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Exhibit 10.8
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REVOLVING CREDIT, TERM LOAN
AND
SECURITY AGREEMENT
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PNC BANK NATIONAL ASSOCIATION
(AS LENDER AND AS AGENT)
AND
THE SEVERAL OTHER LENDERS PARTIES HERETO
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WITH
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CENTURION INTERNATIONAL, INC.
(BORROWER)
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DECEMBER 30, 1998
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REVOLVING CREDIT, TERM LOAN
AND
SECURITY AGREEMENT
Revolving Credit, Term Loan and Security Agreement dated
December 30, 1998 among CENTURION INTERNATIONAL, INC., a corporation organized
under the laws of the State of Nebraska ("Centurion"), the undersigned financial
institutions and the various financial institutions which in accordance with the
terms and provisions of Section 15.3(c) become Purchasing Lenders (collectively,
the "Lenders" and individually a "Lender") and PNC BANK NATIONAL ASSOCIATION
"PNC"), as agent for Lenders (PNC, in such capacity, the "Agent").
IN CONSIDERATION of the mutual covenants and undertakings
herein contained, Borrower, Lenders and Agent hereby agree as follows:
I. DEFINITIONS.
1.1 Accounting Terms. As used in this Agreement, the Notes, or any
certificate, report or other document made or delivered pursuant to this
Agreement, accounting terms not defined in Section 1.2 or elsewhere in this
Agreement, and accounting terms partly defined in Section 1.2 to the extent not
defined, shall have the respective meanings given to them under GAAP.
1.2 General Terms. For purposes of this Agreement the following terms
shall have the following meanings:
"Advances" shall mean and include the Revolving Advances, the
Term Loan and the Equipment Loans.
"Advance Rates" shall mean the respective percentages
applicable to Eligible Accounts Receivable, Eligible Inventory consisting of
antennas and Eligible Inventory consisting of batteries referred to in the
definition of Formula Amount, as the same may be adjusted from time to time in
accordance with Section 2.1(b).
"Affiliate" of any Person shall mean (a) any Person (other
than a Subsidiary) which, directly or indirectly, is in control of, is
controlled by, or is under common control with such Person, or (b) any Person
who is a director or officer (i) of such Person, (ii) of any Subsidiary of such
Person or (iii) of any Person described in clause (a) above. For purposes of
this definition, control of a Person shall mean the power, direct or indirect,
(x) to vote 5% or more of the interests having ordinary voting power for the
election of directors of such Person, or (y) to direct or cause the direction of
the management and policies of such Person whether by contract or otherwise.
"Agent" shall have the meaning set forth in the preamble to
this Agreement and any successor Agent appointed in accordance with Section
14.3.
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"Alternate Base Rate" shall mean, for any day, a rate per
annum equal to the higher of (i) the Base Rate in effect on such day and (ii)
the Federal Funds Rate in effect on such day plus 1/2 of 1%.
"Alternate Base Rate Loans " shall mean Loans the rate of
interest applicable to which is based upon the Alternate Base Rate.
"Authority" shall have the meaning set forth in Section
4.19(d).
"Base Rate" shall mean the base commercial lending rate of PNC
as publicly announced to be in effect from time to time, such rate to be
adjusted automatically, without notice, on the effective date of any change in
such rate. This rate of interest is determined from time to time by PNC as a
means of pricing certain loans to its customers and is neither tied to any
external rate of interest or index nor does it necessarily reflect the lowest
rate of interest actually charged by PNC to any particular class or category of
customers of PNC.
"Blocked Account" shall mean the commercial depository account
with Processor established by Borrower as provided in the Blocked Account
Agreement, or such other account maintained with the consent of Agent from time
to time by Borrower for the collection of Receivables and the cash proceeds of
the Collateral as required by Section 4.15(h).
"Blocked Account Agreement" shall mean the Blocked Account
Agreement, dated as of the Closing Date, among Agent, Borrower and Processor, in
substantially the form attached hereto as Exhibit 4.15(h), together with all
extensions, renewals, amendments, supplements, modifications, substitutions and
replacements thereto and thereof.
"Borrower" shall mean Centurion and all its permitted
successors and assigns.
"Borrowing Base Certificate" shall mean a certificate duly
executed by an officer of Borrower appropriately completed and in substantially
the form of Exhibit A hereto.
"Borrower's Account" shall have the meaning set forth in
Section 2.8.
"Business Day" shall mean (a) any day other than a day on
which commercial banks in New York are authorized or required by law to close
and (b) when used with respect to or in connection with Eurodollar Loans, which
is also a day on which dealings in Dollars are carried on between banks in the
London interbank Eurodollar market.
"Centurion China" shall mean Centurion Electronics Ltd.
(Shanjia), a company organized under the laws of China.
"Centurion Trading" shall mean Centurion International Trading
Co., Inc., a company organized under the laws of the U.S. Virgin Islands.
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"CERCLA" shall mean the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, 42 U.S.C. S Section 9601 et
seq.
"Change of Control" shall mean (a) the occurrence of any event
(whether in one or more transactions) which results in a transfer of control of
Borrower to a Person who is not the Majority Stockholder or (b) any merger or
consolidation of or with Borrower or sale of all or substantially all of the
property or assets of Borrower (other than a merger permitted by Section 15.17
hereof). For purposes of this definition, "control of Borrower" shall mean the
power, direct or indirect (x) to vote 50% or more of the interests having
ordinary voting power for the election of directors of Borrower or (y) to elect
a majority of the members of the board of directors of Borrower by contract or
otherwise.
"Charges" shall mean all taxes, charges, fees, imposts, levies
or other assessments, including, without limitation, all net income, gross
income, gross receipts, sales, use, ad valorem, value added, transfer,
franchise, profits, inventory, capital stock, license, withholding, payroll,
employment, social security, unemployment, excise, severance, stamp, occupation
and property taxes, custom duties, fees, assessments, liens, claims and charges
of any kind whatsoever, together with any interest and any penalties, additions
to tax or additional amounts, imposed by any taxing or other authority, domestic
or foreign (including, without limitation, the Pension Benefit Guaranty
Corporation or any environmental agency or superfund), upon the Collateral,
Borrower or any of its Subsidiaries.
"Closing Date" shall mean December 31, 1998 or such other date
as may be agreed to by the parties hereto.
"Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time and the regulations promulgated thereunder.
"Collateral" shall mean and include:
(a) all Receivables;
(b) all Equipment;
(c) all General Intangibles;
(d) all Inventory;
(e) all Real Property;
(f) all of Borrower's right, title and interest in and to (i)
its goods and other property including, but not limited to all merchandise
returned or rejected by Customers, relating to or securing any of the
Receivables; (ii) all of Borrower's rights as a consignor, a consignee, an
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unpaid vendor, mechanic, artisan, or other lien or, including stoppage in
transit, setoff, detinue, replevin, reclamation and repurchase; (iii) all
additional amounts due to Borrower from any Customer relating to the
Receivables; (iv) other property, including warranty claims, relating to any
goods securing this Agreement; (v) all of Borrower's contract rights, rights of
payment which have been earned under a contract right, instruments, documents,
chattel paper, warehouse receipts, deposit accounts, money, securities and
investment property; (vi) if and when obtained by Borrower, all real and
personal property of third patties in which Borrower has been granted a lien or
security interest as security for the payment or enforcement of Receivables; and
(vii) any other goods, personal property or real property now owned or hereafter
acquired in which Borrower has expressly granted a security interest or may in
the future grant a security interest to Agent hereunder, or in any amendment or
supplement hereto, or under any other agreement between Agent and Borrower;
(g) all of Borrower's ledger sheets, ledger cards, files,
correspondence, records, books of account, business papers, computers, computer
software (owned by Borrower or in which it has an interest), computer programs,
tapes, disks and documents relating to clauses (a), (b), (c), (d), (e) or (f) of
this Definition; and
(h) all proceeds and products of (a), (b), (c), (d), (e), (f)
and (g) of this Definition in whatever form, including, but not limited to:
cash, deposit accounts (whether or not comprised solely of proceeds),
certificates of deposit, insurance proceeds (including hazard, flood and credit
insurance), negotiable instruments and other instruments for the payment of
money, chattel paper, security agreements, documents, eminent domain proceeds,
condemnation proceeds and tort claim proceeds.
Collateral shall not include assets of any foreign
Subsidiaries, any equity securities of Centurion China and Centurion Trading,
and more than 65% of each class or type of equity securities of any other
foreign Subsidiary.
"Commitment Date" shall mean the date on which Agent has
received commitments from Lenders to fund an aggregate of $47,000,000 of
Advances.
"Commitment Percentage" of any Lender shall mean the
percentage set f below such Lender's name on the signature page hereof as same
may be adjusted upon any assignment by a Lender pursuant to Section 15.3(c).
"Commitment Transfer Supplement" shall mean a document in the
form of Exhibit 15.3, hereto, properly completed and otherwise in form and
substance satisfactory to Agent by which the Purchasing Lender purchases and
assumes a portion of the obligation of Lenders to make Advances under this
Agreement.
"Consents" shall mean all filings and all licenses, permits,
consents, approvals, authorizations, qualifications and orders of governmental
authorities and other third parties, domestic
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or foreign, necessary to carry on Borrower's business, including, without
limitation, any Consents required under all applicable federal, state or other
applicable law.
"Contract Rate" shall have the meaning set forth in Section
3.1.
"Controlled Group" shall mean all members of a controlled
group of corporations and all trades or businesses (whether or not incorporated)
under common control which, together with Borrower, are treated as a single
employer under Section 414 of the Code.
"Current Assets" at a particular date, shall mean all cash,
cash equivalents, accounts and inventory of Borrower and all other items which
would, in conformity with GAAP, be included under current assets on a balance
sheet of Borrower as at such date; provided, however, that such amounts shall
not include (a) any amounts for any Indebtedness owing by an Affiliate to
Borrower, unless such Indebtedness arose in connection with the sale of goods or
rendering of services in the ordinary course of business and would otherwise
constitute current assets in conformity with GAAP, (b) any shares of stock
issued by an Affiliate of Borrower, or (c) the cash surrender value of any life
insurance policy.
"Current Liabilities" at a particular date, shall mean all
amounts which would, in conformity with GAAP, be included under current
liabilities on a balance sheet of Borrower as at such date, but in any event
including, without limitation, the amounts of (a) all Indebtedness of Borrower
payable on demand, or, at the option of the Person to whom such Indebtedness is
owed, not more than twelve (12) months after such date, (b) any payments in
respect of any Indebtedness of Borrower (whether installment, serial maturity,
sinking fund payment or otherwise) required to be made not more than twelve (12)
months after such date, (c) all reserves in respect of liabilities or
Indebtedness payable on demand or, at the option of the Person to whom such
Indebtedness is owed, not more than twelve (12) months after such date, the
validity of which is not contested at such date, and (d) all accruals for
federal or other taxes measured by income payable within a twelve (12) month
period.
"Customer" shall mean and include the account debtor with
respect to any Receivable and/or the prospective purchaser of goods, services or
both with respect to any contract or contract right, and/or any party who enters
into or proposes to enter into any contract or other arrangement with Borrower,
pursuant to which Borrower is to deliver any personal property or perform any
services.
"Deed of Trust" shall mean the deed of trust on the Real
Property securing the Obligations, in substantially the form attached hereto as
Exhibit 8.1(p) together with all extensions, renewals, amendments, supplements,
modifications, substitutions and replacements thereto and thereof.
"Default" shall mean an event which, with the giving of notice
or passage of time or both, would constitute an Event of Default.
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"Default Rate" shall have the meaning set forth in Section
3.1.
"Depository Accounts" shall have the meaning set forth in
Section 4.15(h).
"Documents" shall have the meaning set forth in Section
8.1(c).
"Dollar" and the sign "$" shall mean lawful money of the
United States of America.
"Earnings Before Interest and Taxes" shall mean for any period
the sum of (i) Borrower's and its consolidated Subsidiaries' net income for such
period, (ii) all cash interest expense of Borrower and its consolidated
Subsidiaries for such period (other than interest on the Holdback Notes), and
(iii) all charges against Borrower's and its consolidated Subsidiaries' income
for such period for federal, state and local taxes based on such income minus
(iv) extraordinary gains plus (v) extraordinary losses.
"EBITDA" shall mean for any period the sum of (i) Earnings
Before Interest and Taxes for such period, (ii) depreciation expenses of
Borrower and its consolidated Subsidiaries for such period and (iii)
amortization expenses of Borrower and its consolidated Subsidiaries for such
period.
"Eligible Inventory" shall mean and include Inventory
consisting of antennas or batteries, valued at the lower of cost or market
value, determined on a first-in-first-out basis, which is not, in Agent's
reasonable opinion, obsolete, slow moving or unmerchantable and which Agent, in
its reasonable discretion, shall not deem ineligible Inventory, based on such
considerations as Agent may from time to time deem appropriate including,
without limitation, whether the Inventory is subject to a perfected, first
priority security interest in favor of Agent and whether the Inventory conforms
to all standards imposed by any governmental agency, division or department
thereof which has regulatory authority over such goods or the use or sale
thereof. Eligible Inventory shall not include sub-assemblies.
"Eligible Receivables" shall mean each Receivable unless
Agent, in its reasonable credit judgment, shall deem such Receivable not to be
an Eligible Receivable, based on such considerations as Agent may in its
reasonable discretion from time to time deem appropriate. In addition, a
Receivable shall be deemed not to be an Eligible Receivable if:
(a) it arises out of a sale made by Borrower to an Affiliate
of Borrower or to a Person controlled by an Affiliate of Borrower,
(b) it is due or unpaid more than (i) ninety (90) days after
the original due date or (ii) one hundred twenty (120) days after the original
invoice date;
(c) fifty percent (50%) or more of the Receivables from such
Customer are not deemed Eligible Receivables hereunder,
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(d) any covenant, representation or warranty contained in this
Agreement with respect to such Receivable has been breached in any material
respect;
(e) the Customer shall (i) apply for, suffer, or consent to
the appointment of, or the taking of possession by, a receiver, custodian,
trustee or liquidator of itself or of all or a substantial part of its property
or call a meeting of its creditors, (ii) admit in writing its inability, or be
generally unable, to pay its debts as they become due or cease operations of its
present business, (iii) make a general assignment for the benefit of creditors,
(iv) commence a voluntary case under any state or federal bankruptcy laws (as
now or hereafter in effect), (v) be adjudicated a bankrupt or insolvent, (vi)
file a petition seeking to take advantage of any other law providing for the
relief of debtors, (vii) acquiesce to, or fail to have dismissed, any petition
which is filed against it in any involuntary case under such bankruptcy laws, or
(viii) take any action for the purpose of effecting any of the foregoing;
(f) the sale is to a Customer outside the continental United
States of America or Canada (other than Customers that are, or are direct or
indirect wholly-owned subsidiaries of, Motorola, Inc., Ericsson X.X. Telephone
Company (Sweden) or Nokia Corp (Finland)), unless the sale is on letter of
credit, guaranty or acceptance terms, in each case acceptable to Agent in its
reasonable discretion;
(g) it is not subject to a perfected, first priority, security
interest in favor of Agent;
(h) it is not evidenced by an invoice or other documentary
evidence satisfactory to Lenders;
(i) the sale to the Customer is on a xxxx-and-hold, guaranteed
sale, sale-and-return, sale on approval, consignment or any other repurchase or
return basis or is evidenced by chattel paper;
(j) the Customer is the United States of America, any state or
any department, agency or instrumentality of any of them, unless Borrower
assigns its right to payment of such Receivable to Agent pursuant to the
Assignment of Claims Act of 1940, as amended (31 U.S.C. SubSection 3727 et seq.
and 41 U.S.C. Sub-Section 15 et seq.) or has otherwise complied with other
applicable statutes or ordinances;
(k) the goods giving rise to such Receivable have not been
shipped and delivered to and accepted by the Customer or the services giving
rise to such Receivable have not been performed by Borrower and accepted by the
Customer or the Receivable otherwise does not represent a final sale;
(l) the Receivables of the Customer exceed a credit limit
determined by Agent, in its reasonable discretion, to the extent such Receivable
exceeds such limit;
(m) the Receivable is subject to any offset, deduction,
defense, dispute, or
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counterclaim the Customer is also a creditor or supplier or the Receivable is
contingent in any respect or for any reason;
(n) Borrower has made any agreement with any Customer for any
deduction therefrom, except for discounts or allowances made in the ordinary
course of business for prompt payment, all of which discounts or allowances are
reflected in the calculation of the face value of each respective invoice
related thereto;
(o) shipment of the merchandise or the rendition of services
has not been completed;
(p) any return, rejection or repossession of the merchandise
has occurred;
(q) such Receivable is not payable to Borrower or any of its
consolidated Subsidiaries, provided, that Receivables which are payable to any
such consolidated Subsidiaries must comply with all other eligibility criteria
set forth in the definition "Eligible Receivables" provided further, that
Receivables payable to Centurion China need not comply with clause (g) so long
as the applicable Customer is, or is a direct or indirect wholly-owned
subsidiary of, Motorola, Inc., Ericsson X.X. Telephone Company (Sweden) or Nokia
Corp. (Finland); or
(r) such Receivable is not otherwise satisfactory to Agent as
determined in good faith by Agent in the exercise of its discretion in a
reasonable manner.
"Environmental Complaint" shall have the meaning set forth in
Section 4.19(d).
"Environmental Laws" shall mean all federal, state and local
environmental, land use, zoning, worker health and safety, chemical use laws,
statutes, ordinances and codes relating to the protection of the environment
and/or governing the use, storage, treatment, generation, transportation,
processing, handling, production or disposal of Hazardous Substances and the
rules, regulations, policies, guidelines, interpretations, decisions, orders and
directives of federal, state and local governmental agencies and authorities
with respect thereto, in each case as now in force or hereafter enacted or
adopted, including without limitation CERCLA, the Hazardous Materials
Transportation Act, as amended (49 U.S.C. Sections 1801, et seq.) and RCRA.
"Equipment" shall mean and include all of Borrower's goods
(other than Inventory) whether now owned or hereafter acquired and wherever
located including, without limitation, all equipment, machinery, apparatus,
motor vehicles, fittings, furniture, furnishings, fixtures, parts, accessories
and all replacements and substitutions therefor or accessions thereto.
"Equipment Cost Verification" shall mean the equipment cost
verifications delivered from time to time by Borrower to Agent reflecting the
net cost (excluding taxes, freight, delivery, installation, overhead and other
so called soft costs) of Equipment then to be purchased by Borrower with
Equipment Loan proceeds in accordance with the provisions of Section 2.4(b),
which
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Equipment Cost Verification shall be prepared by an officer of Borrower and
shall be satisfactory in all respects to Agent.
"Equipment Loan" shall mean an Advance made pursuant to
Section 2.4(b).
"Equipment Notes" shall mean the promissory notes described in
Section 2.4(b).
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended from time to time and the rules and regulations promulgated
thereunder.
"Eurodollar Loans" means Advances the rate of interest
applicable to which is based upon the Eurodollar Rate.
"Eurodollar Rate" shall mean for any Eurodollar Rate Loan for
the then current interest Period relating thereto the interest rate per annum
determined by PNC by dividing (the resulting quotient rounded upwards, if
necessary, to the nearest 1/100th of 1% per annum) (i) the rate of interest
determined by PNC in accordance with its usual procedures (which determination
shall be conclusive absent manifest error) to be the average of the London
interbank offered rates for U.S. Dollars quoted by the British Bankers'
Association as set forth on Dow Xxxxx Markets Service (formerly known as
Telrate) (or appropriate successor or, if British Banker's Association or its
successor ceases to provide such quotes, a comparable replacement determined by
PNC display page 3750 (or such other display page on the Dow Xxxxx Markets
Service system as may replace display page 3750) two (2) Business Days prior to
the first day of such Interest Period for an amount comparable to such
Eurodollar Rate Loan and having a borrowing date and a maturity comparable to
such Interest Period by (ii) a number equal to 1.00 minus the Reserve
Percentage. The Eurodollar Rate may also be expressed by the following formula:
Average of London interbank offered rates quoted by BBA as shown on
Eurodollar Rate = Dow Xxxxx Markets Service display page 3750 or appropriate successor
1.00 - Reserve Percentage
"Event of Default" shall mean the occurrence of any of the
events set forth in Article X hereof.
"Excess Cash Flow" shall mean, with respect to any fiscal
period, EBITDA for such period MM cash interest and scheduled cash principal
payments on all Indebtedness for borrowed money for such period, minus permitted
capital expenditures to the extent not financed for such period, minus income
taxes paid for such period, minus permitted cash dividends on Series A
Convertible Preferred Stock and Series B Redeemable Preferred Stock.
"Facility Fee Amount" shall have the meaning set forth in
Section 3.2.
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"Federal Funds Rate" shall mean, 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 which is a Business Day, the average of quotations for such day on such
transactions received by PNC from three Federal funds brokers of recognized
standing selected by PNC.
"Fee Letter" shall mean the letter agreement dated December
30, 1998 between Borrower and Agent regarding certain fees payable to Agent.
"Fixed Charge Coverage Ratio" shall mean, with respect to any
fiscal period, the ratio of (a) EBITDA for such period minus the sum of (i)
capital expenditures for such period which are not financed and (ii) income and
franchise taxes paid for such period to (b) Senior Debt and Fixed Charge
Payments for such period.
"Foreign Exchange Contract" shall have the meaning set forth
in Section 3.1C.
"Foreign Exchange Obligations" shall have the meaning set
forth in Section 3.1C.
"Foreign Exchange Reserves" shall have the meaning set forth
in Section 3.3C.
"Formula Amount" shall mean an amount equal to the sum of:
(i) 85% of Eligible Receivables, plus
(ii) the lesser of (A) the sum of (x) 60% of the Eligible
Inventory consisting of antennas plus (y) 50% of
Eligible Inventory consisting of batteries and (B)
the lesser of (x) $10,000,000 prior to the Commitment
Date and $11,500,000 on and after the Commitment Date
and (y) an amount equal to 50% of Advances (other
than the Term Loan and Equipment Loan), minus
(iii) such reserves as Agent may reasonably deem proper and
necessary from time to time.
"Funded Debt" at a particular date, shall mean all
Indebtedness of Borrower that matures more than one year from the date of its
creation or matures within one year from such date but is renewable or
extendable, at the option of Borrower, to a date more than one year from such
date or arises under a revolving credit or similar agreement that obligates the
lender or lenders to extend credit during a period of more than one year from
such date, including, without limitation, all current maturities and current
sinking fund payments in respect of such Indebtedness whether or not required to
be paid within one year from the date of its creation, including, without
limitation, Indebtedness in respect of the Advances.
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"GAAP" shall mean generally accepted accounting principles in
the United States of America in effect from time to time.
"General Intangibles" shall mean and include all of Borrower's
general intangibles, whether now owned or hereafter acquired including, without
limitation, all choses in action, causes of action, corporate or other business
records, inventions, designs, patents, patent applications, equipment
formulations, manufacturing procedures, quality control procedures, trademarks,
trade secrets, goodwill, copyrights, registrations, licenses, franchises,
customer lists, tax refunds, tax refund claim computer programs, all claims
under guaranties, security interests or other security held by or granted to
Borrower to secure payment of any of the Receivables by a Customer all rights of
indemnification and all other intangible property of every kind and nature
(other than Receivables).
"Governmental Body" shall mean any nation or government, any
state or other political subdivision thereof or any entity authorized to
exercise the legislative, judicial, regulatory or administrative functions of or
pertaining to a government.
"Hazardous Discharge" shall have the meaning set forth in
Section 4.19(d).
"Hazardous Substance" shall mean, without limitation, any
flammable or explosive, radon, radioactive materials, asbestos, urea
formaldehyde foam insulation, polychlorinated byphenyls, petroleum and petroleum
products, methane, hazardous materials, Hazardous Wastes, hazardous or toxic
substances as defined in the Environmental Laws.
"Hazardous Wastes" shall mean all hazardous waste materials
subject to regulation under the Environmental Laws.
"Holdback Notes" shall mean the promissory notes in an
aggregate principal amount of $3,000,000 issued by Borrower on April 18, 1997 to
Xxxx Investment Partners, L.P., Xxxxx X. Xxxx and Xxxxx X. Xxxx.
"Indebtedness" of a Person at a particular date shall mean all
obligations of such Person which in accordance with GAAP would be classified
upon a balance sheet as liabilities (except capital stock and surplus earned or
otherwise) and in any event, without limitation by reason of enumeration, shall
include all indebtedness, debt and other similar monetary obligations of such
Person whether direct or guaranteed, and all premiums, if any, due at the
required prepayment dates of such indebtedness, and all indebtedness secured by
a Lien on assets owned by such Person, whether or not such indebtedness actually
shall have been created, assumed or incurred by such Person. Any indebtedness of
such Person resulting from the acquisition by such Person of any assets subject
to any Lien shall be deemed, for the purposes hereof, to be the equivalent of
the creation, assumption and incurring of the indebtedness secured thereby,
whether or not actually so created, assumed or incurred.
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"Ineligible Security" shall mean any security which may not be
underwritten or dealt in by member banks of the Federal Reserve System under
Section 16 of the Banking Act of 1933 (12 U.S.C. Section 24, Seventh), as
amended.
"Initial Public Offering" shall mean the initial sale by the
Borrower of its common stock in an offering registered under the Securities Act
of 1933, as amended, other than an offering pursuant to a registration statement
on Form S-8 or any similar form.
"Intellectual Property Security Agreement" shall mean the
Copyright Patent and Trademark Security Agreement securing the Obligations, in
substantially the form attached hereto as Exhibit 8.1 (n)-1 together with all
extensions, renewals, amendments, supplements, modifications, substitutions and
replacements thereto and thereof.
"Interest Expense" shall mean for any fiscal period of
Borrower and its consolidated Subsidiaries, the amount which, on a consolidated
basis in conformity with GAAP (but excluding the effect of any interest income
for such fiscal period), would be deducted as interest expense (other than
interest payable under the Holdback Notes) in any determination of net income of
Borrower and its consolidated Subsidiaries for such fiscal period (including,
without limitation, the interest component of payments made under capital
leases).
"Interest Payment Date" shall mean (a) as to any Alternate
Base Rate Loan on the first Business Day of each calendar month occurring while
such Alternate Base Rate Loan is outstanding, commencing on February 1, 1999 and
(b) as to any Eurodollar Loan, the last day of each Interest Period for such
Loan.
"Interest Period" shall mean, with respect to any Eurodollar
Loan:
(i) initially, the period commencing on the borrowing
or conversion date, as the case may be, with respect to such
Eurodollar Loan and ending one, two or three months
thereafter, as selected by Borrower in its notice of borrowing
or notice of conversion, as the case may be, given with
respect thereto; and
(ii) thereafter, each period commencing on the last
day of the next preceding Interest Period applicable to such
Eurodollar Loan and ending one, two or three months
thereafter, as selected by Borrower by irrevocable notice to
Agent not less than three Business Days prior to the last day
of the then current Interest Period with respect thereto;
provided that all of the foregoing provisions relating to
Interest Periods are subject to the following:
(1) if any Interest Period pertaining to a Eurodollar
Loan would otherwise end on a day that is not a Business Day,
such Interest Period shall be
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extended to the next succeeding Business Day unless the result
of such extension would be to carry such Interest Period into
another calendar month in which event such Interest Period
shall end on the immediately preceding Business Day;
(2) any Interest Period that would otherwise extend
beyond the Termination Date or beyond the date final payment
is due on the Term Loan and the Equipment Loans shall end on
the Termination Date or such date of final payment, as the
case may be;
(3) any Interest Period pertaining to a Eurodollar
Loan that begins on the last Business Day of a calendar month
(or on a day for which there is no numerically corresponding
day in the calendar month at the end of such Interest Period)
shall end on the last Business Day of a calendar month, and
(4) Borrower shall select Interest Periods so as not
to require a payment or prepayment of any Eurodollar Loan
during an Interest Period for such Loan.
"Inventory" shall mean all of Borrower's now owned or
hereafter acquired goods, merchandise and other personal property, wherever
located, to be furnished under any contract of service or held for sale or lea ,
all raw materials, work in process, finished goods and materials and supplies of
any kind, nature or description which are or might be used or consumed in
Borrower's business or used in selling or furnishing such goods, merchandise and
other personal property, and all documents of title or other documents
representing than.
"Issuing Lender" means, in the case of any Letter of Credit,
the Lender that shall have issued such Letter of Credit, in its capacity as the
issuer thereof under Article III.
"Lender" and "Lenders" shall have the meaning ascribed to such
term in the Preamble and shall include each Person which is a Purchasing Lender.
"Lending Office" shall mean, with respect to any Lender, the
branch or branches from which any such Lender's Eurodollar Loans or Alternate
Base Rate Loans, as the case may be, are made or maintained and for the account
of which all payments of principal of, or interest on, such Lender's Eurodollar
Loans or Alternate Base Rate Loans are made, provided to Agent from time to time
in accordance, as the case may be, with Section 15.6.
"Letter of Credit" means any letter of credit issued or to be
issued hereunder by Issuing Lender for the account of Borrower pursuant to
Article IIIA.
"Letter of Credit Cash Collateral" shall have the meaning
ascribed to such term in Section 3.6A.
"Letter of Credit Cash Collateral Account" has the meaning
specified in Section 3.6A.
