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CREDIT AGREEMENT
by and among
THREE-FIVE SYSTEMS, INC.
and its Subsidiaries
The Banks Named Herein
and
IMPERIAL BANK ARIZONA
as Agent
Dated as of
November 5, 1998
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TABLE OF CONTENTS
Page
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RECITALS..................................................................1
ARTICLE 1 DEFINITION OF TERMS...................................2
1.1 Definitions...........................................2
1.2 Terms Generally......................................13
ARTICLE 2 THE RLC..............................................14
2.1 RLC Commitment.......................................14
2.2 Revolving Line.......................................14
2.3 RLC Notes............................................14
2.4 RLC..................................................15
2.5 Excess Balance Repayment.............................18
2.6 Reduction of RLC Commitment..........................18
2.7 Conditions...........................................18
2.8 Other RLC Advances...................................19
2.9 Assignment...........................................19
2.10 Issuance of Letters of Credit........................19
2.11 Issuance Procedure for Letter of Credit..............20
2.12 Letter of Credit Fees................................20
2.13 Disbursements........................................20
2.14 Reimbursement Obligations of Borrower................20
2.15 Nature of Reimbursement Obligations..................21
2.16 Banks Obligation.....................................21
2.17 Certain Requirements.................................22
2.18 Risk Participations, Drawings, and Reimbursements....22
2.19 Repayment of Participations..........................24
2.20 Role of the Issuing Bank.............................25
ARTICLE 2A THE RLCT.............................................26
2A.1 RLCT Commitment......................................26
2A.2 Revolving Line.......................................26
2A.3 RLCT Notes...........................................26
2A.4 RLCT.................................................27
2A.5 Excess Balance Repayment.............................30
2A.6 Reduction of RLCT Commitment.........................30
2A.7 Conditions...........................................30
2A.8 Other RLCT Advances..................................31
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2A.9 Assignment...........................................31
ARTICLE 3 PAYMENTS, FEES AND EURODOLLAR PROVISIONS.............32
3.1 Payments.............................................32
3.2 Loan Fees............................................32
3.3 Computations.........................................33
3.4 Maintenance of Accounts..............................33
3.5 Certain Contingencies................................33
3.6 Increased Capital Requirements; Tax..................34
3.7 Special Provisions for LIBOR Rate Advances...........35
3.8 Prepayments..........................................37
3.9 Non U.S. Subsidiaries - Currency Indemnity...........38
ARTICLE 4 SECURITY DOCUMENTS...................................39
4.1 Security.............................................39
4.2 Security Documents...................................39
ARTICLE 5 CONDITIONS PRECEDENT.................................40
5.1 Initial Advance......................................40
5.2 No Event of Default..................................41
5.3 No Material Adverse Effect...........................41
5.4 Representations and Warranties.......................41
ARTICLE 6 REPRESENTATIONS AND WARRANTIES.......................42
6.1 Recitals.............................................42
6.2 Organization and Good Standing.......................42
6.3 Authorization and Power..............................42
6.4 Enforceable Obligations..............................42
6.5 No Conflicts or Consents.............................42
6.6 No Litigation........................................43
6.7 Financial Condition..................................43
6.8 Taxes................................................43
6.9 No Stock Purchase....................................43
6.10 Advances.............................................43
6.11 Solvent..............................................43
6.12 ERISA................................................44
6.13 Full Disclosure......................................44
6.14 No Default...........................................44
6.15 Significant Debt Agreements..........................44
6.16 Compliance with Law..................................44
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6.17 Subsidiaries.........................................44
6.18 Year 2000 Compliance.................................44
ARTICLE 7 AFFIRMATIVE COVENANTS................................45
7.1 Financial Statements, Reports and Documents..........45
7.2 Maintenance of Existence.............................46
7.3 Maintain Business....................................46
7.4 Insurance............................................46
7.5 Compliance with Credit Documents.....................47
7.6 Books and Records; Access............................47
7.7 Payment of Taxes and Other Indebtedness..............47
7.8 Notice of Default....................................47
7.9 Other Notices........................................47
7.10 ERISA Compliance.....................................47
7.11 Further Assurances...................................48
7.12 Compliance with Significant Debt Agreements..........48
7.13 Compliance with Law..................................48
7.14 Authorizations and Approvals.........................48
7.15 News Releases........................................48
7.16 New Subsidiaries.....................................48
7.17 Change in Control....................................48
7.18 Year 2000 Compliance.................................49
7.19 Treasury Stock.......................................49
ARTICLE 8 NEGATIVE COVENANTS...................................50
8.1 No Debt..............................................50
8.2 Liens................................................50
8.3 Loans................................................50
8.4 Dividends............................................50
8.5 Existence; Sale or Transfer of Assets................50
8.6 Fiscal Year..........................................51
8.7 Margin Stock.........................................51
8.8 Amendments to Organizational Documents...............51
8.9 Treasury Stock.......................................51
8.10 Investment in China..................................51
8.11 Financial Covenants..................................51
ARTICLE 9 EVENTS OF DEFAULT....................................53
9.1 Events of Default....................................53
9.2 Remedies Upon Event of Default.......................55
9.3 Performance by the Banks.............................57
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ARTICLE 9A ADMINISTRATIVE AGENT.................................58
9A.1 Appointment and Authorization........................58
9A.2 Exculpation..........................................58
9A.3 Administrative Agent and Affiliates..................58
9A.4 Banks' Credit Decisions..............................58
9A.5 Indemnification......................................59
9A.6 Administration.......................................59
9A.7 Default by a Bank....................................61
9A.8 Collections; Sharing of Payments.....................62
9A.9 Successor Administrative Agent.......................62
9A.10 Issuing Bank.........................................62
ARTICLE 10 MISCELLANEOUS........................................64
10.1 Modification.........................................64
10.2 Waiver...............................................64
10.3 Payment of Expenses..................................64
10.4 Notices..............................................64
10.5 Governing Law; Jurisdiction, Venue...................65
10.6 Invalid Provisions...................................66
10.7 Binding Effect.......................................66
10.8 Entirety.............................................66
10.9 Relationship of the Banks and Borrower...............66
10.10 Time of the Essence..................................66
10.11 Good Faith Standard..................................66
10.12 Assignments and Participations; Transferees..........67
10.13 Headings.............................................69
10.14 Survival.............................................69
10.15 No Third Party Beneficiary...........................69
10.16 Joint Liability......................................70
10.17 Schedules and Exhibits Incorporated..................70
10.18 Waiver of Jury Trial.................................70
10.19 Counterparts.........................................71
Schedule 1.1 - Pro Rata Share and Notice Address of each Bank
Schedule 6.17 - Subsidiaries
Schedule 8.2 - Existing Liens
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Exhibit "A" - Form of Compliance Certificate
Exhibit "B" - Form of Advance Notice
Exhibit "C" - Form of Notes
Exhibit "D" - Form of Assumption Agreement
Exhibit "E" - Administrative Details Reply Form
Exhibit "F" - Form of Assignment and Acceptance
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CREDIT AGREEMENT
BY THIS CREDIT AGREEMENT (together with any amendments or
modifications, the "Credit Agreement"), entered into as of the 5th day of
November, 1998 by and between THREE- FIVE SYSTEMS, INC., a Delaware corporation
(the "Company"), all present and future Subsidiaries (as hereinafter defined) of
the Company (with the Company, the "Borrower"), the banks listed from time to
time in Schedule 1.1 (the "Banks"), and IMPERIAL BANK ARIZONA, an Arizona
banking corporation, as administrative agent for the Banks (in such capacity,
together with any successor agent appointed hereunder, the "Administrative
Agent") and as Issuing Bank (as hereinafter defined) or as agent for the Issuing
Bank (as Administrative Agent and as agent for the Issuing Bank, the "Agent"),
in consideration of the mutual promises herein contained and for other valuable
consideration, the parties hereto do hereby agree as follows:
RECITALS
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A. Borrower has requested that the Banks establish the following
financial accommodations:
1. A revolving line of credit (the "RLC") in the principal
amount of $15,000,000.00 to provide working capital financing and for
the issuance from time to time of letters of credit; and
2. A revolving line of credit term loan (the "RLCT") in the
principal amount of $10,000,000.00 to provide liquidity for a common
stock repurchase program by Borrower.
B. The Banks have agreed to do so upon the terms, conditions and
provisions set forth herein.
C. Effective as of the delivery of this Credit Agreement, the Company
acknowledges and agrees that the Credit Agreement dated as of May 23, 1997
between the Company and Imperial Bank, a California banking corporation, shall
be terminated and Imperial Bank shall have no further obligations to the Company
under said Credit Agreement and the Company shall have no further obligation to
Imperial Bank under said Credit Agreement.
Accordingly, the parties hereto agree as follows:
ARTICLE 1
DEFINITION OF TERMS
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1.1 Definitions. For the purposes of this Credit Agreement, unless the
context otherwise requires, the following terms shall have the respective
meanings assigned to them in this Article 1 or in the section hereof referred to
below:
"Administrative Agent": See the Preamble hereto.
"Administrative Questionnaire" means that Administrative
Details Reply Form substantially in the form of Exhibit "E" attached hereto
delivered to the Agent pursuant to Section 10.12.
"Advance" means an RLC Advance or an RLCT Advance.
"Affiliate" of any Person means any Person which, directly or
indirectly, controls, is controlled by, or is under common control with, such
Person. For the purposes of this definition, "control" (including, with
correlative meanings, the terms "controlled by" and "under common control
with"), as used with respect to any Person, shall mean the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of such Person, whether by contract or otherwise.
"Agent": See the Preamble hereto.
"Assignment and Acceptance" means that Assignment and
Acceptance substantially in the form of Exhibit "F" attached hereto delivered to
the Agent pursuant to Section 10.12.
"Authorized Officer" means the chief executive officer, chief
financial officer or the chief accounting officer of Borrower, or such other
individual who is from time to time designated to the Banks in writing by said
officer as authorized to act for Borrower with respect to the Loans.
"Banking Day" means a day of the year on which commercial
banks are not required or authorized to close in Inglewood, California, and,
with respect to a LIBOR Rate Advance, a day on which dealings are carried on in
the London interbank market.
"Banks": See the Preamble hereto.
"Borrower": See the Preamble hereto.
"Cash Flow" means the sum for the relevant period of
Borrower's Net Income, tax expense (less taxes actually paid in cash),
depreciation expense, amortization of intangibles expense and interest expense,
all to the extent deducted in the calculation of Net Income.
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"Change in Control" means the occurrence or existence of
either of the following events or conditions without the prior written consent
of the Banks, if different than the state of affairs as of the Closing Date:
(a) the acquisition by any Person or two or more
Persons acting in concert of "beneficial ownership" (within
the meaning of Rule 13d-3 promulgated by the SEC under the
Exchange Act or as otherwise specified under the provisions of
this Credit Agreement) of securities of Borrower having more
than 50% of the ordinary voting power for the election of
directors; or
(b) the acquisition of Control of Borrower by any
Person or two or more Persons acting in concert of Control of
Borrower.
"Closing Date" means November 5, 1998.
"Co-Borrowers," each a "Co-Borrower" means the Subsidiaries
that are a party to this Credit Agreement from time to time.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collateral" means any property subject to the Security
Documents.
"Commitment" means the RLC Commitment and the RLCT Commitment.
"Company": See the Preamble hereto.
"Compliance Certificate": See Section 7.1(c).
"Control" when used with respect to any Person means the
power, directly or indirectly, to direct the management policies of such Person,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Controlled Group" means, severally and collectively, the
members of the group controlling, controlled by and/or in common control of
Borrower, within the meaning of Section 4001(b) of ERISA.
"Controlled Subsidiary" means any Subsidiary in which the
Company owns in excess of fifty percent (50.0%) of both all voting rights and
all equity interests.
"Credit Agreement": See the Preamble hereto.
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"Credit Documents" means this Credit Agreement, the Notes
(including any renewals, extensions, restatements and refundings thereof), the
Security Documents, and any written agreements, certificates or documents (and
with respect to this Credit Agreement, the Notes, the Security Documents and
such other written agreements and documents, any amendments or supplements
thereto or modifications thereof) executed or delivered pursuant to the terms of
this Credit Agreement.
"Credit Facilities" means the RLC and the RLCT.
"Current Assets" means all assets of Borrower classified as
current assets under GAAP, determined on a consolidated basis.
"Current Liabilities" means all liabilities of Borrower
classified as current liabilities under GAAP, determined on a consolidated
basis.
"Current Ratio" means as of any date the ratio of Borrower's
Current Assets as of such date to its Current Liabilities as of such date.
"Debt Coverage Ratio" means for any date the ratio of
Borrower's Cash Flow to its Debt Service Requirement, calculated on a rolling
four-quarter basis.
"Debt Service Requirement" means the sum of the following that
are due within the relevant period: all current maturities of long-term debt
(excluding the RLC), capital lease obligations, interest expense and off-balance
sheet lease expense.
"Default Rate" means an interest rate per annum equal to five
percent (5.0%) over the Variable Rate, which Default Rate shall change when and
as the Variable Rate changes.
"Disbursement": See Section 2.13.
"Disbursement Date": See Section 2.13.
"Dollars" and the sign "$" mean lawful currency of the United
States of America.
"EBITDA" means Net Income, plus the sum of all interest
expense, tax expense, depreciation and amortization deducted in computing such
Net Income.
"EBITDA Ratio" means as of any date the ratio of Funded Debt
to EBITDA, calculated on a rolling four-quarter basis.
"Equity" means Borrower's stockholders' equity, determined on
a consolidated basis in accordance with GAAP.
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"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, together with all final and permanent regulations issued
pursuant thereto. References herein to sections and subsections of ERISA are
deemed to refer to any successor or substitute provisions therefor.
"Eurocurrency Liabilities" has the meaning assigned to that
term in Regulation D of the Board of Governors to the Federal Reserve System, as
in effect from time to time.
"Eurodollar Rate Reserve Percentage" for the LIBOR Interest
Period for each LIBOR Rate Advance means the reserve percentage applicable two
(2) Banking Days before the first day of such LIBOR Interest Period under
regulations issued from time to time by the Board of Governors of the Federal
Reserve System (or any successor) for determining the maximum reserve
requirement (including, but not limited to, any emergency, supplemental, or
other marginal reserve requirement) for a member bank of the Federal Reserve
System in San Francisco with respect to liabilities or assets consisting of or
including Eurocurrency Liabilities (or with respect to any other category of
liabilities which includes deposits by reference to which the interest rate on
LIBOR Rate Advances) having a term equal to such Interest Period.
"Event of Default": See Section 9.1.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Federal Funds Rate" means, as of any date of determination,
the rate set forth in the weekly statistical release designated as H.15(519), or
any successor publication, published by the Federal Reserve Board (including any
such successor, "H.15(519)") for such date opposite the caption "Federal Funds
(Effective)." If for any relevant date such rate is not yet published in
H.15(519), the rate for such date will be the rate set forth in the daily
statistical release designated as the Composite 3:30 p.m. Quotations for U.S.
Government Securities, or any successor publication, published by the Federal
Reserve Bank of New York (including any such successor, the "Composite 3:30 p.m.
Quotation") for such date under the caption "Federal Funds Effective Rate." If
on any relevant date the appropriate rate for such date is not yet published in
either H.15(519) or the Composite 3:30 p.m. Quotations, the rate for such date
will be the arithmetic mean of the rates for the last transaction in overnight
Federal funds arranged prior to 9:00 a.m. (New York City time) on that date by
each of three leading brokers of Federal funds transactions in New York City
selected by the Agent.
"Financial Covenants": See Section 8.11 hereof.
"Funded Debt" means as of the end of any fiscal quarter, with
respect to any Person, its interest-bearing Indebtedness including without
limitation any capital lease debt.
"GAAP" means those generally accepted accounting principles
and practices which are recognized as such by the American Institute of
Certified Public Accountants acting through its Accounting Principles Board or
by the Financial Accounting Standards Board or through other
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appropriate boards or committees thereof and which are consistently applied for
all periods after the date hereof so as to properly reflect the financial
condition, and the results of operations and changes in the financial position,
of Borrower, including without limitation accounting rules promulgated pursuant
to Regulations SX and SK, except that any accounting principle or practice
required to be changed by the said Accounting Principles Board or Financial
Accounting Standards Board (or other appropriate board or committee of the said
Boards) in order to continue as a generally accepted accounting principle or
practice may be so changed.
"Governmental Authority" means any government (or any
political subdivision or jurisdiction thereof), court, bureau, agency or other
governmental authority having jurisdiction over Borrower or any of its business,
operations or properties.
"Honor Date" has the meaning specified in Section 2.18(b).
"Imperial" means Imperial Bank Arizona, an Arizona banking
corporation.
"Indebtedness" means, with respect to any Person, all of its
monetary and contingent obligations and liabilities, including without
limitation each of the following (without duplication): (a) obligations of that
Person to any other Person for payment of borrowed money, (b) capital lease
obligations, (c) notes and drafts drawn or accepted by that Person payable to
any other Person, whether or not representing obligations for borrowed money
(but without duplication of indebtedness for borrowed money), (d) any obligation
for the purchase price of property the payment of which is deferred for more
than one year or evidenced by a note or equivalent instrument, (e) guarantees of
Indebtedness of third parties, and (f) a recourse or non recourse payment
obligation of any other Person that is secured by a Lien on any property of the
first Person, whether or not assumed by the first Person, up to the fair market
value (from time to time) of such property (absent manifest evidence to the
contrary, the fair market value of such property shall be the amount determined
under GAAP for financial reporting purposes), but excluding any trades accounts
payables and any accruals.
"Insolvency Proceeding" means any proceeding undertaken under
the Debtor Relief Laws.
"Issuance Date" means the date on which a Letter of Credit is
delivered to the beneficiary thereof.
"Issuance Request" means a request for a Letter of Credit duly
executed by Borrower in a form satisfactory to the Issuing Bank.
"Issue" means, with respect to any Letter of Credit, to issue
or, by amendment or otherwise, to extend the expiry of, or to renew or increase
or decrease the amount of, such Letter of Credit; and the terms "Issued,"
"Issuing" and "Issuance" have corresponding meanings.
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"Issuing Bank" means Imperial and/or any Affiliate thereof in
its capacity as issuer of one or more Letters of Credit hereunder, together with
any replacement Letter of Credit issuer arising under this Credit Agreement.
"LC Borrowing" means an extension of credit resulting from a
drawing under any Letter of Credit which shall not have been reimbursed on the
date when made nor converted into a Variable Rate Advance.
"LC Obligations" means at any time the sum of (a) the
Outstanding LC Balance under the RLC, plus (b) the amount of all unreimbursed
drawings under all Letters of Credit, including all outstanding LC Borrowings.
"Letter of Credit" means a letter of credit issued by the
Issuing Bank for the account of Borrower pursuant to Article 2.
"LIBOR" means the London Interbank Offered Rate, determined as
provided herein, for the applicable LIBOR Interest Period to be specified by the
Borrower as provided herein. For each Advance under the LIBOR option, the LIBOR
rate will remain in effect through the end of the LIBOR Interest Period. If
prior to the due date for a LIBOR Rate Advance Borrower requests a continuation
of said LIBOR Rate Advance, Borrower's request shall comply with the request
procedure specified below and the LIBOR rate for the LIBOR Rate Advance shall be
re-determined for the next LIBOR Interest Period as provided below. LIBOR shall
mean with respect to any LIBOR Interest Period the rate equal to the arithmetic
mean (rounded upwards, if necessary, to the nearest one-sixteenth (1/16th) of
one percent (1%)) of:
(a) the offered rates per annum for deposits in U.S.
Dollars for a period equal to such LIBOR Interest Period which
appears at 11:00 a.m., London time, on the Reuters Screen
LIBOR Page on the Banking Day that is two (2) Banking Days
before the first day of such LIBOR Interest Period, in each
case if at least four (4) such offered rates appear on such
page, or
(b) if clause (a) is not available, (x) the offered
rate per annum for deposits in U.S. Dollars for a period equal
to such LIBOR Interest Period for a LIBOR Rate Advance
hereunder which appears as of 11:00 a.m., London time on the
Telerate Monitor on Telerate Screen 3750 on the Banking Day
which is two (2) Banking Days before the first day of such
LIBOR Interest Period; or (y) if clause (x) above is not
available, the arithmetic mean (rounded upwards, if necessary,
to the nearest one-sixteenth (1/16th) of one percent (1%)) of
the interest rates per annum offered by at least three (3)
prime banks selected by the Banks at approximately 11:00 a.m.,
London time, on the Banking Day which is two (2) Banking Days
before such date for deposits in U.S. Dollars to prime banks
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in the London interbank market, in each case for a period
equal to such LIBOR Interest Period for a LIBOR Rate Advance
hereunder in an amount equal to the amount to which the LIBOR
applies. "Reuters Screen LIBOR Page" as used herein means the
display designated as page LIBOR on the Reuters Monitor Money
Rates Service or such other page as may replace the LIBOR page
on that service for the purpose of displaying London interbank
offered rates of major banks.
