Exhibit 4.1
[Execution]
LOAN AND SECURITY AGREEMENT
by and among
PEMSTAR INC.
TURTLE MOUNTAIN CORPORATION
PEMSTAR PACIFIC CONSULTANTS INC.
as Borrowers
and
GENTLELIFE, INC.
as Guarantor
CONGRESS FINANCIAL CORPORATION (CENTRAL)
as Administrative and Collateral Agent
and
FLEET CAPITAL CORPORATION
as Documentation Agent
and
WACHOVIA BANK, N.A.
as Arranger
and
THE LENDERS FROM TIME TO TIME PARTY HERETO
as Lenders
Dated: April 25, 2003
TABLE OF CONTENTS
Page
SECTION 1. DEFINITIONS ............................................................... 1
SECTION 2. CREDIT FACILITIES ......................................................... 28
2.1 Loans ....................................................................... 28
2.2 Letter of Credit Accommodations. ............................................ 29
2.3 Commitments ................................................................. 34
SECTION 3. INTEREST AND FEES ......................................................... 34
3.1 Interest. ................................................................... 34
3.2 Fees. ....................................................................... 35
3.3 Changes in Laws and Increased Costs of Loans. ............................... 36
SECTION 4. CONDITIONS PRECEDENT ...................................................... 38
4.1 Conditions Precedent to Initial Loans and Letter of Credit Accommodations ... 38
4.2 Conditions Precedent to All Loans and Letter of Credit Accommodations ....... 41
SECTION 5. GRANT AND PERFECTION OF SECURITY INTEREST ................................. 42
5.1 Grant of Security Interest .................................................. 42
5.2 Perfection of Security Interests. ........................................... 43
SECTION 6. COLLECTION AND ADMINISTRATION ............................................. 48
6.1 Borrowers' Loan Accounts .................................................... 48
6.2 Statements .................................................................. 48
6.3 Collection of Accounts ...................................................... 49
6.4 Payments. ................................................................... 50
6.5 Authorization to Make Loans ................................................. 51
6.6 Use of Proceeds ............................................................. 51
6.7 Appointment of Administrative Borrower as Agent for Requesting Loans
and Receipts of Loans and Statements ....................................... 52
6.8 Pro Rata Treatment .......................................................... 53
6.9 Sharing of Payments, Etc. ................................................... 53
6.10 Settlement Procedures ....................................................... 54
6.11 Obligations Several; Independent Nature of Lenders' Rights .................. 57
SECTION 7. COLLATERAL REPORTING AND COVENANTS. ....................................... 57
7.1 Collateral Reporting. ....................................................... 57
7.2 Accounts Covenants. ......................................................... 58
7.3 Inventory Covenants ......................................................... 59
7.4 Equipment and Real Property Covenants ....................................... 60
7.5 Power of Attorney ........................................................... 61
7.6 Right to Cure ............................................................... 62
7.7 Access to Premises ........................................................... 62
SECTION 8. REPRESENTATIONS AND WARRANTIES ............................................ 63
8.1 Corporate Existence, Power and Authority ..................................... 63
8.2 Name; State of Organization; Chief Executive Office; Collateral Locations .... 63
8.3 Financial Statements; No Material Adverse Change ............................. 64
8.4 Priority of Liens; Title to Properties ....................................... 64
8.5 Tax Returns .................................................................. 65
8.6 Litigation ................................................................... 65
8.7 Compliance with Other Agreements and Applicable Laws ......................... 65
8.8 Environmental Compliance ..................................................... 66
8.9 Employee Benefits ............................................................ 66
8.10 Bank Accounts ................................................................ 67
8.11 Intellectual Property ........................................................ 67
8.12 Subsidiaries; Affiliates; Capitalization; Solvency ........................... 68
8.13 Labor Disputes ............................................................... 69
8.14 Restrictions on Subsidiaries ................................................. 69
8.15 Material Contracts ........................................................... 69
8.16 Payable Practices ............................................................ 70
8.17 Accuracy and Completeness of Information ..................................... 70
8.18 Survival of Warranties; Cumulative ........................................... 70
SECTION 9. AFFIRMATIVE AND NEGATIVE COVENANTS ........................................ 70
9.1 Maintenance of Existence. .................................................... 70
9.2 New Collateral Locations ..................................................... 71
9.3 Compliance with Laws, Regulations, Etc. ...................................... 71
9.4 Payment of Taxes and Claims .................................................. 72
9.5 Insurance .................................................................... 73
9.6 Financial Statements and Other Information ................................... 74
9.7 Sale of Assets, Consolidation, Merger, Dissolution, Etc ...................... 76
9.8 Encumbrances ................................................................. 80
9.9 Indebtedness ................................................................. 82
9.10 Loans and Investments, Etc ................................................... 88
9.11 Dividends and Redemptions .................................................... 92
9.12 Transactions with Affiliates ................................................. 93
9.13 Compliance with ERISA ........................................................ 94
9.14 End of Fiscal Years; Fiscal Quarters ......................................... 94
9.15 Change in Business ........................................................... 94
9.16 Limitations on Restrictions Affecting Subsidiaries ........................... 94
9.17 Minimum EBITDA ............................................................... 95
9.18 Minimum Excess Availability .................................................. 96
9.19 Capital Expenditures ......................................................... 96
9.20 License Agreements ........................................................... 96
9.21 After Acquired Real Property ................................................. 97
9.22 Costs and Expenses ........................................................... 98
9.23 Further Assurances ........................................................... 98
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SECTION 10. EVENTS OF DEFAULT AND REMEDIES ......................................... 99
10.1 Events of Default ........................................................ 99
10.2 Remedies. ................................................................ 101
SECTION 11. JURY TRIAL WAIVER, OTHER WAIVERS AND CONSENTS; GOVERNING LAW ...........
11.1 Governing Law; Choice of Forum; Service of Process; Jury Trial Waiver .... 105
11.2 Waiver of Notices ........................................................ 107
11.3 Amendments and Waivers ................................................... 107
11.4 Waiver of Counterclaims .................................................. 109
11.5 Indemnification .......................................................... 109
SECTION 12. THE AGENT .............................................................. 110
12.1 Appointment, Powers and Immunities ....................................... 110
12.2 Reliance by Agent ........................................................ 110
12.3 Events of Default ........................................................ 111
12.4 Congress in its Individual Capacity ...................................... 111
12.5 Indemnification .......................................................... 112
12.6 Non-Reliance on Agent and Other Lenders .................................. 112
12.7 Failure to Act ........................................................... 113
12.8 Additional Loans ......................................................... 113
12.9 Concerning the Collateral and the Related Financing Agreements ........... 113
12.10 Field Audit, Examination Reports and other Information; Disclaimer
by Lenders .............................................................. 114
12.11 Collateral Matters ....................................................... 114
12.12 Agency for Perfection .................................................... 116
12.13 Successor Agent .......................................................... 116
12.14 Documentation Agent ...................................................... 117
SECTION 13. TERM OF AGREEMENT; MISCELLANEOUS ....................................... 117
13.1 Term ..................................................................... 117
13.2 Interpretative Provisions ................................................ 119
13.3 Notices .................................................................. 121
13.4 Partial Invalidity ....................................................... 121
13.5 Confidentiality .......................................................... 122
13.6 Successors ............................................................... 123
13.7 Assignments; Participations .............................................. 123
13.8 Entire Agreement ......................................................... 125
13.9 Counterparts, Etc ........................................................ 126
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INDEX TO
EXHIBITS AND SCHEDULES
Exhibit A Form of Assignment and Acceptance
Exhibit B Information Certificate
Exhibit C Form of Compliance Certificate
Exhibit D Form of Borrowing Base Certificate
Schedule 1.29 List of US Companies with Foreign Subsidiaries with
Eligible Accounts
Schedule 1.43 Existing Letters of Credit
Schedule 9.7 List of Equipment in San Jose, California to be Subject
to Sale/Leaseback
Schedule 9.17(a) Minimum EBITDA for Parent and all Subsidiaries
Schedule 9.17(b) Minimum EBITDA for Parent and Domestic Subsidiaries
LOAN AND SECURITY AGREEMENT
This Loan and Security Agreement dated April 25, 2003 is entered into by
and among Pemstar, Inc., a Minnesota corporation ("Parent"), Turtle Mountain
Corporation, a North Dakota corporation ("Turtle Mountain") and Pemstar Pacific
Consultants Inc., a California corporation ("PPC",and together with Parent and
Turtle Mountain, each individually a "Borrower" and collectively, "Borrowers"),
Gentlelife, Inc., a California corporation, formerly known as Kinderlife
Instruments Inc. ("Guarantor"), the parties hereto from time to time as lenders,
whether by execution of this Agreement or an Assignment and Acceptance (each
individually, a "Lender" and collectively, "Lenders"), Congress Financial
Corporation (Central), an Illinois corporation, in its capacity as
Administrative Agent for Lenders (in such capacity, "Agent"), Fleet Capital
Corporation, a Rhode Island corporation, in its capacity as Documentation Agent
for Lenders (in such capacity, "Documentation Agent") and Wachovia Bank, N.A., a
national banking association, in its capacity as Arranger for Lenders (in such
capacity, "Arranger").
W I T N E S S E T H:
WHEREAS, Borrowers and Guarantor have requested that Agent and Lenders
enter into financing arrangements with Borrowers pursuant to which Lenders may
make loans and provide other financial accommodations to Borrowers; and
WHEREAS, each Lender is willing to agree (severally and not jointly) to
make such loans and provide such financial accommodations to Borrowers on a pro
rata basis according to its Commitment (as defined below) on the terms and
conditions set forth herein and Agent is willing to act as agent for Lenders on
the terms and conditions set forth herein and the other Financing Agreements;
NOW, THEREFORE, in consideration of the mutual conditions and agreements
set forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
SECTION I. DEFINITIONS
For purposes of this Agreement, the following terms shall have the
respective meanings given to them below:
1.1 "Accounts" shall mean, as to each Borrower and Guarantor, all present
and future rights of such Borrower and Guarantor to payment of a monetary
obligation, whether or not earned by performance, which is not evidenced by
chattel paper or an instrument, (a) for property that has been or is to be sold,
leased, licensed, assigned, or otherwise disposed of, (b) for services rendered
or to be rendered, (c) for a secondary obligation incurred or to be incurred, or
(d) arising out of the use of a credit or charge card or information contained
on or for use with the card.
1.2 "Adjusted Eurodollar Rate" shall mean, with respect to each Interest
Period for any Eurodollar Rate Loan, the rate per annum (rounded upwards, if
necessary, to the next one-sixteenth (1/16) of one (1%) percent) determined by
dividing (a) the Eurodollar Rate for such Interest Period by (b) a percentage
equal to: (i) one (1) minus (ii) the Reserve Percentage. For purposes hereof,
"Reserve Percentage" shall mean the reserve percentage, expressed as a decimal,
prescribed by any United States or foreign banking authority for determining the
reserve requirement which is or would be applicable to deposits of United States
dollars in a non-United States or an international banking office of Reference
Bank used to fund a Eurodollar Rate Loan or any Eurodollar Rate Loan made with
the proceeds of such deposit, whether or not the Reference Bank actually holds
or has made any such deposits or loans. The Adjusted Eurodollar Rate shall be
adjusted on and as of the effective day of any change in the Reserve Percentage.
1.3 "Administrative Borrower" shall mean Pemstar, Inc., a Minnesota
corporation, in its capacity as Administrative Borrower on behalf of itself and
the other Borrowers pursuant to Section 6.7 hereof and it successors and assigns
in such capacity.
1.4 "Affiliate" shall mean, with respect to a specified Person, any other
Person which directly or indirectly, through one or more intermediaries,
controls or is controlled by or is under common control with such Person, and
without limiting the generality of the foregoing, includes (a) any Person which
beneficially owns or holds five (5%) percent or more of any class of Voting
Stock of such Person or other equity interests in such Person, (b) any Person of
which such Person beneficially owns or holds five (5%) percent or more of any
class of Voting Stock or in which such Person beneficially owns or holds five
(5%) percent or more of the equity interests and (c) any director or executive
officer of such Person. For the purposes of this definition, the term "control"
(including with correlative meanings, the terms "controlled by" and "under
common control with"), as used with respect to any Person, means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of such Person, whether through the ownership of Voting
Stock, by agreement or otherwise.
1.5 "Agent" shall mean Congress Financial Corporation (Central), in its
capacity as agent on behalf of Lenders pursuant to the terms hereof and any
replacement or successor agent hereunder.
1.6 "Agent Payment Account" shall mean account no. 5000000030266 of Agent
at Wachovia Bank, National Association, or such other account of Agent as Agent
may from time to time designate to Administrative Borrower as the Agent Payment
Account for purposes of this Agreement and the other Financing Agreements.
1.7 "Applicable Margin" shall mean, at any time, as to the interest rate
for Prime Rate Loans and the interest rate for Eurodollar Rate Loans, the
applicable percentage (on a per annum basis) set forth below if either the
Quarterly Average Excess Availability for the immediately preceding fiscal
quarter is at or within the amounts indicated for such percentage or the
Leverage Ratio as of the last day of the immediately preceding fiscal quarter
(which ratio for this purpose shall be calculated based on the four (4)
immediately preceding fiscal quarters) is at or within the levels indicated for
such percentage:
Applicable Applicable
Quarterly Average Prime Eurodollar
Excess Availability Leverage Ratio Rate Margin Rate Margin
------------------- -------------- ----------- -----------
(a) $30,000,000 or more 2.00 to 1.00 or less 3/4% 2 3/4%
(b) Greater than or equal to Greater than 2.00 to 1.00 but 1% 3%
$20,000,000 and less than equal to or less than 3.00 to 1.00
$30,000,000
(c) Greater than or equal to Greater than 3.00 to 1.00 but 1 1/4% 3 1/4%
$10,000,000 and less than equal to or less than 4.00 to 1.00
$20,000,000
(d) Less than $10,000,000 Greater than 4.00 to 1.00 1 1/2% 3 1/2%
provided, that, (i) the Applicable Margin shall be calculated and established
once each fiscal quarter for both Prime Rate Loans and Eurodollar Rate Loans
(including any Eurodollar Rate Loans for which the duration of applicable
Interest Period continues after the end of the applicable fiscal quarter),
commencing with the fiscal quarter ending June 30, 2003, and shall remain in
effect until adjusted thereafter at the end of the next quarter and (ii) the
Applicable Margin shall be the lower percentage set forth above based on the
Quarterly Average Excess Availability or the Leverage Ratio.
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1.8 "Assignment and Acceptance" shall mean an Assignment and Acceptance
substantially in the form of Exhibit A attached hereto (with blanks
appropriately completed) delivered to Agent in connection with an assignment of
a Lender's interest hereunder in accordance with the provisions of Section 13.7
hereof.
1.9 "Blocked Accounts" shall have the meaning set forth in Section 6.3
hereof.
1.10 "Borrowing Base" shall mean, at any time, as to each Borrower, the
amount equal to:
(a) the lesser of:
(i) the amount equal to: (A) eighty-five (85%) percent of
the Net Amount of the Eligible Accounts of such Borrower, plus (B) as to each of
Parent and Turtle Mountain, the lesser of (1) the Inventory Loan Limit for such
Borrower or (2) thirty-five (35%) percent multiplied by the Value of the
Eligible Inventory of such Borrower or (3) eighty-five (85%) percent of the Net
Recovery Percentage multiplied by the Value of such Eligible Inventory, or
(ii) the Loan Limit for such Borrower,
minus
(b) Reserves attributable to such Borrower.
Notwithstanding anything to the contrary contained herein, in no event shall any
Eligible Accounts of PPC be included in the calculation of the Borrowing Base
unless and until Agent shall have conducted a field examination with respect
thereto the scope and results of which shall in all respects be satisfactory to
Agent and then only to the extent the criteria for Eligible Accounts set forth
herein are satisfied with respect thereto, together with such other or
additional criteria as Agent may, at its option, establish with respect thereto
and subject to such Reserves as Agent may establish with respect thereto. For
purposes only of applying the Inventory Loan Limit, Agent may treat the then
undrawn amounts of outstanding Letter of Credit Accommodations for the purpose
of purchasing Eligible Inventory as Loans to the extent Agent is in effect
basing the issuance of the Letter of Credit Accommodations on the Value of the
Eligible Inventory being purchased with such Letter of Credit Accommodations. In
determining the actual amounts of such Letter of Credit Accommodations to be so
treated for purposes of the sublimit, the outstanding Loans and Reserves shall
be attributed first to any components of the lending formulas set forth above
that are not subject to such sublimit, before being attributed to the components
of the lending formulas subject to such sublimit. The amounts of Eligible
Inventory of any Borrower shall, at Agent's option, be determined based on the
lesser of the amount of Inventory set forth in the general ledger of such
Borrower or the perpetual inventory record maintained by such Borrower.
1.11 "Borrowing Base Certificate" shall mean a certificate substantially in
the form of Exhibit B hereto, as such form may from time to time be modified by
Agent, which is duly completed (including all schedules thereto) and executed by
the chief financial officer, treasurer or controller of Parent and delivered to
Agent.
1.12 "Business Day" shall mean any day other than a Saturday, Sunday, or
other day on which commercial banks are authorized or required to close under
the laws of the State of Illinois, or the State of North Carolina, and a day on
which Agent is open for the transaction of business, except that if a
determination of a Business Day shall relate to any Eurodollar Rate Loans, the
term Business Day shall also exclude any day on which banks are closed for
dealings in dollar deposits in the London interbank market or other applicable
Eurodollar Rate market.
1.13 "Capital Leases" shall mean, as applied to any Person, any lease of
(or any agreement conveying the right to use) any property (whether real,
personal or mixed) by such Person as lessee which in accordance with GAAP, is
required to be reflected as a liability on the balance sheet of such Person.
1.14 "Capital Stock" shall mean, with respect to any Person, any and all
shares, interests, participations or other equivalents (however designated) of
such Person's capital stock or partnership, limited liability company or
3
other equity interests at any time outstanding, and any and all rights, warrants
or options exchangeable for or convertible into such capital stock or other
interests (but excluding any debt security that is exchangeable for or
convertible into such capital stock).
1.15 "Cash Equivalents" shall mean, at any time, (a) any evidence of
Indebtedness with a maturity date of ninety (90) days or less issued or directly
and fully guaranteed or insured by the United States of America or any agency or
instrumentality thereof; provided, that, the full faith and credit of the United
States of America is pledged in support thereof; (b) certificates of deposit or
bankers' acceptances with a maturity of ninety (90) days or less of any
financial institution that is a member of the Federal Reserve System having
combined capital and surplus and undivided profits of not less than
$250,000,000; (c) commercial paper (including variable rate demand notes) with a
maturity of ninety (90) days or less issued by a corporation (except an
Affiliate of any Borrower or Guarantor) organized under the laws of any State of
the United States of America or the District of Columbia and rated at least A-1
by Standard & Poor's Ratings Service, a division of The XxXxxx-Xxxx Companies,
Inc. or at least P-1 by Xxxxx'x Investors Service, Inc.; (d) repurchase
obligations with a term of not more than thirty (30) days for underlying
securities of the types described in clause (a) above entered into with any
financial institution having combined capital and surplus and undivided profits
of not less than $250,000,000; (e) repurchase agreements and reverse repurchase
agreements relating to marketable direct obligations issued or unconditionally
guaranteed by the United States of America or issued by any governmental agency
thereof and backed by the full faith and credit of the United States of America,
in each case maturing within ninety (90) days or less from the date of
acquisition; provided, that, the terms of such agreements comply with the
guidelines set forth in the Federal Financial Agreements of Depository
Institutions with Securities Dealers and Others, as adopted by the Comptroller
of the Currency on October 31, 1985; and (f) investments in money market funds
and mutual funds which invest substantially all of their assets in securities of
the types described in clauses (a) through (e) above.
1.16 "Change of Control" shall mean (a) the transfer (in one transaction or
a series of transactions) of all or substantially all of the assets of any
Borrower to any Person or group (as such term is used in Section 13(d)(3) of the
Exchange Act), other than as permitted in Section 9.7 hereof; (b) the
liquidation or dissolution of any Borrower or the adoption of a plan by the
stockholders of any Borrower relating to the dissolution or liquidation of such
Borrower other than as permitted in Section 9.7 hereof; (c) the acquisition by
any Person or group (as such term is used in Section 13(d)(3) of the Exchange
Act) of beneficial ownership, directly or indirectly, of a majority of the
voting power of the total outstanding Voting Stock of any Borrower or the Board
of Directors of any Borrower; (d) during any period of two (2) consecutive
years, individuals who at the beginning of such period constituted the Board of
Directors of Parent (together with any new directors whose nomination for
election by the stockholders of such Borrower was approved by a vote of at least
fifty-one (51%) percent of the directors then still in office who were either
directors at the beginning of such period or whose election or nomination for
election was previously so approved) cease for any reason to constitute a
majority of the Board of Directors of such Borrower then still in office; or (e)
the failure of Parent to own directly or indirectly one hundred (100%) percent
of the voting power of the total outstanding Voting Stock of any other Borrower.
1.17 "Chiptronics" shall mean TMC, Inc., d/b/a Chiptronics, Inc., a North
Dakota corporation, and its successors and assigns.
1.18 "Code" shall mean the Internal Revenue Code of 1986, as the same now
exists or may from time to time hereafter be amended, modified, recodified or
supplemented, together with all rules, regulations and interpretations
thereunder or related thereto.
1.19 "Collateral" shall have the meaning set forth in Section 5 hereof.
1.20 "Collateral Access Agreement" shall mean an agreement in writing, in
form and substance satisfactory to Agent, from any lessor of premises to any
Borrower or Guarantor, or any other person to whom any Collateral is consigned
or who has custody, control or possession of any such Collateral or is otherwise
the owner or operator of any premises on which any of such Collateral is
located.
4
1.21 "Commitment" shall mean, at any time, as to each Lender, the
principal amount set forth below such Lender's signature on the signatures pages
hereto designated as the Commitment or on Schedule 1 to the Assignment and
Acceptance Agreement pursuant to which such Lender became a Lender hereunder in
accordance with the provisions of Section 13.7 hereof, as the same may be
adjusted from time to time in accordance with the terms hereof; sometimes being
collectively referred to herein as "Commitments".
1.22 "Congress" shall mean Congress Financial Corporation (Central), an
Illinois corporation, in its individual capacity, and its successors and
assigns.
1.23 "Consolidated Net Income" shall mean, with respect to any Person
for any period, the aggregate of the net income (loss) of such Person and its
Subsidiaries, on a consolidated basis, for such period (excluding to the extent
included therein any extraordinary or non-recurring gains and extraordinary
non-cash charges to property, plant and equipment or goodwill) after deducting
all charges which should be deducted before arriving at the net income (loss)
for such period and after deducting the Provision for Taxes for such period, all
as determined in accordance with GAAP; provided, that, (a) the net income of any
Person that is not a wholly-owned Subsidiary or that is accounted for by the
equity method of accounting shall be included only to the extent of the amount
of dividends or distributions paid or payable to such Person or a wholly-owned
Subsidiary of such Person; (b) except to the extent included pursuant to the
foregoing clause, the net income of any Person accrued prior to the date it
becomes a wholly-owned Subsidiary of such Person or is merged into or
consolidated with such Person or any of its wholly-owned Subsidiaries or that
Person's assets are acquired by such Person or by any of its wholly-owned
Subsidiaries shall be excluded; (c) the effect of any change in accounting
principles adopted by such Person or its Subsidiaries after the date hereof
shall be excluded; (d) net income shall exclude interest accruing, but not paid
on indebtedness owing to a Subsidiary or parent corporation of such Person,
which is subordinated in right of payment to the payment in full of the
Obligations, on terms and conditions acceptable to Lender; and (e) the net
income (if positive) of any wholly-owned Subsidiary to the extent that the
declaration or payment of dividends or similar distributions by such
wholly-owned Subsidiary to such Person or to any other wholly-owned Subsidiary
of such Person is not at the time permitted by operation of the terms of its
charter or any agreement, instrument, judgment, decree, order, statute, rule or
governmental regulation applicable to such wholly-owned Subsidiary shall be
excluded. For the purposes of this definition, net income excludes any gain and
non-cash loss (but not any cash loss) together with any related Provision for
Taxes for such gain and non-cash loss (but not any cash loss) realized upon the
sale or other disposition of any assets that are not sold in the ordinary course
of business (including, without limitation, dispositions pursuant to sale and
leaseback transactions) or of any Capital Stock of such Person or a Subsidiary
of such Person.
1.24 "Credit Facility" shall mean the Loans and Letter of Credit
Accommodations provided to or for the benefit of any Borrower pursuant to
Sections 2.1 and 2.2 hereof.
1.25 "Default" shall mean an act, condition or event which with notice
or passage of time or both would constitute an Event of Default.
1.26 "Defaulting Lender" shall have the meaning set forth in Section
6.10 hereof.
1.27 "Deposit Account Control Agreement" shall mean an agreement in
writing, in form and substance satisfactory to Agent, by and among Agent, the
Borrower or Guarantor with a deposit account at any bank and the bank at which
such deposit account is at any time maintained which provides that such bank
will comply with instructions originated by Agent directing disposition of the
funds in the deposit account without further consent by such Borrower or
Guarantor and such other terms and conditions as Agent may require.
1.28 "EBITDA" shall mean, as to any Person, with respect to any period,
an amount equal to: (a) the Consolidated Net Income of such Person for such
period, plus (b) depreciation and amortization for such period (to the extent
deducted in the computation of Consolidated Net Income of such Person), all in
accordance with GAAP, plus (c) Interest Expense for such period (to the extent
deducted in the computation of Consolidated Net Income of such Person), plus (d)
the Provision of Taxes for such period (to the extent deducted in the
computation of Consolidated Net Income of such Person). For purposes of Section
9.17(b) hereof, corporate expenses shall be
5
allocated to Parent and its Subsidiaries other than Foreign Subsidiaries in a
manner consistent with the current practices of Parent as of the date hereof.
1.29 "Eligible Accounts" shall mean Accounts created by a Borrower which
are and continue to be acceptable to Agent based on the criteria set forth
below. In general, Accounts shall be Eligible Accounts if:
(a) such Accounts arise from the actual and bona fide sale and
delivery of goods by such Borrower or rendition of services by such Borrower in
the ordinary course of its business which transactions are completed in
accordance with the terms and provisions contained in any documents related
thereto (but in no event shall Eligible Accounts include Accounts arising from
the sale of goods or rendition of services on or after the termination of any
contract for the sale of goods or rendition of services between such Borrower
and the account debtor or any notice of termination sent by either party
thereto);
(b) such Accounts are not unpaid more than the earlier of sixty (60)
days after the original due date for them or ninety (90) days after the date of
the original invoice for them;
(c) such Accounts comply with the terms and conditions contained in
Section 7.2(b) of this Agreement;
(d) such Accounts do not arise from sales on consignment, guaranteed
sale, sale and return, sale on approval, or other terms under which payment by
the account debtor may be conditional or contingent;
(e) (i) the chief executive office of the account debtor with respect
to such Accounts is located in the United States of America or Canada (provided,
that, at any time promptly upon Agent's request, such Borrower shall execute and
deliver, or cause to be executed and delivered, such other agreements, documents
and instruments as may be required by Agent to perfect the security interests of
Agent in those Accounts of an account debtor with its chief executive office or
principal place of business in Canada in accordance with the applicable laws of
the Province of Canada in which such chief executive office or principal place
of business is located and take or cause to be taken such other and further
actions as Agent may request to enable Agent as secured party with respect
thereto to collect such Accounts under the applicable Federal or Provincial laws
of Canada) or (ii) if the chief executive office and principal place of business
of the account debtor with respect to such Accounts is located other than in the
United States of America or Canada (other than if such account debtor is a
subsidiary of a corporation listed on Schedule 1.29 hereto), then at Agent's
option, if either: (A) the account debtor has delivered to such Borrower an
irrevocable letter of credit issued or confirmed by a bank satisfactory to Agent
and payable only in the United States of America and in U.S. dollars, sufficient
to cover such Account, in form and substance satisfactory to Agent and if
required by Agent, the original of such letter of credit has been delivered to
Agent or Agent's agent and the issuer thereof, and such Borrower has complied
with the terms of Section 5.2(f) hereof with respect to the assignment of the
proceeds of such letter of credit to Agent or naming Agent as transferee
beneficiary thereunder, as Agent may specify, or (B) such Account is subject to
credit insurance payable to Agent issued by an insurer and on terms and in an
amount acceptable to Agent, or (C) such Account is otherwise acceptable in all
respects to Agent (subject to such lending formula with respect thereto as Agent
may determine) or (iii) if the chief executive office and principal place of
business of the account debtor with respect to such Accounts is located other
than in the United States of America or Canada and such account debtor is a
subsidiary of a corporation listed on Schedule 1.29 hereto, provided, that, in
no event shall the aggregate amount of all such Accounts owing by all of such
account debtors that shall be deemed to be Eligible Accounts at any one time
exceed $2,000,000;
(f) such Accounts do not consist of progress xxxxxxxx (such that the
obligation of the account debtors with respect to such Accounts is conditioned
upon such Borrower's satisfactory completion of any further performance under
the agreement giving rise thereto) or such Accounts do not consist of Accounts
of Parent's Engineering Services business unit based on percentage of completion
accounting, or xxxx and hold invoices or retainage invoices, except as to xxxx
and hold invoices, if Agent shall have received an agreement in writing from the
account debtor, in form and substance satisfactory to Agent, confirming the
unconditional obligation of the account debtor to take the goods related thereto
and pay such invoice;
6
(g) the account debtor with respect to such Accounts has not asserted
a counterclaim, defense or dispute and is not owed any amounts that may give
rise to any right of setoff or recoupment against such Accounts (but the portion
of the Accounts of such account debtor in excess of the amount at any time and
from time to time owed by such Borrower to such account debtor or claimed owed
by such account debtor may be deemed Eligible Accounts),
(h) there are no facts, events or occurrences which would impair the
validity, enforceability or collectability of such Accounts or reduce the amount
payable or delay payment thereunder;
(i) such Accounts are subject to the first priority, valid and
perfected security interest of Agent and any goods giving rise thereto are not,
and were not at the time of the sale thereof, subject to any liens except those
permitted in this Agreement that are subject to an intercreditor agreement in
form and substance satisfactory to Agent between the holder of such security
interest or lien and Agent;
(j) neither the account debtor nor any officer or employee of the
account debtor with respect to such Accounts is an officer, employee, agent or
other Affiliate of any Borrower or Guarantor;
(k) the account debtors with respect to such Accounts are not any
foreign government, the United States of America, any State, political
subdivision, department, agency or instrumentality thereof, unless, if the
account debtor is the United States of America, any State, political
subdivision, department, agency or instrumentality thereof, upon Agent's
request, the Federal Assignment of Claims Act of 1940, as amended or any similar
State or local law, if applicable, has been complied with in a manner
satisfactory to Agent;
(l) there are no proceedings or actions which are threatened or
pending against the account debtors with respect to such Accounts which might
result in any material adverse change in any such account debtor's financial
condition (including, without limitation, any bankruptcy, dissolution,
liquidation, reorganization or similar proceeding);
(m) the aggregate amount of such Accounts owing by a single account
debtor (other than Chiptronics, Computer Sciences Corporation, General Dynamics,
Inc., and IBM Corporation) do not constitute more than ten (10%) percent of the
aggregate amount of all otherwise Eligible Accounts and such Accounts owing by
Chiptronics do not constitute more than the percentage set forth in Section
1.29(n) below of all otherwise Eligible Accounts, and the aggregate amount of
such Accounts owing by Computer Sciences Corporation and General Dynamics, Inc.
do not exceed more than fifteen (15%) percent of all otherwise Eligible
Accounts, and such Accounts owing by IBM Corporation do not exceed more than
twenty-five (25%) percent of all otherwise Eligible Accounts (but the portion of
the Accounts not in excess of the applicable percentages may be deemed Eligible
Accounts);
(n) the aggregate amount of such Accounts owing by Chiptronics
satisfy each of the following additional conditions: (i) in no event shall
Accounts owing by Chiptronics to Borrowers that exceed the lesser of: (A)
$13,000,000 or (B) the amount equal to eighteen (18%) percent of all Eligible
Accounts, be deemed to be Eligible Accounts, (ii) in no event shall the
aggregate amount of Accounts owing by Chiptronics to Borrowers that are deemed
to be Eligible Accounts exceed the amount equal to ninety-eight (98%) percent of
the amount of the accounts owing to Chiptronics from its customers (net of
sales, excise or similar taxes included in the amount thereof and returns,
discounts, claims, credits and allowances) that have received a written notice,
in form and substance satisfactory to Agent, of the security interest and lien
of Agent in such accounts owing to Chiptronics with instructions to make
payments to a deposit account subject to a Deposit Account Control Agreement and
that if owned by a Borrower would constitute Eligible Accounts, (iii) Agent
shall have received a guarantee by Chiptronics of the Obligations, duly
authorized, executed and delivered by it, in form and substance satisfactory to
Agent, and such guarantee shall be in full force and effect and Chiptronics
shall not have revoked or terminated such guarantee or purported to revoke or
terminate such guarantee or claimed that it has no liability thereunder or
raised any defenses or counterclaims with respect thereto, (iv) Agent shall at
all times have a first priority security interest in and lien upon the accounts
and related assets of Chiptronics pursuant to a security agreement by
Chiptronics in favor of Agent, duly authorized, executed and delivered by
Chiptronics, in form and substance satisfactory to Agent, (v)
7
all payments by account debtors or other obligors in respect of accounts,
payment intangibles and supporting obligations in respect thereof of Chiptronics
shall be made directly to a deposit account that is subject to a Deposit Account
Control Agreement that has been duly authorized, executed and delivered by the
bank at which such deposit account is maintained, Chiptronics and Turtle
Mountain;
(o) such Accounts are not owed by an account debtor who has Accounts
unpaid more than the earlier of sixty (60) days after the original due date for
them or ninety (90) days after the original invoice date for them which
constitute more than fifty (50%) percent of the total Accounts of such account
debtor;
(p) the account debtor is not located in a state requiring the filing
of a Notice of Business Activities Report or similar report in order to permit
such Borrower to seek judicial enforcement in such State of payment of such
Account, unless such Borrower has qualified to do business in such state or has
filed a Notice of Business Activities Report or equivalent report for the then
current year or such failure to file and inability to seek judicial enforcement
is capable of being remedied without any material delay or material cost;
(q) such Accounts do not arise from the initial setup costs to
produce circuit boards (sometimes referred to as "tooling"), unless such
Accounts arise from the final billing for such setup costs and Agent has
received evidence, in form and substance satisfactory to Agent, that such
tooling has been unconditionally and finally accepted by the account debtor with
respect thereto;
(r) such Accounts are owed by account debtors whose total
indebtedness to such Borrower does not exceed the credit limit with respect to
such account debtors as determined by such Borrower from time to time, to the
extent such credit limit as to any account debtor is established consistent with
the current practices of such Borrower as of the date hereof and such credit
limit is acceptable to Agent in good faith (but the portion of the Accounts not
in excess of such credit limit may be deemed Eligible Accounts); and
(s) such Accounts are owed by account debtors deemed creditworthy at
all times by Agent in good faith.
The criteria for Eligible Accounts set forth above may only be changed and any
new criteria for Eligible Accounts may only be established by Agent in good
faith based on either: (i) an event, condition or other circumstance arising
after the date hereof, or (ii) an event, condition or other circumstance
existing on the date hereof to the extent Agent has no written notice thereof
from a Borrower prior to the date hereof, in either case under clause (i) or
(ii) which adversely affects or could reasonably be expected to adversely affect
the Accounts in the good faith determination of Agent. Any Accounts which are
not Eligible Accounts shall nevertheless be part of the Collateral.
1.30 "Eligible Inventory" shall mean, as to each of Parent and Turtle
Mountain, Inventory of such Borrower consisting of finished goods held for
resale in the ordinary course of the business of such Borrower and raw materials
for such finished goods, in each case which are acceptable to Agent based on the
criteria set forth below. In general, Eligible Inventory shall not include (a)
work-in-process; (b) components which are not part of finished goods; (c) spare
parts for equipment; (d) packaging and shipping materials; (e) supplies used or
consumed in such Borrower's business; (f) Inventory at premises other than those
owned or leased and controlled by any Borrower; provided, that, (i) as to
locations which are leased by a Borrower, if Agent shall not have received a
Collateral Access Agreement from the owner and lessor with respect to such
location, duly authorized, executed and delivered by such owner and lessor (or
Agent shall determine to accept a Collateral Access Agreement that does not
include all required provisions or provisions in the form otherwise required by
Agent), Agent may, at its option, establish such Reserves in respect of amounts
at any time due or to become due to the owner and lessor thereof as Agent shall
determine, and (ii) as to locations owned and operated by a third person, if
Agent shall not have received a Collateral Access Agreement from the owner and
operator with respect to such location, duly authorized, executed and delivered
by such owner and operator (or Agent shall determine to accept a Collateral
Access Agreement that does not include all required provisions or provisions in
the form otherwise required by Agent), Agent may, at its option, establish such
Reserves in respect of amounts at any time due or to become due to the owner and
operator thereof as Agent shall determine, provided that, in addition, if
required by Agent, in order for such Inventory at
8
locations owned and operated by a third person to be Eligible Inventory, Agent
shall have received: (A) UCC financing statements between the owner and
operator, as consignee or bailee and such Borrower, as consignor or xxxxxx, in
form and substance satisfactory to Agent, which are duly assigned to Agent and
(B) a written notice to any lender to the owner and operator of the first
priority security interest in such Inventory of Agent; (g) Inventory subject to
a security interest or lien in favor of any Person other than Agent except those
permitted in this Agreement that are subject to an intercreditor agreement in
form and substance satisfactory to Agent between the holder of such security
interest or lien and Agent; (h) xxxx and hold goods; (i) unserviceable, obsolete
or slow moving Inventory (including P99 Parts, MRB and non-nettables); (j)
Inventory which is not subject to the first priority, valid and perfected
security interest of Agent; (k) returned, damaged and/or defective Inventory
(including subassembly parts); (l) Inventory purchased or sold on consignment;
(m) Inventory located outside the United States of America; (n) Inventory
produced for or on behalf of a customer that has (i) terminated its arrangements
with a Borrower or (ii) either given notice to a Borrower or to whom a Borrower
has given notice of its intention to terminate its arrangements with such
Borrower and (o) as to Inventory consisting of raw materials and finished goods,
the amount of the Inventory on hand for any customer that exceeds the amount
equal to the sum of (i) the amount of Inventory that such customer projects will
be purchased by such customer from a Borrower in the forecasts of such purchases
that have been provided by such customer to a Borrower for the time period
consistent with such customer's current practices as of the date hereof (or such
shorter time period as the customer or a Borrower may elect) plus (ii) the
amount of the Inventory then on hand subject to existing valid and binding
purchase orders received by such Borrower from such customer. The criteria for
Eligible Inventory set forth above may only be changed and any new criteria for
Eligible Inventory may only be established by Agent in good faith based on
either: (i) an event, condition or other circumstance arising after the date
hereof, or (ii) an event, condition or other circumstance existing on the date
hereof to the extent Agent has no written notice thereof from a Borrower prior
to the date hereof, in either case under clause (i) or (ii) which adversely
affects or could reasonably be expected to adversely affect the Inventory in the
good faith determination of Agent. Any Inventory which is not Eligible Inventory
shall nevertheless be part of the Collateral.
1.31 "Eligible Transferee" shall mean (a) any Lender; (b) the parent
company of any Lender and/or any Affiliate of such Lender which is at least
fifty (50%) percent owned by such Lender or its parent company; (c) any person
(whether a corporation, partnership, trust or otherwise) that is engaged in the
business of making, purchasing, holding or otherwise investing in bank loans and
similar extensions of credit in the ordinary course of its business that Agent
determines in good faith has the capability of making revolving loans and is
administered or managed by a Lender or with respect to any Lender that is a fund
which invests in bank loans and similar extensions of credit, any other fund
that invests in bank loans and similar extensions of credit and is managed by
the same investment advisor as such Lender or by an Affiliate of such investment
advisor, that together with affiliated funds has total assets in excess of
$100,000,000 that Agent determines in good faith has the capability of making
revolving loans and in each case is approved by Agent; and (d) any other
commercial bank, financial institution or "accredited investor" (as defined in
Regulation D under the Securities Act of 1933) that has total assets in excess
of $100,000,000 and is approved by Agent, provided, that, (i) neither any
Borrower nor any Guarantor or any Affiliate of any Borrower or Guarantor shall
qualify as an Eligible Transferee and (ii) no Person to whom any Indebtedness
which is in any way subordinated in right of payment to any other Indebtedness
of any Borrower or Guarantor shall qualify as an Eligible Transferee, except as
Agent may otherwise specifically agree.