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"Letter of Credit Obligations" shall mean, as at any date of
determination, the slim of the following amounts (without duplication): (i) with
respect to any Letter of Credit issued for the purpose of purchasing Eligible
Inventory consisting of batteries, 50% of the cost of such Eligible Inventory,
(ii) with respect to any Letter of Credit issued for the purpose of purchasing
Eligible Inventory consisting of antennas, 400/6 of the cost of such Eligible
Inventory, (iii) the cost of freight, taxes, duty and other amounts which
Agent estimates must be paid in connection with the Inventory referred to in the
preceding clauses (i) and (ii) upon arrival and for delivery to one of
Borrower's locations for Eligible Inventory within the United States, (iv) with
respect to any Letter of Credit issued for any other purpose, an amount equal to
I W/O of the stated amount thereof and all other commitments and obligations
made or incurred by Issuing Lender with respect thereto and (v) the aggregate
amount of all Reimbursement Obligations.
"Lien" shall mean any mortgage, deed of trust, pledge,
hypothecation, assignment, security interest, Hen (whether statutory or
otherwise), charge, claim or encumbrance, or preference, priority or other
security agreement or preferential arrangement held or asserted in respect of
any asset of any kind or nature whatsoever including, without limitation, any
conditional sale or other title retention agreement, any lease having
substantially the same economic effect as any of the foregoing, and the filing
of, or agreement to give, any financing statement under the Uniform Commercial
Code or comparable law of any jurisdiction.
"Loan" shall mean either an Alternative Base Rate Loan or a
Eurodollar Loan.
"Loan Year" shall mean each period Of twelve (12) consecutive
months commencing on the Closing Date and on each anniversary thereof.
"Majority Stockholder" shall mean collectively Cornerstone
Equity Investors, IV, L.P. and Prudential Private Equity Investors, III, L.P.
"Material Adverse Effect" shall mean a material adverse effect
on (i) the business, assets, operations, prospects or financial condition of
Borrower or any of its Subsidiaries, (ii) Borrower's ability to pay the
Obligations in accordance with the terms thereof, (iii) the Collateral or
Agent's Liens on the Collateral or the priority of any such Lim or (iv) Agent's
and Lenders' rights and remedies under this Agreement and the Other Documents.
"Maturity Date" shall have the meaning set forth in Section
13.1.
"Maximum Equipment Loan Amount" shall mean (x) from the
Closing Date to the Commitment Date, $2,000,000 and (y) on the Commitment Date
and thereafter, $4,000,000.
"Maximum Foreign Exchange Facility Amount" shall mean
$2,000,000.
"Maximum Letter of Credit Stated Amount"shall mean $4,000,000.
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"Maximum Loan Amount" shall mean (x) from the Closing Date to
the Commitment Date, $42,000,000 and (y) on the Commitment Date and thereafter,
$47,000,000, in each case less the aggregate amount of all repayments of the
Term Loan and the Equipment Loans.
"Maximum Revolving Advance Amount" shall mean (x) from the
Closing Date to the Commitment Date, $20,000,000 and (y) on the Commitment Date
and thereafter, $23,000,000.
"Notes" shall mean, collectively, the Term Notes, the
Equipment Notes and the Revolving Credit Notes.
"Obligations" shall mean and include Indebtedness, obligations
and liabilities of Borrower to Agent (in such capacity and as Issuing Lender)
and each Lender now existing or hereafter incurred, under or arising out of or
in connection with the Advances, the Letters of Credit, the Foreign Exchange
Contacts, this Agreement, or any of the Other Documents, whether for principal,
interest, fees, expenses, indemnities or otherwise.
"Other Documents" shall mean the Blocked Account Agreement,
the Deed of Trust, the Intellectual Property Security Agreement, the Notes, the
Questionnaire, any and all stock pledge, security and other documents granting
Agent additional Liens as security for the obligations as by Section 6.9 and
7.4, and any and all other agreements, instruments and documents, including,
without limitation, guaranties, security agreements, pledges, powers of
attorney, consents, and all other writings now or hereafter executed by Borrower
and/or delivered to Agent or any Lender in respect of the transactions
contemplated by this Agreement.
"Participant" shall mean each Person who shall be granted the
right by any Lender to participate in any of the Advances and who shall have
entered into a participation agreement in form and substance satisfactory to
such Lender.
"Payment Office" shall mean initially Xxx Xxxxx Xxxxxx
Xxxxxxxxx, Xxxx Xxxxxxxxx, Xxx Xxxxxx 00000; thereafter, such other office of
Agent, if any, which it may designate by notice to Borrower and to each Lender
to be the Payment Office.
"Permitted Encumbrances" shall mean (a) Liens in favor of
Agent for the benefit of Agent and Lenders; (b) Liens for taxes, assessments or
other governmental charges not delinquent, or, being contested in good faith and
by appropriate proceedings and with respect to which proper reserves have been
taken by Borrower; provided, that, the Lien shall have no effect on the priority
of the Liens in favor of Agent or the value of the assets in which Agent has
such a Lien and a stay of enforcement of any such Lien shall be in effect; (c)
deposits or pledges to secure obligations under worker's compensation, social
security or similar laws, or under unemployment insurance; (d) deposits or
pledges to secure bids, tenders, contracts (other than contracts for the payment
of money), leases, statutory obligations, surety and appeal bonds and other
obligations of like nature arising in the ordinary course of Borrower's
business; (e) judgment Liens that have been stayed or bonded and mechanics',
worker's, materialmen's or other like Liens arising in the ordinary course
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of Borrower's business with respect to obligations which are not due or which
are being contested in good faith by Borrower, (f) Liens placed upon fixed
assets hereafter acquired to secure a portion of the purchase price thereof,
provided that (x) any such lien shall not encumber any other property of
Borrower and (y) the aggregate amount of Indebtedness secured by such Liens
incurred as a result of such purchases during any fiscal year shall not exceed
the amount provided for in Section 7.6; (g) Liens disclosed on Schedule 1.2 and
(h) Liens covering assets that are acquired by Borrower or any Subsidiary, to
the extent such acquisition is otherwise permitted hereunder.
"Person" shall mean an individual, a partnership, a
corporation, a business bust, a joint stock company, a bust, an unincorporated
association, a joint venture, a limited liability company, a limited liability
partnership, a governmental authority or any other entity of whatever nature.
"Plan" shall mean any employee benefit plan within the meaning
of Section 3(3) of ERISA, maintained for employees of Borrower or any member of
the Controlled Group or any such Plan to which Borrower or any member of the
Controlled Group is required to contribute on behalf of any of its employees.
"PNC Collateral Account" shall have the meaning ascribed to
such term in Section 4.15(j).
"Processor" shall mean Norwest Bank Nebraska, National
Association, at which Borrower has established the Special Account pursuant to
the Blocked Account Agreement, or such other bank reasonably satisfactory to
Agent at which the Blocked Account shall be maintained from time to time in
accordance with this Agreement.
"Pro Forma Balance Sheet" shall have the meaning set forth in
Section 5.5(a).
"Pro Forma Financial Statements" shall have the meaning set
forth in Section 5.5(b).
"Projections" shall have the meaning set forth in Section
5.5(b).
"Purchasing Lender" shall have the meaning set forth in
Section 15.3(c).
"Questionnaire" shall mean the Documentation Information
Questionnaire and the responses thereto provided by Borrower and delivered to
Agent.
"RCRA" shall mean the Resource Conservation and Recovery Act,
42 U.S.C. Section 6901 et seq., as same may be amended from time to time.
"Real Property" shall mean all of Borrower's right, title and
interest in and to the premises located at 0000 Xxxxx 00xx Xxxxxx, Lincoln,
Nebraska.
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"Receivables" shall mean and include all of Borrower's and its
consolidated Subsidiaries' accounts, contract rights, instruments (including
those evidencing indebtedness among Borrower and its Affiliates), documents,
chattel paper, general intangibles relating to accounts, drafts and acceptances,
and all other forms of obligations owing to Borrower arising in the ordinary
course of Borrower's business out of or in connection with the sale of Inventory
or the rendition of services, all guarantees and other security therefor,
whether secured or unsecured, now existing or hereafter created, and whether or
not specifically sold or assigned to Lenders hereunder.
"Reimbursement Obligation" shall have the meaning set forth in
Section 3.3A.
"Release" shall have the meaning set forth in Section
5.7(c)(i).
"Reportable Event" shall mean a reportable event described in
Section 4043(b) of ERISA or the regulations promulgated thereunder.
"Required Lenders" shall mean Lenders the Commitment
Percentages of which aggregate at least sixty six percent (66%).
"Reserve Percentage" shall mean the maximum effective
percentage in effect on any day as prescribed by the Board of Governors of the
Federal Reserve System (or any successor) for determining the reserve
requirements (including, without limitation, supplemental, and emergency reserve
requirements) with respect to eurocurrency funding.
"Revolving Advances" shall mean Advances made other than the
Term Loan or the Equipment Loans.
"Revolving Credit Notes" shall mean the promissory notes
referred to in Section 2.1(a).
"Revolving Interest Rate" shall mean an interest rate per
annum equal to (a) in the case of Revolving Advances and Equipment Loans made as
Alternate Base Rate Loans, the sum of the Alternate Base Rate plus one-half of
one percent (.50%) and (b) in the case of Revolving Advances and Equipment Loans
made as Eurodollar Loans, the sum of the Eurodollar Rate plus two and one half
percent (2.50%).
"Section 20 Subsidiary" shall mean the Subsidiary of the bank
holding company controlling PNC, which Subsidiary has been granted authority by
the Federal Reserve Board to underwrite and deal in certain Ineligible
Securities.
"Senior Debt and Fixed Charge Payments" shall mean and include
(without duplication) for any fiscal period the aggregate amount of cash
actually expended by Borrower to pay (a) Interest Expense, (b) scheduled
principal payments on the Term Loan and the Equipment Loans, (c) payments for
all fees, commissions and charges set forth herein, including without
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limitation, with respect to all Advances, Letters of Credit and Foreign Exchange
Contracts, but excluding any such fees paid on the Closing Date, and (d) cash
dividend payments made by Borrower with respect to Borrower's preferred stock
during such period other than dividend payments permitted by Section 2.12, to
the extent permitted hereunder.
"Series A Convertible Preferred Stock" shall mean the Series A
Convertible Preferred Stock, par value $.01 per share, of Borrower, authorized
under the Restated Article of Incorporation of Borrower and in effect on the
date hereof, issued by Borrower with an aggregate liquidation preference
(excluding dividends) of $16,000,000.
"Series B Redeemable Preferred Stock" shall mean the Series B
Redeemable Preferred Stock, par value S.01 per share, of Borrower, authorized
under the Restated Articles of Incorporation of Borrower and in effect on the
date hereof, issued by Borrower with an aggregate liquidation preference
(excluding dividends) of $9,500,000.
"Settlement Date" shall mean the Closing Date and thereafter
Wednesday of each week unless such day is not a Business Day in which case it
shall be the next succeeding Business Day.
"Subordinated Notes" shall mean the 12% Subordinated Notes Due
April 18, 2004 issued by Borrower in the aggregate principal amount of
$18,000,000.
"Subsidiary" shall mean as to any Person a corporation or
other entity whose sham of stock or other ownership interests having ordinary
voting power (other than stock or other ownership interests having such power
only by reason of the happening of a contingency) to elect a majority of the
directors of such corporation, or other Persons performing similar functions for
such entity, are owned, directly or indirectly, by such Person.
"Taxes" shall have the meaning set forth in Section 3.9.
"Term" means the period beginning on the Closing Date and
ending on the first to occur of the Maturity Date or the Termination Date.
"Termination Date" shall have the meaning set forth in Section
13.1.
"Term Loan" shall mean the Advances made pursuant to Section
2.4(a).
"Term Loan Rate" shall mean an interest rate per annum equal
to the sum of (a) in the case of the Term Loan made as Alternate Base Rate
Loans, the Alternate Base Rate plus three-quarters of one percent (.75%) and (b)
in the case of the Term Loan made as Eurodollar Loans, the sum of the Eurodollar
Rate plus two and three-quarters percent (2.75%).
"Term Notes" shall mean the promissory notes described in
Section 2.4(a).
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"Termination Event" shall mean (i) a Reportable Event with
respect to any Plan or Multiemployer Plan; (ii) the withdrawal of either
Borrower or any member of the Controlled Group from a Plan or Multiemployer Plan
during a plan year in which such entity was a "substantial employer" as defined
in Section 4001(a)(2) of ERISA; (iii) the providing of notice of intent to
terminate a Plan in a distress termination described in Section 4041(c) of
ERISA; (iv) the institution by the PBGC of proceedings to terminate a Plan or
Multiemployer Plan; (y) any event or condition (a) which might constitute
grounds under Section 4042 of ERISA for the termination of, or the appointment
of a trustee to administer, any Plan or Multiemployer Plan, or (b) that may
result in termination of a Multiemployer Plan pursuant to Section 4041A of
ERISA; or (vi) the partial or complete withdrawal within the meaning of Sections
4203 and 4205 of ERISA, of either Borrower or any member of the Controlled Group
from a Multiemployer Plan.
"Tranche" shall mean Eurodollar Loans all of which have
Interest Periods that begin on the same date and end on the same later date
(whether or not such Loans shall originally have been made on the same day).
"Transferee" shall have the meaning set forth in Section
15.3(b).
"Transactions" shall have the meaning set forth in Section
5.5(a).
"Type" shall mean, as to any Loan, its nature as an
Alternative Base Rate Loan or a Eurodollar Loan.
"Undrawn Availability" shall mean, at any time, an amount
equal to the lesser of (a) the Formula Amount or (b) the Maximum Revolving
Advance Amount, in each case less the slim of the following amounts (without
duplication) at such time: (i) the aggregate outstanding principal amount of all
Revolving Advances, (ii) the aggregate amount of all Foreign Exchange Reserves
and Foreign Exchange Obligations (iii) all amounts due and owing to Borrower's
trade creditors which are outstanding more than sixty (60) days past the due
date thereof, and (iv) with respect to clause (a) above, the aggregate amount of
all Letter of Credit Obligations, and with respect to clause (b) above, the
aggregate stated amount of all outstanding Letters of Credit and the aggregate
amount of all outstanding Reimbursement Obligations.
"Week" shall mean the time period commencing with the opening
of business on a Wednesday and ending on the end of business the following
Tuesday.
"Working Capital" shall mean, at any date, (a) Current Assets
(excluding cash), less (b) Current Liabilities (other than the current portion
of long-term Indebtedness of Borrower at such time, determined in accordance
with GAAP).
1.3 Uniform Commercial Code Terms. All terms used herein and defined in
the Uniform Commercial Code as adopted in the State of New York shall have the
meaning given therein unless otherwise defined herein.
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1.4 Certain Matters of Construction. The terms "herein", "hereof" and
"hereunder" and other words of similar import refer to this Agreement as a whole
and not to any particular section, paragraph or subdivision, and all references
herein to numbered Sections or Articles refer to Sections or Articles of this
Agreement Any pronoun used shall be deemed to cover all genders. Wherever
appropriate in the context, terms used herein in the singular also include the
plural and vice versa. All references to statutes and related regulations shall
include any amendments of same and any successor statutes and regulations. All
references to any instruments or agreements, including, without limitation,
references to any of the Other Documents shall include any and all modifications
or amendments thereto and any and all extensions or renewals thereof.
II. ADVANCES, PAYMENTS.
2.1 Revolving Advances. (a) Subject to the terms and conditions set
forth in this Agreement, each Lender, severally and not jointly, will make
Revolving Advances to Borrower in aggregate amounts outstanding at any time
equal to such Lender's Commitment Percentage of up to the lesser of (x) the
Maximum Revolving Advance Amount and (y) the Formula Amount; provided, however,
the Lenders shall not be required to make any Revolving Advance at any time to
the extent that after giving effect to such Advance, Undrawn Availability would
be less than zero. The Revolving Advances of each Lender shall be evidenced by
secured promissory notes (each, a "Revolving Credit Note") substantially in the
form attached hereto as Exhibit 2. 1(a) and shall be secured by the Collateral.
(b) Discretionary Rights as to Advance Rates: Reserves. The
Advance Rates may be increased (subject to Section 15.2(b)(ii)) or decreased,
and the reserves referred to in clause (iii) of the definition of Formula Amount
may be increased or decreased, by Agent at any time and from time to time in the
exercise of its reasonable discretion. Borrower consents to any such increases
or decreases and acknowledges that decreasing the Advance Rates or imposing or
increasing such reserves may limit or restrict Advances requested by Borrower.
Agent shall give Borrower prior written notice of its intention to decrease any
of the Advance Rates or impose, increase or decrease any such reserves.
(c) Types of Revolving Advances. The Revolving Advances made
pursuant to this Section 2.1 may from time to time be (i) Eurodollar Loans, (ii)
Alternate Base Rate Loans or (iii) a combination thereof, as determined by
Borrower and notified to Agent in accordance with Sections 2.2(a) and 2.14.
2.2 (a) Procedure for Borrowings. Borrower shall give Agent irrevocable
notice (which notice must be received by Agent prior to 10:00 AM on a Business
Day, New York City time, three Business Days prior to the requested borrowing
date, if all or any part of the Revolving Advances, Term Loan or Equipment Loans
to which such notice relates are to be Eurodollar Loans, or prior to 12:00 noon,
New York City time, on a Business Day that is the date of the requested
borrowing, if all of the Revolving Advances, Term Loan or Equipment Loans to
which such notice
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relates are to be Alternate Base Rate Loans; provided that, with respect to the
Term Loan to be made on the Closing Date, the borrowing request therefor may, at
the discretion of Agent, be delivered later than the times specified above),
specifying (i) whether the borrowing to which such notice relates is to be a
Revolving Advance, a Term Loan or an Equipment Loan, (ii) the amount to be
borrowed, (iii) the requested borrowing date, (iv) whether the requested
borrowing is to be of Eurodollar Loans, Alternate Base Rate Loans or a
combination thereof and (v) if the borrowing is to be entirely or partly of
Eurodollar Loans, the amount of such Loan and the initial Interest Period
therefor. Each borrowing made as a Revolving Advance shall be in an amount equal
to at least $100,000 (or, if the Undrawn Availability is less than $100,000,
such lesser amount). Each borrowing made as an Equipment Loan shall be in an
amount equal to at least $50,000.
(b) Deemed Requests for Revolving Advances. Should any amount
required to be paid as interest hereunder, or as fees or other charges under
this Agreement or any other agreement with Agent or Lenders, or with respect to
any other obligation, including, without limitation, any Reimbursement
Obligation or Foreign Exchange Obligations as contemplated by Section 3.3A and
Section 3.1C, or amount remain unpaid within two (2) Business Days after the
same amount became due, same shall be deemed a request for a Revolving Advance
as of the date two (2) Business days after such payment became due, in the
amount required to pay in full such interest, fee, charge or Obligation under
this Agreement or any other agreement with Agent or Lenders, and such request
shall be irrevocable.
2.3 Disbursement of Advance Proceeds. All Advances shall be disbursed
from whichever office or other place Agent may designate from time to time and,
together with any and all other Obligations of Borrower to Agent or Lenders,
shall be charged to Borrower's Account on Agent's books. During the Term,
Borrower may use the Revolving Advances by borrowing, prepaying and reborrowing,
all in accordance with the terms and conditions hereof. The proceeds of each
Revolving Advance requested by Borrower or deemed to have been requested by
Borrower under Section 2.2 shall, with respect to requested Revolving Advances
to the extent Lenders make such Revolving Advances, be made available to
Borrower on the day so requested by way of credit to Borrower's operating
account at PNC, or such other bank as Borrower may designate following
notification to Agent, in immediately available federal funds or other
immediately available funds or, with respect to Revolving Advances deemed to
have been requested, be disbursed to Agent to be applied to the outstanding
obligations giving rise to such deemed request.
2.4 (a) Term Loan. Subject to the terms and conditions of this
Agreement, each Lender, severally and not jointly, will make a Term Loan to
Borrower in the sum equal to such Lender's Commitment Percentage of $20,000,000.
The Term Loan shall be advanced on the Closing Date and shall be, with respect
to principal, payable in consecutive monthly installments of $238,095 commencing
on February 1, 1999 and on the first day of each month thereafter, with a final
installment in an amount equal to the entire remaining outstanding balance
thereof, payable on the last day of the Term, subject to acceleration upon the
occurrence of an Event of Default under this Agreement or termination of this
Agreement and to mandatory prepayments pursuant to Section
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2.11. The Term Loan shall be evidenced by secured promissory notes (each, a
"Term Note") in substantially the form attached hereto as Exhibit 2.4(a) and
shall be secured by the Collateral.
(b) Equipment Loans. (i) Subject to the terms and conditions
of this Agreement (including, without limitation, the terms and conditions of
Section 8.2(e)), each Lender, severally and not jointly, shall, from time to
time during the period commencing on the Closing Date and ending on the third
anniversary of the Closing Date make Advances to Borrower ("Equipment Loans") to
finance Borrower's purchase of Equipment for use in Borrower's business based
upon such Lender's Commitment Percentage of the requested Equipment Loan. All
such Equipment Loans shall be in such amounts as are requested by Borrower, but
in no event shall the amount of any Equipment Loan exceed eighty percent (80%)
of the net cost (excluding taxes, freight, delivery, installation, overhead and
other so called soft costs) of the Equipment then to be purchased by Borrower,
nor shall the total amount of all Equipment Loans made hereunder exceed, in the
aggregate, the Maximum Equipment Loan Amount. Once repaid, Equipment Loans may
not be reborrowed.
(ii) Advances constituting Equipment Loans shall be
accumulated during each Loan Year. At the end of each Loan Year, the sum of all
Equipment Loans made during such Loan Year shall amortize on the basis of an
eighty-four (84) month schedule (each such monthly amount as determined with
respect to any Loan Year, the "Amortization Amount"). Monthly principal payments
will be determined for the Equipment Loans made during the first Loan Year and
the amount of such monthly principal payments shall be increased upon completion
of the subsequent Loan Year by the applicable Amortization Amount for each month
with respect to the subsequent Loan Year. The Equipment Loans shall, with
respect to principal, be payable in consecutive monthly installments based upon
the amortization schedule set forth above, commencing January 1, 2000 and on the
first day of each month thereafter, with a final installment in an amount equal
to the entire remaining outstanding balance of all. Equipment Loans, payable on
the Maturity Date, subject to (x) acceleration upon the occurrence of an Event
of Default under this Agreement or termination of this Agreement, and (y)
mandatory prepayments pursuant to Section 2.11. The Equipment Loans shall be
evidenced by secured promissory notes (each, an "Equipment Note") in
substantially the form attached hereto as Exhibit 2.4(b) and shall be secured by
the Collateral.
(c) Types of Term Loan and & Equipment Loans. The Term Loan
and the Equipment Loans may from time to time be (i) Eurodollar Loans, (ii)
Alternate Base Rate Loans or (iii) a combination thereof, as determined by
Borrower and notified to Agent in accordance with Sections 2.2(a) and 2.14.
2.5 Maximum Advances. The aggregate unpaid principal balance of
Advances plus the stated amount of all Letters of Credit, all Reimbursement
Obligations, the face amount of all Foreign Exchange Contracts and all Foreign
Exchange Obligations outstanding at any time shall not exceed the Maximum Loan
Amount Subject to the provisions of Section 2.1 (a) further limiting the
availability of Revolving Advances, the aggregate unpaid principal balance of
Revolving Advances plus the stated amount of all Letters of Credit, all
Reimbursement Obligations, the face amount of
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all Foreign Exchange Contracts and all Foreign Exchange Obligations outstanding
at any time shall not exceed the Maximum Revolving Advance Amount.
2.6 Repayment of Advance.
(a) The Advances shall be due and payable in full on the
Maturity Date subject to earlier prepayment as herein provided. The Term Loan
shall be due and payable as provided in Section 2.4(a) and in the Term Note. The
Equipment Loans shall be due and payable as provided in Section 2.4(b) and in
the Equipment Note.
(b) Borrower recognizes that the amounts evidenced by checks,
notes, drafts or any other items of payment relating to and/or proceeds of
Collateral may not be collectible by Agent on the date received. In
consideration of Agent's agreement to conditionally credit Borrower's Account as
of the Business Day on which Agent receives those items of payment, Borrower
agrees that, in computing the charges under this Agreement, all items of payment
shall be deemed applied by Agent on account of the Obligations one (1) Business
Day after receipt by Agent by wire transfer or electronic depository check of
such payments. Agent is not, however, required to credit Borrower's Account for
the amount of any item of payment which is unsatisfactory to Agent and Agent may
charge Borrower's Account for the amount of any item of payment which is
returned to Agent unpaid.
(c) All payments of principal, interest, fees and other
amounts payable hereunder (including prepayments), or under any of the Other
Documents shall be made without setoff or counterclaim and shall be made to
Agent on behalf of Lenders, as appropriate, at the Payment Office not later than
1:00 PM (New York Time) on the due date therefor in Dollars in federal funds or
other funds immediately available to Agent. Agent shall have the right to
effectuate payment on any and all Obligations due and owing hereunder by
charging Borrower's Account or by making Advances as provided in Section 2.2(b).
Payments on account of the Advances are also subject to the provisions of
Section 4.15(h) and the Blocked Account Agreement.
(d) Borrower shall pay principal, interest, and all other
amounts payable hereunder, or under any related agreement, without any deduction
whatsoever, including, but not limited to, any deduction for any setoff or
counterclaim.
2.7 Repayment of Excess Advances. The aggregate balance of Advances
outstanding at any time in excess of the maximum amount of Advances permitted
hereunder shall be immediately due and payable without the necessity of any
demand, at the Payment Office, whether or not a Default or Event of Default has
occurred.
2.8 Statement of Account. Agent shall maintain, in accordance with its
customary procedures, a loan account ("Borrower's Account") in the name of
Borrower in which shall be recorded the date and amount of each Advance made by
Lenders and the date and amount of each payment in respect thereof; provided,
however, the failure by Agent to record the date and amount
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of any Advance shall not adversely affect Agent or any Lender. Each month, Agent
shall send to Borrower a statement showing the accounting for the Advances made,
payments made or credited in respect thereof, and other transactions between
Lenders and Borrower, during such month. The monthly statements shall be deemed
correct and binding upon Borrower in the absence of manifest error and shall
constitute an account stated between Lenders and Borrower unless Agent receives
a written statement of Borrower's specific exceptions thereto within thirty (30)
days after such statement is received by Borrower. The records of Agent with
respect to the loan account shall be conclusive evidence absent manifest error
of the amounts of Advances and other charges thereto and of payments applicable
thereto.
2.9 Additional Payments. Any sums expended by Agent or any Lender due
to Borrower's failure to perform or comply with its obligations under this
Agreement or any Other Document including, without limitation, Borrower's
obligations under Sections 4.2, 4.4, 4.12, 4.13, 4.14 and 6. 1, may be charged
to Borrower's Account as a Revolving Advance and added to the Obligations.
2.10 Manner of Borrowing and Payment.
(a) Each borrowing of Revolving Advances shall be advanced
according to the Commitment Percentages of Lenders. The Term Loan and Equipment
Loan shall each be advanced according to the Commitment Percentages of Lenders.
(b) Each payment (including each prepayment) by Borrower on
account of the principal of and interest on a type of Advance shall be applied
to the applicable type of Advance pro rata according to the Commitment
Percentages of Lenders. Except as expressly provided herein, all payments
(including prepayments) to be made by Borrower on account of principal, interest
and fees shall be made without set-off or counterclaim and shall be made to
Agent on behalf of Lenders to the Payment Office, in each case on or prior to
1:00 PK New York time, in Dollars and in immediately available funds. Payments
on account of the Revolving Advances are also subject to the provisions of
Section 4.15(h).
(c) (i) Notwithstanding anything to the contrary contained in
Sections 2.10(a) and (b), commencing with the first Business Day following the
Closing Date, each borrowing of Revolving Advances shall be advanced by Agent
and each payment by Borrower on account of Revolving Advances shall be applied
first to those Revolving Advances made by Agent. On or before 1:00 PM, New York
time, on each Settlement Date commencing with the first Settlement Date
following the Closing Date, Agent and Lenders shall make certain payments as
follows: (1) if the aggregate amount of new Revolving Advances made by Agent
during the preceding Week exceeds the aggregate amount of repayments applied to
outstanding Revolving Advances during such preceding Week, then each Lender
shall provide Agent with funds in an amount equal to its Commitment Percentage
of the difference between (w) such Revolving Advances and (x) such repayments
and (11) if the aggregate amount of repayments applied to outstanding Revolving
Advances during such Week exceeds the aggregate amount of new Revolving Advances
made
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during such Week, then Agent shall provide each Lender with its Commitment
Percentage of the difference between (y) such repayments and (z) such Revolving
Advances.
(ii) Each Lender shall be entitled to earn interest
at the Contract Rate on outstanding Advances which it has funded.
(iii) Promptly following each Settlement Date, Agent
shall submit to each Lender a certificate with respect to payments received and
Advances made during the week immediately preceding such Settlement Date. Such
certificate of Agent shall be conclusive in the absence of manifest error.