"LIBOR Advance" means an Advance or a portion of a Loan
designated by Borrower, that bears, or is requested to bear, interest at a LIBOR
Based Rate. Each LIBOR Advance shall be in a minimum amount of $500,000.00 with
integral multiples of $1,000.00 in excess thereof.
"LIBOR Based Rate" means the rate per annum equal (A) to the
sum of LIBOR and the following margin:
(i) one hundred seventy-five basis points (175 bp) as
to an RLC Advance;
(ii) two hundred thirty-seven and one-half basis
points (237.5 bp) as to an RLCT Advance;
in each case divided by (B) a percentage equal to one hundred percent (100%)
minus the Eurodollar Rate Reserve Percentage for the period equal to the
applicable LIBOR Interest Period.
"LIBOR Interest Period" means, for each LIBOR Rate Advance,
the period commencing on the date of such LIBOR Rate Advance and ending on the
last day of the period selected by Borrower pursuant to the provisions herein
and, thereafter, each subsequent period commencing on the last day of the
immediately preceding LIBOR Interest Period and ending on the last day of the
period selected by Borrower pursuant to the provisions herein. The duration of
each LIBOR Interest Period shall be one, two, three or six months, as selected
by Borrower (A), for a new Advance, in the request for a LIBOR Rate Advance or
(B), for an outstanding Advance, in the request for a LIBOR Rate Advance to
continue bearing interest at the LIBOR Based Rate or (C), for an outstanding
Variable Rate Advance, in the request to convert to a LIBOR Rate Advance;
provided, however, that:
(i) LIBOR Interest Periods commencing on the same
date shall be of the same duration;
(ii) Whenever the last day of any LIBOR Interest
Period would otherwise occur on a day other than a Banking
Day, the last day of such LIBOR Interest Period shall be
extended to occur on the next succeeding Banking Day, provided
that if such extension
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would cause the last day of such LIBOR Interest Period to
occur in the next following calendar month, the last day of
such LIBOR Interest Period shall occur on the next preceding
Banking Day; and
(iii) No LIBOR Interest Period with respect to any
RLC Advance shall extend beyond the applicable Maturity Date.
"Lien" means any lien, mortgage, security interest, tax lien,
pledge, encumbrance, conditional sale or title retention arrangement, or any
other interest in property designed to secure the repayment of Indebtedness
whether arising by agreement or under any statute or law, or otherwise.
"Loans" means together the RLC and the RLCT, each being a
Loan.
"Loan Fees": See Section 3.2 hereof.
"Material Adverse Effect" means any circumstance or event
which (i) has any material adverse effect upon the validity or enforceability of
any Credit Document, (ii) materially impairs the ability of Borrower to fulfill
its obligations under the Credit Documents, or (iii) causes an Event of Default
or any event which, with notice or lapse of time or both, would become an Event
of Default.
"Maturity Date" means the RLC Maturity Date or the RLCT
Maturity Date, as applicable.
"Maximum LC Commitment" means SEVEN MILLION FIVE HUNDRED
THOUSAND AND NO/100 DOLLARS ($7,500,000.00).
"Net Income" means for any period the net income of Borrower
for such period in accordance with GAAP, determined on a consolidated basis.
"New Subsidiary": See Section 7.16 hereof.
"Notes" means the RLC Note and the RLCT Note, each being a
Note.
"Obligation" means all present and future indebtedness,
obligations and liabilities of Borrower to the Banks, and all renewals and
extensions thereof, or any part thereof, arising pursuant to this Credit
Agreement or represented by the Notes, including without limitation the Loans
and all interest accruing thereon, and attorneys' fees incurred in the
enforcement or collection thereof, regardless of whether such indebtedness,
obligations and liabilities are direct, indirect, fixed, contingent, joint,
several or joint and several; together with all indebtedness, obligations and
liabilities of Borrower evidenced or arising pursuant to any of the other Credit
Documents, and all renewals and extensions thereof, or part thereof.
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"Outstanding LC Balance" in effect at any time means the
maximum aggregate amount available to be drawn at such time under all
outstanding Letters of Credit, the determination of such maximum amount to
assume compliance with all conditions for a Disbursement.
"Payment Date" means:
(i) as to a Variable Rate Advance, the first day of
each month, provided that if any such day is not a Banking
Day, then such Payment Date shall be the next successive
Banking Day; and
(ii) as to a LIBOR Rate Advance, the earlier of (A)
the last day of its LIBOR Interest Period, or (B) the last day
of each three month period during such LIBOR Interest Period.
"PBGC" means the Pension Benefit Guaranty Corporation, and any
successor to all or substantially all of the Pension Benefit Guaranty
Corporation's functions under ERISA.
"Permitted Liens" means Liens which consist of the following:
(a) Liens for taxes, assessments or governmental charges not
yet delinquent;
(b) Liens to which the Banks shall consent in writing, in
their sole and absolute discretion; and
(c) Existing Liens listed on Schedule 8.2.
"Person" includes an individual, a corporation, a joint
venture, a partnership, a trust, a limited liability company, an unincorporated
organization or a government or any agency or political subdivision thereof.
"Plan" means an employee defined benefit plan or other plan
maintained by Borrower for employees of Borrower and covered by Title IV of
ERISA, or subject to the minimum funding standards under Section 412 of the
Code.
"Prime Rate" means the interest rate per annum publicly
announced by Imperial Bank, a California banking corporation, or its successors,
as its "prime rate" as in effect from time to time. Borrower acknowledges that
the Prime Rate is not necessarily the best or lowest rate offered by Imperial
Bank and Imperial Bank may lend to its customers at rates that are at, above or
below its Prime Rate.
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"Pro Rata Share" means, as to each Bank, that amount shown at
any time on Schedule 1.1 attached hereto as that Bank's share of each
Commitment, each Advance and each Letter of Credit.
"Quarterly End Date" means the last day of each March, June,
September and December.
"Regulation U" means Regulation U promulgated by the Board of
Governors of the Federal Reserve System, 12 C.F.R. Part 221, or any other
regulation hereafter promulgated by said Board to replace the prior Regulation U
and having substantially the same function.
"Regulatory Change" means any change effective after the date
of this Credit Agreement in United States federal, state, or foreign law,
regulations, or rules or the adoption or making after such date of any
interpretation, directive, or request applying to a class of banks including the
Banks, of or under any United States federal, state, or foreign law, regulation
or rule (whether or not having the force of law) by any court or governmental or
monetary authority charged with the interpretation or administration thereof.
"Reportable Event" means any "reportable event" as described
in Section 4043(b) of ERISA with respect to which the thirty (30) day notice
requirement has not been waived by the PBGC.
"Required Banks" means, at any time, Banks having Pro Rata
Shares representing at least sixty-five percent (65.0%) of the aggregate
Commitment.
"RLC": See Recital A hereto.
"RLC Advance" means a disbursement of the proceeds of the RLC.
"RLC Balance" means (i) with respect to the RLC on any date,
the aggregate outstanding principal amount thereof after giving effect to any
borrowings and prepayments or repayments of RLC Advances occurring on such date;
plus (ii) with respect to any outstanding LC Obligations on any date, the amount
of such LC Obligations on such date after giving effect to any Issuances of
Letters of Credit occurring on such date and any other changes in the aggregate
amount of the LC Obligations as of such date, including changes occurring as a
result of any reimbursements of outstanding unpaid drawings under any Letters of
Credit or any reductions in the maximum amount available for drawing under
Letters of Credit taking effect on such date.
"RLC Commitment" means FIFTEEN MILLION AND NO/100 DOLLARS
($15,000,000.00).
"RLC Maturity Date" means May 22, 2000.
"RLC Non-Use Fee": See Section 3.2(a).
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"RLC Note" means a Revolving Promissory Note of even date
herewith substantially in the form attached hereto as Exhibit C-1, in the amount
of a Bank's Pro Rata Share of the RLC Commitment, executed by Borrower and
delivered to a Bank pursuant to the terms of this Credit Agreement, together
with any renewals, extensions, modifications, restatements or replacements
thereof.
"RLCT": See Recital A hereto.
"RLCT Advance" means a disbursement of the proceeds of the
RLCT.
"RLCT Balance" means the aggregate outstanding principal
amount of all RLCT Advances, after giving effect to any borrowings and
prepayments or repayments of RLCT Advances occurring on such date.
"RLCT Commitment" means TEN MILLION AND NO/100 DOLLARS
($10,000,000.00).
"RLCT Maturity Date" means August 5, 2004.
"RLCT Non-Use Fee": See Section 3.2(c).
"RLCT Note" means a Revolving Promissory Note of even date
herewith substantially in the form attached hereto as Exhibit C-2 in the amount
of a Bank's Pro Rata Share of the RLCT Commitment executed by Borrower and
delivered to a Bank pursuant to the terms of this Credit Agreement, together
with any renewals, extensions, modifications or replacements thereof.
"RLCT Principal Date" means initially November 5, 1999 and
every 3 month anniversary thereafter.
"RLCT Termination Date" means August 5, 1999.
"SEC" means the Securities and Exchange Commission.
"Security Agreement": See Section 4.1.
"Security Documents": See Section 4.2.
"Significant Debt Agreement" means all documents, instruments
and agreements executed by Borrower, evidencing, securing or ensuring any
Indebtedness of Borrower or any guaranty in excess of $50,000 in outstanding
principal (or principal equivalent) amount.
"Stated Amount" of a Letter of Credit means the amount of the
Letter of Credit as stated in the Letter of Credit.
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"Stated Expiry Date" of a Letter of Credit means the stated
expiry date or expiration date as stated in the Letter of Credit.
"Subsidiary" means any business association directly or
indirectly controlled by the Borrower.
"Tangible Net Worth" means, at any given date, the total
shareholder's equity (including capital stock, additional paid in capital and
retained earnings after deducting treasury stock) which would appear on a
balance sheet of Borrower prepared as of such date in accordance with generally
accepted accounting principles consistently applied, less the aggregate book
value of "Intangible Assets" (as defined below) shown on such balance sheet.
"Intangible Assets" means those assets that are (i) deferred assets, other than
prepaid taxes; (ii) patents, copyrights, trademarks, tradenames, franchises,
goodwill, experimental expenses and other similar assets which would be
classified as intangible assets on a balance sheet prepared in accordance with
generally accepted accounting principles consistently applied; and (iii)
unamortized debt discount and expense.
"Tangible Net Worth Minimum" means the sum of (i)
$55,000,000.00, plus (ii) beginning December 31, 1998, fifty percent (50.0%) of
its positive Net Income for each fiscal quarter thereafter, less (iii) the
amount of its treasury stock acquired by Borrower since August 1, 1998.
"U.S." means the United States of America.
"Variable Rate" means the rate per annum equal to the Prime
Rate per annum as in effect from time to time. The Variable Rate will change on
each day that the "Prime Rate" changes.
"Variable Rate Advance" means an Advance or a portion of a
Loan designated by Borrower, that bears, or is requested to bear, interest at
the Variable Rate.
1.2 Terms Generally.
(a) The definitions in Section 1.1 shall apply equally to both
the singular and plural forms of the terms defined.
(b) Whenever the context may require, any pronoun shall
include the corresponding masculine, feminine and neuter forms.
(c) All references herein to Articles, Sections, Exhibits and
Schedules shall be deemed references to Articles and Sections of, and
Exhibits and Schedules to, this Agreement unless the context shall
otherwise require.
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(d) Except as otherwise expressly provided herein, all terms
of an accounting or financial nature shall be construed in accordance
with GAAP, as in effect from time to time.
ARTICLE 2
THE RLC
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2.1 RLC Commitment. Each Bank agrees, severally but not jointly, to
loan to or for the benefit of Borrower, and Borrower shall be entitled to draw
upon and borrow, in the manner and upon the terms and conditions contained in
this Credit Agreement, an amount that shall not exceed that Bank's Pro Rata
Share of the RLC Commitment.
2.2 Revolving Line.
(a) Subject to the terms and conditions set forth in this
Credit Agreement, each Bank shall provide to Borrower a revolving line
of credit (each, a "RLC"), against which a Bank shall fund its Pro Rata
Share of each RLC Advance to be made to Borrower, repaid by Borrower,
and readvanced to Borrower, as Borrower may request, and the Issuing
Bank shall issue such Letters of Credit as Borrower shall request,
which may be terminated or repaid by Borrower and reissued provided
that (i) there is no Event of Default under any provision of this
Credit Agreement, (ii) no RLC Advance shall be made or Letter of Credit
issued that would cause the RLC Balance to exceed the RLC Commitment,
(iii) no Bank shall be obligated under any circumstances to fund an RLC
Advance in excess of that Bank's Pro Rata Share of the requested RLC
Advance, (iv) the aggregate amount of a Bank's funding of the RLC
Balance at any one time outstanding shall not exceed its Pro Rata Share
of the RLC Commitment, and (v) no Letter of Credit shall be issued with
a Stated Expiry Date later than the RLC Maturity Date. The Banks shall
not be obligated to fund their Pro Rata Share of any RLC Advance if,
after giving effect thereto, any of the foregoing limitations would be
exceeded.
(b) The failure of any Bank to fund its Pro Rata Share of an
RLC Advance in accordance with its Pro Rata Share of the RLC Commitment
shall not relieve any other Bank of its several obligations hereunder,
but no Bank shall be liable with respect to the obligation of any other
Bank hereunder.
(c) RLC Advances may be made for the purpose of providing to
Borrower working capital financing or in connection with a Disbursement
under a Letter of Credit.
2.3 RLC Notes. The RLC of each Bank shall be evidenced by an RLC Note
and shall bear interest and be payable to the order of such Bank upon the terms
and conditions contained therein. The aggregate amount funded by a Bank under
its RLC Note less all repayments of
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principal thereof shall be the principal amount owing and unpaid on its RLC Note
and its RLC. The principal amount funded by a Bank and all principal payments
and prepayments thereof may be noted by such Bank on a schedule attached to its
RLC Note and shall be entered by the Bank on its ledgers and computer records;
provided that the failure of the Bank to make such notations or entries shall
not affect the principal amount owing and unpaid on its RLC Note. The entries
made in the ordinary course of business by a Bank on its ledgers and computer
records and any notations made in the ordinary course of business by a Bank on
any such schedule annexed to its RLC Note shall be presumed to be accurate until
the contrary is established. If requested, Borrower shall confirm in writing to
the Administrative Agent each RLC Advance.
2.4 RLC. The RLC shall bear interest and be payable to the Banks upon
the terms and conditions contained therein, which include the following
provisions:
(a) Interest shall accrue:
(i) On the unpaid principal of an RLC Advance at the
Variable Rate except to the extent that an RLC Advance bears
interest at the LIBOR Based Rate.
(ii) On the unpaid principal of an RLC Advance at the
LIBOR Based Rate to the extent Borrower shall elect and to the
extent not otherwise provided herein.
(b) All interest shall be computed on the basis of a 360-day
year and accrue on a daily basis for the actual number of days elapsed.
All accrued interest shall be due and payable on each Payment Date.
(c) The entire unpaid principal balance, all accrued and
unpaid interest, and all other amounts payable under the RLC Note shall
be due and payable in full on the RLC Maturity Date.
(d) Each request for an RLC Advance shall be substantially in
the form attached hereto as Exhibit "B" from an Authorized Officer and
shall, in addition to complying with the other requirements in this
Credit Agreement, (i) specify the date and amount of the requested RLC
Advance, (ii) specify whether the RLC Advance shall be an RLC Advance
that bears interest at the Variable Rate or shall be an RLC Advance
that bears interest at the LIBOR Based Rate, (iii) be in a minimum
amount of $500,000.00 with integral multiples of $1,000.00 in excess
thereof, and (iv) if the RLC Advance is to bear interest at the LIBOR
Based Rate, (A) specify the LIBOR Interest Period, and (B) be delivered
to Administrative Agent before 9:00 a.m. (Inglewood, California local
time) at least three (3) Banking Days prior to the date of the
requested RLC Advance. Any request for an RLC Advance not complying
with the foregoing requirements for an RLC Advance bearing interest at
the LIBOR Based Rate shall bear interest at the
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Variable Rate; provided that in the event such non-compliance is due to
Borrower's failure to specify the required information, the Banks agree
to notify Borrower of such failure and to provide Borrower the
opportunity to provide such information prior to directing that the
Advance bear interest at the Variable Rate.
(e) After receiving a request for an RLC Advance in the manner
provided herein, the Administrative Agent shall promptly, before 11:30
a.m. (Inglewood, California local time) on the date an RLC Advance is
requested, notify each Bank by telephone (confirmed promptly in
writing), telefacsimile or cable of the terms of such request and such
Bank's Pro Rata Share of the requested Rate Advance. Each Bank shall,
before 1:00 p.m. (Inglewood, California local time) on the date an RLC
Advance is to be made as specified in a request for an RLC Advance,
deposit with the Administrative Agent such Bank's Pro Rata Share of the
requested RLC Advance in immediately available funds. Upon fulfillment
of all applicable conditions set forth herein and after receipt by the
Administrative Agent of such funds, the Administrative Agent shall pay
or deliver all funds so received to the order of Borrower at the
principal office of the Administrative Agent. The failure of any Bank
to fund its Pro Rata Share of any RLC Advance required of it hereunder
shall not relieve any other Bank of its obligation to fund its Pro Rata
Share of any RLC Advance hereunder. If any Bank fails to fund its Pro
Rata Share of the requested RLC Advance and if all conditions to such
RLC Advance have apparently been satisfied, the Administrative Agent
will make available to Borrower the funds received by it from the other
Bank. Neither the Administrative Agent nor any Bank shall be
responsible for the performance by any other Bank of its obligations
hereunder.
Unless the Administrative Agent shall have received notice
from a Bank prior to the date of any RLC Advance that such Bank will
not make available to the Administrative Agent such Bank's Pro Rata
Share of the requested RLC Advance, the Administrative Agent may assume
that such Bank has made such amount available to the Administrative
Agent on the date of such RLC Advance in accordance with this Section
and the Administrative Agent may, in reliance upon such assumption,
make available a corresponding amount to or on behalf of Borrower on
such date. If and to the extent any Bank shall not have so made its Pro
Rata Share of the requested RLC Advance available to the Administrative
Agent (the "Principal Shortfall Amount"), Borrower agrees to repay the
Principal Shortfall Amount to the Administrative Agent forthwith on
demand, together with interest thereon for each day from (and
including) the date such amount is made available to or on behalf of
Borrower to (but excluding) the date such amount is repaid to the
Administrative Agent, at the rate per annum equal to the rate otherwise
applicable to the RLC Advance in question.
(f) If Borrower desires that a LIBOR Rate Advance continue to
bear interest at the LIBOR Based Rate after the end of an existing
LIBOR Interest
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Period, Borrower shall deliver to the Administrative Agent at least
three (3) Banking Days prior to the end of the existing LIBOR Interest
Period; a notice making such election and specifying the new LIBOR
Interest Period. If Borrower does not deliver such notice within such
time, then after the existing LIBOR Interest Period the LIBOR Rate
Advance shall become a Variable Rate Advance and shall bear interest at
the Variable Rate.
(g) Borrower may upon written notice to and received by the
Administrative Agent not later than 9:00 a.m. (Inglewood, California
local time) (i) on the third Banking Day, in the case of any conversion
of a Variable Advance into a LIBOR Rate Advance and (ii) on the first
Banking Day in the case of any conversion of a LIBOR Rate Advance into
a Variable Rate Advance, prior to the date of the proposed conversion,
convert any RLC Advance of one type into an RLC Advance of the other
type; provided, however, that any conversion of a LIBOR Rate Advance
(A) shall only be made on the last day of the applicable LIBOR Interest
Period except as otherwise provided herein, and (B) shall be made only
as to an RLC Advance in a minimum amount of $500,000.00 with integral
multiples of $1,000.00 in excess thereof. Each such notice of a
conversion shall specify the date of such conversion and the RLC
Advance(s) to be converted. After receiving any such notice, the
Administrative Agent shall promptly notify each Bank by telephone,
telefacsimile or cable and deliver a copy thereof to each Bank.
(h) Each request for an RLC Advance as well as each election
by the Borrower that an RLC Advance continue to bear interest at the
LIBOR Based Rate after the end of an existing LIBOR Interest Period and
each conversion request shall be irrevocable and binding on Borrower
once the request is received by the Administrative Agent and the
Administrative Agent notifies the Banks of the request. Prior to the
Administrative Agent's notice of the request to the Banks, Borrower may
revoke the request. Borrower shall indemnify each Bank against any
cost, loss or expense incurred by any Bank as a result of Borrower's
failure to fulfill, on or before the date specified for an RLC Advance
in any request for an RLC Advance, the conditions to such RLC Advance
set forth herein, including any cost, loss or expense incurred by
reason of the liquidation or reemployment of deposits or other funds
acquired by a Bank to fund such RLC Advance when such RLC Advance, as a
result of such failure, is not made on the date so specified.