1.32 "Environmental Laws" shall mean all foreign, Federal, State and local
laws (including common law), legislation, rules, codes, licenses, permits
(including any conditions imposed therein), authorizations, judicial or
administrative decisions, injunctions or agreements between any Borrower or
Guarantor and any Governmental Authority, (a) relating to pollution and the
protection, preservation or restoration of the environment (including air, water
vapor, surface water, ground water, drinking water, drinking water supply,
surface land, subsurface land, plant and animal life or any other natural
resource), or to human health or safety, (b) relating to the exposure to, or the
use, storage, recycling, treatment, generation, manufacture, processing,
distribution, transportation, handling, labeling, production, release or
disposal, or threatened release, of Hazardous Materials, or (c) relating to all
laws with regard to recordkeeping, notification, disclosure and reporting
requirements respecting Hazardous Materials. The term "Environmental Laws"
includes (i) the Federal Comprehensive Environmental Response, Compensation and
Liability Act of 1980, the Federal Superfund Amendments and Reauthorization Act,
the Federal Water Pollution Control Act of 1972, the Federal Clean Water Act,
the Federal Clean Air Act, the Federal Resource Conservation
9
and Recovery Act of 1976 (including the Hazardous and Solid Waste Amendments
thereto), the Federal Solid Waste Disposal and the Federal Toxic Substances
Control Act, the Federal Insecticide, Fungicide and Rodenticide Act, and the
Federal Safe Drinking Water Act of 1974, (ii) applicable state counterparts to
such laws and (iii) any common law or equitable doctrine that may impose
liability or obligations for injuries or damages due to, or threatened as a
result of, the presence of or exposure to any Hazardous Materials.
1.33 "Equipment" shall mean, as to each Borrower and Guarantor, all of such
Borrower's and Guarantor's now owned and hereafter acquired equipment, wherever
located, including machinery, data processing and computer equipment (whether
owned or licensed and including embedded software), vehicles, tools, furniture,
fixtures, all attachments, accessions and property now or hereafter affixed
thereto or used in connection therewith, and substitutions and replacements
thereof, wherever located.
1.34 "ERISA" shall mean the Employee Retirement Income Security Act of
1974, together with all rules, regulations and interpretations thereunder or
related thereto.
1.35 "ERISA Affiliate" shall mean any person required to be aggregated with
any Borrower, any Guarantor or any of its or their respective Subsidiaries under
Sections 414(b), 414(c), 414(m) or 414(o) of the Code.
1.36 "ERISA Event" shall mean (a) any "reportable event", as defined in
Section 4043(c) of ERISA or the regulations issued thereunder, with respect to a
Plan; (b) the adoption of any amendment to a Plan that would require the
provision of security pursuant to Section 401(a)(29) of the Code or Section 307
of ERISA; (c) the existence with respect to any Plan of an "accumulated funding
deficiency" (as defined in Section 412 of the Code or Section 302 of ERISA),
whether or not waived; (d) the filing pursuant to Section 412 of the Code or
Section 303(d) of ERISA of an application for a waiver of the minimum funding
standard with respect to any Plan; (e) the occurrence of a "prohibited
transaction" with respect to which any Borrower, Guarantor or any of its or
their respective Subsidiaries is a "disqualified person" (within the meaning of
Section 4975 of the Code) or with respect to which any Borrower, Guarantor or
any of its or their respective Subsidiaries could otherwise be liable; (f) a
complete or partial withdrawal by any Borrower, Guarantor or any ERISA Affiliate
from a Multiemployer Plan or a cessation of operations which is treated as such
a withdrawal or notification that a Multiemployer Plan is in reorganization; (g)
the filing of a notice of intent to terminate, the treatment of a Plan amendment
as a termination under Section 4041 or 4041A of ERISA, or the commencement of
proceedings by the Pension Benefit Guaranty Corporation to terminate a Plan; (h)
an event or condition which might reasonably be expected to constitute grounds
under Section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Plan; (i) the imposition of any liability under Title
IV of ERISA, other than the Pension Benefit Guaranty Corporation premiums due
but not delinquent under Section 4007 of ERISA, upon any Borrower, Guarantor or
any ERISA Affiliate in excess of $100,000 and (j) any other event or condition
with respect to a Plan including any Plan subject to Title IV of ERISA
maintained, or contributed to, by any ERISA Affiliate that could reasonably be
expected to result in liability of any Borrower in excess of $500,000.
1.37 "Eurodollar Rate" shall mean with respect to the Interest Period for a
Eurodollar Rate Loan, the interest rate per annum equal to the arithmetic
average of the rates of interest per annum (rounded upwards, if necessary, to
the next one-sixteenth (1/16) of one (1%) percent) at which Reference Bank is
offered deposits of United States dollars in the London interbank market (or
other Eurodollar Rate market selected by a Borrower or Administrative Borrower
on behalf of such Borrower and approved by Agent) on or about 9:00 a.m. (New
York time) two (2) Business Days prior to the commencement of such Interest
Period in amounts substantially equal to the principal amount of the Eurodollar
Rate Loans requested by and available to such Borrower in accordance with this
Agreement, with a maturity of comparable duration to the Interest Period
selected by or on behalf of a Borrower.
1.38 "Eurodollar Rate Loans" shall mean any Loans or portion thereof on
which interest is payable based on the Adjusted Eurodollar Rate in accordance
with the terms hereof.
1.39 "Event of Default" shall mean the occurrence or existence of any event
or condition described in Section 10.1 hereof.
10
1.40 "Excess Availability" shall mean, as to each Borrower, the amount, as
determined by Agent, calculated at any date, equal to: (a) the lesser of: (i)
the Borrowing Base of such Borrower and (ii) the Loan Limit of such Borrower (in
each case under (i) or (ii) after giving effect to any Reserves other than any
Reserves in respect of Letter of Credit Accommodations), minus (b) the sum of:
(i) the amount of all then outstanding and unpaid Obligations of such Borrower
(but not including for this purpose Obligations of such Borrower arising
pursuant to any guarantees in favor of Agent and Lenders of the Obligations of
the other Borrowers), plus (ii) the amount of all Reserves then established in
respect of Letter of Credit Accommodations, plus (iii) the aggregate amount of
all then outstanding and unpaid trade payables and other obligations of such
Borrower which are outstanding more than sixty (60) days past due as of such
time (other than trade payables or other obligations being contested or disputed
by such Borrower in good faith), plus (iv) without duplication, the amount of
checks issued by such Borrower to pay trade payables and other obligations which
are more than sixty (60) days past due as of such time (other than trade
payables or other obligations being contested or disputed by such Borrower in
good faith), but not yet sent.
1.41 "Exchange Act" shall mean the Securities Exchange Act of 1934,
together with all rules, regulations and interpretations thereunder or related
thereto.
1.42 "Existing Lenders" shall mean, collectively, together with their
prdecessors, successors and assigns: (a) U.S. Bank National Association and (b)
IBM Credit LLC, formerly IBM Credit Corporation; sometimes being referred to
herein individually as an "Existing Lender".
1.43 "Existing Letters of Credit" shall mean, collectively, the letters of
credit issued for the account of a Borrower or Guarantor or for which such
Borrower or Guarantor is otherwise liable listed on Schedule 1.43 hereto, as the
same now exist or may hereafter be amended, modified, supplemented, extended,
renewed, restated or replaced.
1.44 "Fee Letter" shall mean the letter agreement, dated of even date
herewith, by and among Borrowers, Guarantor and Agent, setting forth certain
fees payable by Borrowers to Agent for the benefit of itself and Lenders, as the
same now exists or may hereafter be amended, modified, supplemented, extended,
renewed, restated or replaced.
1.45 "Financing Agreements" shall mean, collectively, this Agreement and
all notes, guarantees, security agreements, deposit account control agreements,
investment property control agreements, intercreditor agreements and all other
agreements, documents and instruments now or at any time hereafter executed
and/or delivered by any Borrower or Obligor in connection with this Agreement.
1.46 "Foreign Subsidiary" shall mean any Subsidiary of Parent organized or
incorporated under the laws of any jurisdiction outside the United States and
which has substantially all of its assets outside the United States.
1.47 "Funded Debt" shall mean, with respect to any person, any Indebtedness
of such person and its Subsidiaries (without duplication) consisting of any
liability (a) in respect of borrowed money (whether or not the recourse of the
lender is to the whole of the assets of such Person or only to a portion
thereof) or evidenced by bonds, notes, debentures or similar instruments; (b)
representing the balance deferred and unpaid of the purchase price of any
property or services (except any such balance that constitutes an account
payable to a trade creditor (whether or not an Affiliate) created, incurred,
assumed or guaranteed by such Person in the ordinary course of business of such
Person in connection with obtaining goods, materials or services that is not
overdue by more than ninety (90) days, unless the trade payable is being
contested in good faith); and (c) all obligations as lessee under leases which
have been, or should be, in accordance with GAAP recorded as Capital Leases.
1.48 "GAAP" shall mean generally accepted accounting principles in the
United States of America as in effect from time to time as set forth in the
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and the statements and pronouncements
of the Financial Accounting Standards Board which are applicable to the
circumstances as of the date of determination consistently applied, except that,
for purposes of Section 9.17 hereof and the calculation of the Leverage Ratio or
any component
11
thereof, GAAP shall be determined on the basis of such principles in effect on
the date hereof and consistent with those used in the preparation of the most
recent audited financial statements delivered to Agent prior to the date hereof.
1.49 "Governmental Authority" shall mean any nation or government, any
state, province, or other political subdivision thereof, any central bank (or
similar monetary or regulatory authority) thereof, and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.
1.50 "Guarantor" shall mean Gentlelife, Inc., a California corporation,
formerly known as Kinderlife Instruments Inc., and it successors and assigns.
1.51 "Hazardous Materials" shall mean any hazardous, toxic or dangerous
substances, materials and wastes, including hydrocarbons (including naturally
occurring or man-made petroleum and hydrocarbons), flammable explosives,
asbestos, urea formaldehyde insulation, radioactive materials, biological
substances, polychlorinated biphenyls, pesticides, herbicides and any other kind
and/or type of pollutants or contaminants (including materials which include
hazardous constituents), sewage, sludge, industrial slag, solvents and/or any
other similar substances, materials, or wastes and including any other
substances, materials or wastes that are or become regulated under any
Environmental Law (including any that are or become classified as hazardous or
toxic under any Environmental Law).
1.52 "Indebtedness" shall mean, with respect to any Person, any liability,
whether or not contingent, (a) in respect of borrowed money (whether or not the
recourse of the lender is to the whole of the assets of such Person or only to a
portion thereof) or evidenced by bonds, notes, debentures or similar
instruments; (b) representing the balance deferred and unpaid of the purchase
price of any property or services (except any such balance that constitutes an
account payable to a trade creditor (whether or not an Affiliate) created,
incurred, assumed or guaranteed by such Person in the ordinary course of
business of such Person in connection with obtaining goods, materials or
services that is not overdue by more than ninety (90) days, unless the trade
payable is being contested in good faith); (c) all obligations as lessee under
leases which have been, or should be, in accordance with GAAP recorded as
Capital Leases; (d) any contractual obligation, contingent or otherwise, of such
Person to pay or be liable for the payment of any indebtedness described in this
definition of another Person, including, without limitation, any such
indebtedness, directly or indirectly guaranteed, or any agreement to purchase,
repurchase, or otherwise acquire such indebtedness, obligation or liability or
any security therefor, or to provide funds for the payment or discharge thereof,
or to maintain solvency, assets, level of income, or other financial condition;
(e) all obligations with respect to redeemable stock and redemption or
repurchase obligations under any Capital Stock or other equity securities issued
by such Person; (f) all reimbursement obligations and other liabilities of such
Person with respect to surety bonds (whether bid, performance or otherwise),
letters of credit, banker's acceptances, drafts or similar documents or
instruments issued for such Person's account; (g) all indebtedness of such
Person in respect of indebtedness of another Person for borrowed money or
indebtedness of another Person otherwise described in this definition which is
secured by any consensual lien, security interest, collateral assignment,
conditional sale, mortgage, deed of trust, or other encumbrance on any asset of
such Person, whether or not such obligations, liabilities or indebtedness are
assumed by or are a personal liability of such Person, all as of such time; (h)
all obligations, liabilities and indebtedness of such Person (marked to market)
arising under swap agreements, cap agreements and collar agreements and other
agreements or arrangements designed to protect such person against fluctuations
in interest rates or currency or commodity values; and (i) all obligations owed
by such Person under License Agreements with respect to non-refundable, advance
or minimum guarantee royalty payments.
1.53 "Information Certificate" shall mean the Information Certificates of
Borrowers and Guarantor constituting Exhibit C hereto containing material
information with respect to Borrowers and Guarantor, their respective businesses
and assets provided by or on behalf of Borrowers and Guarantor to Agent in
connection with the preparation of this Agreement and the other Financing
Agreements and the financing arrangements provided for herein.
1.54 "Intellectual Property" shall mean, as to each Borrower and Guarantor,
such Borrower's and Guarantor's now owned and hereafter arising or acquired:
patents, patent rights, patent applications, patent
12
registrations, copyrights, works which are the subject matter of copyrights,
copyright applications, copyright registrations, trademarks, trade names, trade
styles, trademark and service xxxx applications, trademark registrations and
licenses and rights to use any of the foregoing; all extensions, renewals,
reissues, divisions, continuations, and continuations-in-part of any of the
foregoing; all rights to xxx for past, present and future infringement of any of
the foregoing; inventions, trade secrets, formulae, processes, compounds,
drawings, designs, blueprints, surveys, reports, manuals, and operating
standards; goodwill (including any goodwill associated with any trademark or the
license of any trademark); customer and other lists in whatever form maintained;
trade secret rights, copyright rights, rights in works of authorship, domain
names and domain name registration; software and contract rights relating to
computer software programs, in whatever form created or maintained.
1.55 "Interest Expense" shall mean, for any period, as to any Person, as
determined in accordance with GAAP, the total interest expense of such Person,
whether paid or accrued during such period (including the interest component of
Capital Leases for such period), including, without limitation, discounts in
connection with the sale of any Accounts, but excluding interest paid in
property other than cash and any other interest expense not payable in cash.
1.56 "Interest Period" shall mean for any Eurodollar Rate Loan, a period of
approximately one (1), two (2), or three (3) months duration as any Borrower (or
Administrative Borrower on behalf of such Borrower) may elect, the exact
duration to be determined in accordance with the customary practice in the
applicable Eurodollar Rate market; provided, that, such Borrower (or
Administrative Borrower on behalf of such Borrower) may not elect an Interest
Period which will end after the last day of the then-current term of this
Agreement.
1.57 "Interest Rate" shall mean,
(a) Subject to clauses (b) and (c) of this definition below:
(i) as to Prime Rate Loans, a rate equal to one and
one-quarter (1 1/4%) percent in excess of the Prime Rate calculated on a per
annum basis,
(ii) as to Eurodollar Rate Loans, a rate equal to three and
one-quarter (3 1/4%) percent in excess of the Adjusted Eurodollar Rate
calculated on a per annum basis (in each case, based on the Eurodollar Rate
applicable for the Interest Period selected by a Borrower, or by Administrative
Borrower on behalf of such Borrower, as in effect three (3) Business Days after
the date of receipt by Agent of the request of or on behalf of such Borrower for
such Eurodollar Rate Loans in accordance with the terms hereof, whether such
rate is higher or lower than any rate previously quoted to any Borrower or
Guarantor).
(b) Subject to clause (c) of this definition below, effective as of
the first (1st) day of the second month of each fiscal quarter (commencing with
the fiscal quarter ending on or about June 30, 2003), the Interest Rate payable
by each Borrower shall be increased or decreased, as the case may be, (i) as to
Prime Rate Loans, to the rate equal to the Applicable Margin on a per annum
basis in excess of the Prime Rate, and (ii) as to Eurodollar Rate Loans, to the
rate equal to the Applicable Margin on a per annum basis in excess of the
Adjusted Eurodollar Rate.
(c) Notwithstanding anything to the contrary contained in clauses
(a) and (b) of this definition, the Applicable Margin otherwise used to
calculate the Interest Rate for Prime Rate Loans and Eurodollar Rate Loans shall
be the highest percentage set forth in the definition of the term Applicable
Margin for each category of Loans (without regard to the amount of Quarterly
Average Excess Availability or the Leverage Ratio) plus two (2%) percent per
annum, at Agent's option, without notice, (i) for the period (A) from and after
the effective date of termination or non-renewal hereof until Agent and Lenders
have received full and final payment of all outstanding and unpaid Obligations
which are not contingent and cash collateral or letter of credit, as Agent may
specify, in the amounts and on the terms required under Section 13.1 hereof for
contingent Obligations (notwithstanding entry of a judgment against any Borrower
or Guarantor) and (B) from and after the date of the occurrence of an Event of
Default and for so long as such Event of Default is continuing as determined by
Agent and (ii) on Loans to any Borrower at any time outstanding in excess of the
Borrowing Base of such Borrower or the Loan Limit of such
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Borrower (whether or not such excess(es) arise or are made with or without
Agent's or any Lender's knowledge or consent and whether made before or after an
Event of Default).
1.58 "Inventory" shall mean, as to each Borrower and Guarantor, all of such
Borrower's and Guarantor's now owned and hereafter existing or acquired goods,
wherever located, which (a) are leased by such Borrower or Guarantor as lessor;
(b) are held by such Borrower for sale or lease or to be furnished under a
contract of service; (c) are furnished by such Borrower or Guarantor under a
contract of service; or (d) consist of raw materials, work in process, finished
goods or materials used or consumed in its business.
1.59 "Inventory Loan Limit" shall mean, as to each Borrower, at any time,
the amount equal to $25,000,000 minus the then outstanding principal amount of
Loans to the other Borrowers based on Eligible Inventory (and including Letter
of Credit Accommodations to the extent provided in the definition of the term
Borrowing Base).
1.60 "Investment Property Control Agreement" shall mean an agreement in
writing, in form and substance satisfactory to Agent, by and among Agent, any
Borrower or Guarantor (as the case may be) and any securities intermediary,
commodity intermediary or other person who has custody, control or possession of
any investment property of such Borrower or Guarantor acknowledging that such
securities intermediary, commodity intermediary or other person has custody,
control or possession of such investment property on behalf of Agent, that it
will comply with entitlement orders originated by Agent with respect to such
investment property, or other instructions of Agent, or (as the case may be)
apply any value distributed on account of any commodity contract as directed by
Agent, in each case, without the further consent of such Borrower or Guarantor
and including such other terms and conditions as Agent may require.
1.61 "Lenders" shall mean the financial institutions who are signatories
hereto as Lenders and other persons made a party to this Agreement as a Lender
in accordance with Section 13.7 hereof, and their respective successors and
assigns; each sometimes being referred to herein individually as a "Lender".
1.62 "Letter of Credit Accommodations" shall mean, collectively, the
letters of credit, merchandise purchase or other guaranties which are from time
to time either (a) issued or opened by Agent or any Lender for the account of
any Borrower or Obligor or (b) with respect to which Agent or Lenders have
agreed to indemnify the issuer or guaranteed to the issuer the performance by
any Borrower or Obligor of its obligations to such issuer; sometimes being
referred to herein individually as "Letter of Credit Accommodation".
1.63 "Leverage Ratio" shall mean, at any time, as to Parent and its
Subsidiaries (on a consolidated basis), the ratio of: (a) the Funded Debt of
Parent and its Subsidiaries (on a consolidated basis) as of such time (and
including for this purpose, (i) the Indebtedness of Parent evidenced by or
arising under the Subordinated Notes, (ii) all Funded Debt of any Subsidiary of
any Borrower, and (iii) the Obligations) to (b) the EBITDA of Parent and its
Subsidiaries (on a consolidated basis) for the four (4) immediately preceding
fiscal quarters of such Person (treated as a single accounting period). For
purposes hereof, Funded Debt shall include intercompany Indebtedness owing by
Parent or any Subsidiary of Parent to another Subsidiary or to Parent on a net
basis.
1.64 "License Agreements" shall have the meaning set forth in Section 8.11
hereof.
1.65 "Loan Limit" shall mean, as to each Borrower, at any time, the amount
equal to the Maximum Credit minus the then outstanding principal amount of the
Loans and the Letter of Credit Accommodations provided to the other Borrowers.
1.66 "Loans" shall mean the loans now or hereafter made by or on behalf of
any Lender or by Agent for the account of any Lender on a revolving basis
pursuant to the Credit Facility (involving advances, repayments and readvances)
as set forth in Section 2.1 hereof.
1.67 "Material Adverse Effect" shall mean a material adverse effect on (a)
the financial condition, business, performance or operations of Borrowers or the
legality, validity or enforceability of this Agreement or any
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of the other Financing Agreements; (b) the legality, validity, enforceability,
perfection or priority of the security interests and liens of Agent upon the
Collateral; (c) the Collateral or its value, (d) the ability of any Borrower to
repay the Obligations or of any Borrower to perform its obligations under this
Agreement or any of the other Financing Agreements as and when to be performed;
or (e) the ability of Agent or any Lender to enforce the Obligations or realize
upon the Collateral or otherwise with respect to the rights and remedies of
Agent and Lenders under this Agreement or any of the other Financing Agreements.
1.68 "Material Contract" shall mean (a) any contract or other agreement
(other than the Financing Agreements), written or oral, of any Borrower or
Guarantor involving monetary liability of or to any Person in an amount in
excess of $1,000,000 in any fiscal year and (b) any other contract or other
agreement (other than the Financing Agreements), whether written or oral, to
which any Borrower or Guarantor is a party as to which the breach,
nonperformance, cancellation or failure to renew by any party thereto would have
a Material Adverse Effect.
1.69 "Maximum Credit" shall mean the amount of $80,000,000.
1.70 "Mortgages" shall mean, individually and collectively, each of the
following (as the same now exist or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced): (a) the Mortgage,
Security Agreement and Assignment of Rents and Leases, dated of even date
herewith, by Parent in favor of Agent with respect to the Real Property and
related assets of such Borrower located in Rochester, Minnesota and (b) the
Mortgage, Security Agreement and Assignment of Rents and Leases, dated of even
date herewith, by Parent in favor of Agent with respect to the Real Property and
related assets of such Borrower located in Dunseith, North Dakota.
1.71 "Multiemployer Plan" shall mean a "multi-employer plan" as defined in
Section 4001(a)(3) of ERISA which is or was at any time during the current year
or the immediately preceding six (6) years contributed to by any Borrower,
Guarantor or any ERISA Affiliate.
1.72 "Net Amount of Eligible Accounts" shall mean, as to any Borrower, the
gross amount of the Eligible Accounts of such Borrower less (a) sales, excise or
similar taxes included in the amount thereof and (b) returns, discounts, claims,
credits and allowances of any nature at any time issued, owing, granted,
outstanding, available or claimed with respect thereto.
1.73 "Net Proceeds" shall mean the aggregate cash proceeds payable to any
Borrower or Guarantor in respect of any sale, lease, transfer or other
disposition of any assets or properties, or interest in assets and properties or
as proceeds of any loans or other financial accommodations provided to any
Borrower or Guarantor, in each case net of the direct costs relating to such
sale, lease, transfer or other disposition or loans or other financial
accommodation (including, without limitation, legal, accounting and investment
banking fees, and sales commissions) and taxes paid or payable as a result
thereof (after taking into account any available tax credits or deductions and
any tax sharing arrangements), and amounts applied to the repayment of
indebtedness secured by lien on the asset or assets that are the subject of such
sale or other disposition required to be repaid in connection with such
transaction. Net Proceeds shall exclude any non-cash proceeds received from any
sale or other disposition, but shall include such proceeds when and as converted
by any Borrower or Subsidiary of Borrower to cash or other immediately available
funds.
1.74 "Net Recovery Percentage" shall mean the fraction, expressed as a
percentage, (a) the numerator of which is the amount equal to the amount of the
recovery in respect of the Inventory at such time a "net orderly liquidation
value--existing channels" basis as set forth in the most recent acceptable
appraisal of Inventory received by Agent in accordance with Section 7.3, net of
operating expenses, liquidation expenses and commissions, and (b) the
denominator of which is the applicable original cost of the aggregate amount of
the Inventory subject to such appraisal.
1.75 "Obligations" shall mean any and all Loans, Letter of Credit
Accommodations and all other obligations, liabilities and indebtedness of every
kind, nature and description owing by any or all of Borrowers to Agent or any
Lender and/or any of their Affiliates, including principal, interest, charges,
fees, costs and expenses, however evidenced, whether as principal, surety,
endorser, guarantor or otherwise, arising under this Agreement or
15
any of the other Financing Agreements, whether now existing or hereafter
arising, whether arising before, during or after the initial or any renewal term
of this Agreement or after the commencement of any case with respect to such
Borrower under the United States Bankruptcy Code or any similar statute
(including the payment of interest and other amounts which would accrue and
become due but for the commencement of such case, whether or not such amounts
are allowed or allowable in whole or in part in such case), whether direct or
indirect, absolute or contingent, joint or several, due or not due, primary or
secondary, liquidated or unliquidated, or secured or unsecured.
1.76 "Obligor" shall mean any guarantor, endorser, acceptor, surety or
other person liable on or with respect to the Obligations or who is the owner of
any property which is security for the Obligations (including, without
limitation, Guarantor), other than Borrowers.
1.77 "Parent" shall mean Pemstar, Inc., a Minnesota corporation, and its
successors and assigns.
1.78 "Participant" shall mean any financial institution that acquires and
holds a participation in the interest of any Lender in any of the Loans and
Letter of Credit Accommodations in conformity with the provisions of Section
13.7 of this Agreement governing participations.
1.79 "Person" or "person" shall mean any individual, sole proprietorship,
partnership, corporation (including any corporation which elects subchapter S
status under the Code), limited liability company, limited liability
partnership, business trust, unincorporated association, joint stock
corporation, trust, joint venture or other entity or any government or any
agency or instrumentality or political subdivision thereof.
1.80 "Plan" means an employee benefit plan (as defined in Section 3(3) of
ERISA) which any Borrower or Guarantor sponsors, maintains, or to which it
makes, is making, or is obligated to make contributions, or in the case of a
Multiemployer Plan has made contributions at any time during the immediately
preceding six (6) plan years.
1.81 "Prime Rate" shall mean the rate from time to time publicly announced
by Wachovia Bank, National Association, or its successors, as its prime rate,
whether or not such announced rate is the best rate available at such bank.
1.82 "Prime Rate Loans" shall mean any Loans or portion thereof on which
interest is payable based on the Prime Rate in accordance with the terms
thereof.
1.83 "Pro Rata Share" shall mean as to any Lender, the fraction (expressed
as a percentage) the numerator of which is such Lender's Commitment and the
denominator of which is the aggregate amount of all of the Commitments of
Lenders, as adjusted from time to time in accordance with the provisions of
Section 13.7 hereof; provided, that , if the Commitments have been terminated,
the numerator shall be the unpaid amount of such Lender's Loans and its interest
in the Letter of Credit Accommodations and the denominator shall be the
aggregate amount of all unpaid Loans and Letter of Credit Accommodations.
1.84 "Provision for Taxes" shall mean an amount equal to all taxes imposed
on or measured by net income, whether Federal, State, Provincial, county or
local, and whether foreign or domestic, that are paid or payable by any Person
in respect of any period in accordance with GAAP.
1.85 "Quarterly Average Excess Availability" shall mean, at any time, the
daily average of the aggregate amount of the Excess Availability of Borrowers
for the immediately preceding fiscal quarter as calculated by Agent in good
faith.
1.86 "Real Property" shall mean all now owned and hereafter acquired real
property of each Borrower and Guarantor, including leasehold interests, together
with all buildings, structures, and other improvements located thereon and all
licenses, easements and appurtenances relating thereto, wherever located,
including the real property and related assets more particularly described in
the Mortgages.
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1.87 "Receivables" shall mean all of the following now owned or hereafter
arising or acquired property of each Borrower and Guarantor: (a) all Accounts;
(b) all interest, fees, late charges, penalties, collection fees and other
amounts due or to become due or otherwise payable in connection with any
Account; (c) all payment intangibles of such Borrower or Guarantor; (d) letters
of credit, indemnities, guarantees, security or other deposits and proceeds
thereof issued payable to any Borrower or Guarantor or otherwise in favor of or
delivered to any Borrower or Guarantor in connection with any Account; or (e)
all other accounts, contract rights, chattel paper, instruments, notes, general
intangibles and other forms of obligations owing to any Borrower or Guarantor,
whether from the sale and lease of goods or other property, licensing of any
property (including Intellectual Property or other general intangibles),
rendition of services or from loans or advances by any Borrower or Guarantor or
to or for the benefit of any third person (including loans or advances to any
Affiliates or Subsidiaries of any Borrower or Guarantor) or otherwise associated
with any Accounts, Inventory or general intangibles of any Borrower or Guarantor
(including, without limitation, choses in action, causes of action, tax refunds,
tax refund claims, any funds which may become payable to any Borrower or
Guarantor in connection with the termination of any Plan or other employee
benefit plan and any other amounts payable to any Borrower or Guarantor from any
Plan or other employee benefit plan, rights and claims against carriers and
shippers, rights to indemnification, business interruption insurance and
proceeds thereof, casualty or any similar types of insurance and any proceeds
thereof and proceeds of insurance covering the lives of employees on which any
Borrower or Guarantor is a beneficiary).
1.88 "Records" shall mean, as to each Borrower and Guarantor, all of such
Borrower's and Guarantor's present and future books of account of every kind or
nature, purchase and sale agreements, invoices, ledger cards, bills of lading
and other shipping evidence, statements, correspondence, memoranda, credit files
and other data relating to the Collateral or any account debtor, together with
the tapes, disks, diskettes and other data and software storage media and
devices, file cabinets or containers in or on which the foregoing are stored
(including any rights of any Borrower or Guarantor with respect to the foregoing
maintained with or by any other person).
1.89 "Reference Bank" shall mean Wachovia Bank, National Association, or
such other bank as Agent may from time to time designate.
1.90 "Renewal Date" shall the meaning set forth in Section 13.1 hereof.
1.91 "Register" shall have the meaning set forth in Section 13.7 hereof.
1.92 "Required Lenders" shall mean, at any time, those Lenders whose Pro
Rata Shares aggregate sixty-six and two-thirds (66 2/3%) percent or more of the
aggregate of the Commitments of all Lenders, or if the Commitments shall have
been terminated, Lenders to whom at least sixty-six and two-thirds (66 2/3%)
percent of the then outstanding Obligations are owing.
1.93 "Reserves" shall mean as of any date of determination, such amounts as
Agent may from time to time establish and revise in good faith reducing the
amount of Loans and Letter of Credit Accommodations which would otherwise be
available to any Borrower under the lending formula(s) provided for herein: (a)
to reflect events, conditions, contingencies or risks which, as determined by
Agent in good faith, adversely affect, or would have a reasonable likelihood of
adversely affecting, either (i) the Collateral or any other property which is
security for the Obligations or its value or (ii) the assets, business or
prospects of any Borrower or Obligor or (iii) the security interests and other
rights of Agent or any Lender in the Collateral (including the enforceability,
perfection and priority thereof) or (b) to reflect Agent's good faith belief
that any collateral report or financial information furnished by or on behalf of
any Borrower or Obligor to Agent is or may have been incomplete, inaccurate or
misleading in any material respect or (c) to reflect outstanding Letter of
Credit Accommodations as provided in Section 2.2 hereof or (d) in respect of any
state of facts which Agent determines in good faith constitutes a Default or an
Event of Default. Without limiting the generality of the foregoing, Reserves may
be established to reflect that dilution with respect to the Accounts of a
Borrower, or at Agent's option, a division or location of a Borrower as
currently operated by such Borrower (based on the ratio of the aggregate amount
of non-cash reductions in Accounts for any period to the aggregate dollar amount
of the sales of such Borrower for such period) as calculated by Agent for any
period is or is reasonably anticipated to be greater than five (5%) percent or
that the number of days of the turnover of the Inventory for any period has
adversely changed or the liquidation value of the Eligible Inventory, or any
17
category thereof, has decreased, including any decrease attributable to a change
in the nature, quality or mix of the Inventory. To the extent Agent may revise
the lending formulas used to determine the Borrowing Base or establish new
criteria or revise existing criteria for Eligible Accounts or Eligible Inventory
so as to address any circumstances, condition, event or contingency in a manner
satisfactory to Agent, Agent shall not establish a Reserve for the same purpose.
The amount of any Reserve established by Agent shall have a reasonable
relationship to the event, condition or other matter which is the basis for such
reserve as determined by Agent in good faith.
1.94 "Rochester IRB Agreements" shall mean, collectively, the Rochester
1997 IRB Agreements and the Rochester 1998 IRB Agreements.
1.95 "Rochester IRB Collateral" shall mean the cash collateral pledged by
Parent to U.S. Bank National Association held in account no. 30001301540830 at
U.S. Bank National Association in the name of US Bank National Association
Business Credit to secure the obligations of Parent under the Rochester IRB
Agreements.
1.96 "Rochester 1997 IRB Agreements" shall mean, collectively, the
following (as the same now exist or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced): (a) the Loan Agreement,
dated as of May 1, 1997, between the City of Rochester, Minnesota and Parent;
(b) the Indenture of Trust, dated as of May 1, 1997, between the City of
Rochester, Minnesota, as issuer and First Trust National Association, as
trustee; (c) Letter of Credit No. 76626, dated May 1, 1997, issued by First Bank
National Association payable to First Trust National Association as trustee; (c)
the Letter of Credit and Reimbursement Agreement, dated as of May 1, 1997, by
and among Parent, First Bank National Association and First Trust National
Association as trustee; and (d) all agreements, documents and instruments at any
time executed and/or delivered by a Borrower or Guarantor in connection with any
of the foregoing.
1.97 "Rochester 1998 IRB Agreements" shall mean, collectively, the
following (as the same now exist or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced): (a) the Loan Agreement,
dated as of June 1, 1998, between the City of Rochester, Minnesota and Parent;
(b) the Indenture of Trust, dated as of June 1, 1998, between the City of
Rochester, Minnesota, as issuer and U.S. Bank Trust National Association, as
trustee; (c) Letter of Credit No. SLCMMSP00109, dated June 4, 1998, issued by
U.S. Bank National Association payable to U.S. Bank Trust National Association
as trustee; (c) the Letter of Credit and Reimbursement Agreement, dated as of
June 1, 1998, by and among Parent, U.S. Bank National Association and U.S. Bank
Trust National Association as trustee; and (d) all agreements, documents and
instruments at any time executed and/or delivered by a Borrower or Guarantor in
connection with any of the foregoing.
1.98 "Rochester Real Property" shall mean the Real Property currently
owned by Parent located in Rochester, Minnesota and subject to the Mortgage with
respect thereto.
1.99 "Solvent" shall mean, at any time with respect to any Person, that at
such time such Person (a) is able to pay its debts as they mature and has (and
has a reasonable basis to believe it will continue to have) sufficient capital
(and not unreasonably small capital) to carry on its business consistent with
its practices as of the date hereof, and (b) the assets and properties of such
Person at a fair valuation (and including as assets for this purpose at a fair
valuation all rights of subrogation, contribution or indemnification arising
pursuant to any guarantees given by such Person) are greater than the
Indebtedness of such Person, and including subordinated and contingent
liabilities computed at the amount which, such person has a reasonable basis to
believe, represents an amount which can reasonably be expected to become an
actual or matured liability (and including as to contingent liabilities arising
pursuant to any guarantee the face amount of such liability as reduced to
reflect the probability of it becoming a matured liability).
1.100 "Special Agent Advances" shall have the meaning set forth in Section
12.11 hereof.
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1.101 "Subordinated Notes" shall mean the Subordinated Convertible Notes,
dated May 10, 2002, issued by Parent in the original aggregate principal amount
of $5,000,000 pursuant to the Subordinated Note Agreements, as the same now
exist or may hereafter be amended, modified, supplemented, extended, renewed,
restated or replaced.
1.102 "Subordinated Note Agreements" shall mean, collectively, the
following (as the same now exist or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced): (a) the Securities
Purchase Agreement, dated as of May 3, 2002, by and among Parent, Smithfield
Fiduciary LLC and Citadel Equity Fund Ltd., with each purchasing the principal
amount of $2,500,000; (b) the Subordinated Notes; (c) the letter agreement,
dated as of May 8, 2002, by and among Parent, Smithfield Fiduciary LLC and
Citadel Equity Fund, Ltd.; (d) the Warrants; (e) the Amendment and Termination
Agreement, dated as of July 18, 2002, by and among Parent, Smithfield Fiduciary
LLC and Citadel Equity Fund Ltd.; and (f) all other agreements, documents and
instruments now or at any time executed and/or delivered in connection
therewith.
1.103 "Subsidiary" or "subsidiary" shall mean, with respect to any Person,
any corporation, limited liability company, limited liability partnership or
other limited or general partnership, trust, association or other business
entity of which an aggregate of at least a majority of the outstanding Capital
Stock or other interests entitled to vote in the election of the board of
directors of such corporation (irrespective of whether, at the time, Capital
Stock of any other class or classes of such corporation shall have or might have
voting power by reason of the happening of any contingency), managers, trustees
or other controlling persons, or an equivalent controlling interest therein, of
such Person is, at the time, directly or indirectly, owned by such Person and/or
one or more subsidiaries of such Person.
1.104 "UCC" shall mean the Uniform Commercial Code as in effect in the
State of Illinois, and any successor statute, as in effect from time to time
(except that terms used herein which are defined in the Uniform Commercial Code
as in effect in the State of Illinois on the date hereof shall continue to have
the same meaning notwithstanding any replacement or amendment of such statute
except as Agent may otherwise determine).
1.105 "Value" shall mean, as determined by Agent in good faith, with
respect to Inventory, the lower of (a) cost computed on a first-in first-out
basis in accordance with GAAP or (b) market value, provided, that, for purposes
of the calculation of the Borrowing Base, (i) the Value of the Inventory shall
not include: (A) the portion of the value of Inventory equal to the profit
earned by any Affiliate on the sale thereof to any Borrower or (B) write-ups or
write-downs in value with respect to currency exchange rates or (C) in the case
of Inventory consisting of raw materials, any corporate overhead or other
corporate or administrative costs or other costs, other than the costs
attributable to payments to the sellers thereof to a Borrower (sometimes
referred to as "burden") that may be added thereto and (ii) notwithstanding
anything to the contrary contained herein, the cost of the Inventory shall be
computed in the same manner and consistent with the most recent appraisal of the
Inventory received and accepted by Agent prior to the date hereof, if any.
1.106 "Voting Stock" shall mean with respect to any Person, (a) one (1) or
more classes of Capital Stock of such Person having general voting powers to
elect at least a majority of the board of directors, managers or trustees of
such Person, irrespective of whether at the time Capital Stock of any other
class or classes have or might have voting power by reason of the happening of
any contingency, and (b) any Capital Stock of such Person convertible or
exchangeable without restriction at the option of the holder thereof into
Capital Stock of such Person described in clause (a) of this definition.
1.107 "Warrants" shall mean, collectively, the following (as the same now
exist or may hereafter be amended, modified, supplemented, extended, renewed,
restated or replaced): (a) the Warrants, dated May 10, 2002, issued by Parent
pursuant to the Subordinated Note Agreements and (b) the Warrants, dated as of
July 18, 2002,
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issued by Parent pursuant to the Amendment and Termination Agreement, dated as
of July 18, 2002, by and among Parent, Smithfield Fiduciary LLC and Citadel
Equity Fund, Ltd.
SECTION 2. CREDIT FACILITIES
2.1 Loans.
(a Subject to and upon the terms and conditions contained herein,
each Lender severally (and not jointly) agrees to make its Pro Rata Share of
Loans to each Borrower from time to time in amounts requested by such Borrower
(or Administrative Borrower on behalf of such Borrower) up to the amount
outstanding at any time equal to the Borrowing Base of such Borrower at such
time.
(b Except in Agent's discretion, with the consent of all Lenders, or
as otherwise provided herein, (i) the aggregate amount of the Loans and the
Letter of Credit Accommodations outstanding at any time shall not exceed the
Maximum Credit, (ii) the aggregate principal amount of the Loans and Letter of
Credit Accommodations outstanding at any time to a Borrower shall not exceed the
lesser of the Borrowing Base of such Borrower or the Loan Limit of such
Borrower, and (iii) the aggregate principal amount of the Loans outstanding at
any time to Borrowers based on the Eligible Inventory of Borrowers shall not
exceed $25,000,000.