(d) If any Lender or Participant (a "benefitted Lender") shall
at any time receive any payment of all or part of its Advances, or interest
thereon, or receive any Collateral in respect thereof (whether voluntarily or
involuntarily or by setoff) in a greater proportion than any such payment to and
Collateral received by any other Lender, if any, in respect of such other
Lender's Advances, or interest thereon, and such greater proportionate payment
or receipt of Collateral is not expressly permitted hereunder, such benefitted
Lender shall purchase for cash from the other Lenders such portion of each such
other Lender's Advances, or shall provide such other Lender with the benefits of
any such Collateral, or the proceeds thereof, as shall be necessary to cause
such benefitted Lender to share the excess payment or benefits of such
Collateral or proceeds ratably with each other Lender provided, however, that if
all or any portion of such excess payment or benefits is thereafter recovered
from such benefitted Lender, such purchase shall be rescinded, and the purchase
price and benefits returned, to the extent of such recovery, but without
interest. Each Lender so purchasing a portion of another Lender's Advances may
exercise all rights of payment (including, without limitation, rights of
set-off) with respect to such portion as fully as if such Lender were the direct
holder of such portion.
(e) Unless Agent shall have been notified by telephone,
confirmed in writing, by any Lender that such Lender will not make the amount
which would constitute its Commitment Percentage of the Advances available to
Agent, Agent may (but shall not be obligated to) assume that such Lender shall
make such amount available to Agent and, in reliance upon such assumption, make
available to Borrower a corresponding amount. Agent will promptly notify
Borrower of its receipt of any such notice from a Lender. If such amount is made
available to Agent on a date after a Settlement Date, such Lender shall pay to
Agent on an amount equal to the product of (i) the daily average Federal Funds
Rate (computed on the basis of a year of 360 days) during such period as quoted
by Agent, times (ii) such amount, times (iii) the number of days from and
including such Settlement Date to the date on which such amount becomes
immediately available to Agent. A certificate of Agent submitted to any Lender
with respect to any amounts owing under this paragraph (e) shall be conclusive,
in the absence of manifest error. If such amount is not in fact made available
to Agent by such Lender within three (3) Business Days after such Settlement
Date, Agent shall be entitled to recover such an amount, with interest thereon
at the rate per annum. then applicable to Revolving Advances hereunder, on
demand from Borrower; provided, however, that Agent's right
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to such recovery shall not prejudice or otherwise adversely affect Borrower's
rights (if any) against such Lender.
(f) Each Lender may, at its option, make or maintain any
Eurodollar Loan by causing a Lending Office of such Lender to make or maintain
such Loan; provided, however, that any exercise of such option shall not affect
the obligation of Borrower to repay such Loan in accordance with the terms of
this Agreement.
(g) In the event, and on each occasion, that on the date two
Business Days prior to the commencement of any Interest Period for any
Eurodollar Loan to be made or maintained by a Lender, such Lender shall have
determined (which determination shall be conclusive and binding upon Borrower)
that dollar deposits in the unpaid principal amount of such Eurodollar Loan are
not generally available in the London interbank market, or that the rate at
which such dollar deposits are being offered will not adequately and fairly
reflect the cost to such Lender of making or maintaining the principal amount of
such Eurodollar Loan during such Interest Period, such Lender shall promptly
give Borrower and Agent notice of such determination. For one Business Day after
receipt of such notice, Borrower shall have the right to withdraw any request
for a Eurodollar Loan pursuant to Section 2.2(a) by notice to Agent. If notice
is not received from Borrower, such request shall be deemed to be a request for
an Alternate Base Rate Loan and Agent shall notify the Lenders accordingly.
After any notice of such a determination shall have been given by a Lender and
until the circumstances giving rise to such notice no longer exist, each request
to make, convert or maintain a Eurodollar Loan pursuant to Section 2.2(a) or
2.14 shall be deemed to be a request to make or convert into an Alternate Base
Rate Loan. Each determination by a Lender hereunder shall be conclusive absent
manifest error. Any Lender giving notice as described above shall notify
Borrower and Agent at such time as the circumstances giving rise to such notice
cease to exist.
2.11 Mandatory and Optional Prepayments.
(a) Except as otherwise expressly provided in Section 4.3,
when Borrower sells or otherwise disposes of any Collateral other than Inventory
sold in the ordinary course of business, Borrower shall repay the Advances in an
amount equal to the net proceeds of such sale or other disposition (i.e., gross
proceeds less the reasonable costs of such sale or other disposition), such
repayments to be made promptly but in no event more than one (1) Business Day
following receipt of such net proceeds~ and until the date of payment such
proceeds shall be held in trust for Agent. The foregoing shall not be deemed to
be implied consent to any such sale otherwise prohibited by the term and
conditions hereof.
(b) Repayments under the foregoing paragraph (a) shall be
applied first, to the outstanding principal installments on the Term Loan in the
inverse order of the maturities thereof, second, to the outstanding aggregate
principal installments of the Equipment Loans in the inverse order of the
maturities thereof, and third, to the remaining Advances in such order as Agent
may determine, subject to Borrower's ability to reborrow Revolving Advances in
accordance with the terms hereof.
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(c) Borrower shall prepay the outstanding amount of the Term
Loan in an amount equal to 50% of Excess Cash Flow for each fiscal year
commencing on or after January 1, 1999, payable no later than thirty (30) days
following delivery of the financial statements to Agent referred to in and
required by Section 9.7 for such fiscal year but in any event not later than one
hundred and twenty (120) days after the end of each such fiscal year, which
amount shall be applied to the outstanding principal installments of the Term
Loan in the inverse order of the maturities thereof. In the event that the
financial statements are not so delivered, then a calculation based upon
estimated amounts shall be made by Agent upon which calculation Borrower shall
make the prepayment required by this Section 2.11(c), subject to adjustment
when the financial statements are delivered to Agent as required hereby. The
calculation made by Agent shall not be deemed a waiver of any rights Agent or
Lenders may have as a result of the failure by Borrowers to deliver such
financial statements.
(d) At its option, Borrower may at any time and from time to
time prepay in whole or in part the outstanding amount of the Advances without
premium or penalty; provided, however, Borrower cannot terminate this Agreement
except as provided in Article XIII hereof.
2.12 Use of Proceeds. Borrower shall apply the proceeds of Advances to
(i) pay in full all outstanding obligations under Borrower's existing senior
Indebtedness as of immediately prior to the Closing Date and the Indebtedness
evidenced by the Subordinated Notes and the Holdback Notes (ii) pay fees and
expenses related to consummating the transactions contemplated by this Agreement
(including a transaction fee payable to Cornerstone Equity Investors, LLC in an
amount not exceeding $ 1,000,000 in the aggregate, (iii) provide for permitted
capital expenditure requirements and investments (including investments
permitted by Section 7.4) (iv) provide for its working capital needs and (y) the
payment of dividends on Borrower's preferred stock in an amount not exceeding
$1,726,456 in the aggregate (such dividends to be payable only to the extent
that, after giving effect to such payment, Borrower shall have Undrawn
Availability of not less than $5,000,000).
2.13 Defaulting Lender
(a) Notwithstanding anything to the contrary contained herein,
in the event any Lender (x) has refused (which refusal constitutes a breach by
such Lender of its obligations under this Agreement) to make available its
portion of any Advance or (y) notifies either Agent or Borrower that it does not
intend to make available its portion of any Advance (if the actual refusal would
constitute a breach by such Lender of its obligations under this Agreement)
(each, a "Lender Default"), all rights and obligations hereunder of such Lender
(a "Defaulting Lender") as to which a Lender Default is in effect and of the
other parties hereto shall be modified to the extent of the express provisions
of this Section 2.13 while such Lender Default remains in effect.
(b) Advances shall be incurred pro rata from Lenders (the
"Non-Defaulting Lenders") which are not Defaulting Lenders based on their
respective Commitment Percentages, and no Commitment Percentage of any Lender or
any pro rata share of any Advances required to be
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advanced by any Lender shall be increased as a result of such Lender Default.
Amounts received in respect of principal of any type of Advances shall be
applied to reduce the applicable Advances of each Lender pro rata based on the
aggregate of the outstanding Advances of that type of all Lenders at the time of
such application; provided that, such amount shall not be applied to any
Advances of a Defaulting Lender at any time when, and to the extent that, the
aggregate amount of Advances of any Non-Defaulting Lender exceeds such
Non-Defaulting Lender's Commitment Percentage of all Advances then outstanding.
(c) A Defaulting Lender shall not be entitled to give
instructions to Agent or to approve, disapprove, consent to or vote on any
matters relating to this Agreement and the Other Documents. All amendments,
waivers and other modifications of this Agreement and the Other Documents may be
made without regard to a Defaulting Lender and, solely for purposes of the
definition of "Required Lenders", a Defaulting Lender shall be deemed not to be
a Lender and not to have Advances outstanding.
(d) Other than as expressly set forth in this Section 2.13,
the rights and obligations of a Defaulting Lender (including the obligation to
indemnify Agent) and the other parties hereto shall remain unchanged. Nothing in
this Section 2.13 shall be deemed to release any Defaulting Lender from its
obligations under this Agreement and the Other Documents, shall alter such
obligations, shall operate as a waiver of any default by such Defaulting Lender
hereunder, or shall prejudice any rights which Borrower, Agent or any Lender may
have against any Defaulting Lender as a result of any default by such Defaulting
Lender hereunder.
(e) In the event a Defaulting Lender retroactively cures to
the satisfaction of Agent the breach which caused a Lender to become a
Defaulting Lender, such Defaulting Lender shall no longer be a Defaulting Lender
and shall be treated as a Lender under this Agreement.
2.14 Conversion and Continuation of Loans. (a) Subject to the
limitations set forth in Section 2.14(b), Borrower may (i) continue any
Eurodollar Loan or portion thereof into a subsequent Interest Period as a
Eurodollar Loan, (ii) convert an Alternate Base Rate Loan or portion thereof
into a Eurodollar Loan, or (iii) convert a Eurodollar Loan or portion thereof
into an Alternate Base Rate Loan, in any such case, by giving irrevocable notice
to Agent not later than 10:00 AM New York City time, three Business Days prior
to the proposed date of continuation of or conversion into a Eurodollar Dollar
Loan, or one Business Day prior to the proposed date of conversion into an
Alternate Base Rate Loan. Such notice shall specify (A) whether a continuation
or conversion is requested, (B) the Loan being continued or converted and (C)
the Interest Period, if applicable. In the event that the Borrower shall not
give notice to continue any Eurodollar Loan, such Loan (except to the extent
repaid) shall automatically be converted into an Alternate Base Rate Loan at the
expiration of the Interest Period in effect for such Loan.
(b) Borrower's right to continue or convert any Loan in
accordance with Section 2.14(a) is subject to the following:
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(i) with respect to the conversion to or continuation
of Eurodollar Loans, no Default or Event of Default shall have occurred
and be continuing at the time of such continuation or conversion;
(ii) each conversion shall be effected by the Lenders
applying the proceeds of the new Loan to the Loan (or portion thereof)
being converted;
(iii) if the new Loan made in respect of the
conversion shall be a Eurodollar Loan, the first Interest Period with
respect thereto shall commence on the date of conversion;
(iv) a Eurodollar Loan may be converted only on the
last day of the Interest Period applicable to such Loan, except
conversion of a Eurodollar Loan to an Alternate Base Rate Loan to the
extent required to be converted pursuant to Section 3.8;
(v) each request for a Eurodollar Loan or for a
continuation thereof which shall fail to state the applicable Interest
Period shall be deemed to be a request for an Interest Period of one
month's duration;
(vi) no Term Loan or Equipment Loans may be converted
into or continued as a Eurodollar Loan if after giving effect to such
action the Interest Period applicable thereto shall extend beyond the
date of payment of any installment of principal of the Term Loan or the
Equipment Loans, as the case may be, unless there is a sufficient
principal amount of Term Loan or Equipment Loans, as the case may be,
maintained as Base Rate Loans or Eurodollar Loans having Interest
Periods ending prior to such date to permit such repayment or
prepayment to be applied solely to an Alternate Base Rate Loans;
(vii) any portion of a Eurodollar Loan which cannot
be converted into or continued as a Eurodollar Loan by reason of clause
(i) or (vi) above shall be automatically converted into an Alternate
Base Rate Loan at the expiration of the Interest Period in effect for
such Loan;
(viii) no Loans may be converted into or continued as
a Eurodollar Loan if after giving effect to such action the number of
Tranches in existence shall exceed 8; and
(ix) each request hereunder for conversion of Base
Rate Loans to Eurodollar Loans or of Eurodollar Loans to an Alternate
Base Rate Loans shall be in an aggregate principal amount of at least $
100,000.
2.15 Limitation on Maximum Loan Amount. Anything in this Agreement to
the contrary notwithstanding, Agent shall advise Borrower two (2) Business Days
prior to the date on which PNC will sell a portion of its commitment pursuant to
Section 15.3(c) to a third Lender (in a transaction which would, but for this
Section 2.15, increase the Maximum Loan Amount from $42,000,000 to
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$47,000,000) and Borrower shall have the right to notify Agent one (1) Business
Day prior to such sale (or prior thereto if Borrower so chooses) that Borrower
does not seek to increase the Maximum Loan Amount. In such event, the Commitment
Date shall be deemed not to have occurred notwithstanding such sale by PNC.
ARTICLE III.A
LETTERS OF CREDIT
SECTION 3.1A Letters of Credit. Agent agrees that it will from time to
time prior to the Maturity Date, on the terms and conditions of this Agreement
and such other conditions to the opening of Letters of Credit as Agent in its
capacity as Issuing Lender requires of its customers generally, acting for and
on behalf of each Lender, open for the account of Borrower one or more standby
or documentary sight Letters of Credit denominated and payable in Dollars ($).
Letters of Credit will be available hereunder upon the request of Borrower in an
aggregate stated amount of all outstanding Letters of Credit not at any time to
exceed the Maximum Letter of Credit Amount; provided however that Borrower may
not request Issuing Lender to open a Letter of Credit to the extent that after
giving effect thereto Undrawn Availability would be less than zero.
SECTION 3.2A Issuance of Letters of Credit. The issuance of each Letter
of Credit hereunder shall be made on at least two (2) Business Days' written
notice from Borrower to Issuing Lender, which written notice shall be an
application for a Letter of Credit on Issuing Lender's customary form completed
to the satisfaction of Issuing Lender, together with such other certificates,
documents and other papers and information as Issuing Lender may reasonably
request. Such notice shall specify the date a Letter of Credit is to be issued,
set forth the amount and expiry date of such Letter of Credit, identify the
beneficiary and describe the nature of the transactions proposed to be supported
thereby. Issuing Lender shall not at any time be obligated to issue any Letter
of Credit if such issuance would conflict with, or cause Issuing Lender or any
Lender to exceed any limits imposed by, any applicable requirements of law. The
expiration date of any Letter of Credit shall not be later than 360 days from
the date of issuance thereof, and, in any event, no Letter of Credit shall have
an expiration date later than thirty days prior to the Maturity Date.
SECTION 3.3A Reimbursement Obligations. Upon the issuance of a Letter
of Credit, Borrower shall be irrevocably and unconditionally obligated forthwith
without presentment, demand, protest or other formalities of any kind, to pay to
Issuing Lender as a reimbursement for the account of Issuing Lender any amounts
paid by Issuing Lender with respect to such Letter of Credit. Borrower hereby
authorizes and directs Agent to debit Borrower's Account (by increasing the
principal balance of the Revolving Advances (to the extent only of the then
Undrawn Availability)) in the amount of any payment made by Issuing Lender with
respect to any Letter of Credit All amounts paid by Issuing Lender with respect
to any Letter of Credit that are not immediately paid by Borrower with the
proceeds of a Revolving Advance, or otherwise (such unpaid amounts being called
"Reimbursement Obligations"), shall bear interest at the Default Rate applicable
to Revolving Advances that are Alternative Base Rate Advances.
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SECTION 3.4.A Participation. To the extent that any Reimbursement
Obligation shall arise hereunder and remain outstanding, Issuing Lender shall
promptly notify each Lender of the amount thereof, together with accrued
interest thereon, and each Lender agrees to purchase, and shall be deemed to
have purchased (as of the date of issuance of such Letter of Credit), a
participation (which participation shall be nonrecourse to Issuing Lender) in
such Letter of Credit in an amount equal to its Commitment Percentage of such
Reimbursement Obligation, together with accrued interest thereon. Upon one (1)
Business Day's notice from Issuing Lender, each Lender shall deliver to Agent
(for the account of Issuing Lender) an amount equal to its respective
participation in same day funds, at the place, on the date and by the time
notified by Agent. Each Lender hereby absolutely and unconditionally assumes, as
primary obligor and not as a surety, and agrees to pay and discharge, and to
indemnify and hold Issuing Lender harmless from liability in respect of, such
Lender's Commitment Percentage of the amount of any Reimbursement Obligation
under any Letter of Credit. Each Lender acknowledges and agrees that its
obligation to acquire participations in each Letter of Credit issued by Issuing
Lender and its obligation to make the payments specified herein, and the right
of Issuing Lender to receive the same, in the manner specified herein, are
absolute and unconditional and shall not be affected by any circumstance
whatsoever, including, without limitation, the occurrence and continuance of a
Default or an Event of Default hereunder, and that each such payment shall be
made without any offset, abatement, withholding or reduction whatsoever.
SECTION 3.5.A Reimbursement Obligations Absolute, Etc. The obligations
of Borrower under Section 3.3A to reimburse the Lenders and Issuing Lender for
all drawings under any Letter of Credit shall be absolute, unconditional and
immovable and shall (absent the gross negligence or willful misconduct of
Issuing Lender or any Lender) be satisfied strictly in accordance with their
terms, irrespective of:
(a) any lack of validity or enforceability of such Letter of
Credit;
(b) the existence of any claim, setoff, defense or other right
which Borrower or any other person may at any time have against the beneficiary
under such Letter of Credit, Issuing Leader or any Lender or any other person in
connection with this Agreement or any other transaction;
(c) any draft or other document presented under such Letter of
Credit proving to be forged, fraudulent, invalid or insufficient in any respect
or any statement therein being untrue or inaccurate in any respect;
(d) payment by Issuing Lender or any Lender under such Letter
of Credit against presentation of a draft or other document which does not
comply with the terms of such Letter of Credit;
(e) any other circumstance or event whatsoever, whether or not
similar to any of the foregoing; and
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(f) the fact that a Default or an Event of Default shall have
occurred and be continuing.
It is understood that in making any payment under any Letter
of Credit (x) Issuing Lender's and any Lender's exclusive reliance on the
documents presented to it under any Letter of Credit as to any and all matters
set forth therein, including, without limitation, reliance on the amount of any
draft presented under such Letter of Credit, whether or not the amount due to
the beneficiary equals the amount of such draft and whether or not any document
presented pursuant to any Letter of Credit proves to be insufficient in any
respect, if such document on its face appears to be in order, and whether or not
any other statement or any other document presented pursuant to such Letter of
Credit proves to be forged or invalid or any statement therein proves to be
inaccurate or untrue in any respect whatsoever and (y) any noncompliance in any
immaterial respect of the documents presented under any Letter of Credit with
the terms thereof shall, in each case, not be deemed willful misconduct or gross
negligence of Issuing Lender or any Lender.
SECTION 3.6A Cash Collateral. Notwithstanding anything to the contrary
expressed or implied in this Agreement, upon the occurrence and during the
continuation of any Event of Default hereunder, Issuing Lender may, by notice to
Borrower, require that Borrower provide to Agent cash collateral with respect to
all outstanding Letters of Credit, and upon receipt of such notice, Borrower
shall, within five Business Days of such notice, deliver cash to Issuing Lender
in an amount equal to the sum of (x) the maximum aggregate amount that is or at
any time thereafter may become available to be drawn under such Letters of
Credit and (y) the aggregate amount of all outstanding Reimbursement
Obligations. The Agent is hereby authorized and directed in the event of such
Event of Default and requirement of cash Collateral to create a segregated
non-interest bearing cash collateral account (a "Letter of Credit Cash
Collateral Account"), and to deposit in such account any amounts received from
Borrower pursuant to the foregoing provisions of this Section 3.6A. Funds on
deposit from time to time in any Letter of Credit Cash Collateral Account (the
"Letter of Credit Cash Collateral") shall be held by Issuing Lender for the
ratable benefit of Issuing Lender and the Lenders (in the case of the Lenders,
in respect of their participations in such Letters of Credit and as Lenders
hereunder) and otherwise as security for the payment and performance of all
Obligations in accordance with this Agreement and Other Documents, including
Borrower's obligations under this Article IIIA. Notwithstanding any provision of
this Agreement or in any Other Document, after payment of any costs of
collection and reasonable expenses of Issuing Lender in connection with the
establishment of The Letter of Credit Cash Collateral Account Letter of Credit
Cash Collateral shall be applied by Agent as follows: first, to payment of all
Reimbursement Obligations by payment to Issuing Lander and any Lenders
participating in such, such payments to be made from time to time until no
Letter of Credit is any longer outstanding; second, after all Reimbursement
Obligations (or participations in such) of Issuing Lender and any Lender have
been fully repaid and all fees payable under this Article IHA have been paid, to
the payment, in accordance with this Agreement and the Other Documents, of any
of the remaining Obligations then due and payable; and finally, after its
application in accordance with the foregoing, returned to Borrower.
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SECTION 3.7A Payment of, and Issuing Lender's Actions with respect to,
Letters of Credit. Issuing Lender shall review, on behalf of the Lenders, each
draft and any accompanying documents presented under any Letter of Credit and
shall notify each Lender of any such presentment.
Any Letter of Credit may, in the discretion of Issuing Lender or its
correspondents, be interpreted by them (to the extent not inconsistent with such
Letter of Credit) in accordance with the Uniform Customs and Practice for
Documentary Credits of the International Chamber of Commerce, as adopted or
amended from time to time, or any other rules, regulations and customs
prevailing at the place where any Letter of Credit is available or the drafts
are drawn or negotiated. Issuing Lender and its correspondents may accept and
act upon the name, signature, or act of any party purported to be the executor,
administrator, receiver, trustee in bankruptcy, or other legal representative of
any party designated in any Letter of Credit in the place of the name,
signature, or act of such party.
SECTION 3.8A Compensation. (a) In addition to interest on Reimbursement
Obligations as provided in Section 3.3A, Borrower agrees to pay the following
amounts:
(i) With respect to the opening, any amendment or
transfer of any Letter of Credit and each drawing made
thereunder, documentary and processing charges in accordance
with Issuing Lender's standard schedule (a copy of which as
currently in effect being attached hereto as Exhibit 3.8A) for
such charges in effect at the time of such amendment, transfer
or drawing, as the case may be;
(ii) In respect of each Letter of Credit outstanding
a commission equal to .75% per annum of the maximum amount
available from time to time to be drawn under such outstanding
Letter of Credit, payable in arrears on and through the last
Business Day of each June, September, December and March
commencing March, 1999 and calculated on the basis of a
360-day year and the actual number of days elapsed.
(iii) On the date of issuance of each Letter of
Credit an amount equal to .125% of the maximum amount
available to be drawn thereunder.
(b) Interest payable under Section 3.3A and amounts payable
under clause (ii) of Section 3.8A(a) shall be paid to Issuing Lender for the
benefit of each of the Lenders in an amount equal to such Lender's Commitment
Percentage thereof. Issuing Lender shall promptly distribute to each Lender such
amounts. Amounts payable under clauses (i) and (iii) of Section 3.8A(a) shall be
paid directly to Issuing Lender.
SECTION 3.9A Additional Payments. If by reason of (a) any change after
the Closing Date in applicable law, regulation, rule, decree or regulatory
requirement or any change in the interpretation or application by any judicial
or regulatory authority of any law, regulation, rule, decree or regulatory
requirement or (b) compliance by Issuing Lender or any Lender with any
direction, request or requirement (whether or not having the force of law) of
any Governmental Body
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or monetary authority including, without limitation, Regulation D of the Board
of Governors of the Federal Reserve System, any reserve, deposit or similar
requirement is or shall be applicable, imposed or modified in respect of any
Letter of Credit issued by Issuing Lender or participations therein purchased by
any Lender and the result of the foregoing is to increase the cost to Issuing
Lender or any Lender of issuing, making or maintaining any Letter of Credit or
of purchasing or maintaining any participation therein, or to reduce the amount
receivable in respect thereof by Issuing Lender or any Lender, then and in any
such case Issuing Lender or such Lender shall, after the additional cost is
incurred or the amount received is reduced, notify Borrower and Borrower shall
pay within 10 Business Days after demand such amounts as Issuing Lender or such
Lender may specify to be necessary to compensate Issuing Lender or such Lender
for such additional cost or reduced receipt, together with interest on such
amount from the date demanded until payment in full thereof at a rate per annum
equal at all times to the Alternative Base Rate applicable to Revolving Advances
then in effect.
SECTION 3.10A Indemnification; Nature of Issuing Lender's Duties. (a)
In addition to amounts payable as elsewhere provided in this Article IIIA,
without duplication, Borrower hereby agrees to protect, indemnify, pay and save
Issuing Lender harmless from and against any and all claims, demands,
liabilities, damages, losses, costs, charges and expenses (including reasonable
attorneys' fees and allocated costs of internal counsel) which Issuing Lender
may incur or be subject to as a consequence, direct or indirect, of (i) the
issuance of any Letter of Credit or (ii) the failure of Issuing Lender to honor
a drawing under any Letter of Credit, in each case as a result of any act or
omission, whether rightful or wrongful, of any present or future de jure or de
facto Governmental Body.
(b) As between Borrower and Issuing Lender, Borrower assumes
all risks of the acts and omissions of, or misuse of any Letter of Credit issued
by Issuing Lender by any beneficiary of any Letter of Credit In furtherance and
not in limitation of the foregoing, Issuing Lender shall not be responsible: (i)
for the form, validity, sufficiency, accuracy, genuineness or legal effects of
any document submitted by any party in connection with the application for and
of any Letter of Credit, even if it should in fact prove to be in any or all
respects invalid, insufficient, inaccurate, fraudulent or forged; (ii) for the
validity or sufficiency of any instrument transferring or assigning or
purporting to transfer or assign any Letter of Credit or the rights or benefits
thereunder or proceeds thereof, in whole or in part, that may prove to be
invalid or ineffective for any reason; (iii) for failure of the beneficiary of
any Letter of Credit to comply fully with conditions required in order to draw
upon any Letter of Credit; (iv) for errors, omissions, interruptions or delays
in transmission or delivery of any messages, by mail, cable, telegraph, telex or
otherwise, whether or not they are in cipher; (v) for errors in the translation
or on of technical terms; (vi) for any loss or delay in the transmission or
otherwise of any document required in order to make a drawing under any Letter
of Credit or of the proceeds thereof; (vii) for the misapplication by the
beneficiary of any Letter of Credit of the proceeds of any drawing under such
Letter of Credit; (viii) for any consequences arising from causes beyond the
control of Issuing Lender or its correspondents, including, without limitation,
any act or omission of any Governmental Body; and (ix) for any error, neglect,
default, suspension or insolvency of Issuing Lender or its correspondents or any
consequence thereof, gm in each case, that
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Issuing Lender acts in good faith. None of the above shall affect, impair, or
prevent the vesting of any of Issuing Lender's rights or powers hereunder.
(c) Issuing Lender shall have the right to transmit the terms
of any Letter of Credit without translating them. If any Letter of Credit
provides that payment is to be made by Issuing Lender's correspondent, neither
Issuing Lender nor such correspondent shall be responsible for the failure of
any document specified in any Letter of Credit to come into Issuing Lender's
hands or for any delay in connection therewith, and Borrower's obligation to
reimburse Issuing Lender for payments made or obligations incurred shall not be
affected by such failure or delay in the receipt by such correspondent of any or
all of such documents whether sent to such Lender in one or multiple mailings.
Issuing Lender shall not be liable for any failure by such correspondent or
anyone else to pay or accept any draft or other demands for payment or
acceptance under any Letter of Credit resulting from any censorship, law,
control or restriction rightfully or wrongfully exercised by any de facto or de
jure Governmental Body or from any other cause beyond such correspondent's
control or the control of such correspondent's agents or sub-agents or for any
loss or damage to Borrower or anyone else resulting from any such failure to pay
or accept, all such risks being expressly assumed by Borrower.
(d) In furtherance and extension and not in limitation of the
specific provisions hereinabove set forth, any action taken or omitted by
Issuing Lender in connection with any Letter of Credit issued by it or the
related certificates, if taken or omitted in good faith, shall not result in
Issuing Lender incurring any liability to Borrower. Without limiting the
generality of the foregoing, Issuing Lender and its correspondents may, without
incurring any responsibility or liability, (i) act in reliance upon any oral,
telephonic, telegraphic, telex, telecopier, electronic or written request,
application (including an application for issuance of a Letter of Credit) or
notice believed in good faith to have been authorized by Borrower, whether or
not given or signed by an authorized person, and (ii) receive, accept and pay
any drafts or other documents and instruments (otherwise in order) signed by, or
issued to, the receiver, executor, administrator, liquidator, guardian or
conservator of anyone named in any Letter of Credit as the person by whom drafts
and other documents and instruments are to be made or issued.
(e) Notwithstanding anything to the contrary contained in this
Section 3.10A, Borrower shall have no obligation to indemnify Issuing Lender or
any Lender in respect of any liability incurred by Issuing Lender or such Lender
arising solely out of the gross negligence or willful misconduct of Issuing
Lender or such Lender.
SECTION 3.11A Computation of Interest. Interest and commissions payable
pursuant to this Article MA shall be computed on the basis of a 360-day year and
the actual number of days elapsed.
