A.
0000 Xxxxxxxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxxx,
Vice President
Telecopy: (000) 000-0000
with a copy to:
Xxx X. Xxxxxx XX, Esq.
Xxxxx, Xxxxxx & Xxxxxx LLP
000 Xxxxxxxxxxx Xxxxxx 00xx Xxxxx
Xxxxxx, XX 00000
Telecopy: (000) 000-0000
or, as to each Party, at such other address as shall be designated by such Party
in a written notice to the other Party. All such notices and communications
shall, when telecopied, telegraphed, telexed or cabled, be effective when
telecopied, delivered to the telegraph company, confirmed by telex answerback or
delivered to the cable company, respectively, or when personally delivered. Any
notice, if mailed and properly addressed with first class postage prepaid,
return receipt requested, shall be deemed given three Business Days after
deposit in the U.S. mail. Except that notices to the Banks pursuant to the
provisions of Article II shall not be effective until received by the Bank.
SECTION 8.3 Remedies. The remedies provided in the Loan Instruments are
cumulative and not exclusive of any remedies provided by law.
SECTION 8.4 Costs, Expenses and Taxes. The Borrower agrees to pay on
demand all reasonable out-of-pocket costs and expenses in connection with the
preparation, execution, delivery, administration, modification and amendment of
the Loan Instruments and the other documents to be delivered under the Loan
Instruments, including, without limitation, the reasonable fees and
out-of-pocket expenses of counsel for the Agent with respect thereto and with
respect to advising the Agent as to its
-81-
rights and responsibilities under the Loan Instruments. The Borrower further
agrees to pay on demand all reasonable costs and expenses, if any (including
reasonable counsel, consultants and appraisers fees and expenses), in connection
with the enforcement (whether through negotiations, legal proceedings or
otherwise) of the Loan Instruments and the other documents to be delivered under
the Loan Instruments, including, without limitation, reasonable counsel,
consultants and appraisers fees and expenses in connection with the enforcement
of rights under this Section 8.4, expressly including all such costs and
expenses incurred by the Agent and the Banks in connection with or during the
pendency of any bankruptcy or insolvency proceedings involving the Borrower or
any Guarantor. In addition, the Borrower shall pay any and all stamp and other
taxes payable or determined to be payable in connection with the execution,
delivery, filing and recording of the Loan Instruments and the other documents
to be delivered under the Loan Instruments, and agrees to save the Bank harmless
from and against any and all liabilities with respect to or resulting from any
delay in paying or omission to pay such taxes.
SECTION 8.5 Right of Set-off. Upon the occurrence and during the
continuance of any Event of Default the Banks are hereby authorized at any time
and from time to time, to the fullest extent permitted by law, to set off and
apply any and all deposits (general or special, time or demand, provisional or
final) at any time held and other indebtedness at any time owing by the Banks to
or for the credit or the account of the Borrower against any and all of the
obligations of the Borrower now or hereafter existing under any Loan Instrument,
whether or not the Banks shall have made any demand under such Loan Instrument
and although such obligations may be unmatured. The Banks agree promptly to
notify the Borrower after any such set-off and application, provided that the
failure to give such notice shall not affect the validity of such set-off and
application. The rights of the Banks under this Section are in addition to other
rights and remedies (including, without limitation, other rights of set-off)
which the Banks may have.
SECTION 8.6 Binding Effect. This Agreement shall be binding upon and
inure to the benefit of the Borrower and the Banks and their respective
successors and assigns, except that the Borrower shall not have the right to
assign its rights hereunder or any interest herein without the prior written
consent of the Banks. Any assignment of rights or interests herein by the
Borrower without such prior written consent of the Bank will be void and
ineffective. It is expressly agreed that the Banks may transfer interests herein
to other lending institutions by way of assignment or participation agreement as
an to the extent permitted by Section 8.13.