(c) In the event that the aggregate principal amount of the Loans and
Letter of Credit Accommodations outstanding to a Borrower exceed the Borrowing
Base of such Borrower or the Loan Limit of such Borrower, or the aggregate
principal amount of Loans and Letter of Credit Accommodations based on the
Eligible Inventory of a Borrower exceed the Inventory Loan Limit of such
Borrower, or the aggregate principal amount of Loans and Letter of Credit
Accommodations based on the Eligible Inventory of all Borrowers exceeds the
sublimit set forth above, or the aggregate amount of the outstanding Letter of
Credit Accommodations exceed the sublimit for Letter of Credit Accommodations
set forth in Section 2.2(e), or the aggregate amount of the Loans and Letter of
Credit Accommodations exceed the Maximum Credit, such event shall not limit,
waive or otherwise affect any rights of Agent or Lenders in such circumstances
or on any future occasions and Borrowers shall, upon demand by Agent, which may
be made at any time or from time to time, immediately repay to Agent the entire
amount of any such excess(es) for which payment is demanded.
2.2 Letter of Credit Accommodations.
(a) Subject to and upon the terms and conditions contained herein, at
the request of a Borrower (or Administrative Borrower on behalf of such
Borrower), Agent agrees, for the ratable risk of each Lender according to its
Pro Rata Share, to provide or arrange for Letter of Credit Accommodations for
the account of such Borrower containing terms and conditions acceptable to Agent
and the issuer thereof. Any payments made by or on behalf of Agent or any Lender
to any issuer thereof and/or related parties in connection with the Letter of
Credit Accommodations provided to or for the benefit of a Borrower shall
constitute additional Loans to such Borrower pursuant to this Section 2 (or
Special Agent Advances as the case may be).
(b) In addition to any charges, fees or expenses charged by any bank
or issuer in connection with the Letter of Credit Accommodations, Borrowers
shall pay to Agent, for the benefit of Lenders, a letter of credit fee at a rate
equal to two and three-quarters (2 3/4%) percent per annum, on the daily
outstanding balance of the Letter of Credit Accommodations for the immediately
preceding month (or part thereof), payable in arrears as of the first day of
each succeeding month, except that Agent may, and upon the written direction of
Required Lenders shall, require Borrowers to pay to Agent for the ratable
benefit of Lenders such letter of credit fee, at a rate equal to four and
three-quarters (4 3/4%) percent per annum on such daily outstanding balance for:
(i) the period from and after the date of termination hereof until Agent and
Lenders have received full and final payment of all Obligations
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(notwithstanding entry of a judgment against any Borrower) and (ii) the period
from and after the date of the occurrence of an Event of Default for so long as
such Event of Default is continuing as determined by Agent. Such letter of
credit fee shall be calculated on the basis of a three hundred sixty (360) day
year and actual days elapsed and the obligation of Borrowers to pay such fee
shall survive the termination of this Agreement.
(c) The Borrower requesting such Letter of Credit Accommodation (or
Administrative Borrower on behalf of such Borrower) shall give Agent two (2)
Business Days' prior written notice of such Borrower's request for the issuance
of a Letter of Credit Accommodation. Such notice shall be irrevocable and shall
specify the original face amount of the Letter of Credit Accommodation
requested, the effective date (which date shall be a Business Day) of issuance
of such requested Letter of Credit Accommodation, whether such Letter of Credit
Accommodations may be drawn in a single or in partial draws, the date on which
such requested Letter of Credit Accommodation is to expire (which date shall be
a Business Day and shall in no event be a date less than ten (10) days prior to
the end of the then current term of this Agreement), the purpose for which such
Letter of Credit Accommodation is to be issued, and the beneficiary of the
requested Letter of Credit Accommodation. The Borrower requesting the Letter of
Credit Accommodation (or Administrative Borrower on behalf of such Borrower)
shall attach to such notice the proposed terms of the Letter of Credit
Accommodation.
(d) In addition to being subject to the satisfaction of the
applicable conditions precedent contained in Section 4 hereof and the other
terms and conditions contained herein, no Letter of Credit Accommodations shall
be available unless each of the following conditions precedent have been
satisfied in a manner satisfactory to Agent: (i) the Borrower requesting such
Letter of Credit Accommodation (or Administrative Borrower on behalf of such
Borrower) shall have delivered to the proposed issuer of such Letter of Credit
Accommodation at such times and in such manner as such proposed issuer may
require, an application, in form and substance satisfactory to such proposed
issuer and Agent, for the issuance of the Letter of Credit Accommodation and
such other documents as may be required pursuant to the terms thereof, and the
form and terms of the proposed Letter of Credit Accommodation shall be
satisfactory to Agent and such proposed issuer, (ii) as of the date of issuance,
no order of any court, arbitrator or other Governmental Authority shall purport
by its terms to enjoin or restrain money center banks generally from issuing
letters of credit of the type and in the amount of the proposed Letter of Credit
Accommodation, and no law, rule or regulation applicable to money center banks
generally and no request or directive (whether or not having the force of law)
from any Governmental Authority with jurisdiction over money center banks
generally shall prohibit, or request that the proposed issuer of such Letter of
Credit Accommodation refrain from, the issuance of letters of credit generally
or the issuance of such Letters of Credit Accommodation; and (iii) the Excess
Availability of the Borrower requesting such Letter of Credit Accommodation,
prior to giving effect to any Reserves with respect to such Letter of Credit
Accommodations, on the date of the proposed issuance of any Letter of Credit
Accommodations, shall be equal to or greater than: (A) if the proposed Letter of
Credit Accommodation is for the purpose of purchasing Eligible Inventory and the
documents of title with respect thereto are consigned to the issuer, the sum of
(1) the percentage equal to one hundred (100%) percent minus the then applicable
percentage with respect to Eligible Inventory set forth in the definition of the
term Borrowing Base multiplied by the Value of such Eligible Inventory, plus (2)
freight, taxes, duty and other amounts which Agent estimates must be paid in
connection with such Inventory upon arrival and for delivery to one of such
Borrower's locations for Eligible Inventory within the United States of America
and (B) if the proposed Letter of Credit Accommodation is for any other purpose
or the documents of title are not consigned to the issuer in connection with a
Letter of Credit Accommodation for the purpose of purchasing Inventory, an
amount equal to one hundred (100%) percent of the face amount thereof and all
other commitments and obligations made or incurred by Agent with respect
thereto. Effective on the issuance of each Letter of Credit Accommodation, a
Reserve shall be established in the applicable amount set forth in Section
2.2(d)(iii)(A) or Section 2.2(d)(iii)(B).
(e) Except in Agent's discretion, with the consent of all Lenders,
the amount of all outstanding Letter of Credit Accommodations and all other
commitments and obligations made or incurred by Agent or any Lender in
connection therewith shall not at any time exceed $10,000,000.
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(f) Borrowers and Guarantor shall indemnify and hold Agent and
Lenders harmless from and against any and all losses, claims, damages,
liabilities, costs and expenses which Agent or any Lender may suffer or incur in
connection with any Letter of Credit Accommodations and any documents, drafts or
acceptances relating thereto, including any losses, claims, damages,
liabilities, costs and expenses due to any action taken by any issuer or
correspondent with respect to any Letter of Credit Accommodation, except for
such losses, claims, damages, liabilities, costs or expenses that are a direct
result of the gross negligence or wilful misconduct of Agent or any Lender as
determined pursuant to a final non-appealable order of a court of competent
jurisdiction. Each Borrower and Guarantor assumes all risks with respect to the
acts or omissions of the drawer under or beneficiary of any Letter of Credit
Accommodation and for such purposes the drawer or beneficiary shall be deemed
such Borrower's agent. Each Borrower and Guarantor assumes all risks for, and
agrees to pay, all foreign, Federal, State and local taxes, duties and levies
relating to any goods subject to any Letter of Credit Accommodations or any
documents, drafts or acceptances thereunder. Each Borrower and Guarantor hereby
releases and holds Agent and Lenders harmless from and against any acts,
waivers, errors, delays or omissions, whether caused by any Borrower, Guarantor,
by any issuer or correspondent or otherwise with respect to or relating to any
Letter of Credit Accommodation, except for the gross negligence or wilful
misconduct of Agent or any Lender as determined pursuant to a final,
non-appealable order of a court of competent jurisdiction. The provisions of
this Section 2.2(f) shall survive the payment of Obligations and the termination
of this Agreement.
(g) In connection with Inventory purchased pursuant to Letter of
Credit Accommodations, Borrowers and Guarantor shall, at Agent's request,
instruct all suppliers, carriers, forwarders, customs brokers, warehouses or
others receiving or holding cash, checks, Inventory, documents or instruments in
which Agent holds a security interest to deliver them to Agent and/or subject to
Agent's order, and if they shall come into such Borrower's or Guarantor's
possession, to deliver them, upon Agent's request, to Agent in their original
form. Borrowers and Guarantor shall also, at Agent's request, designate Agent as
the consignee on all bills of lading and other negotiable and non-negotiable
documents.
(h) Each Borrower and Guarantor hereby irrevocably authorizes and
directs any issuer of a Letter of Credit Accommodation to name such Borrower or
Guarantor as the account party therein and to deliver to Agent all instruments,
documents and other writings and property received by issuer pursuant to the
Letter of Credit Accommodations and to accept and rely upon Agent's instructions
and agreements with respect to all matters arising in connection with the Letter
of Credit Accommodations or the applications therefor. Nothing contained herein
shall be deemed or construed to grant any Borrower or Guarantor any right or
authority to pledge the credit of Agent or any Lender in any manner. Agent and
Lenders shall have no liability of any kind with respect to any Letter of Credit
Accommodation provided by an issuer other than Agent or any Lender unless Agent
has duly executed and delivered to such issuer the application or a guarantee or
indemnification in writing with respect to such Letter of Credit Accommodation.
Borrowers and Guarantor shall be bound by any reasonable interpretation made in
good faith by Agent, or any other issuer or correspondent under or in connection
with any Letter of Credit Accommodation or any documents, drafts or acceptances
thereunder, notwithstanding that such interpretation may be inconsistent with
any instructions of any Borrower or Guarantor.
(i) So long as no Event of Default exists or has occurred and is
continuing, a Borrower may (i) approve or resolve any questions of
non-compliance of documents, (ii) give any instructions as to acceptance or
rejection of any documents or goods, (iii) execute any and all applications for
steamship or airway guaranties, indemnities or delivery orders, and (iv) with
Agent's consent, grant any extensions of the maturity of, time of payment for,
or time of presentation of, any drafts, acceptances, or documents, and agree to
any amendments, renewals, extensions, modifications, changes or cancellations of
any of the terms or conditions of any of the applications, Letter of Credit
Accommodations, or documents, drafts or acceptances thereunder or any letters of
credit included in the Collateral.
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(j) At any time an Event of Default exists or has occurred and is
continuing, Agent shall have the right and authority to, and Borrowers and
Guarantor shall not, without the prior written consent of Agent, (i) approve or
resolve any questions of non-compliance of documents, (ii) give any instructions
as to acceptance or rejection of any documents or goods, (iii) execute any and
all applications for steamship or airway guaranties, indemnities or delivery
orders, (iv) grant any extensions of the maturity of, time of payments for, or
time of presentation of, any drafts, acceptances, or documents, and (v) agree to
any amendments, renewals, extensions, modifications, changes or cancellations of
any of the terms or conditions of any of the applications, Letter of Credit
Accommodations, or documents, drafts or acceptances thereunder or any letters of
credit included in the Collateral. Agent may take such actions either in its own
name or in any Borrower's name.
(k) Any rights, remedies, duties or obligations granted or undertaken
by any Borrower or Guarantor to any issuer or correspondent in any application
for any Letter of Credit Accommodation, or any other agreement in favor of any
issuer or correspondent relating to any Letter of Credit Accommodation, shall be
deemed to have been granted or undertaken by such Borrower or Guarantor to Agent
for the ratable benefit of Lenders. Any duties or obligations undertaken by
Agent to any issuer or correspondent in any application for any Letter of Credit
Accommodation, or any other agreement by Agent in favor of any issuer or
correspondent to the extent relating to any Letter of Credit Accommodation,
shall be deemed to have been undertaken by Borrowers and Guarantor to Agent for
the ratable benefit of Lenders and to apply in all respects to Borrowers and
Guarantor.
(l) Immediately upon the issuance or amendment of any Letter of
Credit Accommodation, each Lender shall be deemed to have irrevocably and
unconditionally purchased and received, without recourse or warranty, an
undivided interest and participation to the extent of such Lender's Pro Rata
Share of the liability with respect to such Letter of Credit Accommodation
(including, without limitation, all Obligations with respect thereto).
(m) Each Borrower is irrevocably and unconditionally obligated,
without presentment, demand or protest, to pay to Agent any amounts paid by an
issuer of a Letter of Credit Accommodation with respect to such Letter of Credit
Accommodation (whether through the borrowing of Loans in accordance with Section
2.2(a) or otherwise). In the event that any Borrower fails to pay Agent on the
date of any payment under a Letter of Credit Accommodation in an amount equal to
the amount of such payment, Agent (to the extent it has actual notice thereof)
shall promptly notify each Lender of the unreimbursed amount of such payment and
each Lender agrees, upon one (1) Business Day's notice, to fund to Agent the
purchase of its participation in such Letter of Credit Accommodation in an
amount equal to its Pro Rata Share of the unpaid amount. The obligation of each
Lender to deliver to Agent an amount equal to its respective participation
pursuant to the foregoing sentence is absolute and unconditional and such
remittance shall be made notwithstanding the occurrence or continuance of any
Event of Default, the failure to satisfy any other condition set forth in
Section 4 or any other event or circumstance. If such amount is not made
available by a Lender when due, Agent shall be entitled to recover such amount
on demand from such Lender with interest thereon, for each day from the date
such amount was due until the date such amount is paid to Agent at the interest
rate then payable by any Borrower in respect of Loans that are Prime Rate Loans
as set forth in Section 3.1(a) hereof.
2.3 Commitments. The aggregate amount of each Lender's Pro Rata Share of
the Loans and Letter of Credit Accommodations shall not exceed the amount of
such Lender's Commitment, as the same may from time to time be amended in
accordance with the provisions hereof.
SECTION 3. INTEREST AND FEES
3.1 Interest.
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(a) Borrowers shall pay to Agent, for the benefit of Lenders,
interest on the outstanding principal amount of the Loans at the Interest Rate.
All interest accruing hereunder on and after the date of any Event of Default or
termination hereof shall be payable on demand.
(b) Each Borrower (or Administrative Borrower on behalf of such
Borrower) may from time to time request Eurodollar Rate Loans or may request
that Prime Rate Loans be converted to Eurodollar Rate Loans or that any existing
Eurodollar Rate Loans continue for an additional Interest Period. Such request
from a Borrower (or Administrative Borrower on behalf of such Borrower) shall
specify the amount of the Eurodollar Rate Loans or the amount of the Prime Rate
Loans to be converted to Eurodollar Rate Loans or the amount of the Eurodollar
Rate Loans to be continued (subject to the limits set forth below) and the
Interest Period to be applicable to such Eurodollar Rate Loans. Subject to the
terms and conditions contained herein, three (3) Business Days after receipt by
Agent of such a request from a Borrower (or Administrative Borrower on behalf of
such Borrower), such Eurodollar Rate Loans shall be made or Prime Rate Loans
shall be converted to Eurodollar Rate Loans or such Eurodollar Rate Loans shall
continue, as the case may be, provided, that, (i) no Default or Event of Default
shall exist or have occurred and be continuing, (ii) no party hereto shall have
sent any notice of termination of this Agreement, such Borrower (or
Administrative Borrower on behalf of such Borrower) shall have complied with
such customary procedures as are established by Agent and specified by Agent to
Administrative Borrower from time to time for requests by Borrowers for
Eurodollar Rate Loans, (iii) no more than six (6) Interest Periods may be in
effect at any one time, (iv) the aggregate amount of the Eurodollar Rate Loans
must be in an amount not less than $5,000,000 or an integral multiple of
$1,000,000 in excess thereof, and (v) Agent and each Lender shall have
determined that the Interest Period or Adjusted Eurodollar Rate is available to
Agent and such Lender and can be readily determined as of the date of the
request for such Eurodollar Rate Loan by such Borrower. Any request by or on
behalf of a Borrower for Eurodollar Rate Loans or to convert Prime Rate Loans to
Eurodollar Rate Loans or to continue any existing Eurodollar Rate Loans shall be
irrevocable. Notwithstanding anything to the contrary contained herein, Agent
and Lenders shall not be required to purchase United States Dollar deposits in
the London interbank market or other applicable Eurodollar Rate market to fund
any Eurodollar Rate Loans, but the provisions hereof shall be deemed to apply as
if Agent and Lenders had purchased such deposits to fund the Eurodollar Rate
Loans.
(c) Any Eurodollar Rate Loans shall automatically convert to Prime
Rate Loans upon the last day of the applicable Interest Period, unless Agent has
received and approved a request to continue such Eurodollar Rate Loan at least
three (3) Business Days prior to such last day in accordance with the terms
hereof. Any Eurodollar Rate Loans shall, at Agent's option, upon notice by Agent
to Parent, be subsequently converted to Prime Rate Loans in the event that this
Agreement shall terminate or not be renewed. Borrowers shall pay to Agent, for
the benefit of Lenders, upon demand by Agent (or Agent may, at its option,
charge any loan account of any Borrower) any amounts required to compensate any
Lender or Participant for any loss (including loss of anticipated profits), cost
or expense incurred by such person, as a result of the conversion of Eurodollar
Rate Loans to Prime Rate Loans pursuant to any of the foregoing.
(d) Interest shall be payable by Borrowers to Agent, for the account
of Lenders, monthly in arrears not later than the first day of each calendar
month and shall be calculated on the basis of a three hundred sixty (360) day
year and actual days elapsed. The interest rate on non-contingent Obligations
(other than Eurodollar Rate Loans) shall increase or decrease by an amount equal
to each increase or decrease in the Prime Rate effective on the first day of the
month after any change in such Prime Rate is announced based on the Prime Rate
in effect on the last day of the month in which any such change occurs. In no
event shall charges constituting interest payable by Borrowers to Agent and
Lenders exceed the maximum amount or the rate permitted under any applicable law
or regulation, and if any such part or provision of this Agreement is in
contravention of any such law or regulation, such part or provision shall be
deemed amended to conform thereto.
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3.2 Fees.
(a) Borrowers shall pay to Agent, for the account of Lenders, monthly
an unused line fee at a rate equal to one-half (1/2%) percent per annum
calculated upon the amount by which $80,000,000 exceeds the average daily
principal balance of the outstanding Loans and Letter of Credit Accommodations
during the immediately preceding month (or part thereof) while this Agreement is
in effect and for so long thereafter as any of the Obligations are outstanding,
which fee shall be payable on the first day of each month in arrears.
(b) Borrowers agree to pay to Agent the other fees and amounts set
forth in the Fee Letter in the amounts and at the times specified therein.
3.3 Changes in Laws and Increased Costs of Loans.
(a) If after the date hereof, either (i) any change in, or in the
interpretation of, any law or regulation is introduced, including, without
limitation, with respect to reserve requirements, applicable to Lender or any
banking or financial institution from whom any Lender borrows funds or obtains
credit (a "Funding Bank"), or (ii) a Funding Bank or any Lender complies with
any future guideline or request from any central bank or other Governmental
Authority or (iii) a Funding Bank or any Lender determines that the adoption of
any applicable law, rule or regulation 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 has or would have the effect described
below, or a Funding Bank or any Lender complies 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, and in the case of any event set
forth in this clause (iii), such adoption, change or compliance has or would
have the direct or indirect effect of reducing the rate of return on any
Lender's capital as a consequence of its obligations hereunder to a level below
that which Lender could have achieved but for such adoption, change or
compliance (taking into consideration the Funding Bank's or Lender's policies
with respect to capital adequacy) by an amount deemed by such Lender to be
material, and the result of any of the foregoing events described in clauses
(i), (ii) or (iii) is or results in an increase in the cost to any Lender of
funding or maintaining the Loans, the Letter of Credit Accommodations or its
Commitment, then Borrowers and Guarantor shall from time to time upon demand by
Agent pay to Agent additional amounts sufficient to indemnify Lenders against
such increased cost on an after-tax basis (after taking into account applicable
deductions and credits in respect of the amount indemnified) as to Loans, Letter
of Credit Accommodations and its Commitment (but not as to loans, letter of
credit accommodations or commitments to other borrowers from such Lenders). A
certificate as to the amount of such increased cost shall be submitted to
Administrative Borrower by Agent and shall be conclusive, absent manifest error.
(b) If prior to the first day of any Interest Period, (i) Agent shall
have determined in good faith (which determination shall be conclusive and
binding upon Borrowers and Guarantor) that, by reason of circumstances affecting
the relevant market, adequate and reasonable means do not exist for ascertaining
the Eurodollar Rate for such Interest Period, (ii) Agent has received notice
from the Required Lenders that the Eurodollar Rate determined or to be
determined for such Interest Period will not adequately and fairly reflect the
cost to Lenders of making or maintaining Eurodollar Rate Loans during such
Interest Period, or (iii) Dollar deposits in the principal amounts of the
Eurodollar Rate Loans to which such Interest Period is to be applicable are not
generally available in the London interbank market, Agent shall give telecopy or
telephonic notice thereof to Administrative Borrower as soon as practicable
thereafter, and will also give prompt written notice to Administrative Borrower
when such conditions no longer exist. If such notice is given (A) any Eurodollar
Rate Loans requested to be made on the first day of such Interest Period shall
be made as Prime Rate Loans, (B) any Loans that were to have been converted on
the first day of such Interest Period to or continued as Eurodollar Rate Loans
shall be converted to or continued as Prime Rate Loans and (C) each outstanding
Eurodollar Rate Loan shall be converted, on the last day of the then-current
Interest Period thereof, to Prime Rate Loans. Until such notice has been
withdrawn by Agent, no further Eurodollar Rate Loans shall be made or continued
as such, nor shall any
25
Borrower (or Administrative Borrower on behalf of any Borrower) have
the right to convert Prime Rate Loans to Eurodollar Rate Loans.
(c) Notwithstanding any other provision herein, if the adoption of or
any change in any law, treaty, rule or regulation or final, non-appealable
determination of an arbitrator or a court or other Governmental Authority or in
the interpretation or application thereof occurring after the date hereof shall
make it unlawful for Agent or any Lender to make or maintain Eurodollar Rate
Loans as contemplated by this Agreement, (i) Agent or such Lender shall promptly
give written notice of such circumstances to Administrative Borrower (which
notice shall be withdrawn whenever such circumstances no longer exist), (ii) the
commitment of such Lender hereunder to make Eurodollar Rate Loans, continue
Eurodollar Rate Loans as such and convert Prime Rate Loans to Eurodollar Rate
Loans shall forthwith be canceled and, until such time as it shall no longer be
unlawful for such Lender to make or maintain Eurodollar Rate Loans, such Lender
shall then have a commitment only to make a Prime Rate Loan when a Eurodollar
Rate Loan is requested and (iii) such Lender's Loans then outstanding as
Eurodollar Rate Loans, if any, shall be converted automatically to Prime Rate
Loans on the respective last days of the then current Interest Periods with
respect to such Loans or within such earlier period as required by law. If any
such conversion of a Eurodollar Rate Loan occurs on a day which is not the last
day of the then current Interest Period with respect thereto, Borrowers and
Guarantor shall pay to such Lender such amounts, if any, as may be required
pursuant to Section 3.3(d) below.
(d) Borrowers and Guarantor shall indemnify Agent and each Lender and
to hold Agent and each Lender harmless from any loss or expense which Agent or
such Lender may sustain or incur as a consequence of (i) default by Borrower in
making a borrowing of, conversion into or extension of Eurodollar Rate Loans
after such Borrower (or Administrative Borrower on behalf of such Borrower) has
given a notice requesting the same in accordance with the provisions of this
Loan Agreement, (ii) default by any Borrower in making any prepayment of a
Eurodollar Rate Loan after such Borrower has given a notice thereof in
accordance with the provisions of this Agreement, and (iii) the making of a
prepayment of Eurodollar Rate Loans on a day which is not the last day of an
Interest Period with respect thereto. With respect to Eurodollar Rate Loans,
such indemnification may include an amount equal to the excess, if any, of (A)
the amount of interest which would have accrued on the amount so prepaid, or not
so borrowed, converted or extended, for the period from the date of such
prepayment or of such failure to borrow, convert or extend to the last day of
the applicable Interest Period (or, in the case of a failure to borrow, convert
or extend, the Interest Period that would have commenced on the date of such
failure) in each case at the applicable rate of interest for such Eurodollar
Rate Loans provided for herein over (B) the amount of interest (as determined by
such Agent or such Lender) which would have accrued to Agent or such Lender on
such amount by placing such amount on deposit for a comparable period with
leading banks in the interbank Eurodollar market. This covenant shall survive
the termination or non-renewal of this Loan Agreement and the payment of the
Obligations.
SECTION 4. CONDITIONS PRECEDENT
4.1 Conditions Precedent to Initial Loans and Letter of Credit
Accommodations. Each of the following is a condition precedent to Agent and
Lenders making the initial Loans and providing the initial Letter of Credit
Accommodations hereunder:
(a) Agent shall have received, in form and substance satisfactory to
Agent, all releases, terminations and such other documents as Agent may request
to evidence and effectuate the termination by the Existing Lenders of their
respective financing arrangements with Borrowers and Guarantor and the
termination and release by it or them, as the case may be, of any interest in
and to any assets and properties of each Borrower and Guarantor, duly
authorized, executed and delivered by it or each of them, including, but not
limited to, (i) UCC termination statements for all UCC financing statements
previously filed by it or any of them or their predecessors, as secured party
and any Borrower or Guarantor, as debtor; and (ii) satisfactions and discharges
of any mortgages,
26
deeds of trust or deeds to secure debt by any Borrower or Guarantor in favor of
it or any of them, in form acceptable for recording with the appropriate
Governmental Authority;
(b) all requisite corporate action and proceedings in connection with
this Agreement and the other Financing Agreements shall be satisfactory in form
and substance to Agent, and Agent shall have received all information and copies
of all documents, including records of requisite corporate action and
proceedings which Agent may have requested in connection therewith, such
documents where requested by Agent or its counsel to be certified by appropriate
corporate officers or Governmental Authority (and including a copy of the
certificate of incorporation of each Borrower and Guarantor certified by the
Secretary of State (or equivalent Governmental Authority) which shall set forth
the same complete corporate name of such Borrower or Guarantor as is set forth
herein and such document as shall set forth the organizational identification
number of each Borrower or Guarantor, if one is issued in its jurisdiction of
incorporation);
(c) no material adverse change shall have occurred in the assets,
business or prospects of Borrowers since the date of Agent's latest field
examination (not including for this purpose the field review referred to in
clause (d) below) and no change or event shall have occurred which would impair
the ability of any Borrower or Obligor to perform its obligations hereunder or
under any of the other Financing Agreements to which it is a party or of Agent
or any Lender to enforce the Obligations or realize upon the Collateral;
(d) Agent shall have completed a field review of the Records and such
other information with respect to the Collateral as Agent may require to
determine the amount of Loans available to Borrowers (including, without
limitation, current perpetual inventory records and/or roll-forwards of Accounts
and Inventory through the date of closing and test counts of the Inventory in a
manner satisfactory to Agent, together with such supporting documentation as may
be necessary or appropriate, and other documents and information that will
enable Agent to accurately identify and verify the Collateral), the results of
which in each case shall be satisfactory to Agent, not more than five (5)
Business Days prior to the date hereof;
(e) Agent shall have received, in form and substance satisfactory to
Agent, all consents, waivers, acknowledgments and other agreements from third
persons which Agent may deem necessary or desirable in order to permit, protect
and perfect its security interests in and liens upon the Collateral or to
effectuate the provisions or purposes of this Agreement and the other Financing
Agreements, including, without limitation, Collateral Access Agreements by
owners and lessors of leased premises of each Borrower and by processors and
warehouses at which Collateral is located;
(f) the Excess Availability as determined by Agent, as of the date
hereof, shall be not less than $15,000,000 after giving effect to the initial
Loans made or to be made and Letter of Credit Accommodations issued or to be
issued in connection with the initial transactions hereunder;
(g) Agent shall have received, in form and substance satisfactory to
Agent, Deposit Account Control Agreements by and among Agent, each Borrower and
Guarantor, as the case may be and each bank where such Borrower (or Guarantor)
has a deposit account, in each case, duly authorized, executed and delivered by
such bank and Borrower or Guarantor, as the case may be;
(h) Agent shall have received evidence, in form and substance
satisfactory to Agent, that Agent has a valid perfected first priority security
interest in all of the Collateral;
(i) Agent shall have received and reviewed lien and judgement search
results for the jurisdiction of incorporation of each Borrower and Guarantor,
the jurisdiction of the chief executive office of each Borrower and Guarantor
and all jurisdictions in which assets of Borrowers and Guarantor are located,
which search results shall be in form and substance satisfactory to Agent;
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(j) Agent shall have received, in form and substance satisfactory to
Agent, a valid and effective title insurance policy issued by a company and
agent acceptable to Agent: (i) insuring the priority, amount and sufficiency of
the Mortgage with respect to the Rochester Real Property, (ii) insuring against
matters that would be disclosed by surveys as to such Real Property and (iii)
containing any legally available endorsements, assurances or affirmative
coverage requested by Agent for protection of its interests under the Mortgage
with respect to such Real Property;
(k) Agent shall have received originals of the shares of the stock
certificates representing (i) one hundred percent (100%) of the issued and
outstanding shares of the Capital Stock of the direct and indirect Subsidiaries
of Borrowers and Guarantor which are not Foreign Subsidiaries (in each case
together with stock powers duly executed in blank with respect thereto) and (ii)
sixty-six (66%) percent of the issued and outstanding shares of Capital Stock of
the direct Subsidiaries of Borrower which are Foreign Subsidiaries (other than
such Subsidiaries which are organized under the laws of Luxembourg since under
such laws no certificates are issued and other than such other Subsidiaries as
Agent may specify), in each case together with stock powers duly executed in
blank with respect thereto;
(l) Agent shall have received evidence of insurance and loss payee
endorsements required hereunder and under the other Financing Agreements, in
form and substance satisfactory to Agent, and certificates of insurance policies
and/or endorsements naming Agent as loss payee;
(m) Agent shall have received, in form and substance satisfactory to
Agent, such opinion letters of counsel to Borrowers and Guarantor with respect
to the Financing Agreements and such other matters as Agent may request (and
including in addition to the opinion of counsel to Borrowers and Guarantor in
the United States, opinion letters of counsel to Borrowers and Guarantor in
Luxembourg with respect to the pledge and security interest of Agent in the
shares of the Foreign Subsidiary organized under the laws of Luxembourg); and
(n) the other Financing Agreements and all instruments and documents
hereunder and thereunder shall have been duly executed and delivered to Agent,
in form and substance satisfactory to Agent.
4.2 Conditions Precedent to All Loans and Letter of Credit Accommodations.
Each of the following is an additional condition precedent to the Loans and/or
providing Letter of Credit Accommodations to Borrowers, including the initial
Loans and Letter of Credit Accommodations and any future Loans and Letter of
Credit Accommodations:
(a) all representations and warranties contained herein and in the
other Financing Agreements shall be true and correct with the same effect as
though such representations and warranties had been made on and as of the date
of the making of each such Loan or providing each such Letter of Credit
Accommodation and after giving effect thereto, except to the extent that such
representations and warranties expressly relate solely to an earlier date (in
which case such representations and warranties shall have been true and accurate
on and as of such earlier date);
(b) no law, regulation, order, judgment or decree of any Governmental
Authority shall exist, and no action, suit, investigation, litigation or
proceeding shall be pending or threatened in any court or before any arbitrator
or Governmental Authority, which (i) purports to enjoin, prohibit, restrain or
otherwise affect (A) the making of the Loans or providing the Letter of Credit
Accommodations, or (B) the consummation of the transactions contemplated
pursuant to the terms hereof or the other Financing Agreements or (ii) has or
has a reasonable likelihood of having a Material Adverse Effect; and
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(c) no Default or Event of Default shall exist or have occurred and
be continuing on and as of the date of the making of such Loan or providing each
such Letter of Credit Accommodation and after giving effect thereto.
SECTION 5. GRANT AND PERFECTION OF SECURITY INTEREST
5.1 Grant of Security Interest.
(a) To secure payment and performance of all Obligations, each
Borrower and Guarantor hereby grants to Agent, for itself and the ratable
benefit of Lenders, a continuing security interest in, a lien upon, and a right
of set off against, and hereby assigns to Agent, for itself and the ratable
benefit of Lenders, as security, all personal and real property and fixtures,
and interests in property and fixtures, of each Borrower and Guarantor, whether
now owned or hereafter acquired or existing, and wherever located (together with
all other collateral security for the Obligations at any time granted to or held
or acquired by Agent or any Lender, collectively, the "Collateral"), including:
(i) all Accounts;
(ii) all general intangibles, including, without limitation, all
Intellectual Property;
(iii) all goods, including, without limitation, Inventory and
Equipment;
(iv) all Real Property and fixtures;
(v) all chattel paper, including, without limitation, all tangible
and electronic chattel paper;
(vi) all instruments, including, without limitation, all promissory
notes;
(vii) all documents;
(viii) all deposit accounts;
(ix) all letters of credit, banker's acceptances and similar
instruments and including all letter-of-credit rights;
(x) all supporting obligations and all present and future liens,
security interests, rights, remedies, title and interest in, to and in respect
of Receivables and other Collateral, including (A) rights and remedies under or
relating to guaranties, contracts of suretyship, letters of credit and credit
and other insurance related to the Collateral, (B) rights of stoppage in
transit, replevin, repossession, reclamation and other rights and remedies of an
unpaid vendor, lienor or secured party, (C) goods described in invoices,
documents, contracts or instruments with respect to, or otherwise representing
or evidencing, Receivables or other Collateral, including returned, repossessed
and reclaimed goods, and (D) deposits by and property of account debtors or
other persons securing the obligations of account debtors;
(xi) all (A) investment property (including securities, whether
certificated or uncertificated, securities accounts, security entitlements,
commodity contracts or commodity accounts) and (B) monies, credit balances,
deposits and other property of any Borrower or Guarantor now or hereafter held
or received by or in transit to Agent, any Lender or its Affiliates or at any
other depository or other institution from or for the account of any Borrower or
Guarantor, whether for safekeeping, pledge, custody, transmission, collection or
otherwise;
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(xii) all commercial tort claims, including, without limitation,
those identified in the Information Certificate;
(xiii) to the extent not otherwise described above, all Receivables;
(xiv) all Records; and
(xv) all products and proceeds of the foregoing, in any form,
including insurance proceeds and all claims against third parties for loss or
damage to or destruction of or other involuntary conversion of any kind or
nature of any or all of the other Collateral.
(b) Notwithstanding anything to the contrary set forth in Section
5.1(a) above, the types or items of Collateral described in such Section shall
not include any rights or interests in any contract or lease covering real or
personal property, as such, if under the terms of such contract or lease, the
valid grant of a security interest or lien therein to Agent is prohibited and
such prohibition has not been or is not waived or the consent of the other party
to such contract or lease has not been or is not otherwise obtained or under
applicable law such prohibition cannot be waived; provided, that, the foregoing
exclusion shall in no way be construed to apply if any such prohibition is
unenforceable under Sections 9-406, 9-407 or 9-408 of the UCC or other
applicable law or so as to limit, impair or otherwise affect Agent's
unconditional continuing security interests in and liens upon any rights or
interests of a Borrower or Guarantor in or to monies due or to become due under
any such contract or lease (including any Receivables).
5.2 Perfection of Security Interests.
(a) Each Borrower and Guarantor irrevocably and unconditionally
authorizes Agent (or its agent) to file at any time and from time to time such
financing statements with respect to the Collateral naming Agent or its designee
as the secured party and such Borrower or Guarantor as debtor, as Agent may
require, and including any other information with respect to such Borrower or
Guarantor or otherwise required by part 5 of Article 9 of the Uniform Commercial
Code of such jurisdiction as Agent may determine, together with any amendment
and continuations with respect thereto, which authorization shall apply to all
financing statements filed on, prior to or after the date hereof. Each Borrower
and Guarantor hereby ratifies and approves all financing statements naming Agent
or its designee as secured party and such Borrower or Guarantor, as the case may
be, as debtor with respect to the Collateral (and any amendments with respect to
such financing statements) filed by or on behalf of Agent prior to the date
hereof and ratifies and confirms the authorization of Agent to file such
financing statements (and amendments, if any). Each Borrower and Guarantor
hereby authorizes Agent to adopt on behalf of such Borrower and Guarantor any
symbol required for authenticating any electronic filing. In the event that the
description of the collateral in any financing statement naming Agent or its
designee as the secured party and any Borrower or Guarantor as debtor includes
assets and properties of such Borrower or Guarantor that do not at any time
constitute Collateral, whether hereunder, under any of the other Financing
Agreements or otherwise, the filing of such financing statement shall
nonetheless be deemed authorized by such Borrower or Guarantor to the extent of
the Collateral included in such description and it shall not render the
financing statement ineffective as to any of the Collateral or otherwise affect
the financing statement as it applies to any of the Collateral. In no event
shall any Borrower or Guarantor at any time file, or permit or cause to be
filed, any correction statement or termination statement with respect to any
financing statement (or amendment or continuation with respect thereto) naming
Agent or its designee as secured party and such Borrower or Guarantor as debtor.
(b) Each Borrower and Guarantor does not have any chattel paper
(whether tangible or electronic) or instruments as of the date hereof, except as
set forth in the Information Certificate. In the event that any Borrower or
Guarantor shall be entitled to or shall receive any chattel paper or instrument
after the date hereof, Borrowers and Guarantor shall promptly notify Agent
thereof in writing. Promptly upon the receipt thereof by or on
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behalf of any Borrower or Guarantor (including by any agent or representative),
such Borrower or Guarantor shall deliver, or cause to be delivered to Agent, all
tangible chattel paper and instruments that such Borrower or Guarantor has or
may at any time acquire, accompanied by such instruments of transfer or
assignment duly executed in blank as Agent may from time to time specify, in
each case except as Agent may otherwise agree. At Agent's option, each Borrower
and Guarantor shall, or Agent may at any time on behalf of any Borrower or
Guarantor, cause the original of any such instrument or chattel paper to be
conspicuously marked in a form and manner acceptable to Agent with the following
legend referring to chattel paper or instruments as applicable: "This [chattel
paper][instrument] is subject to the security interest of Congress Financial
Corporation as Agent and any sale, transfer, assignment or encumbrance of this
[chattel paper][instrument] violates the rights of such secured party."
(c) In the event that any Borrower or Guarantor shall at any time
hold or acquire an interest in any electronic chattel paper or any "transferable
record" (as such term is defined in Section 201 of the Federal Electronic
Signatures in Global and National Commerce Act or in Section 16 of the Uniform
Electronic Transactions Act as in effect in any relevant jurisdiction), such
Borrower or Guarantor shall promptly notify Agent thereof in writing. Promptly
upon Agent's request, such Borrower or Guarantor shall take, or cause to be
taken, such actions as Agent may request to give Agent control of such
electronic chattel paper under Section 9-105 of the UCC and control of such
transferable record under Section 201 of the Federal Electronic Signatures in
Global and National Commerce Act or, as the case may be, Section 16 of the
Uniform Electronic Transactions Act, as in effect in such jurisdiction.
(d) Each Borrower and Guarantor does not have any deposit accounts as
of the date hereof, except as set forth in the Information Certificate.
Borrowers and Guarantor shall not, directly or indirectly, after the date hereof
open, establish or maintain any deposit account unless each of the following
conditions is satisfied: (i) Agent shall have received not less than five (5)
Business Days prior written notice of the intention of any Borrower or Guarantor
to open or establish such account which notice shall specify in reasonable
detail and specificity acceptable to Agent the name of the account, the owner of
the account, the name and address of the bank at which such account is to be
opened or established, the individual at such bank with whom such Borrower or
Guarantor is dealing and the purpose of the account, (ii) the bank where such
account is opened or maintained shall be acceptable to Agent, and (iii) on or
before the opening of such deposit account, such Borrower or Guarantor shall as
Agent may specify either (A) deliver to Agent a Deposit Account Control
Agreement with respect to such deposit account duly authorized, executed and
delivered by such Borrower or Guarantor and the bank at which such deposit
account is opened and maintained or (B) arrange for Agent to become the customer
of the bank with respect to the deposit account on terms and conditions
acceptable to Agent. The terms of this subsection (d) shall not apply to deposit
accounts specifically and exclusively used for payroll, payroll taxes and other
employee wage and benefit payments to or for the benefit of any Borrower's or
Guarantor's salaried employees.
(e) No Borrower or Guarantor owns or holds, directly or indirectly,
beneficially or as record owner or both, any investment property, as of the date
hereof, or have any investment account, securities account, commodity account or
other similar account with any bank or other financial institution or other
securities intermediary or commodity intermediary as of the date hereof, in each
case except as set forth in the Information Certificate.