(i) No RLC Advance shall be requested by Borrower to bear a
LIBOR Based Rate, whether pursuant to a request for an RLC Advance or a
conversion hereunder, so long as there shall have occurred an Event of
Default and such Event of Default is continuing.
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(j) Nothing herein shall be deemed to relieve any Bank from
its obligation to fulfill its Pro Rata Share of the RLC Commitment
hereunder or to prejudice any right which the Administrative Agent or
the Borrower may have against any Bank as a result of any default by
such Bank hereunder.
(k) If any payment of interest and/or principal is not
received by the Administrative Agent when such payment is due, then in
addition to the remedies conferred upon the Banks under the Credit
Documents, a late charge of five percent (5%) of the amount of the
installment due and unpaid will be added to the delinquent amount to
compensate the Banks for the expense of handling the delinquency for
any payment past due in excess of ten (10) days, regardless of any
notice and cure period.
(l) Upon the occurrence of an Event of Default and after
maturity, including maturity upon acceleration, the unpaid principal
balance, all accrued and unpaid interest and all other amounts payable
hereunder shall bear interest at the Default Rate.
2.5 Excess Balance Repayment. There shall be due and payable from
Borrower to the Banks, and Borrower shall immediately repay to the Banks three
(3) days after notice to Borrower, from time to time, any amount by which the
RLC Balance exceeds the RLC Commitment.
2.6 Reduction of RLC Commitment. Borrower shall have the right at any
time upon at least seven days' prior written notice to the Administrative Agent
to reduce the aggregate amount of the RLC Commitment; provided, that the amount
of each such reduction shall be in a minimum aggregate amount of $1,000,000.00
or an integral aggregate multiple of $100,000.00 in excess thereof and that no
such reduction shall reduce (i) the amount of the RLC Commitment to less than
the RLC Balance, or (ii) the amount of a Bank's Pro Rata Share of the RLC
Commitment to less than the amount of the RLC Balance funded by such Bank. Any
reduction in the aggregate amount of the RLC Commitment shall reduce each Bank's
share of the RLC Commitment by its Pro Rata Share of the aggregate amount of
such reduction. The Administrative Agent shall promptly notify each Bank of any
such notice of reduction received from the Borrower. Any reduction in the RLC
Commitment may not be reinstated without the mutual prior consent of the
Borrower and the Banks.
2.7 Conditions. The Banks shall have no obligation to fund their Pro
Rata Shares of any RLC Advance unless and until all of the conditions and
requirements of this Credit Agreement are fully satisfied. However, the Banks in
their sole and absolute discretion may elect to make one or more RLC Advances
prior to full satisfaction of one or more such conditions and/or requirements.
Notwithstanding that such an RLC Advance or RLC Advances are made, such
unsatisfied conditions and/or requirements shall not be waived or released
thereby. Borrower shall be and continue to be obligated to fully satisfy such
conditions and requirements, and the
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Banks, at any time, in their sole and absolute discretion, may stop making RLC
Advances until all conditions and requirements are fully satisfied.
2.8 Other RLC Advances. The Administrative Agent, at the direction of
the Banks, after giving written notice to Borrower, from time to time, may make
RLC Advances in any amount in payment of (i) insurance premiums, taxes,
assessments, liens or encumbrances existing against the Collateral, (ii)
interest accrued and payable upon the RLC, (iii) any indebtedness, charges and
expenses that are the obligation of Borrower under this Credit Agreement, and
(iv) any charges or matters necessary to cure any Event of Default.
2.9 Assignment. Borrower shall have no right to any RLC Advance other
than to have the same disbursed by the Administrative Agent in accordance with
the disbursement provisions contained in this Credit Agreement. Any assignment
or transfer, voluntary or involuntary, of this Credit Agreement or any right
hereunder shall not be binding upon or in any way affect the Banks without their
written consent; the Administrative Agent, at the direction of the Banks may
make RLC Advances under the disbursement provisions herein, notwithstanding any
such assignment or transfer.
2.10 Issuance of Letters of Credit.
(a) Subject to the terms and conditions of this Credit
Agreement, (i) the Issuing Bank agrees from time to time before the RLC
Maturity Date to issue Letters of Credit for the account of the
Borrower; and (ii) the Banks severally agree to participate in Letters
of Credit issued for the account of the Borrower, subject to the prior
approval by each Bank of the provisions of each Letter of Credit. Each
reference in this Credit Agreement to the "issue" or "issuance" or
other forms of such words in relation to Letters of Credit shall be
deemed to include any extension or renewal of a Letter of Credit.
(b) Each Letter of Credit shall (i) by its terms be issued in
a Stated Amount; (ii) have a Stated Expiry Date no later than the RLC
Maturity Date; (iii) expire or be terminated by the beneficiary
thereunder on or before its Stated Expiry Date; (iv) not cause the RLC
Balance after the issuance of said Letter of Credit to exceed the RLC
Commitment; and (v) not cause the Outstanding LC Balance after the
issuance of said Letter of Credit to exceed the Maximum LC Commitment.
(c) In addition to the conditions otherwise specified in this
Section, the obligation of the Issuing Bank to issue a Letter of Credit
shall be subject to the further condition precedent that the following
statements shall be correct, and each of the application for such
Letter of Credit and the issuance of such Letter of Credit shall
constitute a representation and warranty by Borrower that on the date
of the issuance of such Letter of Credit such statements are correct:
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(i) The representations and warranties in Article 6
are correct on and as of the date of the issuance of such
Letter of Credit, before and after giving effect to such
issuance, as though made on and as of such date;
(ii) No Event of Default has occurred and is
continuing; and
(iii) The conditions in Section 2.2(a) are satisfied
as of the date of issuance of the Letter of Credit, before and
after giving effect to such issuance.
2.11 Issuance Procedure for Letter of Credit. By delivery to the
Issuing Bank of an Issuance Request on or before 9:00 a.m. (Inglewood,
California time) three (3) Banking Days prior to the requested Issuance Date,
and the execution of such applications and agreements as the Issuing Bank may
reasonably request, Borrower may request the issuance of a Letter of Credit in
such form as Borrower may reasonably request. Each Issuance Request shall
include the form of the Letter of Credit, the amount and other terms thereof.
Subject to the terms and conditions of this Credit Agreement, the Issuing Bank
will issue such Letter of Credit on the Issuance Date specified in the Issuance
Request submitted in connection therewith. The Issuing Bank and Borrower agree
that all Letters of Credit issued pursuant to the terms of this Article shall be
subject to the terms and conditions, and entitled to the benefits, of this
Credit Agreement and the other Credit Documents.
2.12 Letter of Credit Fees. Borrower agrees to pay to the Issuing Bank
a charge for all reasonable administrative expenses of the Issuing Bank in
connection with the issuance, amendment or modification (if any) and
administration of the Letter of Credit upon demand from time to time, which
charge shall not exceed $150.00 per draw, transfer or transaction.
2.13 Disbursements. The Issuing Bank will notify Borrower of the
presentment for payment of a Letter of Credit by any beneficiary thereto,
together with notice of the date (the "Disbursement Date") such payment shall be
made. Subject to the terms and provisions of the Letter of Credit, the Issuing
Bank shall make such payment (a "Disbursement") to the beneficiary of the Letter
of Credit. Each such Disbursement shall be deemed to be an RLC Advance
hereunder.
2.14 Reimbursement Obligations of Borrower. Borrower's obligation under
Section 2.13 to reimburse the Banks with respect to each Disbursement (including
interest thereon) in respect of any Letter of Credit shall be absolute and
unconditional under any and all circumstances and irrespective of any setoff,
counterclaim, or defense to payment which Borrower may have or have had against
the Banks, the Issuing Bank, the Administrative Agent or the beneficiary
thereof, including any defense based upon the occurrence of any Event of
Default, any draft, demand or certificate or other document presented under the
Letter of Credit proving to be forged, fraudulent, invalid or insufficient, the
failure of any Disbursement to conform to the terms
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of the Letter of Credit (if, in Issuing Bank's good faith opinion, such
Disbursement is determined to be appropriate) or any non-application or
misapplication by the beneficiary of the proceeds of such Disbursement, or the
legality, validity, form, regularity or enforceability of the Letter of Credit;
provided, however, that nothing herein shall adversely affect the right of
Borrower to commence any proceeding against Issuing Bank for any wrongful
Disbursement made by Issuing Bank under the Letter of Credit as a result of acts
or omissions constituting gross negligence or willful misconduct on the part of
Issuing Bank.
2.15 Nature of Reimbursement Obligations. Borrower shall assume all
risks of the acts, omissions or misuse of any Letter of Credit by the
beneficiary thereof. Neither the Banks nor the Issuing Bank (except to the
extent of its own gross negligence or willful misconduct) shall be responsible
for:
(a) the form, validity, sufficiency, accuracy, genuineness or
legal effect of any Letter of Credit or any document submitted by any
party in connection with the issuance of any Letter of Credit, even if
such document should in fact prove to be in any or all respects
invalid, insufficient, inaccurate, fraudulent or forged;
(b) the form, validity, sufficiency, accuracy, genuineness or
legal effect of any instrument transferring or assigning or purporting
to transfer or assign any Letter of Credit;
(c) failure of any beneficiary of any Letter of Credit to
comply fully with conditions required in order to demand payment under
a Letter of Credit;
(d) errors, omissions, interruption or delays in transmission
or delivery of any messages, by mail, cable, telegraph, telex or
otherwise; or
(e) any loss or delay in the transmission or otherwise of any
document or draft required by or from a beneficiary of a Letter of
Credit in order to make a Disbursement under a Letter of Credit or of
the proceeds thereof.
None of the foregoing shall affect, impair or prevent the vesting of any of the
rights or powers granted the Banks or the Issuing Bank hereunder. In furtherance
and extension, and not in limitation or derogation of any of the foregoing, any
action taken or omitted to be taken by the Banks or the Issuing Bank in good
faith shall be binding upon the Borrower and shall not put the Banks or the
Issuing Bank under any resulting liability to Borrower.
2.16 Banks Obligation. Nothing herein shall be deemed to relieve any
Bank from its obligations to fulfill its Pro Rata Share of the RLC Commitment
hereunder or to prejudice any right which the Administrative Agent or the
Borrower may have against any Bank as a result of any default by such Bank
hereunder.
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2.17 Certain Requirements. The Issuing Bank is under no obligation to
Issue any Letter of Credit if:
(i) any order, judgment or decree of any Governmental
Authority or arbitrator shall by its terms purport to enjoin or
restrain the Issuing Bank from Issuing such Letter of Credit, or any
requirement of law applicable to the Issuing Bank or any request or
directive (with which it is customary for banks in the relevant
jurisdiction to comply whether or not having the force of law) from any
Governmental Authority with jurisdiction over the Issuing Bank shall
prohibit, or request that the Issuing Bank refrain from, the Issuance
of letters of credit generally or such Letter of Credit in particular
or shall impose upon the Issuing Bank with respect to such Letter of
Credit any restriction, reserve, or capital requirement (for which the
Issuing Bank is not otherwise compensated hereunder) not in effect on
the Closing Date, or shall impose upon the Issuing Bank any
unreimbursed loss, cost, or expense which was not applicable on the
Closing Date and which the Issuing Bank in good xxxxx xxxxx material to
it;
(ii) the Issuing Bank has received written notice
from any Bank, the Administrative Agent or Borrower, on or prior to the
Banking Day prior to the requested date of Issuance of such Letter of
Credit, that one or more of the applicable conditions contained in
Article 5 is not then satisfied;
(iii) the Stated Expiry Date of any requested Letter
of Credit is not in accord with the requirements of Section 2.10(b),
unless all of the Banks have approved such Stated Expiry Date;
(iv) any requested Letter of Credit does not provide
for drafts, or is not otherwise in form and substance acceptable to the
Issuing Bank, or the Issuance of a Letter of Credit shall violate any
applicable policies of the Issuing Bank; or
(v) such Letter of Credit is to be denominated in a
currency other than Dollars.
2.18 Risk Participations, Drawings, and Reimbursements.
(a) Immediately upon the Issuance of each Letter of Credit,
each Bank shall be deemed to, and hereby irrevocably and
unconditionally agrees to, purchase from the Issuing Bank a
participation in such Letter of Credit and each drawing thereunder in
an amount equal to the product of (i) the Pro Rata Share of such Bank,
times (ii) the maximum amount available to be drawn under such Letter
of Credit and the amount of any Drawing, respectively. For purposes of
the applicable Commitment, each Issuance of a Letter of Credit shall be
deemed to
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utilize each Bank's Pro Rata Share of said Commitment by an amount
equal to the amount of such participation.
(b) In the event of any request for a drawing under a Letter
of Credit by the beneficiary or transferee thereof, the Issuing Bank
will promptly notify the Borrower. The Issuing Bank shall honor any
Disbursement request under any Letter of Credit only if (i) such
request is delivered to the Issuing Bank by the beneficiary of such
Letter of Credit, and (ii) such request is accompanied by the original
documents required by the Letter of Credit for any Disbursement. Except
as otherwise provided herein, the Borrower shall reimburse the Issuing
Bank prior to 11:00 a.m. (Inglewood, California local time) on each
date that any amount is paid by the Issuing Bank under any Letter of
Credit (each such date, an "Honor Date"), in an amount equal to the
amount so paid by the Issuing Bank. In the event the Borrower is
required but fails to reimburse the Issuing Bank for the full amount of
any drawing under any Letter of Credit by 11:00 a.m. (Inglewood,
California local time) on the Honor Date, the Issuing Bank will
promptly notify the Administrative Agent and the Administrative Agent
will promptly notify each Bank thereof. Any notice given by the Issuing
Bank or the Administrative Agent pursuant to this Section may be oral
if immediately confirmed in writing (including by facsimile); provided
that the lack of such an immediate confirmation shall not affect the
conclusiveness or binding effect of such notice.
(c) Each Bank shall upon any notice pursuant to this Section
make available to the Administrative Agent for the account of the
Issuing Bank an amount in Dollars and in immediately available funds
equal to its Pro Rata Share of the amount of the drawing, whereupon the
Banks shall (subject to paragraph (d)) each be deemed to have made a
Variable Rate Advance to the Borrower in that amount. If any Bank so
notified fails to make available to the Administrative Agent for the
account of the Issuing Bank the amount of such Bank's Pro Rata Share of
the amount of the drawing by no later than 3:00 p.m. (Inglewood,
California local time) on the Honor Date, then interest shall accrue on
such Bank's obligation to make such payment, from the Honor Date to the
date such Bank makes such payment, at a rate per annum equal to the
Federal Funds Rate in effect from time to time during such period and
such amount and interest shall be immediately due and payable to the
Administrative Agent; the obligation of such Bank to make such payment
to the Administrative Agent shall not be waived by the Administrative
Agent without the prior written consent of the Borrower. The
Administrative Agent will promptly give notice of the occurrence of the
Honor Date, but failure of the Administrative Agent to give any such
notice on the Honor Date or in sufficient time to enable any Bank to
effect such payment on such date shall not relieve such Bank from its
obligations under this Section.
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(d) With respect to any unreimbursed drawing, the Borrower
shall be deemed to have incurred from the Issuing Bank a Variable Rate
RLC Advance in the amount of such drawing.
(e) Each Bank's obligation in accordance with this Credit
Agreement to make the Variable Rate Advance, as contemplated by this
Section, as a result of a drawing under a Letter of Credit, shall be
absolute and unconditional and without recourse to the Issuing Bank and
shall not be affected by any circumstance, including (i) any set-off,
counterclaim, recoupment, defense, or other right which such Bank may
have against the Issuing Bank, the Borrower, or any other Person for
any reason whatsoever, (ii) the occurrence or continuance of a default,
an Event of Default, or a Material Adverse Effect, or (iii) any other
circumstance, happening, or event whatsoever, whether or not similar to
any of the foregoing.
2.19 Repayment of Participations.
(a) Upon (and only upon) receipt by the Administrative Agent
for the account of the Issuing Bank of immediately available funds from
the Borrower (i) in reimbursement of any payment made by the Issuing
Bank under a Letter of Credit with respect to which any Bank has paid
the Administrative Agent for the account of the Issuing Bank for such
Bank's participation in such Letter of Credit pursuant to Section 2.18,
or (ii) in payment of interest thereon, the Administrative Agent will
pay to each Bank, in the same funds as those received by the
Administrative Agent for the account of the Issuing Bank, the amount of
such Bank's Pro Rata Share of such funds, and the Issuing Bank shall
receive the amount of the Pro Rata Share of such funds of any Bank that
did not so pay the Administrative Agent for the account of the Issuing
Bank.
(b) If the Administrative Agent or the Issuing Bank is
required at any time to return to the Borrower, or to a trustee,
receiver, liquidator, custodian, or any official in any Insolvency
Proceeding, any portion of the payments made by the Borrower to the
Administrative Agent for the account of the Issuing Bank pursuant to
paragraph (a) in reimbursement of a payment made under a Letter of
Credit or interest or fee thereon, each Bank shall, on demand of the
Administrative Agent, forthwith return to the Administrative Agent or
the Issuing Bank the amount of its Pro Rata Share of any amounts so
returned by the Administrative Agent or the Issuing Bank plus interest
thereon from the date such demand is made to the date such amounts are
returned by such Bank to the Administrative Agent or the Issuing Bank,
at a rate per annum equal to the Federal Funds Rate in effect from time
to time.
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2.20 Role of the Issuing Bank.
(a) Each Bank and Borrower agree that, in paying any drawing
under a Letter of Credit, the Issuing Bank shall not have any
responsibility to obtain any document (other than any sight draft and
certificates expressly required by the Letter of Credit) or to
ascertain or inquire as to the validity or accuracy of any such
document or the authority of the Person executing or delivering any
such document.
(b) No Administrative Agent-related Person nor any of the
respective correspondents, participants or assignees of the Issuing
Bank shall be liable to any Bank for: (i) any action taken or omitted
in connection herewith at the request or with the approval of the Banks
or (ii) any action taken or omitted in the absence of gross negligence
or willful misconduct.
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ARTICLE 2A
THE RLCT
--------
2A.1 RLCT Commitment. Each Bank agrees, severally but not jointly, to
loan to or for the benefit of Borrower, and Borrower shall be entitled to draw
upon and borrow, in the manner and upon the terms and conditions contained in
this Credit Agreement, an amount that shall not exceed that Bank's Pro Rata
Share of the RLCT Commitment.
2A.2 Revolving Line.
(a) Subject to the terms and conditions set forth in this
Credit Agreement, each Bank shall provide to Borrower a revolving line
of credit (each, a "RLCT"), against which a Bank shall fund its Pro
Rata Share of each RLCT Advance to be made to Borrower, repaid by
Borrower, and readvanced to Borrower, as Borrower may request, provided
that (i) there is no Event of Default under any provision of this
Credit Agreement, (ii) no RLCT Advance shall be made that would cause
the RLCT Balance to exceed the RLCT Commitment, (iii) no Bank shall be
obligated under any circumstances to fund an RLCT Advance in excess of
that Bank's Pro Rata Share of the requested RLCT Advance, (iv) the
aggregate amount of a Bank's funding of the RLCT Balance at any one
time outstanding shall not exceed its Pro Rata Share of the RLCT
Commitment, and (v) no RLCT Advance shall be made after the RLCT
Termination Date. The Banks shall not be obligated to fund their Pro
Rata Share of any RLCT Advance if, after giving effect thereto, any of
the foregoing limitations would be exceeded.
(b) The failure of any Bank to fund its Pro Rata Share of an
RLCT Advance in accordance with its Pro Rata Share of the RLCT
Commitment shall not relieve any other Bank of its several obligations
hereunder, but no Bank shall be liable with respect to the obligation
of any other Bank hereunder.
(c) RLCT Advances may be made for the purpose of providing
liquidity for a common stock repurchase program by Borrower including
without limitation of reimbursing itself for common stock repurchases
made since August 1, 1998.
2A.3 RLCT Notes. The RLCT of each Bank shall be evidenced by an RLCT
Note and shall bear interest and be payable to the order of such Bank upon the
terms and conditions contained therein. The aggregate amount funded by a Bank
under its RLCT Note less all repayments of principal thereof shall be the
principal amount owing and unpaid on its RLCT Note and its RLCT. The principal
amount funded by a Bank and all principal payments and prepayments thereof may
be noted by such Bank on a schedule attached to its RLCT Note and shall be
entered by the Bank on its ledgers and computer records; provided that the
failure of the Bank to make such notations or entries shall not affect the
principal amount owing and unpaid on
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its RLCT Note. The entries made in the ordinary course of business by a Bank on
its ledgers and computer records and any notations made in the ordinary course
of business by a Bank on any such schedule annexed to its RLCT Note shall be
presumed to be accurate until the contrary is established. If requested,
Borrower shall confirm in writing to the Administrative Agent each RLCT Advance.