-82-
SECTION 8.7 Indemnity. The Borrower agrees to indemnify the Agent and
the Banks, and their respective directors, officers, employees and agents for,
and hold each of them harmless against, any and all losses, liabilities, claims,
damages or expenses incurred by any of them arising out of or by reason of any
investigation or litigation or other proceedings (including any threatened
investigation or litigation or other proceedings) relating to the extensions of
credit hereunder or any actual or proposed use by the Borrower of the proceeds
of any extensions of credit hereunder or the past, present or future business
activities of the Borrower including, without limitation, the reasonable fees
and disbursements of counsel incurred in connection with any such investigation
or litigation or other proceedings (but excluding any such losses, liabilities,
claims, damages or expenses that are determined pursuant to a final,
non-appealable order of a court of competent jurisdiction to have resulted
solely from the gross negligence or willful misconduct of the Person to be
indemnified).
SECTION 8.8 Consent to Exclusive Jurisdiction. Any legal action or
other proceeding with respect to this Agreement or any other Loan Instrument
shall be brought exclusively in the courts of competent jurisdiction of the
State of Colorado or of the United States located in the City and County of
Denver, and by execution and delivery of this Agreement, each of the Borrower
and the Banks consents, for itself and in respect of its property, to the
exclusive jurisdiction of those courts. Each of the Borrower and the Banks
irrevocably waives any objection, including any objection to the laying of venue
or based on the grounds of forum non conveniens, which it may now or hereafter
have to the bringing of any action or proceeding in such jurisdiction in respect
of this Agreement or any other Loan Instrument. The Borrower and the Banks each
waive personal service of any summons, complaint or other process which may be
made by any other means permitted by Colorado law.
SECTION 8.9 Waiver of Jury Trial and Certain Damages. Each of the
Borrower and the Banks hereby waives, to the extent permitted by applicable law,
trial by jury in any litigation in any court with respect to, in connection
with, or arising out of this Agreement or any other Loan Instrument or the
validity, protection, interpretation, collection or enforcement thereof; and the
Borrower hereby waives, to the extent permitted by applicable law, the right to
interpret set off or counterclaim or cross-claim in connection with any such
litigation, irrespective of the nature of set off, counterclaim or cross-claim
except to the extent that the failure so to assert a set off, counterclaim or
cross-claim would permanently preclude the prosecution of or recovery upon the
same. Notwithstanding anything contained in this Agreement or any other Loan
Instrument to the contrary, no claim may be made by the Borrower against the
Banks for any lost profits or any special, indirect or consequential damages in
-83-
respect of any breach or wrongful conduct (other than willful misconduct
constituting actual fraud) in connection with, arising out of or in any way
related to the transactions contemplated hereunder or under any other Loan
Instrument, or any act, omission or event occurring in connection therewith; and
the Borrower hereby waives, releases and agrees not to xxx upon any such claim
for any such damages. The Borrower agrees that this Section 8.9 is a specific
and material aspect of this Agreement and acknowledges that the Bank would not
extend to the Borrower the credit provided for herein if this Section 8.9 were
not part of this Agreement.
SECTION 8.10 Governing Law. This Agreement and the Notes shall be
governed by, and construed in accordance with, the laws of the State of
Colorado, without giving effect to any conflict of law or choice of law
provision or rule (whether of the State of Colorado or any other jurisdiction)
that would cause the application of the laws of any jurisdiction other than the
State of Colorado.
SECTION 8.11 Inconsistent Provisions. In the event of any inconsistency
or conflict between the terms of this Agreement and the terms of any other Loan
Instrument, the provisions of this Agreement will be controlling.