(i) In the event that any Borrower or Guarantor shall be
entitled to or shall at any time after the date hereof hold or acquire any
certificated securities, such Borrower or Guarantor shall promptly endorse,
assign and deliver the same to Agent, accompanied by such instruments of
transfer or assignment duly executed in blank as Agent may from time to time
specify. If any securities, now or hereafter acquired by any Borrower or
Guarantor are uncertificated and are issued to such Borrower or Guarantor or its
nominee directly by the issuer thereof, such Borrower or Guarantor shall
immediately notify Agent thereof and shall as Agent may specify, either (A)
cause the issuer to agree to comply with instructions from Agent as to such
securities, without further consent of any Borrower or Guarantor or such
nominee, or (B) arrange for Agent to become the registered owner of the
securities.
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(ii) Borrowers and Guarantor shall not, directly or
indirectly, after the date hereof open, establish or maintain any investment
account, securities account, commodity account or any other similar account
(other than a deposit account) with any securities intermediary or commodity
intermediary unless each of the following conditions is satisfied: (A) Agent
shall have received not less than five (5) Business Days prior written notice of
the intention of such Borrower or Guarantor to open or establish such account
which notice shall specify in reasonable detail and specificity acceptable to
Agent the name of the account, the owner of the account, the name and address of
the securities intermediary or commodity intermediary at which such account is
to be opened or established, the individual at such intermediary with whom such
Borrower or Guarantor is dealing and the purpose of the account, (B) the
securities intermediary or commodity intermediary (as the case may be) where
such account is opened or maintained shall be acceptable to Agent, and (C) on or
before the opening of such investment account, securities account or other
similar account with a securities intermediary or commodity intermediary, such
Borrower or Guarantor shall as Agent may specify either (1) execute and deliver,
and cause to be executed and delivered to Agent, an Investment Property Control
Agreement with respect thereto duly authorized, executed and delivered by such
Borrower or Guarantor and such securities intermediary or commodity intermediary
or (2) arrange for Agent to become the entitlement holder with respect to such
investment property on terms and conditions acceptable to Agent.
(f) Borrowers and Guarantor are not the beneficiary or otherwise
entitled to any right to payment under any letter of credit, banker's acceptance
or similar instrument as of the date hereof, except as set forth in the
Information Certificate. In the event that any Borrower or Guarantor shall be
entitled to or shall receive any right to payment under any letter of credit,
banker's acceptance or any similar instrument, whether as beneficiary thereof or
otherwise after the date hereof, such Borrower or Guarantor shall promptly
notify Agent thereof in writing. Such Borrower or Guarantor shall immediately,
as Agent may specify, either (i) deliver, or cause to be delivered to Agent,
with respect to any such letter of credit, banker's acceptance or similar
instrument, the written agreement of the issuer and any other nominated person
obligated to make any payment in respect thereof (including any confirming or
negotiating bank), in form and substance satisfactory to Agent, consenting to
the assignment of the proceeds of the letter of credit to Agent by such Borrower
or Guarantor and agreeing to make all payments thereon directly to Agent or as
Agent may otherwise direct or (ii) cause Agent to become, at Borrowers' expense,
the transferee beneficiary of the letter of credit, banker's acceptance or
similar instrument (as the case may be).
(g) Borrowers and Guarantor do not have any commercial tort claims as
of the date hereof, except as set forth in the Information Certificate. In the
event that any Borrower or Guarantor shall at any time after the date hereof
have any commercial tort claims, such Borrower or Guarantor shall promptly
notify Agent thereof in writing, which notice shall (i) set forth in reasonable
detail the basis for and nature of such commercial tort claim and (ii) include
the express grant by such Borrower or Guarantor to Agent of a security interest
in such commercial tort claim (and the proceeds thereof). In the event that such
notice does not include such grant of a security interest, the sending thereof
by such Borrower or Guarantor to Agent shall be deemed to constitute such grant
to Agent. Upon the sending of such notice, any commercial tort claim described
therein shall constitute part of the Collateral and shall be deemed included
therein. Without limiting the authorization of Agent provided in Section 5.2(a)
hereof or otherwise arising by the execution by such Borrower or Guarantor of
this Agreement or any of the other Financing Agreements, Agent is hereby
irrevocably authorized from time to time and at any time to file such financing
statements naming Agent or its designee as secured party and such Borrower or
Guarantor as debtor, or any amendments to any financing statements, covering any
such commercial tort claim as Collateral. In addition, each Borrower and
Guarantor shall promptly upon Agent's request, execute and deliver, or cause to
be executed and delivered, to Agent such other agreements, documents and
instruments as Agent may require in connection with such commercial tort claim.
(h) Borrowers and Guarantor do not have any goods, documents of title
or other Collateral in the custody, control or possession of a third party as of
the date hereof, except as set forth in the Information Certificate
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and except for goods located in the United States in transit to a location of a
Borrower or Guarantor permitted herein in the ordinary course of business of
such Borrower or Guarantor in the possession of the carrier transporting such
goods. In the event that any goods, documents of title or other Collateral are
at any time after the date hereof in the custody, control or possession of any
other person not referred to in the Information Certificate or such carriers,
Borrowers and Guarantor shall promptly notify Agent thereof in writing. Promptly
upon Agent's request, Borrowers and Guarantor shall deliver to Agent a
Collateral Access Agreement duly authorized, executed and delivered by such
person and the Borrower or Guarantor that is the owner of such Collateral.
(i) Borrowers and Guarantor shall take any other actions reasonably
requested by Agent from time to time to cause the attachment, perfection and
first priority of, and the ability of Agent to enforce, the security interest of
Agent in any and all of the Collateral, including, without limitation, (i)
executing, delivering and, where appropriate, filing financing statements and
amendments relating thereto under the UCC or other applicable law, to the
extent, if any, that any Borrower's or Guarantor's signature thereon is required
therefor, (ii) causing Agent's name to be noted as secured party on any
certificate of title for a titled good if such notation is a condition to
attachment, perfection or priority of, or ability of Agent to enforce, the
security interest of Agent in such Collateral, (iii) complying with any
provision of any statute, regulation or treaty of the United States as to any
Collateral if compliance with such provision is a condition to attachment,
perfection or priority of, or ability of Agent to enforce, the security interest
of Agent in such Collateral, (iv) obtaining the consents and approvals of any
Governmental Authority or third party, including, without limitation, any
consent of any licensor, lessor or other person obligated on Collateral, and
taking all actions required by any earlier versions of the UCC or by other law,
as applicable in any relevant jurisdiction.
SECTION 6. COLLECTION AND ADMINISTRATION
6.1 Borrowers' Loan Accounts. Agent shall maintain one or more loan
account(s) on its books in which shall be recorded (a) all Loans, Letter of
Credit Accommodations and other Obligations and the Collateral, (b) all payments
made by or on behalf of any Borrower or Guarantor and (c) all other appropriate
debits and credits as provided in this Agreement, including fees, charges,
costs, expenses and interest. All entries in the loan account(s) shall be made
in accordance with Agent's customary practices as in effect from time to time.
6.2 Statements. Agent shall render to Administrative Borrower each month a
statement setting forth the balance in the Borrowers' loan account(s) maintained
by Agent for Borrowers pursuant to the provisions of this Agreement, including
principal, interest, fees, costs and expenses. Each such statement shall be
subject to subsequent adjustment by Agent but shall, absent manifest errors or
omissions, be considered correct and deemed accepted by Borrowers and Guarantor
and conclusively binding upon Borrowers and Guarantor as an account stated
except to the extent that Agent receives a written notice from Administrative
Borrower of any specific exceptions of Administrative Borrower thereto within
thirty (30) days after the date such statement has been received by Parent.
Until such time as Agent shall have rendered to Administrative Borrower a
written statement as provided above, the balance in any Borrower's loan
account(s) shall be presumptive evidence of the amounts due and owing to Agent
and Lenders by Borrowers and Guarantor.
6.3 Collection of Accounts.
(a) Borrowers and Guarantor shall establish and maintain, at their
expense, blocked accounts or lockboxes and related blocked accounts (in either
case, "Blocked Accounts"), as Agent may specify, with such banks as are
acceptable to Agent into which Borrowers and Guarantor shall promptly deposit
and direct their respective account debtors to directly remit all payments on
Receivables and all payments constituting proceeds of Inventory or other
Collateral in the identical form in which such payments are made, whether by
cash, check or other manner. Borrowers and Guarantor shall deliver, or cause to
be delivered to Agent a Deposit Account Control
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Agreement duly authorized, executed and delivered by each bank where a Blocked
Account is maintained as provided in Section 5.2 hereof or at any time and from
time to time Agent may become the bank's customer with respect to any of the
Blocked Accounts and promptly upon Agent's request, Borrowers and Guarantor
shall execute and deliver such agreements and documents as Agent may require in
connection therewith. Each Borrower and Guarantor agrees that all payments made
to such Blocked Accounts or other funds received and collected by Agent or any
Lender, whether in respect of the Receivables, as proceeds of Inventory or other
Collateral or otherwise shall be treated as payments to Agent and Lenders in
respect of the Obligations and therefore shall constitute the property of Agent
and Lenders to the extent of the then outstanding Obligations.
(b) For purposes of calculating the amount of the Loans
available to each Borrower, such payments will be applied (conditional upon
final collection) to the Obligations on the Business Day of receipt by Agent of
immediately available funds in the Agent Payment Account provided such payments
and notice thereof are received in accordance with Agent's usual and customary
practices as in effect from time to time and within sufficient time to credit
such Borrower's loan account on such day, and if not, then on the next Business
Day. For the purposes of calculating interest on the Obligations, such payments
or other funds received will be applied (conditional upon final collection) to
the Obligations one (1) Business Day following the date of receipt of
immediately available funds by Agent in the Agent Payment Account provided such
payments or other funds and notice thereof are received in accordance with
Agent's usual and customary practices as in effect from time to time and within
sufficient time to credit such Borrower's loan account on such day, and if not,
then on the next Business Day. In the event that at any time or from time to
time there are no Loans outstanding, Agent shall be entitled to an
administrative fee in an amount equivalent to the Interest Rate for Prime Rate
Loans (on a per annum basis) multiplied by the amount of the funds received in
the Blocked Account for such day as calculated by Agent in accordance with its
customary practice. The economic benefit of the timing in the application of
payments (and the administrative charge with respect thereto, if applicable)
shall be for the sole benefit of Agent.
(c) Each Borrower and Guarantor and their respective
shareholders, directors, employees, agents, Subsidiaries or other Affiliates
shall, acting as trustee for Agent, receive, as the property of Agent, any
monies, checks, notes, drafts or any other payment relating to and/or proceeds
of Accounts or other Collateral which come into their possession or under their
control and immediately upon receipt thereof, shall deposit or cause the same to
be deposited in the Blocked Accounts, or remit the same or cause the same to be
remitted, in kind, to Agent. In no event shall the same be commingled with any
Borrower's or Guarantor's own funds. Borrowers agree to reimburse Agent on
demand for any amounts owed or paid to any bank at which a Blocked Account or
any other deposit account is established or any other bank or person involved in
the transfer of funds to or from the Blocked Accounts arising out of Agent's
payments to or indemnification of such bank or person. The obligations of
Borrowers to reimburse Agent for such amounts pursuant to this Section 6.3 shall
survive the termination of this Agreement.
6.4 Payments.
(a) All Obligations shall be payable to the Agent Payment
Account as provided in Section 6.3 or such other place as Agent may designate
from time to time. Agent shall apply payments received or collected from any
Borrower or Guarantor or for the account of any Borrower or Guarantor (including
the monetary proceeds of collections or of realization upon any Collateral) as
follows: first, to pay any fees, indemnities or expense reimbursements then due
to Agent and Lenders from any Borrower or Guarantor; second, to pay interest due
in respect of any Loans (and including any Special Agent Advances); third, to
pay or prepay principal in respect of Special Agent Advances; fourth, to pay
principal due in respect of the Loans; fifth, to pay or prepay any other
Obligations whether or not then due, in such order and manner as Agent
determines. Notwithstanding anything to the contrary contained in this
Agreement, (i) unless so directed by Administrative Borrower, or unless a
Default or an Event of Default shall exist or have occurred and be continuing,
Agent shall not apply any payments which it receives to any Eurodollar Rate
Loans, except (A) on the expiration date of the Interest Period applicable to
any such Eurodollar Rate Loans or (B) in the event that there are no outstanding
Prime Rate Loans and (ii) to the extent
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any Borrower uses any proceeds of the Loans or Letter of Credit Accommodations
to acquire rights in or the use of any Collateral or to repay any Indebtedness
used to acquire rights in or the use of any Collateral, payments in respect of
the Obligations shall be deemed applied first to the Obligations arising from
Loans and Letter of Credit Accommodations that were not used for such purposes
and second to the Obligations arising from Loans and Letter of Credit
Accommodations the proceeds of which were used to acquire rights in or the use
of any Collateral in the chronological order in which such Borrower acquired
such rights in or the use of such Collateral.
(b) At Agent's option, all principal, interest, fees, costs,
expenses and other charges provided for in this Agreement or the other Financing
Agreements may be charged directly to the loan account(s) of any Borrower
maintained by Agent. Borrowers and Guarantor shall make all payments to Agent
and Lenders on the Obligations free and clear of, and without deduction or
withholding for or on account of, any setoff, counterclaim, defense, duties,
taxes, levies, imposts, fees, deductions, withholding, restrictions or
conditions of any kind. If after receipt of any payment of, or proceeds of
Collateral applied to the payment of, any of the Obligations, Agent or any
Lender is required to surrender or return such payment or proceeds to any Person
for any reason, then the Obligations intended to be satisfied by such payment or
proceeds shall be reinstated and continue and this Agreement shall continue in
full force and effect as if such payment or proceeds had not been received by
Agent or such Lender. Borrowers and Guarantor shall be liable to pay to Agent,
and do hereby indemnify and hold Agent and Lenders harmless for the amount of
any payments or proceeds surrendered or returned. This Section 6.4(b) shall
remain effective notwithstanding any contrary action which may be taken by Agent
or any Lender in reliance upon such payment or proceeds. This Section 6.4 shall
survive the payment of the Obligations and the termination of this Agreement.
6.5 Authorization to Make Loans. Agent and Lenders are authorized to make
the Loans and provide the Letter of Credit Accommodations based upon telephonic
or other instructions received from anyone purporting to be an officer of
Administrative Borrower or any Borrower or other authorized person or, at the
discretion of Agent, if such Loans are necessary to satisfy any Obligations. All
requests for Loans or Letter of Credit Accommodations hereunder shall specify
the date on which the requested advance is to be made or Letter of Credit
Accommodations established (which day shall be a Business Day) and the amount of
the requested Loan. Requests received after 12:00 noon Chicago time on any day
shall be deemed to have been made as of the opening of business on the
immediately following Business Day. All Loans and Letter of Credit
Accommodations under this Agreement shall be conclusively presumed to have been
made to, and at the request of and for the benefit of, any Borrower or Guarantor
when deposited to the credit of any Borrower or Guarantor or otherwise disbursed
or established in accordance with the instructions of any Borrower or Guarantor
or in accordance with the terms and conditions of this Agreement.
6.6 Use of Proceeds. Borrowers shall use the initial proceeds of the Loans
provided by Agent to Borrowers hereunder only for: (a) payments to each of the
persons listed in the disbursement direction letter furnished by Borrowers to
Agent on or about the date hereof and (b) costs, expenses and fees in connection
with the preparation, negotiation, execution and delivery of this Agreement and
the other Financing Agreements. All other Loans made or Letter of Credit
Accommodations provided to or for the benefit of any Borrower pursuant to the
provisions hereof shall be used by such Borrower only for general operating,
working capital and other proper corporate purposes of such Borrower not
otherwise prohibited by the terms hereof. None of the proceeds will be used,
directly or indirectly, for the purpose of purchasing or carrying any margin
security or for the purposes of reducing or retiring any indebtedness which was
originally incurred to purchase or carry any margin security or for any other
purpose which might cause any of the Loans to be considered a "purpose credit"
within the meaning of Regulation U of the Board of Governors of the Federal
Reserve System, as amended.
6.7 Appointment of Administrative Borrower as Agent for Requesting Loans
and Receipts of Loans and Statements.
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(a) Each Borrower hereby irrevocably appoints and constitutes
Administrative Borrower as its agent to request and receive Loans and Letter of
Credit Accommodations pursuant to this Agreement and the other Financing
Agreements from Agent or any Lender in the name or on behalf of such Borrower.
Agent and Lenders may disburse the Loans to such bank account of Administrative
Borrower or a Borrower or otherwise make such Loans to a Borrower and provide
such Letter of Credit Accommodations to a Borrower as Administrative Borrower
may designate or direct, without notice to any other Borrower or Obligor.
Notwithstanding anything to the contrary contained herein, Agent may at any time
and from time to time require that Loans to or for the account of any Borrower
be disbursed directly to an operating account of such Borrower.
(b) Administrative Borrower hereby accepts the appointment by
Borrowers to act as the agent of Borrowers pursuant to this Section 6.7.
Administrative Borrower shall ensure that the disbursement of any Loans to each
Borrower requested by or paid to or for the account of Parent, or the issuance
of any Letter of Credit Accommodations for a Borrower hereunder, shall be paid
to or for the account of such Borrower.
(c) Each Borrower and other Guarantor hereby irrevocably appoints and
constitutes Administrative Borrower as its agent to receive statements on
account and all other notices from Agent and Lenders with respect to the
Obligations or otherwise under or in connection with this Agreement and the
other Financing Agreements.
(d) Any notice, election, representation, warranty, agreement or
undertaking by or on behalf of any other Borrower or any Guarantor by
Administrative Borrower shall be deemed for all purposes to have been made by
such Borrower or Guarantor, as the case may be, and shall be binding upon and
enforceable against such Borrower or Guarantor to the same extent as if made
directly by such Borrower of Guarantor.
(e) No purported termination of the appointment of Administrative
Borrower as agent as aforesaid shall be effective, except after ten (10) days'
prior written notice to Agent.
6.8 Pro Rata Treatment. Except to the extent otherwise provided in this
Agreement: (a) the making and conversion of Loans shall be made among the
Lenders based on their respective Pro Rata Shares as to the Loans and (b) each
payment on account of any Obligations to or for the account of one or more of
Lenders in respect of any Obligations due on a particular day shall be allocated
among the Lenders entitled to such payments based on their respective Pro Rata
Shares and shall be distributed accordingly.
6.9 Sharing of Payments, Etc.
(a) Each Borrower and Guarantor agrees that, in addition to (and
without limitation of) any right of setoff, banker's lien or counterclaim Agent
or any Lender may otherwise have, each Lender shall be entitled, at its option
(but subject, as among Agent and Lenders, to the provisions of Section 12.3(b)
hereof), to offset balances held by it for the account of such Borrower or
Guarantor at any of its offices, in dollars or in any other currency, against
any principal of or interest on any Loans owed to such Lender or any other
amount payable to such Lender hereunder, that is not paid when due (regardless
of whether such balances are then due to such Borrower or Guarantor), in which
case it shall promptly notify Administrative Borrower and Agent thereof;
provided, that, such Lender's failure to give such notice shall not affect the
validity thereof.
(b) If any Lender (including Agent) shall obtain from any Borrower or
Guarantor payment of any principal of or interest on any Loan owing to it or
payment of any other amount under this Agreement or any of the other Financing
Agreements through the exercise of any right of setoff, banker's lien or
counterclaim or similar right or otherwise (other than from Agent as provided
herein), and, as a result of such payment, such Lender shall have received more
than its Pro Rata Share of the principal of the Loans or more than its share of
such other amounts then due hereunder or thereunder by any Borrower or Guarantor
to such Lender than the percentage thereof received by
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any other Lender, it shall promptly pay to Agent, for the benefit of Lenders,
the amount of such excess and simultaneously purchase from such other Lenders a
participation in the Loans or such other amounts, respectively, owing to such
other Lenders (or such interest due thereon, as the case may be) in such
amounts, and make such other adjustments from time to time as shall be
equitable, to the end that all Lenders shall share the benefit of such excess
payment (net of any expenses that may be incurred by such Lender in obtaining or
preserving such excess payment) in accordance with their respective Pro Rata
Shares or as otherwise agreed by Lenders. To such end all Lenders shall make
appropriate adjustments among themselves (by the resale of participation sold or
otherwise) if such payment is rescinded or must otherwise be restored.
(c) Each Borrower and Guarantor agrees that any Lender purchasing a
participation (or direct interest) as provided in this Section may exercise, in
a manner consistent with this Section, all rights of setoff, banker's lien,
counterclaim or similar rights with respect to such participation as fully as if
such Lender were a direct holder of Loans or other amounts (as the case may be)
owing to such Lender in the amount of such participation.
(d) Nothing contained herein shall require any Lender to exercise any
right of setoff, banker's lien, counterclaims or similar rights or shall affect
the right of any Lender to exercise, and retain the benefits of exercising, any
such right with respect to any other Indebtedness or obligation of any Borrower
or Guarantor. If, under any applicable bankruptcy, insolvency or other similar
law, any Lender receives a secured claim in lieu of a setoff to which this
Section applies, such Lender shall, to the extent practicable, assign such
rights to Agent for the benefit of Lenders and, in any event, exercise its
rights in respect of such secured claim in a manner consistent with the rights
of Lenders entitled under this Section to share in the benefits of any recovery
on such secured claim.
6.10 Settlement Procedures.
(a) In order to administer the Credit Facility in an efficient manner
and to minimize the transfer of funds between Agent and Lenders, Agent may, at
its option, subject to the terms of this Section, make available, on behalf of
Lenders, the full amount of the Loans requested or charged to any Borrower's
loan account(s) or otherwise to be advanced by Lenders pursuant to the terms
hereof, without requirement of prior notice to Lenders of the proposed Loans.
(b) With respect to all Loans made by Agent on behalf of Lenders as
provided in this Section, the amount of each Lender's Pro Rata Share of the
outstanding Loans shall be computed weekly, and shall be adjusted upward or
downward on the basis of the amount of the outstanding Loans as of 5:00 p.m.
Chicago time on the Business Day immediately preceding the date of each
settlement computation; provided, that, Agent retains the absolute right at any
time or from time to time to make the above described adjustments at intervals
more frequent than weekly, but in no event more than twice in any week. Agent
shall deliver to each of the Lenders after the end of each week, or at such
lesser period or periods as Agent shall determine, a summary statement of the
amount of outstanding Loans for such period (such week or lesser period or
periods being hereinafter referred to as a "Settlement Period"). If the summary
statement is sent by Agent and received by a Lender prior to 12:00 p.m. Chicago
time, then such Lender shall make the settlement transfer described in this
Section by no later than 3:00 p.m. Chicago time on the same Business Day and if
received by a Lender after 12:00 p.m. Chicago time, then such Lender shall make
the settlement transfer by not later than 3:00 p.m. Chicago time on the next
Business Day following the date of receipt. If, as of the end of any Settlement
Period, the amount of a Lender's Pro Rata Share of the outstanding Loans is more
than such Lender's Pro Rata Share of the outstanding Loans as of the end of the
previous Settlement Period, then such Lender shall forthwith (but in no event
later than the time set forth in the preceding sentence) transfer to Agent by
wire transfer in immediately available funds the amount of the increase.
Alternatively, if the amount of a Lender's Pro Rata Share of the outstanding
Loans in any Settlement Period is less than the amount of such Lender's Pro Rata
Share of the outstanding Loans for the previous Settlement Period, Agent shall
forthwith transfer to such Lender by wire transfer in immediately available
funds the amount of the decrease. The obligation of each of the Lenders to
transfer such funds and effect such settlement shall be irrevocable and
unconditional and without recourse to or warranty by Agent. Agent and each
Lender agrees to xxxx its books and
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records at the end of each Settlement Period to show at all times the dollar
amount of its Pro Rata Share of the outstanding Loans and Letter of Credit
Accommodations. Each Lender shall only be entitled to receive interest on its
Pro Rata Share of the Loans to the extent such Loans have been funded by such
Lender. Because the Agent on behalf of Lenders may be advancing and/or may be
repaid Loans prior to the time when Lenders will actually advance and/or be
repaid such Loans, interest with respect to Loans shall be allocated by Agent in
accordance with the amount of Loans actually advanced by and repaid to each
Lender and the Agent and shall accrue from and including the date such Loans are
so advanced to but excluding the date such Loans are either repaid by Borrowers
or actually settled with the applicable Lender as described in this Section.
(c) To the extent that Agent has made any such amounts available and
the settlement described above shall not yet have occurred, upon repayment of
any Loans by a Borrower, Agent may apply such amounts repaid directly to any
amounts made available by Agent pursuant to this Section. In lieu of weekly or
more frequent settlements, Agent may, at its option, at any time require each
Lender to provide Agent with immediately available funds representing its Pro
Rata Share of each Loan, prior to Agent's disbursement of such Loan to Borrower.
In such event, all Loans under this Agreement shall be made by the Lenders
simultaneously and proportionately to their Pro Rata Shares. No Lender shall be
responsible for any default by any other Lender in the other Lender's obligation
to make a Loan requested hereunder nor shall the Commitment of any Lender be
increased or decreased as a result of the default by any other Lender in the
other Lender's obligation to make a Loan hereunder.
(d) If Agent is not funding a particular Loan to a Borrower (or
Administrative Borrower for the benefit of such Borrower) pursuant to this
Section on any day, Agent may assume that each Lender will make available to
Agent such Lender's Pro Rata Share of the Loan requested or otherwise made on
such day and Agent may, in its discretion, but shall not be obligated to, cause
a corresponding amount to be made available to or for the benefit of such
Borrower on such day. If Agent makes such corresponding amount available to a
Borrower and such corresponding amount is not in fact made available to Agent by
such Lender, Agent shall be entitled to recover such corresponding amount on
demand from such Lender together with interest thereon for each day from the
date such payment was due until the date such amount is paid to Agent at the
Federal Funds Rate for each day during such period (as published by the Federal
Reserve Bank of New York or at Agent's option based on the arithmetic mean
determined by Agent of the rates for the last transaction in overnight Federal
funds arranged prior to 9:00 a.m. (New York City time) on that day by each of
the three leading brokers of Federal funds transactions in New York City
selected by Agent) and if such amounts are not paid within three (3) days of
Agent's demand, at the highest Interest Rate provided for in Section 3.1 hereof
applicable to Prime Rate Loans. During the period in which such Lender has not
paid such corresponding amount to Agent, notwithstanding anything to the
contrary contained in this Agreement or any of the other Financing Agreements,
the amount so advanced by Agent to or for the benefit of any Borrower shall, for
all purposes hereof, be a Loan made by Agent for its own account. Upon any such
failure by a Lender to pay Agent, Agent shall promptly thereafter notify
Administrative Borrower of such failure and Borrowers shall pay such
corresponding amount to Agent for its own account within five (5) Business Days
of Administrative Borrower's receipt of such notice. A Lender who fails to pay
Agent its Pro Rata Share of any Loans made available by the Agent on such
Lender's behalf, or any Lender who fails to pay any other amount owing by it to
Agent, is a "Defaulting Lender". Agent shall not be obligated to transfer to a
Defaulting Lender any payments received by Agent for the Defaulting Lender's
benefit, nor shall a Defaulting Lender be entitled to the sharing of any
payments hereunder (including any principal, interest or fees). Amounts payable
to a Defaulting Lender shall instead be paid to or retained by Agent. Agent may
hold and, in its discretion, relend to a Borrower the amount of all such
payments received or retained by it for the account of such Defaulting Lender.
For purposes of voting or consenting to matters with respect to this Agreement
and the other Financing Agreements and determining Pro Rata Shares, such
Defaulting Lender shall be deemed not to be a "Lender" and such Lender's
Commitment shall be deemed to be zero (0). This Section shall remain effective
with respect to a Defaulting Lender until such default is cured. The operation
of this Section shall not be construed to increase or otherwise affect the
Commitment of any Lender, or relieve or excuse the performance by any Borrower
or Obligor of their duties and obligations hereunder.
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(e) Nothing in this Section or elsewhere in this Agreement or the
other Financing Agreements shall be deemed to require Agent to advance funds on
behalf of any Lender or to relieve any Lender from its obligation to fulfill its
Commitment hereunder or to prejudice any rights that any Borrower may have
against any Lender as a result of any default by any Lender hereunder in
fulfilling its Commitment.
6.11 Obligations Several; Independent Nature of Lenders' Rights. The
obligation of each Lender hereunder is several, and no Lender shall be
responsible for the obligation or commitment of any other Lender hereunder.
Nothing contained in this Agreement or any of the other Financing Agreements and
no action taken by the Lenders pursuant hereto or thereto shall be deemed to
constitute the Lenders to be a partnership, an association, a joint venture or
any other kind of entity. The amounts payable at any time hereunder to each
Lender shall be a separate and independent debt, and subject to Section 12.3
hereof, each Lender shall be entitled to protect and enforce its rights arising
out of this Agreement and it shall not be necessary for any other Lender to be
joined as an additional party in any proceeding for such purpose.
SECTION 7. COLLATERAL REPORTING AND COVENANTS.
7.1 Collateral Reporting.
(a) Borrowers shall provide Agent with the following documents in a
form satisfactory to Agent:
(i) as soon as possible after the end of each week (but in
any event by each Thursday after the end of each such period), on a weekly basis
or more frequently as Agent or Administrative Borrower may request, a Borrowing
Base Certificate setting forth the calculation of the Borrowing Base as of the
last Business Day of the immediately preceding period as to the Accounts and
Inventory, duly completed and executed by the chief financial officer, treasurer
or controller of Parent, together with all schedules required pursuant to the
terms of the Borrowing Base Certificate duly completed (including a schedule of
all Accounts created, collections received and credit memos issued for each day
of the immediately preceding period);
(ii) as soon as possible after the end of each month (but in
any event within ten (10) Business Days after the end thereof), on a monthly
basis or more frequently as Agent may request, (A) perpetual inventory reports,
(B) inventory reports by location and category (and including the amounts of
Inventory and the value thereof at any leased locations and at premises of
warehouses, processors or other third parties), (C) inventory reports
categorized by customer (and including the amounts of all raw materials and
finished goods and the value thereof for such customer and identifying any
customer that has terminated or sent or been sent a notice of termination of its
arrangements with a Borrower), (D) reports of projected sales by each Borrower
by customer based on the forecasts of projected purchases received by a Borrower
from each such customer, (E) agings of accounts receivable (together with a
reconciliation to the previous month's aging and general ledger) and (F) agings
of accounts payable (and including information indicating the amounts owing to
owners and lessors of leased premises, warehouses, processors and other third
parties from time to time in possession of any Collateral);
(iii) upon Agent's request, (A) copies of customer statements,
purchase orders, sales invoices, credit memos, remittance advices and reports,
and copies of deposit slips and bank statements, (B) copies of shipping and
delivery documents, and (C) copies of purchase orders, invoices and delivery
documents for Inventory and Equipment acquired by any Borrower or Guarantor;
(iv) such other reports as to the Collateral as Agent shall
request from time to time.
(b) Nothing contained in any Borrowing Base Certificate shall be
deemed to limit, impair or otherwise affect the rights of Agent contained herein
and in the event of any conflict or inconsistency between the
39
calculation of the Borrowing Base as set forth in any Borrowing Base Certificate
and as determined by Agent in good faith, the determination of Agent shall
govern and be conclusive and binding upon Borrowers and Guarantor. Without
limiting the foregoing, Borrowers shall furnish to Agent any information which
Agent may reasonably request regarding the determination and calculation of any
of the amounts set forth in any Borrowing Base Certificate.
(c) If any Borrower's or Guarantor's records or reports of the
Collateral are prepared or maintained by an accounting service, contractor,
shipper or other agent, such Borrower and Guarantor hereby irrevocably
authorizes such service, contractor, shipper or agent to deliver such records,
reports, and related documents to Agent and to follow Agent's instructions with
respect to further services at any time that an Event of Default exists or has
occurred and is continuing.
7.2 Accounts Covenants.
(a) Borrowers shall notify Agent promptly of: (i) any material delay
in any Borrower's performance of any of its material obligations to any account
debtor or the assertion of any material claims, offsets, defenses or
counterclaims by any account debtor, or any material disputes with account
debtors, or any settlement, adjustment or compromise thereof, (ii) all material
adverse information known to any Borrower or Guarantor relating to the financial
condition of any account debtor and (iii) any event or circumstance which, to
the best of any Borrower's or Guarantor's knowledge, would cause Agent to
consider any then existing Accounts as no longer constituting Eligible Accounts.
No credit, discount, allowance or extension or agreement for any of the
foregoing shall be granted to any account debtor without Agent's consent, except
in the ordinary course of a Borrower's or Guarantor's business in accordance
with practices and policies previously disclosed in writing to Agent and except
as set forth in the schedules delivered to Agent pursuant to Section 7.1(a)
above. So long as no Event of Default exists or has occurred and is continuing,
Borrowers and Guarantor shall settle, adjust or compromise any claim, offset,
counterclaim or dispute with any account debtor. At any time that an Event of
Default exists or has occurred and is continuing, Agent shall, at its option,
have the exclusive right to settle, adjust or compromise any claim, offset,
counterclaim or dispute with account debtors or grant any credits, discounts or
allowances.
(b) With respect to each Account: (i) the amounts shown on any
invoice delivered to Agent or schedule thereof delivered to Agent shall be true
and complete, (ii) no payments shall be made thereon except payments immediately
delivered to Agent pursuant to the terms of this Agreement, (iii) no credit,
discount, allowance or extension or agreement for any of the foregoing shall be
granted to any account debtor except as reported to Agent in accordance with
this Agreement and except for credits, discounts, allowances or extensions made
or given in the ordinary course of each Borrower's business in accordance with
practices and policies previously disclosed to Agent, (iv) there shall be no
setoffs, deductions, contras, defenses, counterclaims or disputes existing or
asserted with respect thereto except as reported to Agent in accordance with the
terms of this Agreement, (v) none of the transactions giving rise thereto will
violate any applicable foreign, Federal, State or local laws or regulations, all
documentation relating thereto will be legally sufficient under such laws and
regulations and all such documentation will be legally enforceable in accordance
with its terms.
(c) Agent shall have the right at any time or times, in Agent's name
or in the name of a nominee of Agent, to verify the validity, amount or any
other matter relating to any Receivables or other Collateral, by mail,
telephone, facsimile transmission or otherwise.
7.3 Inventory Covenants. With respect to the Inventory: (a) each Borrower
and Guarantor shall at all times maintain inventory records reasonably
satisfactory to Agent, keeping correct and accurate records itemizing and
describing the kind, type, quality and quantity of Inventory, such Borrower's or
Guarantor's cost therefor and daily withdrawals therefrom and additions thereto;
(b) Borrowers and Guarantor shall conduct a physical count of the Inventory at
least once each year but at any time or times as Agent may request on or after
an Event of Default, and
40
promptly following such physical inventory shall supply Agent with a report in
the form and with such specificity as may be satisfactory to Agent concerning
such physical count; (c) Borrowers and Guarantor shall not remove any Inventory
from the locations set forth or permitted herein, without the prior written
consent of Agent, except for sales of Inventory in the ordinary course of its
business and except to move Inventory directly from one location set forth or
permitted herein to another such location and except for Inventory shipped from
the manufacturer thereof to such Borrower or Guarantor which is in transit to
the locations set forth or permitted herein; (d) upon Agent's request, Borrowers
shall, at their expense, no more than four (4) times in any twelve (12) month
period, but at any time or times as Agent may request on or after an Event of
Default, deliver or cause to be delivered to Agent written appraisals as to the
Inventory in form, scope and methodology acceptable to Agent and by an appraiser
acceptable to Agent, addressed to Agent and Lenders and upon which Agent and
Lenders are expressly permitted to rely; (e) Borrowers and Guarantor shall
produce, use, store and maintain the Inventory with all reasonable care and
caution and in accordance with applicable standards of any insurance and in
conformity with applicable laws (including the requirements of the Federal Fair
Labor Standards Act of 1938, as amended and all rules, regulations and orders
related thereto); (f) none of the Inventory or other Collateral constitutes farm
products or the proceeds thereof; (g) each Borrower and Guarantor assumes all
responsibility and liability arising from or relating to the production, use,
sale or other disposition of the Inventory; (h) Borrowers and Guarantor shall
not sell Inventory to any customer on approval, or any other basis which
entitles the customer to return or may obligate any Borrower or Guarantor to
repurchase such Inventory; (i) Borrowers and Guarantor shall keep the Inventory
in good and marketable condition; and (j) Borrowers and Guarantor shall not,
without prior written notice to Agent or the specific identification of such
Inventory in a report with respect thereto provided by Administrative Borrower
to Agent pursuant to Section 7.1(a) hereof, acquire or accept any Inventory on
consignment or approval.
7.4 Equipment and Real Property Covenants. With respect to the Equipment
and Real Property: (a) upon Agent' s request, Borrowers and Guarantor shall, at
their expense, no more than one (1) time in any twelve (12) month period, but at
any time or times as Agent may request on or after an Event of Default, deliver
or cause to be delivered to Agent written appraisals as to the Equipment and/or
the Real Property in form, scope and methodology acceptable to Agent and by an
appraiser acceptable to Agent, addressed to Agent and upon which Agent is
expressly permitted to rely; (b) Borrowers and Guarantor shall keep the
Equipment in good order, repair, running and marketable condition (ordinary wear
and tear excepted); (c) Borrowers and Guarantor shall use the Equipment and Real
Property with all reasonable care and caution and in accordance with applicable
standards of any insurance and in conformity with all applicable laws; (d) the
Equipment is and shall be used in the business of Borrowers and Guarantor and
not for personal, family, household or farming use; (e) Borrowers and Guarantor
shall not remove any Equipment from the locations set forth or permitted herein,
except (i) to the extent necessary to have any Equipment repaired or maintained
in the ordinary course of its business, (ii) to move Equipment directly from one
location set forth or permitted herein to another such location, (iii) to move
Equipment to locations outside the United States, provided, that, the aggregate
book value of all Equipment so moved shall not exceed $250,000 and any such
Equipment shall not be necessary or material to the operations of any Borrower
or Guarantor or (iv) the movement of motor vehicles used by or for the benefit
of such Borrower or Guarantor in the ordinary course of business; (f) the
Equipment is now and shall remain personal property and Borrowers and Guarantor
shall not permit any of the Equipment to be or become a part of or affixed to
real property; and (g) each Borrower and Guarantor assumes all responsibility
and liability arising from the use of the Equipment and Real Property.
7.5 Power of Attorney. Each Borrower and Guarantor hereby irrevocably
designates and appoints Agent (and all persons designated by Agent) as such
Borrower's and Guarantor's true and lawful attorney-in-fact, and authorizes
Agent, in such Borrower's, Guarantor's or Agent's name, to: (a) at any time an
Event of Default exists or has occurred and is continuing (i) demand payment on
Receivables or other Collateral, (ii) enforce payment of Receivables by legal
proceedings or otherwise, (iii) exercise all of such Borrower's or Guarantor's
rights and remedies to collect any Receivable or other Collateral, (iv) sell or
assign any Receivable upon such terms, for such amount and at such time or times
as the Agent deems advisable, (v) settle, adjust, compromise, extend or renew an
41
Account, (vi) discharge and release any Receivable, (vii) prepare, file and sign
such Borrower's or Guarantor's name on any proof of claim in bankruptcy or other
similar document against an account debtor or other obligor in respect of any
Receivables or other Collateral, (viii) notify the post office authorities to
change the address for delivery of remittances from account debtors or other
obligors in respect of Receivables or other proceeds of Collateral to an address
designated by Agent, and open and dispose of all mail addressed to such Borrower
or Guarantor and handle and store all mail relating to the Collateral; and (ix)
do all acts and things which are necessary, in Agent's determination, to fulfill
such Borrower's or Guarantor's obligations under this Agreement and the other
Financing Agreements and (b) at any time to (i) take control in any manner of
any item of payment in respect of Receivables or constituting Collateral or
otherwise received in or for deposit in the Blocked Accounts or otherwise
received by Agent or any Lender, (ii) have access to any lockbox or postal box
into which remittances from account debtors or other obligors in respect of
Receivables or other proceeds of Collateral are sent or received, (iii) endorse
such Borrower's or Guarantor's name upon any items of payment in respect of
Receivables or constituting Collateral or otherwise received by Agent and any
Lender and deposit the same in Agent's account for application to the
Obligations, (iv) endorse such Borrower's or Guarantor's name upon any chattel
paper, document, instrument, invoice, or similar document or agreement relating
to any Receivable or any goods pertaining thereto or any other Collateral,
including any warehouse or other receipts, or bills of lading and other
negotiable or non-negotiable documents, (v) clear Inventory the purchase of
which was financed with Letter of Credit Accommodations through U.S. Customs or
foreign export control authorities in such Borrower's or Guarantor's name,
Agent's name or the name of Agent's designee, and to sign and deliver to customs
officials powers of attorney in such Borrower's or Guarantor's name for such
purpose, and to complete in such Borrower's or Guarantor's or Agent's name, any
order, sale or transaction, obtain the necessary documents in connection
therewith and collect the proceeds thereof, and (vi) sign such Borrower's or
Guarantor's name on any verification of Receivables and notices thereof to
account debtors or any secondary obligors or other obligors in respect thereof.