2A.4 RLCT. The RLCT shall bear interest and be payable to the Banks
upon the terms and conditions contained therein, which include the following
provisions:
(a) Interest shall accrue:
(i) On the unpaid principal of an RLCT Advance at the
Variable Rate except to the extent that an RLCT Advance bears
interest at the LIBOR Based Rate.
(ii) On the unpaid principal of an RLCT Advance at
the LIBOR Based Rate to the extent Borrower shall elect and to
the extent not otherwise provided herein.
(b) All interest shall be computed on the basis of a 360-day
year and accrue on a daily basis for the actual number of days elapsed.
All accrued interest shall be due and payable on each Payment Date.
(c) Principal under the RLCT Note shall be due and payable on
each RLCT Principal Date, beginning with the first RLCT Principal Date
after the RLCT Termination Date in an amount sufficient to fully
amortize the principal balance of the RLCT on the RLCT Termination Date
over twenty equal payments of such principal. The entire unpaid
principal balance, all accrued and unpaid interest, and all other
amounts payable under the RLCT Note shall be due and payable in full on
the RLCT Maturity Date.
(d) Each request for an RLCT Advance shall be substantially in
the form attached hereto as Exhibit "A" from an Authorized Officer, and
shall, in addition to complying with the other requirements in this
Credit Agreement, (i) specify the date and amount of the requested RLCT
Advance, (ii) specify whether the RLCT Advance shall be an RLCT Advance
that bears interest at the Variable Rate or shall be an RLCT Advance
that bears interest at the LIBOR Based Rate, (iii) be in a minimum
amount of $500,000.00 with integral multiples of $1,000.00 in excess
thereof, and (iv) if the RLCT Advance is to bear interest at the LIBOR
Based Rate, (A) specify the LIBOR Interest Period, and (B) be delivered
to Administrative Agent before 9:00 a.m. (Inglewood, California local
time) at least three (3) Business Days prior to the date of the
requested RLCT Advance. Any request for an RLCT Advance not complying
with the foregoing requirements for an RLCT Advance bearing interest at
the LIBOR Based Rate shall bear interest at
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the Variable Rate; provided that in the event such non-compliance is
due to Borrower's failure to specify the required information, the
Banks agree to notify Borrower of such failure and to provide Borrower
the opportunity to provide such information prior to directing that the
Advance bear interest at the Variable Rate.
(e) After receiving a request for an RLCT Advance in the
manner provided herein, the Administrative Agent shall promptly, before
11:30 a.m. (Inglewood, California local time) on the date an RLCT
Advance is requested, notify each Bank by telephone (confirmed promptly
in writing), telefacsimile or cable of the terms of such request and
such Bank's Pro Rata Share of the requested RLCT Advance. Each Bank
shall, before 1:00 p.m. (Inglewood, California local time) on the date
an RLCT Advance is to be made as specified in a request for an RLCT
Advance, deposit with the Administrative Agent such Bank's Pro Rata
Share of the requested RLCT Advance in immediately available funds.
Upon fulfillment of all applicable conditions set forth herein and
after receipt by the Administrative Agent of such funds, the
Administrative Agent shall pay or deliver all funds so received to the
order of Borrower at the principal office of the Administrative Agent.
The failure of any Bank to fund its Pro Rata Share of any RLCT Advance
required of it hereunder shall not relieve any other Bank of its
obligation to fund its Pro Rata Share of any RLCT Advance hereunder. If
any Bank fails to fund its Pro Rata Share of the requested RLCT Advance
and if all conditions to such RLCT Advance have apparently been
satisfied, the Administrative Agent will make available to Borrower the
funds received by it from the other Bank. Neither the Administrative
Agent nor any Bank shall be responsible for the performance by any
other Bank of its obligations hereunder.
Unless the Administrative Agent shall have received notice
from a Bank prior to the date of any RLCT Advance that such Bank will
not make available to the Administrative Agent such Bank's Pro Rata
Share of the requested RLCT Advance, the Administrative Agent may
assume that such Bank has made such amount available to the
Administrative Agent on the date of such RLCT Advance in accordance
with this Section and the Administrative Agent may, in reliance upon
such assumption, make available a corresponding amount to or on behalf
of Borrower on such date. If and to the extent any Bank shall not have
so made its Pro Rata Share of the requested RLCT Advance available to
the Administrative Agent (the "Principal Shortfall Amount"), Borrower
agrees to repay the Principal Shortfall Amount to the Administrative
Agent forthwith on demand, together with interest thereon for each day
from (and including) the date such amount is made available to or on
behalf of Borrower to (but excluding) the date such amount is repaid to
the Administrative Agent, at the rate per annum equal to the rate
otherwise applicable to the RLCT Advance in question.
(f) If Borrower desires that a LIBOR Rate Advance continue to
bear interest at the LIBOR Based Rate after the end of an existing
LIBOR Interest
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Period, Borrower shall deliver to the Administrative Agent at least
three (3) Banking Days prior to the end of the existing LIBOR Interest
Period; a notice making such election and specifying the new LIBOR
Interest Period. If Borrower does not deliver such notice within such
time, then after the existing LIBOR Interest Period the LIBOR Rate
Advance shall become a Variable Rate Advance and shall bear interest at
the Variable Rate.
(g) Borrower may upon written notice to and received by the
Administrative Agent not later than 9:00 a.m. (Inglewood, California
local time) (i) on the third Business Day, in the case of any
conversion of a Variable Rate Advance into a LIBOR Rate Advance and
(ii) on the first Business Day in the case of any conversion of a LIBOR
Rate Advance into a Variable Rate Advance, prior to the date of the
proposed conversion, convert any RLCT Advance of one type into an RLCT
Advance of the other type; provided, however, that any conversion of a
LIBOR Rate Advance (A) shall only be made on the last day of the
applicable LIBOR Interest Period except as otherwise provided herein,
and (B) shall be made only as to an RLCT Advance in a minimum amount of
$500,000.00 with integral multiples of $1,000.00 in excess thereof.
Each such notice of a conversion shall specify the date of such
conversion and the RLCT Advance(s) to be converted. After receiving any
such notice, the Administrative Agent shall promptly notify each Bank
by telephone, telefacsimile or cable and deliver a copy thereof to each
Bank.
(h) Each request for an RLCT Advance as well as each election
by the Borrower that an RLCT Advance continue to bear interest at the
LIBOR Based Rate after the end of an existing LIBOR Interest Period and
each conversion request shall be irrevocable and binding on Borrower
once the request is received by the Administrative Agent and the
Administrative Agent notifies the Banks of the request. Prior to the
Administrative Agent's notice of the request to the Banks, Borrower may
revoke the request. Borrower shall indemnify each Bank against any
cost, loss or expense incurred by any Bank as a result of Borrower's
failure to fulfill, on or before the date specified for an RLCT Advance
in any request for an RLCT Advance, the conditions to such RLCT Advance
set forth herein, including any cost, loss or expense incurred by
reason of the liquidation or reemployment of deposits or other funds
acquired by a Bank to fund such RLCT Advance when such RLCT Advance, as
a result of such failure, is not made on the date so specified.
(i) No RLCT Advance shall be requested by Borrower to bear a
LIBOR Based Rate, whether pursuant to a request for an RLCT Advance or
a conversion hereunder, so long as there shall have occurred an Event
of Default and such Event of Default is continuing.
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(j) Nothing herein shall be deemed to relieve any Bank from
its obligation to fulfill its Pro Rata Share of the RLCT Commitment
hereunder or to prejudice any right which the Administrative Agent or
the Borrower may have against any Bank as a result of any default by
such Bank hereunder.
(k) If any payment of interest and/or principal is not
received by the Administrative Agent when such payment is due, then in
addition to the remedies conferred upon the Banks under the Credit
Documents, a late charge of five percent (5%) of the amount of the
installment due and unpaid will be added to the delinquent amount to
compensate the Banks for the expense of handling the delinquency for
any payment past due in excess of ten (10) days, regardless of any
notice and cure period.
(l) Upon the occurrence of an Event of Default and after
maturity, including maturity upon acceleration, the unpaid principal
balance, all accrued and unpaid interest and all other amounts payable
hereunder shall bear interest at the Default Rate.
2A.5 Excess Balance Repayment. There shall be due and payable from
Borrower to the Banks, and Borrower shall immediately repay to the Banks three
(3) days after notice to Borrower, from time to time, any amount by which the
RLCT Balance exceeds the RLCT Commitment.
2A.6 Reduction of RLCT Commitment. Borrower shall have the right at any
time upon at least seven days' prior written notice to the Administrative Agent
to reduce the aggregate amount of the RLCT Commitment; provided, that the amount
of each such reduction shall be in a minimum aggregate amount of $1,000,000.00
or an integral aggregate multiple of $100,000.00 in excess thereof and that no
such reduction shall reduce (i) the amount of the RLCT Commitment to less than
the RLCT Balance, or (ii) the amount of a Bank's Pro Rata Share of the RLCT
Commitment to less than the amount of the RLCT Balance funded by such Bank. Any
reduction in the aggregate amount of the RLCT Commitment shall reduce each
Bank's share of the RLCT Commitment by its Pro Rata Share of the aggregate
amount of such reduction. The Administrative Agent shall promptly notify each
Bank of any such notice of reduction received from the Borrower. Any reduction
in the RLCT Commitment may not be reinstated without the mutual prior consent of
the Borrower and the Banks.
2A.7 Conditions. The Banks shall have no obligation to fund their Pro
Rata Shares of any RLCT Advance unless and until all of the conditions and
requirements of this Credit Agreement are fully satisfied. However, the Banks in
their sole and absolute discretion may elect to make one or more RLCT Advances
prior to full satisfaction of one or more such conditions and/or requirements.
Notwithstanding that such an RLCT Advance or RLCT Advances are made, such
unsatisfied conditions and/or requirements shall not be waived or released
thereby. Borrower shall be and continue to be obligated to fully satisfy such
conditions and requirements,
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and the Banks, at any time, in their sole and absolute discretion, may stop
making RLCT Advances until all conditions and requirements are fully satisfied.
2A.8 Other RLCT Advances. The Administrative Agent, at the direction of
the Banks, after giving written notice to Borrower, from time to time, may make
RLCT Advances in any amount in payment of (i) insurance premiums, taxes,
assessments, liens or encumbrances existing against the Collateral, (ii)
interest accrued and payable upon the RLCT, (iii) any indebtedness, charges and
expenses that are the obligation of Borrower under this Credit Agreement, and
(iv) any charges or matters necessary to cure any Event of Default.
2A.9 Assignment. Borrower shall have no right to any RLCT Advance other
than to have the same disbursed by the Administrative Agent in accordance with
the disbursement provisions contained in this Credit Agreement. Any assignment
or transfer, voluntary or involuntary, of this Credit Agreement or any right
hereunder shall not be binding upon or in any way affect the Banks without their
written consent; the Administrative Agent, at the direction of the Banks may
make RLCT Advances under the disbursement provisions herein, notwithstanding any
such assignment or transfer.
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ARTICLE 3
PAYMENTS, FEES AND EURODOLLAR PROVISIONS
----------------------------------------
3.1 Payments.
(a) All payments and prepayments by the Borrower of principal
of and interest on the Notes and all fees, expenses and any other
Obligation payable to the Administrative Agent or the Banks in
connection with the Loans shall be nonrefundable and made in Dollars or
immediately available funds to the Banks not later than 11:00 a.m.
(Inglewood, California local time) on the dates called for under this
Credit Agreement, at the main office of the Administrative Agent in
Inglewood, California. Funds received after such hour shall be deemed
to have been received by the Administrative Agent on the next Banking
Day. Payment to the Administrative Agent as aforesaid shall be deemed
payment to the Banks as well, regardless of whether the Administrative
Agent makes the distributions contemplated by Section 9A.8(a) hereof.
(b) Unless otherwise required by applicable law, payments will
be applied first to accrued, unpaid interest, then to principal, and
any remaining amount to any unpaid collection costs, late charges and
other charges; provided, however, upon delinquency or other default,
the Banks reserve the right to apply payments among principal,
interest, late charges, collection costs and other charges at its
discretion.
(c) Interest shall be due and payable on each Loan on each
Payment Date and on each applicable Maturity Date.
(d) Whenever any payment to be made hereunder shall be stated
to be due on a day which is not a Banking Day, such payment shall be
made on the next succeeding Banking Day, and such extension of time
shall in such case be included in the computation of interest,
commission or fee, as the case may be.
3.2 Loan Fees.
(a) RLC Non-Use Fee. Borrower agrees to pay the Administrative
Agent for distribution to the Banks pursuant to Section 9A.8 hereof a
quarterly fee (the "RLC Non-Use Fee") in an annualized amount equal to
one-quarter percent (0.25%) of the average daily undrawn balance of the
RLC Commitment during the prior calendar quarterly period. For purposes
of calculating the RLC Non-Use Fee, the Outstanding LC Balance on any
date shall be deemed to have been drawn. The RLC Non-Use Fee shall
accrue from the Closing Date and shall be due and payable in arrears
within three (3) Banking Days after written notice of such amount due
by the Administrative Agent to Borrower and shall be non-refundable.
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The first such payment shall be prorated from the Closing Date and
shall be due on December 31, 1998 and thereafter on each Quarterly End
Date.
(b) RLCT Fee. Borrower agrees to pay Administrative Agent on
the Closing Date for distribution to the Banks pursuant to Section 9A.8
hereof a fee (the "RLCT Fee") in an amount equal to one quarter percent
(0.25%) of the RLCT Commitment.
(c) RLCT Non-Use Fee. Borrower agrees to pay Administrative
Agent for distribution to the Banks pursuant to Section 9A.8 hereof a
quarterly fee (the "RLCT Non-Use Fee") in an annualized amount equal to
one-quarter percent (0.25%) of the average daily undrawn balance of the
RLCT Commitment during the prior calendar quarterly period. The RLCT
Non-Use Fee shall accrue from the Closing Date until the RLCT
Termination Date and shall be due and payable in arrears within three
(3) Banking Days after written notice of such amount due by the
Administrative Agent to Borrower and shall be non-refundable. The first
such payment shall be prorated from the Closing Date and shall be due
on December 31, 1998 and thereafter on each Quarterly End Date until
the RLCT Termination Date. The final payment shall be prorated from the
prior Quarterly End Date until the RLCT Termination Date.
3.3 Computations. All fees and interest on each Note shall be computed
on the basis of a year of 360-days/year and accrue on a daily basis for the
actual number of days elapsed.
3.4 Maintenance of Accounts. The Banks shall maintain, in accordance
with their usual practice, an account or accounts evidencing the indebtedness of
the Borrower and the amounts payable and paid from time to time hereunder. In
any legal action or proceeding in respect of this Credit Agreement, the entries
made in the ordinary course of business in such account or accounts shall be
evidence of the existence and amounts of the obligations of the Borrower therein
recorded and shall be presumed to be accurate until the contrary is established.
The failure to record any such amount shall not, however, limit or otherwise
affect the obligations of the Borrower hereunder to repay all amounts owed
hereunder, together with all interest accrued thereon as provided in the Notes.
3.5 Certain Contingencies.
(a) If the contingency contemplated by Section 3.6, 3.7(b) or
3.7(c) should occur, the Borrower may at any time after receipt of such
notice, and as long as the circumstances giving rise to the relevant
claim continue, require the Banks to terminate upon not less than
thirty days' notice the participation agreement with such participant,
unless such participant has waived any claim to payment under those
provisions.
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(b) If circumstances arise which would (or would upon the
giving of notice) entitle a Bank to receive additional payments
pursuant to Section 3.6, 3.7(b) or 3.7(c), then the Bank shall
promptly, upon becoming aware of such circumstances, notify the
Borrower and, to the extent that it can legally do so without material
prejudice to its own position, the Bank shall take such reasonable
steps as may be available to it to mitigate the effects of such
circumstances.
3.6 Increased Capital Requirements; Tax.
(a) In the event that, as a result of any Regulatory Change,
compliance by any Bank with any applicable law or governmental rule,
requirement, regulation, guideline or order (with which it is customary
for banks in the relevant jurisdiction to comply whether or not having
the force of law) has or would have the effect of reducing the rate of
return on the capital of the Bank or any institution controlling the
Bank as a consequence of or with reference to any Commitment, the
issuance of a Letter of Credit or amounts outstanding under the Notes
to a level below that which the Bank or such other corporation could
have achieved but for such change or compliance (taking into
consideration the policies of the Bank or such other corporation with
respect to capital), then from time to time the Borrower shall pay to
such Bank such additional amount or amounts as will compensate the Bank
for such reduction. The Bank will notify the Borrower of any Regulatory
Change that will entitle the Bank to compensation pursuant to this
Section as promptly as practicable, but in any event within ninety (90)
days after the Bank obtains knowledge thereof; provided, however, that
if the Bank fails to give such notice within ninety (90) days after it
obtains knowledge of such a Regulatory Change, the Bank shall, with
respect to compensation payable in respect of any costs resulting from
such Regulatory Change, only be entitled to payment for costs incurred
from and after the date that the Bank does give such notice. Such Bank
shall deliver to the Borrower a written certificate which states the
additional amount(s) due and payable, showing in reasonable detail the
calculation of such amount and provide evidence to substantiate the
Bank's claim for such amount(s).
(b) Each Bank that is organized outside the United States (i)
on or before the date it becomes a party to this Credit Agreement and
(ii) with respect to each lending office located outside the United
States of such Bank, shall deliver to the Borrower and the
Administrative Agent such certificates, documents or other evidence, as
required by the Code or Treasury Regulations issued pursuant thereto,
including Internal Revenue Service Form 1001 or Form 4224, properly
completed and duly executed by such Bank establishing that payments
received hereunder are (i) not subject to withholding under the Code
because such payment is effectively connected with the conduct by such
Bank of a trade or business in the United States or (ii) totally exempt
from United States Federal withholding tax under a provision of an
applicable tax treaty. In addition, each such Bank shall, if legally
able to do
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so, thereafter deliver such certificates, documents or other evidence
from time to time establishing that payments received hereunder are not
subject to such withholding upon receipt of a written request therefor
from the Borrower or the Administrative Agent. Unless the Borrower and
the Administrative Agent have received forms or other documents
satisfactory to them indicating that payments hereunder or under the
Notes are not subject to United States Federal withholding tax, the
Borrower or the Administrative Agent shall withhold such taxes from
such payments at the applicable statutory rate.
(c) The Borrower shall not be required to pay any additional
amounts to any Bank or the Administrative Agent in respect to United
States Federal withholding tax if the obligation to pay such additional
amounts would not have arisen but for a failure by such Bank or the
Administrative Agent to deliver the certificates, documents or other
evidence specified in the preceding paragraph (b) unless such failure
is attributable to (i) a change in applicable law, regulation or
official interpretation thereof or (ii) an amendment or modification to
or a revocation of any applicable tax treaty or a change in official
position regarding the application or interpretation thereof, in each
case on or after the date such Bank or the Administrative Agent becomes
a party to this Credit Agreement.
(d) Nothing contained in this Section shall require any Bank
or the Administrative Agent to make available any of its tax returns
(or any other information relating to its taxes) which it deems to be
confidential.
3.7 Special Provisions for LIBOR Rate Advances.
(a) Funding: Notwithstanding any provision of the Credit
Documents to the contrary, the Banks shall be entitled to fund and
maintain their funding of all or any part of any Advance in any manner
they see fit; provided, however, that for the purposes of the Notes,
all determinations thereunder shall be made as if the Banks had
actually funded and maintained each Advance bearing interest at the
LIBOR Based Rate during the LIBOR Interest Period therefor through the
purchase of deposits having a maturity corresponding to the last day of
the LIBOR Interest Period and bearing an interest rate equal to the
LIBOR Based Rate for such LIBOR Interest Period.
(b) Inadequacy of Eurodollar Pricing: If, due to any
Regulatory Change, there shall be any increase in the cost to a Bank of
agreeing to make or making, funding, or maintaining Advances bearing
interest at the LIBOR Based Rate (including, without limitation, any
increase in any applicable reserve requirement), then the Borrower
shall from time to time, upon demand by the Bank, pay to the Bank such
amounts as the Bank may reasonably determine to be necessary to
compensate the Bank for any additional costs that the Bank reasonably
determines are attributable to such Regulatory Change. The Bank will
notify the Borrower of
-35-
any Regulatory Change that will entitle the Bank to compensation
pursuant to this paragraph as promptly as practicable, but in any event
within ninety (90) days after the Bank obtains knowledge thereof;
provided, however, that if the Bank fails to give such notice within
ninety (90) days after it obtains knowledge of such a Regulatory
Change, the Bank shall, with respect to compensation payable in respect
of any costs resulting from such Regulatory Change, only be entitled to
payment for costs incurred from and after the date that the Bank does
give such notice. The Bank will furnish to the Borrower a certificate
setting forth in reasonable detail the basis for the amount of each
request by the Bank for compensation under this paragraph.