ARTICLE III.B [INTENTIONALLY OMITTED]
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ARTICLE III.C
FOREIGN EXCHANGE FACILITY
SECTI0N 3.1C Requests Under the Foreign Exchange Facility. Subject to
the terms and conditions hereof, Borrower may, from time to time, request and
Agent may, in its sole discretion, purchase or arrange for the purchase of
foreign currency for delivery immediately ("Foreign Exchange Contacts") in the
outstanding face amount of Foreign Exchange Contracts up to the Maximum Foreign
Exchange Facility Amount; provided, however, that the Agent shall not be
required to purchase or arrange for the purchase of any Foreign Exchange
Contract at any time to the extent that after giving effect thereto, Undrawn
Availability would be less than zero; and provided, further, however, that the
aggregate settlement amounts of all Foreign Exchange Contracts so requested
shall not exceed $1,000,000 on any one day. All Foreign Exchange Contracts
entered into by Agent upon Borrower's request shall be for Borrower's exclusive
account and Borrower will reimburse Agent on demand for all costs, expenses,
services, service charges, fees and commissions incurred in connection therewith
(including the cost of purchasing the foreign currency). All amounts paid by
Agent with respect to any Foreign Exchange Contracts that are not immediately
paid by Borrower with the proceeds of a Revolving Advance, or otherwise
("Foreign Exchange Obligations") shall bear interest at the Default Rate
applicable to Revolving Advances that are Alternative Base Rate Advances. The
obligations of Borrower under this Section 3.1 C to reimburse Agent for all
Foreign Exchange Obligations shall be absolute, unconditional and irrevocable
and shall be satisfied strictly in accordance with their terms, irrespective of
(a) any lack of validity or enforceability of such Foreign Exchange Obligations
or (b) the fact that a Default or an Event of Default shall have occurred and be
continuing.
SECTION 3.2C Sale of Foreign Currency Purchased. If, as of a date on
which foreign currency is to be delivered, Borrower has not instructed Agent as
to where such currency is to be transferred or if on such date a Default or
Event of Default shall have occurred and be continuing, Agent may, in its sole
discretion, sell or arrange for the sale of the foreign currency to any third
party and charge Borrower's account for the difference between the cost quoted
to Borrower for purchasing the foreign currency and the price Agent (or its
nominee) obtains in selling the foreign currency. Agent (or its nominee) shall
not hold the foreign currency beyond the designated delivery date. Borrower
acknowledges and agrees that the cost of purchasing foreign currency from Agent
may be greater than Agent's cost. Borrower shall indemnify and hold Agent
harmless from all losses, liabilities and expenses (including attorneys' fees)
incurred by Agent as a result of or arising from any foreign currency
transaction that Agent institutes at Borrower's request. Borrower shall be bound
by the regulations and rules of Agent and of any bank or other financial
institution through which Agent purchases Foreign Exchange Contracts and agrees
dud neither Agent nor any bank or correspondent of any bank that purchases
Foreign Exchange Contracts shall be liable for any error, negligence and/or
mistake, whether of omission or commission, in purchasing or failing to purchase
Foreign Exchange Contracts.
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SECTION 3.3C Foreign Exchange Reserves. Agent shall from time to time
establish such reserves (the "Foreign Exchange Reserve") in connection with the
purchase of Foreign Exchange Contracts as Agent in its reasonable discretion
deems appropriate. Initially, the Foreign Exchange Reserve shall be an amount
equal to (i) 100%of the aggregate outstanding face amount of all spot Foreign
Exchange Contracts and (ii) 20% of the outstanding face amount of all forward
Foreign Exchange Contracts, which amount may, in each case, in the exercise by
Agent of its reasonable discretion, at any time be decreased or increased, in
which case the increase will be in an amount equal to the difference between the
aggregate exchange exposure of Agent under all outstanding Foreign Exchange
Contracts and the amount of the Foreign Exchange Reserve in existence at such
time.
SECTION 3.4C Participations. To the extent that Borrower shall fail to
reimburse Agent for any amount due in respect of a Foreign Exchange Contract as
provided in Section 3. 1C, Agent shall promptly notify each Lender of the
unreimbursed amount of such payment together with accrued interest thereon and
each Lender agrees to purchase, and shall be deemed to have purchased (as of the
date of purchase of such Foreign Exchange Contract), a participation (which
participation shall be nonrecourse to Agent) in such Foreign Exchange Contract
in an amount equal to its Commitment Percentage of the unpaid portion of such
among together with accrued interest thereon. Upon one (1) Business Day's notice
from Agent, each Lender shall deliver to Agent an amount equal to its respective
participation in same day funds, at the place, on the date and by the time
notified by Agent Each Lender hereby absolutely and unconditionally assumes, as
primary obligor and not as a surety, and agrees to pay and discharge, and to
indemnify and hold Agent harmless from liability in respect of, such Lender's
Commitment Percentage of the amount of any payment obligation in respect of any
Foreign Exchange Contract. Each Lender acknowledges and agrees that its
obligation to acquire participations in each Foreign Exchange Contract purchased
by Agent and its obligation to make the payments specified herein, and the right
of Agent to receive the same, in the manner specified herein, are absolute and
unconditional and shall not be affected by any circumstance whatsoever,
including, without limitation, the occurrence and continuance of a Default or an
Event of Default hereunder, and that each such payment shall be made without any
offset, abatement, withholding or reduction whatsoever.
SECTION 3.5C Indemnification; Nature of Agent's Duties. In addition to
amounts payable as elsewhere provided in this Article IIIC, without duplication,
Borrower hereby agrees to protect, indemnify, pay and save Agent harmless from
and against any and all claims, demands, liabilities, damages, losses, costs,
charges and expenses (including reasonable attorneys' fees and allocated costs
of internal counsel) which Agent may incur or be subject to as a consequence,
direct or indirect, of (i) the purchase of any Foreign Exchange Contract or (ii)
the failure of Agent to honor its obligations in respect of any Foreign Exchange
Contact, in each case as a result of any act or omission, whether rightfully or
wrongfully, of any present or future de jure or de facto Governmental Body.
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III. INTEREST AND FEES.
3.1 Interest. Interest on Advances shall be payable in arrears on each
Interest Payment Date. Interest charges shall be computed on the actual
principal amount of Advances outstanding during the month at a rate per annum
equal to (i) with respect to Revolving Advances and Equipment Loans, the
Revolving Interest Rate and (ii) with respect to the Term Loan, the Term Loan
Rate (as applicable, the "Contract Rate"). Whenever, subsequent to the date of
this Agreement, the Alternate Base Rate or Eurodollar Rate is increased or
decreased, the applicable Contract Rate shall be similarly changed without
notice or demand of any kind by an amount equal to the amount of such change in
the Alternate Base Rate or Eurodollar Rate, as the case may be, during the time
such change or changes remain in effect. The Eurodollar Rate shall be adjusted
with respect to Eurodollar Rate Loans without notice or demand of any kind on
the effective date of any change in the Reserve Percentage as of such effective
date. Agent shall determine the applicable Eurodollar Rate for each Interest
Period as soon as practicable after 10:00 AM, New York City time, two Business
Days prior to the commencement of such Interest Period and shall notify Borrower
and the Lenders of such Eurodollar Rate so determined. Such determination shall
be conclusive absent manifest error. Upon the occurrence of an Event of Default,
and during the continuation thereof, the Obligations shall bear interest at the
applicable Contract Rate plus two percent (2%) per annum and the Letter of
Credit Fees shall be increased by two percent (2%) per annum (as applicable, the
"Default Rate").
3.2 Facility Fee. If, for any quarter during the Term, the average
daily unpaid balance of the Advances for each day of such quarter is less than
the Maximum Loan Amount (such difference being hereunder referred to as the
"Facility Fee Amount"), then Borrower shall pay to Agent for the ratable benefit
of Lenders a fee at a rate equal to three-eighths of one percent (.375%) per
annum of the Facility Fee Amount. Such fee shall be payable to Agent in arrears
on the first day of each quarter.
3.3 Fee Letter. Borrower shall pay PNC the fees set forth in the Fee
Letter.
3.4 Computation of Interest and Fees. Interest and fees hereunder shall
be computed on the basis of a year of 360 days and for the actual number of days
elapsed. If any payment to be made hereunder becomes due and payable on a day
other than a Business Day, the due date thereof shall be extended to the next
succeeding Business Day and interest thereon shall be payable at the applicable
Contract Rate during such extension.
3.5 Maximum Charges. In no event whatsoever shall interest and other
charges charged hereunder exceed the highest rate permissible under law In the
event interest and other charges as computed hereunder would otherwise exceed
the highest rate permitted under law, such excess amount shall be first applied
to any unpaid principal balance owed by Borrower, and if the then remaining
excess amount is greater dun the previously unpaid principal balance, Lenders
shall promptly refund such excess amount to Borrower and the provisions hereof
shall be deemed amended to provide for such permissible rate.
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3.6 Increased Costs; Compensation. (a) In the event that any applicable
law, treaty or governmental regulation, or any change therein or in the
interpretation or application thereof, or compliance by any Lender (for purposes
of this Section 3.6, the term "Lender" shall include Agent or any Lender and any
corporation or bank controlling Agent or any Lender) with any request or
directive (whether or not having the force of law) from any central bank or
other financial, monetary or other authority, shall:
(i) subject Agent or any Lender to any tax of any
kind whatsoever with respect to this Agreement or change the basis of
taxation of payments to Agent or any Lender of principal, fees,
interest or any other amount payable hereunder or under any Other
Documents (except for changes in the rate of tax on the overall net
income of Agent or any Lender by the jurisdiction in which it maintains
its principal office);
(ii) impose, modify or hold applicable any reserve,
special deposit, assessment or similar requirement against assets held
by, or deposits in or for the account of, advances or loans by, or
other credit extended by, any office of Agent or any Lender that is not
otherwise included in the determination of the Eurodollar Rate
hereunder (including, without limitation, pursuant to Regulation D of
the Board of Governors of the Federal Reserve System); or
(iii) impose on Agent or any Lender any other
condition with respect to this Agreement, any Other Documents; and the
result of any of the foregoing is to increase the cost to Agent or any
Lender of making, renewing or maintaining its Advances hereunder or
making, converting into, continuing or maintaining Eurodollar Loans, in
any such case, by an amount that Agent or such Lender deems to be
material or to reduce the amount of any payment (whether of principal,
interest or otherwise) in respect of any of the Advances by an amount
that Agent or such Lender deems to be material, then, in any case
Borrower shall promptly pay Agent or such Lender, upon its demand, such
additional amount as will compensate Agent or such Lender for such
additional cost or such reduction, as the case may be. Agent or such
Lender shall use reasonable efforts to minimize any such additional
cost or reduction of amount. Agent or such Lender shall certify the
amount of such additional cost or reduced amount to Borrower, and such
certification shall be conclusive absent manifest error.
(b) Compensation. Borrower shall compensate each Lender, upon
its written request (which request shall set forth in reasonable detail the
basis for requesting such compensation), for all reasonable losses, expenses and
liabilities (including, without limitation, any loss, expense or liability
incurred by reason of the liquidation or reemployment of deposits or other funds
required by such Lender to fund its Eurodollar Loans) which such Lender may
sustain: (i) if for any reason (other than a default by such Lender or Agent) a
Borrowing of Eurodollar Loans does not occur on a date specified therefor by
Borrower; (ii) if any repayment or conversion of any of its Eurodollar Loans
occurs on a date which is not the last day of an Interest Period applicable
thereto; (iii) if any prepayment of any of its Eurodollar Loans is not made on
any date specified in a notice
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of prepayment given by Borrower, or (iv) as a consequence of any other default
by the terms of this Agreement. Calculation of all amounts payable to a Lender
under this Section 3.6(b) in respect of Eurodollar Loans shall be made as though
that Lender had actually funded its relevant Eurodollar Loan through the
Purchase of a Eurodollar deposit bearing interest at the Eurodollar Rate in an
amount equal to the amount of that Loan, having a maturity comparable to the
relevant Interest Period provided, however, that each Lender may fund each of
its Eurodollar Loans in any manner it sees fit and the foregoing assumption
shall be utilized only for the calculation of amounts payable under this Section
3.6(b).
3.7 Capital Adequacy. (a) In the event that Agent or any Lender shall
have determined that any applicable law, rule, regulation or guideline regarding
capital adequacy, or any change therein, or any change in the interpretation or
administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
by Agent or any Lender (for purposes of this Section 3.7, the term "Lender"
shall include Agent or any Lender and any corporation or bank controlling Agent
or any Lender) with any request or directive regarding capital adequacy (whether
or not having the force of law) of any such authority, central bank or
comparable agency, has or would have the effect of reducing the rate of return
on Agent or any Lender's capital as a consequence of its obligations hereunder
to a level below that which Agent or such Lender could have achieved but for
such adoption, change or compliance (taking into consideration Agent's and each
Lender's policies with respect to capital adequacy) by an amount deemed by Agent
or any Lender to be material, then, from time to time, Borrower shall pay upon
demand to Agent or such Lender such additional amount or amounts as will
compensate Agent or such Lender for such reduction. In determining such amount
or amounts, Agent or such Lender may use any reasonable averaging or attribution
methods. The protection of this Section 3.7 shall be available to Agent and each
Lender regardless of any possible contention of invalidity or inapplicability
with respect to the applicable law, regulation or condition.
(b) A certificate of Agent or such Lender setting forth such
amount or amounts as shall be necessary to compensate Agent or such Lender with
respect to Section 3.7(a) when delivered to Borrower shall be conclusive absent
manifest error.
3.8 Illegality. Notwithstanding any other provision herein, if the
adoption of or any change in any requirement of law or in the interpretation or
application thereof shall make it unlawful for any Lender to make or maintain
Eurodollar Loans as contemplated by this Agreement (a) for so long as such
changed requirement of law shall continue to have such effect, the commitment of
such Lender hereunder to make Eurodollar Loans, continue Eurodollar Loans as
such and convert Alternate Base Rate Loans to Eurodollar Loans shall forthwith
be suspended and (b) such Lender's Loans then outstanding as Eurodollar Loans,
if any, shall be converted automatically to Alternate Base Rate Loans on the
respective last days of the then current Interest Periods with respect to such
Loans or within such earlier period as is required by law. If any such
conversion of a Eurodollar Loan occurs on a day which is not the last day of the
then current Interest Period with respect thereto, Borrower shall pay to such
Lender such amounts, if any, as may be required pursuant to Section 3.10.
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3.9 Taxes. (a) Subject to Section 3.9(b), all payments made by Borrower
under this Agreement and the Notes shall be made free and clear of, and without
deduction or withholding for or on account to any present or future income,
stamp or other taxes, levies, imposts, dudes, charges, fees, deductions or
withholdings, now or hereafter imposed, levied, collected, withheld or assessed
by any Governmental Body, excluding, in the case of Agent and each Lender, net
income taxes and franchise taxes (or other similar taxes imposed as a result of
doing business in a particular jurisdiction) imposed on Agent or any Lender, as
the case may be, as a result of a present or former connection between the
jurisdiction of the government or taxing authority imposing such tax and Agent
or such Lender (excluding a connection arising solely from Agent or such Lender
having executed, delivered or performed its obligations or received a payment
under, or enforced, this Agreement or the Notes) or any political subdivision or
taxing authority thereof or therein (all such non-excluded taxes, levies,
imposts, duties, charges, fees, deductions and withholdings being hereinafter
called "Taxes"). If any Taxes are required to be withheld from any amounts
payable to Agent or any Lender hereunder or under the Notes, and subject to
Agent's or such Lender's compliance with this Section 3.9, the amounts so
payable to Agent or such Lender shall be increased to the extent necessary to
yield to Agent or such Lender (after payment of all Taxes) interest or any such
other amounts payable hereunder at the rates or in the amounts specified in this
Agreement and the Notes. Whenever any Taxes are payable by Borrower, as promptly
as possible thereafter, Borrower shall send to Agent for its own account or for
the account of such Lender, as the case may be, a certified copy of an original
official receipt received by Borrower showing payment thereof. If any Lender
shall become entitled to any tax credit or receive a refund from any
Governmental Body, in either case, directly attributable to the payment by
Borrower of any Taxes, such Lender shall return to Agent for the benefit of
Borrower an amount equal to the lesser of (x) the amount of such credit or
refund, as the case may be, and (y) the aggregate amount of the Taxes so paid by
Borrower that gave rise to such credit or refund. Any payment to be made by a
Lender to Borrower pursuant to the preceding sentence shall be made at the time,
and solely to the extent, that (i) in the case of a refund, such refund is
actually received by the Lender from the applicable Governmental Body, and (ii)
in the case of a credit, a payment of Taxes actually made by the Lender to a
Governmental Body is reduced as a direct result of such credit. If Borrower
fails to pay any Taxes when due to the appropriate taxing authority or fails to
remit to Agent the required receipts or other required documentary evidence,
Borrower shall indemnify Agent and the Lenders for any incremental taxes,
interest or penalties that may become payable by Agent or any Lender as a result
of any such failure. The agreements in this Section 3.9 shall survive the
payment of the Notes and all other amounts payable hereunder.
(b) Each Lender that is not incorporated under the laws of the
United States of America or a state thereof agrees that it will deliver to
Borrower and Agent (i) two duly completed copies of United States Internal
Revenue Service Form 1001 or 4224 or successor applicable form, establishing
that payments of interest hereunder are either not subject to or totally exempt
from United States Federal withholding tax and (ii) a duly completed Internal
Revenue Service Form W-8 or W-9 or successor applicable form. Each such Lender
also agrees to deliver to Borrower and Agent two further copies of the said Form
1001 or 4224 and Form W-8 or W-9, or successor applicable forms or other manner
of certification, as the case may be, on or before the date that any such form
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expires or becomes obsolete (provided that a request has been made by Borrower)
or after the occurrence of any event requiring a change in the most recent form
previously delivered by it to Borrower, and such extensions or renewals thereof
as may reasonably be requested by Borrower or Agent, unless in any such case an
event (including, without limitation, any change in treaty, law or regulation)
has occurred prior to the date on which any such delivery would otherwise be
required which renders any such forms inapplicable or which would prevent such
Lender from duly completing and delivering any such form with respect to it and
such Lender so advises each of Borrower and Agent. Each such Lender shall
certify (i) in the case of a Form 1001, that it is entitled to receive payments
under this Agreement without deduction or withholding of any United States
federal income taxes, (ii) in the case of a Form 4224, that the interest paid
hereunder is effectively connected with the conduct of such Lender's trade or
business in the United States, and (iii) in the case of a Form W-8 or W-9, that
it is entitled to an exemption from United States backup withholding tax.
Borrower's obligation under paragraph (a) of this Section 3.9 to make payments
free and clear of United States federal income taxes shall be in effect with
respect to a Lender only during the period(s) in which such Lender establishes
that it is exempt from withholding of all United States federal income taxes
with respect to such payments in accordance with the foregoing procedures or
such other procedures as may be promulgated by the United States Treasury
Department or Internal Revenue Service.
(c) The Agent or any Lender (as the case may be) claiming any
additional amounts payable pursuant to this Section 3.9 shall use reasonable
efforts (consistent with its internal policy and legal and regulatory
restrictions) to (i) change the jurisdiction of its Lending Office or (H) assign
or otherwise transfer its interest, rights and obligations under this Agreement,
the Notes and Other Documents to an affiliate, if the making of such a change
would avoid the need for, or reduce the amount of, any such additional amounts
which may thereafter accrue and would not, in the reasonable judgment of the
Agent or such Lender (as the case may be), be otherwise disadvantageous to the
Agent or such Lender (as the case may be).
3.10 Indemnity. Borrower agrees to indemnify each Lender and to hold
each Lender harmless from any loss or expense which such Lender may sustain or
incur as a consequence of (a) the failure of a borrowing of, conversion into or
continuation of Eurodollar Loans to occur for any reason (other than as a
consequence of the failure of any Lender to fulfill its obligations hereunder)
after Borrower shall have given a notice requesting the same in accordance with
the provisions of this Agreement, (b) default by Borrower in making any
prepayment after Borrower shall have given a notice thereof in accordance with
the provisions of this Agreement or (c) the making of a payment or prepayment of
Eurodollar Loans on a day which is not the last day of an Interest Period with
respect thereto, including, without limitation, in each case, any such loss
(including, without limitation, loss of margin) or expense arising from the
redeployment of funds obtained by it or from fees payable to terminate the
deposits from which such funds were obtained. This covenant shall survive the
payment of the Notes and all other amounts payable hereunder.
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IV. COLLATERAL: GENERAL TERMS.
4.1 Security Interest in the Collateral. To secure the prompt payment
and performance to Agent and each Lender of the Obligations, Borrower hereby
pledges and grants to Agent for its benefit and for the ratable benefit of each
Lender a continuing security interest in and to all of the Collateral, whether
now owned or existing or hereafter acquired or arising and wheresoever located.
Borrower shall xxxx its books and records as may be necessary or appropriate to
evidence, protect and perfect Agent's security interest and shall cause its
financial statements to reflect such security interest.
4.2 Perfection of Security Interest. Borrower shall take all action
that may be necessary or desirable and that Agent may request, so as at all
times to maintain the validity, perfection, enforceability and priority of
Agent's security interest in the Collateral and to enable Agent to protect,
exercise or enforce its rights hereunder and in the Collateral, including, but
not limited to (i) immediately discharging all Liens other than Permitted
Encumbrances, (ii) obtaining landlords' or mortgagees' lien waivers, (iii)
delivering to Agent, endorsed or accompanied by such instruments of assignment
as Agent may specify, and stamping or marking, in such manner as Agent may
specify, any and all chattel paper, instruments, letters of credits and advices
thereof and documents evidencing or forming a part of the Collateral, (iv)
entering into warehousing, lockbox and other custodial arrangements satisfactory
to Agent, and (v) executing and delivering financing statements, instruments of
pledge, mortgages, notices and assignments, in each case in form and substance
satisfactory to Agent, relating to the creation, validity, perfection,
maintenance or continuation of Agent's security interest under the Uniform
Commercial Code or other applicable law. Agent is hereby authorized to file
financing statements signed by Agent instead of Borrower in accordance with
Section 9-402(2) of Uniform Commercial Code as adopted in the State of New York.
All charges, expenses and fees Agent may incur in doing any of the foregoing,
and any local taxes relating thereto, shall be charged to Borrower's Account as
a Revolving Advance and added to the Obligations, or, at Agent's option, shall
be paid to Agent immediately upon demand.
4.3 Disposition of Collateral. Borrower will safeguard and protect all
Collateral for Agent's general account and make no disposition thereof whether
by sale, lease or otherwise except (a) the sale of Inventory in the ordinary
course of business and (b) the disposition or transfer of Equipment during any
fiscal year having an aggregate fair market value of not more than $500,000 in
any fiscal year of Borrower, but only to the extent, in each case, that the
proceeds of any such disposition are (i) used within 180 days of such sale to
acquire replacement Equipment which is subject to Agent's first, perfected,
priority security interest (in which case, the provisions of Section 2.11 (a)
shall not apply to such disposition or transfer) or (ii) remitted to Agent as a
prepayment on the Advances in accordance with Section 2.11 (a).
4.4 Preservation of Collateral. During the occurrence of an Event of
Default, in addition to the rights and remedies set forth in Section 11. 1,
Agent: (a) may at any time take such steps a Agent deems necessary to protect
Agent's interest in and to preserve the Collateral, including the hiring of such
security guards or the placing of other security protection measures as Agent
may
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deem appropriate; (b) may employ and maintain at any of Borrower's premises a
custodian who shall have full authority to do all acts necessary to protect
Agent's interests in the Collateral; (c) may lease warehouse facilities to which
Agent may move all or part of the Collateral; (d) may use any of Borrower's
owned or leased lifts, hoists, trucks and other facilities or equipment for
handling or removing the Collateral; and (e) shall have, and is hereby granted,
a right of ingress and egress to the places where the Collateral is located, and
may proceed over and through any of Borrower's owned or leased property.
Borrower shall cooperate fully with all of Agent's efforts to preserve the
Collateral and will take such actions to preserve the Collateral as Agent may
direct. All of Agent's expenses of preserving the Collateral, including any
expenses relating to the bonding of a custodian, shall be charged to Borrower's
Account as a Revolving Advance and added to the Obligations.
4.5 Ownership of Collateral. With respect to the Collateral, at the
time the Collateral becomes subject to Agent's security interest: (a) Borrower
shall be the sole owner of and fully authorized and able to sell, transfer,
pledge and/or grant a first security interest in each and every item of the
Collateral to Agent; and, except for Permitted Encumbrances, the Collateral
shall be free and clear of all Liens and encumbrances whatsoever; (b) each
document and agreement executed by Borrower or delivered to Agent or any Lender
in connection with this Agreement shall be true and correct in all material
respects; (c) all signatures and endorsements of Borrower that appear on such
documents and agreements shall be genuine and Borrower shall have full capacity
to execute same; and (d) Borrower's Equipment and Inventory shall be located as
set forth on Schedule 4.5 (and shall not be removed from such locations) without
the prior written consent of Agent except with respect to the sale of Inventory
in the ordinary course of business and Equipment to the extent permitted in
Section 4.3.
4.6 Defense of Agent's and Lenders' Interests. Until (a) payment and
performance in full of all of the Obligations and (b) termination of this
Agreement, Agent's interests in the Collateral shall continue in full force and
effect. During such period Borrower shall not, without Agent's prior written
consent, pledge, sell (except Inventory in the ordinary course of business and
Equipment to the extent permitted in Section 4.3), assign, transfer, create or
suffer to exist a Lien upon or encumber or allow or suffer to be encumbered in
any way, except for Permitted Encumbrances, any part of the Collateral. Borrower
shall defend Agent's interests in the Collateral against any and all Persons
whatsoever. At any time following the occurrence and during the continuance of
an Event of Default, Agent shall have the right to take possession of all
indicia of the Collateral and the Collateral in whatever physical form
contained, including without limitation: labels, stationery, documents,
instruments and advertising materials. If Agent exercises this right to take
possession of the Collateral, Borrower shall, upon demand, assemble it in the
best manner possible and make it avoidable to Agent at a place reasonably
convenient to Agent. In addition, with respect to all Collateral, Agent and
Lenders shall be entitled to all of the rights and remedies set forth herein and
further provided by the Uniform Commercial Code or other applicable law.
Borrower shall, upon the reasonable request of Agent, and Agent may, at its
option, instruct all suppliers, carriers, forwarders, warehouses or others
receiving or holding cash, checks, Inventory, documents or instruments in which
Agent holds a security interest to deliver same to Agent and/or subject to
Agent's order and if they shall come into Borrower's possession, they, and each
of them, shall be held
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by Borrower in trust as Agent's trustee, and Borrower will immediately deliver
them to Agent in their original form together with any necessary endorsement.
4.7 Books and Records. Borrower (a) shall keep proper books of record
and account in which full, true and correct entries will be made of all dealings
or transactions of or in relation to its business and affairs; (b) set up on its
books accruals with respect to all taxes, assessments, charges, levies and
claims; and (c) on a reasonably current basis set up on its books, from its
earnings, allowances against doubtful Receivables, advances and investments and
all other proper accruals (including without limitation by reason of
enumeration, accruals for premiums, if any, due on required payments and
accruals for depreciation, obsolescence, or amortization of properties, which
should be set aside from such earnings in connection with its business. All
determinations pursuant to this subsection shall be made in accordance with, or
as required by, GAAP consistently applied in the opinion of such independent
certified public accountant as shall then be regularly engaged by Borrower.
4.8 Financial Disclosure. Borrower hereby irrevocably authorizes and
directs all accountants and auditors employed by Borrower at any time during the
Term, if requested by Agent, to exhibit and deliver to Agent and each Lender
copies of any of Borrower's financial statements, trial balances or other
accounting records of any sort in the accountant's or auditor's possession, and
to disclose to Agent and each Lender any information such accountants or
auditors may have concerning Borrower's financial status and business
operations. Borrower hereby authorizes all federal, state and municipal
authorities to furnish to Agent and each Lender copies of all reports or
examinations relating to Borrower, whether made by Borrower or otherwise;
however, Agent and each Lender will attempt to obtain such information or
materials directly from Borrower prior to obtaining such information or
materials from such accountants or such authorities.
4.9 Compliance with Laws. Borrower shall comply with all acts, rules,
regulations and orders of any legislative, administrative or judicial body or
official applicable to the Collateral or any part thereof or to the operation of
Borrower's business the non-compliance with which could reasonably be expected
to have a Material Adverse Effect.
4.10 Inspection of Premises. At all reasonable times Agent and each
Lender shall have full access to and the right to audit, check, inspect and make
abstracts and copies from Borrower's books, records, audits, correspondence and
all other papers relating to the Collateral and the operation of Borrower's
business. Agent, any Lender and their agents may enter upon any of Borrower's
premises at any time during business hours and at any other reasonable time, and
from time to time, for the purpose of inspecting the Collateral and any and all
records pertaining thereto and the operation of Borrower's business.