Each Borrower and Guarantor hereby releases Agent and Lenders and their
respective officers, employees and designees from any liabilities arising from
any act or acts under this power of attorney and in furtherance thereof, whether
of omission or commission, except as a result of Agent's or any Lender's own
gross negligence or wilful misconduct as determined pursuant to a final
non-appealable order of a court of competent jurisdiction.
7.6 Right to Cure. Agent may, at its option, upon notice to Administrative
Borrower, (a) cure any default by any Borrower or Guarantor under any material
agreement with a third party that affects the Collateral, its value or the
ability of Agent to collect, sell or otherwise dispose of the Collateral or the
rights and remedies of Agent or any Lender therein or the ability of any
Borrower or Guarantor to perform its obligations hereunder or under any of the
other Financing Agreements, (b) pay or bond on appeal any judgment entered
against any Borrower or Guarantor, (c) discharge taxes, liens, security
interests or other encumbrances at any time levied on or existing with respect
to the Collateral and pay any amount, incur any expense or perform any act
which, in Agent's judgment, is necessary or appropriate to preserve, protect,
insure or maintain the Collateral and the rights of Agent and Lenders with
respect thereto. Agent may add any amounts so expended to the Obligations and
charge any Borrower's account therefor, such amounts to be repayable by
Borrowers on demand. Agent and Lenders shall be under no obligation to effect
such cure, payment or bonding and shall not, by doing so, be deemed to have
assumed any obligation or liability of any Borrower or Guarantor. Any payment
made or other action taken by Agent or any Lender under this Section shall be
without prejudice to any right to assert an Event of Default hereunder and to
proceed accordingly.
7.7 Access to Premises. From time to time as requested by Agent, at the
cost and expense of Borrowers, (a) Agent and Documentation Agent or Agent's
designee shall have complete access to all of each Borrower's and Guarantor's
premises during normal business hours and after notice to Administrative
Borrower, or at any time and without notice to Administrative Borrower if an
Event of Default exists or has occurred and is continuing, for the purposes of
inspecting, verifying and auditing the Collateral and all of each Borrower's and
Guarantor's books and records, including the Records, and (b) each Borrower and
Guarantor shall promptly furnish to Agent such copies of such books and records
or extracts therefrom as Agent may request, and Agent and Documentation Agent or
Agent's designee may use during normal business hours such of any Borrower's and
Guarantor's personnel,
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equipment, supplies and premises as may be reasonably necessary for the
foregoing and if an Event of Default exists or has occurred and is continuing
for the collection of Receivables and realization of other Collateral.
SECTION 8. REPRESENTATIONS AND WARRANTIES
Each Borrower and Guarantor hereby represents and warrants to Agent and
Lenders the following (which shall survive the execution and delivery of this
Agreement), the truth and accuracy of which are a continuing condition of the
making of Loans and providing Letter of Credit Accommodations to Borrowers:
8.1 Corporate Existence, Power and Authority. Each Borrower and Guarantor
is a corporation duly organized and in good standing under the laws of its state
of incorporation and is duly qualified as a foreign corporation and in good
standing in all states or other jurisdictions where the nature and extent of the
business transacted by it or the ownership of assets makes such qualification
necessary, except for those jurisdictions in which the failure to so qualify
would not have a material adverse effect on such Borrower's or Guarantor's
financial condition, results of operation or business or the rights of Agent in
or to any of the Collateral. The execution, delivery and performance of this
Agreement, the other Financing Agreements and the transactions contemplated
hereunder and thereunder (a) are all within each Borrower's and Guarantor's
corporate powers, (b) have been duly authorized, (c) are not in contravention of
law or the terms of any Borrower's or Guarantor's certificate of incorporation,
by-laws, or other organizational documentation, or any indenture, agreement or
undertaking to which any Borrower or Guarantor is a party or by which any
Borrower or Guarantor or its property are bound and (d) will not result in the
creation or imposition of, or require or give rise to any obligation to grant,
any lien, security interest, charge or other encumbrance upon any property of
any Borrower or Guarantor. This Agreement and the other Financing Agreements to
which any Borrower or Guarantor is a party constitute legal, valid and binding
obligations of such Borrower and Guarantor enforceable in accordance with their
respective terms.
8.2 Name; State of Organization; Chief Executive Office; Collateral
Locations
(a) The exact legal name of each Borrower and Guarantor is as set
forth on the signature page of this Agreement and in the Information
Certificate. No Borrower or Guarantor has, during the past five years, been
known by or used any other corporate or fictitious name or been a party to any
merger or consolidation, or acquired all or substantially all of the assets of
any Person, or acquired any of its property or assets out of the ordinary course
of business, except as set forth in the Information Certificate.
(b) Each Borrower and Guarantor is an organization of the type and
organized in the jurisdiction set forth in the Information Certificate. The
Information Certificate accurately sets forth the organizational identification
number of each Borrower and Guarantor or accurately states that such Borrower or
Guarantor has none and accurately sets forth the federal employer identification
number of each Borrower and Guarantor.
(c) The chief executive office and mailing address of each Borrower
and Guarantor and each Borrower's and Guarantor's Records concerning Accounts
are located only at the address identified as such in Schedule 8.2 to the
Information Certificate and its only other places of business and the only other
locations of Collateral, if any, are the addresses set forth in Schedule 8.2 to
the Information Certificate, subject to the rights of any Borrower or Guarantor
to establish new locations in accordance with Section 9.2 below. The Information
Certificate correctly identifies any of such locations which are not owned by a
Borrower or Guarantor and sets forth the owners and/or operators thereof.
8.3 Financial Statements; No Material Adverse Change. All financial
statements relating to any Borrower or Guarantor which have been or may
hereafter be delivered by any Borrower or Guarantor to Agent and Lenders have
been prepared in accordance with GAAP (except as to any interim financial
statements, to the extent such statements are subject to normal year-end
adjustments and do not include any notes) and fairly present in all material
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respects the financial condition and the results of operation of such Borrower
and Guarantor as at the dates and for the periods set forth therein. Except as
disclosed in any interim financial statements furnished by Borrowers and
Guarantor to Agent prior to the date of this Agreement, there has been no act,
condition or event which has had or is reasonably likely to have a Material
Adverse Effect since the date of the most recent audited financial statements of
any Borrower or Guarantor furnished by any Borrower or Guarantor to Agent prior
to the date of this Agreement.
8.4 Priority of Liens; Title to Properties. The security interests and
liens granted to Agent under this Agreement and the other Financing Agreements
constitute valid and perfected first priority liens and security interests in
and upon the Collateral subject only to the liens indicated on Schedule 8.4 to
the Information Certificate and the other liens permitted under Section 9.8
hereof. Each Borrower and Guarantor has good and marketable fee simple title to
or valid leasehold interests in all of its Real Property and good, valid and
merchantable title to all of its other properties and assets subject to no
liens, mortgages, pledges, security interests, encumbrances or charges of any
kind, except those granted to Agent and such others as are specifically listed
on Schedule 8.4 to the Information Certificate or permitted under Section 9.8
hereof.
8.5 Tax Returns. Each Borrower and Guarantor has filed, or caused to be
filed, in a timely manner all tax returns, reports and declarations which are
required to be filed by it. All information in such tax returns, reports and
declarations is complete and accurate in all material respects. Each Borrower
and Guarantor has paid or caused to be paid all taxes due and payable or claimed
due and payable in any assessment received by it, except taxes the validity of
which are being contested in good faith by appropriate proceedings diligently
pursued and available to such Borrower or Guarantor and with respect to which
adequate reserves have been set aside on its books. Adequate provision has been
made for the payment of all accrued and unpaid Federal, State, county, local,
foreign and other taxes whether or not yet due and payable and whether or not
disputed.
8.6 Litigation. Except as set forth on Schedule 8.6 to the Information
Certificate, (a) there is no investigation by any Governmental Authority
pending, or to the best of any Borrower's or Guarantor's knowledge threatened,
against or affecting any Borrower or Guarantor, its or their assets or business
and (b) there is no action, suit, proceeding or claim by any Person pending, or
to the best of any Borrower's or Guarantor's knowledge threatened, against any
Borrower or Guarantor or its or their assets or goodwill, or against or
affecting any transactions contemplated by this Agreement, in each case, which
if adversely determined against such Borrower or Guarantor has or could
reasonably be expected to have a Material Adverse Effect.
8.7 Compliance with Other Agreements and Applicable Laws.
(a) Borrowers and Guarantor are not in default in any respect under,
or in violation in any respect of the terms of, any material agreement,
contract, instrument, lease or other commitment to which it is a party or by
which it or any of its assets are bound. Borrowers and Guarantor are in
compliance with the requirements of all applicable laws, rules, regulations and
orders of any Governmental Authority relating to their respective businesses,
including, without limitation, those set forth in or promulgated pursuant to the
Occupational Safety and Health Act of 1970, as amended, the Fair Labor Standards
Act of 1938, as amended, ERISA, the Code, as amended, and the rules and
regulations thereunder, and all Environmental Laws.
(b) Borrowers and Guarantor have obtained all material permits,
licenses, approvals, consents, certificates, orders or authorizations of any
Governmental Authority required for the lawful conduct of its business (the
"Permits"). All of the Permits are valid and subsisting and in full force and
effect. There are no actions, claims or proceedings pending or to the best of
any Borrower's or Guarantor's knowledge, threatened that seek the revocation,
cancellation, suspension or modification of any of the Permits.
44
8.8 Environmental Compliance.
(a) Except as set forth on Schedule 8.8 to the Information
Certificate, Borrowers, Guarantor and any Subsidiary of any Borrower or
Guarantor have not generated, used, stored, treated, transported, manufactured,
handled, produced or disposed of any Hazardous Materials, on or off its premises
(whether or not owned by it) in any manner which at any time violates in any
material respect any applicable Environmental Law or Permit, and the operations
of Borrowers, Guarantor and any Subsidiary of any Borrower or Guarantor complies
in all material respects with all Environmental Laws and all Permits.
(b) Except as set forth on Schedule 8.8 to the Information
Certificate, there has been no investigation by any Governmental Authority or
any proceeding, complaint, order, directive, claim, citation or notice by any
Governmental Authority or any other person nor is any pending or to the best of
any Borrower's or Guarantor's knowledge threatened, with respect to any
non-compliance with or violation of the requirements of any Environmental Law by
any Borrower or Guarantor and any Subsidiary of any Borrower or Guarantor or the
release, spill or discharge, threatened or actual, of any Hazardous Material or
the generation, use, storage, treatment, transportation, manufacture, handling,
production or disposal of any Hazardous Materials or any other environmental,
health or safety matter, which adversely affects or could reasonably be expected
to adversely affect in any material respect any Borrower or Guarantor or its or
their business, operations or assets or any properties at which such Borrower or
Guarantor has transported, stored or disposed of any Hazardous Materials.
(c) Except as set forth on Schedule 8.8 to the Information
Certificate, Borrowers, Guarantor and their Subsidiaries have no material
liability (contingent or otherwise) in connection with a release, spill or
discharge, threatened or actual, of any Hazardous Materials or the generation,
use, storage, treatment, transportation, manufacture, handling, production or
disposal of any Hazardous Materials.
(d) Borrowers, Guarantor and their Subsidiaries have all Permits
required to be obtained or filed in connection with the operations of Borrowers
and Guarantor under any Environmental Law and all of such licenses,
certificates, approvals or similar authorizations and other Permits are valid
and in full force and effect.
8.9 Employee Benefits.
(a) Each Plan is in compliance in all material respects with the
applicable provisions of ERISA, the Code and other Federal or State law.
Borrowers and Guarantor do not have and have not sponsored a Plan that is
subject to Title IV of ERISA. Each Borrower and its ERISA Affiliates have made
all required contributions to any Plan subject to Section 412 of the Code, and
no application for a funding waiver or an extension of any amortization period
pursuant to Section 412 of the Code has been made with respect to any Plan.
(b) There are no pending, or to the best of any Borrower's or
Guarantor's knowledge, threatened claims, actions or lawsuits, or action by any
Governmental Authority, with respect to any Plan. There has been no prohibited
transaction or violation of the fiduciary responsibility rules with respect to
any Plan.
(c) (i) No ERISA Event has occurred or is reasonably expected to
occur; (ii) the current value of each Plan's assets (determined in accordance
with the assumptions used for funding such Plan pursuant to Section 412 of the
Code) are not less than such Plan's liabilities under Section 4001(a)(16) of
ERISA; (iii) each Borrower and Guarantor, and their ERISA Affiliates, have not
incurred and do not reasonably expect to incur, any liability under Title IV of
ERISA with respect to any Plan (other than premiums due and not delinquent under
Section 4007 of ERISA); (iv) each Borrower and Guarantor, and their ERISA
Affiliates, have not incurred and do not reasonably expect to incur, any
liability (and no event has occurred which, with the giving of notice under
Section 4219 of ERISA, would result in such liability) under Section 4201 or
4243 of ERISA with respect to a Multiemployer Plan; and (v) each Borrower and
Guarantor, and their ERISA Affiliates, have not engaged in a transaction that
would be subject to Section 4069 or 4212(c) of ERISA.
45
8.10 Bank Accounts. All of the deposit accounts, investment accounts or
other accounts in the name of or used by any Borrower or Guarantor maintained at
any bank or other financial institution are set forth on Schedule 8.10 to the
Information Certificate, subject to the right of each Borrower and Guarantor to
establish new accounts in accordance with Section 5.2 hereof.
8.11 Intellectual Property. Each Borrower and Guarantor owns or licenses or
otherwise has the right to use all Intellectual Property necessary for the
operation of its business as presently conducted or proposed to be conducted. As
of the date hereof, Borrowers and Guarantor do not have any Intellectual
Property registered, or subject to pending applications, in the United States
Patent and Trademark Office or any similar office or agency in the United
States, any State thereof, any political subdivision thereof or in any other
country, other than those described in Schedule 8.11 to the Information
Certificate and has not granted any licenses with respect thereto other than as
set forth in Schedule 8.11 to the Information Certificate. No event has occurred
which permits or would permit after notice or passage of time or both, the
revocation, suspension or termination of such rights. To the best of any
Borrower's and Guarantor's knowledge, no slogan or other advertising device,
product, process, method, substance or other Intellectual Property or goods
bearing or using any Intellectual Property presently contemplated to be sold by
or employed by any Borrower or Guarantor infringes any patent, trademark,
servicemark, tradename, copyright, license or other Intellectual Property owned
by any other Person presently and no claim or litigation is pending or
threatened against or affecting any Borrower or Guarantor contesting its right
to sell or use any such Intellectual Property. Schedule 8.11 to the Information
Certificate sets forth all of the agreements or other arrangements of each
Borrower and Guarantor pursuant to which such Borrower or Guarantor has a
license or other right to use any trademarks, logos, designs, representations or
other Intellectual Property owned by another person as in effect on the date
hereof and the dates of the expiration of such agreements or other arrangements
of such Borrower or Guarantor as in effect on the date hereof (collectively,
together with such agreements or other arrangements as may be entered into by
any Borrower or Guarantor after the date hereof, collectively, the "License
Agreements" and individually, a "License Agreement"). No trademark, servicemark,
copyright or other Intellectual Property at any time used by any Borrower or
Guarantor which is owned by another person, or owned by such Borrower or
Guarantor subject to any security interest, lien, collateral assignment, pledge
or other encumbrance in favor of any person other than Agent, is affixed to any
Eligible Inventory, except (a) to the extent permitted under the term of the
license agreements listed on Schedule 8.11 to the Information Certificate and
(b) to the extent the sale of Inventory to which such Intellectual Property is
affixed is permitted to be sold by such Borrower or Guarantor under applicable
law (including the United States Copyright Act of 1976).
8.12 Subsidiaries; Affiliates; Capitalization; Solvency.
(a) Each Borrower and Guarantor does not have any direct or indirect
Subsidiaries or Affiliates and is not engaged in any joint venture or
partnership except as set forth in Schedule 8.12 to the Information Certificate.
(b) Each Borrower and Guarantor is the record and beneficial owner of
all of the issued and outstanding shares of Capital Stock of each of the
Subsidiaries listed on Schedule 8.12 to the Information Certificate as being
owned by such Borrower or Guarantor and there are no proxies, irrevocable or
otherwise, with respect to such shares and no equity securities of any of the
Subsidiaries are or may become required to be issued by reason of any options,
warrants, rights to subscribe to, calls or commitments of any kind or nature and
there are no contracts, commitments, understandings or arrangements by which any
Subsidiary is or may become bound to issue additional shares of it Capital Stock
or securities convertible into or exchangeable for such shares.
(c) The issued and outstanding shares of Capital Stock of each
Borrower and Guarantor (other than Parent) are directly and beneficially owned
and held by the persons indicated in the Information Certificate, and in each
case all of such shares have been duly authorized and are fully paid and
non-assessable, free and clear of all claims, liens, pledges and encumbrances of
any kind, except as disclosed in writing to Agent prior to the date hereof.
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(d) Each Borrower and Guarantor is Solvent and will continue to be
Solvent after the creation of the Obligations, the security interests of Agent
and the other transaction contemplated hereunder.
8.13 Labor Disputes.
(a) Set forth on Schedule 8.13 to the Information Certificate is a
list (including dates of termination) of all collective bargaining or similar
agreements between or applicable to each Borrower and Guarantor and any union,
labor organization or other bargaining agent in respect of the employees of any
Borrower or Guarantor on the date hereof.
(b) There is (i) no significant unfair labor practice complaint
pending against any Borrower or Guarantor or, to the best of any Borrower's or
Guarantor's knowledge, threatened against it, before the National Labor
Relations Board, and no significant grievance or significant arbitration
proceeding arising out of or under any collective bargaining agreement is
pending on the date hereof against any Borrower or Guarantor or, to best of any
Borrower's or Guarantor's knowledge, threatened against it, and (ii) no
significant strike, labor dispute, slowdown or stoppage is pending against any
Borrower or Guarantor or, to the best of any Borrower's or Guarantor's
knowledge, threatened against any Borrower or Guarantor.
8.14 Restrictions on Subsidiaries. Except for restrictions contained in
this Agreement or any other agreement with respect to Indebtedness of any
Borrower or Guarantor permitted hereunder as in effect on the date hereof, there
are no contractual or consensual restrictions on any Borrower or Guarantor or
any of its Subsidiaries (other than a Foreign Subsidiary) which prohibit or
otherwise restrict (a) the transfer of cash or other assets (i) between any
Borrower or Guarantor and any of its or their Subsidiaries or (ii) between any
Subsidiaries of any Borrower or Guarantor or (b) the ability of any Borrower or
Guarantor or any of its or their Subsidiaries to incur Indebtedness or grant
security interests to Agent or any Lender in the Collateral.
8.15 Material Contracts. Schedule 8.15 to the Information Certificate sets
forth all Material Contracts to which any Borrower or Guarantor is a party or is
bound as of the date hereof. Borrowers and Guarantor have delivered true,
correct and complete copies of such Material Contracts to Agent on or before the
date hereof. Borrowers and Guarantor are not in breach or in default in any
material respect of or under any Material Contract and have not received any
notice of the intention of any other party thereto to terminate any Material
Contract.
8.16 Payable Practices. Each Borrower and Guarantor have not made any
material change in the historical accounts payable practices from those in
effect immediately prior to the date hereof.
8.17 Accuracy and Completeness of Information. All information furnished by
or on behalf of any Borrower or Guarantor in writing to Agent or any Lender in
connection with this Agreement or any of the other Financing Agreements or any
transaction contemplated hereby or thereby, including all information on the
Information Certificate is true and correct in all material respects on the date
as of which such information is dated or certified and does not omit any
material fact necessary in order to make such information not misleading. No
event or circumstance has occurred which has had or could reasonably be expected
to have a Material Adverse Affect, which has not been fully and accurately
disclosed to Agent in writing prior to the date hereof.
8.18 Survival of Warranties; Cumulative. All representations and warranties
contained in this Agreement or any of the other Financing Agreements shall
survive the execution and delivery of this Agreement and shall be deemed to have
been made again to Agent and Lenders on the date of each additional borrowing or
other credit accommodation hereunder and shall be conclusively presumed to have
been relied on by Agent and Lenders regardless of any investigation made or
information possessed by Agent or any Lender. The representations and
47
warranties set forth herein shall be cumulative and in addition to any other
representations or warranties which any Borrower or Guarantor shall now or
hereafter give, or cause to be given, to Agent or any Lender.
SECTION 9. AFFIRMATIVE AND NEGATIVE COVENANTS
9.1 Maintenance of Existence.
(a) Each Borrower and Guarantor shall at all times preserve, renew
and keep in full force and effect its corporate existence and rights and
franchises with respect thereto and maintain in full force and effect all
licenses, trademarks, tradenames, approvals, authorizations, leases, contracts
and Permits necessary to carry on the business as presently or proposed to be
conducted, except as to Guarantor to the extent it is dissolved and liquidated
as permitted in Section 9.7 hereto.
(b) No Borrower or Guarantor shall change its name unless each of the
following conditions is satisfied: (i) Agent shall have received not less than
thirty (30) days prior written notice from Administrative Borrower of such
proposed change in its corporate name, which notice shall accurately set forth
the new name; and (ii) Agent shall have received a copy of the amendment to the
Certificate of Incorporation of such Borrower or Guarantor providing for the
name change certified by the Secretary of State of the jurisdiction of
incorporation or organization of such Borrower or Guarantor as soon as it is
available.
(c) No Borrower or Guarantor shall change its chief executive office
or its mailing address or organizational identification number (or if it does
not have one, shall not acquire one) unless Agent shall have received not less
than thirty (30) days' prior written notice from Administrative Borrower of such
proposed change, which notice shall set forth such information with respect
thereto as Agent may require and Agent shall have received such agreements as
Agent may reasonably require in connection therewith. No Borrower or Guarantor
shall change its type of organization, jurisdiction of organization or other
legal structure.
9.2 New Collateral Locations. Each Borrower and Guarantor may only open any
new location within the continental United States provided such Borrower or
Guarantor (a) gives Agent thirty (30) days prior written notice of the intended
opening of any such new location and (b) executes and delivers, or causes to be
executed and delivered, to Agent such agreements, documents, and instruments as
Agent may deem reasonably necessary or desirable to protect its interests in the
Collateral at such location.
9.3 Compliance with Laws, Regulations, Etc.
(a) Each Borrower and Guarantor shall, and shall cause any Subsidiary
to, at all times, comply in all material respects with all laws, rules,
regulations, licenses, approvals, orders and other Permits applicable to it and
duly observe all requirements of any foreign, Federal, State or local
Governmental Authority, including ERISA, the Code, the Occupational Safety and
Health Act of 1970, as amended, the Fair Labor Standards Act of 1938, as
amended, and all statutes, rules, regulations, orders, permits and stipulations
relating to environmental pollution and employee health and safety, including
all of the Environmental Laws.
(b) Borrowers and Guarantor shall give written notice to Agent
immediately upon any Borrower's or Guarantor's receipt of any notice of, or any
Borrower's or Guarantor's otherwise obtaining knowledge of, (i) the occurrence
of any event involving the release, spill or discharge, threatened or actual, of
any Hazardous Material or (ii) any investigation, proceeding, complaint, order,
directive, claims, citation or notice with respect to: (A) any non-compliance
with or violation of any Environmental Law by any Borrower or Guarantor or (B)
the release, spill or discharge, threatened or actual, of any Hazardous Material
other than in the ordinary course of business and other than as permitted under
any applicable Environmental Law. Copies of all environmental surveys, audits,
48
assessments, feasibility studies and results of remedial investigations shall be
promptly furnished, or caused to be furnished, by such Borrower or Guarantor to
Agent. Each Borrower and Guarantor shall take prompt action to respond to any
material non-compliance with any of the Environmental Laws and shall regularly
report to Agent on such response.
(c) Without limiting the generality of the foregoing, whenever Agent
reasonably determines that there is any material non-compliance, or any
condition which requires any action by or on behalf of any Borrower or Guarantor
in order to avoid any material non-compliance, with any Environmental Law,
Borrowers shall, at Agent's request and Borrowers' expense: (i) cause an
independent environmental engineer reasonably acceptable to Agent to conduct
such tests of the site where non-compliance or alleged non-compliance with such
Environmental Laws has occurred as to such non-compliance and prepare and
deliver to Agent a report as to such non-compliance setting forth the results of
such tests, a proposed plan for responding to any environmental problems
described therein, and an estimate of the costs thereof and (ii) provide to
Agent a supplemental report of such engineer whenever the scope of such
non-compliance, or such Borrower's or Guarantor's response thereto or the
estimated costs thereof, shall change in any material respect.
(d) Each Borrower and Guarantor shall indemnify and hold harmless
Agent and Lenders and their respective directors, officers, employees, agents,
invitees, representatives, successors and assigns, from and against any and all
losses, claims, damages, liabilities, costs, and expenses (including reasonable
attorneys' fees and expenses) directly or indirectly arising out of or
attributable to the use, generation, manufacture, reproduction, storage,
release, threatened release, spill, discharge, disposal or presence of a
Hazardous Material, including the costs of any required or necessary repair,
cleanup or other remedial work with respect to any property of any Borrower or
Guarantor and the preparation and implementation of any closure, remedial or
other required plans. All representations, warranties, covenants and
indemnifications in this Section 9.3 shall survive the payment of the
Obligations and the termination of this Agreement.
9.4 Payment of Taxes and Claims. Each Borrower and Guarantor shall, and
shall cause any Subsidiary to, duly pay and discharge all taxes, assessments,
contributions and governmental charges upon or against it or its properties or
assets, except for taxes the validity of which are being contested in good faith
by appropriate proceedings diligently pursued and available to such Borrower,
Guarantor or Subsidiary, as the case may be, and with respect to which adequate
reserves have been set aside on its books. Each Borrower and Guarantor shall be
liable for any tax or penalties imposed on Agent or any Lender as a result of
the financing arrangements provided for herein and each Borrower and Guarantor
agrees to indemnify and hold Agent harmless with respect to the foregoing, and
to repay to Agent, for the benefit of Lenders, on demand the amount thereof, and
until paid by such Borrower or Guarantor such amount shall be added and deemed
part of the Loans, provided, that, nothing contained herein shall be construed
to require any Borrower or Guarantor to pay any income or franchise taxes
attributable to the income of Lenders from any amounts charged or paid hereunder
to Lenders. The foregoing indemnity shall survive the payment of the Obligations
and the termination of this Agreement.
9.5 Insurance.
(a) Each Borrower and Guarantor shall, and shall cause any Subsidiary
to, at all times, maintain with financially sound and reputable insurers
insurance with respect to the Collateral against loss or damage and all other
insurance of the kinds and in the amounts customarily insured against or carried
by corporations of established reputation engaged in the same or similar
businesses and similarly situated. Said policies of insurance shall be
reasonably satisfactory to Agent as to form, amount and insurer. Borrowers and
Guarantor shall furnish certificates, policies or endorsements to Agent as Agent
shall reasonably require as proof of such insurance, and, if any Borrower or
Guarantor fails to do so, Agent is authorized, but not required, to obtain such
insurance at the expense of Borrowers. All policies shall provide for at least
thirty (30) days prior written notice to Agent of any cancellation or reduction
of coverage and that Agent may act as attorney for each Borrower and Guarantor
in obtaining, and at
49
any time an Event of Default exists or has occurred and is continuing,
adjusting, settling, amending and canceling such insurance. Borrowers and
Guarantor shall cause Agent to be named as a loss payee and an additional
insured (but without any liability for any premiums) under such insurance
policies and Borrowers and Guarantor shall obtain non-contributory lender's loss
payable endorsements to all insurance policies in form and substance
satisfactory to Agent. Such lender's loss payable endorsements shall specify
that the proceeds of such insurance shall be payable to Agent as its interests
may appear and further specify that Agent and Lenders shall be paid regardless
of any act or omission by any Borrower, Guarantor or any of its or their
Affiliates. Without limiting any other rights of Agent or Lenders, any insurance
proceeds received by Agent at any time may be applied to payment of the
Obligations, whether or not then due, in any order and in such manner as Agent
may determine. Upon application of such proceeds to the Loans, Loans may be
available subject and pursuant to the terms hereof to be used for the costs of
repair or replacement of the Collateral lost or damages resulting in the payment
of such insurance proceeds.
(b) Notwithstanding anything to the contrary contained herein, if any
of the Equipment or any portion of any building, structure or other improvement
on any Real Property is lost, physically damaged or destroyed, upon the written
request of Administrative Borrower, Agent shall release the net cash proceeds
from insurance received by Agent pursuant to this Section 9.5 based on a claim
by a Borrower as a result of such loss, damage or destruction to the extent
necessary for the repair, refurbishing or replacement of such Equipment or
building, structure or improvement, provided, that , all of the following
conditions are satisfied: (i) no Default or Event of Default shall exist or have
occurred and be continuing, (ii) the amount of the insurance proceeds are
sufficient, in Agent's good faith determination, to effect such repair,
refurbishing or replacement in a satisfactory manner, (iii) such proceeds shall
be used only to repair, refurbish or replace such Equipment or building,
structure or improvement, (iv) the insurance proceeds shall be released by Agent
to Administrative Borrower from time to time as needed or at Agent's option,
released by Agent directly to the contractor, subcontractor, materialmen and
other persons rendering services or materials to repair, refurbish or replace
such Equipment, building, structure or improvement and (v) the casualty resulted
in a payment of $500,000 or less in insurance proceeds.
9.6 Financial Statements and Other Information.
(a) Each Borrower and Guarantor shall, and shall cause any Subsidiary
to, keep proper books and records in which true and complete entries shall be
made of all dealings or transactions of or in relation to the Collateral and the
business of such Borrower, Guarantor and its Subsidiaries in accordance with
GAAP. Borrowers and Guarantor shall promptly furnish to Agent and Lenders all
such financial and other information as Agent shall reasonably request relating
to the Collateral and the assets, business and operations of Borrowers and
Guarantor, and Borrowers shall notify the auditors and accountants of Borrowers
and Guarantor that Agent is authorized to obtain such information directly from
them. Without limiting the foregoing, Borrowers and Guarantor shall furnish or
cause to be furnished to Agent, the following: (i) within thirty (30) days after
the end of each fiscal month, monthly unaudited consolidated financial
statements, and unaudited consolidating financial statements (including in each
case balance sheets, statements of income and loss, statements of cash flow, and
statements of shareholders' equity), all in reasonable detail, fairly presenting
the financial position and the results of the operations of Parent and its
Subsidiaries as of the end of and through such fiscal month, certified to be
correct by the chief financial officer of Parent, subject to normal year-end
adjustments and no footnotes and accompanied by a compliance certificate
substantially in the form of Exhibit D hereto, along with a schedule in a form
satisfactory to Agent of the calculations used in determining, as of the end of
such month, whether Borrowers and Guarantor are in compliance with the covenants
set forth in Sections 9.17 of this Agreement for such month and (ii) within
ninety (90) days after the end of each fiscal year, audited consolidated
financial statements and unaudited consolidating financial statements of Parent
and its Subsidiaries (including in each case balance sheets, statements of
income and loss, statements of cash flow, and statements of shareholders'
equity), and the accompanying notes thereto, all in reasonable detail, fairly
presenting the financial position and the results of the operations of Parent
and its Subsidiaries as of the end of and for such fiscal year, together with
the unqualified opinion of independent certified
50
public accountants with respect to the audited consolidated financial
statements, which accountants shall be an independent accounting firm selected
by Borrowers and acceptable to Agent, that such audited consolidated financial
statements have been prepared in accordance with GAAP, and present fairly the
results of operations and financial condition of Parent and its Subsidiaries as
of the end of and for the fiscal year then ended.
(b) Borrowers and Guarantor shall promptly notify Agent in writing of
the details of (i) any loss, damage, investigation, action, suit, proceeding or
claim relating to Collateral having a value of more than $500,000 or which if
adversely determined would result in any material adverse change in any
Borrower's or Guarantor's business, properties, assets, goodwill or condition,
financial or otherwise, (ii) any Material Contract being terminated or amended
or any new Material Contract entered into (in which event Borrowers and
Guarantor shall provide Agent with a copy of such Material Contract), (iii) any
order, judgment or decree in excess of $500,000 shall have been entered against
any Borrower or Guarantor any of its or their properties or assets, (iv) any
notification of a material violation of laws or regulations received by any
Borrower or Guarantor, (v) any ERISA Event, and (vi) the occurrence of any
Default or Event of Default.
(c) Borrowers and Guarantor shall promptly after the sending or
filing thereof furnish or cause to be furnished to Agent copies of all reports
which any Borrower or Guarantor sends to its stockholders generally and copies
of all reports and registration statements which any Borrower or Guarantor files
with the Securities and Exchange Commission, any national securities exchange or
the National Association of Securities Dealers, Inc.
(d) Borrowers and Guarantor shall furnish or cause to be furnished to
Agent such budgets, forecasts, projections and other information respecting the
Collateral and the business of Borrowers and Guarantor, as Agent may, from time
to time, reasonably request. Agent is hereby authorized to deliver a copy of any
financial statement or any other information relating to the business of
Borrowers and Guarantor to any court or other Governmental Authority or to any
Lender or Participant or prospective Lender or Participant or any Affiliate of
any Lender or Participant. Each Borrower and Guarantor hereby irrevocably
authorizes and directs all accountants or auditors to deliver to Agent, at
Borrowers' expense, copies of the financial statements of any Borrower and
Guarantor and any reports or management letters prepared by such accountants or
auditors on behalf of any Borrower or Guarantor and to disclose to Agent and
Lenders such information as they may have regarding the business of any Borrower
and Guarantor. Any documents, schedules, invoices or other papers delivered to
Agent or any Lender may be destroyed or otherwise disposed of by Agent or such
Lender one (1) year after the same are delivered to Agent or such Lender, except
as otherwise designated by Administrative Borrower to Agent or such Lender in
writing.
9.7 Sale of Assets, Consolidation, Merger, Dissolution, Etc. Each Borrower
and Guarantor shall not, and shall not permit any Subsidiary to, directly or
indirectly,
(a) merge into or with or consolidate with any other Person or permit
any other Person to merge into or with or consolidate with it except that
(i) any Foreign Subsidiary may merge or consolidate with and
into any other Foreign Subsidiary or any other Person, provided, that, as to any
such merger or consolidation, each of the following conditions is satisfied: (A)
Agent shall have received not less than ten (10) Business Days' prior written
notice of the intention of such Foreign Subsidiary to so merge or consolidate,
which notice shall set forth in reasonable detail satisfactory to Agent, the
Foreign Subsidiary that is merging or consolidating, the person with whom such
Foreign Subsidiary is merging or consolidating and the material agreements and
documents relating to such merger or consolidation, (B) a Foreign Subsidiary
shall be the surviving entity of such merger or consolidation, (C) Agent shall
have received such other information with respect to such merger or
consolidation as Agent may reasonably request, (D) as of the effective date of
the merger or consolidation and after giving effect thereto, no Event of Default
shall exist or have occurred and be continuing, and (E) in no event shall any
Borrower or Guarantor make, or be required
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to make, any payment or incur any obligation or liability in connection with
such merger or consolidation or take any other action which is otherwise
prohibited hereunder;
(ii) any Borrower may merge or consolidate with and into any
other Borrower and Guarantor may merge or consolidate with and into any
Borrower, provided, that, as to any such merger or consolidation, each of the
following conditions is satisfied: (A) Agent shall have received not less than
ten (10) Business Days' prior written notice of the intention of any Borrower or
Guarantor to so merge or consolidate, which notice shall set forth in reasonable
detail satisfactory to Agent, the persons that are merging or consolidating,
which person will be the surviving entity, and the material agreements and
documents relating to such merger or consolidation, (B) Agent shall have
received such other information with respect to such merger or consolidation as
Agent may reasonably request within such ten (10) Business Day period, (C) as of
the effective date of the merger or consolidation and after giving effect
thereto, no Default or Event of Default shall exist or have occurred, (D) Agent
shall have received, true, correct and complete copies of all agreements,
documents and instruments relating to such merger or consolidation, including,
but not limited to, the certificate or certificates of merger to be filed with
each appropriate Secretary of State (with a copy as filed promptly after such
filing), (E) the surviving corporation shall expressly confirm, ratify and
assume the Obligations and the Financing Agreements to which it is a party in
writing, in form and substance satisfactory to Agent, and Borrowers and
Guarantor shall execute and deliver such other agreements, documents and
instruments as Agent may request in connection therewith, and (F) in the case of
a merger or consolidation of Guarantor with and into a Borrower, the Borrower
shall be the surviving corporation and the amount of the liabilities (contingent
or otherwise) acquired by such Borrower pursuant to such merger or consolidation
shall not exceed the value of the assets acquired pursuant thereto and the
liabilities so acquired by such Borrower shall otherwise be acceptable to Agent,
(b) sell, issue, assign, lease, license, transfer, abandon or
otherwise dispose of any Capital Stock or Indebtedness to any other Person or
any of its assets to any other Person, except for
(i) sales of Inventory in the ordinary course of business,
(ii) the sale or other disposition of Equipment (including
worn-out or obsolete Equipment or Equipment no longer used or useful in the
business of any Borrower or Guarantor) so long as such sales or other
dispositions do not involve Equipment having an aggregate fair market value in
excess of $500,000 for all such Equipment disposed of in any fiscal year of
Borrowers or as Agent may otherwise agree,
(iii) in addition to sales or other dispositions of Equipment
permitted under clause (ii) above, the sale or other disposition of Equipment to
Foreign Subsidiaries so long as such sales or other dispositions do not involve
Equipment having an aggregate fair market value in excess of $750,000 for all
such Equipment disposed of in any fiscal year of Borrowers or as Agent may
otherwise agree, and
(iv) the issuance and sale by any Borrower or Guarantor of
Capital Stock of such Borrower or Guarantor after the date hereof; provided ,
that, (A) Agent shall have received not less than ten (10) Business Days' prior
written notice of such issuance and sale by such Borrower or Guarantor, which
notice shall specify the parties to whom such shares are to be sold, the terms
of such sale, the total amount which it is anticipated will be realized from the
issuance and sale of such stock and the net cash proceeds which it is
anticipated will be received by such Borrower or Guarantor from such sale, (B)
such Borrower or Guarantor shall not be required to pay any cash dividends or
repurchase or redeem such Capital Stock or make any other payments in respect
thereof, except as otherwise permitted in Section 9.11 hereof, (C) the terms of
such Capital Stock, and the terms and conditions of the purchase and sale
thereof, shall not include any terms that include any limitation on the right of
any Borrower to request or receive Loans or Letter of Credit Accommodations or
the right of any Borrower and Guarantor to amend or modify any of the terms and
conditions of this Agreement or any of the other Financing Agreements or
otherwise in any way relate to or affect the arrangements of Borrowers and
Guarantor with Agent and Lenders or are more
52
restrictive or burdensome to any Borrower or Guarantor than the terms of any
Capital Stock in effect on the date hereof, (D) except as Agent may otherwise
agree in writing, all of the proceeds of the sale and issuance of such Capital
Stock shall be paid to Agent for application to the Obligations in such order
and manner as Agent may determine or at Agent's option, to be held as cash
collateral for the Obligations and (E) as of the date of such issuance and sale
and after giving effect thereto, no Default or Event of Default shall exist or
have occurred and be continuing,
(v) the issuance of Capital Stock of any Borrower or Guarantor
consisting of common stock pursuant to an employee stock option or grant or
similar equity plan or 401(k) plans of such Borrower or Guarantor for the
benefit of its employees, directors and consultants, provided, that, in no event
shall such Borrower or Guarantor be required to issue, or shall such Borrower or
Guarantor issue, Capital Stock pursuant to such stock plans or 401(k) plans
which would result in a Change of Control or other Event of Default,
(vi) the issuance of Capital Stock of Parent to the holders of the
Subordinated Notes and the Warrants to the extent required under the
Subordinated Note Agreements as in effect on the date hereof, provided, that, in
connection with the issuance of any such Capital Stock, (A) Agent shall have
received not less than one (1) Business Day prior written notice of such
issuance specifying the number of shares to be issued and the basis for such
issuance pursuant to the Subordinated Note Agreements and (B) on and after
giving effect to such issuance, no Default or Event of Default shall exist or
have occurred,
(vii) the sale by Parent of the Equipment of Parent located in San
Jose, California as of the date hereof listed on Schedule 9.7 hereto, provided,
that, as to any such sale each of the following conditions is satisfied: (A)
Agent shall have received not less than ten (10) Business Days' prior written
notice of the proposed sale by Parent of any of such Equipment, which notice
shall specify the parties to such sale, the purchase price and manner of payment
thereof, the Equipment to be sold, and such other information with respect
thereto as Agent may request, (B) all of the Net Proceeds payable to or for the
benefit of Parent in respect of such sale shall be in the form of immediately
available funds received by Parent on the effective date of the transfer of the
title to such Equipment, (C) the total amount of the Net Proceeds payable to
Parent in cash or other immediately available funds in consideration of such
sale at the time of the transfer of title of such Equipment shall be not less
than $3,000,000, (D) all Net Proceeds from such sale shall be paid directly by
the purchaser to Agent for application to the Obligations in such order and
manner as Agent may determine, (E) such sale shall be on commercially reasonable
terms in a bona fide arms' length transaction with a person that is not an
Affiliate, (F) all of the Equipment so sold shall be leased back by the
purchaser thereof to Parent and the Indebtedness arising pursuant to such lease
shall be permitted under Section 9.9(f) hereof, (G) Agent shall have received an
agreement in form and substance satisfactory to Agent from the purchaser of such
Equipment giving Agent the right to use such Equipment under certain
circumstances duly authorized, executed and delivered by the purchaser thereof,
and (H) as of the date of such sale and after giving effect thereto, no Default
or Event of Default shall exist or have occurred and be continuing,
(viii) the sale by Parent of the Rochester Real Property after the
date hereof, provided, that, as to any such sale each of the following
conditions is satisfied: (A) Agent shall have received not less than ten (10)
Business Days' prior written notice of the proposed sale by Parent of any of
such Real Property, which notice shall specify the parties to such sale, the
purchase price and manner of payment thereof, the Real Property to be sold, and
such other information with respect thereto as Agent may request, (B) all of the
Net Proceeds payable to or for the benefit of Parent in respect of such sale
shall be in the form of immediately available funds received by Parent on the
effective date of the transfer of the title to such Real Property, (C) the total
amount of the Net Proceeds payable to Parent in cash or other immediately
available funds in consideration of such sale at the time of the transfer of
title of such Real Property shall be not less than $1,500,000, (D) all Net
Proceeds from such sale shall be paid directly by the purchaser to Agent for
application to the Obligations in such order and manner as Agent may determine
and if there are no Loans outstanding, to be held by Agent as cash collateral
for the Obligations, (E) such sale shall be on commercially reasonable terms in
a bona fide arms' length transaction with a person that is not an Affiliate, (F)
all
53
of the Real Property so sold shall be leased back to Parent and the Indebtedness
arising pursuant to such lease shall be permitted under Section 9.9(g) hereof,
and (G) as of the date of such sale and after giving effect thereto, no Default
or Event of Default shall exist or have occurred and be continuing;
(c) wind up, liquidate or dissolve, except that:
(i) any Foreign Subsidiary may wind up, liquidate and
dissolve, provided, that, (A) in no event shall any Borrower or Guarantor assume
any Indebtedness, obligations or liabilities as a result of such winding up,
liquidation or dissolution, or otherwise become liable in respect of any
obligations or liabilities, or make or be required to make any payment in
connection with such winding up, liquidating or dissolution or take any other
action which is otherwise prohibited hereunder, (B) Agent shall have received
not less than ten (10) Business Days' prior written notice of the intention of
such Foreign Subsidiary to wind up, liquidate or dissolve, and (C) as of the
date of such winding up, liquidation or dissolution and after giving effect
thereto, no Default or Event of Default shall exist or have occurred,
(ii) Guarantor may wind up, liquidate or dissolve, provided,
that, (A) in no event shall any Borrower assume any Indebtedness, obligations or
liabilities as a result of such winding up, liquidation or dissolution, or
otherwise become liable in respect of any obligations or liabilities, or make or
be required to make any payment in connection with such winding up, liquidating
or dissolution or take any other action which is otherwise prohibited hereunder,
(B) Agent shall have received not less than ten (10) Business Days' prior
written notice of the intention of Guarantor to wind up, liquidate or dissolve,
and (C) as of the date of such winding up, liquidation or dissolution and after
giving effect thereto, no Default or Event of Default shall exist or have
occurred; or
(d) agree to do any of the foregoing.