Determinations by the Bank of the amounts required to compensate the
Bank shall be conclusive, absent manifest error. The Bank shall be
entitled to compensation in connection with any Regulatory Change only
for costs actually incurred by the Bank.
(c) Illegality: Notwithstanding any provision of the Credit
Documents, if a Bank shall notify the Borrower that as a result of a
Regulatory Change it is unlawful for the Bank to make Advances at the
LIBOR Based Rate, or to fund or maintain Advances bearing interest at
the LIBOR Based Rate , (i) the obligations of the Bank to make Advances
at the LIBOR Based Rate and to convert Advances to the LIBOR Based Rate
shall be suspended until the Bank shall notify the Borrower that the
circumstances causing such suspension no longer exist, and (ii) in the
event such Regulatory Change makes the maintenance of Advances at the
LIBOR Based Rate unlawful, the Borrower shall forthwith prepay in full
all Advances bearing interest at the LIBOR Based Rate then outstanding,
together with interest accrued thereon and all amounts in connection
with such prepayment specified herein, unless the Borrower, within five
(5) Banking Days of notice from the Bank, converts all Advances bearing
interest at the LIBOR Based Rate then outstanding into Advances bearing
interest at the Variable Rate pursuant to the conversion procedures
herein and pays all amounts in connection with such prepayments or
conversions specified herein.
(d) Market Disruption: Notwithstanding any other provision of
the Credit Documents, if prior to the commencement of any LIBOR
Interest Period, the Banks shall determine (i) that United States
dollar deposits in the amount of any Advance bearing interest at the
LIBOR Based Rate to be outstanding during such LIBOR Interest Period
are not readily available to the Banks in the London interbank market,
or (ii) by reason of circumstances affecting the London interbank
market, adequate and reasonable means do not exist for ascertaining the
LIBOR Based Rate for such LIBOR Interest Period in the manner
prescribed in the definition of "LIBOR Based Rate," then the
Administrative Agent shall promptly give notice thereof to the Borrower
and the obligation of the Banks to create, continue, or effect by
conversion any Advance bearing interest at the LIBOR Based Rate in such
amount and for such LIBOR Interest Period shall terminate until United
States dollar deposits in such amount and for the LIBOR Interest Period
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shall again be readily available in the London interbank market and
adequate and reasonable means exist for ascertaining the LIBOR Based
Rate.
(e) Prepayment: Borrower may, upon at least two (2) Banking
Days' notice in the case of LIBOR Based Rate Advances and one (1)
Banking Day's notice in the case of Variable Rate Advances to the
Administrative Agent stating the proposed date and aggregate principal
amount of the prepayment, and if such notice is given Borrower shall,
prepay the outstanding principal balance of the Loan in whole or in
part at any time prior to the applicable Maturity Date as stated in
such notice by Borrower. With any prepayment of a LIBOR Based Rate
Advance or with any conversion of a LIBOR Based Rate Advance to a
Variable Rate Advance, in either case other than on the last Banking
Day of the LIBOR Interest Period for such LIBOR Based Rate Advance
(including any such prepayment made voluntarily or involuntarily as a
result of the acceleration of maturity upon a default or otherwise),
Borrower shall pay all accrued interest on the principal amount prepaid
with such prepayment and, on demand, shall reimburse the Banks and hold
the Banks harmless from all losses and expenses incurred by the Banks
as a result of such prepayment, including, without limitation, any
losses and expenses arising from the liquidation or reemployment of
deposits acquired to fund or maintain the principal amount prepaid.
Such reimbursement shall be calculated as though the Banks funded the
principal amount prepaid through the purchase of U.S. Dollar deposits
in the London, England interbank market having a maturity corresponding
to such LIBOR Interest Period and bearing an interest rate equal to the
LIBOR Based Rate for such LIBOR Interest Period, whether in fact that
is the case or not. The Banks' determination of the amount of such
reimbursement shall be conclusive in the absence of manifest error.
3.8 Prepayments.
(a) Borrower shall have the option to prepay the Loans, in
full or in part, at any time, subject to payment of all amounts
specified hereinbelow with respect to any LIBOR Rate Advance.
(b) If for any reason (including voluntary prepayment,
voluntary conversion of a LIBOR Rate Advance into a Variable Rate
Advance, or acceleration, but excluding any mandatory prepayment or
mandatory conversion such as pursuant to Section 3.7(b)), the Banks
receive all or part of the principal amount of a LIBOR Rate Advance
prior to the last day of the LIBOR Interest Period for such Advance,
the Borrower shall immediately notify the Borrower's account officer at
the Administrative Agent and, on demand by the Banks, pay the "LIBOR
Breakage Fees," defined as the amount (if any) by which (i) the
additional interest which would have been payable on the amount so
received had it not been received until the last day of such LIBOR
Interest Period exceeds (ii) the interest
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which would have been recoverable by the Banks (without regard to
whether the Banks actually so invest said funds) by placing the amount
so received on deposit in the certificate of deposit markets or the
offshore currency interbank markets or United States Treasury
investment products, as the case may be for a period starting on the
date on which it was so received and ending on the last day of such
LIBOR Interest Period at the interest rate determined by the Banks in
their reasonable discretion. The Banks' determination as to such amount
shall be conclusive and final, absent manifest error.
(c) The Borrower shall pay to the Banks, upon the demand of
the Required Banks, such other amount or amounts as shall be sufficient
to compensate them for any loss, costs or expense ("LIBOR Prepayment
Charges") incurred by them as a result of any prepayment by the
Borrower (including voluntary prepayment, voluntary conversion of a
LIBOR Rate Advance into a Variable Rate Advance, or prepayment due to
acceleration, but excluding any mandatory prepayment or mandatory
conversion such as pursuant to Section 3.7(b)) of all or part of the
principal amount of a LIBOR Rate Advance prior to the last day of the
LIBOR Interest Period for such Advance (including without limitation,
any failure by the Borrower to borrow a LIBOR Rate Advance on the loan
date for such borrowing specified in the relevant notice of borrowing
hereunder). Such LIBOR Prepayment Charges shall include, without
limitation, any interest or fees payable by the Banks to lenders of
funds obtained by them in order to make or maintain their loans based
on the London interbank eurodollar market. The Banks' determination as
to such LIBOR Prepayment Charges shall be conclusive and final, absent
manifest error.
(d) The Banks agree that they shall make a best effort to
minimize any such LIBOR Breakage Fees or any such LIBOR Prepayment
Charges.
3.9 Non U.S. Subsidiaries - Currency Indemnity. Borrower shall pay to
the Banks, upon the demand of the Required Banks, such other amount or amounts
as shall be sufficient to compensate them for any loss, cost or expense
("Currency Loss") incurred by them as a result of any repayment being made in a
currency other than Dollars. The Banks' determination as to such Currency Loss
shall be conclusive and final, absent manifest error.
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ARTICLE 4
SECURITY DOCUMENTS
------------------
4.1 Security.
(a) So long as any Loan is outstanding, Borrower shall cause
such Loan and Borrower's obligations under this Credit Agreement to be
secured at all times by a valid and effective security agreement (the
"Security Agreement"), duly executed and delivered by or on behalf of
the Company, granting the Agent on behalf of the Banks and the Issuing
Bank a valid and enforceable security interest in all of its assets
other than its real property, subject to no prior Lien other than
Permitted Liens.
(b) On and after the date hereof, Company will not create or
suffer to exist any Lien upon its property, real or personal, including
without limitation its patents, copyrights and trademarks, except as
permitted under Section 8.2.
4.2 Security Documents. All of the documents required by this Article 4
shall be in form satisfactory to the Banks, the Issuing Bank and their counsel,
and, together with any Financing Statements for filing and/or recording, and any
other items required by the Banks and the Issuing Bank to fully perfect and
effectuate the liens and security interests of the Banks and the Issuing Bank
contemplated by the Security Agreement and this Credit Agreement, may heretofore
or hereinafter be referred to as the "Security Documents."
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ARTICLE 5
CONDITIONS PRECEDENT
--------------------
The obligations of the Banks to make the Loans and to make the initial
Advance hereunder or the Issuing Bank's obligation to issue the initial Letter
of Credit is subject to the full prior satisfaction of each of the following
conditions precedent and, as to each future Advance, to the full prior
satisfaction at each such time of each of the conditions precedent in Sections
5.2, 5.3 and 5.4 hereof:
5.1 Initial Advance. Prior to its making the initial Advance, the
Administrative Agent shall have received the following, each in form and
substance satisfactory to the Required Banks:
(a) This Credit Agreement. This Credit Agreement, duly
executed by Borrower.
(b) The Notes. The Notes, each duly executed, as provided in
Articles 2 and 2A hereof.
(c) Officer's Certificate. A certificate signed by an
Authorized Officer of the Company and an Authorized Agent's Certificate
as to each Subsidiary, stating that (to the best knowledge and belief
thereof, after reasonable inquiry and review of matters pertinent to
the subject matter of such certificate): (i) all of the representations
and warranties contained in Article 6 of this Credit Agreement and in
the other Credit Documents are, in all material respects, true and
correct as of the date hereof (other than those of such representations
which by their express terms speak to a date prior to such date, which
representations are, in all material respects, true and correct as of
such respective dates); (ii) no event has occurred and is continuing,
or would result from the advance of the proceeds of the Loans, which
would constitute an Event of Default, and (iii) no change or changes
having a Material Adverse Effect have occurred in the business or
financial condition of Borrower since the date of the last financial
statements of Borrower heretofore delivered to the Banks.
(d) Organizational Documents. A copy of the current
organizational documents of Borrower, including all amendments thereto,
except for non U.S. Subsidiaries certified as current and complete by
the appropriate authority of the state of said corporation's
incorporation, together with evidence of said corporation's good
standing in said corporation's state of incorporation and in every
other state in which it is doing business or the conduct of said
corporation's business requires such standing for the enforcement of
material contracts.
(e) Certificate. A certificate of the corporate secretary of
Company, signed by the duly appointed secretary thereof and issued as
of the Closing Date,
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certifying that (i) attached thereto is a true and complete copy of the
corporate by-laws of said corporation in effect on the date of passage
of the corporate resolutions described immediately below and at all
subsequent times to and including the date of the certificate, (ii) no
change has been made to said corporation's charter documents other than
as reflected in the certified copies submitted in connection with the
delivery of this Credit Agreement or as approved in writing by the
Administrative Agent, and (iii) attached thereto are proper
resolutions, authorizations and certificates relating to the authority
of any person executing documents on behalf of such entity. As to each
Subsidiary, a unanimous Written Consent in Lieu of Special Meeting of
the Sole Shareholder together with an Authorized Agent's Certificate as
to the organizational documents of the Subsidiary, certifying that no
change has been made to said documents.
(f) Security Agreement. A Security Agreement executed by the
Company.
(g) Financing Statements. UCC-1 Financing Statements executed
by the Company for each state in which the Company has a business
location.
(h) Costs. Payment of costs of the Administrative Agent and
the Banks.
(i) Opinion of Counsel. An opinion of counsel to the Company
as to those matters reasonably required by the Banks.
(j) Compliance Certificate. A Compliance Certificate in the
form of Exhibit "A" attached hereto executed by the Company, indicating
that Borrower is in compliance with all Financial Covenants as of
September 30, 1998.
(k) Additional Information. Such other information and
documents as may reasonably be required by the Banks or their counsel.
5.2 No Event of Default. No Event of Default known to Borrower shall
have occurred and be continuing, or result from the making of the Loans.
5.3 No Material Adverse Effect. Since the date of the most recent
financial statements provided to the Banks by Borrower, no change shall have
occurred in the business or financial condition of Borrower that could have a
Material Adverse Effect.
5.4 Representations and Warranties. The representations and warranties
contained in Article 6 hereof shall be true and correct in all material
respects, with the same force and effect as though made on and as of the Closing
Date (other than those of such representations which by their express terms
speak to a date prior to that date, which representations shall, in all material
respects, be true and correct as of such respective date).
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ARTICLE 6
REPRESENTATIONS AND WARRANTIES
------------------------------
To induce the Banks to make the Loans, the Company and, to the extent
applicable, each Co-Borrower represents and warrants to the Banks that:
6.1 Recitals. The recitals and statements of intent appearing in this
Credit Agreement are true and correct.
6.2 Organization and Good Standing. It is duly organized under the laws
of the jurisdiction of its organization, is validly existing and is in good
standing, to the extent required by law, in each jurisdiction in which it is
doing business. It has the legal power and authority to own its properties and
assets and to transact the business in which it is engaged and is or will be
qualified in those jurisdictions wherein the nature of its proposed business and
property will make such qualifications necessary or appropriate in the future.
6.3 Authorization and Power. It has the corporate power and requisite
authority to execute, deliver and perform this Credit Agreement, the Notes and
the other Credit Documents to be executed by it; it is duly authorized to, and
has taken all action, corporate or otherwise, necessary to authorize it to,
execute, deliver and perform this Credit Agreement, the Notes and such other
Credit Documents and is and will continue to be duly authorized to perform this
Credit Agreement, the Notes and such other Credit Documents.
6.4 Enforceable Obligations. This Credit Agreement, the Notes and the
other Credit Documents are the legal, valid and binding obligations of Borrower,
enforceable against Borrower in accordance with their respective terms, except
as limited by bankruptcy, insolvency or other laws or equitable principles of
general application relating to the enforcement of creditors' rights.
6.5 No Conflicts or Consents. Neither the execution and delivery of
this Credit Agreement, the Notes or the other Credit Documents to which it is a
party, nor the consummation of any of the transactions herein or therein
contemplated, nor compliance with the terms and provisions hereof or with the
terms and provisions thereof, (a) will contravene or conflict with: (i) any
provision of law, statute or regulation to which it is subject, (ii) any
judgment, license, order or permit applicable to it, (iii) any indenture, loan
agreement, mortgage, deed of trust, or other agreement or instrument to which it
is a party or by which it may be bound, or to which it may be subject, or (b)
will violate any provision of its organizational documents. No consent,
approval, authorization or order of any court or Governmental Authority or other
Person is required in connection with the execution and delivery by it of the
Credit Documents or to consummate the transactions contemplated hereby or
thereby, or if required, such consent, approval, authorization or order shall
have been obtained.
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6.6 No Litigation. There are no actions, suits or legal, equitable,
arbitration or administrative proceedings pending, or to its actual knowledge
overtly threatened, against Borrower that would, if adversely determined, have a
Material Adverse Effect.
6.7 Financial Condition. It has delivered to the Banks copies of the
its audited consolidated financial statements as most recently filed with the
SEC. Such financial statements, in all material respects, fairly present the
financial position of Borrower as of such date and have been prepared in
accordance with GAAP. Since the date thereof, it has not discovered any
obligations, liabilities or indebtedness (including contingent and indirect
liabilities and obligations or unusual forward or long-term commitments) which
in the aggregate are material and adverse to the financial position or business
of Borrower that should have been but were not reflected in such financial
statements. No changes having a Material Adverse Effect have occurred in the
financial condition or business of Borrower since its most recent filings with
the SEC.
6.8 Taxes. It has filed or caused to be filed all returns and reports
which are required to be filed by any jurisdiction, and has paid or made
provision for the payment of all taxes, assessments, fees or other governmental
charges imposed upon its properties, income or franchises, as to which the
failure to file or pay would have a Material Adverse Effect, except such
assessments or taxes, if any, which are being contested in good faith by
appropriate proceedings.
6.9 No Stock Purchase. No part of the proceeds of any financial
accommodation made by the Banks in connection with this Credit Agreement will be
used to purchase or carry "margin stock," as that term is defined in Regulation
U, or to extend credit to others for the purpose of purchasing or carrying such
margin stock.
6.10 Advances. Each request for an Advance or for the extension of any
financial accommodation by the Banks whatsoever shall constitute an affirmation
that the representations and warranties of Section 6.7 are true and correct with
respect to any financial statements submitted by Borrower to the Banks between
the date of this Credit Agreement and the date of such request, and that the
representations and warranties of Sections 6.1, 6.4, 6.5, 6.6, 6.7 and 6.8
hereof are true and correct as of the time of such request. All representations
and warranties made herein shall survive the execution of this Credit Agreement,
all advances of proceeds of the Loans and the execution and delivery of all
other documents and instruments in connection with the Loans and/or this Credit
Agreement, so long as any Bank has any commitment to lend hereunder and until
the Loans have been paid in full and all of Borrower's obligations under this
Credit Agreement and the Notes been fully discharged.
6.11 Solvent. It (both before and after giving effect to the Loans
contemplated hereby) is solvent, has assets having a fair value in excess of the
amount required to pay its probable liabilities on its existing debts as they
become absolute and matured, and has, and is expected to have, access to
adequate capital for the conduct of its business and the ability to pay its
debts from time to time incurred in connection therewith as such debts mature.
-43-
6.12 ERISA. (a) No Reportable Event has occurred and is continuing with
respect to any Plan; (b) PBGC has not instituted proceedings to terminate any
Plan; (c) neither the Borrower, any member of the Controlled Group, nor any
duly-appointed administrator of a Plan (i) has incurred any liability to PBGC
with respect to any Plan other than for premiums not yet due or payable or (ii)
has instituted or intends to institute proceedings to terminate any Plan under
Section 4041 or 4041A of ERISA; and (d) each Plan of Borrower has been
maintained and funded in all material respects in accordance with its terms and
in all material respects in accordance with all provisions of ERISA applicable
thereto. Neither the Borrower nor any of its Subsidiaries participates in, or is
required to make contributions to, any Multi-employer Plan (as that term is
defined in Section 3(37) of ERISA).
6.13 Full Disclosure. No certificate or statement delivered herewith or
heretofore by it to the Banks in connection with negotiations of this Credit
Agreement, contains any untrue statement of a material fact or omits to state
any material fact necessary to keep the statements contained herein or therein
from being misleading.
6.14 No Default. No event or condition has occurred and is continuing
that constitutes an Event of Default.
6.15 Significant Debt Agreements. It is not in default in any material
respect under any Significant Debt Agreement.
6.16 Compliance with Law. It is in substantial compliance with all
laws, rules, regulations, orders and decrees that are applicable to it, or its
properties, noncompliance with which would have a Material Adverse Effect.
6.17 Subsidiaries. Except for Subsidiaries listed on Schedule 6.17,
Company has no existing Subsidiary that conducts any business or operations.
6.18 Year 2000 Compliance. Company and its Subsidiaries have reviewed
the areas within their operations and business which could be adversely affected
by, and have developed or are developing a program to address on a timely basis,
the Year 2000 Problem and have made related appropriate inquiry of material
suppliers and vendors, and based on such review and program, the Year 2000
Problem will not have a Material Adverse Effect upon its financial condition,
operations or business as now conducted. "Year 2000 Problem" means the
possibility that any computer applications or equipment used by Borrower may be
unable to recognize and properly perform date-sensitive functions involving
certain dates prior to and any dates on or after December 31, 1999.
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ARTICLE 7
AFFIRMATIVE COVENANTS
---------------------
Until payment in full of the Notes and the complete performance of the
Obligation, and so long as any Bank has any Commitment outstanding to any
Borrower, the Company and, to the extent applicable, each Co-Borrower agrees
that:
7.1 Financial Statements, Reports and Documents. Borrower shall
deliver, or cause to be delivered, to the Banks each of the following:
(a) Consolidated Quarterly Statements of the Company. As soon
as available, and in any event within forty-five (45) days after the
end of the first three (3) fiscal quarterly periods of each fiscal year
of the Company, copies of the consolidated balance sheet of the Company
as of the end of such fiscal quarter, and consolidated statements of
income of the Company for that fiscal quarter and for the portion of
the fiscal year ending with such fiscal quarter, in each case setting
forth in comparative form the figures for the corresponding period of
the preceding fiscal year, all in reasonable detail and fairly stated
and prepared in accordance with GAAP.
(b) Consolidated Annual Statements of the Company. As soon as
available and in any event within ninety (90) days after the close of
each fiscal year of the Company, audited consolidated financial
statements of the Company, including its consolidated balance sheet as
of the close of such fiscal year and consolidated statements of income
of the Company for such fiscal year, in each case setting forth in
comparative form the figures for the preceding fiscal year, all in
reasonable detail and accompanied by an unqualified opinion thereon of
independent public accountants of recognized national standing selected
by the Company and acceptable to the Banks, to the effect that such
financial statements have been prepared in accordance with GAAP (except
for changes in which such accountants concur) and that the examination
of such accounts in connection with such financial statements has been
made in accordance with generally accepted auditing standards and,
accordingly, includes such tests of the accounting records and such
other auditing procedures as were considered necessary in the
circumstances.