4.11 Insurance. Borrower shall bear the full risk of any loss of any
nature whatsoever with respect to the Collateral. At Borrower's own cost and
expense, and in amounts and with carriers acceptable to Agent, Borrower shall
(a) keep all its insurable properties and properties in which Borrower has an
interest insured against the hazards of fire, flood, sprinkler leakage, those
hazards
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covered by extended coverage insurance and such other hazards, and for such
amounts, as is customary in the case of companies engaged in businesses similar
to Borrower's including, without limitation, business interruption insurance;
(b) maintain a bond in such amounts as is customary in the case of companies
engaged in businesses similar to Borrower's insuring against larceny,
embezzlement or other criminal misappropriation of insured's officers and
employees who may either singly or jointly with others at any time have access
to the assets or funds of Borrower either directly or through authority to draw
upon such funds or to direct generally the disposition of such assets; (c)
maintain public and product liability finance against claim for personal injury,
death or property damage suffered by others; (d) maintain all such worker's
compensation or similar insurance as may be required under the laws of any state
or jurisdiction in which Borrower is engaged in business; and (c) at Agent's
request furnish Agent with (i) copies of all policies and evidence of the
maintenance of such policies by the renewal thereof at least thirty (30) days
before any expiration date, and (ii) appropriate loss payable endorsements in
form and substance satisfactory to Agent, naming Agent as a co-insured and loss
payee as its interests may appear with respect to all insurance coverage
referred to in clauses (a) and (b) above, and providing (A) that all proceeds
thereunder shall be payable to Agent, (B) no such insurance shall be affected by
any act or neglect of the insured or owner of the property described in such
policy, and (C) that such policy and loss payable clauses my not be canceled,
amended or terminated unless at least thirty (30) days prior written notice is
given to Agent. In the event of any loss thereunder, the carriers named therein
hereby are directed by Agent and Borrower to make payment for such loss to Agent
and not to Borrower and Agent jointly. If any insurance losses are paid by
check, draft or other instrument payable to Borrower and Agent jointly, Agent
may endorse Borrower's name thereon and do such other things as Agent may deem
advisable to reduce the same to cash. Agent is hereby authorized following the
occurrence and during the continuation of an Event of Default to adjust and
compromise claims under insurance coverage referred to in clauses (a), (b) and
(e) above. All loss recoveries received by Agent upon any such insurance may be
applied to the Obligations, in such order as Agent in its sole discretion shall
determine. Any surplus shall be paid by Agent to Borrower or applied as may be
otherwise required by law. Borrower shall remain liable for all unpaid
Obligations after application of all loss recoveries to the Obligations.
4.12 Failure to Pay Insurance. If Borrower fails to obtain insurance as
hereinabove provided, or to keep the same in force, Agent, if Agent so elects,
may obtain such insurance and pay the premium therefor for Borrower's Account,
and charge Borrower's Account therefor and such expenses so paid shall be part
of the Obligations.
4.13 Payment of Taxes. Borrower will pay, when due, all taxes,
assessments and other Charges lawfully levied or assessed upon Borrower or any
of the Collateral including, without limitation, real and personal property
taxes, assessments and charges and all franchise, income, employment. social
security benefits, withholding, and sales taxes except when the amount or
validity thereof is currently being contested in good faith by appropriate
proceedings and Borrower shall have provided for such reserves as Agent may
reasonably deem proper and necessary. If any tax by any Governmental Body is or
may be imposed on or as a result of any transaction between Borrower and Agent
or any Lender which Agent or any Lender may be required to withhold or pay
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or if any taxes, assessments, or other Charges remain unpaid after the date
fixed for their payment, or if any claim shall be made which, in Agent's or any
Lender's opinion, may possibly create a valid Lien on the Collateral, Agent may
without notice to Borrower pay the tam, assessments or other Charges and
Borrower hereby indemnities and holds Agent and each Lender harmless in respect
thereof. The amount of any payment by Agent under this Section 4.13 shall be
charged to Borrower's Account as a Revolving Advance and added to the
Obligations and, until Borrower shall furnish Agent with an indemnity therefor
(or supply Agent with evidence satisfactory to Agent that due provision for the
payment thereof has been made), Agent may hold without interest on any balance
standing to Borrower's credit and Agent shall retain its security interest in
any and all Collateral held by Agent.
4.14 Payment of Leasehold Obligations. Borrower shall at all times pay,
when and as due, its rental obligations under all leases under which it is a
tenant, and shall otherwise comply, in all material respects, with all other
terms of such leases and keep them in full force and effect and, at Ages request
will provide evidence of having done so. In the event Borrower is contesting the
validity and a material amount of such rental obligations, it shall notify the
Agent of the existence of such contest and the amount involved, and, if
requested by Agent, shall remit the disputed amount to Agent to be held as cash
collateral for the Obligations.
4.15 Receivables.
(a) Nature of Receivables. Each of the Receivables shall be a
bona fide and valid account representing a bona fide indebtedness incurred by
the Customer therein named, for a fixed sum as set forth in the invoice relating
thereto (provided immaterial or unintentional invoice errors shall not be deemed
to be a breach hereof) with respect to an absolute sale or lease and delivery of
goods upon stated term of Borrower, or work, labor or services theretofore
rendered by Borrower as of the date each Receivable is created. Same shall be
due and owing in accordance with Borrower's standard terms of sale without
dispute, setoff or counterclaim except as may be stated on the accounts
receivable schedules delivered by Borrower to Agent.
(b) Solvency of Customers. Each Customer, to the best of
Borrower's knowledge, as of the date each Receivable is created, is and will be
solvent and able to pay all Receivables on which the Customer is obligated in
full when due or, with respect to such Customers of Borrower who are not
solvent, Borrower has set up on its books and in its financial records bad debt
reserves adequate to cover such Receivables.
(c) Locations of Borrower. Borrower's chief executive office
is located at 0000 Xxxxx 00xx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000. Until written
notice is given to Agent by Borrower of any other office at which it keeps its
records pertaining to Receivables, all such records shall be kept at such
executive office.
(d) Collection of Receivables. Until Borrower's authority to
do so is terminated by Agent (which notice Agent may give at any time during the
continuance of an Event of Default),
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Borrower will, at Borrower's sole cost and expense, but on Agent's behalf and
for Agent's account, collect as Agent's property and in tug for Agent all
amounts received on Receivables, and shall not commingle such collections with
Borrower's funds or use the same except to pay Obligations. Borrower shall, upon
request, deliver to Agent or the Blocked Account in original form and on the
date of receipt thereof, all checks, drafts, notes, money orders, acceptances,
cash and other evidences of Indebtedness.
(e) Notification of Assignment of Receivables. At any time
during the continuance of an Event of Default, Agent shall have the right to
send notice of the assignment of, and Agent's security interest in, the
Receivables to any and all Customers or any third party holding or otherwise
concerned with any of the Collateral. Thereafter, Agent shall have the sole
right to collect the Receivables, take possession of the Collateral, or both.
Agent's actual collection expenses, including, but not limited to, stationery
and postage, telephone and telegraph, secretarial and clerical expenses and the
salaries of any collection personnel used for collection, may be charged to
Borrower's Account and added to the Obligations.
(f) Power of Agent to Act on Borrower's Behalf. Agent shall
have the right to receive, endorse, assign and/or deliver in the name of Agent
or Borrower any and all checks, drafts and other instruments for the payment of
money relating to the Receivables, and Borrower hereby waives notice of
presentment, protest and non-payment of any instrument so endorsed. Effective
only during the continuance of an Event of Default, Borrower hereby constitutes
Agent or Agent's designee as Borrower's attorney with power (i) to endorse
Borrower's name upon any notes, acceptances, checks, drafts, money orders or
other evidences of payment or Collateral; (ii) to sign Borrower's name on any
invoice or xxxx of lading relating to any of the Receivables, drafts against
Customers, assignments and verifications of Receivables; (iii) to send
verifications of Receivables to any Customer; (iv) to sign Borrower's name on
all financing statements or any other documents or instruments deemed necessary
or appropriate by Agent to preserve, protect, or perfect Agent's interest in the
Collateral and to file same; (v) to demand payment of the Receivables; (vi) to
enforce payment of the Receivables by legal proceedings or otherwise; (vii) to
exercise all of Borrower's rights and remedies with respect to the collection of
the Receivables and any other Collateral; (viii) to settle, adjust, compromise,
extend or renew the Receivables; (ix) to settle, adjust or compromise any legal
proceedings brought to collect Receivables; (x) to prepare, file and sign
Borrower's name on a proof of claim in bankruptcy or similar document against
any Customer; (xi) to prepare, file and sign Borrower's name on any notice of
Lien, assignment or satisfaction of Lien or similar document in connection with
the Receivables; and (xii) to do all other acts and things necessary to carry
out this Agreement. All acts of said attorney or designee are hereby ratified
and approved, and said attorney or designee shall not be liable for any acts of
omission or commission nor for any error of judgment or mistake of fact or of
law, unless done maliciously or with gross (not mere) negligence; this power
being coupled with an interest is irrevocable while any of the Obligations
remain unpaid. Agent shall have the right at any time during the continuance of
an Event of Default, to change the address for delivery of mail addressed to
Borrower to such address as Agent may designate and to receive, open and dispose
of all mail addressed to Borrower.
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(g) No Liability. Neither Agent nor any Lender shall, under
any circumstances or in any event whatsoever, have any liability for any error
or omission or delay of any kind occurring in the settlement, collection or
payment of any of the Receivables or any instrument received in payment thereof,
or for any damage resulting therefrom. During the continuance of an Event of
Default Agent may, without notice or consent from Borrower, xxx upon or
otherwise collect, extend the time of payment of, compromise or settle for cash,
credit or upon any terms any of the Receivables or any other securities,
instruments or insurance applicable thereto and/or release any obligor thereof.
Agent is authorized and empowered to accept during the continuance of an Event
of Default the return of the goods represented by any of the Receivables,
without notice to or consent by Borrower, all without discharging or in any way
affecting Borrower's liability hereunder.
(h) Establishment of Blocked Account. All proceeds of
Collateral shall, at the direction of Agent, be deposited by Borrower into a
blocked account as Agent may require pursuant to an arrangement with such bank
as may be selected by Borrower and be acceptable to Agent Borrower shall issue
to any such bank, irrevocable instructions directing said bank to transfer such
funds so deposited to Agent, either to any account maintained by Agent at said
bank or by wire transfer to appropriate account(s) of Agent. All funds deposited
in such blocked account shall immediately become the property of Agent and
Borrower shall obtain the agreement by such bank to waive any offer rights
against the funds so deposited. Agent assumes no responsibility for such blocked
account arrangement, including without limitation, any claim of accord and
satisfaction or release with respect to deposits accepted by any bank
thereunder. Alternatively, Agent may establish depository accounts ("Depository
Accounts") in the name of Agent at a bank or banks for the deposit of such funds
and Borrower shall deposit all proceeds of Collateral or cause same to be
deposited, in kind, in such Depository Accounts of Agent in lieu of depositing
same to the blocked accounts. In either case, funds in blocked accounts and
Depository Accounts, if any, shall be made available to Borrower on
substantially the same basis as set forth in the following provisions of this
Section 4.15(h) with respect to the Blocked Account:
(i) Blocked Account Agreement. Without limiting the
generality of the foregoing, Borrower agrees with Agent and the
Lenders, at all times during the Term, and thereafter so long as any
Obligations remain unpaid, (A) to execute, deliver and comply with all
obligations on its part to be performed under, and to give full force
and effect to procedures and arrangements contemplated by, the Blocked
Account Agreement and (B) in the event that at any time during such
period the Blocked Account Agreement shall not be in full force and
effect for any reason, that all of the representations, warranties, and
covenants of Borrower contained in the form of Blocked Account
Agreement attached hereto as Exhibit 4.15(h) shall be binding upon
Borrower and deemed incorporated herein by reference, except to the
extent that any such representation, warranty or covenant can have no
relevance due to circumstances beyond the control of Borrower.
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(ii) PNC Collateral Account.
(A) Borrower has established with Processor the Blocked
Account into which Borrower has agreed to deposit all collections of
Receivables and other cash proceeds of the Collateral, and Agent has
established a cash collateral account (the "PNC Collateral Account")
into which Processor has agreed to transmit funds on deposit with
Processor in the Blocked Account in accordance with the Blocked Account
Agreement.
(B) Notwithstanding anything to the contrary contained herein
(but subject in all events to Section 2.11 hereof) or in the Blocked
Account Agreement, from and after the date that funds shall be
deposited in the PNC Collateral Account as aforesaid, Borrower agrees
that at all times during the Term and thereafter so long as any
Obligations remain unpaid, Agent shall have the continuing exclusive
right to apply and reapply any and all such funds on deposit in the PNC
Collateral Account representing proceeds of Inventory or General
Intangibles in satisfaction of the Obligations in the following manner.
(1) so long as no Default or Event of Default shall have occurred and
be continuing, such funds may be applied first to repay outstanding
Revolving Advances and thereafter to such other Obligations (other than
the Term Loan and the Equipment Loans) as Agent in its sole discretion
shall determine; and (2) following the occurrence and during the
continuance of an Event of Default, such funds may be applied to the
Obligations in such order of priority as Agent in its sole discretion
shall determine. Agent shall give Borrower notice of each such
application; provided, however that failure by Agent to give such
notice shall not affect Agent's right to make or continue to make
applications of funds on deposit in the PNC Collateral Account in
accordance with this Section 4.15. So long as no Default or Event of
Default shall have occurred and be continuing, to the extent that there
are funds on deposit in the PNC Collateral Account at a time when no
Revolving Advances we outstanding and no other Obligations (other than
the Term Loan and Equipment Loans) are then due and payable (without
regard to any grace periods provided hereunder for the payment thereof
after the date when such Obligations are due), Agent shall promptly
make such funds available to Borrower by way of credit to Borrower's
operating account at Processor, or such other bank as Borrower may
designate following notification to Agent, in immediately available
federal funds or other immediately available funds.
(C) Notwithstanding anything to the contrary herein, (1) for
purposes of computing interest on the Advances under this Agreement in
all cases where Agent exercises its right to apply funds on deposit in
the PNC Collateral Account in satisfaction of the Obligations, funds
shall be deemed applied by Agent the day after the funds become
available and (2) solely for purposes of determining the occurrence of
an Event of Default and determining the Undrawn Availability at any
date, funds shall be deemed on deposit in the PNC Collateral Account as
provided in the preceding paragraph 4.15(h)(ii)B subject, in all cases,
to the condition that funds transferred by Processor to the PNC
Collateral Account on any date are not subsequently dishonored for any
reason whatsoever, and that no such trader shall constitute payment to
Agent unless such item is actually collected by Processor
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or such other bank as may act as the Agent's depository bank as to such
items of payment and such collection is actually transferred to the PNC
Collateral Account.
(iii) Special Receipts. Notwithstanding anything to
the contrary in this Agreement or the Blocked Account Agreement, if the
Blocked Account Agreement shall be terminated during the Term or its
provisions cannot be implemented in accordance with the terms thereof,
any monies, advance customer deposits, checks, notes, drafts, or other
similar items of payment relating to or constituting the Collateral or
proceeds thereof received by Borrower shall be held by Borrower in
trust for Agent and as the property of Agent and the other Lenders,
separate from the funds of Borrower, and, until Borrower is notified in
writing by Agent to do otherwise, Borrower shall forthwith on the date
of receipt of all such monies and items of collection, deposit the same
in the PNC Collateral Account for application on account of the
Obligations as provided in this Section 4.15.
(i) Adjustments. Borrower will not, without Agent's consent,
compromise or adjust any Receivables (or extend the time for payment thereof) or
accept any returns of merchandise or grant any additional discounts, allowances
or credits thereon except for those compromises, adjustments, returns,
discounts, credits and allowances as have been heretofore customary in the
business of Borrower.
4.16 Inventory. All Inventory held for sale has been, and will be,
produced by Borrower in accordance with the Federal Fair Labor Standards Act of
1938, as amended and all rules, regulations and orders thereunder.
4.17 Maintenance of Equipment. The Equipment shall be maintained in
good operating condition and repair (reasonable wear and tear excepted) and all
necessary replacements of and repairs thereto shall be made so that the value
and operating efficiency of the Equipment shall be maintained and preserved.
Borrower shall not use or operate the Equipment in violation of any law,
statute, ordinance, code, rule or regulation except to the extent such violation
could not reasonably be expected to have a Material Adverse Effect Borrower
shall have the right to sell Equipment to the extent set forth in Section 4.3.
4.18 Exculpation of Liability. Nothing herein contained shall be
construed to constitute Agent or any Lender as Borrower's agent for any purpose
whatsoever, nor shall Agent or any Lender be responsible or liable for any
shortage, discrepancy, damage, loss or destruction of any part of the Collateral
wherever the same may be located and regardless of the cause thereof. Neither
Agent nor any Lender, whether by anything herein or in any assignment or
otherwise, assume any of Borrower's obligations under any contract or agreement
assigned to Agent or such Lender, and neither Agent nor any Lender shall be
responsible in any way for the performance by Borrower of any of the terms and
conditions thereof.
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4.19 Environmental Matters. (a) Borrower will ensure that the Real
Property complies with all Environmental Laws and it will not place or permit to
be placed any Hazardous Substances on any Real Property except as not prohibited
by Environmental Laws.
(b) Borrower will establish and maintain a system, including
without limitation an asbestos management plan, to assure and monitor continued
compliance with all applicable Environmental Laws which system shall include
periodic reviews of such compliance.
(c) Borrower will dispose of any and all Hazardous Waste
generated at the Real Property in compliance with Environmental Laws.
(d) In the event Borrower obtains, gives or receives notice of
any Release or threat of Release of a reportable quantity of or the capacity to
emit any Hazardous Substances at the Real Property (any such event being
hereinafter referred to as a "Hazardous Discharge") or receives any notice of
violation, request for information or notification that it is potentially
responsible for investigation or cleanup of environmental conditions at the Real
Property, demand letter or complaint, order, citation, or other written notice
with regard to any Hazardous Discharge or violation of Environmental Laws
affecting the Real Property or Borrower's interest therein (any of the foregoing
is referred to herein as an "Environmental Complaint") from any Person or
entity, including any local or state agency responsible in whole or in part for
environmental matters in the state in which the Real Property is located or the
United States Environmental Protection Agency (any such person or entity
hereinafter the "Authority"), then Borrower shall, within five (5) Business
Days, give written notice of same to Agent detailing facts and circumstances of
which Borrower is aware giving rise to the Hazardous Discharge or Environmental
Complaint. Such information is to be provided to allow Agent to protect its
security interest in the Real Property and is not intended to create nor shall
it create any obligation upon Agent or any Lender with respect thereto.
(e) Borrower shall promptly forward to Agent copies of any
request for information, notification of potential liability, demand letter
relating to potential responsibility with respect to the investigation or
cleanup of Hazardous Substances at any site owned, operated or used by Borrower
to dispose of Hazardous Substances and shall continue to forward copies of
correspondence between Borrower and the Authority regarding such claim to Agent
until the claim is settled. Borrower shall promptly forward to Agent copies of
all documents and reports concerning a Hazardous Discharge at the Real Property
that Borrower is required to file under any Environmental Laws. Such information
is to be provided solely to allow Agent to protect Agent's security interest in
the Real Property and the Collateral.
(f) Borrower shall respond promptly to any Hazardous Discharge
or Environmental Complaint and take all necessary action in order to safeguard
the health of any Person and to avoid subjecting the Collateral or Real Property
to any Lien. If Borrower shall fail to respond promptly to any Hazardous
Discharge or Environmental Complaint or Borrower shall fail to comply with any
of the requirements of any Environmental Laws, Agent on behalf of Lenders may,
but without the obligation to do so, for the sole purpose of protecting Agent's
interest in Collateral, with
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five (5) days written notice to Borrower: (A) give such notices or (B) enter
onto the Real Property (or authorize third parties to enter onto the Real
Property) and take such actions as Agent (or such third parties as directed by
Agent) deem reasonably necessary or advisable, to comply with Environmental
Laws. All reasonable costs and expenses incurred by Agent and Lenders (or such
third parties) in the exercise of any such rights, including any reasonable sums
paid in connection with any judicial or administrative investigation or
proceeding fines and penalties, together with interest thereon from the date
expended at the Default Raft for Revolving Advances shall be paid upon demand by
Borrower, and until paid shall be added to and become a part of the obligations
secured by the Liens created by the terms of this Agreement or any other
agreement between Agent, any Lender and Borrower.
(g) made at a time when Agent reasonably believes that a
Hazardous Discharge exists at the Real Property, Borrower shall provide Agent,
at Borrower's expense, with an environmental site assessment or environmental
audit report prepared by an environmental engineering shall acceptable in the
reasonable opinion of Agent, to assess with a reasonable degree of certainty the
existence of a Hazardous Discharge and the potential costs in connection with
abatement, cleanup, removal or remediation of any Hazardous Discharge or
Hazardous Substances found on, under, at or within the Real Property. Any report
or investigation of such Hazardous Discharge proposed and acceptable to an
appropriate Authority that is charged to oversee the clean-up of such Hazardous
Discharge shall be acceptable to Agent. If such estimates, individually or in
the aggregate, exceed $500,000, Agent shall have the right to require Borrower
to post a bond, letter of credit or other security reasonably satisfactory to
Agent to secure payment of these costs and expenses.
(h) Borrower shall defend and indemnify Agent and Lenders and
hold Agent, Lenders and their respective employees, agents, directors and
officers harmless from and against all loss, liability, damage and expense,
claims, costs, fines and penalties, including attorney's fees, suffered or
incurred by Agent or Lenders under or on account of any Environmental Laws,
including, without limitation, the assertion of any lien thereunder, with
respect to any Hazardous Discharge, the presence of any Hazardous Substances
affecting the Real Property, whether or not the some originates or emerges from
the Real Property or any contiguous real estate, including any loss of value of
the Real Property as a result of the foregoing except to the extent such loss,
liability, damage and expenses is attributable to any Hazardous Discharge
resulting from actions on the part of Agent or any Lender. Borrowers obligations
under this Section 4.19 shall arise upon the discovery of the presence of any
Hazardous Substances at the Real Property, whether or not any federal, state, or
local environmental agency has taken or threatened any action in connection with
the presence of any Hazardous Substances. Borrowers's obligation and the
indemnifications hereunder shall survive the termination of this Agreement
(i) For purposes of Section 4.19 and 5.7, all references to
Real Property shall be deemed to include all of Borrower's right, title and
interest in and to its owned and leased premises.
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4.20 Financing Statements. Except as respects the financing statements
filed by Agent and the financing statements described on Schedule 1.2, as of the
date hereof, no financing statement covering any of the Collateral or any
proceeds thereof is on file in any public office.
V. REPRESENTATIONS AND WARRANTIES.
Borrower represents and warrants as follows:
5.1 Authority. Borrower has full corporate power, authority and legal
right to enter into this Agreement and the Other Documents and perform all
Obligations hereunder and thereunder. The execution, delivery and performance
hereof and of the Other Documents (a) are within Borrower's corporate powers,
have been duly authorized, are not in contravention of any law, judgment,
injunction, order or decree of any, arbitrator, court or other Governmental
Body, or the terms of Borrower's Restated Articles of Incorporation or by-laws
or to the conduct of Borrower's business or of any material agreement or
undertaking to which Borrower is a party or by which Borrower is bound, and (b)
will not conflict with nor result in any breach in any of the provisions of or
constitute a default under or result in the creation of any Lien except
Permitted Encumbrances upon any asset of Borrower under the provisions of any
agreement, organization document, indenture or other instrument to which
Borrower or its property is a party or by which it may be bound, except for any
conflict which could not reasonably be expected to have a Material Adverse
Effect.
5.2 Formation and Qualification. (a) Borrower is duly organized and in
good standing under the laws of the State of Nebraska and is qualified to do
business and is in good standing in the states listed on Schedule 5.2(a) which
constitute all states in which qualification and good standing we necessary for
Borrower to conduct its business and own its property except whom the failure to
so qualify could not reasonably be expected to have a Material Adverse Effect
Borrower has delivered to Agent true and complete copies of its Restated
Articles of Incorporation and by-laws and will promptly notify Agent of any
amendment or changes thereto.
(b) Except as listed on Schedule 5.2(b) Borrower has no
Subsidiaries.
5.3 Survival of Representations and Warranties. All representations and
warranties of Borrower contained in this Agreement and the Other Documents shall
be true at the time of Borrowers's execution of this Agreement and the Official
Documents, and shall survive the execution, delivery and acceptance thereof by
the parties thereto and the closing of the transactions described therein or
related thereto.
5.4 Tax Returns. Borrower's federal tax identification number is
00-0000000. Borrower has filed all federal, state and local tax returns and
other reports it is required by law to file and has paid all taxes, assessments,
fees and other governmental charges that are due and payable. The provision for
taxes on the books of Borrower are adequate for all years not closed by
applicable
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statutes, and for its current fiscal year, and Borrower has no knowledge of any
deficiency or additional assessment in connection therewith not provided for on
its books.
5.5 Financial Statements.
(a) The pro forma balance sheet of Borrower (the "Pro Forma
Balance Sheet") furnished to Agent on the Closing Date reflects the consummation
of the transactions contemplated by this Agreement (the "Transactions") and is
accurate, complete and correct and fairly reflects the financial condition of
Borrower as of the Closing Date after giving effect to the Transactions, and has
been prepared in accordance with GAAP, consistently applied. All financial
statements referred to in this subsection 5.5(a), including the related
schedules and notes thereto, have been prepared, in accordance with GAAP, except
as may be disclosed in such financial statements.
(b) The cash flow projections of Borrower and its projected
balance sheets as of the Closing Date, copies of which are annexed hereto as
Exhibit 5.5(b) (the "Projections") are based on underlying assumptions which
provide a reasonable basis for the projections contained therein and reflect
Borrower's judgment based on present circumstances of the most likely set of
conditions and course of action for the projected period. The cash flow
Projections together with the Pro Forma Balance Sheet, are referred to as the
"Pro Forma Financial Statements".
(c) The consolidated balance sheet of Borrower and its
Subsidiaries as of December 31, 1997, and the related statements of income,
changes in stockholder's equity, and changes in cash flow for the fiscal year
ended on such date, all accompanied by reports thereon containing opinions
without qualification by an independent certified public accounting firm, copies
of which have been delivered to Agent, have been prepared in all material
respects in accordance with GAAP, consistently applied (except for changes in
application in which such accounting firm concur) and present fairly, in all
material respects, the financial position of Borrower and its Subsidiaries at
such date and the results of their operations for such period. Since October 31,
1999 there has been no change in the condition, financial or otherwise, of
Borrower or its Subsidiaries as shown on the consolidated balance sheet as of
such date and no change in the aggregate value of machinery, equipment and Real
Property owned by Borrower and its Subsidiaries except changes in the ordinary
course of business, none of which individually or in the aggregate could
reasonably be expected to have a Material Adverse Effect.
5.6 Name. Borrower has not been known by any other name in the past
five years and does not sell Inventory under any name other than names disclosed
in the Questionnaire, nor has Borrower been the surviving entity of a merger or
consolidation or acquired all or substantially all of the assets of any Person
during the preceding five (5) years.
5.7 O.S.H.A. and Environmental Compliance. Except as set forth on
Schedule 5.7:
(a) Borrower has duly complied with, and its facilities,
business, assets, property, leaseholds and Equipment are in compliance in all
material respects with, the provisions of the
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Federal Occupational Safety and Health Act, the Environmental Protection Act,
RCRA and all other Environmental Laws; there have been no outstanding citations,
notices or orders of non-compliance issued to Borrower or relating to its
business, assets, property, leaseholds or equipment under any such laws, rules
or regulations.
(b) Borrower has applied for or been issued all required
federal, state and local licenses, certificates or permits required under all
applicable Environmental Laws.
(c) (i) There are no visible signs of releases, spills,
discharges, leaks or disposal (collectively referred to as "Releases") of
Hazardous Substances at, upon, under or within any Real Property or any premises
leased by Borrower; there are no underground storage tanks or polychlorinated
biphenyls on the Real Property or any premises leased by Borrower; neither the
Real Property nor any premises leased by Borrower has ever been used as a
treatment, storage or disposal facility of Hazardous Waste; and no Hazardous
Substances are present on the Real Property or any premises leased by Borrower,
excepting such quantities a are handled in accordance with all applicable
manufacturer's instructions and in proper storage containers and as are
necessary for the operation of the commercial business of Borrower cc of its
tenants and with all Environmental Laws.
5.8 Solvency; No Litigation, Violation, Indebtedness or Default.
(a) After giving effect to the Transactions, Borrower will be
solvent, able to pay its debts as they mature, have capital sufficient to carry
on its business and all businesses in which it is about to engage, and as of the
Closing Date, the fair present saleable value of its assets, calculated on a
going concern basis, is in excess of the amount of its liabilities and
subsequent to the Closing Date, the fair saleable value of its assets
(calculated on a going concern basis) will be in excess of the amount of its
liabilities.
(b) Except as set forth on Schedule 5.8(b), Borrower has (i)
no pending or threatened litigation, arbitration, actions or proceedings which
could reasonably be expected to have a Material Adverse Effect, and (ii) there
are no liabilities of Borrower, fixed or contingent which are material but are
not reflected in the most recent financial statements (or in the notes thereto)
of Borrower required to be delivered to Agent hereunder, other than liabilities
arising in the ordinary course of business since the date of such financial
statements.
(c) Except as set forth on Schedule 5.8(c) Borrower is not in
violation of any applicable statute, regulation or ordinance in any respect
which could reasonably be expected to have a Material Adverse Effect, nor is
Borrower in violation of any order of any court, governmental authority or
arbitration board or tribunal.