9.8 Encumbrances. Each Borrower and Guarantor shall not, and shall not
permit any Subsidiary to, create, incur, assume or suffer to exist any security
interest, mortgage, pledge, lien, charge or other encumbrance of any nature
whatsoever on any of its assets or properties, including the Collateral, or file
or permit the filing of, or permit to remain in effect, any financing statement
or other similar notice of any security interest or lien with respect to any
such assets or properties, except:
(a) the security interests and liens of Agent for itself and the
benefit of Lenders;
(b) liens securing the payment of taxes, assessments or other
governmental charges or levies either not yet overdue or the validity of which
are being contested in good faith by appropriate proceedings diligently pursued
and available to such Borrower or Guarantor or Subsidiary, as the case may be
and with respect to which adequate reserves have been set aside on its books;
(c) non-consensual statutory liens (other than liens securing the
payment of taxes) arising in the ordinary course of such Borrower's, Guarantor's
or Subsidiary's business to the extent: (i) such liens secure Indebtedness which
is not overdue or (ii) such liens secure Indebtedness relating to claims or
liabilities which are fully insured and being defended at the sole cost and
expense and at the sole risk of the insurer or being contested in good faith by
appropriate proceedings diligently pursued and available to such Borrower,
Guarantor or such Subsidiary, in each case prior to the commencement of
foreclosure or other similar proceedings and with respect to which adequate
reserves have been set aside on its books;
(d) zoning restrictions, easements, licenses, covenants and other
restrictions affecting the use of Real Property which do not interfere in any
material respect with the use of such Real Property or ordinary conduct of the
54
business of such Borrower, Guarantor or such Subsidiary as presently conducted
thereon or materially impair the value of the Real Property which may be subject
thereto;
(e) purchase money security interests in Equipment (including Capital
Leases) and purchase money mortgages on Real Property to secure Indebtedness
permitted under Section 9.9(b) hereof;
(f) pledges and deposits of cash by any Borrower or Guarantor after
the date hereof in the ordinary course of business in connection with workers'
compensation, unemployment insurance and other types of social security benefits
consistent with the current practices of such Borrower or Guarantor as of the
date hereof;
(g) pledges and deposits of cash by any Borrower or Guarantor after
the date hereof to secure the performance of tenders, bids, leases, trade
contracts (other than for the repayment of Indebtedness), statutory obligations
and other similar obligations in each case in the ordinary course of business
consistent with the current practices of such Borrower or Guarantor as of the
date hereof; provided, that, in connection with any performance bonds issued by
a surety or other person, the issuer of such bond shall have waived in writing
any rights in or to, or other interest in, any of the Collateral in an
agreement, in form and substance satisfactory to Agent;
(h) liens arising from (i) operating leases and the precautionary UCC
financing statement filings in respect thereof and (ii) equipment or other
materials which are not owned by any Borrower or Guarantor located on the
premises of such Borrower or Guarantor (but not in connection with, or as part
of, the financing thereof) from time to time in the ordinary course of business
and consistent with current practices of such Borrower or Guarantor and the
precautionary UCC financing statement filings in respect thereof;
(i) judgments and other similar liens arising in connection with
court proceedings that do not constitute an Event of Default, provided , that,
(i) such liens are being contested in good faith and by appropriate proceedings
diligently pursued, (ii) adequate reserves or other appropriate provision, if
any, as are required by GAAP have been made therefor, (iii) a stay of
enforcement of any such liens is in effect and (iv) Agent may establish a
Reserve with respect thereto;
(j) the security interests and liens on assets of any Foreign
Subsidiary to secure Indebtedness of such Foreign Subsidiary permitted under
Section 9.9 hereof;
(k) the security interests in and liens upon the Equipment arising
after the date hereof pursuant to a Capital Lease of the Equipment sold by
Parent to the extent such sale is permitted under Section 9.7(b)(vi) hereof to
secure Indebtedness of Parent to the purchaser thereof pursuant to the leaseback
by such purchaser of such Equipment to Parent giving rise to Indebtedness
permitted under Section 9.9(f) hereof;
(l) the security interests in and liens and mortgages upon the
Rochester Real Property arising after the date hereof pursuant to a Capital
Lease of such Real Property sold by Parent to the extent that such sale is
permitted under Section 9.7(b)(vii) hereof to secure Indebtedness of Parent to
the purchaser thereof pursuant to the leaseback by such purchaser of such Real
Property to Parent giving rise to Indebtedness permitted under Section 9.9(g)
hereof, or the security interests in and liens and mortgages upon the Rochester
Real Property arising after the date hereof pursuant to a mortgage loan based on
the value of such Real Property to secure the Indebtedness of Parent arising
pursuant to such mortgage loan to Parent permitted under Section 9.9(g) hereof;
and
(m) the security interests and liens set forth on Schedule 8.4 to the
Information Certificate.
9.9 Indebtedness. Each Borrower and Guarantor shall not, and shall not
permit any Subsidiary to, incur, create, assume, become or be liable in any
manner with respect to, or permit to exist, any Indebtedness, or guarantee,
assume, endorse, or otherwise become responsible for (directly or indirectly),
the Indebtedness, performance, obligations or dividends of any other Person,
except:
55
(a) the Obligations;
(b) purchase money Indebtedness (including Capital Leases) arising
after the date hereof to the extent secured by purchase money security interests
in Equipment (including Capital Leases) and purchase money mortgages on Real
Property not to exceed $8,000,000 in the aggregate at any time outstanding so
long as such security interests and mortgages do not apply to any property of
such Borrower, Guarantor or Subsidiary other than the Equipment or Real Property
so acquired, and the Indebtedness secured thereby does not exceed the cost of
the Equipment or Real Property so acquired, as the case may be;
(c) guarantees by any Borrower or Guarantor of the Obligations of the
other Borrowers or Guarantor in favor of Agent for the benefit of Lenders;
(d) the Indebtedness of any Borrower or Guarantor to any other
Borrower or Guarantor arising after the date hereof pursuant to loans by any
Borrower or Guarantor permitted under Section 9.10(g) hereof;
(e) Indebtedness of Parent evidenced by the Subordinated Notes as in
effect on the date hereof or as permitted to be amended pursuant to the terms
hereof, provided, that:
(i) the aggregate amount of such Indebtedness shall not
exceed $5,000,000, less the aggregate amount of all repayments or redemptions,
whether optional or mandatory, in respect thereof, plus interest thereon at the
rate provided for in the Subordinated Notes as in effect on the date hereof;
(ii) the Obligations are and shall at all times continue to be
"Permitted Refinancing Indebtedness" and "Senior Indebtedness" under the
"Permitted Refinancing Senior Indebtedness Documents" as each of such terms is
defined in the Subordinated Note Agreements as in effect on the date hereof and
are and shall at all times be entitled to all of the rights and benefits thereof
under the Subordinated Note Agreements as in effect on the date hereof and there
is not, and shall not be, any other "Senior Indebtedness" except with the prior
written consent of Agent;
(iii) Borrowers and Guarantor shall not, directly or
indirectly, make any payments in respect of such Indebtedness, except that they
may make (A) regularly scheduled payments of interest and fees, if any, in
respect of such Indebtedness when due in accordance with the terms of the
Subordinated Notes and the other Subordinated Note Agreements as in effect on
the date hereof, and (B) payments of principal in respect of such Indebtedness
when scheduled to mature in accordance with the terms of the Subordinated Note
Agreements as in effect on the date hereof,
(iv) Borrowers and Guarantor shall not, directly or
indirectly, amend, modify, alter or change in any material respect any terms of
such Indebtedness or any of the Subordinated Notes, the other Subordinated Note
Agreements or any related agreements, documents and instruments, except that
Parent may, after prior written notice to Agent, amend, modify, alter or change
the terms thereof so as to extend the maturity thereof or defer the timing of
any payments in respect thereof, or to forgive or cancel any portion of such
Indebtedness other than pursuant to payments thereof, or to reduce the interest
rate or any fees in connection therewith,
(v) Borrowers and Guarantor shall not, directly or
indirectly, redeem, retire, defease, purchase or otherwise acquire such
Indebtedness other than at maturity (as set forth in the Subordinated Note
Agreements as in effect on the date hereof or as extended after the date
hereof), or set aside or otherwise deposit or invest any sums for such purpose,
(vi) Agent shall have received true, correct and complete
copies of the Subordinated Note Agreements (including all amendments and
supplemental indentures with respect thereto) and all related agreements,
documents and instruments at any time entered into in connection therewith,
56
(vii) Borrowers and Guarantor shall furnish to Agent all
material written notices or demands in connection with such Indebtedness either
received by any Borrower or Guarantor or on its behalf, promptly after the
receipt thereof, or sent by any Borrower or Guarantor or on its behalf,
concurrently with the sending thereof, as the case may be;
(f) Indebtedness of Parent arising after the date hereof to the
lessor under the Capital Lease by Parent of the Equipment of Parent sold by it
in accordance with Section 9.7(b)(vi) hereof; provided, that:
(i) as to any such Indebtedness, (A) Agent shall have
received not less than ten (10) Business Days' prior written notice of the
intention of Parent to incur such Indebtedness, which notice shall set forth in
reasonable detail satisfactory to Agent, the amount of such proposed
Indebtedness, the person to whom such Indebtedness is proposed to be owed, the
proposed interest rate, schedule of repayments and maturity date with respect
thereto and such other information with respect thereto as Agent may request,
(B) Agent shall have received true, correct and complete copies of all
agreements, documents and instruments evidencing or otherwise related to such
Indebtedness, as duly authorized, executed and delivered by the parties thereto,
(C) Agent shall have received a Collateral Access Agreement with respect to the
Equipment subject to the security interest and lien to secure such Indebtedness
from the person to whom such Indebtedness is owed or with any other interest
therein, duly authorized, executed and delivered by such person, in form and
substance satisfactory to Agent, (D) such Indebtedness shall be incurred by
Parent at commercially reasonable rates and terms in a bona fide arm's length
transaction, (E) such Indebtedness shall be owed to a financial institution
acceptable to Agent and not to any shareholder, officer, director, agent,
employee or other Affiliate of any Borrower or Guarantor, (F) in no event shall
Parent or any other Borrower or Obligor make, or be required to make, payments
in respect of the principal balance of such Indebtedness (or such allocated
portion of the installment payments under the Capital Lease) in any twelve (12)
consecutive month period that in the aggregate exceed the amount equal to forty
(40%) percent of the original principal amount of such Indebtedness, (G) the
Equipment which is subject to the Capital Lease shall be the only collateral for
such Indebtedness, (H) as of the date of incurring such Indebtedness and after
giving effect thereto, no Default or Event of Default shall exist or have
occurred and be continuing, and (I) Borrowers and Guarantor shall furnish to
Agent all notices or demands in connection with such Indebtedness either
received by any Borrower or Guarantor or on its behalf promptly after the
receipt thereof, or sent by any Borrower or Guarantor or on its behalf,
concurrently with the sending thereof, as the case may be; and
(ii) so long as each of the conditions set forth in clause (i)
above are satisfied, as determined by Agent in good faith, Agent shall, upon the
request of Administrative Borrower and at Borrowers' expense, enter into a
subordination agreement with the person to whom such Indebtedness is owed, in
form and substance satisfactory to Agent, providing for the subordination of the
security interest in and lien upon the Equipment or if required by the person to
whom such Indebtedness is owed, execute and deliver to Administrative Borrower a
discharge and satisfaction of the security interest and lien with respect to
such Equipment which is the collateral for such Indebtedness, such discharge and
satisfaction to be effective only upon the consummation of the incurrence of
such Indebtedness and the satisfaction of the condition set forth in clause (i)
above and the conditions to the sale of such Equipment set forth in Section
9.7(b)(vi) hereof;
(g) Indebtedness of Parent arising after the date hereof either to
the lessor under a Capital Lease by Parent of the Rochester Real Property sold
by Parent to such lessor in accordance with Section 9.7(b)(vii) hereof or
Indebtedness of Parent arising after the date pursuant to a mortgage loan in
immediately available funds to Parent based on the value of the Rochester Real
Property, provided, that:
(i) as to any such Indebtedness, (A) Agent shall have
received not less than ten (10) Business Days' prior written notice of the
intention of Parent to incur such Indebtedness, which notice shall set forth in
reasonable detail satisfactory to Agent, the amount of such proposed
Indebtedness, the person to whom such Indebtedness is proposed to be owed, the
proposed interest rate, schedule of repayments and maturity date with
57
respect thereto and such other information with respect thereto as Agent may
request, (B) Agent shall have received true, correct and complete copies of all
agreements, documents and instruments evidencing or otherwise related to such
Indebtedness, as duly authorized, executed and delivered by the parties thereto,
(C) such Indebtedness shall be incurred by Parent at commercially reasonable
rates and terms in a bona fide arm's length transaction, (D) such Indebtedness
shall be owed to a financial institution acceptable to Agent and not to any
shareholder, officer, director, agent, employee or other Affiliate of any
Borrower or Guarantor, (E) Parent shall cause the person to whom such
Indebtedness is owed to remit all of the proceeds of the loan giving rise to
such Indebtedness directly to Agent for application to the Obligations in such
order and manner as Agent may determine, (F) in no event shall Parent or any
other Borrower or Obligor make, or be required to make, payments in respect of
the principal balance of such Indebtedness (or such allocated portion of the
installment payments under the Capital Lease) in any twelve (12) consecutive
month period that in the aggregate exceed the amount equal to twenty (20%)
percent of the original principal amount of such Indebtedness, (G) the Real
Property, the value of which is the basis for such loan or that is subject to
such Capital Lease, as the case may be, shall be the only collateral for such
Indebtedness, (H) as of the date of incurring such Indebtedness and after giving
effect thereto, no Default or Event of Default shall exist or have occurred and
be continuing, (I) the total amount of the Net Proceeds payable to Parent in
cash or other immediately available funds at the time of incurring such
Indebtedness shall be not less than $1,500,000, and (J) Borrowers and Guarantor
shall furnish to Agent all notices or demands in connection with such
Indebtedness either received by any Borrower or Guarantor or on its behalf
promptly after the receipt thereof, or sent by any Borrower or Guarantor or on
its behalf, concurrently with the sending thereof, as the case may be; and
(ii) so long as each of the conditions set forth in clause (i)
above are satisfied, as determined by Agent in good faith, Agent shall, upon the
request of Administrative Borrower and at Borrowers' expense, enter into a
subordination agreement with the person to whom such Indebtedness is owed, in
form and substance satisfactory to Agent, providing for the subordination of the
Mortgage with respect to such Real Property to the mortgage of such person on
such Real Property or if required by the person to whom such Indebtedness is
owed, execute and deliver to Administrative Borrower a discharge and
satisfaction of the Mortgage with respect to such Real Property which is the
collateral for such Indebtedness, such discharge and satisfaction to be
effective only upon the consummation of the incurrence of such Indebtedness and
the satisfaction of the condition set forth in clause (i) above and in the case
of Indebtedness arising pursuant to a Capital Lease, the satisfaction of the
conditions to the sale of such Real Property set forth in Section 9.7(b)(vii)
hereof;
(h) Indebtedness of Parent evidenced by or arising under the Rochester IRB
Agreements as in effect on the date hereof; provided, that:
(i) the aggregate principal amount of such Indebtedness shall
not exceed $3,870,000, less the aggregate amount of all repayments, repurchases
or redemptions, whether optional or mandatory in respect thereof, plus interest
thereon at the rate provided for in the Rochester IRB Agreements as in effect on
the date hereof,
(ii) such Indebtedness is and shall be secured only by the
Rochester IRB Collateral,
(iii) Parent shall not, directly or indirectly, make any payments
in respect of such Indebtedness, except, that, Parent may make (A) regularly
scheduled payments of principal or interest when due in accordance with the
terms of the Rochester IRB Agreements as in effect on the date hereof, and (B)
payments of principal and interest and other amounts owing in respect thereof
with certain cash collateral as permitted under Section 9.9(h)(v) below,
(iv) Parent shall not, directly or indirectly, amend, modify,
alter or change any terms of such Indebtedness or any of the Rochester IRB
Agreements, except that Parent may, after prior written notice to Agent, amend,
modify, alter or change the terms thereof so as to extend the maturity thereof
or defer the timing of any
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payments in respect thereof, or to forgive or cancel any portion of such
Indebtedness other than pursuant to payments thereof, or to reduce the interest
rate or any fees in connection therewith,
(v) Parent shall not, directly or indirectly, redeem, retire,
defease, purchase or otherwise acquire such Indebtedness, or set aside or
otherwise deposit or invest any sums for such purpose, except that Parent may
redeem, retire, defease, purchase or otherwise acquire all of such Indebtedness,
provided, that, (A) Agent shall have received written notice from Parent of any
such redemption, retirement, defeasance, purchase or other acquisition of any of
such Indebtedness and (B) all payments required to be made to so redeem, retire,
defease, purchase or otherwise acquire such Indebtedness shall only be made with
the Rochester IRB Collateral pledged by Parent to, and in the possession of,
U.S. Bank National Association as of the date hereof, and
(vi) Borrower shall furnish to Agent all written notices or
demands in connection with such Indebtedness either received by Borrower or on
its behalf, promptly after the receipt thereof, or sent by Borrower or on its
behalf, concurrently with the sending thereof, as the case may be;
(i) Indebtedness of Parent arising after the date hereof pursuant to
the guarantee or "comfort letter" (that is not a binding commitment) by Parent
of the Indebtedness of any Foreign Subsidiary permitted under Section 9.9(j)
below entered into by Parent after the date hereof, provided, that, (i) in the
case of any such guarantee, the maximum aggregate amount of the liability of
Parent (whether contingent or otherwise) pursuant to each of such guarantees
shall be set forth in the express written terms of such guarantees, (ii) the sum
of the maximum aggregate amount of the liability of Parent (whether contingent
or otherwise) pursuant to all of such guarantees arising after the date hereof,
plus the maximum aggregate amount of the liability of Parent pursuant to all of
the existing guarantees by Parent of Indebtedness of Foreign Subsidiaries set
forth on Schedule 9.9 to the Information Certificate, shall not, at any time,
exceed $2,000,000, (iii) such Indebtedness of Parent shall be unsecured, (iv)
prior to entering into any such guarantee or comfort letter, Parent shall notify
Agent in writing of its intention to do so, which notice shall set forth the
maximum amount of the potential liability of Parent pursuant to such guarantee
or comfort letter, the person receiving the benefit of the guarantee or comfort
letter, the Foreign Subsidiary whose Indebtedness is being guaranteed or is
subject to such comfort letter, the amount of such Indebtedness, whether it is
secured or unsecured by any assets of any Foreign Subsidiary and if secured, the
assets constituting collateral therefor, and such other information with respect
thereto as Agent may request and (v) promptly after the execution thereof, Agent
shall receive true, correct and complete copies of such guarantee or comfort
letter and such other agreements related thereto as Agent may request;
(j) Indebtedness of any Foreign Subsidiary arising after the date
hereof, provided, that, (i) as to any such Indebtedness Borrowers and Obligors
shall not be directly or indirectly liable (by virtue of such Borrower or such
Obligor being the primary obligor on, guarantor of, or otherwise liable in any
respect of such Indebtedness), except as to Parent to the extent permitted in
Section 9.9(i) above and (ii) the occurrence of a default with respect thereto
shall not result in, or permit any holder of any Indebtedness of any Borrower or
any Obligor to declare a default on Indebtedness of any Borrower or any Obligor
or cause the payment thereof to be accelerated or payable prior to its stated
maturity;
(k) the Indebtedness set forth on Schedule 9.9 to the Information
Certificate; provided, that, (i) Borrowers and Guarantor may only make regularly
scheduled payments of principal and interest in respect of such Indebtedness in
accordance with the terms of the agreement or instrument evidencing or giving
rise to such Indebtedness as in effect on the date hereof, (ii) Borrowers and
Guarantor shall not, directly or indirectly, (A) amend, modify, alter or change
the terms of such Indebtedness or any agreement, document or instrument related
thereto as in effect on the date hereof except, that, Borrowers and Guarantor
may, after prior written notice to Agent, amend, modify, alter or change the
terms thereof so as to extend the maturity thereof, or defer the timing of any
payments in respect thereof, or to forgive or cancel any portion of such
Indebtedness (other than pursuant to payments thereof), or to reduce the
interest rate or any fees in connection therewith, or (B) redeem, retire,
defease,
59
purchase or otherwise acquire such Indebtedness, or set aside or otherwise
deposit or invest any sums for such purpose, and (iii) Borrowers and Guarantor
shall furnish to Agent all notices or demands in connection with such
Indebtedness either received by any Borrower or Guarantor or on its behalf,
promptly after the receipt thereof, or sent by any Borrower or Guarantor or on
its behalf, concurrently with the sending thereof, as the case may be.
9.10 Loans and Investments, Etc. Each Borrower and Guarantor shall not, and
shall not permit any Subsidiary to, directly or indirectly, make any loans or
advance money or property to any person, or invest in (by capital contribution,
dividend or otherwise) or purchase or repurchase the Capital Stock or
Indebtedness or all or a substantial part of the assets or property of any
person, or form or acquire any Subsidiaries, or agree to do any of the
foregoing, except:
(a) the endorsement of instruments for collection or deposit in the
ordinary course of business;
(b) investments in cash or Cash Equivalents, provided, that, (i) no
Loans are then outstanding and (ii) the terms and conditions of Section 5.2
hereof shall have been satisfied with respect to the deposit account, investment
account or other account in which such cash or Cash Equivalents are held;
(c) the existing equity investments of each Borrower and Guarantor as
of the date hereof in its Subsidiaries, provided, that, no Borrower or Guarantor
shall have any further obligations or liabilities to make any capital
contributions or other additional investments or other payments to or in or for
the benefit of any of such Subsidiaries;
(d) loans and advances by any Borrower or Guarantor to employees of
such Borrower or Guarantor not to exceed the principal amount of $250,000 in the
aggregate at any time outstanding for: (i) reasonably and necessary work-related
travel or other ordinary business expenses to be incurred by such employee in
connection with their work for such Borrower or Guarantor and (ii) reasonable
and necessary relocation expenses of such employees (including home mortgage
financing for relocated employees);
(e) stock or obligations issued to any Borrower or Guarantor by any
Person (or the representative of such Person) in respect of Indebtedness of such
Person owing to such Borrower or Guarantor in connection with the insolvency,
bankruptcy, receivership or reorganization of such Person or a composition or
readjustment of the debts of such Person; provided, that, the original of any
such stock or instrument evidencing such obligations shall be promptly delivered
to Agent, upon Agent's request, together with such stock power, assignment or
endorsement by such Borrower or Guarantor as Agent may request;
(f) obligations of account debtors to any Borrower or Guarantor
arising from Accounts which are past due evidenced by a promissory note made by
such account debtor payable to such Borrower or Guarantor; provided, that,
promptly upon the receipt of the original of any such promissory note by such
Borrower or Guarantor, such promissory note shall be endorsed to the order of
Agent by such Borrower or Guarantor and promptly delivered to Agent as so
endorsed;
(g) loans by a Borrower or Guarantor to another Borrower or Guarantor
after the date hereof, provided, that,
(i) as to all of such loans, (A) within thirty (30) days after
the end of each fiscal month, Borrowers shall provide to Agent a report in form
and substance satisfactory to Agent of the outstanding amount of such loans as
of the last day of the immediately preceding month and indicating any loans made
and payments received during the immediately preceding month, (B) the
Indebtedness arising pursuant to any such loan shall not be evidenced by a
promissory note or other instrument, unless the single original of such note or
other instrument is promptly delivered to Agent upon its request to hold as part
of the Collateral, with such endorsement and/or
60
assignment by the payee of such note or other instrument as Agent may require,
(C) as of the date of any such loan and after giving effect thereto, the
Borrower or Guarantor making such loan shall be Solvent, and (D) as of the date
of any such loan and after giving effect thereto, no Default or Event of Default
shall exist or have occurred and be continuing,
(ii) as to loans by Guarantor to a Borrower, (A) the
Indebtedness arising pursuant to such loan shall be subject to, and subordinate
in right of payment to, the right of Agent and Lenders to receive the prior
final payment and satisfaction in full of all of the Obligations on terms and
conditions acceptable to Agent, (B) promptly upon Agent's request, Agent shall
have received a subordination agreement, in form and substance satisfactory to
Agent, providing for the terms of the subordination in right of payment of such
Indebtedness of such Borrower to the prior final payment and satisfaction in
full of all of the Obligations, duly authorized, executed and delivered by
Guarantor and such Borrower, and (C) such Borrower shall not, directly or
indirectly make, or be required to make, any payments in respect of such
Indebtedness prior to the end of the then current term of this Agreement;
(iii) as to loans by a Borrower to Guarantor or another
Borrower, as of the date of any such loan and after giving effect thereto, (A)
with respect to any such loans by Parent to any other Borrower or Guarantor, the
Excess Availability of Parent shall be not less than $2,500,000, (B) with
respect to any such loans by Turtle Mountain to any other Borrower or Guarantor,
the Excess Availability of Turtle Mountain shall be not less than $1,000,000 and
(C) with respect to any such loans by PPC to any other Borrower or Guarantor,
the Excess Availability of PPC shall be not less than $1,000,000;
(h) loans or advances by a Borrower to any Foreign Subsidiary after
the date hereof, provided, that, as to any such loan or advance, each of the
following conditions is satisfied: (i) as of the date of any such loan or
advance, the aggregate amount of the Excess Availability of Borrowers shall have
been not less than $12,500,000 for each of the ten (10) immediately preceding
consecutive days and as of the date of any such loan or advance and after giving
effect thereto, shall be not less than $15,000,000, (ii) with respect to any
such loans or advances by Parent to any Foreign Subsidiary, as of the date of
any such loan or advance and after giving effect thereto, the Excess
Availability of Parent be not less than $6,000,000, (iii) with respect to any
such loans or advances by Turtle Mountain to any Foreign Subsidiary, as of the
date of any such loan or advance and after giving effect thereto, the Excess
Availability of Turtle Mountain shall be not less than $3,500,000, (iv) with
respect to any such loans or advances by PPC to any Foreign Subsidiary, as of
the date of any such loan or advance and after giving effect thereto, the Excess
Availability of PPC shall have been not less than $1,000,000, (v) as of the date
of any such loan or advance and after giving effect thereto, the aggregate
amount of all such loans and advances outstanding at any time shall not exceed
$10,000,000, (vi) as of the date of any such loan or advance and after giving
effect thereto, no Default or Event of Default shall exist or have occurred and
be continuing, and (vii) the Indebtedness arising pursuant to any such loan or
advance shall be evidenced by a promissory note or other instrument, in form and
substance satisfactory to Agent, and the single original of such note or other
instrument shall be promptly delivered to Agent upon its request to hold as part
of the Collateral, with such endorsement and/or assignment by the payee of such
note or other instrument as Agent may require;
(i) investments by Parent in any Foreign Subsidiary after the date
hereof (by capital contribution, dividend or otherwise); provided, that, as to
any such investment, each of the following conditions is satisfied: (i) as of
the date of any such investment or any payment in respect thereof, the aggregate
amount of the Excess Availability of Borrowers shall have been not less than
$12,500,000 for each of the ten (10) immediately preceding consecutive days and
as of the date of any such investment or payment in respect thereof and after
giving effect thereto, shall be not less than $15,000,000, (ii) as of the date
of the date of any such investment or any payment in respect thereof, the Excess
Availability of Parent shall have been not less than $8,000,000 for each of the
ten (10) immediately preceding consecutive days and as of the date of any such
investment or any payment in respect thereof and after giving effect thereto,
shall be not less than $6,000,000, (iii) the aggregate amount of all such
investments shall not exceed $2,000,000, except that the amount of capital
contributions other than with cash or other property
61
shall not be considered for purposes of this limitation, (iv) as of the date of
any such investment or any payment in respect thereof and after giving effect
thereto, no Default or Event of Default shall exist or have occurred and be
continuing, (v) at Agent's option, if the Capital Stock of the Foreign
Subsidiary is represented or evidenced by a certificate or other instrument or
document, the original stock certificate or other document or instrument
evidencing such capital contribution (or such other evidence as may be issued in
respect thereof) shall be promptly delivered to Agent, together with such stock
power, assignment or endorsement as Agent may request, and Parent shall execute
and deliver to Agent such other agreements, in form and substance satisfactory
to Agent, as Agent may request providing for Agent to have, or to maintain, a
first priority pledge of, security interest in and lien upon sixty-six (66%) of
all of the issued and outstanding shares of the Capital Stock of the Foreign
Subsidiary in or to which Parent is making such investment;
(j) loans or advances of money or property by any Foreign Subsidiary
after the date hereof to any person, or the investment by any Foreign Subsidiary
after the date hereof in any person (by capital contribution, dividend or
otherwise), or the purchase or repurchase by any Foreign Subsidiary after the
date hereof of the Capital Stock or Indebtedness or all or a substantial part of
the assets or property of any person, or the formation or acquisition by any
Foreign Subsidiary after the date hereof of any Subsidiaries, or the agreement
of any Foreign Subsidiary after the date hereof to do any of the foregoing,
provided that, (i) as of the date of such loan or advance, or investment or
purchase or repurchase, or the formation or acquisition of any such Subsidiary
and after giving effect thereto, no Default or Event of Default shall exist or
have occurred and be continuing, (ii) in no event shall any Borrower or Obligor
make, or be required to make, any payment or incur any obligation or liability
(contingent or otherwise) in connection with any such loan or advance, or
investment or purchase or repurchase, or the formation or acquisition of such
Subsidiary or take any other action otherwise prohibited hereunder, (iii) in the
case of any loans or advances to any Borrower or Guarantor, (A) the Indebtedness
arising pursuant to such loans shall be subject to, and subordinate in right of
payment to, the right of Agent and Lenders to receive the prior final payment
and satisfaction in full of all of the Obligations on terms and condition
acceptable to Agent, (B) promptly upon Agent's request, Agent shall have
received a subordination agreement, in form and substance satisfactory to Agent,
providing for the terms of the terms of the subordination in right of payment of
such Indebtedness of such Borrower or Guarantor to the prior final payment and
satisfaction in full of all of the Obligations, duly authorized, executed and
delivered by such Subsidiary and such Borrower (or Guarantor), and (C) such
Borrower or Guarantor shall not, directly or indirectly make, or be required to
make, any payments in respect of such Indebtedness;
(k) the loans and advances set forth on Schedule 9.10 to the
Information Certificate; provided, that, as to such loans and advances,
Borrowers and Guarantor shall not, directly or indirectly, amend, modify, alter
or change the terms of such loans and advances or any agreement, document or
instrument related thereto and Borrowers and Guarantor shall furnish to Agent
all notices or demands in connection with such loans and advances either
received by any Borrower or Guarantor or on its behalf, promptly after the
receipt thereof, or sent by any Borrower or Guarantor or on its behalf,
concurrently with the sending thereof, as the case may be.
9.11 Dividends and Redemptions. Each Borrower and Guarantor shall not,
directly or indirectly, declare or pay any dividends on account of any shares of
class of any Capital Stock of such Borrower or Guarantor now or hereafter
outstanding, or set aside or otherwise deposit or invest any sums for such
purpose, or redeem, retire, defease, purchase or otherwise acquire any shares of
any class of Capital Stock (or set aside or otherwise deposit or invest any sums
for such purpose) for any consideration or apply or set apart any sum, or make
any other distribution (by reduction of capital or otherwise) in respect of any
such shares or agree to do any of the foregoing, except that:
(a) any Borrower or Guarantor may declare and pay such dividends or
redeem, retire, defease, purchase or otherwise acquire any shares of any class
of Capital Stock for consideration in the form of shares of common stock (so
long as after giving effect thereto no Change of Control or other Default or
Event of Default shall exist or occur);
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(b) Borrowers and Guarantor may pay dividends to the extent permitted
in Section 9.12 below;
(c) Parent may purchase Capital Stock of Parent that is to be resold
to employees of Parent in accordance with Parent's employee stock purchase plan,
provided, that, as to any such purchase, each of the following conditions is
satisfied: (i) such purchase shall not occur more than five (5) Business Days
prior to the purchase of such Capital Stock by employees in accordance with such
employee stock purchase plan and (ii) the aggregate amount of all payments for
such repurchases in any fiscal year shall not exceed $400,000, net of funds
received in payment in cash or other immediately available funds for such
Capital Stock from employees of Parent.
9.12 Transactions with Affiliates. Each Borrower and Guarantor shall not,
directly or indirectly:
(a) purchase, acquire or lease any property from, or sell, transfer
or lease any property to, any officer, director or other Affiliate of such
Borrower or Guarantor, except in the ordinary course of and pursuant to the
reasonable requirements of such Borrower's or Guarantor's business (as the case
may be) and upon fair and reasonable terms no less favorable to such Borrower or
Guarantor than such Borrower or Guarantor would obtain in a comparable arm's
length transaction with an unaffiliated person; or
(b) make any payments (whether by dividend, loan or otherwise) of
management, consulting or other fees for management or similar services, or of
any Indebtedness owing to any officer, employee, shareholder, director or any
other Affiliate of such Borrower or Guarantor, except (i) reasonable
compensation to officers, employees and directors for services rendered to such
Borrower or Guarantor in the ordinary course of business, (ii) payments by any
such Borrower or Guarantor to Parent for actual and necessary reasonable
out-of-pocket legal and accounting, insurance, marketing, payroll and similar
types of services paid for by Parent on behalf of such Borrower or Guarantor, in
the ordinary course of their respective businesses or as the same may be
directly attributable to such Borrower or Guarantor and for the payment of taxes
by or on behalf of Parent, provided, that, the aggregate amount of all such
payments in any fiscal year shall not exceed $500,000, (iii) payments in respect
of loans by a Borrower or Guarantor to another Borrower or Guarantor permitted
under Section 9.10(g) hereof and (iv) loans, investments and guarantees to the
extent permitted under Section 9.10 hereof.
9.13 Compliance with ERISA. Each Borrower and Guarantor shall, and shall
cause each of its ERISA Affiliates, to: (a) maintain each Plan in compliance in
all material respects with the applicable provisions of ERISA, the Code and
other Federal and State law; (b) cause each Plan which is qualified under
Section 401(a) of the Code to maintain such qualification; (c) not terminate any
of such Plans so as to incur any material liability to the Pension Benefit
Guaranty Corporation; (d) not allow or suffer to exist any prohibited
transaction involving any of such Plans or any trust created thereunder which
would subject such Borrower, Guarantor or such ERISA Affiliate to a material tax
or penalty or other liability on prohibited transactions imposed under Section
4975 of the Code or ERISA; (e) make all required contributions to any Plan which
it is obligated to pay under Section 302 of ERISA, Section 412 of the Code or
the terms of such Plan; (f) not allow or suffer to exist any accumulated funding
deficiency, whether or not waived, with respect to any such Plan; or (g) allow
or suffer to exist any occurrence of a reportable event or any other event or
condition which presents a material risk of termination by the Pension Benefit
Guaranty Corporation of any such Plan that is a single employer plan, which
termination could result in any material liability to the Pension Benefit
Guaranty Corporation.
9.14 End of Fiscal Years; Fiscal Quarters. Each Borrower and Guarantor
shall, for financial reporting purposes, cause its, and each of its
Subsidiaries' (a) fiscal years to end on March 31 of each year and (b) fiscal
quarters to end on June 30, September 30, December 31, and March 31 of each
year.
9.15 Change in Business. Each Borrower and Guarantor shall not engage in
any business other than the business of such Borrower or Guarantor on the date
hereof and any business reasonably related, ancillary or
63
complimentary to the business in which such Borrower or Guarantor is engaged on
the date hereof. Guarantor and Pemstar FSC are and shall at all times be
inactive and shall not engage in any business or other commercial activity or
own or hold any assets or properties, except in the case of Guarantor, any
rights, benefits and obligations of Guarantor arising under agreements to sell
technology assets or pursue intellectual property rights with Natus Medical
Incorporated and in the case of Pemstar FSC, certain tax credits.