SECTION 8.12 Sharing of Recoveries. Each Bank agrees that, if, for any
reason, including as a result of (a) the exercise of any right of counterclaim,
set-off, banker's lien or similar right, (b) its claim in any applicable
bankruptcy, insolvency or other similar law being deemed secured by a Debt owed
by it to the Borrower and any Guarantor, including a claim deemed secured under
Section 506 of the Bankruptcy Code, or (c) the allocation of payments by the
Agent or the Borrower or any Guarantor in a manner contrary to the provisions of
Section 2.10, such Bank shall receive payment of a proportion of the aggregate
amount due and payable to it hereunder as principal of or interest on the Loans
or fees that is greater than the proportion received by any other Bank in
respect of the aggregate of such amounts due and payable to such other Bank
hereunder, then the Bank receiving such proportionately greater payment shall
purchase Participations (which it shall be deemed to have done simultaneously
upon the receipt of such payment) in the rights of the other Banks hereunder so
that all such recoveries with respect to such amounts due and payable hereunder
(net of costs of collection) shall be pro rata; provided that if all or part of
such proportionately greater payment received by the purchasing Bank is
thereafter recovered by or on behalf of the Borrower or any Guarantor from such
Bank, such purchases shall be rescinded and the purchase prices paid for such
participations shall be returned to such Bank to the extent of such recovery,
but without interest (unless the purchasing Bank is required to pay interest on
the amount recovered to the Person recovering
-84-
such amount, in which case the selling Bank shall be required to pay interest at
a like rate). The Borrower expressly consents to the foregoing arrangements and
agrees that any holder of a participation in any rights hereunder so purchased
or acquired pursuant to this Section 8.12 shall, with respect to such
participation, be entitled to all of the rights of a Bank under Sections 2.10,
7.4, 7.5 and 7.7 (subject to any condition imposed on a Bank hereunder with
respect thereto) and may exercise any and all rights of set-off with respect to
such participation as fully as though the Borrower were directly indebted to the
holder of such participation for Loans in the amount of such participation.
SECTION 8.13 Assignments and Participations.
(a) Assignments.
(i) The Borrower may not assign any of its rights or
obligations under the Borrower Loan Instruments without the
prior written consent of (A) in the case of the Borrower Loan
Instruments referred to in Section 7.7(a), the Agent and (B)
in the case of any of the other Borrower Loan Instruments, the
Issuing Bank and each Bank, and no assignment of any such
obligation shall release such Borrower therefrom unless the
Agent, the Issuing Bank and each Bank, as applicable, shall
have consented to such release in a writing specifically
referring to the obligation from which such Borrower is to be
released.
(ii) Each Bank may from time to time assign any or all of its
rights and obligations under the Borrower Loan Instruments to
one or more Persons; provided that, except in the case of the
grant of a security interest to a Federal Reserve Bank (which
may be made without condition or restriction), no such
assignment shall be effective unless (A) the assignment is
consented to by the Borrower (unless an Event of Default
exists) the Issuing Bank and the Agent, such consents not to
be unreasonably withheld, (B) in the case of a partial
assignment, the assignment shall involve the assignment of not
less than $5,000,000 of the assignor Bank's Commitment and
there shall at no time be more than five Banks and the
assignment is consented to by the Borrower, such consent not
to be unreasonably withheld, (C) a Notice of Assignment in the
form of Exhibit I with respect to the assignment, duly
executed by the assignor and the assignee, shall have been
given to the Borrower, the Issuing Bank and the Agent, (D)
except in the case of an assignment by the Bank that is the
Agent, the Agent shall have been paid an assignment fee of
$3,500, (E) unless otherwise agreed to by each of
-85-
the Banks, such assignment is made on or after the earlier of
the date that is 90 days following the Effective Date and the
date on which the general syndication of the credit facility
provided for herein is completed, as specified by the Agent
and (F) in the case of an assignment of any Revolving Loan,
Revolving Loan Commitment, Term Loan or Letter of Credit
Participation to any assignee, the assignment shall include a
pro rata portion of all of the Revolving Loans, Revolving Loan
Commitments, Term Loan and Letter of Credit Participations of
the assignor Bank. Upon any effective assignment, the assignor
shall be released from the obligations so assigned and, in the
case of an assignment of all of its Loans and Commitment,
shall cease to be a Bank. In the event of any effective
assignment by a Bank, the Borrower shall issue new Notes to
the assignee Bank (against, other than in the case of a
partial assignment, receipt of the existing Note of the
assignor Bank). Notwithstanding the foregoing, no Bank may
assign any of its rights and obligations under the Borrower
Loan Instruments prior to the date on which the general
syndication or the credit facility provided for herein is
completed, as specified by the Agent, other than in accordance
with the agreement of such Banks entered into prior to the
Effective Date with respect thereto. Nothing in this Section
8.13 shall limit the right of any Bank to assign its interest
in the Loans and its Notes to a Federal Reserve Bank as
collateral security under Regulation A of the Board of
Governors of the Federal Reserve System, but no such
assignment shall release such Bank from it obligations
hereunder.