(c) Compliance Certificate of the Company. Within forty-five
(45) days after the end of each fiscal quarter of the Company, a
certificate (the "Compliance Certificate") substantially in the form of
Exhibit "A" attached hereto signed by an Authorized Officer, (i)
stating that a review of the activities of the Company during such
quarter or year has been made under his/her supervision, that, as of
such date, the Company has observed, performed and fulfilled each and
every obligation and covenant contained herein and no Event of Default
exists under any of the
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same or, if any Event of Default shall have occurred, specifying the
nature and status thereof, and stating that all financial statements
delivered to the Banks during the respective period pursuant to Section
7.1(a) and 7.1(b) hereof, to such officer's knowledge after due
inquiry, fairly present in all material respects the financial position
of the Company and the results of its operations at the dates and for
the periods indicated, and have been prepared in accordance with GAAP,
subject to year end audit and adjustments, and (ii) setting forth in
such level of detail as the Banks shall reasonably require a
calculation of the Financial Covenants as of the end of that fiscal
quarter.
(d) Management Letters. With the audited fiscal year-end
statements submitted under Section 7.1(b) above, the management letter,
if any, of the Company's certified public accountants issued in
connection with such audit.
(e) SEC Filings. When filed, copies of each filing with the
SEC made by the Company, including without limitation its annual 10-K
and quarterly 10-Q reports.
(f) Projections. No later than thirty-one (31) days before the
end of each fiscal year, financial statements of the Company for the
following fiscal year and each fiscal quarter thereof, based on its
current financial projections for such fiscal year.
(g) Other Information. Such other information concerning the
business, properties or financial condition of Borrower as the Banks
shall reasonably request.
7.2 Maintenance of Existence. Borrower shall maintain its existence
with no material amendments or changes in its organizational documents without
the prior written approval of the Required Banks.
7.3 Maintain Business. Borrower shall maintain in full force and effect
all agreements, rights, trademarks, patents and licenses necessary to carry out
its business in its reasonable business judgment, shall keep all of its assets
and properties in good condition and repair, ordinary wear and tear excepted,
and shall make all needed and proper repairs and improvements to its properties
in order to properly conduct its business in its reasonable business judgment.
7.4 Insurance. To the extent Borrower is not self-insured, Borrower
shall maintain in full force and effect at all times policies of fire, flood and
extended coverage insurance and policies of public liability property damage,
xxxxxxx'x compensation insurance in scope and amount not less than, and not less
extensive than, the scope and amount of insurance coverages customary for
companies of comparable size and financial strength in the trades or businesses
in which Borrower is from time to time engaged. Upon request by the Banks,
Borrower shall deliver to the Banks certificates of, and copies of the originals
of, all such policies of insurance in effect
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from time to time, to be retained by the Banks so long as the Banks shall have
any commitment to lend to Borrower and/or any portion of the Loans shall be
outstanding or unsatisfied.
7.5 Compliance with Credit Documents. Borrower will comply with any and
all covenants and provisions of this Credit Agreement, the Notes and all other
Credit Documents.
7.6 Books and Records; Access. Borrower shall maintain, in a safe
place, proper and accurate books, ledgers, correspondence and other records
relating to its operations and business affairs. The Banks shall have the right
from time to time, upon reasonable notice to Borrower, to examine and audit
(within a reasonable scope of audit) at Borrower's expense (such expense not to
exceed $5,000.00 per annum) and to make abstracts from and photocopies of
Borrower's books, ledgers, correspondence and other records.
7.7 Payment of Taxes and Other Indebtedness. Borrower shall pay all of
its current obligations before they become delinquent under applicable
agreements or normal trade practices, including all accounts payable and all
federal, state and local taxes, assessments, levies and governmental charges and
all other payments required under any federal state or local law. Borrower may,
however, contest in good faith the validity or amount of any such taxes,
assessments, levies or other such governmental charges provided that the Banks
may require Borrower to provide security with respect thereto in the form of a
bond, insurance, security deposit, cash reserve or other evidence satisfactory
to the Banks of Borrower's ability to pay and discharge such matter in the event
such contest is unsuccessful where the failure to provide such security would
result in the occurrence of a Material Adverse Event.
7.8 Notice of Default. Borrower will furnish to the Banks immediately
upon becoming actually aware of the existence of any event or condition that
constitutes an Event of Default, a written notice specifying the nature and
period of existence thereof and the action which it is taking or proposes to
take with respect thereto.
7.9 Other Notices. Borrower will promptly notify the Banks of (a) any
Material Adverse Effect, (b) any waiver, release or default under any
Significant Debt Agreement, (c) except as to any claim not covered as a result
of an insurance deductible provision, any claim not covered by insurance against
Borrower or any of Borrower's properties, and (d) the commencement of, and any
material determination in, any litigation with any third party or any proceeding
before any Governmental Authority affecting it, except litigation or proceedings
which, if adversely determined, would not have a Material Adverse Effect.
7.10 ERISA Compliance. With respect to its Plans, Borrower shall (a) at
all times comply with the minimum funding standards set forth in Section 302 of
ERISA and Section 412 of the Code or shall have duly obtained a formal waiver of
such compliance from the proper authority; (b) at the Banks' request, within
thirty (30) days after the filing thereof, furnish to the Banks copies of each
annual report/return (Form 5500 Series), as well as all schedules and
attachments required to be filed with the Department of Labor and/or the
Internal Revenue Service pursuant to ERISA, in connection with each of its Plans
for each year of the plan; (c) notify the
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Banks within a reasonable time of any fact, including, but not limited to, any
Reportable Event arising in connection with any of its Plans, which constitutes
grounds for termination thereof by the PBGC or for the appointment by the
appropriate United States District Court of a trustee to administer such Plan,
together with a statement, if requested by the Banks, as to the reason therefor
and the action, if any, proposed to be taken with respect thereto; and (d)
furnish to the Banks within a reasonable time, upon the Banks' request, such
additional information concerning any of its Plans as may be reasonably
requested.
7.11 Further Assurances. Borrower will make, execute or endorse, and
acknowledge and deliver or file or cause the same to be done, all such notices,
certifications and additional agreements, undertakings or other assurances, and
take any and all such other action, as the Banks may, from time to time, deem
reasonably necessary or proper to fully evidence the Loan.
7.12 Compliance with Significant Debt Agreements. Borrower will comply
in all material respects with all Significant Debt Agreements.
7.13 Compliance with Law. Borrower will comply with all applicable
laws, rules, regulations, and all final, nonappealable orders of any
Governmental Authority applicable to it or any of its property, business
operations or transactions, a breach of which could result in a Material Adverse
Effect.
7.14 Authorizations and Approvals. Borrower will promptly obtain, from
time to time at its own expense, all such governmental licenses, authorizations,
consents, permits and approvals as may be required to enable it to comply with
its obligations hereunder and under the other Credit Documents and to operate
its businesses as presently or hereafter duly conducted.
7.15 News Releases. Borrower shall forward to the Banks copies of all
news releases made by it to the news media as to anything of material
significance with respect to its financial status or its business operations or,
in each case, that of its Subsidiaries.
7.16 New Subsidiaries. Company shall promptly and diligently take all
actions necessary to cause any existing Subsidiary which is not a Co-Borrower
and that subsequently undertakes to conduct any business or operations and
qualifies as a Controlled Subsidiary, and any new Controlled Subsidiary (each a
"New Subsidiary") to become a Co-Borrower. Within thirty (30) days of being
acquired, or in the case of an existing Subsidiary within thirty (30) days of
the later of undertaking to conduct any business or operations or qualifying as
a Controlled Subsidiary, such New Subsidiary shall deliver to the Banks an
executed Assumption Agreement in the form attached hereto as Exhibit "D", and
such other documents as the Banks may reasonably request. The term "Co-Borrower"
shall mean that such Subsidiary shall be jointly liable, and each severally and
unconditionally liable, for the full payment and satisfaction of the Loans and
all other obligations of Borrower under this Credit Agreement.
7.17 Change in Control. Should there be a Change in Control, the Loans
shall be immediately due and payable.
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7.18 Year 2000 Compliance. Borrower shall perform all acts reasonably
necessary to ensure that (a) Borrower and any business in which Borrower holds a
substantial interest, and (b) all customers, suppliers and vendors whose
compliance is likely to be material to Borrower's business, become Year 2000
Compliant in a timely manner. Such acts shall include, without limitation,
performing a comprehensive review and assessment of all Borrower's systems and
adopting a detailed plan, with itemized budget, for the remediation, monitoring
and testing of such systems. As used in this paragraph, "Year 2000 Compliant"
shall mean, in regard to any entity, that all software, hardware, firmware,
equipment, goods or systems utilized by or material to the business operations
or financial condition of such entity, will properly perform date sensitive
functions before, during and after the year 2000. Borrower shall, immediately
upon request, provide to the Banks such certifications or other evidence of
Borrower's compliance with the terms of this paragraph as the Banks may from
time to time require.
7.19 Treasury Stock. Upon its sale of any of its treasury stock,
Borrower shall apply the net proceeds from such sale to the repayment of the
RLCT.
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ARTICLE 8
NEGATIVE COVENANTS
------------------
Until payment in full of the Notes and the performance of the
Obligation, and so long as any Bank has any Commitment outstanding to any
Borrower, the Company and, to the extent applicable, each Co-Borrower agrees
that:
8.1 No Debt. The Company shall not become or remain obligated either
directly or as a guarantor or surety for any Indebtedness for borrowed money, or
for any Indebtedness incurred in connection with the acquisition of any
property, real or personal, tangible or intangible including, but not limited
to, lease purchase agreements, except:
(a) Indebtedness to the Banks hereunder.
(b) Unsecured trade, utility or accounts payable arising in
the ordinary course of its business.
(c) Lease purchase agreements and purchase money security
interests not exceeding the sum of $3,000,000.00 in payments during any
fiscal year.
(d) Borrower's line of credit up to $350,000 with Barclays
Bank PLC (U.K.) secured by U.K. receivables and inventory.
(e) Indebtedness secured by liens permitted under Section 8.2
hereof.
8.2 Liens. On and after the date hereof, the Company will not create or
suffer to exist Liens upon its property, real or personal, including without
limitation its patents, copyrights and trademarks, except (i) Liens, if any, for
the benefit of the Banks, and (ii) Permitted Liens, including without limitation
those listed on Schedule 8.2 attached hereto.
8.3 Loans. It will not make any loan, advance, or direct extension of
credit in excess of $1,000,000.00, or, except as permitted under Section 8.10,
any investment (consisting of equity or debt convertible into equity) in excess
of $3,000,000.00, in aggregate on an annual basis to any person(s) or entities
other than in the ordinary course of business.
8.4 Dividends. It will not declare or pay any cash dividend.
8.5 Existence; Sale or Transfer of Assets. It will not (i) dissolve or
liquidate, or merge or consolidate with or into any corporation or entity, or
(ii) turn over the management or operation of its property, assets or businesses
to any other person, firm or corporation, or (iii) sell, lease, transfer or
dispose of more than $500,000.00 of its assets in any calendar year. The Company
will not transfer more than $100,000.00 in aggregate value per calendar year of
its assets that consist of accounts receivable or existing fixed assets located
in the U.S. to locations
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outside the U.S. Notwithstanding anything herein to the contrary, the Company
may transfer to locations outside the U.S. equipment purchased by the Company in
the U.S. with the sole intent to transfer it to its non-U.S. Subsidiaries.
8.6 Fiscal Year. It will not change the times of commencement or
termination of its fiscal year or other accounting periods; or change its
methods of accounting other than to conform to GAAP applied on a consistent
basis. After any such changes, its method of accounting shall conform to GAAP.
8.7 Margin Stock. Borrower shall not use any proceeds of the Loans, or
any proceeds of any other or future financial accommodation from the Banks for
the purpose, whether immediate, incidental or ultimate, of purchasing or
carrying any "margin stock" as that term is defined in Regulation U or to reduce
or retire any indebtedness undertaken for such purposes within the meaning of
said Regulation U, and will not use such proceeds in a manner that would involve
Borrower in a violation of Regulation U or of any other Regulation of the Board
of Governors of its Federal Reserve System, nor use such proceeds for any
purpose not permitted by Section 7 of the Exchange Act, as amended, or any of
the rules or regulations respecting the extensions of credit promulgated
thereunder.
8.8 Amendments to Organizational Documents. Borrower will not amend its
organizational documents if the result thereof could result in the occurrence
directly or indirectly of a Material Adverse Effect.
8.9 Treasury Stock. It will not make purchases of its common stock that
exceed in the aggregate $10,000,000.00 after August 1, 1998.
8.10 Investment in China. It will not make investments in land or other
real property, directly or indirectly through a Subsidiary, in the People's
Republic of China that exceed at any time in the aggregate $12,000,000.00.
8.11 Financial Covenants. It will not permit on a consolidated basis:
(a) Its Tangible Net Worth to be less than the Tangible Net
Worth Minimum at the end of any fiscal quarter.
(b) Its EBITDA Ratio to be more than 3.25 to 1.0 at the end of
any fiscal quarter.
(c) Its Debt Coverage Ratio to be less than 1.75 to 1.0 at the
end of any fiscal quarter.
(d) Its Current Ratio to be less than 1.50 to 1.0 at the end
of any fiscal quarter.
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(e) Its Net Income for any two consecutive fiscal quarters or
for any fiscal year to be less than zero (i.e. net loss).
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ARTICLE 9
EVENTS OF DEFAULT
-----------------
9.1 Events of Default. An "Event of Default" shall exist if any one or
more of the following events (herein collectively called "Events of Default")
shall occur and be continuing:
(a) Failure to pay any installment of principal or interest
under the Loans within five (5) Banking Days of when the same become
due and payable, or the failure to pay any other sum due under the
Loans or this Credit Agreement when the same shall become due and
payable and such failure continues for five (5) Banking Days after
notice thereof to Borrower;
(b) Any failure or neglect to perform or observe any of the
material terms, provisions, or covenants of this Credit Agreement
(other than a failure or neglect described in one or more of the other
provisions of this Section 9.1) and such failure or neglect either (i)
cannot be remedied, (ii) can be remedied within fifteen (15) days by
prompt and diligent action, but it continues unremedied for a period of
fifteen (15) days after notice thereof to Borrower, or (iii) can be
remedied, although not within fifteen (15) days even by prompt and
diligent action, but such remedy is not commenced within fifteen (15)
days after notice thereof to Borrower or is not diligently prosecuted
to completion within a total of forty-five (45) days from the date of
such notice;
(c) Any warranty, representation or statement contained in
this Agreement, or made or furnished to the Banks by or on behalf of
the Borrower, that shall be or shall prove to have been false in any
material respect when made or furnished;
(d) The occurrence of any "event of default" or "default" by
Borrower under any Credit Document or any agreement, now or hereafter
existing to which any Bank and Borrower are a party, after the
expiration of any notice and cure period;
(e) Borrower shall (i) fail to pay any Indebtedness of
Borrower (other than the Notes) due under any Significant Debt
Agreement, or any interest or premium thereon, when due (whether by
scheduled maturity, required prepayment, acceleration, demand, or
otherwise) or within any applicable grace period, (ii) fail to perform
or observe any term, covenant, or condition on its part to be performed
or observed under any agreement or instrument relating to such
Indebtedness, within any applicable grace period when required to be
performed or observed, if the effect of such failure to perform or
observe is to accelerate the maturity of such Indebtedness, or any such
Indebtedness shall be declared to be due and payable, or required to be
prepaid (other than by a regularly scheduled prepayment), prior
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to the stated maturity thereof, or (iii) allow the occurrence of any
material event of default with respect to such Indebtedness;
(f) Any one or more of the Credit Documents shall have been
determined to be invalid or unenforceable against Borrower executing
the same in accordance with the respective terms thereof, or shall in
any way be terminated or become or be declared ineffective or
inoperative, so as to deny the Banks the substantial benefits
contemplated by such Credit Document or Credit Documents;
(g) Borrower shall (i) apply for or consent to the appointment
of a receiver, trustee, custodian, intervenor or liquidator of itself
or of all or a substantial part of its assets, (ii) file a voluntary
petition in bankruptcy or admit in writing that it is unable to pay its
debts as they become due, (iii) make a general assignment for the
benefit of creditors, (iv) file a petition or answer seeking
reorganization of an arrangement with creditors or to take advantage of
any bankruptcy or insolvency laws, (v) file an answer admitting the
material allegations of, or consent to, or default in answering, a
petition filed against it in any bankruptcy, reorganization or
insolvency proceeding, or (vi) take corporate action for the purpose of
effecting any of the foregoing;
(h) An involuntary petition or complaint shall be filed
against Borrower, seeking bankruptcy or reorganization of Borrower, or
the appointment of a receiver, custodian, trustee, intervenor or
liquidator of Borrower, or all or substantially all of its assets, and
such petition or complaint shall not have been dismissed within sixty
(60) days of the filing thereof; or an order, order for relief,
judgment or decree shall be entered by any court of competent
jurisdiction or other competent authority approving a petition or
complaint seeking reorganization of Borrower, appointing a receiver,
custodian, trustee, intervenor or liquidator of Borrower, or all or
substantially all of its assets, and such order, judgment or decree
shall continue unstayed and in effect for a period of sixty (60) days;
(i) Any final judgment(s) (excluding those the enforcement of
which is suspended pending appeal) for the payment of money in excess
of the sum of $250,000.00 in the aggregate (other than any judgment
covered by insurance where coverage has been acknowledged by the
insurer) shall be rendered against Borrower, and such judgment or
judgments shall not be satisfied, settled, bonded or discharged at
least ten (10) days prior to the date on which any of its assets could
be lawfully sold to satisfy such judgment;
(j) Either (i) proceedings shall have been instituted to
terminate, or a notice of termination shall have been filed with
respect to, any Plans (other than a Multi-Employer Pension Plan as that
term is defined in Section 4001(a)(3) of ERISA) by Borrower, any member
of the Controlled Group, PBGC or any representative of any thereof, or
any such Plan shall be terminated, in each case
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under Section 4041 or 4042 of ERISA, and such termination shall give
rise to a liability of the Borrower or the Controlled Group to the PBGC
or the Plan under ERISA having an effect in excess of $500,000.00 or
(ii) a Reportable Event, the occurrence of which would cause the
imposition of a lien in excess of $500,000.00 under Section 4062 of
ERISA, shall have occurred with respect to any Plan (other than a
Multi-Employer Pension Plan as that term is defined in Section
4001(a)(3) of ERISA) and be continuing for a period of sixty (60) days;
(k) Any of the following events shall occur with respect to
any Multi- Employer Pension Plan (as that term is defined in Section
4001(a)(3) of ERISA) to which Borrower contributes or contributed on
behalf of its employees and the Required Banks determine in good faith
that the aggregate liability likely to be incurred by Borrower, as a
result of any of the events specified in Subsections (i), (ii) and
(iii) below, will have an effect in excess of $500,000.00; (i) Borrower
incurs a withdrawal liability under Section 4201 of ERISA; (ii) any
such plan is "in reorganization" as that term is defined in Section
4241 of ERISA; or (iii) any such Plan is terminated under Section 4041A
of ERISA;
(l) The occurrence of a Change in Control without the written
consent of the Banks;
(m) The dissolution, liquidation, sale, transfer, lease or
other disposal of all or substantially all of the assets or business of
Borrower;
(n) Any attachment, garnishment, levy or execution upon, or
judicial seizure of, any property of Borrower that has a fair market
value in excess of $500,000.00, that is not bonded or released within
thirty (30) days;
(o) The institution of any legal action or proceedings to
enforce a lien or security interest in any property of Borrower that
has a fair market value in excess of $500,000.00;
(p) The failure of Borrower to comply with any Financial
Covenant at the end of any fiscal quarter; or
(q) The occurrence of a Material Adverse Event if the Banks in
good faith shall believe that the prospect of payment or performance of
the Loans is impaired.
9.2 Remedies Upon Event of Default. If an Event of Default shall have
occurred and be continuing, then the Administrative Agent, at the request of the
Required Banks may, at their sole option, exercise any one or more of the
following rights and remedies, and any other remedies provided in any of the
Credit Documents, as the Required Banks in their sole discretion
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may deem necessary or appropriate, all of which remedies shall be deemed
cumulative, and not alternative:
(i) Cease making Advances or extensions of financial
accommodations in any form to or for the benefit of Borrower
and declare the principal of, and all interest then accrued
on, the Notes and any other liabilities hereunder to be
forthwith due and payable, whereupon the same shall become
immediately due and payable without presentment, demand,
protest, notice of default, notice of acceleration or of
intention to accelerate or other notice of any kind all of
which Borrower hereby expressly waives, anything contained
herein or in the Notes to the contrary notwithstanding;
(ii) Reduce any claim to judgment;
(iii) Without notice of default or demand, pursue and
enforce any of the Banks' and the Administrative Agent's
rights and remedies under the Credit Documents, or otherwise
provided under or pursuant to any applicable law or agreement;
(iv) Require the Borrower to deposit with the
Administrative Agent cash in an amount equal to the
Outstanding LC Balance;
provided, however, that if any Event of Default specified in Sections 9.1(g) and
9.1(h) shall occur, the principal of, and all interest on, the Notes and other
liabilities hereunder shall thereupon become due and payable concurrently
therewith, without any further action by the Banks and without presentment,
demand, protest, notice of default, notice of acceleration or of intention to
accelerate or other notice of any kind, all of which Borrower hereby expressly
waives.