9.16 Limitations on Restrictions Affecting Subsidiaries. Each Borrower and
Guarantor shall not, directly, or indirectly, create or otherwise cause or
suffer to exist any encumbrance or restriction which prohibits or limits the
ability of any Subsidiary of such Borrower or Guarantor to (a) pay dividends or
make other distributions or pay any Indebtedness owed to such Borrower or
Guarantor or any Subsidiary of such Borrower or Guarantor; (b) make loans or
advances to such Borrower or Guarantor or any Subsidiary of such Borrower or
Guarantor, (c) transfer any of its properties or assets to such Borrower or
Guarantor or any Subsidiary of such Borrower or Guarantor; or (d) create, incur,
assume or suffer to exist any lien upon any of its property, assets or revenues,
whether now owned or hereafter acquired, other than encumbrances and
restrictions arising under (i) applicable law, (ii) this Agreement, (iii)
customary provisions restricting subletting or assignment of any lease governing
a leasehold interest of such Borrower or Guarantor or any Subsidiary of such
Borrower or Guarantor, (iv) customary restrictions on dispositions of real
property interests found in reciprocal easement agreements of such Borrower or
Guarantor or any Subsidiary of such Borrower or Guarantor, (v) any agreement
relating to permitted Indebtedness incurred by a Subsidiary of such Borrower or
Guarantor prior to the date on which such Subsidiary was acquired by such
Borrower or such Guarantor and outstanding on such acquisition date (but not
including for purposes of this clause (v) any agreements with respect to Pemstar
(Tianjin) Enterprise Ltd. or any other Foreign Subsidiary of Parent organized
under the laws of China or otherwise operating principally in China), and (vi)
the extension or continuation of contractual obligations in existence on the
date hereof; provided, that , any such encumbrances or restrictions contained in
such extension or continuation are no less favorable to Agent and Lenders than
those encumbrances and restrictions under or pursuant to the contractual
obligations so extended or continued.
9.17 Minimum EBITDA.
(a) The EBITDA of Parent and its Subsidiaries (on a consolidated
basis) (i) for the period commencing April 1, 2003 through and including the end
of each fiscal quarter thereafter for which Agent has received financial
statements of Borrowers and Guarantor (in each case treated as a single
accounting period) shall be not less than the amount for such period set forth
on Schedule 9.17(a) hereto and (ii) after the end of the periods set forth in
Schedule 9.17(a) hereto, for the immediately preceding four (4) consecutive
fiscal quarters as of the end of each fiscal quarter thereafter for which Agent
has received financial statements of Borrowers and Guarantor shall be not less
than $32,700,000.
(b) The EBITDA of Parent and its Subsidiaries other than the Foreign
Subsidiaries (on a consolidated basis) (i) for the period commencing April 1,
2003 through and including the end of each fiscal quarter thereafter for which
Agent has received financial statements of Borrowers and Guarantor (in each case
treated as a single accounting period) shall be not less than the amount for
such period set forth on Schedule 9.17(b) hereto and (ii) after the end of the
periods set forth in Schedule 9.17(b), for the immediately preceding four (4)
consecutive fiscal quarters as of the end of each fiscal quarter thereafter for
which Agent has received financial statements of Borrowers and Guarantor shall
be not less than $10,200,000.
9.18 Minimum Excess Availability. The aggregate amount of the Excess
Availability of Borrowers shall at all times be equal to or greater than
$3,000,000.
9.19 Capital Expenditures. Borrowers and Guarantor shall not permit the
aggregate amount of all Capital Expenditures of Borrowers and Guarantor during
the fiscal year of Borrowers and Guarantor ending on or about March 31, 2004 to
exceed $15,000,000 or to exceed $12,000,000 in any fiscal year thereafter. For
purposes hereof,
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the term "Capital Expenditures" shall mean all expenditures for, or contracts
for expenditures for, any fixed or capital assets or improvements, or for
replacements, substitutions or additions thereto, which have a useful life of
more than one (1) year, including, but not limited to, the direct or indirect
acquisition of such assets by way of offset items or otherwise and shall include
the principal amount of payments under Capital Leases during the applicable
period.
9.20 License Agreements.
(a) Each Borrower and Guarantor shall (i) promptly and faithfully
observe and perform all of the material terms, covenants, conditions and
provisions of the material License Agreements to which it is a party to be
observed and performed by it, at the times set forth therein, if any, (ii) not
do, permit, suffer or refrain from doing anything that could reasonably be
expected to result in a default under or breach of any of the terms of any
material License Agreement, (iii) not cancel, surrender, modify, amend, waive or
release any material License Agreement in any material respect or any term,
provision or right of the licensee thereunder in any material respect, or
consent to or permit to occur any of the foregoing; except, that, subject to
Section 9.20(b) below, such Borrower or Guarantor may cancel, surrender or
release any material License Agreement in the ordinary course of the business of
such Borrower or Guarantor; provided, that, such Borrower or Guarantor (as the
case may be) shall give Agent not less than thirty (30) days prior written
notice of its intention to so cancel, surrender and release any such material
License Agreement, (iv) give Agent prompt written notice of any material License
Agreement entered into by such Borrower or Guarantor after the date hereof,
together with a true, correct and complete copy thereof and such other
information with respect thereto as Agent may request, (v) give Agent prompt
written notice of any material breach of any obligation, or any default, by any
party under any material License Agreement, and deliver to Agent (promptly upon
the receipt thereof by such Borrower or Guarantor in the case of a notice to
such Borrower or Guarantor and concurrently with the sending thereof in the case
of a notice from such Borrower or Guarantor) a copy of each notice of default
and every other notice and other communication received or delivered by such
Borrower or Guarantor in connection with any material License Agreement which
relates to the right of such Borrower or Guarantor to continue to use the
property subject to such License Agreement, and (vi) furnish to Agent, promptly
upon the request of Agent, such information and evidence as Agent may reasonably
require from time to time concerning the observance, performance and compliance
by such Borrower or Guarantor or the other party or parties thereto with the
material terms, covenants or provisions of any material License Agreement.
(b) Each Borrower and Guarantor will either exercise any option to
renew or extend the term of each material License Agreement to which it is a
party in such manner as will cause the term of such material License Agreement
to be effectively renewed or extended for the period provided by such option and
give prompt written notice thereof to Agent or give Agent prior written notice
that such Borrower or Guarantor does not intend to renew or extend the term of
any such material License Agreement or that the term thereof shall otherwise be
expiring, not less than sixty (60) days prior to the date of any such
non-renewal or expiration. In the event of the failure of such Borrower or
Guarantor to extend or renew any material License Agreement to which it is a
party, Agent shall have, and is hereby granted, the irrevocable right and
authority, at its option, to renew or extend the term of such material License
Agreement, whether in its own name and behalf, or in the name and behalf of a
designee or nominee of Agent or in the name and behalf of such Borrower or
Guarantor, as Agent shall determine at any time that an Event of Default shall
exist or have occurred and be continuing. Agent may, but shall not be required
to, perform any or all of such obligations of such Borrower or Guarantor under
any of the License Agreements, including, but not limited to, the payment of any
or all sums due from such Borrower or Guarantor thereunder. Any sums so paid by
Agent shall constitute part of the Obligations.
9.21 After Acquired Real Property. If any Borrower or Guarantor hereafter
acquires any Real Property, fixtures or any other property that is of the kind
or nature described in the Mortgages and such Real Property, fixtures or other
property is adjacent to, contiguous with or necessary or related to or used in
connection with any Real Property then subject to a Mortgage, or if such Real
Property is not adjacent to, contiguous with or related to or used in connection
with such Real Property, then if such Real Property, fixtures or other property
at any location (or
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series of adjacent, contiguous or related locations, and regardless of the
number of parcels) has a fair market value in an amount equal to or greater than
$100,000 (or if a Default or Event of Default exists, then regardless of the
fair market value of such assets), without limiting any other rights of Agent or
any Lender, or duties or obligations of any Borrower or Guarantor, promptly upon
Agent's request, such Borrower or Guarantor shall execute and deliver to Agent a
mortgage, deed of trust or deed to secure debt, as Agent may determine, in form
and substance substantially similar to the Mortgages and as to any provisions
relating to specific state laws satisfactory to Agent and in form appropriate
for recording in the real estate records of the jurisdiction in which such Real
Property or other property is located granting to Agent a first and only lien
and mortgage on and security interest in such Real Property, fixtures or other
property (except as such Borrower or Guarantor would otherwise be permitted to
incur hereunder or under the Mortgages or as otherwise consented to in writing
by Agent) and such other agreements, documents and instruments as Agent may
require in connection therewith.
9.22 Costs and Expenses. Borrowers and Guarantor shall pay to Agent on
demand all costs, expenses, filing fees and taxes paid or payable in connection
with the preparation, negotiation, execution, delivery, recording,
administration, collection, liquidation, enforcement and defense of the
Obligations, Agent's rights in the Collateral, this Agreement, the other
Financing Agreements and all other documents related hereto or thereto,
including any amendments, supplements or consents which may hereafter be
contemplated (whether or not executed) or entered into in respect hereof and
thereof, including: (a) all costs and expenses of filing or recording (including
Uniform Commercial Code financing statement filing taxes and fees, documentary
taxes, intangibles taxes and mortgage recording taxes and fees, if applicable);
(b) costs and expenses and fees for insurance premiums, environmental audits,
title insurance premiums, surveys, assessments, engineering reports and
inspections, appraisal fees and search fees, costs and expenses of remitting
loan proceeds, collecting checks and other items of payment, and establishing
and maintaining the Blocked Accounts, together with Agent's customary charges
and fees with respect thereto; (c) charges, fees or expenses charged by any bank
or issuer in connection with the Letter of Credit Accommodations; (d) costs and
expenses of preserving and protecting the Collateral; (e) costs and expenses of
Agent or Documentation Agent paid or incurred in connection with obtaining
payment of the Obligations, enforcing the security interests and liens of Agent,
selling or otherwise realizing upon the Collateral, and otherwise enforcing the
provisions of this Agreement and the other Financing Agreements or defending any
claims made or threatened against Agent or any Lender arising out of the
transactions contemplated hereby and thereby (including preparations for and
consultations concerning any such matters); (f) all out-of-pocket expenses and
costs heretofore and from time to time hereafter incurred by Agent during the
course of periodic field examinations of the Collateral and such Borrower's or
Guarantor's operations, plus a per diem charge at Agent's then standard rate for
Agent's examiners in the field and office (which rate as of the date hereof is
$750 per person per day); and (g) the fees and disbursements of counsel
(including legal assistants) to Agent and Documentation Agent in connection with
any of the foregoing.
9.23 Further Assurances. At the request of Agent at any time and from time
to time, Borrowers and Guarantor shall, at their expense, duly execute and
deliver, or cause to be duly executed and delivered, such further agreements,
documents and instruments, and do or cause to be done such further acts as may
be necessary or proper to evidence, perfect, maintain and enforce the security
interests and the priority thereof in the Collateral and to otherwise effectuate
the provisions or purposes of this Agreement or any of the other Financing
Agreements. Agent may at any time and from time to time request a certificate
from an officer of any Borrower or Guarantor representing that all conditions
precedent to the making of Loans and providing Letter of Credit Accommodations
contained herein are satisfied. In the event of such request by Agent, Agent and
Lenders may, at Agent's option, cease to make any further Loans or provide any
further Letter of Credit Accommodations until Agent has received such
certificate and, in addition, Agent has determined that such conditions are
satisfied.
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SECTION 10. EVENTS OF DEFAULT AND REMEDIES
10.1 Events of Default. The occurrence or existence of any one or more of
the following events are referred to herein individually as an "Event of
Default", and collectively as "Events of Default":
(a) (i) any Borrower fails to pay any of the Obligations when due or
(ii) any Borrower or Obligor fails to perform any of the covenants contained in
Sections 9.3, 9.4, 9.13, 9.14, 9.15, and 9.16 of this Agreement and such failure
shall continue for fifteen (15) days; provided, that, such fifteen (15) day
period shall not apply in the case of: (A) any failure to observe any such
covenant which is not capable of being cured at all or within such ten (10) day
period or which has been the subject of a prior failure within a six (6) month
period or (B) an intentional breach by any Borrower or Obligor of any such
covenant or (iii) any Borrower or Obligor fails to perform any of the terms,
covenants, conditions or provisions contained in this Agreement or any of the
other Financing Agreements other than those described in Sections 10.1(a)(i) and
10.1(a)(ii) above;
(b) any representation, warranty or statement of fact made by any
Borrower or Guarantor to Agent in this Agreement, the other Financing Agreements
or any other written agreement, schedule, confirmatory assignment or otherwise
shall when made or deemed made be false or misleading in any material respect;
(c) any Obligor revokes or terminates or purports to revoke or
terminate or fails to perform any of the terms, covenants, conditions or
provisions of any guarantee, endorsement or other agreement of such party in
favor of Agent or any Lender;
(d) any judgment for the payment of money is rendered against any
Borrower or Obligor in excess of $1,000,000 in any one case or in excess of
$2,000,000 in the aggregate (to the extent not covered by insurance where the
insurer has assumed responsibility in writing for such judgment) and shall
remain undischarged or unvacated for a period in excess of forty-five (45) days
or execution shall at any time not be effectively stayed, or any judgment other
than for the payment of money, or injunction, attachment, garnishment or
execution is rendered against any Borrower or Obligor or any of the Collateral
having a value in excess of $1,000,000;
(e) any Obligor (being a natural person or a general partner of an
Obligor which is a partnership) dies or any Borrower or Obligor, which is a
partnership, limited liability company, limited liability partnership or a
corporation, dissolves or suspends or discontinues doing business;
(f) any Borrower or Obligor makes an assignment for the benefit of
creditors, makes or sends notice of a bulk transfer or calls a meeting of its
creditors or principal creditors in connection with a moratorium or adjustment
of the Indebtedness due to them;
(g) a case or proceeding under the bankruptcy laws of the United
States of America now or hereafter in effect or under any insolvency,
reorganization, receivership, readjustment of debt, dissolution or liquidation
law or statute of any jurisdiction now or hereafter in effect (whether at law or
in equity) is filed against any Borrower or Obligor or all or any part of its
properties and such petition or application is not dismissed within forty-five
(45) days after the date of its filing or any Borrower or Obligor shall file any
answer admitting or not contesting such petition or application or indicates its
consent to, acquiescence in or approval of, any such action or proceeding or the
relief requested is granted sooner;
(h) a case or proceeding under the bankruptcy laws of the United
States of America now or hereafter in effect or under any insolvency,
reorganization, receivership, readjustment of debt, dissolution or liquidation
law or statute of any jurisdiction now or hereafter in effect (whether at a law
or equity) is filed by any Borrower or Obligor or for all or any part of its
property;
(i) any default in respect of any Indebtedness of any Borrower or
Obligor (other than Indebtedness owing to Agent and Lenders hereunder), in any
case in an amount in excess of $500,000, which default continues
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for more than the applicable cure period, if any, with respect thereto or any
default by any Borrower or Obligor under any Material Contract, which default
continues for more than the applicable cure period, if any, with respect thereto
and/or is not waived in writing by the other parties thereto;
(j) any material provision hereof or of any of the other Financing
Agreements shall for any reason cease to be valid, binding and enforceable with
respect to any party hereto or thereto (other than Agent) in accordance with its
terms, or any such party shall challenge the enforceability hereof or thereof,
or shall assert in writing, or take any action or fail to take any action based
on the assertion that any provision hereof or of any of the other Financing
Agreements has ceased to be or is otherwise not valid, binding or enforceable in
accordance with its terms, or any security interest provided for herein or in
any of the other Financing Agreements shall cease to be a valid and perfected
first priority security interest in any of the Collateral purported to be
subject thereto (except as otherwise permitted herein or therein);
(k) an ERISA Event shall occur which results in or could reasonably
be expected to result in liability of any Borrower in an aggregate amount in
excess of $500,000;
(l) any Change of Control;
(m) the indictment by any Governmental Authority, or as Agent may
reasonably and in good faith determine, the threatened indictment by any
Governmental Authority of any Borrower or Obligor of which any Borrower, Obligor
or Agent receives notice, in either case, as to which there is a reasonable
possibility of an adverse determination, in the good faith determination of
Agent, under any criminal statute, or commencement or threatened commencement of
criminal or civil proceedings against such Borrower or Obligor, pursuant to
which statute or proceedings the penalties or remedies sought or available
include forfeiture of (i) any of the Collateral having a value in excess of
$500,000 or (ii) any other property of any Borrower or Guarantor which is
necessary or material to the conduct of its business;
(n) there shall be an event, condition or circumstance that has a
Material Adverse Effect after the date hereof; or
(o) there shall be an event of default under any of the other
Financing Agreements.
10.2 Remedies.
(a) At any time an Event of Default exists or has occurred and is
continuing, Agent and Lenders shall have all rights and remedies provided in
this Agreement, the other Financing Agreements, the UCC and other applicable
law, all of which rights and remedies may be exercised without notice to or
consent by any Borrower or Obligor, except as such notice or consent is
expressly provided for hereunder or required by applicable law. All rights,
remedies and powers granted to Agent and Lenders hereunder, under any of the
other Financing Agreements, the UCC or other applicable law, are cumulative, not
exclusive and enforceable, in Agent's discretion, alternatively, successively,
or concurrently on any one or more occasions, and shall include, without
limitation, the right to apply to a court of equity for an injunction to
restrain a breach or threatened breach by any Borrower or Obligor of this
Agreement or any of the other Financing Agreements. Subject to Section 12
hereof, Agent may, and at the direction of the Required Lenders shall, at any
time or times, proceed directly against any Borrower or Obligor to collect the
Obligations without prior recourse to the Collateral.
(b) Without limiting the foregoing, at any time an Event of Default
exists or has occurred and is continuing, Agent may, in its discretion, and upon
the direction of the Required Lenders, shall (i) accelerate the payment of all
Obligations and demand immediate payment thereof to Agent for itself and the
ratable benefit of Lenders (provided, that, upon the occurrence of any Event of
Default described in Sections 10.1(g) and 10.1(h), all Obligations shall
automatically become immediately due and payable), (ii) with or without judicial
process or the
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aid or assistance of others, enter upon any premises on or in which any of the
Collateral may be located and take possession of the Collateral or complete
processing, manufacturing and repair of all or any portion of the Collateral,
(iii) require any Borrower or Obligor, at Borrowers' expense, to assemble and
make available to Agent any part or all of the Collateral at any place and time
designated by Agent, (iv) collect, foreclose, receive, appropriate, setoff and
realize upon any and all Collateral, (v) remove any or all of the Collateral
from any premises on or in which the same may be located for the purpose of
effecting the sale, foreclosure or other disposition thereof or for any other
purpose, (vi) sell, lease, transfer, assign, deliver or otherwise dispose of any
and all Collateral (including entering into contracts with respect thereto,
public or private sales at any exchange, broker's board, at any office of Agent
or elsewhere) at such prices or terms as Agent may deem reasonable, for cash,
upon credit or for future delivery, with the Agent having the right to purchase
the whole or any part of the Collateral at any such public sale, all of the
foregoing being free from any right or equity of redemption of any Borrower or
Obligor, which right or equity of redemption is hereby expressly waived and
released by Borrowers and Obligors and/or (vii) terminate this Agreement. If any
of the Collateral is sold or leased by Agent upon credit terms or for future
delivery, the Obligations shall not be reduced as a result thereof until payment
therefor is finally collected by Agent. If notice of disposition of Collateral
is required by law, ten (10) days prior notice by Agent to Administrative
Borrower designating the time and place of any public sale or the time after
which any private sale or other intended disposition of Collateral is to be
made, shall be deemed to be reasonable notice thereof and Borrowers and Obligors
waive any other notice. In the event Agent institutes an action to recover any
Collateral or seeks recovery of any Collateral by way of prejudgment remedy,
each Borrower and Obligor waives the posting of any bond which might otherwise
be required. At any time an Event of Default exists or has occurred and is
continuing, upon Agent's request, Borrowers will either, as Agent shall specify,
furnish cash collateral to the issuer to be used to secure and fund Agent's
reimbursement obligations to the issuer in connection with any Letter of Credit
Accommodations or furnish cash collateral to Agent for the Letter of Credit
Accommodations. Such cash collateral shall be in the amount equal to one hundred
ten (110%) percent of the amount of the Letter of Credit Accommodations plus the
amount of any fees and expenses payable in connection therewith through the end
of the latest expiration date of such Letter of Credit Accommodations.
(c) At any time or times that an Event of Default exists or has
occurred and is continuing, Agent may, in its discretion, and upon the direction
of the Required Lenders, Agent shall, enforce the rights of any Borrower or
Obligor against any account debtor, secondary obligor or other obligor in
respect of any of the Accounts or other Receivables. Without limiting the
generality of the foregoing, Agent may, in its discretion, and upon the
direction of the Required Lenders, Agent shall, at such time or times (i) notify
any or all account debtors, secondary obligors or other obligors in respect
thereof that the Receivables have been assigned to Agent and that Agent has a
security interest therein and Agent may direct any or all accounts debtors,
secondary obligors and other obligors to make payment of Receivables directly to
Agent, (ii) extend the time of payment of, compromise, settle or adjust for
cash, credit, return of merchandise or otherwise, and upon any terms or
conditions, any and all Receivables or other obligations included in the
Collateral and thereby discharge or release the account debtor or any secondary
obligors or other obligors in respect thereof without affecting any of the
Obligations, (iii) demand, collect or enforce payment of any Receivables or such
other obligations, but without any duty to do so, and Agent and Lenders shall
not be liable for any failure to collect or enforce the payment thereof nor for
the negligence of its agents or attorneys with respect thereto and (iv) take
whatever other action Agent may deem necessary or desirable for the protection
of its interests and the interests of Lenders. At any time that an Event of
Default exists or has occurred and is continuing, at Agent's request, all
invoices and statements sent to any account debtor shall state that the Accounts
and such other obligations have been assigned to Agent and are payable directly
and only to Agent and Borrowers and Obligors shall deliver to Agent such
originals of documents evidencing the sale and delivery of goods or the
performance of services giving rise to any Accounts as Agent may require. In the
event any account debtor returns Inventory when an Event of Default exists or
has occurred and is continuing, Borrowers shall, upon Agent's request, hold the
returned Inventory in trust for Agent, segregate all returned Inventory from all
of its other property, dispose of the returned Inventory solely according to
Agent's instructions, and not issue any credits, discounts or allowances with
respect thereto without Agent's prior written consent.
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(d) To the extent that applicable law imposes duties on Agent or any
Lender to exercise remedies in a commercially reasonable manner (which duties
cannot be waived under such law), each Borrower and Guarantor acknowledges and
agrees that it is not commercially unreasonable for Agent or any Lender (i) to
fail to incur expenses reasonably deemed significant by Agent or any Lender to
prepare Collateral for disposition or otherwise to complete raw material or work
in process into finished goods or other finished products for disposition, (ii)
to fail to obtain third party consents for access to Collateral to be disposed
of, or to obtain or, if not required by other law, to fail to obtain consents of
any Governmental Authority or other third party for the collection or
disposition of Collateral to be collected or disposed of, (iii) to fail to
exercise collection remedies against account debtors, secondary obligors or
other persons obligated on Collateral or to remove liens or encumbrances on or
any adverse claims against Collateral, (iv) to exercise collection remedies
against account debtors and other persons obligated on Collateral directly or
through the use of collection agencies and other collection specialists, (v) to
advertise dispositions of Collateral through publications or media of general
circulation, whether or not the Collateral is of a specialized nature, (vi) to
contact other persons, whether or not in the same business as any Borrower or
Guarantor, for expressions of interest in acquiring all or any portion of the
Collateral, (vii) to hire one or more professional auctioneers to assist in the
disposition of Collateral, whether or not the collateral is of a specialized
nature, (viii) to dispose of Collateral by utilizing Internet sites that provide
for the auction of assets of the types included in the Collateral or that have
the reasonable capability of doing so, or that match buyers and sellers of
assets, (ix) to dispose of assets in wholesale rather than retail markets, (x)
to disclaim disposition warranties, (xi) to purchase insurance or credit
enhancements to insure Agent or Lenders against risks of loss, collection or
disposition of Collateral or to provide to Agent or Lenders a guaranteed return
from the collection or disposition of Collateral, or (xii) to the extent deemed
appropriate by Agent, to obtain the services of other brokers, investment
bankers, consultants and other professionals to assist Agent in the collection
or disposition of any of the Collateral. Each Borrower and Guarantor
acknowledges that the purpose of this Section is to provide non-exhaustive
indications of what actions or omissions by Agent or any Lender would not be
commercially unreasonable in the exercise by Agent or any Lender of remedies
against the Collateral and that other actions or omissions by Agent or any
Lender shall not be deemed commercially unreasonable solely on account of not
being indicated in this Section. Without limitation of the foregoing, nothing
contained in this Section shall be construed to grant any rights to any Borrower
or Guarantor or to impose any duties on Agent or Lenders that would not have
been granted or imposed by this Agreement or by applicable law in the absence of
this Section.
(e) For the purpose of enabling Agent to exercise the rights and
remedies hereunder, each Borrower and Obligor hereby grants to Agent, to the
extent assignable, an irrevocable, non-exclusive license (exercisable at any
time an Event of Default shall exist or have occurred and for so long as the
same is continuing) without payment of royalty or other compensation to any
Borrower or Obligor, to use, assign, license or sublicense any of the
trademarks, service-marks, trade names, business names, trade styles, designs,
logos and other source of business identifiers and other Intellectual Property
and general intangibles now owned or hereafter acquired by any Borrower or
Obligor, wherever the same maybe located, including in such license reasonable
access to all media in which any of the licensed items may be recorded or stored
and to all computer programs used for the compilation or printout thereof.
(f) Agent may apply the cash proceeds of Collateral actually received
by Agent from any sale, lease, foreclosure or other disposition of the
Collateral to payment of the Obligations, in whole or in part and in such order
as Agent may elect, whether or not then due. Borrowers and Guarantor shall
remain liable to Agent and Lenders for the payment of any deficiency with
interest at the highest rate provided for herein and all costs and expenses of
collection or enforcement, including attorneys' fees and expenses.
(g) Without limiting the foregoing, upon the occurrence of a Default
or an Event of Default, (i) Agent and Lenders may, at Agent's option, and upon
the occurrence of an Event of Default at the direction of the Required Lenders,
Agent and Lenders shall, without notice, (A) cease making Loans or arranging for
Letter of
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Credit Accommodations or reduce the lending formulas or amounts of Loans and
Letter of Credit Accommodations available to Borrowers and/or (B) terminate any
provision of this Agreement providing for any future Loans or Letter of Credit
Accommodations to be made by Agent and Lenders to Borrowers and (ii) Agent may,
at its option, establish such Reserves as Agent determines, without limitation
or restriction, notwithstanding anything to the contrary contained herein.
SECTION 11. JURY TRIAL WAIVER, OTHER WAIVERS
AND CONSENTS; GOVERNING LAW
11.1 Governing Law; Choice of Forum; Service of Process; Jury Trial Waiver.
(a) The validity, interpretation and enforcement of this
Agreement and the other Financing Agreements (other than the Mortgages to the
extent provided therein) and any dispute arising out of the relationship between
the parties hereto, whether in contract, tort, equity or otherwise, shall be
governed by the internal laws of the State of Illinois but excluding any
principles of conflicts of law or other rule of law that would cause the
application of the law of any jurisdiction other than the laws of the State of
Illinois.
(b) Borrowers, Guarantor, Agent and Lenders irrevocably consent
and submit to the non-exclusive jurisdiction of the Circuit Court of Xxxx
County, Illinois and the United States District Court for the Northern District
of Illinois, whichever Agent may elect, and waive any objection based on venue
or forum non conveniens with respect to any action instituted therein arising
under this Agreement or any of the other Financing Agreements or in any way
connected with or related or incidental to the dealings of the parties hereto in
respect of this Agreement or any of the other Financing Agreements or the
transactions related hereto or thereto, in each case whether now existing or
hereafter arising, and whether in contract, tort, equity or otherwise, and agree
that any dispute with respect to any such matters shall be heard only in the
courts described above (except that Agent and Lenders shall have the right to
bring any action or proceeding against any Borrower or Guarantor or its or their
property in the courts of any other jurisdiction which Agent deems necessary or
appropriate in order to realize on the Collateral or to otherwise enforce its
rights against any Borrower or Guarantor or its or their property).
(c) Each Borrower and Guarantor hereby waives personal service of
any and all process upon it and consents that all such service of process may be
made by certified mail (return receipt requested) directed to its address set
forth herein and service so made shall be deemed to be completed five (5) days
after the same shall have been so deposited in the U.S. mails, or, at Agent's
option, by service upon any Borrower or Guarantor (or Administrative Borrower on
behalf of such Borrower or Guarantor) in any other manner provided under the
rules of any such courts. Within thirty (30) days after such service, such
Borrower or Guarantor shall appear in answer to such process, failing which such
Borrower or Guarantor shall be deemed in default and judgment may be entered by
Agent against such Borrower or Guarantor for the amount of the claim and other
relief requested.
(d) BORROWERS, GUARANTOR, AGENT AND LENDERS EACH HEREBY WAIVES
ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION
ARISING UNDER THIS AGREEMENT OR ANY OF THE OTHER FINANCING AGREEMENTS OR IN ANY
WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES
HERETO IN RESPECT OF THIS AGREEMENT OR ANY OF THE OTHER FINANCING AGREEMENTS OR
THE TRANSACTIONS RELATED HERETO OR THERETO IN EACH CASE WHETHER NOW EXISTING OR
HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY OR OTHERWISE.
BORROWERS, GUARANTOR, AGENT AND LENDERS EACH HEREBY AGREES AND CONSENTS THAT ANY
SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL
WITHOUT A JURY AND THAT ANY BORROWER, GUARANTOR, AGENT OR ANY LENDER MAY FILE AN
ORIGINAL COUNTERPART OF A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN
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EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO
TRIAL BY JURY.
(e) Agent and Lenders shall not have any liability to any
Borrower or Guarantor (whether in tort, contract, equity or otherwise) for
losses suffered by such Borrower or Guarantor in connection with, arising out
of, or in any way related to the transactions or relationships contemplated by
this Agreement, or any act, omission or event occurring in connection herewith,
unless it is determined by a final and non-appealable judgment or court order
binding on Agent and such Lender, that the losses were the result of acts or
omissions constituting gross negligence or willful misconduct. In any such
litigation, Agent and Lenders shall be entitled to the benefit of the rebuttable
presumption that it acted in good faith and with the exercise of ordinary care
in the performance by it of the terms of this Agreement. Each Borrower and
Guarantor: (i) certifies that neither Agent, any Lender nor any representative,
agent or attorney acting for or on behalf of Agent or any Lender has
represented, expressly or otherwise, that Agent and Lenders would not, in the
event of litigation, seek to enforce any of the waivers provided for in this
Agreement or any of the other Financing Agreements and (ii) acknowledges that in
entering into this Agreement and the other Financing Agreements, Agent and
Lenders are relying upon, among other things, the waivers and certifications set
forth in this Section 11.1 and elsewhere herein and therein.
11.2 Waiver of Notices. Each Borrower and Guarantor hereby expressly
waives demand, presentment, protest and notice of protest and notice of dishonor
with respect to any and all instruments and chattel paper, included in or
evidencing any of the Obligations or the Collateral, and any and all other
demands and notices of any kind or nature whatsoever with respect to the
Obligations, the Collateral and this Agreement, except such as are expressly
provided for herein. No notice to or demand on any Borrower or Guarantor which
Agent or any Lender may elect to give shall entitle such Borrower or Guarantor
to any other or further notice or demand in the same, similar or other
circumstances.
11.3 Amendments and Waivers.
(a) Neither this Agreement nor any other Financing Agreement nor
any terms hereof or thereof may be amended, waived, discharged or terminated
unless such amendment, waiver, discharge or termination is in writing signed by
Agent and the Required Lenders or at Agent's option, by Agent with the
authorization of the Required Lenders, and as to amendments to any of the
Financing Agreements (other than with respect to any provision of Section 12
hereof), by any Borrower; except, that, no such amendment, waiver, discharge or
termination shall:
(i) reduce the interest rate or any fees or extend the time
of payment of principal, interest or any fees or reduce the principal amount of
any Loan or Letter of Credit Accommodations, in each case without the consent of
each Lender directly affected thereby,
(ii) increase the Commitment of any Lender over the amount
thereof then in effect or provided hereunder, in each case without the consent
of the Lender directly affected thereby,
(iii) release any Collateral (except as expressly required
hereunder or under any of the other Financing Agreements or applicable law and
except as permitted under Section 12.11(b) hereof), without the consent of Agent
and all of Lenders,
(iv) reduce any percentage specified in the definition of
Required Lenders, without the consent of Agent and all of Lenders,
(v) consent to the assignment or transfer by any Borrower or
Guarantor of any of their rights and obligations under this Agreement, without
the consent of Agent and all of Lenders,
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(vi) amend, modify or waive any terms of this Section 11.3
hereof, without the consent of Agent and all of Lenders, or
(vii) increase the advance rates constituting part of the
Borrowing Base, without the consent of Agent and all of Lenders.
(b) Agent and Lenders shall not, by any act, delay, omission or
otherwise be deemed to have expressly or impliedly waived any of its or their
rights, powers and/or remedies unless such waiver shall be in writing and signed
as provided herein. Any such waiver shall be enforceable only to the extent
specifically set forth therein. A waiver by Agent or any Lender of any right,
power and/or remedy on any one occasion shall not be construed as a bar to or
waiver of any such right, power and/or remedy which Agent or any Lender would
otherwise have on any future occasion, whether similar in kind or otherwise.
(c) Notwithstanding anything to the contrary contained in Section
11.3(a) above, in connection with any amendment, waiver, discharge or
termination, in the event that any Lender whose consent thereto is required
shall fail to consent or fail to consent in a timely manner (such Lender being
referred to herein as a "Non-Consenting Lender"), but the consent of any other
Lenders to such amendment, waiver, discharge or termination that is required are
obtained, if any, then Congress shall have the right, but not the obligation, at
any time thereafter, and upon the exercise by Congress of such right, such
Non-Consenting Lender shall have the obligation, to sell, assign and transfer to
Congress or such Eligible Transferee as Congress may specify, the Commitment of
such Non-Consenting Lender and all rights and interests of such Non-Consenting
Lender pursuant thereto. Congress shall provide the Non-Consenting Lender with
prior written notice of its intent to exercise its right under this Section,
which notice shall specify on date on which such purchase and sale shall occur.
Such purchase and sale shall be pursuant to the terms of an Assignment and
Acceptance (whether or not executed by the Non-Consenting Lender), except that
on the date of such purchase and sale, Congress, or such Eligible Transferee
specified by Congress, shall pay to the Non-Consenting Lender the amount equal
to: (i) the principal balance of the Loans held by the Non-Consenting Lender
outstanding as of the close of business on the business day immediately
preceding the effective date of such purchase and sale, plus (ii) amounts
accrued and unpaid in respect of interest and fees payable to the Non-Consenting
Lender to the effective date of the purchase (but in no event shall the
Non-Consenting Lender be deemed entitled to any early termination fee), minus
(iii) except as Congress may otherwise agree in writing, the amount of the
closing fee received by the Non-Consenting Lender pursuant to the terms hereof
or of any of the other Financing Agreements multiplied by the fraction, the
numerator of which is the number of months remaining in the then current term of
the Credit Facility and the denominator of which is the number of months in the
then current term thereof. Such purchase and sale shall be effective on the date
of the payment of such amount to the Non-Consenting Lender and the Commitment of
the Non-Consenting Lender shall terminate on such date.
(d) The consent of Agent shall be required for any amendment,
waiver or consent affecting the rights or duties of Agent hereunder or under any
of the other Financing Agreements, in addition to the consent of the Lenders
otherwise required by this Section and the exercise by Agent of any of its
rights hereunder with respect to Reserves or Eligible Accounts or Eligible
Inventory shall not be deemed an amendment to the advance rates provided for in
this Section 11.3.
11.4 Waiver of Counterclaims. Each Borrower and Guarantor waives all
rights to interpose any claims, deductions, setoffs or counterclaims of any
nature (other then compulsory counterclaims) in any action or proceeding with
respect to this Agreement, the Obligations, the Collateral or any matter arising
therefrom or relating hereto or thereto.
11.5 Indemnification. Each Borrower and Guarantor shall, jointly and
severally, indemnify and hold Agent and each Lender, and its officers,
directors, agents, employees, advisors and counsel and their respective
Affiliates (each such person being an "Indemnitee"), harmless from and against
any and all losses, claims, damages, liabilities,
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costs or expenses (including attorneys' fees and expenses) imposed on, incurred
by or asserted against any of them in connection with any litigation,
investigation, claim or proceeding commenced or threatened related to the
negotiation, preparation, execution, delivery, enforcement, performance or
administration of this Agreement, any other Financing Agreements, or any
undertaking or proceeding related to any of the transactions contemplated hereby
or any act, omission, event or transaction related or attendant thereto,
including amounts paid in settlement, court costs, and the fees and expenses of
counsel except that Borrowers and Guarantor shall not have any obligation under
this Section 11.5 to indemnify an Indemnitee with respect to a matter covered
hereby resulting from the gross negligence or wilful misconduct of such
Indemnitee as determined pursuant to a final, non-appealable order of a court of
competent jurisdiction (but without limiting the obligations of Borrowers or
Guarantor as to any other Indemnitee). To the extent that the undertaking to
indemnify, pay and hold harmless set forth in this Section may be unenforceable
because it violates any law or public policy, Borrowers and Guarantor shall pay
the maximum portion which it is permitted to pay under applicable law to Agent
and Lenders in satisfaction of indemnified matters under this Section. To the
extent permitted by applicable law, no Borrower or Guarantor shall assert, and
each Borrower and Guarantor hereby waives, any claim against any Indemnitee, on
any theory of liability, for special, indirect, consequential or punitive
damages (as opposed to direct or actual damages) arising out of, in connection
with, or as a result of, this Agreement, any of the other Financing Agreements
or any undertaking or transaction contemplated hereby. All amounts due under
this Section shall be payable upon demand. The foregoing indemnity shall survive
the payment of the Obligations and the termination or non-renewal of this
Agreement.
SECTION 12. THE AGENT
12.1 Appointment, Powers and Immunities. Each Lender irrevocably
designates, appoints and authorizes Congress to act as Agent hereunder and under
the other Financing Agreements with such powers as are specifically delegated to
Agent by the terms of this Agreement and of the other Financing Agreements,
together with such other powers as are reasonably incidental thereto. Agent (a)
shall have no duties or responsibilities except those expressly set forth in
this Agreement and in the other Financing Agreements, and shall not by reason of
this Agreement or any other Financing Agreement be a trustee or fiduciary for
any Lender; (b) shall not be responsible to Lenders for any recitals,
statements, representations or warranties contained in this Agreement or in any
of the other Financing Agreements, or in any certificate or other document
referred to or provided for in, or received by any of them under, this Agreement
or any other Financing Agreement, or for the value, validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement or any other
Financing Agreement or any other document referred to or provided for herein or
therein or for any failure by any Borrower or any Obligor or any other Person to
perform any of its obligations hereunder or thereunder; and (c) shall not be
responsible to Lenders for any action taken or omitted to be taken by it
hereunder or under any other Financing Agreement or under any other document or
instrument referred to or provided for herein or therein or in connection
herewith or therewith, except for its own gross negligence or willful misconduct
as determined by a final non-appealable judgment of a court of competent
jurisdiction. Agent may employ agents and attorneys-in-fact and shall not be
responsible for the negligence or misconduct of any such agents or
attorneys-in-fact selected by it in good faith. Agent may deem and treat the
payee of any note as the holder thereof for all purposes hereof unless and until
the assignment thereof pursuant to an agreement (if and to the extent permitted
herein) in form and substance satisfactory to Agent shall have been delivered to
and acknowledged by Agent.
12.2 Reliance by Agent. Agent shall be entitled to rely upon any
certification, notice or other communication (including any thereof by
telephone, telecopy, telex, telegram or cable) believed by it to be genuine and
correct and to have been signed or sent by or on behalf of the proper Person or
Persons, and upon advice and statements of legal counsel, independent
accountants and other experts selected by Agent. As to any matters not expressly
provided for by this Agreement or any other Financing Agreement, Agent shall in
all cases be fully protected in acting, or in refraining from acting, hereunder
or thereunder in accordance with instructions given by
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the Required Lenders or all of Lenders as is required in such circumstance, and
such instructions of such Agents and any action taken or failure to act pursuant
thereto shall be binding on all Lenders.
12.3 Events of Default.
(a) Agent shall not be deemed to have knowledge or notice of the
occurrence of a Default or an Event of Default or other failure of a condition
precedent to the Loans and Letter of Credit Accommodations hereunder, unless and
until Agent has received written notice from a Lender, or a Borrower specifying
such Event of Default or any unfulfilled condition precedent, and stating that
such notice is a "Notice of Default or Failure of Condition". In the event that
Agent receives such a Notice of Default or Failure of Condition, Agent shall
give prompt notice thereof to the Lenders. Agent shall (subject to Section 12.7)
take such action with respect to any such Event of Default or failure of
condition precedent as shall be 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 or by reason of such Event of Default or failure of condition
precedent, as it shall deem advisable in the best interest of Lenders. Without
limiting the foregoing, and notwithstanding the existence or occurrence and
continuance of an Event of Default or any other failure to satisfy any of the
conditions precedent set forth in Section 4 of this Agreement to the contrary,
Agent may, but shall have no obligation to, continue to make Loans and issue or
cause to be issued Letter of Credit Accommodations for the ratable account and
risk of Lenders from time to time if Agent believes making such Loans or issuing
or causing to be issued such Letter of Credit Accommodations is in the best
interests of Lenders.