(b) Participations. Each Bank may from time to time sell or
otherwise grant participations in any or all of its rights and
obligations under the Borrower Loan Instruments. In the event
of any such grant by a Bank of a participation, such Bank's
obligations under the Loan Instruments to the other parties
thereto shall remain unchanged, such Bank shall remain solely
responsible for the performance thereof, and the Borrower, the
Issuing Bank, the Agent and the other Banks may continue to
deal solely and directly with such Bank in connection with
such Bank's rights and obligations thereunder. A Bank may not
grant to any holder of a participation the right to require
such Bank to take or omit to take any action under the Loan
Documents, except that a Bank may grant to any such holder the
right to require such holder's consent to (i) reduce the
principal of or the rate of interest on such Bank's Loans,
Note or the amount of such Bank's Letter of Credit
Participations or any fees payable to
-86-
such Bank hereunder, (ii) postpone any date fixed for any
reduction of the Revolving Loan Commitments or any payment of
principal of or interest on such Bank's Loans, Note or the
amount of such Bank's Letter of Credit Participations or any
fees payable to such Bank hereunder, (iii) permit any Loan
Party to assign any of its obligations under the Loan
Instruments to any other Person or (iv) release any Collateral
from the Security Interest except as required or contemplated
by the Loan Instruments. Each holder of a participation in any
rights under the Borrower Loan Instruments, if and to the
extent the applicable participation agreement so provides,
shall, with respect to such participation, be entitled to all
of the rights of a Bank as fully as though it were a Bank
under Sections 2.10, 2.12, 8.1 and 8.7 (subject to any
conditions imposed on a Bank hereunder with respect thereto)
and may exercise any and all rights of set-off with respect to
such participation as fully as though the Borrower were
directly indebted to the holder of such participation for
Loans in the amount of such participation; provided, however,
that no holder of a participation shall be entitled to any
amounts that would otherwise be payable to it with respect to
its participation under Section 2.10 or 2.12 unless (x) such
amounts are payable in respect of Regulatory Changes that are
enacted, adopted or issued after the date the applicable
participation agreement was executed or (y) such amounts would
have been payable to the Bank that granted such participation
if such participation had not been granted.
SECTION 8.14 Survival of Representations and Warranties. All
representations and warranties of the Borrower contained in this Agreement or of
any of its subsidiaries contained in any other Loan Instrument shall survive
delivery of the Notes and the making of the Loans and the issuance of the
Letters of Credit.
SECTION 8.15 Counterparts. This Agreement and any amendment hereof may
be executed in several counterparts and by each party on a separate counterpart,
each of which when executed and delivered shall be an original, and all of which
together shall constitute one instrument. In proving the Agreement it shall not
be necessary to produce or account for more than one such counterpart signed by
the party against whom enforcement is sought.
-87-
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective duly authorized officers, as of the
date first above written.
EFTC CORPORATION
By: /s/
Xxxxxx X. Xxxxxxxxxx
Vice President and CFO
BANK ONE, COLORADO, N.A.
as Agent and as a Bank
By: /s/
Xxxxx X. Xxxxxxx
Vice President
-88-