(d) Neither Borrower nor any member of the Controlled Group
maintains or contributes to any Plan other than those fisted on Schedule 5.9(d)
hereto. (i) No Plan has incurred any "accumulated finding deficiency," as
defined in Section 302(a)(2) of ERISA and Section 412(a)
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of the Code, whether or not waived, and Borrower and each member of the
Controlled Group has met all applicable minimum funding requirements under
Section 302 of ERISA in respect of each Plan, (ii) each Plan which is intended
to be a qualified plan under Section 401 (a) of the Code as currently in effect
has been determined by the Internal Revenue Service to be qualified under
Section 401 (a) of the Code and the trust related thereto is exempt from federal
income tax under Section 501 (a) of the Code, (iii) neither Borrower nor any
member of the Controlled Group has incurred any liability to the PBGC other than
for the payment of premiums, and there are no premium payments which have become
due which are unpaid, (iv) no Plan has been terminated by the plan administrator
thereof or by the PBGC, and there is no occurrence which would cause the PBGC to
institute proceedings under Title IV of ERISA to terminate any Plan, (y) at this
time, the present value of the accrued benefits and other liabilities of each
Plan exceed the current value of the assets of such Plan and neither Borrower
nor any member of the Controlled Group knows of any facts or circumstances which
would materially change the value of such assets and accrued benefits and other
liabilities, (vi) neither Borrower nor any member of the Controlled Group has
breached any of the responsibilities, obligations or duties imposed on it by
ERISA with respect to any Plan, (vii) neither Borrower nor any member of a
Controlled Group has incurred any liability for any excise tax arising under
Section 4972 or 4990B of the Code, and no fact exists which could give rise to
any such liability, (viii) neither Borrower nor any member of the Controlled
Group nor any fiduciary of, nor any trustee to, any Plan, has engaged in a
"prohibited transactions" described in Section 406 of the ERISA or Section 4975
of the Code nor taken any action which would constitute or result in a
Termination Event with respect to any such Plan which is subject to ERISA, (ix)
Borrower and each member of the Controlled Group has made all contributions due
and payable with respect to each Plan, (x) there exists no event described in
Section 4043(b) of ERISA, for which the thirty (30) day notice period contained
in 29 CFR Section 2615.3 has not been waived, (xi) neither Borrower nor any
member of the Controlled Group has any fiduciary responsibility for investments
with respect to any plan existing for the benefit of persons other than
employees or former employees of Borrower and any member of the Controlled
Group, and (xii) neither Borrower nor any member of the Controlled Group has
withdrawn, completely or partially, from any Multiemployer Plan so as to incur
liability under the Multiemployer Pension Plan Amendments Act of 1980.
5.9 Patents, Trademarks, Copyrights and Licenses. All patents, patent
applications, trademarks, tidemark applications, service marks, service xxxx
applications, copyrights (other than any such copyrights that have not been
registered and are not necessary for the operation of Borrower's business),
copyright applications, tradenames, assumed names and licenses owned or utilized
by Borrower are set forth on Schedule 5.9, are valid and, except as set forth on
said Schedule, have been duly registered or filed with all appropriate
governmental authorities and together with design rights and trade secrets, the
Borrower owns all of the intellectual property rights which we necessary for the
operation of its business; there is no objection to or pending challenge to the
validity of any such material patent, trademark, copyright, design right,
tradename, trade secret or license and Borrower is not aware of any grounds for
any challenge. Each material patent, patent application, patent license,
trademark, trademark application, trademark license, service xxxx, service xxxx
application, service xxxx license, copyright, copyright application and
copyright license owned or held by Borrower and each design right and trade
secret used by Borrower consists
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of original material or property developed by Borrower or was lawfully acquired
by Borrower from the proper and lawful owner thereof Each of such items has been
maintained so as to preserve the value thereof from the date of creation or
acquisition thereof. With respect to each piece of software used by Borrower,
Borrower is either the licensee under a valid license covering the use of such
software by Borrower or in possession of the source and object codes related to
such software or is the beneficiary of a source code escrow agreement, each such
source code escrow agreement being listed on Schedule 5.9 hereto.
5.10 Licenses and Permits. Borrower (a) is in compliance with and (b)
has procured and is now in possession of, all material licenses or permits
required by any applicable federal, state or local law or regulation for the
operation of its business in each jurisdiction wherein it is now conducting or
proposes to conduct business except where the failure to so comply or to procure
such licenses or permits could not reasonably be expected to have a Material
Adverse Effect.
5.11 Default of Indebtedness. Borrower is not in default in the payment
of the principal of or interest on any Indebtedness or under any instrument or
agreement under or subject to which any Indebtedness has been issued and no
event has occurred under the provisions of any such instrument or agreement
which with or without the lapse of time or the giving of notice, or both,
constitutes or would constitute an event of default thereunder.
5.12 No Default. Borrower is not in material default in the payment or
performance of any of its continuing obligations and no Default has occurred.
5.13 No Burdensome Restrictions. Borrower is not party to any contract
or agreement the performance of which could reasonably be expected to have a
Material Adverse Effect. Borrower has not agreed or consented to cause or permit
in the future (upon the happening of a contingency or otherwise) any of its
property, whether now owned or hereafter acquired, to be subject to a Lien which
is not a Permitted Encumbrance.
5.14 No Labor Disputes. Borrower is not involved in any labor dispute;
there are no strikes or walkouts or union organization of any of Borrower's
employees threatened or in existence and no labor contract is scheduled to
expire during the Term.
5.15 Margin Regulations. Borrower is not engaged, nor will it engage,
principally or as one of its important activities, in the business of extending
credit for the purpose of "purchasing" or "carrying" any "margin stock" within
the respective meanings of each of the quoted terms under Regulation U of the
Board of Governors of the Federal Reserve System as now and from time to time
hereafter in effect. No part of the proceeds of any Advance will be used for
"purchasing" or "carrying" "margin stock" as defined in Regulation U of such
Board of Governors.
5.16 Investment Company Act. Borrower is not an "investment company"
registered or required to be registered under the Investment Company Act of
1940, as amended, nor is it controlled by such a company.
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5.17 Disclosure. No representation or warranty made by Borrower in this
Agreement, or in any financial statement, report, certificate or any other
document finished in connection herewith or them-with 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. There is no fact known to
Borrower or which reasonably should be known to Borrower which Borrower has not
disclosed to Agent in writing with respect to the Transactions which could
reasonably be expected to have a Material Adverse Effect
5.18 Intentionally Omitted.
5.19 Swaps. Borrower is not a party to, nor will it be a party to, any
swap agreement whereby Borrower has agreed or will agree to swap interest rates
or currencies unless same provides that damages upon termination following an
event of default thereunder are payable on an unlimited "two-way basis" without
regard to fault on the part of either party.
5.20 Conflicting Agreements. No provision of any mortgage, indenture,
contract, agreement, judgment, decree or order binding on Borrower or affecting
the Collateral conflicts with, or requires any Consent which has not already
been obtained to, or would in any way prevent the execution, delivery or
performance of, the terms of this Agreement or the Other Documents.
5.21 Application of Certain Laws and Regulations. Neither Borrower nor
any Subsidiary of Borrower is subject to any statute, rule or regulation which
regulates the incurrence of any Indebtedness, including, without limitation,
statutes or regulations relative to common or interstate carriers or to the sale
of electricity, gas, steam, water, telephone, telegraph or other public utility
services.
5.22 Business and Property of Borrower. Upon and after the Closing
Date, Borrower does not propose to engage in any business other than the
manufacture and distribution of design, manufacture, assembly, testing and
marketing of antennas and battery products and other related products and
components for use in the communications industry and activities necessary to
conduct such business. On the Closing Date, Borrower will own all the property
and possess all of the rights and Consents necessary for the conduct of the
business of Borrower.
5.23 Intentionally Omitted.
5.24 Year 2000. Borrower and its Subsidiaries have reviewed the areas
within their business and operations which could be adversely affected by, and
have developed or are developing a program to address on a timely basis, the
risk that certain computer applications used by Borrower or its Subsidiaries (or
any of their respective material suppliers, customers or vendors) may be unable
to recognize and perform properly date-sensitive functions involving dates prior
to and after December 31, 1999 (the "Year 2000 Problem"). The Year 2000 Problem
will not have a Material Adverse Effect on Borrower.
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5.25 Section 20 Subsidiaries. Borrower does not intend to use and shall
not use any portion of the proceeds of the Advances, directly or indirectly, to
purchase during the underwriting period, or for 30 days thereafter, Ineligible
Securities being underwritten by a Section 20 Subsidiary.
VI. AFFIRMATIVE COVENANTS.
Borrower shall, until payment in full of the Obligations and
termination of this Agreement:
6.1 Payment of Fees. Pay to Agent on demand all usual and customary
fees and expenses which Agent incurs in connection with (a) the forwarding of
Advance proceeds and (b) the establishment and maintenance of any Blocked
Accounts or Depository Accounts as provided for in Section 4.15(h). Agent may,
without making demand, charge the account of Borrower for all such fees and
expenses.
6.2 Conduct of Business and Maintenance of Existence and Assets. (a)
Conduct continuously and operate actively its business according to good
business practices common to the industry in which Borrower is engaged and
maintain all of its properties useful or necessary in its business in good
working order and condition (reasonable wear and tear excepted and except as may
be disposed of in accordance with the terms of this Agreement), including,
without limitation, all licenses, patents, copyrights, design rights,
tradenames, trade secrets and trademarks and take all actions necessary to
enforce and protect the validity of any material intellectual property right or
other material right included in the Collateral; (b) keep in full force and
effect its existence and comply in all material respects with the laws and
regulations governing the conduct of its business where the failure to do so
could reasonably be expected to have a Material Adverse Effect, and (c) make all
such reports and pay all such franchise and other taxes and license fees and do
all such other acts and things as may be lawfully required to maintain its
rights, licenses, leases, powers and franchises under the laws of the United
States or any political subdivision thereof where the failure to do so could
reasonably be expected to have a Material Adverse Effect.
6.3 Violations. Promptly notify Agent in writing of any violation of
any law, statute, regulation or ordinance of any governmental entity, or of any
agency thereof, applicable to Borrower and known to Borrower which could
reasonably be expected to have a Material Adverse Effect.
6.4 Government Receivables. At Agent's request, take all steps
necessary to protect Agent's interest in the Collateral under the Federal
Assignment of Claim Act or other applicable state or local statutes or
ordinances and deliver to Agent appropriately endorsed, any instrument or
chattel paper connected with any Receivable arising out of contracts between
Borrower and the United States, any state or any department, agency or
instrumentality of any of them.
6.5 Fixed Charged Coverage. Cause for any twelve month fiscal Period (a
"Test Period") ending on any March 3 1, June 30, September 30 or December 31
during the Term commencing with the Test Period ending March 31, 1999 the Fixed
Charge Coverage Ratio for such Test Period to be equal to or greater than 1.10
to 1.00:
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6.6 Funded Debt to EBITDA. Cause as at the end of any Test Period the
ratio of Funded Debt to EBITDA to be equal to or less than 3.80 to 1.00.
6.7 Notices of Defaults, Events of Default, Etc. Promptly after the
occurrence thereof, deliver to Agent a written notice setting forth the details
of each Default, Event of Default or condition or state of facts known to
Borrower that has, or could reasonably be expected to have a Material Adverse
Effect.
6.8 Execution of Supplemental Instruments. Execute and deliver to Agent
from time to time, upon demand, such agreements, statements, assignments and
transfers, or instructions or documents relating to the Collateral, and such
other instruments (including without limitation, legal opinions) as Agent may
request, in order that the full intent of this Agreement and the Other Documents
may be carried into effect.
6.9 Payment of Indebtedness. Pay, discharge or otherwise satisfy at or
before maturity (subject, where applicable, to specified grace periods and, in
the case of the trade payables, to normal payment practices) all its obligations
and liabilities of whatever nature, except when the failure to do so could not
reasonably be expected to have a Material Adverse Effect or when the amount or
validity thereof is currently been contested in good faith by appropriate
proceedings and Borrower shall have provided for such reserves as Agent may
reasonably deem proper and necessary, subject at all times to any applicable
subordination arrangement in favor of Lenders.
6.10 Standards of Financial Statements. Cause all financial statements
referred to in Sections 9.7, 9.9 and 9.11 as to which GAAP is applicable to be
complete and correct in all material respects (subject, in the case of interim
financial statements, to normal year-end audit adjustments) and to be prepared
in reasonable detail, in accordance with GAAP and (except as concurred in by
Borrower's independent certified public accountants in the case of audited
financial statements or by Borrower's chief financial officer, in the case of
unaudited financial statements and in any case as disclosed therein) applied
consistently throughout the periods reflected therein
6.11 Intentionally Omitted.
6.12 Trademark Documentation. Upon registration by Borrower of any
trademark, promptly deliver to Agent such collateral assignments as Agent shall
reasonably request.
6.13 Environmental Licences. Maintain in full force and effect, and
comply with, all licenses and permits relating to Environmental Laws where the
failure to maintain and comply with such licenses could reasonably be expected
to have a Material Adverse Effect.
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VII. NEGATIVE COVENANTS
Borrower shall not, until satisfaction in full of the Obligations and
termination of this Agreement:
7.1 Merger, Consolidation and Sale of Assets.
(a) Except as permitted by Section 15.17 hereof, enter into
any merger, consolidation or other reorganization with or into any other Person,
or permit any other Person to consolidate with or merge with it; or
(b) Sell, lease, transfer or otherwise dispose of any of its
properties or assets, except in the ordinary course of its business or as
permitted by Section 4-3.
7.2 Creation of Liens. Create or suffer to exist any Lien upon or
against any of its property or assets now owned or hereafter acquired, except
Permitted Encumbrances.
7.3 Guarantees. Become liable upon the obligations of any Person by
assumption, endorsement or guaranty thereof or otherwise (other than to Lenders)
except the endorsement of checks in the ordinary course of business.
7.4 Investments. Except as otherwise provided in Section 7.12, purchase
or acquire, or permit any Subsidiary to purchase or acquire, obligations or
stock of, or any other investment in, or any assets constituting a business unit
of, or make any other investment in, any Person, except: obligations issued or
guaranteed by the United States of America or any agency thereof, commercial
paper with maturities of not more than 180 days and a published rating of not
less than A-I or P-1 (or the equivalent rating), certificate of time deposit and
bankers' acceptances having maturities of not more than 190 days and repurchase
agreements backed by United States government securities of a commercial bank if
(x) such bank has a combined capital and surplus of at least $500,000,000, or
(y) its debt obligations, or those of a holding company of which it is a
Subsidiary, are rated not less than A (or the equivalent rating) by a nationally
recognized investment rating agency, U.S. money market funds that invest solely
in obligations issued or guaranteed by the United States of America or an agency
thereof, any domestic Subsidiary that the aggregate amount of investments
pursuant to this clause (v) and clause (B) below during any fiscal year of
Borrower does not exceed $5,000,000, and redemptions permitted by Section 7.7;
provided, however, that if no Event of Default shall have occurred and be
continuing at the time of such investment, or occur as a result thereof Borrower
or any Subsidiary may:
(A) Acquire obligations or additional capital stock of or
contribute additional capital to Centurion China in an aggregate amount
during each fiscal year of Borrower not to exceed $1,750,000;
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(B) Invest in direct or indirect foreign Subsidiaries of the
Borrower so long as Borrower has pledged 65% of each class of equity
securities to Agent and the aggregate amount of such investments during
any fiscal year of Borrower (together with investments pursuant to
clause (v) hereinabove) do not exceed $5,000,000;
(C) Acquire assets constituting capital expenditures permitted
by Section 7.6; and
(D) Acquire assets constituting a business unit or
substantially all of the stock or other equity interests of any Person
engaged in a line of business substantially similar to the line of
business currently engaged in by Borrower as described in Section 5.22,
provided that no more than $5,000,000 of the consideration for any such
acquisition made during the Term shall be funded with the proceeds of
Advances, no more than $10,000,000 of the consideration for all such
acquisitions made during the Term shall be funded with the proceeds of
Advances, any portion of any consideration for any such acquisition
consisting of Indebtedness of Borrower to the seller or sellers of such
assets, stock or other investments shall be subordinated in right of
payment to the prior payment in full of the Obligations on terms and
conditions satisfactory to Agent and Agent shall have completed its due
diligence with respect to the assets being acquired before such assets
are included in the Formula Amount and (4) after giving effect to each
such acquisition Borrower shall have Undrawn Availability of
$5,000,000.
7.5 Loans. Make advances, loans or extensions of credit to any Person,
including without limitation, any Affiliate except for loans in the ordinary
course of business not to exceed $750,000 in the aggregate at any time
outstanding.
7.6 Capital Expenditures. Contract for, purchase or make any
expenditure or commitments for fixed or capital assets (including capitalized
leases) in any fiscal year in an amount in excess of the amounts set forth below
(exclusive of capital expenditures financed under Section 2.4(b) or with the
proceeds of permitted sales of Equipment), minus an amount equal to the amount
of any cash investment or other capital contribution made by Borrower in
Centurion China in such fiscal year:
FISCAL YEAR CAPITAL EXPENDITURES
-------------------------- --------------------
1999 $4,500,000
2000 5,000,000
2001 5,500,000
2002 and each fiscal year 6,000,000
thereafter
7.7 Dividends, Distributions, Etc. Declare or pay any dividend on, or
make any other distribution in respect of, or apply any of its funds, property
or assets to the purchase, redemption
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or other retirement of any shares of any class of capital stock of Borrower, or
of any options to purchase or acquire any shares, except that so long as no
Event of Default or Default shall have occurred and be continuing, Borrower
shall be permitted to (i) declare and pay dividends on Series A Convertible
Preferred Stock provided that the aggregate amount of such dividends will not
exceed The amount payable in accordance with the terms of the Restated Articles
of Incorporation of Borrower, as in effect on the Closing Date in any fiscal
year, prorated for any portion of a fiscal year (ii) redeem the Series B
Redeemable Preferred Stock in accordance with such terms of the Restated
Articles of Incorporation of Borrower with the proceeds of the Initial Public
Offering, provided that the Term Loan shall have been paid in full (iii) issue
its Common Stock upon the conversion of or exercise of any securities of
Borrower that are convertible into or exercisable for its Common Stock, (iv)
declare and pay the dividends described in Section 2.12 and (y) purchase or
redeem of Borrower's equity securities (including options) from employees or
former employees of Borrower or any of its Subsidiaries in an amount not to
exceed $500,000 in any one fiscal year.
7.8 Indebtedness. Create, incur, assume or suffer to exist any
Indebtedness for borrowed money (including, without limitation, Indebtedness to
the seller or sellers of assets, stock or other investments of the kind
contemplated by paragraph C of Section 7.4) of Borrower except in respect of (i)
Indebtedness to Lenders, (ii) Indebtedness incurred for capital expenditures
permitted under Section 7.6, (iii) unsecured Indebtedness for borrowed money
which does not exceed $1,000,000 at any given time, (iv) Indebtedness
subordinated to the Obligations which is incurred in connection with any
investment permitted by paragraph C of Section 7.4 and otherwise complying with
the conditions thereof, and (v) indebtedness in connection with the Holdback
Notes until January 31, 1999 (by which time such Holdback Notes shall be repaid
in full).
7.9 Nature of Business. Substantially change the nature of the business
in which it is presently engaged, nor except as specifically permitted hereby,
purchase or invest, directly or indirectly, in any assets or property other than
in the ordinary course of business for assets or property which are useful in,
necessary for and are to be used in its business as presently conducted.
7.10 Transactions with Affiliates. Except as set forth on Schedule
7.10. directly or indirectly, purchase, acquire or lease any property from, or
sell, transfer or lease any property to, or otherwise deal with, any Affiliate,
except (a) transactions disclosed in the ordinary course of business, on an
arm's-length basis on tam no less favorable than terms which would have been
obtainable from a Person other than an Affiliate, (b) arrangements with Xxxx
Xxxx in connection with his employment by Borrower, (c) to the extent permitted
by Section 7.7, (i) payments of dividends to the holders of the Series A
Convertible Preferred Stock, (ii) redemption of the Series B Redeemable
Preferred Stock, (iii) issuance of Common Stock and other transactions referred
to in Section 7.7, and (d) payments permitted by Section 2.12 to the extent not
otherwise permitted in this Section 7. 10.
7.11 Leases. Enter as lessee into any lease arrangement for real or
personal property (unless capitalized and permitted under Section 7.6) if after
giving effect thereto, aggregate annual rental payments for all leased property
would exceed $1,200,000 in any one fiscal year.
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7.12 Subsidiaries.
(a) Own any Subsidiary whether by formation or acquisition
other than the Subsidiaries listed on Schedule 5.2(b) and Subsidiaries
wholly-owned by Borrower incorporated in the United States, Mexico or Europe
formed or acquired after the Closing Date, provided that, in the case of an
acquisition, such acquisition is otherwise permitted under Section 7. 1 (b) and
that with respect to any such Subsidiary Borrower shall have: (i) provided Agent
with ten (10) Business Days prior written notice of such formation or
acquisition, (ii) if requested by Agent, granted Agent, for the benefit of the
Lenders, a first priority perfected Lien in the capital stock in such Subsidiary
pursuant to a stock pledge agreement (provided that if such Subsidiary is a
foreign Subsidiary then such pledge shall be for only 65% of each class of
equity securities of such foreign Subsidiary), (iii) unless such Subsidiary is a
foreign Subsidiary, if requested by Agent, taken all actions reasonably
requested by Agent so that, if requested by Agent, Agent may be granted a first
priority perfected Lien in all of the assets of such Subsidiary, (iv) unless
such Subsidiary is a foreign Subsidiary, caused such Subsidiary to issue to
Agent and the Lenders a guaranty of the Obligations, in form and substance
satisfactory to Agent.
(b) Enter into any partnership, joint venture or similar
arrangement.
7.13 Fiscal Year and Accounting Changes. Change its fiscal year from
December 31 or make any change (i) in accounting treatment and reporting
practices except as required by GAAP or (ii) in tax reporting treatment except
as required by law.
7.14 Pledge of Credit. Now or hereafter pledge Agent's or any Lender's
credit on any purchases or for any purpose whatsoever or use any portion of any
Advance in or for any business other than Borrower's business as conducted on
the date of this Agreement
7.15 Changes, Amendments or Modifications. Amend, modify or waive any
term or material provision of (i) the Restated Articles of Incorporation of
Borrower or (ii) its by-laws without the prior written consent of Agent and the
Required Lenders; provided, however, that no such consent shall be required if
giving effect thereto shall not result in a Default or Event of Default, or
increase directly or indirectly, the present or fixture monetary obligations of
Borrower, or be reasonably expected to have a Material Adverse Effect. Whether
or not such consent is required hereunder, Borrower shall deliver to Agent a
copy of any such change, modification or waiver that is in writing promptly upon
its execution and delivery.
7.16 Compliance with ERISA. In all material respects, (i) (x) maintain,
or permit any member of the Controlled Group to maintain, or (y) become
obligated to contribute, or permit any member of the Controlled Group to become
obligated to contribute, to any Plan, other than those Plans disclosed on
Schedule 5.8(d) (ii) engage, or permit any member of the Controlled Group to
engage, in any non-exempt "prohibited transaction", as that term is defined in
section 406 of ERISA and Section 4975 of the Code, (iii) incur, or permit any
member of the Controlled Group to incur, any "accumulated finding deficiency",
as that term is defined in Section 302 of ERISA or Section
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412 of the Code, (iv) terminate, or permit any member of the Controlled Group to
terminate, any Plan when such event could result in any liability of Borrower or
any member of the Controlled Group or the imposition of a lien on the property
of Borrower or any member of The Controlled Group pursuant to Section 4068 of
ERISA, (y) assume, or permit any member of The Controlled Group to assume, any
obligation to contribute to any Multiemployer Plan not disclosed on Schedule
5.8(d) (vi) incur, or permit any member of the Controlled Group to incur, any
withdrawal liability to any Multiemployer Plan; (vii) fail promptly to notify
Agent of the occurrence of any Termination Event, (viii) fail to comply, or
permit a member of the Controlled Group to fail to comply, with the requirements
of ERISA or the Code or other applicable laws in respect of any Plan, (ix) fail
to meet, or permit any member of the Controlled Group to fail to meet, all
minimum funding requirements under ERISA or the Code or postpone or delay or
allow any member of the Controlled Group to postpone or delay any funding
requirement with respect of any Plan.
7.17 Prepayment of Indebtedness. Except as permitted by Section 2.12,
at any time, directly or indirectly, prepay any Indebtedness for borrowed money
(including, without limitation, Indebtedness to the seller or sellers of assets,
stock or other investments of the kind contemplated by paragraph C of Section
7.4) (other than to Lenders), or repurchase, redeem, retire or otherwise acquire
such Indebtedness.
VIII. CONDITIONS PRECEDENT
8.1 Conditions to Initial Advances. The agreement of Lenders to make
the initial Advances requested to be made on the Closing Date is subject to the
satisfaction, or waiver by Lenders, immediately prior to or concurrently with
the making of such Advances, of the following conditions precedent:
(a) Notes. Agent shall have received the Notes duly executed
and delivered by an authorized officer of Borrower,
(b) Filings, Registrations and Recordings. Each document
(including, without limitation, any Uniform Commercial Code financing statement)
required by this Agreement, any related agreement or under law or reasonably
requested by Agent to be filed, registered or recorded in order to create, in
favor of Agent, a perfected security interest in or lien upon the Collateral
shall have been properly filed, registered or recorded in each jurisdiction in
the United States in which the filing, registration or recordation thereof is so
required or requested, and Agent shall have received an acknowledgment copy, or
other evidence satisfactory to it, of each such filing, registration or
recordation and satisfactory evidence of the payment of any necessary fee, tax
or expense relating thereto;
(c) Proceedings of Borrower. Agent shall have received a copy
of the resolutions in form and substance reasonably satisfactory to Agent, of
the Board of Directors of Borrower authorizing (i) the execution, delivery and
performance of this Agreement, the Notes, the Mortgage, the Other Documents and
any related agreements (collectively the "Documents") and (ii) the
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granting by Borrower of the security interests in and liens upon the Collateral,
in each case certified by the Secretary or an Assistant Secretary of Borrower as
of the Closing Date; and, such certificate shall state that the resolutions
thereby certified have not been amended, modified, revoked or rescinded as of
the date of such certificate;
(d) Incumbency Certificates of Borrower. Agent shall have
received a certificate of the Secretary or an Assistant Secretary of Borrower,
dated the Closing Date, as to the incumbency and signature of the officers of
Borrower executing this Agreement, any certificate or other documents to be
delivered by it pursuant hereto, together with evidence of the incumbency of
such Secretary or Assistant Secretary;
(e) Restated Articles of Incorporation and By-Laws. Agent
shall have received a copy of the Restated Articles of Incorporation of
Borrower, and all amendments thereto, certified by the Secretary of State or
other appropriate official of its jurisdiction of incorporation together with a
copy of the by-laws of Borrower, and all amendments thereto, in each case
certified as accurate and complete by the Secretary of Borrower,
(f) Good Standing Certificates. Agent shall have received good
standing certificates for Borrower dated not more than fifteen (15) days prior
to the Closing, issued by the Secretary of State or other appropriate official
of Borrower's jurisdiction of incorporation and each jurisdiction listed on
Schedule 5.2 hereto;
(g) Legal Opinion. Agent shall have received executed legal
opinions in form and substance satisfactory to Agent which shall cover such
matters incident to the transactions contemplated by this Agreement, the Notes,
and the Other Documents as Agent may reasonably require and Borrower hereby
authorities and directs such counsel to deliver such opinions to Agent and
Lenders;
(h) No Litigation. (i) No litigation, investigation or
proceeding before or by any arbitrator or governmental authority shall be
continuing or threatened against Borrower or against the officers or directors
of Borrower (A) in connection with the Documents or any of the transactions
contemplated thereby and which, in the reasonable opinion of Agent, is deemed
material or (B) which could, in the reasonable opinion of Agent, have a Material
Adverse Effect; and (ii) no injunction, writ, restraining order or other order
of any nature materially adverse to Borrower or the conduct of its business or
inconsistent with the due consummation of the Transactions shall have been
issued by any Governmental Body;
(i) Financial Condition Certificate. Agent shall have received
an executed financial condition certificate in the form of Exhibit 8. 1 (i)
hereto;
(j) Collateral Examination. Agent shall have completed
Collateral examinations and received appraisals, the results of which shall be
satisfactory in form and substance to Lenders, of the Receivables, Inventory,
General Intangibles, Real Property and Equipment of Borrower and all books and
records in connection therewith;
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(k) Fees. Agent shall have received all fees payable to Agent
and Lenders on or prior to the Closing Date pursuant to Article III hereof;
(l) Pro Forma Financial Statements. Agent shall have received
a copy of the Pro Forma Financial Statements which shall be satisfactory in all
respects to Agent;
(m) Other Documents. Agent shall have received all Other
Documents, duly executed and delivered, each in form and substance satisfactory
to Agent;
(n) Insurance. Agent shall have received in form and substance
satisfactory to Agent, certified copies of Borrower's casualty insurance
policies, together with loss payable endorsements on Agent's standard form of
loss payee endorsement naming Lenders as loss payee, and certified copies of
Borrower's liability insurance policies, together with endorsements g Agent and
Lenders as a co-insured;
(o) Deed of Trust. Agent shall have received in form and
substance satisfactory to Agent and Lenders (i) an executed Deed of Trust, (ii)
surveys and (iii) such other documents and agreements as may be required by
Agent in connection therewith;
(p) Title Insurance. Agent shall have received fully paid
mortgagee title insurance policies (or binding commitments to issue title
insurance policies, marked to Agent's satisfaction to evidence the form of such
policies to be delivered with respect to the Mortgage), in standard ALTA form,
issued by a title insurance company satisfactory to Agent, each in an amount
equal to not less than $1,200,000, insuring the Deed of Trust to create a valid
Lien on the Real Property with no exceptions which Agent shall not have approved
in writing and no survey exceptions;
(q) Payment Instructions. Agent shall have received written
instructions from Borrower directing the application of proceeds of the initial
Advances made pursuant to this Agreement;
(r) Blocked Account. Agent shall have received a duly executed
agreement establishing the Blocked Account with the Processor for the collection
or servicing of the Receivables and the other proceeds of the Collateral;
(s) Consents. Agent shall have received any and all Consents
necessary to permit the effectuation of the transactions contemplated by this
Agreement and the Other Documents; and, Agent shall have received such Consents
and waivers of such third parties as might assert claims with respect to the
Collateral, as Agent and its counsel shall deem necessary;
(t) Leasehold Agreements, Etc. Agent shall have received
landlord, mortgagee or warehouseman agreements satisfactory to Agent with
respect to all premises leased or otherwise used by Borrower at which Inventory
is located;
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(u) Contract Review. Agent shall have reviewed all material
contracts of Borrower including, without limitation, leases, union contracts,
labor contracts, vendor supply contracts, license agreements and distributorship
agreements and such contracts and agreements shall be satisfactory in all
respects to Agent;
(v) Closing Certificate. Agent shall have received a closing
certificate signed by the President of Borrower dated as of the date hereof
stating that (i) all representations and warranties set forth in this Agreement
and the Other Documents are true and correct on and as of such date, (ii)
Borrower is on such date, in compliance with all the terms and provisions set
forth in this Agreement and the Other Documents and (iii) on such date no
Default or Event of Default has occurred or is continuing;
(w) Borrowing Base. Agent shall have received evidence from
Borrower that the aggregate amount of Eligible Receivables and Eligible
Inventory is sufficient in value and amount to support Revolving Advances in the
amount requested by Borrower on the Closing Date;
(x) Undrawn Availability. After giving effect to the initial
Revolving Advances hereunder including, without limitation, for payment of
transaction fees and expenses, Borrower shall have Undrawn Availability of at
least $5,000,000;
(y) Environmental Matters. Agent and Lenders shall be
satisfied that Borrower is in compliance with all pertinent federal, state and
local regulations including, but not limited to, those with respect to EPA, the
Nebraska Department of Environmental Quality, the Lincoln/Lancaster County
Department of Health, OSHA and ERISA; and
(z) Appraisal. Agent shall have received appraisals of
Borrower's Equipment and Real Property which shall be satisfactory in form and
substance to Agent and, based upon 80% of orderly liquidation value of Equipment
and 70% of fair market value of Real Estate, justify an advance of $5,925,000
(aa) Other. All other proceedings, and all documents,
instruments and other legal matters in connection with the Transactions shall be
satisfactory in form and substance to Agent and its counsel.