(b) Except with the prior written consent of Agent, no Lender may
assert or exercise any enforcement right or remedy in respect of the Loans,
Letter of Credit Accommodations or other Obligations, as against any Borrower or
Obligor or any of the Collateral or other property of any Borrower or Obligor.
12.4 Congress in its Individual Capacity. With respect to its
Commitment and the Loans made and Letter of Credit Accommodations issued or
caused to be issued by it (and any successor acting as Agent), so long as
Congress shall be a Lender hereunder, it shall have the same rights and powers
hereunder as any other Lender and may exercise the same as though it were not
acting as Agent, and the term "Lender" or "Lenders" shall, unless the context
otherwise indicates, include Congress in its individual capacity as Lender
hereunder. Congress (and any successor acting as Agent) and its Affiliates may
(without having to account therefor to any Lender) lend money to, make
investments in and generally engage in any kind of business with Borrowers (and
any of its Subsidiaries or Affiliates) as if it were not acting as Agent, and
Congress and its Affiliates may accept fees and other consideration from any
Borrower or Guarantor and any of its Subsidiaries and Affiliates for services in
connection with this Agreement or otherwise without having to account for the
same to Lenders.
12.5 Indemnification. Lenders agree to indemnify Agent (to the extent
not reimbursed by Borrowers hereunder and without limiting any obligations of
Borrowers hereunder) ratably, in accordance with their Pro Rata Shares, for any
and all claims of any kind and nature whatsoever that may be imposed on,
incurred by or asserted against Agent (including by any Lender) arising out of
or by reason of any investigation in or in any way relating to or arising out of
this Agreement or any other Financing Agreement or any other documents
contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby (including the costs and expenses that Agent is
obligated to pay hereunder) or the enforcement of any of the terms hereof or
thereof or of any such other documents, provided, that, no Lender shall be
liable for any of the foregoing to the extent it arises from the gross
negligence or willful misconduct of the party to be indemnified as determined by
a final non-appealable judgment of a court of competent jurisdiction. The
foregoing indemnity shall survive the payment of the Obligations and the
termination or non-renewal of this Agreement.
12.6 Non-Reliance on Agent and Other Lenders. Each Lender agrees that
it has, independently and without reliance on Agent or other Lender, and based
on such documents and information as it has deemed appropriate,
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made its own credit analysis of Borrowers and Obligors and has made its own
decision to enter into this Agreement and that it will, independently and
without reliance upon Agent or any other Lender, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
analysis and decisions in taking or not taking action under this Agreement or
any of the other Financing Agreements. Agent shall not be required to keep
itself informed as to the performance or observance by any Borrower or Obligor
of any term or provision of this Agreement or any of the other Financing
Agreements or any other document referred to or provided for herein or therein
or to inspect the properties or books of any Borrower or Obligor. Agent will use
reasonable efforts to provide Lenders with any information received by Agent
from any Borrower or Obligor which is required to be provided to Lenders or
deemed to be requested by Lenders hereunder and with a copy of any Notice of
Default or Failure of Condition received by Agent from any Borrower or any
Lender; provided, that, Agent shall not be liable to any Lender for any failure
to do so, except to the extent that such failure is attributable to Agent's own
gross negligence or willful misconduct as determined by a final non-appealable
judgment of a court of competent jurisdiction. Except for notices, reports and
other documents expressly required to be furnished to Lenders by Agent
hereunder, Agent shall not have any duty or responsibility to provide any Lender
with any other credit or other information concerning the affairs, financial
condition or business of any Borrower or Obligor that may come into the
possession of Agent.
12.7 Failure to Act. Except for action expressly required of Agent
hereunder and under the other Financing Agreements, Agent shall in all cases be
fully justified in failing or refusing to act hereunder and thereunder unless it
shall receive further assurances to its satisfaction from Lenders of their
indemnification obligations under Section 12.5 hereof against any and all
liability and expense that may be incurred by it by reason of taking or
continuing to take any such action.
12.8 Additional Loans. Agent shall not make any Loans or provide any
Letter of Credit Accommodations to any Borrower on behalf of Lenders
intentionally and with actual knowledge that such Loans or Letter of Credit
Accommodations would cause the aggregate amount of the total outstanding Loans
and Letter of Credit Accommodations to such Borrower to exceed the Borrowing
Base of such Borrower, without the prior consent of all Lenders, except, that,
Agent may make such additional Loans or provide such additional Letter of Credit
Accommodations on behalf of Lenders, intentionally and with actual knowledge
that such Loans or Letter of Credit Accommodations will cause the total
outstanding Loans and Letter of Credit Accommodations to such Borrower to exceed
the Borrowing Base of such Borrower, as Agent may deem necessary or advisable in
its discretion, provided, that: (a) the total principal amount of the additional
Loans or additional Letter of Credit Accommodations to any Borrower which Agent
may make or provide after obtaining such actual knowledge that the aggregate
principal amount of the Loans equal or exceed the Borrowing Bases of Borrowers,
plus the amount of Special Agent Advances made pursuant to Section 12.11(a)(ii)
hereof then outstanding, shall not exceed the aggregate amount equal to five
(5%) percent of the Maximum Credit and shall not cause the total principal
amount of the Loans and Letter of Credit Accommodations to exceed the Maximum
Credit and (b) no such additional Loan or Letter of Credit Accommodation shall
be outstanding more than ninety (90) days after the date such additional Loan or
Letter of Credit Accommodation is made or issued (as the case may be), except as
the Required Lenders may otherwise agree. Each Lender shall be obligated to pay
Agent the amount of its Pro Rata Share of any such additional Loans or Letter of
Credit Accommodations.
12.9 Concerning the Collateral and the Related Financing Agreements.
Each Lender authorizes and directs Agent to enter into this Agreement and the
other Financing Agreements. Each Lender agrees that any action taken by Agent or
Required Lenders in accordance with the terms of this Agreement or the other
Financing Agreements and the exercise by Agent or Required Lenders of their
respective powers set forth therein or herein, together with such other powers
that are reasonably incidental thereto, shall be binding upon all of the
Lenders.
12.10 Field Audit, Examination Reports and other Information;
Disclaimer by Lenders. By signing this Agreement, each Lender:
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(a) is deemed to have requested that Agent furnish such Lender,
promptly after it becomes available, a copy of each field audit or examination
report and report with respect to the Borrowing Base received by Agent (each
field audit or examination report and report with respect to the Borrowing Base
being referred to herein as a "Report" and collectively, "Reports");
(b) expressly agrees and acknowledges that Agent (i) does not
make any representation or warranty as to the accuracy of any Report, or (ii)
shall not be liable for any information contained in any Report;
(c) expressly agrees and acknowledges that the Reports are not
comprehensive audits or examinations, that Agent or any other party performing
any audit or examination will inspect only specific information regarding
Borrowers and Guarantor and will rely significantly upon Borrowers' and
Guarantor's books and records, as well as on representations of Borrowers' and
Guarantor' personnel; and
(d) agrees to keep all Reports confidential and strictly for its
internal use in accordance with the terms of Section 13.5 hereof, and not to
distribute or use any Report in any other manner.
12.11 Collateral Matters.
(a) Agent may, at its option, from time to time, at any time on
or after an Event of Default and for so long as the same is continuing or upon
any other failure of a condition precedent to the Loans and Letter of Credit
Accommodations hereunder, make such disbursements and advances ("Special Agent
Advances") which Agent, in its sole discretion, (i) deems necessary or desirable
either to preserve or protect the Collateral or any portion thereof or (ii) to
enhance the likelihood or maximize the amount of repayment by Borrowers and
Guarantor of the Loans and other Obligations, provided, that, the aggregate
principal amount of the Special Agent Advances pursuant to this clause (ii),
plus the then outstanding principal amount of the additional Loans and Letter of
Credit Accommodations which Agent may make or provide as set forth in Section
12.8 hereof, shall not exceed the aggregate amount of five (5%) percent of the
Maximum Credit or (iii) to pay any other amount chargeable to any Borrower or
Guarantor pursuant to the terms of this Agreement or any of the other Financing
Agreements consisting of costs, fees and expenses and payments to any issuer of
Letter of Credit Accommodations. Special Agent Advances shall be repayable on
demand and be secured by the Collateral. Special Agent Advances shall not
constitute Loans but shall otherwise constitute Obligations hereunder. Without
limitation of its obligations pursuant to Section 6.10, each Lender agrees that
it shall make available to Agent, upon Agent's demand, in immediately available
funds, the amount equal to such Lender's Pro Rata Share of each such Special
Agent Advance. If such funds are not made available to Agent by such Lender,
such Lender shall be deemed a Defaulting Lender and Agent shall be entitled to
recover such funds, on demand from such Lender together with interest thereon
for each day from the date such payment was due until the date such amount is
paid to Agent at the Federal Funds Rate for each day during such period (as
published by the Federal Reserve Bank of New York or at Agent's option based on
the arithmetic mean determined by Agent of the rates for the last transaction in
overnight Federal funds arranged prior to 9:00 a.m. (New York City time) on that
day by each of the three leading brokers of Federal funds transactions in New
York City selected by Agent) and if such amounts are not paid within three (3)
days of Agent's demand, at the highest Interest Rate provided for in Section 3.1
hereof applicable to Prime Rate Loans.
(b) Lenders hereby irrevocably authorize Agent, at its option and
in its discretion to release any security interest in, mortgage or lien upon,
any of the Collateral (i) upon termination of the Commitments and payment and
satisfaction of all of the Obligations and delivery of cash collateral to the
extent required under Section 13.1 below, or (ii) constituting property being
sold or disposed of if Administrative Borrower or any Borrower or Guarantor
certifies to Agent that the sale or disposition is made in compliance with
Section 9.7 hereof (and Agent may rely conclusively on any such certificate,
without further inquiry), or (iii) constituting property in which any Borrower
or Guarantor did not own an interest at the time the security interest, mortgage
or lien was granted or at
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any time thereafter, or (iv) having a value in the aggregate in any twelve (12)
month period of less than $2,500,000, or (v) if required or permitted under the
terms of any of the other Financing Agreements, including any intercreditor
agreement, or (vi) approved, authorized or ratified in writing by all of
Lenders. Except as provided above, Agent will not release any security interest
in, mortgage or lien upon, any of the Collateral without the prior written
authorization of all of Lenders. Upon request by Agent at any time, Lenders will
promptly confirm in writing Agent's authority to release particular types or
items of Collateral pursuant to this Section.
(c) Without any manner limiting Agent's authority to act without
any specific or further authorization or consent by the Required Lenders, each
Lender agrees to confirm in writing, upon request by Agent, the authority to
release Collateral conferred upon Agent under this Section. Agent shall (and is
hereby irrevocably authorized by Lenders to) execute such documents as may be
necessary to evidence the release of the security interest, mortgage or liens
granted to Agent upon any Collateral to the extent set forth above; provided,
that, (i) Agent shall not be required to execute any such document on terms
which, in Agent's opinion, would expose Agent to liability or create any
obligations or entail any consequence other than the release of such security
interest, mortgage or liens without recourse or warranty and (ii) such release
shall not in any manner discharge, affect or impair the Obligations or any
security interest, mortgage or lien upon (or obligations of any Borrower or
Guarantor in respect of) the Collateral retained by such Borrower or Guarantor.
(d) Agent shall have no obligation whatsoever to any Lender or
any other Person to investigate, confirm or assure that the Collateral exists or
is owned by any Borrower or Guarantor or is cared for, protected or insured or
has been encumbered, or that any particular items of Collateral meet the
eligibility criteria applicable in respect of the Loans or Letter of Credit
Accommodations hereunder, or whether any particular reserves are appropriate, or
that the liens and security interests granted to Agent pursuant hereto or any of
the Financing Agreements or otherwise have been properly or sufficiently or
lawfully created, perfected, protected or enforced or are entitled to any
particular priority, or to exercise at all or in any particular manner or under
any duty of care, disclosure or fidelity, or to continue exercising, any of the
rights, authorities and powers granted or available to Agent in this Agreement
or in any of the other Financing Agreements, it being understood and agreed that
in respect of the Collateral, or any act, omission or event related thereto,
Agent may act in any manner it may deem appropriate, in its discretion, given
Agent's own interest in the Collateral as a Lender and that Agent shall have no
duty or liability whatsoever to any other Lender.
12.12 Agency for Perfection. Each Lender hereby appoints Agent and each
other Lender as agent and bailee for the purpose of perfecting the security
interests in and liens upon the Collateral of Agent in assets which, in
accordance with Article 9 of the UCC can be perfected only by possession (or
where the security interest of a secured party with possession has priority over
the security interest of another secured party) and Agent and each Lender hereby
acknowledges that it holds possession of any such Collateral for the benefit of
Agent as secured party. Should any Lender obtain possession of any such
Collateral, such Lender shall notify Agent thereof, and, promptly upon Agent's
request therefor shall deliver such Collateral to Agent or in accordance with
Agent's instructions.
12.13 Successor Agent. Agent may resign as Agent upon forty-five (45)
days' notice to Lenders and Parent. If Agent resigns under this Agreement, the
Required Lenders shall appoint from among the Lenders a successor agent for
Lenders. If no successor agent is appointed prior to the effective date of the
resignation of Agent, Agent may appoint, after consulting with Lenders and
Parent, a successor agent from among Lenders. Upon the acceptance by the Lender
so selected of its appointment as successor agent hereunder, such successor
agent shall succeed to all of the rights, powers and duties of the retiring
Agent and the term "Agent" as used herein and in the other Financing Agreements
shall mean such successor agent and the retiring Agent's appointment, powers and
duties as Agent shall be terminated. After any retiring Agent's resignation
hereunder as Agent, the provisions of this Section 12 shall inure to its benefit
as to any actions taken or omitted by it while it was Agent under this
Agreement. If no successor agent has accepted appointment as Agent by the date
which is forty-five (45) days after
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the date of a retiring Agent's notice of resignation, the retiring Agent's
resignation shall nonetheless thereupon become effective and Lenders shall
perform all of the duties of Agent hereunder until such time, if any, as the
Required Lenders appoint a successor agent as provided for above.
12.14 Documentation Agent. The Lender identified on the facing page or
signature pages of this Agreement as "Documentation Agent" shall have no right,
power, obligation, liability, responsibility or duty under this Agreement or any
of the other Financing Agreements other than those applicable to all Lenders as
such. Without limiting the foregoing, the Lender so identified shall not have or
be deemed to have any fiduciary relationship with any Lender. Each Lender
acknowledges that it has not relied, and will not rely, on the Lender so
identified in deciding to enter into this Agreement or in taking or not taking
action hereunder.
SECTION 13. TERM OF AGREEMENT; MISCELLANEOUS
13.1 Term.
(a) This Agreement and the other Financing Agreements shall
become effective as of the date set forth on the first page hereof and shall
continue in full force and effect for a term ending on the date three (3) years
from the date hereof (the "Renewal Date"), and from year to year thereafter,
unless sooner terminated pursuant to the terms hereof. Agent may, at its option
(or shall at the direction of any Lender in writing received by Agent at least
ninety (90) days prior to the Renewal Date or the anniversary of any Renewal
Date, as the case may be) terminate this Agreement and the other Financing
Agreements, or Administrative Borrower or any Borrower may terminate this
Agreement and the other Financing Agreement, in each case, effective on the
Renewal Date or the anniversary of the Renewal Date in any year by giving to the
other party at least sixty (60) days prior written notice; provided, that, this
Agreement and all other Financing Agreements must be terminated simultaneously.
In addition, Borrowers may terminate this Agreement at any time upon ten (10)
days prior written notice to Agent (which notice shall be irrevocable) and Agent
may, at its option, and shall at the direction of Required Lenders, terminate
this Agreement at any time on or after an Event of Default. Upon the Renewal
Date or any other effective date of termination of the Financing Agreements,
Borrowers shall pay to Agent all outstanding and unpaid Obligations and shall
furnish cash collateral to Agent (or at Agent's option, a letter of credit
issued for the account of Borrowers and at Borrowers' expense, in form and
substance satisfactory to Agent, by an issuer acceptable to Agent and payable to
Agent as beneficiary) in such amounts as Agent determines are reasonably
necessary to secure Agent and Lenders from loss, cost, damage or expense,
including attorneys' fees and expenses, in connection with any contingent
Obligations, including issued and outstanding Letter of Credit Accommodations
and checks or other payments provisionally credited to the Obligations and/or as
to which Agent or any Lender has not yet received final and indefeasible payment
and any continuing obligations of Agent or any Lender pursuant to any Deposit
Account Control Agreement. The amount of such cash collateral (or letter of
credit, as Agent may determine) as to any Letter of Credit Accommodations shall
be in the amount equal to one hundred ten (110%) percent of the amount of the
Letter of Credit Accommodations plus the amount of any fees and expenses payable
in connection therewith through the end of the latest expiration date of such
Letter of Credit Accommodations. Such payments in respect of the Obligations and
cash collateral shall be remitted by wire transfer in Federal funds to the Agent
Payment Account or such other bank account of Agent, as Agent may, in its
discretion, designate in writing to Administrative Borrower for such purpose.
Interest shall be due until and including the next Business Day, if the amounts
so paid by Borrowers to the Agent Payment Account or other bank account
designated by Agent are received in such bank account later than 12:00 noon,
Chicago time.
(b) No termination of this Agreement or the other Financing
Agreements shall relieve or discharge any Borrower or Guarantor of its
respective duties, obligations and covenants under this Agreement or the other
Financing Agreements until all Obligations have been fully and finally
discharged and paid, and Agent's continuing security interest in the Collateral
and the rights and remedies of Agent and Lenders hereunder, under the other
79
Financing Agreements and applicable law, shall remain in effect until all such
Obligations have been fully and finally discharged and paid. Accordingly, each
Borrower and Guarantor waives any rights it may have under the UCC to demand the
filing of termination statements with respect to the Collateral and Agent shall
not be required to send such termination statements to Borrowers or Guarantor,
or to file them with any filing office, unless and until this Agreement shall
have been terminated in accordance with its terms and all Obligations paid and
satisfied in full in immediately available funds.
(c) If for any reason this Agreement is terminated prior to the
second anniversary of the date hereof, in view of the impracticality and extreme
difficulty of ascertaining actual damages and by mutual agreement of the parties
as to a reasonable calculation of Agent's and each Lender's lost profits as a
result thereof, Borrowers agree to pay to Agent for itself and the benefit of
Lenders, upon the effective date of such termination, an early termination fee
in the amount equal to one-half (1/2%) percent of the Maximum Credit. Such early
termination fee shall be presumed to be the amount of damages sustained by Agent
and Lenders as a result of such early termination and Borrowers and Guarantor
agree that it is reasonable under the circumstances currently existing. In
addition, Agent and Lenders shall be entitled to such early termination fee upon
the occurrence of any Event of Default described in Sections 10.1(g) and 10.1(h)
hereof, even if Agent and Lenders do not exercise the right to terminate this
Agreement, but elect, at their option, to provide financing to any Borrower or
permit the use of cash collateral under the United States Bankruptcy Code. The
early termination fee provided for in this Section 13.1 shall be deemed included
in the Obligations.
13.2 Interpretative Provisions.
(a) All terms used herein which are defined in Article 1, Article
8 or Article 9 of the UCC shall have the meanings given therein unless otherwise
defined in this Agreement.
(b) All references to the plural herein shall also mean the
singular and to the singular shall also mean the plural unless the context
otherwise requires.
(c) All references to any Borrower, Guarantor, Agent and Lenders
pursuant to the definitions set forth in the recitals hereto, or to any other
person herein, shall include their respective successors and assigns.
(d) The words "hereof", "herein", "hereunder", "this Agreement"
and words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not any particular provision of this Agreement and as
this Agreement now exists or may hereafter be amended, modified, supplemented,
extended, renewed, restated or replaced.
(e) The word "including" when used in this Agreement shall mean
"including, without limitation".
(f) An Event of Default shall exist or continue or be continuing
until such Event of Default is waived in accordance with Section 11.3 or is
cured in a manner satisfactory to Agent, if such Event of Default is capable of
being cured as determined by Agent.
(g) All references to the term "good faith" used herein when
applicable to Agent or any Lender shall mean, notwithstanding anything to the
contrary contained herein or in the UCC, honesty in fact in the conduct or
transaction concerned. Borrowers and Guarantor shall have the burden of proving
any lack of good faith on the part of Agent or any Lender alleged by any
Borrower or Guarantor at any time.
(h) Any accounting term used in this Agreement shall have, unless
otherwise specifically provided herein, the meaning customarily given in
accordance with GAAP, and all financial computations hereunder shall be computed
unless otherwise specifically provided herein, in accordance with GAAP as
consistently applied and using
80
the same method for inventory valuation as used in the preparation of the
financial statements of Parent most recently received by Agent prior to the date
hereof. Notwithstanding anything to the contrary contained in GAAP or any
interpretations or other pronouncements by the Financial Accounting Standards
Board or otherwise, the term "unqualified opinion" as used herein to refer to
opinions or reports provided by accountants shall mean an opinion or report that
is not only unqualified but also does not include any explanatory note or
language, including any explanation, supplemental comment or other comment
concerning the ability of the applicable person to continue as a going concern.
(i) In the computation of periods of time from a specified date to a
later specified date, the word "from" means "from and including", the words "to"
and "until" each mean "to but excluding" and the word "through" means "to and
including".
(j) Unless otherwise expressly provided herein, (i) references herein
to any agreement, document or instrument shall be deemed to include all
subsequent amendments, modifications, supplements, extensions, renewals,
restatements or replacements with respect thereto, but only to the extent the
same are not prohibited by the terms hereof or of any other Financing Agreement,
and (ii) references to any statute or regulation are to be construed as
including all statutory and regulatory provisions consolidating, amending,
replacing, recodifying, supplementing or interpreting the statute or regulation.
(k) The captions and headings of this Agreement are for convenience of
reference only and shall not affect the interpretation of this Agreement.
(l) This Agreement and other Financing Agreements may use several
different limitations, tests or measurements to regulate the same or similar
matters. All such limitations, tests and measurements are cumulative and shall
each be performed in accordance with their terms.
(m) This Agreement and the other Financing Agreements are the result
of negotiations among and have been reviewed by counsel to Agent and the other
parties, and are the products of all parties. Accordingly, this Agreement and
the other Financing Agreements shall not be construed against Agent or Lenders
merely because of Agent's or any Lender's involvement in their preparation.
13.3 Notices. All notices, requests and demands hereunder shall be in
writing and deemed to have been given or made: if delivered in person,
immediately upon delivery; if by telex, telegram or facsimile transmission,
immediately upon sending and upon confirmation of receipt; if by nationally
recognized overnight courier service with instructions to deliver the next
Business Day, one (1) Business Day after sending; and if by certified mail,
return receipt requested, five (5) days after mailing. All notices, requests and
demands upon the parties are to be given to the following addresses (or to such
other address as any party may designate by notice in accordance with this
Section):
If to any Borrower or Guarantor: c/o Pemstar, Inc.
0000 Xxxxxxxxxx Xxxxx X.X.
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: Chief Financial Officer
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
with a copy to: c/o Pemstar, Inc.
0000 Xxxxxxxxxx Xxxxx X.X.
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxxxx Xxxx, Esq.
81
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
If to Agent: Congress Financial Corporation (Central)
000 Xxxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000-0000
Attention: Portfolio Manager
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
13.4 Partial Invalidity. If any provision of this Agreement is held to be
invalid or unenforceable, such invalidity or unenforceability shall not
invalidate this Agreement as a whole, but this Agreement shall be construed as
though it did not contain the particular provision held to be invalid or
unenforceable and the rights and obligations of the parties shall be construed
and enforced only to such extent as shall be permitted by applicable law.
13.5 Confidentiality.
(a) Agent and each Lender shall use all reasonable efforts to keep
confidential, in accordance with its customary procedures for handling
confidential information and safe and sound lending practices, any non-public
information supplied to it by any Borrower pursuant to this Agreement which is
clearly and conspicuously marked as confidential at the time such information is
furnished by such Borrower to Agent or such Lender, provided, that, nothing
contained herein shall limit the disclosure of any such information: (i) to the
extent required by statute, rule, regulation, subpoena or court order, (ii) to
bank examiners and other regulators, auditors and/or accountants, in connection
with any litigation to which Agent or such Lender is a party, (iii) to any
Lender or Participant (or prospective Lender or Participant) or to any Affiliate
of any Lender so long as such Lender or Participant (or prospective Lender or
Participant) or Affiliate shall have been instructed to treat such information
as confidential in accordance with this Section 13.5, or (iv) to counsel for
Agent or any Lender or Participant (or prospective Lender or Participant).
(b) In the event that Agent or any Lender receives a request or
demand to disclose any confidential information pursuant to any subpoena or
court order, Agent or such Lender, as the case may be, agrees (i) to the extent
permitted by applicable law or if permitted by applicable law, to the extent
Agent or such Lender determines in good faith that it will not create any risk
of liability to Agent or such Lender, Agent or such Lender will promptly notify
Administrative Borrower of such request so that Administrative Borrower may seek
a protective order or other appropriate relief or remedy and (ii) if disclosure
of such information is required, disclose such information and, subject to
reimbursement by Borrowers of Agent's or such Lender's expenses, cooperate with
Administrative Borrower in the reasonable efforts to obtain an order or other
reliable assurance that confidential treatment will be accorded to such portion
of the disclosed information which Administrative Borrower so designates, to the
extent permitted by applicable law or if permitted by applicable law, to the
extent Agent or such Lender determines in good faith that it will not create any
risk of liability to Agent or such Lender.
(c) In no event shall this Section 13.5 or any other provision of
this Agreement, any of the other Financing Agreements or applicable law be
deemed: (i) to apply to or restrict disclosure of information that has been or
is made public by any Borrower, Guarantor or any third party or otherwise
becomes generally available to the public other than as a result of a disclosure
in violation hereof, (ii) to apply to or restrict disclosure of information that
was or becomes available to Agent or any Lender (or any Affiliate of any Lender)
on a non-confidential basis from a person other than a Borrower or Guarantor,
(iii) to require Agent or any Lender to return any materials furnished by a
Borrower or Guarantor to Agent or a Lender or prevent Agent or a Lender from
responding to routine informational requests in accordance with the Code of
Ethics for the Exchange of Credit Information promulgated by The Xxxxxx Xxxxxx
Associates or other applicable industry standards relating to the exchange of
82
credit information. The obligations of Agent and Lenders under this Section 13.5
shall supersede and replace the obligations of Agent and Lenders under any
confidentiality letter signed prior to the date hereof.
13.6 Successors. This Agreement, the other Financing Agreements and any
other document referred to herein or therein shall be binding upon and inure to
the benefit of and be enforceable by Agent, Lenders, Borrowers, Guarantor and
their respective successors and assigns, except that Borrower may not assign its
rights under this Agreement, the other Financing Agreements and any other
document referred to herein or therein without the prior written consent of
Agent and Lenders. Any such purported assignment without such express prior
written consent shall be void. No Lender may assign its rights and obligations
under this Agreement without the prior written consent of Agent, except as
provided in Section 13.7 below. The terms and provisions of this Agreement and
the other Financing Agreements are for the purpose of defining the relative
rights and obligations of Borrowers, Guarantor, Agent and Lenders with respect
to the transactions contemplated hereby and there shall be no third party
beneficiaries of any of the terms and provisions of this Agreement or any of the
other Financing Agreements.
13.7 Assignments; Participations.
(a) Each Lender may, with the prior written consent of Agent, which
consent shall not be unreasonably withheld, assign all or, if less than all, a
portion equal to at least $5,000,000 in the aggregate for the assigning Lender,
of such rights and obligations under this Agreement to one or more Eligible
Transferees (but not including for this purpose any assignments in the form of a
participation), each of which assignees shall become a party to this Agreement
as a Lender by execution of an Assignment and Acceptance; provided, that, (i)
such transfer or assignment will not be effective until recorded by Agent on the
Register and (ii) Agent shall have received for its sole account payment of a
processing fee from the assigning Lender or the assignee in the amount of
$5,000.
(b) Congress shall not reduce its Commitment to less than
$15,000,000, except, that, Congress shall have the right to assign its rights
and delegate its obligations as a Lender under the Financing Agreements below
such minimum amount (i) to any present and future subsidiaries or affiliates of
Congress or (ii) upon the merger, consolidation, sale, transfer or other
disposition of all or any substantial portion of its business, loan portfolio or
other assets or (iii) at any time after the occurrence of a Default or an Event
of Default or (iv) with the consent of Administrative Borrower, which consent
shall not be unreasonably withheld, delayed or conditioned.
(c) Agent shall maintain a register of the names and addresses of
Lenders, their Commitments and the principal amount of their Loans (the
"Register"). Agent shall also maintain a copy of each Assignment and Acceptance
delivered to and accepted by it and shall modify the Register to give effect to
each Assignment and Acceptance. The entries in the Register shall be conclusive
and binding for all purposes, absent manifest error, and any Borrowers,
Obligors, Agent and Lenders may treat each Person whose name is recorded in the
Register as a Lender hereunder for all purposes of this Agreement. The Register
shall be available for inspection by Administrative Borrower and any Lender at
any reasonable time and from time to time upon reasonable prior notice.
(d) Upon such execution, delivery, acceptance and recording, from
and after the effective date specified in each Assignment and Acceptance, the
assignee thereunder shall be a party hereto and to the other Financing
Agreements and, to the extent that rights and obligations hereunder have been
assigned to it pursuant to such Assignment and Acceptance, have the rights and
obligations (including, without limitation, the obligation to participate in
Letter of Credit Accommodations) of a Lender hereunder and thereunder and the
assigning Lender shall, to the extent that rights and obligations hereunder have
been assigned by it pursuant to such Assignment and Acceptance, relinquish its
rights and be released from its obligations under this Agreement.
(e) By execution and delivery of an Assignment and Acceptance, the
assignor and assignee thereunder confirm to and agree with each other and the
other parties hereto as follows: (i) other than as provided in such Assignment
and Acceptance, the assigning Lender makes no representation or warranty and
assumes no
83
responsibility with respect to any statements, warranties or representations
made in or in connection with this Agreement or any of the other Financing
Agreements or the execution, legality, enforceability, genuineness, sufficiency
or value of this Agreement or any of the other Financing Agreements furnished
pursuant hereto, (ii) the assigning Lender makes no representation or warranty
and assumes no responsibility with respect to the financial condition of any
Borrower, Obligor or any of their Subsidiaries or the performance or observance
by any Borrower or Obligor of any of the Obligations; (iii) such assignee
confirms that it has received a copy of this Agreement and the other Financing
Agreements, together with such other documents and information it has deemed
appropriate to make its own credit analysis and decision to enter into such
Assignment and Acceptance, (iv) such assignee will, independently and without
reliance upon the assigning Lender, Agent and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this Agreement and the
other Financing Agreements, (v) such assignee appoints and authorizes Agent to
take such action as agent on its behalf and to exercise such powers under this
Agreement and the other Financing Agreements as are delegated to Agent by the
terms hereof and thereof, together with such powers as are reasonably incidental
thereto, and (vi) such assignee agrees that it will perform in accordance with
their terms all of the obligations which by the terms of this Agreement and the
other Financing Agreements are required to be performed by it as a Lender. Agent
and Lenders may furnish any information concerning any Borrower or Obligor in
the possession of Agent or any Lender from time to time to assignees and
Participants.
(f) Each Lender may sell participations to one or more banks or
other entities in or to all or a portion of its rights and obligations under
this Agreement and the other Financing Agreements (including, without
limitation, all or a portion of its Commitments and the Loans owing to it and
its participation in the Letter of Credit Accommodations, without the consent of
Agent or the other Lenders); provided, that, (i) such Lender's obligations under
this Agreement (including, without limitation, its Commitment hereunder) and the
other Financing Agreements shall remain unchanged, (ii) such Lender shall remain
solely responsible to the other parties hereto for the performance of such
obligations, and Borrowers, Guarantor, the other Lenders and Agent shall
continue to deal solely and directly with such Lender in connection with such
Lender's rights and obligations under this Agreement and the other Financing
Agreements, and (iii) the Participant shall not have any rights under this
Agreement or any of the other Financing Agreements (the Participant's rights
against such Lender in respect of such participation to be those set forth in
the agreement executed by such Lender in favor of the Participant relating
thereto) and all amounts payable by any Borrower or Obligor hereunder shall be
determined as if such Lender had not sold such participation.
(g) Nothing in this Agreement shall prevent or prohibit any Lender
from pledging its Loans hereunder to a Federal Reserve Bank in support of
borrowings made by such Lenders from such Federal Reserve Bank.
(h) Borrowers and Guarantor shall assist Agent or any Lender
permitted to sell assignments or participations under this Section 13.7 in
whatever manner reasonably necessary in order to enable or effect any such
assignment or participation, including (but not limited to) the execution and
delivery of any and all agreements, notes and other documents and instruments as
shall be requested and the delivery of informational materials, appraisals or
other documents for, and the participation of relevant management in meetings
and conference calls with, potential Lenders or Participants. Borrowers shall
certify the correctness, completeness and accuracy, in all material respects, of
all descriptions of Borrowers and Guarantor and their affairs provided, prepared
or reviewed by any Borrower or Guarantor that are contained in any selling
materials and all other information provided by it and included in such
materials.
13.8 Entire Agreement. This Agreement, the other Financing Agreements,
any supplements hereto or thereto, and any instru-ments or documents delivered
or to be delivered in connection herewith or therewith represents the entire
agreement and understanding concerning the subject matter hereof and thereof
between the parties hereto, and supersede all other prior agreements,
understandings, negotiations and discussions, representations, warranties,
commitments, proposals, offers and contracts concerning the subject matter
hereof,
84
whether oral or written. In the event of any inconsistency between the terms of
this Agreement and any schedule or exhibit hereto, the terms of this Agreement
shall govern.
13.9 Counterparts, Etc. This Agreement or any of the other Financing
Agreements may be executed in any number of counterparts, each of which shall be
an original, but all of which taken together shall constitute one and the same
agreement. Delivery of an executed counterpart of this Agreement or any of the
other Financing Agreements by telefacsimile shall have the same force and effect
as the delivery of an original executed counterpart of this Agreement or any of
such other Financing Agreements. Any party delivering an executed counterpart of
any such agreement by telefacsimile shall also deliver an original executed
counterpart, but the failure to do so shall not affect the validity,
enforceability or binding effect of such agreement.
85
IN WITNESS WHEREOF, Agent, Lenders, Borrowers and Guarantor have caused
these presents to be duly executed as of the day and year first above written.
AGENT BORROWERS
----- ---------
CONGRESS FINANCIAL CORPORATION PEMSTAR, INC.
(CENTRAL), as Agent
By: /s/ Xxxxxxx X. Xxxxxxx By: /s/ Xxxx X. Xxx
------------------------ ------------------
Title: Vice President Title: CFO
-------------------- ---------------
TURTLE MOUNTAIN CORPORATION PEMSTAR PACIFIC CONSULTANTS INC.
By: /s/ Xxxxx X. Xxxxx By: /s/ Xxxxx X. Xxxxx
------------------- -------------------
Title: Secretary Title: Secretary
---------------- ------------------
LENDERS
-------
CONGRESS FINANCIAL CORPORATION FLEET CAPITAL CORPORATION
(CENTRAL)
By: /s/ Xxxxxxx X. Xxxxxxx By: /s/ Xxxxxxx X. Xxxxxxx
------------------------ -----------------------
Title: Vice President Title: Senior Vice President
---------------------- ------------------------
Commitment: $50,000,000 Commitment: $30,000,000
[SIGNATURES CONTINUED ON FOLLOWING PAGE]
86
[SIGNATURES CONTINUED FROM PRIOR PAGE]
Guarantor
GENTLELIFE INC.
By: /s/ Xxxxxxx X. Xxxx XX
---------------------------
Title: Assistant Secretary
------------------------
87
SCHEDULE 1.43
TO
LOAN AND SECURITY AGREEMENT
Existing Letters of Credit
-----------------------------------------------------------------------------------------------------------------------------
Letter of Credit Number Beneficiary Issuer Issue Date Expiry Date Amount
-----------------------------------------------------------------------------------------------------------------------------
SLCMMSP01328 Comdisco Inc. or U.S. Bank National 12/28/00 12/31/03 $1,045,071.25
transferee Association
-----------------------------------------------------------------------------------------------------------------------------
SLCMMSP01469 Sentry Insurance U.S. Bank National 4/13/01 4/31/02 (one $ 1,000,000
Association year extensions)
-----------------------------------------------------------------------------------------------------------------------------
SLCMMSP01280 Banco ABN Amro Real U.S. Bank National 11/29/00 5/30/03 $ 150,000
S.A. Association
-----------------------------------------------------------------------------------------------------------------------------
SLCMMSP00109 U.S. Bank Trust U.S. Bank National 6/4/98 8/31/03 $1,839,653.73
National Association Association
-----------------------------------------------------------------------------------------------------------------------------
SLC7662MMSP First Trust First Bank National 5/1/97 8/31/03 $2,103,013.69
National Association**
Association*
-----------------------------------------------------------------------------------------------------------------------------
* Predecessor in interest to U.S. Bank Trust National Association
**Predecessor in interest to U.S. Bank National Association
88
SCHEDULE 9.7
TO
LOAN AND SECURITY AGREEMENT
1. Hewlett Packard production equipment and Agile software
2. 1999 Ford Cargo Vans
3. Environmental Systems HVAC Unit
4. Agile Software
5. Solbot Wave Solder
6. Flowstar, Inc Bldg Fire Sprinkler
7. Xxxxxxxxx & Xxxxxxxxx Cubicles and Furnitures
8. Venture Computer Systems, FABmaster, Big Xxx California, Inc Reach Truck
9. PanasonicMV2/Speedline MPM UP-300
10. Universal Instruments GSM, Panasonic, and Test Equity production equipment
11. Telogy, Tecnomatix Unicam, Technical Devices, CR Technology, and Agile
Software
12. Xxxxxxxxx & Xxxxxxxxx International, Access Com, and Air Logics Bldg Imp/
F&F
13. Silicon Valley Mechanical HVAC System and West Coast Compressor
14. Fastek PanaMVFeeders/ Bay Equipment Exchange IS
15. Comtel Systems Technology, Inc Bldg Imp/ Dell IS equipment
16. Flexible Technologies Conveyor/ CDW Computer Centers IS
17. Access Communications Comm / IS
18. Tenant Improvement Construction, Inc. Bldg Improvement
19. Tenant Improvement Construction Bldg Imp / Statico Lift Truck
20. RDM Industrial Products, Inc F & F / Dell IS
21. T & S Electric, Inc. Bldg Imp/Xxxxxx Oven / CDW IS
22. Monarch Truck Center 1996 Ixuzu Van
23. Panasonic Feeder /Agile
24. Panasonic Test Equipment / IS/ Frt
25. Technomatix IS License (FABmaster)
26. Fuji America Equipment
27. Aegis Industrial Software Corp, Pacific Test Equipment / Source One IS
28. Teradyne Flying Prober / Pacific Test Equipment Test Equip
29. Access Communication, Silicon Valley Shelving, Metric Equipment Test
Equipment
30. Hepco Equip, Test Equity Inc
31. Praxair Gas Regulator / Skyline Computer Corporation IS / License
32. Amherst Fiber Optics FSU 995 Optical Equip/ IS
33. Continental Resources Optical Equipment
34. Cyberoptics Corporation LSM 300 Unit
35. JDS Uniphase E-Tek Dynamics Optical Equipment
36. Xxxxxxxxxx Electronics Ltd, Arra Inc, Optical Equipment
37. Ando Corporation Optical Equipment
38. Technical Devices Company Nu/Clean Stencil Cleaner / Realm Communications
Group
39. Fuji America Equipment located in San Xxxx
89
SCHEDULE 9.17
TO
LOAN AND SECURITY AGREEMENT
Schedule 9.17(a)
Quarter 1 2004 $ 6,000,000
Quarter 2 2004 $13,500,000
Quarter 3 2004 $22,500,000
Quarter 4 2004 $30,800,000
Schedule 9.17(b)
Quarter 1 2004 $ 2,100,000
Quarter 2 2004 $ 4,700,000
Quarter 3 2004 $ 7,500,000
Quarter 4 2004 $ 9,600,000
90