Upon the occurrence and during the continuance of any Event of Default,
the Administrative Agent on behalf of the Banks, at the request of the Required
Banks is hereby authorized at any time and from time to time, without notice to
Borrower (any such notice being expressly waived by Borrower), to set off and
apply any and all moneys, securities or other property of Borrower and the
proceeds therefrom, now or hereafter held or received by or in transit to the
Banks or their agents, from or for the account of Borrower, whether for safe
keeping, custody, pledge, transmission, collection or otherwise, and also upon
any and all deposits (general or special) and credits of Borrower, and any and
all claims of Borrower against the Banks at any time existing. The Banks agree
to notify Borrower promptly after any such setoff and application, provided that
the failure to give such notice shall not affect the validity of such setoff and
application. The rights of the Banks under this Section are in addition to other
rights and remedies (including, without limitation, other rights of setoff)
which the Banks may have.
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9.3 Performance by the Banks. Should Borrower fail to perform any
covenant, duty or agreement with respect to the payment of taxes, obtaining
licenses or permits, or any other requirement contained herein or in any of the
Credit Documents within the period provided herein, if any, for correction of
such failure, the Banks may, at their option, perform or attempt to perform such
covenant, duty or agreement on behalf of Borrower. In such event, Borrower
shall, at the request of the Required Banks, promptly pay any amount expended by
the Banks and/or the Administrative Agent in such performance or attempted
performance to the Administrative Agent at its office in Inglewood, California,
together with interest thereon at the Default Rate, from the date of such
expenditure until paid. Notwithstanding the foregoing, it is expressly
understood that neither the Banks nor the Administrative Agent assume any
liability or responsibility for the performance of any duties of Borrower
hereunder or under any of the Credit Documents or other control over the
management and affairs of Borrower.
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ARTICLE 9A
ADMINISTRATIVE AGENT
--------------------
9A.1 Appointment and Authorization. Each Bank hereby irrevocably
appoints and authorizes the Administrative Agent to act on behalf of such Bank
to the extent provided herein or in any of the Credit Documents or any other
document or instrument delivered hereunder or in connection herewith, and to
take such other action as may be reasonably incidental thereto as determined by
Administrative Agent. The Banks agree that Borrower shall be entitled to rely
upon any communications to them by the Administrative Agent with respect to any
request or notice from, decision or consent of, the Banks.
9A.2 Exculpation. Administrative Agent shall be entitled to rely upon
advice of counsel concerning legal matters, and upon this Credit Agreement, any
Credit Documents and any schedule, certificate, statement, report, notice or
other writing which it believes to be genuine or to have been presented by a
proper person. Neither Administrative Agent nor any of its directors, officers,
employees, or agents shall (a) be responsible for any recitals, representations
or warranties contained in, or for the execution, validity, genuineness,
effectiveness or enforceability of, this Credit Agreement, any Credit Documents
or any other instrument or document delivered hereunder or in connection
herewith, (b) be under any duty to inquire into or pass upon any of the
foregoing matters, or to make any inquiry concerning the performance by the
Borrower or any other obligor of its obligations, or (c) in any event, be liable
as such for any action taken or omitted by it or them, except for its or their
own gross negligence or willful misconduct. The agency hereby created shall in
no way impair or affect any of the rights and powers of, or impose any duties or
obligations upon, Administrative Agent in its individual capacity.
9A.3 Administrative Agent and Affiliates. Administrative Agent has the
same rights and powers hereunder and under the Credit Documents as any other
Bank and may exercise the same as though it were not the Administrative Agent.
Administrative Agent and its Affiliates may accept deposits from, lend money to,
and generally engage in any kind of banking, trust or other business with
Borrower and any Affiliate of Borrower, as if it were not the Administrative
Agent and without any duty to account therefor to the Banks. Administrative
Agent need not account to any other Bank for any monies received by it for
reimbursement of its costs and expenses as Administrative Agent hereunder, or
for any monies received by it in its capacity as a Bank hereunder, except as
otherwise provided herein.
9A.4 Banks' Credit Decisions. Each Bank has made, and shall continue to
make, its own independent investigation or evaluation of the operations,
business, property and condition, financial and otherwise, of the Borrower, in
connection with the making of its respective Commitment, and each has made its
own appraisal of the creditworthiness of the Borrower. Except as explicitly
provided herein, the Administrative Agent has no duty or responsibility, either
initially or on a continuing basis, to provide any Bank with any credit or other
information with respect to such operations, business, property, condition or
creditworthiness, whether such information comes into its possession on or
before an Event of Default or at any time thereafter.
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Each Bank agrees and acknowledges that Administrative Agent makes no
representations or warranties about the creditworthiness of the Borrower or with
respect to the legality, validity, sufficiency or enforceability of this Credit
Agreement or any of the Credit Documents.
9A.5 Indemnification. Each Bank agrees to indemnify, hold harmless and
defend the Administrative Agent (to the extent not reimbursed by the Borrower),
ratably according to its Pro Rata Share, from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever which may be
imposed on, incurred by or asserted against the Administrative Agent in any way
relating to or arising out of this Credit Agreement or the Credit Documents or
any action taken or omitted by the Administrative Agent under the Credit
Agreement or Credit Documents; provided, that no Bank shall be liable for any
portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from the
Administrative Agent's gross negligence or willful misconduct. Without
limitation of the foregoing, each Bank agrees to reimburse the Administrative
Agent promptly upon demand for its Pro Rata Share of any out-of-pocket expenses
(including, without limitation, attorney's fees and expenses) incurred by the
Administrative Agent in connection with the preparation, execution, delivery,
administration, modification, amendment or enforcement (whether through
negotiations, legal proceedings or otherwise) of, or legal advice in respective
rights or responsibilities under, this Credit Agreement and the Credit Documents
to the extent that the Administrative Agent is not reimbursed for such expenses
by the Borrower; provided, that no Bank shall be liable for any portion of any
such expenses resulting from the Administrative Agent's gross negligence or
willful misconduct.
9A.6 Administration.
(a) Administrative Agent shall administer and manage the Loans
in the ordinary course of its business and in accordance with its usual
practices and that degree of care it would use in administering,
managing, and servicing facilities of similar size and type for its own
account. Each Bank expressly agrees that, except as expressly otherwise
provided herein, Administrative Agent shall, in accordance with such
practices and degree of care, make any and all decisions and is hereby
authorized to do or cause to be done any and all acts regarding the
administration of the facilities in accordance with its sole and
absolute discretion.
(b) Unless in each case consented to in writing by all the
Banks, the Administrative Agent shall not (i) agree to the modification
or waiver of any of the terms of any of the Credit Documents, or (ii)
consent to any act or omission by the Borrower, or (iii) exercise any
rights which the Administrative Agent may have with respect to the
Loans, the Notes, or any of the other Credit Documents, if any such
agreement, consent or exercise would:
(i) change or modify the interest rate and repayment
provisions set forth in the Credit Documents;
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(ii) increase any Commitment;
(iii) extend the Maturity Date of any Loan;
(iv) postpone any date for payment or forgive the
payment of principal of, or interest on, the Loans or the
payment of any other sum due under the Credit Documents;
(v) change or modify or waive any Financial Covenant;
(vi) waive any Event of Default;
(vii) allow any assignment by Borrower of any right
or interest in the Credit Documents; or
(viii) release any Collateral.
(c) Other than upon the occurrence of an Event of Default
hereunder, any decision or consent required hereunder shall be made
jointly by the Banks and the Administrative Agent instructed
accordingly. Upon the occurrence of an Event of Default hereunder, the
Banks shall consult with each other and determine whether, and in what
manner and to what extent, any and all rights hereunder and under the
Credit Documents shall be exercised. The course of action so agreed
upon shall set forth what matters, if any, shall require the further
consent of the Banks and shall be carried out by Administrative Agent
in its name on behalf of the Banks.
(d) In the event that all or any portion of the Collateral is
acquired by the Administrative Agent on behalf of the Banks as a result
of the exercise of any remedies following an Event of Default
hereunder, or otherwise, title to any such Collateral or any portion
thereof shall be held in the name of the Administrative Agent or a
nominee or subsidiary of the Administrative Agent, in any case as
Administrative Agent, for the ratable benefit of the Banks. The
Administrative Agent, for the benefit of the Banks in accordance with
the course of action approved by the Banks, shall manage, operate,
repair, administer, complete, construct, restore or otherwise deal with
the Collateral so acquired and administer all transactions relating
thereto, including, without limitation, the employing of a managing
Administrative Agent and other Administrative Agents, contractors and
employees, including Administrative Agents for the sale of such
Collateral, or any portion thereof, and the collecting of any sums that
may come due from such Collateral, and the paying of expenses of such
Collateral. The Administrative Agent shall render, or cause to be
rendered by the managing Administrative Agent, to the Banks, monthly,
an income and expense statement for such Collateral. Each Bank shall
promptly contribute its Pro Rata Share of any operating loss for such
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Collateral, and such other expenses and operating reserves as
Administrative Agent shall deem reasonably necessary in accordance with
the course of action approved by the Banks. To the extent there is net
operating income from such Collateral, the Administrative Agent shall
make quarterly distributions to the Banks in accordance with their Pro
Rata Share.
(e) As to any matters which are subject to the consent of all
of the Banks, the Administrative Agent shall not be permitted or
required to exercise any discretion or take any action except with such
consent. The Administrative Agent shall be fully protected by the Banks
severally and in accordance with their respective Pro Rata Share in so
acting or in so refraining from action, but in no event shall the
Administrative Agent be required to take any action which exposes the
Administrative Agent to personal liability which is contrary to this
Credit Agreement or the Credit Documents or applicable law.
(f) All communications from the Administrative Agent to the
Banks requesting the Banks' determination, consent, approval or
disapproval shall be given in the form of a written notice to each Bank
containing (i) a reasonably detailed description of the matter or thing
as to which such determination, approval, consent or disapproval is
requested, accompanied by such information in Administrative Agent's
possession which, in Administrative Agent's opinion, is reasonably
relevant to such determination, approval, consent or disapproval, and
(ii) the course of action and determination recommended by the
Administrative Agent in respect thereof. Each Bank shall reply within
ten (10) Banking Days after such written notice is given by
Administrative Agent, and, if such reply is not so given by a Bank,
such course of action shall be deemed to have been approved by such
Bank.
9A.7 Default by a Bank. In the event that any Bank (the "Defaulting
Bank") fails to make timely payment to Administrative Agent of any sum due under
this Credit Agreement, including without limitation, such Bank's Pro Rata Share
of any Advance, Disbursement or liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs and expenses or any other expenses
or amounts due Administrative Agent, the non-defaulting Bank may, but shall not
be required to, advance such amount and recover such amount on demand from the
Defaulting Bank, together with interest thereon at the Federal Funds Rate
commencing on the date such amount was made available to Administrative Agent
and ending on the date Administrative Agent recovers such amount. Until the full
repayment is made to Administrative Agent of such amount funded on behalf of the
Defaulting Bank together with interest thereon from the date advanced to the
date repaid by the Defaulting Bank at the Federal Funds Rate, the right of the
Defaulting Bank to participate in decisions or consents hereunder shall be
suspended and the entire interest in the Loans of the Defaulting Bank shall be
subordinated to the interest of the non-defaulting Bank and all payments or
recoveries on the Loans received by Administrative Agent from any source
whatsoever that would otherwise be credited by Administrative Agent to the
Defaulting Bank shall instead be credited to the non-defaulting Bank until full
repayment is made
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to the non-defaulting Bank. In addition, Administrative Agent shall be entitled
to exercise any and all remedies available to it at law or in equity against the
Defaulting Bank.
9A.8 Collections; Sharing of Payments.
(a) Administrative Agent, upon receipt, shall promptly
distribute in like funds as received to each Bank its Pro Rata Share of
all payments of principal, interest and fees received by Administrative
Agent on or with respect to the Loans, whether collected from Borrower,
or any security for the Loans, or otherwise, after first deducting any
costs, fees or other charges due Administrative Agent hereunder or
under the Credit Documents, with the exception of (i) any charge for
the administrative expenses of the Issuing Bank in connection with the
Letters of Credit paid by Borrower pursuant to Section 2.12, which
amounts shall be paid to the Issuing Bank, (ii) interest based on the
LIBOR Based Rate for purposes of distributions to the Banks other than
Imperial shall mean the rate per annum equal to the sum of LIBOR and
(A) as to an RLC Advance, one hundred seventy-five basis points (175
bp) and (B) as to an RLCT Advance, two hundred twenty-five basis points
(225 bp), and (iii) as to the RLC Non-Use Fee and the RLCT Non-Use Fee,
in each case 20 basis points (20 bp).
(b) If any Bank shall receive and retain any payment, whether
by set off, application of deposit balance or security, or otherwise,
in respect of the obligations of Borrower hereunder in excess of such
Bank's Pro Rata Share, then such Bank shall purchase from the other
Bank (for cash and at face value and without recourse) such
participation in the Loans held by it as shall be necessary to cause
such excess payment to be shared ratably as aforesaid with the other
Banks; provided, that if such excess payment or part thereof is
thereafter recovered from such purchasing Bank, the related purchases
from the other Bank shall be rescinded ratably and the purchase price
restored as to the portion of such excess payments so recovered, but
without interest.
9A.9 Successor Administrative Agent. The Administrative Agent may
resign at any time by giving written notice thereof to the Banks and the
Borrower. Borrower and the Banks agree to execute and deliver to such successor
Administrative Agent such documents and agreements as such successor
Administrative Agent may require to carry out the succession contemplated
herein.
9A.10 Issuing Bank. The Issuing Bank shall act on behalf of the Banks
with respect to any Letters of Credit Issued by it and the documents associated
therewith until such time and except for so long as the Administrative Agent may
agree at the request of all the Banks to act for such Issuing Bank with respect
thereto; provided, however, that the Issuing Bank shall have all of the benefits
and immunities (i) provided to the Administrative Agent in this Article 9A with
respect to any acts taken or omissions suffered by the Issuing Bank in
connection with Letters of Credit Issued by it or proposed to be Issued by it
and the application and agreements for letters
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of credit pertaining to the Letters of Credit as fully as if the term
"Administrative Agent," as used in this Article 9A, included the Issuing Bank
with respect to such acts or omissions, and (ii) as additionally provided in
this Credit Agreement with respect to the Issuing Bank.
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ARTICLE 10
MISCELLANEOUS
-------------
10.1 Modification. Except as otherwise required in Section 9A.6(b), all
modifications, consents, amendments or waivers of any provision of any Credit
Document, or consent to any departure by Borrower therefrom, shall be effective
only if the same shall be in writing and accepted by the Required Banks.
10.2 Waiver. No failure to exercise, and no delay in exercising, on the
part of the Banks, any right hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise thereof preclude any other further exercise
thereof or the exercise of any other right. The rights of the Banks and
Administrative Agent hereunder and under the Credit Documents shall be in
addition to all other rights provided by law. No modification or waiver of any
provision of this Credit Agreement, the Notes or any Credit Documents, nor
consent to departure therefrom, shall be effective unless in writing and no such
consent or waiver shall extend beyond the particular case and purpose involved.
No notice or demand given in any case shall constitute a waiver of the right to
take other action in the same, similar or other instances without such notice or
demand.
10.3 Payment of Expenses. Borrower shall pay all costs and expenses of
the Banks and the Administrative Agent (including, without limitation,
reasonable attorneys' fees and costs) incurred by the Banks and the
Administrative Agent in connection with the documentation of the Loans, and the
preservation and enforcement of rights of the Banks and the Administrative Agent
under this Credit Agreement, the Notes, and/or the other Credit Documents;
provided, however, that notwithstanding the aforesaid, with respect to any legal
action between the parties hereto that is pursued to judgment the prevailing
party only shall be reimbursed by the other party for all costs and expenses
(including, without limitation, reasonable attorneys' fees and costs) incurred
in connection with the preservation and enforcement of its rights under this
Credit Agreement, the Notes and/or other Credit Documents. In addition, Borrower
shall pay all costs and expenses of the Banks and the Administrative Agent in
connection with the negotiation, preparation, execution and delivery of any and
all amendments, modifications and supplements of or to this Credit Agreement,
the Notes or any other Credit Document. In addition Borrower agrees to and shall
indemnify, hold harmless and defend the Banks from any liability, claims or
losses resulting from the disbursement of the proceeds of the Loans except for
their own gross negligence or willful misconduct. This provision shall survive
repayment of the Loans and shall continue in full force and effect so long as
the possibility of such liability, claims or losses exists.
10.4 Notices. Except for telephonic notices permitted herein, any
notices or other communications required or permitted to be given by this Credit
Agreement or any other documents and instruments referred to herein must be (i)
given in writing and personally delivered or mailed by prepaid certified or
registered mail, or (ii) made by telefacsimile delivered or transmitted, to the
party to whom such notice or communication is directed, to the address of such
party as follows:
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Company: Three-Five Systems, Inc.
0000 Xxxxx Xxxxxx Xxxxx
Xxxxx, Xxxxxxx 00000-0000
Attention: Vice President - Administration
Telecopier: (000) 000-0000
Administrative Agent: Imperial Bank Arizona
One Arizona Center
000 Xxxx Xxx Xxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxx Xxxxxxxx
Telecopier: (000) 000-0000
with a copy to: Imperial Bank
0000 Xxxxx Xx Xxxxxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: General Counsel
Telecopier: (000) 000-0000
Banks: See Schedule 1.1.
Any notice to be personally delivered may be delivered to the principal offices
(determined as of the date of such delivery) of the party to whom such notice is
directed. Any such notice or other communication shall be deemed to have been
given (whether actually received or not) on the day it is personally delivered
as aforesaid; or, if mailed, on the third day after it is mailed as aforesaid;
or, if transmitted by telefacsimile, on the day that such notice is transmitted
as aforesaid if sent before the end of the normal business hours of recipient.
Any party may change its address for purposes of this Credit Agreement by giving
notice of such change to the other parties pursuant to this Section. Any notice
required to be delivered by the Borrower to the Banks under the Credit Documents
shall be deemed to be so delivered if delivered to the Administrative Agent.
Borrower agrees that any notice required to be delivered by the Administrative
Agent and/or the Banks under the Credit Documents to the Borrower shall be
deemed to be so delivered if delivered to the Company.
10.5 Governing Law; Jurisdiction, Venue.
(a) The Credit Documents shall be governed by and construed in
accordance with the substantive laws (other than conflict laws) of the
State of Arizona, except to the extent the Banks has greater rights or
remedies under Federal law, whether as a national bank or otherwise, in
which case such choice of Arizona law shall not be deemed to deprive
the Banks of any such rights and remedies as may be available under
Federal law. Each party consents to the
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personal jurisdiction and venue of the state courts located in Maricopa
County, State of Arizona in connection with any controversy related to
this Credit Agreement, waives any argument that venue in any such forum
is not convenient and agrees that any litigation initiated by any of
them in connection with this Credit Agreement shall be venued in the
Superior Court of Maricopa County, Arizona.
(b) Each Non-U.S. Subsidiary hereby appoints the Company as
its agent for the service of all process in the United States of
America.
10.6 Invalid Provisions. If any provision of any Credit Document is
held to be illegal, invalid or unenforceable under present or future laws during
the term of this Credit Agreement, such provision shall be fully severable; such
Credit Document shall be construed and enforced as if such illegal, invalid or
unenforceable provision had never comprised a part of such Credit Document; and
the remaining provisions of such Credit Document shall remain in full force and
effect and shall not be affected by the illegal, invalid or unenforceable
provision or by its severance from such Credit Document. Furthermore, in lieu of
each such illegal, invalid or unenforceable provision there shall be added as
part of such Credit Document a provision mutually agreeable to Borrower and the
Banks as similar in terms to such illegal, invalid or unenforceable provision as
may be possible and be legal, valid and enforceable.
10.7 Binding Effect. The Credit Documents shall be binding upon and
inure to the benefit of Borrower, the Banks and the Administrative Agent and
their respective successors, assigns and legal representatives; provided,
however, that Borrower may not, without the prior written consent of the Banks,
assign any rights, powers, duties or obligations thereunder.