8.2 Conditions to Each Advance. The agreement of Lenders to make any
Advance requested to be made on any date (including, without limitation, its
initial Advance), is subject to the satisfaction of the following conditions
precedent as of the date such Advance is made:
(a) Representations and Warranties. Each of the
representations and warranties made by Borrower and contained in this Agreement
and in each of the Other Documents, and each of the representations and
warranties contained in any certificate, document or financial or other
statement furnished at any time under or in connection with this Agreement or
any of the Other Documents shall be true and correct in all material respects on
and as of such date as if made on and as of such date, subject to prior
delivery, if appropriate, of amended Schedules 5.2(a), 5.2(b), 5.8(b),
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51(c), 5.8(d) and 5.9 and the Questionnaire which shall be permitted to the
extent that any condition, state of facts or event requiring the amendment of
such schedule as contemplated by this Section 8.2(a) shall not otherwise be
prohibited hereunder or constitute a breach of any other provision of this
Agreement;
(b) No Default. No Event of Default or Default shall have
occurred and be continuing on such date, or would exist after giving effect to
the Advances requested to be made, on such data and, in the case of the initial
Advance, after giving effect to the consummation of the Transactions; provided,
however, that Agent in its sole discretion, may continue to make Advances
notwithstanding the existence of an Event of Default or Default and that any
Advances so made shall not be deemed a waiver of any such Event of Default or
Default;
(c) No Adverse Material Change. (i) Since December 31, 1997,
there shall not have occurred any event, condition or state of facts which has
or could reasonably be expected to have a Material Adverse Effect;
(d) Maximum Advances. In the case of any Revolving Advances
requested to be made, after giving effect thereto, the aggregate Revolving
Advances shall not exceed the maximum amount of Revolving Advances permitted
under this Agreement; and
(e) Equipment Loans. As respects each Advance constituting an
Equipment Loan in addition to satisfaction of each and every one of the
foregoing conditions precedent, Agent shall have received no later than seven
(7) Business Days prior to Borrower's request for each such Advance an Equipment
Cost Verification covering the Equipment Borrower desires to purchase with the
proceeds of such Equipment Loan.
Each request and deemed request for an Advance by Borrower hereunder shall
constitute a representation and warranty by Borrower as of the date of such
Advance that the conditions contained in this subsection shall have been
satisfied.
IX. INFORMATION AS TO BORROWER
Borrower shall, until satisfaction in full of the Obligations and the
termination of this Agreement:
9.1 Disclosure of Material Matters. Immediately upon learning thereof,
report to Agent all matters materially affecting the value, enforceability or
collectibility of any portion of the Collateral including, without limitation,
Borrower's reclamation or repossession of, or the return to Borrower of, a
material amount of goods or claims or disputes asserted by any Customer or other
obligor.
9.2 Schedules. Deliver to Agent on or before the fifteenth (15th) day
of each month as and for the prior month (a) accounts receivable ageings, (b)
accounts payable schedules, (c) Inventory reports and (d) a Borrowing Base
Certificate (which shall be calculated as of the last day
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of the prior month and which shall not be binding upon Agent or restrictive of
Agent's rights under this Agreement). In addition, Borrower will deliver to
Agent at such intervals as Agent may require: (i) confirmatory assignment
schedules, (ii) copies of Customer's invoices, (iii) evidence of shipment or
delivery, and (iv) such further schedules, documents and/or information
regarding the Collateral as Agent may require including, without limitation,
trial balances and test verifications. Agent shall have the right to confirm and
verify all Receivables by any manner and through any medium it considers
advisable and do, whatever it may deem reasonably necessary to protect its
interests hereunder. The items to be provided under this Section are to be in
form satisfactory to Agent and executed by Borrower and delivered to Agent from
time to time solely for Agent's convenience in maintaining records of the
Collateral, and Borrower's Mum to deliver any of such items to Agent shall not
affect, terminate, modify or otherwise limit Agent's Lien with respect to the
Collateral.
9.3 Environmental Reports. Furnish Agent, concurrently with the
delivery of the financial statements referred to in Section 9.7, with a
certificate of Borrower signed by the President of Borrower stating, to the best
of his knowledge, that Borrower is in compliance in all material respects with
all federal, state and local laws relating to environmental protection and
control and occupational safety and health. To the extent that Borrower knows
that it is not in compliance with the foregoing laws, the certificate shall set
forth with specificity all areas of non-compliance and the proposed action
Borrower will implement in order to achieve compliance.
9.4 Litigation. Promptly notify Agent in writing of any litigation,
suit or administrative proceeding affecting Borrower, whether or not the claim
is covered by insurance, and of any suit or administrative proceeding, which in
any such case could reasonably be expected to have a Material Adverse Effect.
9.5 Material Occurrences. Promptly notify Agent in writing upon the
occurrence of (a) any Event of Default or Default; (b) any event, development or
circumstance whereby any financial statements or other reports furnished to
Agent fail in any material respect to present fairly, in accordance with GAAP
consistently applied, the financial condition or operating results of Borrower
as of the date of such statements; (c) any accumulated retirement plan funding
deficiency which, if such deficiency continued for two plan years and was not
corrected as provided in Section 4971 of the Internal Revenue Code, could
subject Borrower to a tax imposed by Section 4971 of the Internal Revenue Code;
(d) each and every default by Borrower which might result in the acceleration of
the maturity of any Indebtedness in excess of $500,000, including the names and
addresses of the holders of such Indebtedness with respect to which them is a
default existing or with respect to which the maturity has been or could be
accelerated, and the amount of such Indebtedness; and (e) any other development
in the business or affairs of Borrower which could reasonably be expected to
have a Material Adverse Effect; in each case describing the nature thereof and
the action Borrower proposes to take with respect thereto.
9.6 Government Receivables. Notify Agent immediately if any of its
Receivables in excess of $ 100,000 arise out of contracts between Borrower and
the United States, any state, or any department, agency or instrumentality of
any of them.
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9.7 Annual Financial Statements. Furnish Agent within ninety (90) days
after the end of each fiscal year of Borrower commencing with the fiscal year
ending December 31, 1998, financial statements of Borrower including, bin not
limited to, statements of income and stockholders equity and cash flow from the
beginning of such fiscal year to the end of such fiscal year and the balance
sheet as at the end of such fiscal year, all prepared in accordance with GAAP
applied on a basis consistent with prior practices, and in reasonable detail and
reported upon without qualification by an independent certified public
accounting firm selected by Borrower and satisfactory to Agent (provided that
any of the Big Five accounting firms are hereby deemed satisfactory to Agent)
(the "Accountants"). The report of the Accountants for each fiscal year of
Borrower commencing with the fiscal year ending December 31, 1999 shall be
accompanied by a statement of the Accountants certifying that (i) they have
caused Article X and Sections 6.5, 6.6, 7.6 and 7.11 of this Agreement to be
reviewed, (ii) in making the examination upon which such report was based either
no information came to their attention which to their knowledge constituted an
Event of Default or a Default under this Agreement or any related agreement or,
if such information came to their attention, specifying any such Default or
Event of Default, its nature, when it occurred and whether it is continuing, and
such report shall contain or have appended thereto calculations which set forth
Borrower's compliance with the requirements or restrictions for the fiscal year
reported thereon imposed by Sections 6.5, 6.6, 7.6 and 7.11. In addition, the
reports shall be accompanied by a certificate of Borrower's Chief Financial
Officer which shall state that, based on an examination sufficient to permit him
to make an informed statement, no Default or Event of Default exists, or, if
such is not the case, specifying such Default or Event of Default, its nature,
when it occurred, whether it is continuing and the steps being taken by Borrower
with respect to such event and, such certificate shall have appended thereto
calculations which set forth Borrower's compliance with the requirements or
restrictions imposed by Sections 6.5, 6.6, 7.6 and 7.11.
9.8 Monthly Financial Statements. Furnish Agent within thirty (30) days
after the end of each month, an unaudited balance sheet of Borrower and
unaudited statements of income and stockholders' equity and cash flow of
Borrower reflecting results of operations from the beginning of the fiscal year
to the end of such month and for such month, prepared on a basis consistent with
prior practices and complete and correct in all material respects, subject to
normal year end adjustments. The reports shall be accompanied by a certificate
of Borrower's Chief Financial Officer which shall state that, based on an
examination sufficient to permit him to make an informed statement, no Default
or Event of Default exists, or, if such is not the case, specifying such Default
or Event of Default, its nature, when it occurred, whether it is continuing and
the steps being taken by Borrower with respect to such event and, such
certificate shall have appended thereto calculations which set forth Borrower's
compliance with the requirements or restrictions imposed by Sections 6.5, 6.6,
7.6 and 7.11.
9.9 Other Reports. Furnish Agent as soon as available, but in any event
within ten (10) days after the issuance thereof, with copies of such financial
statements, reports and returns as Borrower shall send to its stockholders.
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9.10 Additional Information. Furnish Agent with additional information
as Agent shall reasonably request in order to enable Agent and Lenders to
determine whether the terms, covenants, provisions and conditions of this
Agreement and the Notes have been complied with by Borrower including, without
limitation and without the necessity of any request by Agent, (a) copies of all
environmental audits and reviews, (b) at least thirty (30) days prior thereto,
notice of Borrower's opening of any new office or place of business or
Borrower's closing of any existing office or place of business, and (c) promptly
upon Borrowers learning thereof, of any labor dispute to which Borrower may
become a party, any strikes or walkouts relating to any of its plants or other
facilities, and the expiration of any labor contract to which Borrower is a
party or by which Borrower is bound.
9.11 Projected Operating Budget. Furnish Agent, no less than thirty
(30) days after the beginning of each of Borrower's fiscal years commencing with
fiscal year 2000, a month by month projected operating budget and cash flow of
Borrower for such fiscal year (including an me statement for each month and a
balance sheet as at the end of the last month in each fiscal quarter), such
projections to be accompanied by a certificate signed by Borrowers President or
Chief Financial Officer to the effect that such projections have been prepared
on the basis of sound financial planning practice consistent with past budgets
and financial statements and that such officer has no reason to question the
reasonableness of any material assumptions on which such projections were
prepared.
9.12 Variances From Operating Budget. Furnish Agent, concurrently with
the delivery of the financial statements referred to in Section 9.7 and each
monthly report, a written report summarizing all material variances from,
budgets submitted by Borrower pursuant to Section 9.11 and in the case of each
report delivered for the end of each fiscal quarter of Borrower a discussion and
analysis by management with respect to such variances.
9.13 Notice of Suits, Adverse Events. Furnish Agent with prompt notice
of (i) any lapse or other termination of any Consent issued to Borrower by any
Governmental Body or any other Person that is material to the operation of
Borrower's business, (ii) any refusal by any Governmental Body or any other
Person to renew or extend any such Consent; and (iii) copies of any periodic or
special reports filed by Borrower with any Governmental Body or Person, if such
reports indicate any material change in the business, operations, affairs or
condition of Borrower, or if copies thereof are requested by Agent, and (iv)
copies of any material notices and other communications from any Governmental
Body or Person which specifically relate to Borrower.
9.14 ERISA Notices and Requests. Furnish Agent with immediate written
notice in the event that (i) Borrower or any member of the Controlled Group
knows or has reason to know that a Termination Event has occurred, together with
a written statement describing such Termination Event and the action, if any,
which Borrower or member of the Controlled Group has taken, a taking, or
proposes to take with respect thereto and, when known, any action taken or
threatened by the Internal Revenue Service, Department of Labor or PBGC with
respect thereto, (ii) Borrower or any member of the Controlled Group knows or
has reason to know that a prohibited transaction (as defined in Sections 406 of
ERISA and 4975 of the Internal Revenue Code) has occurred together
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with a written statement describing such transaction and the action which
Borrower or any member of the Controlled Group has taken, is taking or proposes
to take with respect thereto, (iii) a funding waiver request has been filed with
respect to any Plan together with all communications received by either Borrower
or any member of the Controlled Group with respect to such request, (iv) any
increase in the benefits of any existing Plan or the establishment of any new
Plan or the commencement of contributions to any Plan to which either Borrower
or any member of the Controlled Group was not previously contributing shall
occur, (v) Borrower or any member of the Controlled Group shall receive from the
PBGC a notice of intention to terminate a Plan or to have a trustee appointed to
administer a Plan, together with copies of each such notice, (vi) Borrower or
any member of the Controlled Group shall receive any favorable or unfavorable
determination letter from the Internal Revenue Service regarding the
qualification of a Plan under Section 401 (a) of the Internal Revenue Code,
together with copies of each such letter, (vii) Borrower or any member of the
Controlled Group shall receive a notice regarding the imposition of withdrawal
liability, together with copies of each such notice; (viii) Borrower or any
member of the Controlled Group shall fail to make a required installment or any
other required payment under Section 412 of the Internal Revenue Code on or
before the due date for such installment or payment; (ix) Borrower or any member
of the Controlled Group knows that (a) a Multiemployer Plan has been terminated,
(b) the administrator or plan sponsor of a Multiemployer Plan intends to
terminate a Multiemployer Plan, or (c) the PBGC has instituted or will institute
proceedings under Section 4042 of ERISA to terminate a Multiemployer Plan.
9.15 Additional Documents. Execute and deliver to Agent, upon request,
such documents and agreements as Agent may, from time to time, reasonably
request to carry out the purposes, terms or conditions of this Agreement
X. EVENTS OF DEFAULT
The occurrence of any one or more of the following events shall
constitute an "Event of Default":
10.1 failure by Borrower to pay any principal on the Obligations when
due or to pay any interest on the Obligations within two (2) Business Days of
the date when due, whether at maturity or by reason of acceleration pursuant to
the terms of this Agreement or by notice of intention to prepay, or by required
prepayment, or failure to pay any other Obligations within two (2) Business Days
of the date when due;
10.2 any representation or warranty made or deemed made by Borrower in
this Agreement or any Other Documents or in any certificate, document or
financial or other statement required to be furnished at any time in connection
herewith or therewith shall prove to have been misleading in any material
respect on the date when made or deemed to have been made;
10.3 issuance of a notice of Lien, levy, assessment, injunction or
attachment against a material portion of Borrower's property which is not
stayed, bonded or lifted within thirty (30) days;
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10.4 failure or neglect of Borrower to observe or perform any agreement
contained in Article IV, (other than Sections 4.7, 4.9 and 4.19), Article VI
(other than Section 6.4) or Article VU of this Agreement; or
10.5 failure or neglect of Borrower to observe or perform any other
agreement contained in this Agreement or any Other Document (other than as
provided in Section 10. 1 through Section 10.4), and such default shall continue
unremedied for a period of 30 days; or
10.6 failure by Borrower or any of its Subsidiaries to pay any
principal on any Indebtedness (other then the Notes) or in the payment of any
guarantee obligation of any Indebtedness, in either case, the aggregate
principal amount of which exceeds $500,000 beyond the period of grace, if any,
provided in the instrument or agreement under which such Indebtedness or
guarantee obligation was created; or (ii) failure by Borrower or any of its
Subsidiaries to observe or perform my other agreement or condition relating to
any such Indebtedness or guarantee obligation or contained in any instrument or
agreement evidencing, securing or relating thereto, or the occurrence of any
other event or the existence of any other condition, the effect of which failure
or other event or condition is to cause, or to permit the holder or holders of
such Indebtedness or beneficiary or beneficiaries of such guarantee obligation
(or a trustee or agent on behalf of such holder or holders or beneficiary or
beneficiaries) to cause, such Indebtedness to become due prior to its stated
maturity or such guarantee obligation to become payable; or
10.7 any judgment is rendered or judgment liens filed against Borrower
for an amount in excess of $250,000 which within forty (40) days of such
rendering or filing is not either satisfied, stayed or discharged of record;
10.8 Borrower or any Subsidiary of Borrower shall (i) apply for,
consent to or suffer the appointment of, or the taking of possession by, a
receiver, custodian, trustee, liquidator or similar fiduciary of itself or of
all or a substantial part of its property, (ii) make a general assignment for
the benefit of creditors, (iii) file any petition or commence any proceeding
under any bankruptcy, reorganization, arrangement, readjustment of debt,
dissolution or liquidation law or statute of any jurisdiction (as now or
hereafter in effect), (iv) acquiesce to, or fail to have dismissed, within sixty
(60) days, any petition filed or any proceeding commenced against it under any
such law or statute, (v) be adjudicated a bankrupt or insolvent, (vi) file a
petition seeking to take advantage of any other law providing for the relief of
debtors, or (vii) take any action for the purpose of effecting any of the
foregoing;
10.9 Borrower shall admit in writing its inability, or be generally
unable, to pay its debts as they become due or cease operations of its present
business;
10.10 any Lien created hereunder or provided for hereby or under any
Other Document for any reason ceases to be or is not a valid and perfected Lien
having a first priority interest except for those Liens which cease to be
perfected solely as a result of Agent's failure to file continuation statements
for previously filed Uniform Commercial Code financing statements;
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10.11 any Change of Control;
10.12 any material provision of this Agreement shall, for any reason,
cease to be valid and binding on Borrower, or Borrower shall so claim in writing
to Agent;
10.13 (i) any Governmental Body shall (A) revoke, terminate, suspend or
materially adversely modify any license, permit, patent, trademark or tradename
of Borrower which is necessary for the continuation of Borrower's business, or
(B) commence proceedings to suspend, revoke, terminate or adversely modify any
such license, permit, trademark, tradename or patent and such proceedings shall
not be dismissed or discharged within sixty (60) days, or (C) schedule or
conduct a hewing on the renewal of any such license, permit, trademark,
tradename or patent and the staff of such Governmental Body issues a report the
termination, revocation, suspension or material, adverse modification of such
license, permit, trademark, tradename or patent; or (ii) any agreement which is
necessary or material to the operation of Borrower's business shall be revoked
or terminated and not replaced by a substitute acceptable to Agreement within
thirty (30) days after the date of such revocation or termination, and such
revocation or termination and non-replacement would reasonably be expected to
have a Material Adverse Effect;
10.14 any portion of the Collateral shall be seized or taken by a
Governmental Body;
10.15 the operations of Borrower's manufacturing facility are
interrupted at any time other than for the purpose of maintenance for a period
not to exceed two (2) weeks, unless Borrower shall (i) be entitled to receive
for such period of interruption, proceeds of business interruption insurance
sufficient to assure that its per them cash needs during such period is at least
equal to its average per them cash needs for the consecutive three (3) month
period immediately preceding the initial date of interruption and (ii) receive
such proceeds in the amount described in clause (i) preceding not later than
forty-five (45) days following the initial date of any such interruption; or
10.16 an event or condition specified in Sections 7.16 or 9.14 shall
occur or exist with respect to any Plan and, as a result of such event or
condition, together with all other such events or conditions, Borrower or any
member of the Controlled Group shall incur, or in the reasonable opinion of
Agent be reasonably likely to incur, a liability to a Plan or the PBGC (or both)
which, in the reasonable judgment of Lenders, would have a Material Adverse
Effect.
XI. LENDER'S RIGHTS AND REMEDIES AFTER DEFAULT
11.1 Rights and Remedies. (a) Upon the occurrence of (i) an Event of
Default pursuant to Section 10.8 all Obligations shall be immediately due and
payable and this Agreement and the obligation of Lenders to make Advances shall
be deemed terminated; and, (ii) any of the other Events of Default and at any
time thereafter (such default not having previously been cured or waived), at
the option of Required Lenders all Obligations shall be immediately due and
payable and Lenders shall have the right to terminate this Agreement and to
terminate the obligation of Lenders
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to make Advances. Upon the occurrence of any Event of Default (such default not
having previously been cured or waived): (A) Agent shall have the right to
exercise any and all other rights and remedies provided for herein, under the
Uniform Commercial Code and at law or equity generally, including, without
limitation, the right to foreclose the security interests granted herein and to
realize upon any Collateral by any available judicial procedure and/or to take
possession of and sell any or all of the Collateral with or without judicial
process; (B) Agent may enter any of Borrower's premises or other premises
without legal process and without incurring liability to Borrower therefor, and
Agent may thereupon, or at any time thereafter, in its discretion without notice
or demand, take the Collateral sod remove the same to such place as Agent may
deem advisable and Agent may require Borrower to make the Collateral available
to Agent at a convenient place; (C) with or without having the Collateral at the
time or place of sale, Agent may sell the Collateral, or any part thereof at
public or private sale, at any time or place, in one or more sales, at such
price or prices, and upon such terms, either for cash, credit or future
delivery, as Agent may elect, provided that except as to that part of the
Collateral which is perishable or threatens to decline speedily in value or is
of a type customarily sold on a recognized market Agent shall give Borrower
reasonable notification of such sale or sales, it being agreed that in all
events written notice mailed to Borrower at least ten (10) days prior to such
sale or sales is reasonable notification; (D) at any public sale Agent or any
Lender may bid for and become the purchaser, and Agent, any Lender or any other
purchaser at any such sale thereafter shall hold the Collateral sold absolutely
free from any claim or right of whatsoever kind, including any equity of
redemption and such right and equity are hereby expressly waived and released by
Borrower; and (E) in connection with the exercise of the foregoing remedies,
Agent is granted permission to use (x) all of Borrower's trademarks, trade
styles, trade names, patents, patent applications, licenses, franchises and
other proprietary rights which are used in connection with Inventory for the
purpose of disposing of such Inventory and (y) Equipment for the purpose of
completing the manufacture of unfinished goods.
(b) The proceeds realized from the sale of any Collateral
shall be applied as follows: first, to the reasonable costs, expenses and
attorneys' fees and expenses incurred by Agent for collection and for
acquisition, completion, protection, removal, storage, sale and delivery of the
Collateral; second, to interest due upon any of the Obligations; and, third, to
the principal of the Obligations. If any deficiency shall arise, Borrower shall
remain liable to Agent and Lenders therefor.
11.2 Agent's Discretion. Agent shall have the right in its sole
discretion to determine which rights, Liens, security interests or remedies
granted hereunder or under any Other Document Agent may at any time pursue,
relinquish, subordinate, or modify or to take any other action with respect
thereto and such determination will not in any way modify or affect any of
Agent' s or Lenders', rights hereunder.
11.3 In addition to any other rights which Agent or any Lender may have
under applicable law, upon the occurrence of an Event of Default (such default
not having previously been cured or waived), Agent and such Lender shall have a
right to apply any of Borrower's property held by Agent and such Lender to
reduce the Obligations.
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11.4 Rights and Remedies not Exclusive. The enumeration of the
foregoing rights and remedies is not intended to be exhaustive and the exercise
of any right or remedy shall not preclude the exercise of any other right or
remedies provided for herein or otherwise provided by law, all of which shall be
cumulative and not alternative.
XII. WAIVERS AND JUDICIAL PROCEEDINGS
12.1 Waiver of Notice. Borrower hereby waives notice of non-payment of
any of the Receivables, demand, presentment, protest and notice thereof with
respect to any and all instruments, notice of acceptance hereof notice of loans
or advances made, credit extended, Collateral received or delivered, or any
other action taken in reliance hereon, and all other demands and notices of my
description, except such as are expressly provided for herein.
12.2 Delay. No delay or omission on Agent's or any Lender's part in
exercising any right, remedy or option shall operate as a waiver of such or any
other right, remedy or option or of any default.
12.3 Jury Waiver. EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES
ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (A)
ARISING UNDER THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT
EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR (B) IN ANY WAY CONNECTED WITH
OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM
WITH RESPECT TO THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT
EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR THE TRANSACTIONS RELATED HERETO
OR THERETO IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER
SOUNDING IN CONTRACT OR TORT OR OTHERWISE AND EACH PARTY HEREBY CONSENTS THAT
ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT
TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO TIES AGREEMENT MAY FILE AN ORIGINAL
COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE
CONSENTS OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
XIII. EFFECTIVE DATE AND TERMINATION
13.1 Term. This Agreement, which shall inure to the benefit of and
shall be binding upon the respective successors and permitted assigns of each of
Borrower, Agent and each Lender, shall become effective on the date hereof and
shall continue in full force and effect until December 30, 2003 (the "Maturity
Date") unless sooner terminated as herein provided. Borrower may terminate this
Agreement at any time upon ninety (90) days, prior written notice (such actual
termination date, the "Termination Date") upon payment in full of the
Obligations; provided, however, Borrower shall pay to Agent, for the ratable
benefit of Lenders, an early termination fee in an amount equal to (x) $420,000
($470,000 if the Commitment Date has occurred) if the Termination Date occurs at
any
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time prior to the first anniversary of the Closing Date and (y) $210,000
($235,000 if the Commitment Date has occurred) if the Termination Date occurs on
or after the first anniversary of the Closing Date but prior to the date
immediately preceding the second anniversary of the Closing Date.
13.2 Termination. The termination of this Agreement shall not affect
any of Borrower's, Agent's or any Lender's rights, or any of the obligations
having their inception prior to the effective date of such termination, and the
provisions hereof shall continue to be fully operative until all transactions
entered into, rights or interests created or Obligations have been fully
disposed of, concluded or liquidated. The security interests, Liens and rights
granted to Agent and Lenders hereunder and the financing statements filed
hereunder shall continue in full force and effect, and Borrower waives any
rights which it may have under Section 9-404(l) of the Uniform Commercial Code
to demand the filing of termination statements with respect to the Collateral,
and Agent shall not be required to send such termination statements to Borrower,
in each case, notwithstanding the termination of this Agreement or the fact that
Borrower's Account may from time to time be temporarily in a zero or credit
position, until all of the Obligations of Borrower have been paid or performed
in full and all commitments to lend hereunder shall be terminated, or Borrower
has furnished Agent and Lenders with an indemnification satisfactory to Agent
and Lenders with respect thereto. All representations, warranties, covenants,
waivers and agreements contained herein shall survive termination hereof until
all Obligations are paid or performed in full.
XIV. REGARDING AGENT
14.1 Appointment. Each Lender hereby designates PNC to act as Agent for
such Lender under this Agreement and the Other Documents. Each Lender hereby
irrevocably authorizes Agent to take such action on its behalf under the
provisions of this Agreement and the Other Documents and to exercise such powers
and to perform such duties hereunder and thereunder as are specifically
delegated to or required of Agent by the terms hereof and thereof and such other
powers as are reasonably incidental thereto and Agent shall hold all Collateral,
payments of principal and interest, fees (except the fees set forth in the Fee
Letter and Section 3.3) charges and collections (without giving effect to any
collection days) received pursuant to this Agreement, for the ratable benefit of
Lenders. Agent may perform any of its duties hereunder by or through its agents
or employees. As to any matters not expressly provided for by this Agreement
(including without limitation, collection of the Notes) Agent shall not be
required to exercise any discretion or take any action, but shall be required to
act or to refrain from acting (and shall be fully protected in so acting or
refraining from acting) upon the instructions of the Required Lenders, and such
instructions shall be binding; provided however that Agent shall not be required
to take any action which exposes Agent to liability or which is contrary to this
Agreement or the Other Documents or applicable law unless Agent is furnished
with an indemnification reasonably satisfactory to Agent with respect thereto.
14.2 Nature of Duties. Agent shall have no duties or responsibilities
except those expressly set forth in this Agreement and the Other Documents.
Neither Agent nor any of its officers, directors, employees or agents shall be
(i) liable for any action taken or omitted by them as such hereunder or
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in connection herewith, unless caused by their gross negligence (but not mere
negligence) or willful misconduct, or (ii) responsible in any manner for any
recitals, statements, representations or warranties made by Borrower or any
officer thereof contained in this Agreement, or in any of the Other Documents or
in any certificate, report, statement or other document referred to or provided
for in, or received by Agent under or in connection with, this Agreement or any
of the Other Documents or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement, or any of the Other Documents
or for any failure of Borrower to perform its obligations hereunder. Agent shall
not be under any obligation to any Lender to ascertain or to inquire as to the
observance or performance of any of the agreements contained in, or conditions
of, this Agreement or any of the Other Documents, or to inspect the properties,
books or records of Borrower. The duties of Agent as respects the Advances to
Borrower shall be mechanical and administrative in nature; Agent shall not have
by reason of this Agreement a fiduciary relationship in respect of any Lender;
and nothing in this Agreement, expressed or implied, is intended to or shall be
so construed as to impose upon Agent any obligations in respect of this
Agreement except as expressly set forth herein.
14.3 Lack of Reliance on Agent and Resignation. Independently and
without reliance upon Agent or any other Lender, each Lender has made and shall
continue to make (i) its own independent investigation of the financial
condition and affairs of Borrower in connection with the making and the
continuance of the Advances hereunder and the taking or not taking of any action
in connection herewith, and (ii) its own appraisal of the creditworthiness of
Borrower. Agent shall have no duty or responsibility, either initially or on a
continuing basis, to provide any Lender with any credit or other information
with respect thereto, whether coming into its possession before making of the
Advances or at any time or times thereafter except as shall be provided by
Borrower pursuant to the terms hereof Agent shall not be responsible to any
Lender for any recitals, statements, information, representations or wan-antics
herein or in any agreement, document, certificate or a statement delivered in
connection with or for the execution, effectiveness, genuineness, validity,
enforceability, collectibility or sufficiency of this Agreement or any Other
Document, or of the financial condition of Borrower, or be required to make any
inquiry concerning either the performance or observance of any of the terms,
provisions or conditions of this Agreement, the Note, the Other Documents or the
financial condition of Borrower, or the existence of any Event of Default or any
Default.
Agent may resign on sixty (60) days' written notice to each of Lenders
and Borrower and upon such resignation, the Required Lenders will promptly
designate a successor Agent reasonably satisfactory to Borrower.
Any such successor Agent shall succeed to the rights, powers and duties
of Agent, and the term "Agent" shall mean such successor agent effective upon
its appointment, and the former Agent's rights, powers and duties as Agent shall
be terminated, without any other or further act or dead on the port of such
former Agent. After any Agent's resignation as Agent, the provisions of this
Article XIV shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was Agent under this Agreement.
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14.4 Certain Rights of Agent. If Agent shall request instructions from
Lenders with respect to any act or action (including failure to act) in
connection with this Agreement or any Other Document, Agent shall be entitled to
refrain from such act or taking such action unless and until Agent shall have
received instructions from the Required Lenders; and Agent shall not incur
liability to any Person by reason of so refraining. Without limiting the
foregoing, Lenders shall not have any right of action whatsoever against Agent
as a result of its acting or refraining from acting hereunder in accordance with
the instructions of the Required Lenders.
14.5 Reliance. Agent shall be entitled to rely, and shall be fully
protected in relying, upon any note, writing, resolution, notice, statement,
certificate, telex, teletype or telecopier message, cablegram, order or other
document or telephone message believed by it to be genuine and correct and to
have been signed, sent or made by the proper person or entity, and, with respect
to all legal matters pertaining to this Agreement and the Other Documents and
its duties hereunder, upon advice of counsel selected by it Agent may employ
agents and attorneys-in-fact and shall not be liable for the default or
misconduct of any such agents or attorneys-in-fact selected by Agent with
reasonable care.
14.6 Notice of Default. Agent shall not be deemed to have knowledge or
notice of the occurrence of any Default or Event of Default hereunder or under
the Other Documents, unless Agent has received notice from a Lender or Borrower
referring to this Agreement or the Other Documents, describing such Default or
Event of Default and stating that such notice is a "notice of default". In the
event that Agent receives such a notice, Agent shall give notice thereof to
Lenders. Agent shall take such action with respect to such Default or Event of
Default as shall be reasonably directed by the Required Lenders; provided that,
unless and until Agent shall have received such directions, Agent may (but shall
not be obligated to) take such action, or refrain from taking such action, with
respect to such Default or Event of Default as it shall deem advisable in the
best interests of Lenders.
14.7 Indemnification. To the extent Agent is not reimbursed and
indemnified by Borrower, each Lender will reimburse and indemnify Agent in
proportion to its respective portion of the Advances (or, if no Advances are
outstanding, according to its Commitment Percentage from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever which may be
imposed on, incurred by or asserted against Agent in performing its duties
hereunder, or in any way relating to or arising out of this Agreement or any
Other Loan Document; provided that, Lenders shall not be liable for any portion
of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from Agent's gross
negligence (but not mere negligence) or willful misconduct.
14.8 Agent in its Individual Capacity. With respect to the obligation
of Agent to lend under this Agreement, the Advances made by it shall have the
same rights and powers hereunder as any other Lender and as if it were not
performing the duties as Agent specified herein; and the term "Lender" or any
similar term shall, unless the context clearly otherwise indicates, include
Agent in
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its individual capacity as a Lender. Agent may engage in business with Borrower
as if it were not performing the duties specified herein, and may accept fees
and other consideration from Borrower for services in connection with this
Agreement or otherwise without having to account for the same to Lenders.
14.9 Delivery of Documents. To the extent Agent receives documents and
information from Borrower pursuant to the terms of this Agreement, Agent will
promptly finish such documents and information to Lenders.
14.10 Borrower's Undertaking to Agent. Without prejudice to their
respective obligations to Lenders under the other provisions of this Agreement,
Borrower hereby undertakes with Agent to pay to Agent from time to time on
demand all amounts from time to time due and payable by it for the account of
Agent or Lenders or any of them pursuant to this Agreement to the extent not
already paid. Any payment made pursuant to any such demand shall pro tanto
satisfy Borrower's obligations to make payments for the account of Lenders or
the relevant one or more of them pursuant to this Agreement.
XV. MISCELLANEOUS
15.1 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York applied to contracts to be
performed wholly within the State of New York. Any judicial proceeding brought
by or against Borrower with respect to any of the Obligations, this Agreement or
any related agreement may be brought in any court of competent jurisdiction in
the State of New York, United States of America, and, by execution and delivery
of this Agreement, Borrower accepts for itself and in connection with its
properties, generally and unconditionally, the non-exclusive jurisdiction of the
aforesaid courts, and irrevocably agrees to be bound by any judgment rendered
thereby in connection with this Agreement. Nothing herein shall affect the right
to serve process in any manner permitted by law or shall limit the right of
Lenders to bring proceedings against Borrower in the courts of any other
jurisdiction. Borrower waives any objection to jurisdiction and venue of any
action instituted hereunder and shall not assert any defense based on lack of
jurisdiction or venue or based upon forum non conveniens. Any judicial
proceeding by Borrower against Lenders involving, directly or indirectly, any
matter or claim in any way arising out of, related to or connected with this
Agreement or any related agreement, shall be brought only in a federal or state
court located in the City of New York, State of New York.
15.2 Entire Understanding. (a)This Agreement and the documents executed
concurrently herewith contain the entire understanding between Borrower, Agent
and each Lender and supersedes all prior agreements and understandings, if any,
relating to the subject matter hereof. Any promises, representations, warranties
or guarantees not herein contained and hereinafter made shall have no force and
effect unless in writing, and executed by the party or parties making such
representations, warranties or guaranties. Neither this Agreement nor any
portion or provisions hereof may be changed, modified, amended, waived,
supplemented, discharged, canceled or terminated orally or
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by any course of dealing, or in any manner other than by an agreement in
writing, signed by the party to be charged. Borrower acknowledges that it has
been advised by counsel in connection with the execution of this Agreement and
Other Documents and is not relying upon oral representations or statements
inconsistent with the terms and provisions of this Agreement
(b) The Required Lenders, Agent with the consent in writing
of the Required Lenders, and Borrower may, subject to the provisions of this
Section 15.2 (b), from time to time enter into written supplemental agreements
to this Agreement, the Notes or the Other Documents executed by Borrower, for
the purpose of adding or deleting any provisions or otherwise changing, varying
or waiving in any manner the rights of Lenders, Agent or Borrower thereunder or
the conditions, provisions or terms thereof of waiving any Event of Default
thereunder, but only to the extent specified in such written agreements;
provided, however, that no such supplemental agreement shall, without the
consent of all Lenders:
(i) increase the Maximum Loan Amount or increase
the Commitment Percentage of any Lender,
(ii) increase the Receivables Advance Rate in
excess of 95%, increase the Antenna
Inventory Advance Rate in excess of 60% or
increase the Battery Advance Rate in excess
of 50% (this provision shall apply to
actions taken by Agent in accordance with
Section 2. 1 (b));
(iii) extend the maturity of any Note or the due
date for any amount payable hereunder, or
decrease the rate of interest or reduce any
fee or principal payment payable by Borrower
to Lenders pursuant to this Agreement;
(iv) alter the definition of the term Required
Lenders or alter, amend or modify Section
2.5, Section 15.3(a) or this Section
15.2(b);
(v) release any Collateral during any calendar
year having an aggregate value in excess of
$500,000;
(vi) change the rights and duties of Agent; or
(vii) voluntarily make any Revolving Advance if
after giving effect thereto the total of
Revolving Advances outstanding hereunder
would exceed the Formula Amount for more
than sixty (60) consecutive Business Days or
exceed one hundred and twenty percent (120%)
of the Formula Amount. The foregoing
limitation shall not apply to involuntary
overadvances that may result from the
limitations set forth in this Agreement that
were unintentionally exceeded for reasons
including, without limitation, Collateral
believed to be eligible in fact being or
becoming ineligible or the return of
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uncollected checks or other items applied to
the reduction of the Advances or
overadvances made to protect or preserve
Collateral. The foregoing shall not be
deemed to permit the making of any Revolving
Advance if after giving effect thereto there
would be a violation of Section 2.5.
Any such supplemental agreement shall apply equally to each of Lenders
and shall be binding upon Borrower, Lenders and Agent and all future holders of
the Obligations. In the case of my waiver, Borrower, Agent and Lenders shall be
restored to their former positions and rights, and any Event of Default waived
shall be deemed to be cured and not continuing, but no waiver of a specific
Event of Default shall extend to any subsequent Event of Default (whether or not
the subsequent Event of Default is the same as the Event of Default which was
waived), or impair any right consequent thereon.
Notwithstanding the foregoing, Agent may voluntarily permit the
Revolving Advances at any time to exceed the Formula Amount by not more than the
lesser of (x) $ 1,000,000 or (y) 10% of the Formula Amount but Agent will not
voluntarily permit the Revolving Advances to exceed such amount during any
period consisting of more than thirty (30) consecutive days. For the purposes of
the preceding sentence, the discretion granted to Agent hereunder shall not
preclude involuntary overadvances that may result from time to time from the
fact that the Formula Amount was * y exceeded (whether at the time of any
Revolving Advance or at the time of the issuance of a Letter of Credit resulting
in a Revolving Advance) for any reasons including, but not limited to,
Collateral believed to be eligible in fact being or becoming ineligible or the
return of uncollected checks or other items applied to the reduction of the
Revolving Advances or overadvances made to protect or preserve Collateral. In
the event that Agent involuntarily permits the Revolving Advances to exceed the
Formula Amount by more than 10%, Agent shall decrease such excess in as
expeditious a manner as is practicable under the circumstances and not
inconsistent with the reasons for such excess. Revolving Advances made after
Agent has determined the existence of involuntary overadvances shall be deemed
to be involuntary overadvances: and shall be decreased in accordance with the
preceding sentence. The foregoing shall not be deemed to permit the making of
any Revolving Advance if after giving effect thereto there would be a violation
of Section 2.5.
In the event that Agent requests the consent of a Lender pursuant to
this Section 15.2 and such Lender shall not respond or reply to Agent in writing
within fifteen (15) Business Days of delivery of such request, such Lender shall
be deemed to have consented to the matter that was the subject of the request.
In the event that Agent requests the consent of a Lender pursuant to this
Section 15.2 in accordance with Section 15.6 and such consent is denied, then
Agent may, at its option, require such Lender to assign its interest in the
Advances to Agent or to another Lender or to any other Person designated by the
Agent (the "Designated Lender"), for a price equal to the then outstanding
principal amount thereof plus accrued and unpaid interest and fees due such
Lender together with any breakage costs for Eurodollar Loans, which interest and
fees shall be paid when collected from Borrower In the event Agent elects to
require any Lender to assign its interest to PNC or to the Designated Lender,
Agent will so notify such Lender in writing within forty five (45) days
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following such Lender's denial, and such Lender will assign its interest to PNC
or the Designated Lender no later than five (5) days following receipt of such
notice pursuant to a Commitment Transfer Supplement executed by such Lender, PNC
or the Designated Lender, as appropriate, and Agent.
15.3 Successors and Assigns; Participations; New Lenders.
(a) This Agreement shall be binding upon and inure to the
benefit of Borrower, Agent, each Lender, all future holders of the Note and
their respective successors and except the Borrower may not assign or transfer
any of its rights or obligations under this Agreement without the prior written
consent of Agent and each Lender.
(b) Borrower acknowledges that in the regular course of
commercial banking business one or more Lenders may at any time and from time to
time sell participating interests in the Advances to other financial
institutions (each such transferee or purchaser of a participating interest, a
"Transferee"). Each Transferee may exercise all rights of payment (including
without limitation rights of set-off) with respect to the portion of such
Advances held by it or other Obligations payable hereunder as fully as if such
Transferee were the direct holder thereof provided that Borrower shall not be
required to pay to any Transferee more than the amount which it would have been
required to pay to Lender which granted an interest in its Advances or other
Obligations payable hereunder to such Transferee had such Lender retained such
interest in the Advances hereunder or other Obligations payable hereunder and in
no event shall Borrower be required to pay any such amount arising from the same
circumstances and with respect to the same Advances or other Obligations payable
hem-under to both such Lender and such Transferee. Borrower hereby grants to any
Transferee a continuing security interest in any deposits, moneys or other
property actually or constructively held by such Transferee as security for the
Transferee's interest in the Advances.
(c) Any Lender may sell, assign or transfer all or any part of
its rights under tins Agreement and the Other Documents to one or more
additional banks or financial institutions and one or more additional banks or
financial institutions may commit to make Advances hereunder (each a "Purchasing
Lender"); provided no bank or financial institution may become a Purchasing
Lender unless it has assets in excess of $1,000,000,000. Any such assignment or
transfer must be made in minimum amounts of not less than $5,000,000, pursuant
to a Commitment Transfer Supplement, executed by a Purchasing Lender, the
transferor Lender, and Agent and delivered to Agent for recording, provided,
however, that so long as PNC shall act as Agent hereunder, Agent shall not
transfer or assign any part of its rights hereunder to the extent that its
Commitment Percentage would be less than the Commitment Percentage of any other
Lender after giving effect to such assignment or transfer. Upon such execution,
delivery, acceptance and recording, from and after the transfer effective date
determined pursuant to such Commitment Transfer Supplement, (i) Purchasing
Lender thereunder shall be a party hereto and, to the extent provided in such
Commitment Transfer Supplement, have the rights and obligations of a Lender
thereunder with a Commitment Percentage as set forth therein, and (ii) the
transferor Lender thereunder shall, to the
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extent provided in such Commitment Transfer Supplement, be released from its
obligations under this Agreement, the Commitment Transfer Supplement creating a
novation for that purpose. Such Commitment Transfer Supplement shall be deemed
to amend this Agreement to the extent, and only to the extent, necessary to
reflect the addition of such Purchasing Lender and the resulting adjustment of
the Commitment Percentages arising from the purchase by such Purchasing Lender
of all or a portion of the rights and obligations of such transferor Lender
under this Agreement and the Other Documents. Borrower hereby consents to the
addition of such Purchasing Lender and the resulting adjustment of the
Commitment Percentages arising from the purchase by such Purchasing Lender of
all or a portion of the rights and obligations of such transferor Lender under
this Agreement and the Other Documents. Upon the Commitment Date, the Purchasing
Lender which is becoming a Leader under this Agreement shall receive an
assignment from PNC of a portion of PNC's Commitment Amount which, together with
the $5,000,000 increase in the Maximum Loan Amount, shall equal the Commitment
Amount of such Purchasing Lender. The Commitment Percentage of the Purchasing
Lender shall be a percentage of the Maximum Loan Amount as of the Commitment
Date subject to Section 2.15 hereof. Agent shall send a notice to Borrower and
each Lender setting forth the revised Commitment Percentage of each Lender after
giving effect to the increase in the Maximum Loan Amount.
(d) Agent, acting solely for this purpose as agent of
Borrower, shall maintain at its address a copy of each Commitment Transfer
Supplement delivered to it and a register (the "Register") for the recordation
of the names and addresses of the Advances owing to each Lender from, time to
time. The entries in the Register shall be conclusive, in the absence of
manifest error, and Borrower, Agent and Lenders may treat each Person whose name
is recorded in the Register as the owner of the Advance recorded therein for the
purposes of this Agreement The Register shall be available for inspection by
Borrower or any Lender at any reasonable time and from time to time upon
reasonable prior notice. Agent shall receive a fee in the amount of $3500
payable by the applicable Purchasing Lender upon the effective date of each
transfer or assignment to such Purchasing Lender.
(e) Borrower authorizes each Lender to disclose to any
Transferee or Purchasing Lender and any prospective Transferee or Purchasing
Lender any and all financial information in such Lender's possession concerning
Borrower which has been delivered to such Lender by or on behalf of Borrower
pursuant to this Agreement or in connection with such Lender's credit evaluation
of Borrower.
15.4 Application of Payments. Agent shall have the continuing and
exclusive right to apply or reverse and re-apply any payment and any and all
proceeds of Collateral to any portion of the Obligations. To the extent that
Borrower makes a payment or Agent or any Lender receives any payment or proceeds
of the Collateral for Borrower's benefit, which are subsequently invalidated,
declared to be fraudulent or preferential, set aside or required to be repaid to
a trustee, debtor in possession, receiver, custodian or any other party under
any bankruptcy law, common law or equitable cause, then, to such extent, the
Obligations or part thereof intended to be satisfied shall be revived and
continue as if such payment or proceeds had not been received by Agent or such
Lender.
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15.5 Indemnity. Borrower shall indemnify Agent (in such capacity and as
Issuing Lender) and each Lender and each of their respective officers,
directors, employees, and agents from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses and disbursements of any kind or nature whatsoever (including, without
limitation, fees and disbursements of counsel) which may be imposed on, incurred
by, or asserted against Agent or any Lender in any litigation, proceeding or
investigation instituted or conducted by any governmental agency or
instrumentality or any other Person with respect to any aspect of, or any
transaction contemplated by, or referred to in, or any matter related to, this
Agreement, whether or not Agent or any Lender is a party thereto, except to the
extent that any of the foregoing arises out of the willful misconduct or gross
negligence of the party being indemnified.
15.6 Notice. Any notice or request hereunder may be given to Borrower
or to Agent or any Lender at their respective addresses set forth below or at
such other address as may hereafter be specified in a notice designated as a
notice of change of address under this Section. Any notice or request hereunder
shall be given by (a) hand delivery, (b) overnight courier, (c) certified mail,
return receipt requested, (d) telex or telegram, subsequently confirmed by
registered or certified mail, or (e) telecopy to the number set out below (or
such other number as may hereafter be specified in a notice designated as a
notice of change of address) with telephone - on to a duly authorized officer of
the recipient confirming its receipt as subsequently confirmed by registered or
certified mail. Any notice or other communication required or permitted pursuant
to this Agreement shall be deemed given (a) when personally delivered to any
officer of the party to whom it is addressed, (b) on the earlier of actual
receipt thereof or three (3) days following posting thereof by certified or
registered mail, postage prepaid, or (c) upon actual receipt thereof when sent
by a recognized overnight delivery service or (d) upon actual receipt thereof
when sent by telecopier to the number set forth below with telephone
communication confirming receipt and subsequently confirmed by registered,
certified or overnight mail to the address set forth below, in each case
addressed to each party at its address set forth below or at such other address
as has been finished in writing by a party to the other by like notice:
(A) If to Agent or PNC at: PNC Bank National Association
000 Xxxx Xxxxx Xxxxxx
Xxxxxxxxxx, Xxxx 00000
Attention: Xxxxxxx Xxxxxx
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
with a copy to: Xxxx & Hessen LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxx, Esq.
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Telephone: (000) 000-0000
Telecopier: (000) 000-0000
(B) If to a Lender other than Agent, as specified on the signature
pages hereof,
(C) If to Borrower, at: Centurion International, Inc.
0000 Xxxxx 00xx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxx Xxxx
Telephone: (000) 0000000
Telecopier: (000) 0000000
with a copy to: Cornerstone Equity Investors, L.L.C.
000 Xxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxxx
Xxxxxx Xxxx
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
and a copy to: Xxxxxxxx & Xxxxx
Citicorp Center
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxxx X. Xxxxx, Esq.
Telephone: (000) 0000000
Telecopier: (000) 0000000
15.7 Severability. If any part of this Agreement is contrary to,
prohibited by, or deemed invalid under applicable laws or regulations, such
provision shall be inapplicable and deemed omitted to the extent so contrary,
prohibited or invalid, but the remainder hereof shall not be invalidated thereby
and shall be given effect so far as possible.
15.8 Expenses. All costs and expenses including, without limitation,
reasonable attorneys' fees and disbursements incurred by Agent, Agent on behalf
of Lenders and Lenders (a) in all efforts made to enforce payment of any
Obligation or effect collection of any Collateral, or (b) in connection with the
entering into, modification, amendment, administration and enforcement of this
Agreement or any consents or waivers hereunder and all related agreements,
documents and instruments, or (c) in instituting, maintaining, preserving,
enforcing and foreclosing on Agent's security interest in or Lien on any of the
Collateral, whether through judicial proceedings or otherwise, or (d) in
defending
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or prosecuting any actions or proceedings arising out of or relating to Agent's
or any Lender's transactions with Borrower, or (e) in connection with any advice
given to Agent or any Lender with respect to its rights and obligations under
this Agreement and all related agreements, may be charged to Borrower's Account
and shall be part of the Obligations.
15.9 Injunctive Relief. Borrower recognizes that, in the event Borrower
fails to perform, observe or discharge any of its obligations or liabilities
under this Agreement, any remedy at law may prove to be inadequate relief to
Lenders; therefore, Agent, if Agent so requests, shall be entitled to temporary
and permanent injunctive relief in any such case without the necessity of
proving that actual damages are not an adequate remedy.
15.10 Consequential Damages. Neither Agent nor any agent or attorney
for any of them shall be liable to Borrower for consequential damages arising
from any breach of contract, tort or other wrong relating to this Agreement and
the transactions contemplated hereby.
15.11 Captions. The captions at various places in this Agreement are
intended for convenience only and do not constitute and shall not be interpreted
as part of this Agreement.
15.12 Counterparts. This Agreement may be executed in one or more
counterparts, each of which taken together shall constitute one and the same
agreement. Any signature delivered by a party by facsimile transmission shall be
deemed to be an original signature hereto.
15.13 Construction. The parties acknowledge that each party and its
counsel have reviewed this Agreement and that the normal rule of construction to
the effect that any ambiguities are to be resolved against the drafting party
shall not be employed in the interpretation of this Agreement or any amendments,
schedules or exhibits thereto.
15.14 Confidentiality: Shared Information. (a) Agent, each Lender and
each Transferee shall hold all confidential information that is non-public when
obtained by Agent, such Lender or such Transferee pursuant to the requirements
of this Agreement in accordance with Agent's, such Lender's and such
Transferee's customary procedures for handling confidential information of this
nature; Agent, each Lender and each Transferee may disclose such confidential
information (a) to its examiners, affiliates, outside auditors, counsel and
other professional advisors, (b) to Agent, any Lender or to any prospective
Transferees and Purchasing Lenders, and (e) as required or requested by any
Governmental Body or representative thereof or pursuant to legal process; that
(i) unless specifically prohibited by applicable law or court order, Agent, each
Lender and each Transferee shall use its best efforts prior to disclosure
thereof, to notify Borrower of the applicable request for disclosure of such
non-public information (A) by a Governmental Body or representative thereof
(other than any such request in connection with an examination of the financial
condition of a Lender or a Transferee by such Governmental Body) or (B) pursuant
to legal process and (H) in no event shall Agent, any Lender or any Transferee
be obligated to return any materials furnished by any Borrower other than those
documents and instruments in possession of Agent or any Lender in order to
perfect its Lien on the Collateral once the Obligations have been paid in full
and this Agreement has been terminated.
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(b) Borrower acknowledges that from time to time financial
advisory, investment banking and other services may be offered or provided to
Borrower or one or more of its Affiliates (in connection with this Agreement or
otherwise) by any Lender or by one or more Subsidiaries or Affiliates of such
Lender and Borrower hereby authorizes each Lender to share any information
delivered to such Lender by Borrower and its Subsidiaries pursuant to this
Agreement, or in connection with the decision of such Lender to enter into this
Agreement, to any such Subsidiary or Affiliate of such Lender, it being
understood that any such Subsidiary or Affiliate of any Lender receiving such
information shall be bound by the provision of Section 15.14 as if it were a
Lender hereunder. Such authorization shall survive the repayment of the other
Obligations and the termination of the Loan Agreement.
15.15 Publicity. Borrower hereby authorizes Agent to make appropriate
announcements for the financial arrangement entered into among Borrower, Agent
and Lenders including, without limitation, announcements which are commonly
known as tombstones, in such publications and to such selected parties as Agent
shall in its discretion deem appropriate.
15.16 Survival. The obligations of Borrower under Sections 3.6, 3.7,
3.9, 3.10, 4.19(h), 14.7 and 15.5 shall survive termination of this Agreement
and the Other Documents and payment in full of the Obligations.
15.17 Migratory Merger. Notwithstanding anything contained herein to
the contrary, Agent and each Lender hereby acknowledge and agree that Borrower
may at any time, upon notice to Agent, consummate a migratory merger with a
shell corporation pursuant to which Borrower would become a Delaware
corporation.
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Each of the parties has signed this Agreement as of the day
and year first above written.
CENTURION INTERNATIONAL, INC.,
as Borrower
By: /s/ Xxxx X. Xxxx
Name: Xxxx X. Xxxx
Title: President
PNC BANK NATIONAL ASSOCIATION,
as Lender and as Agent
By:/s/ Xxxxx Xxxxxxxxxx
Name: Xxxxx Xxxxxxxxxx
Title: Vice President
000 X. Xxxxx Xxxxxx
X. 0. Xxx 0000
Xxxxxxxxxx, Xxxx 00000
Commitment Percentage: 64.2857%
Commitment Amount: $27,000,000
IBJ XXXXXXXX BUSINESS CREDIT
CORPORATION, as Lender
By: /s/ Xxxxx Xxxxxxx
Name: Xxxxx Xxxxxxx
Title: Vice President
Xxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Commitment Percentage: 35.7143%
Commitment Amount: $15,000,000
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STATE OF Nebraska )
) ss.
COUNTY OF Lancaster )
On this 31st day of December, 1998, before me personally came Xxxx Xxxx to
me known, who, being by me duly sworn, did depose and say that he is the
President of Centurion International, the corporation described in and which
executed the foregoing instrument and that he was duly authorized to sign his
name thereto.
/s/ Xxxxxx X. Xxxxxxxxx
Notary Public
STATE OF New York )
) ss.
COUNTY OF New York )
On this 31st day of December, 1998, before me personally came Xxxxx Xxxxxxx
to me known, who, being by me duly sworn, did depose and say that he is the Vice
President of IBJ Xxxxxxxx Business Credit Corporation, the corporation described
in and which executed the foregoing instrument and that he was duly authorized
to sign his name thereto.
/s/ Xxxxxx X. Xxxxxxx
Notary Public
STATE OF New York )
) ss.
COUNTY OF New York )
On this 31st day of December, 1998, before me personally came Xxxxx
Xxxxxxxxxx to me known, who, being by me duly sworn, did depose and say that he
is the Vice President of PNC Bank National Association, the bank described in
and which executed the foregoing instrument and that he was duly authorized to
sign his name thereto.
/s/ Xxxxxx X. Xxxxxxx
Notary Public
94