10.8 Entirety. The Credit Documents embody the entire agreement between
the parties and supersede all prior agreements and understandings, if any,
relating to the subject matter hereof and thereof.
10.9 Relationship of the Banks and Borrower. The Banks and Borrower
each have separate and independent rights and obligations under this Credit
Agreement. Nothing contained herein shall be construed as creating, forming or
constituting any partnership, joint venture, merger or consolidation of Borrower
and the Banks for any purpose or in any respect.
10.10 Time of the Essence. Time is expressly made of the essence of
this Credit Agreement.
10.11 Good Faith Standard. Except where governed by a specific
provision of this Credit Agreement for a specific purpose, whenever the approval
or consent of the Banks is required hereunder, the Banks shall consider the
request for approval or consent on a timely basis, but the Banks shall have such
time as may be reasonably necessary to review and consider such request, as
determined in their sole judgment, and the Banks shall have the right to not
give their approval or consent or to impose such conditions or additional
requirements with respect to their approval or consent as the Banks in their
sole judgment shall determine. Approvals or consents by the
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Banks shall be effective only when given in writing, except when otherwise
specifically provided herein. The standard by which the Banks shall be governed
with respect to a request for approval or consent shall be "good faith" as that
term is defined in the Arizona Uniform Commercial Code.
10.12 Assignments and Participations; Transferees.
(a) This Credit Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and
assigns, except that the Borrower may not assign its rights or
obligations hereunder, under any Note or under any other Credit
Document without the prior written consent of all of the Banks.
(b) Each Bank may at any time grant participations in any
portion of the Loans and Credit Documents owned by it to an Affiliate
of such Bank without the consent of the other Banks. Otherwise each
Bank may sell, assign, transfer or otherwise dispose of any portion of
its interest therein (each such grant of a participation or interest so
sold, assigned, transferred or disposed of being herein called a
"Transferred Interest") to other financial institutions ("Transferees")
only with the consent of the other Banks. In addition, each Bank may
pledge any portion of its Notes for security purposes to any Federal
Reserve Bank. Without in any way limiting the rights of Transferees
hereunder, the Borrower agrees that each Transferee shall be entitled
to the benefits of the Credit Documents to the extent of its
Transferred Interest as if it were the "Bank" in an aggregate amount
equal to such Transferred Interest, and that each Transferee may
exercise any and all rights of banker's lien, setoff and counterclaim
available pursuant to law with respect to its Transferred Interest as
fully as if such Transferee were a direct lender to the Borrower.
Borrower shall not be obligated to deal with or communicate with any
such participant.
(c) As to any such assignment to a Transferee, (i) each such
assignment shall be of a constant, and not a varying, percentage of all
the assigning Bank's rights and obligations under this Credit
Agreement, (ii) the amount of the Commitment of the assigning Bank
subject to each such assignment (determined as of the date the
Assignment and Acceptance with respect to such assignment is delivered
to the Administrative Agent) shall not be less than $1,000,000.00,
(iii) the amount of the Commitment retained by the assigning Bank,
unless the Assignment and Acceptance covers all or the remaining
portion of the assigning Bank's interest, rights and obligations under
this Credit Agreement, after each such assignment shall not be less
than $1,000,000.00, (iv) the parties to each such assignment shall
execute and deliver to the Administrative Agent an Assignment and
Acceptance, together with the Note or Notes subject to such assignment,
and (v) the Transferee, if it shall not be a Bank, shall deliver to the
Administrative Agent an Administrative Questionnaire. Upon acceptance
and recording pursuant to paragraph (f) of this Section, from and after
the effective date specified in each
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Assignment and Acceptance, (A) the Transferee thereunder shall be a
party hereto and shall become a "Bank" hereunder, and, to the extent of
the interest assigned by such Assignment and Acceptance, have all the
rights and obligations of a Bank under this Credit Agreement and (B)
the assigning Bank thereunder shall, to the extent of the interest
assigned by such Assignment and Acceptance, be released from its
obligations under this Credit Agreement (and, in the case of an
Assignment and Acceptance covering all or the remaining portion of an
assigning Bank's rights and obligations under this Credit Agreement,
such Bank shall cease to be a party hereto (but shall continue to be
entitled to the benefits of Sections 3.6, 3.7(b) and 10.3).
(d) By executing and delivering an Assignment and Acceptance,
the assigning Bank thereunder and the Transferee thereunder shall be
deemed to confirm to and agree with each other and the other parties
hereto as follows: (i) such assigning Bank warrants that it is the
legal and beneficial owner of the interest being assigned thereby free
and clear of any adverse claim and that its Commitment and the
outstanding balances of its Loans, without giving effect to assignments
thereof which have not become effective, are as set forth in such
Assignment and Acceptance, (ii) except as set forth in (i) above, such
assigning Bank makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or
representations made in or in connection with this Credit Agreement, or
the execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Credit Agreement, any other Credit
Document or any other instrument or document furnished pursuant hereto
or the financial condition of the Borrower or the performance or
observance by the Borrower of any of its obligations under this Credit
Agreement, any other Credit Document or any other instrument or
document furnished pursuant hereto; (iii) such Transferee represents
and warrants that it is legally authorized to enter into such
Assignment and Acceptance; (iv) such Transferee confirms that it has
received a copy of this Credit Agreement, together with copies of the
most recent financial statements delivered pursuant to Section 7.1 and
such other documents and information as it has deemed appropriate to
make its own credit analysis and decision to enter into such Assignment
and Acceptance; (v) such Transferee will independently and without
reliance upon the Administrative Agent, such assigning Bank or any
other Bank 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 Credit Agreement; (vi) such
Transferee appoints and authorizes the Administrative Agent to take
such action as agent on its behalf and to exercise such powers under
this Credit Agreement as are delegated to the Administrative Agent by
the terms hereof, together with such powers as are reasonably
incidental thereto; and (vii) such Transferee agrees that it will
perform in accordance with their terms all the obligations which by the
terms of this Credit Agreement are required to be performed by it as a
Bank.
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(e) The Administrative Agent shall maintain at one of its
offices in Phoenix, Arizona, a copy of each Assignment and Acceptance
delivered to it and a register for the recordation of the names and
addresses of the Banks, and the Commitment of, and principal amount of
the Loans owing to, each Bank pursuant to the terms hereof from time to
time (the "Register"). The entries in the Register shall be conclusive
in the absence of manifest error and the Borrower, the Administrative
Agent and the Banks may treat each Person whose name is recorded in the
Register pursuant to the terms hereof as a Bank hereunder for all
purposes of this Credit Agreement. The Register shall be available for
inspection by the Borrower and any Bank, at any reasonable time and
from time to time upon reasonable prior notice.
(f) Upon its receipt of a duly completed Assignment and
Acceptance executed by an assigning Bank and an Transferee together
with the Note or Notes subject to such assignment, an Administrative
Questionnaire completed in respect of the Transferee (unless the
Transferee shall already be a Bank hereunder), the Administrative Agent
shall (i) accept such Assignment and Acceptance, (ii) record the
information contained therein in the Register, and (iii) give prompt
notice thereof to the Banks. Within five Banking Days after receipt of
notice, the Borrower, as applicable, shall execute and deliver to the
Administrative Agent, in exchange for the surrendered Note or Notes, a
new Note or Notes to the order of such assigning Bank in a principal
amount equal to the applicable Commitment retained by it. Such new Note
or Notes shall be in an aggregate principal amount equal to the
aggregate principal amount of such surrendered Note or Notes; such new
Notes shall be dated the date of the surrendered Notes which they
replace and shall otherwise be in substantially the applicable form of
Exhibit "C" hereto.
10.13 Headings. Section headings are for convenience of reference only
and shall in no way affect the interpretation of this Credit Agreement.
10.14 Survival. All representations and warranties made by Borrower
herein shall survive delivery of the Notes and the making of the Loans.
10.15 No Third Party Beneficiary. The parties do not intend the
benefits of this Credit Agreement to inure to any third party, nor shall this
Credit Agreement be construed to make or render the Banks and the Administrative
Agent liable to any materialman, supplier, contractor, subcontractor, purchaser
or lessee of any property owned by Borrower, or for debts or claims accruing to
any such persons against Borrower. Notwithstanding anything contained herein or
in the Notes, or in any other Credit Document, or any conduct or course of
conduct by any or all of the parties hereto, before or after signing this Credit
Agreement or any of the other Credit Documents, neither this Credit Agreement
nor any other Credit Document shall be construed as creating any right, claim or
cause of action against the Banks and the Administrative Agent, or any of their
officers, directors, agents or employees, in favor of any materialman, supplier,
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contractor, subcontractor, purchaser or lessee of any property owned by
Borrower, nor to any other person or entity other than Borrower.
10.16 Joint Liability.
(a) The Company and the Co-Borrowers each: (a) agrees that the
liability hereunder of all parties hereto is joint and several; and (b)
consents that the Banks may extend the time of payment or otherwise
modify the terms of payment of any part or the whole of the debt
evidenced hereby, at the request of any other person liable hereon, and
such consent shall not alter nor diminish the liability of any person
hereon.
(b) In addition, the Company and the Co-Borrowers each waives
and agrees not to assert: (a) any right to require the Banks to proceed
against the obligations, to proceed against or exhaust any security for
the obligations, to pursue any other remedy available to the Banks, or
to pursue any remedy in any particular order or manner; (b) the benefit
of any statute of limitations affecting its liability hereunder or the
enforcement hereof; (c) the benefits of any legal or equitable doctrine
or principle of marshalling; (d) notice of the existence, creation or
incurring of new or additional indebtedness of Borrower to the Banks;
(e) the benefits of any statutory provision limiting the liability of a
surety, including without limitation the provisions of Sections
12-1641, et seq., of the Arizona Revised Statutes; (f) any defense
arising by reason of any disability or other defense of Borrower or by
reason of the cessation from any cause whatsoever (other than payment
in full) of the liability of Borrower for payment of any other party
hereto; and (g) the benefits of any statutory provision limiting the
right of the Banks to recover a deficiency judgment, or to otherwise
proceed against any person or entity obligated for payment of the
obligations, after any foreclosure or trustee's sale of any security
for the obligations, including without limitation the benefits, if any,
to a surety of Arizona Revised Statutes Section 33-814. Until payment
in full of the obligations and the Banks have no obligation to make any
further advances of the proceeds hereof, no party shall have any right
of subrogation and each hereby waives any right to enforce any remedy
which the Banks now have, or may hereafter have, against Borrower or
any other party, and waives any benefit of, and any right to
participate in, any security now or hereafter held by the Banks.
10.17 Schedules and Exhibits Incorporated. All schedules and exhibits
attached hereto are hereby incorporated into this Credit Agreement by each
reference thereto as if fully set forth at each such reference.
10.18 Waiver of Jury Trial. EACH PARTY HERETO HEREBY KNOWINGLY,
VOLUNTARILY, AND INTENTIONALLY WAIVES ANY RIGHTS IT MAY HAVE TO REQUIRE A TRIAL
BY JURY IN ANY COURT ACTION PERTAINING TO OBLIGATIONS
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SECURED OR THE CREDIT DOCUMENTS OR THE COLLATERAL, AND AGREES THAT ANY SUCH
ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.
10.19 Counterparts. This Credit Agreement may be executed in multiple
counterparts, each of which, when so executed, shall be deemed an original but
all such counterparts shall constitute but one and the same agreement.
IN WITNESS WHEREOF, the undersigned have executed this Credit Agreement
as of the day and year first above written.
THREE-FIVE SYSTEMS, INC., a Delaware
corporation
By: /s/ Xxxxxxx X. Xxxxxxxx
--------------------------------
Name: Xxxxxxx X. Xxxxxxxx
-------------------------------
Title: Executive Vice President
------------------------------
COMPANY
THREE-FIVE SYSTEMS (BEIJING), LTD.,
a wholly foreign owned enterprise
organized under the laws of the
People's Republic of China.
By: /s/ Xxxxxxx X. Xxxxxxxx
--------------------------------
Name: Xxxxxxx X. Xxxxxxxx
-------------------------------
Title: Authorized Agent
------------------------------
THREE-FIVE SYSTEMS PACIFIC, INC., a
Philippine corporation
By: /s/ Xxxxxxx X. Xxxxxxxx
--------------------------------
Name: Xxxxxxx X. Xxxxxxxx
-------------------------------
Title: Authorized Agent
------------------------------
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THREE-FIVE SYSTEMS, LIMITED, a
corporation organized under the laws
of the United Kingdom
By: /s/ Xxxxxxx X. Xxxxxxxx
--------------------------------
Name: Xxxxxxx X. Xxxxxxxx
-------------------------------
Title: Authorized Agent
------------------------------
CO-BORROWERS
IMPERIAL BANK ARIZONA, an Arizona
banking corporation
By: /s/ Xxxxx X. Xxxxxxxx
--------------------------------
Name: Xxxxx X. Xxxxxxxx
-------------------------------
Title: Senior Vice President
------------------------------
AGENT AND BANK
NATIONAL BANK OF CANADA
By: /s/ X. X. XxXxxxxxx
--------------------------------
Name: R. A. McKerrol
-------------------------------
Title: Vice President
------------------------------
By: /s/ Xxxx Xxxxx
--------------------------------
Name: Xxxx Xxxxx
-------------------------------
Title: Vice President
------------------------------
BANK
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EXHIBIT "C"
FORM OF NOTES
-------------
EXHIBIT "C-1"
REVOLVING PROMISSORY NOTE
(RLC)
$_______________ Phoenix, Arizona
______________, 1998
FOR VALUE RECEIVED, the undersigned (hereinafter called "Maker"),
promises to pay to the order of ______________________________________________
(the "Payee"; Payee and each subsequent transferee and/or owner of this Note,
whether taking by endorsement or otherwise, are herein successively called
"Holder"), at Imperial Bank, 9920 South La Cienega Boulevard, Lending Services,
Xxxxxxxxx, Xxxxxxxxxx 00000, or at such other place as Holder may from time to
time designate in writing, the principal sum of ____________________
___________________________ AND NO/100 DOLLARS ($_____________) or so much
thereof as Holder may advance to or for the benefit of Maker plus interest
calculated on a daily basis (based on a 360-day year) from the date hereof on
the principal balance from time to time outstanding as hereinafter provided,
principal, interest and all other sums payable hereunder to be paid in lawful
money of the United States of America as follows:
1 Interest shall accrue:
1.1 On the unpaid principal of an RLC Advance at the
Variable Rate, except to the extent that an RLC Advance bears
interest at the LIBOR Based Rate.
1.2 On the unpaid principal of an RLC Advance at the
LIBOR Based Rate, to the extent Borrower shall elect and to
the extent not otherwise provided in the Credit Agreement.
2 All accrued interest shall be due and payable on each
Payment Date.
3 The entire unpaid principal balance, all accrued and unpaid
interest, and all other amounts payable hereunder shall be due and
payable in full on the RLC Maturity Date.
The "Variable Rate" means the rate per annum equal to the Prime Rate
per annum as in effect from time to time; the Variable Rate shall change on each
day that the "Prime Rate" changes. The LIBOR Based Rate means the rate per annum
equal (A) to the sum of LIBOR and one hundred seventy-five basis points (175
bp), divided by (B) a percentage equal to one hundred percent (100%) minus the
Eurodollar Rate Reserve Percentage with respect to the applicable LIBOR Interest
Period. The "RLC Maturity Date" means May 22, 2000.
The principal balance of this Note represents a revolving credit all or
any part of which may be advanced to Maker, repaid by Maker, and re-advanced to
Maker from time to time, subject to the other terms hereof and the conditions,
if any, contained in the Credit Agreement, and provided that the principal
balance outstanding at any one time shall not exceed the face amount hereof.
Maker agrees to an effective rate of interest that is the rate stated
above plus any additional rate of interest resulting from any other charges in
the nature of interest paid or to be paid by or on behalf of Maker, or any
benefit received or to be received by Holder, in connection with this Note.
This Note is issued pursuant to that Credit Agreement dated as of
November 5, 1998 (the "Credit Agreement") between Maker, the Banks named therein
and Imperial Bank Arizona, an Arizona banking corporation as Agent and is
secured by the Security Documents. Capitalized terms used and not otherwise
defined herein shall have the meanings assigned to such terms in the Credit
Agreement.
Time is of the essence of this Note.
Maker shall pay all costs and expenses, including reasonable attorneys'
fees and court costs, incurred in the collection or enforcement of all or any
part of this Note. All such costs and expenses shall be secured by the Security
Documents.
Failure of Holder to exercise any option hereunder shall not constitute
a waiver of the right to exercise the same in the event of any subsequent
default or in the event of continuance of any existing default after demand for
strict performance hereof.
Maker and all sureties, guarantors and/or endorsers hereof (or of any
obligation hereunder) and accommodation parties hereon (severally each
hereinafter called a "Surety") each: (a) agree that the liability under this
Note of all parties hereto is joint and several; (b) severally waive any and all
formalities in connection with this Note to the maximum extent allowed by law,
including (but not limited to) demand, diligence, presentment for payment,
protest and demand, and notice of extension, dishonor, protest, demand and
nonpayment of this Note; and (c) consent that Holder may extend the time of
payment or otherwise modify the terms of payment of any part or the whole of the
debt evidenced by this Note, at the request of any other person liable hereon,
and such consent shall not alter nor diminish the liability of any person
hereon.
This Note shall be binding upon Maker and its successors and assigns
and shall inure to the benefit of Payee, and any subsequent holders of this
Note, and their successors and assigns.
All notices required or permitted in connection with this Note shall be
given at the place and in the manner provided in the Credit Agreement for the
giving of notices.
-2-
If any payment of interest and/or principal is not received by the
Holder hereof when such payment is due, then in addition to the remedies
conferred upon the Holder hereof and the other loan documents, a late charge of
five percent (5%) of the amount of the installment due and unpaid will be added
to the delinquent amount to compensate the Holder hereof for the expense of
handling the delinquency for any payment past due in excess of ten (10) days,
regardless of any notice and cure period.
In any action brought under or arising out of this Note, each obligor,
including successor(s) or assign(s), hereby consents to the application of
Arizona law, with the exception of provisions on conflicts of laws, to the
jurisdiction of any competent court within the State of Arizona, and to service
of process by any means authorized by Arizona law.
This Note may be executed in multiple counterparts, each of which, when
so executed, shall be deemed an original but all such counterparts shall
constitute but one and the same instrument.
IN WITNESS WHEREOF, these presents are executed as of the date first
written above.
THREE-FIVE SYSTEMS, INC., a Delaware
corporation
By:
--------------------------------
Name:
-------------------------------
Its:
------------------------------
THREE-FIVE SYSTEMS (BEIJING), LTD.,
a wholly foreign owned enterprise
organized under the laws of the
People's Republic of China.
By:
--------------------------------
Name:
-------------------------------
Its:
------------------------------
-3-
THREE-FIVE SYSTEMS PACIFIC, INC., a
Philippine corporation
By:
--------------------------------
Name:
-------------------------------
Its:
------------------------------
THREE-FIVE SYSTEMS, LIMITED, a
corporation organized under the laws
of the United Kingdom
By:
--------------------------------
Name:
-------------------------------
Its:
------------------------------
MAKER
-4-
EXHIBIT "C-2"
REVOLVING PROMISSORY NOTE
(RLCT)
$_____________ Phoenix, Arizona
______________, 1998
FOR VALUE RECEIVED, the undersigned (hereinafter called "Maker"),
promises to pay to the order of ______________________________________________
(the "Payee"; Payee and each subsequent transferee and/or owner of this Note,
whether taking by endorsement or otherwise, are herein successively called
"Holder"), at Imperial Bank, 9920 South La Cienega Boulevard, Lending Services,
Xxxxxxxxx, Xxxxxxxxxx 00000, or at such other place as Holder may from time to
time designate in writing, the principal sum of __________________________
_____________________________ AND NO/100 DOLLARS ($__________) or so much
thereof as Holder may advance to or for the benefit of Maker plus interest
calculated on a daily basis (based on a 360-day year) from the date hereof on
the principal balance from time to time outstanding as hereinafter provided,
principal, interest and all other sums payable hereunder to be paid in lawful
money of the United States of America as follows:
4 Interest shall accrue:
4.1 On the unpaid principal of an RLCT Advance at the
Variable Rate, except to the extent that an RLCT Advance bears
interest at the LIBOR Based Rate.
4.2 On the unpaid principal of an RLCT Advance at the
LIBOR Based Rate, to the extent Borrower shall elect and to
the extent not otherwise provided in the Credit Agreement.
5 All accrued interest shall be due and payable on each
Payment Date.
6 Principal hereunder shall be due and payable on each RLCT
Principal Date, beginning with the first RLCT Principal Date after the
RLCT Termination Date, in an amount sufficient to fully amortize the
principal balance of the RLCT on the RLCT Termination Date over twenty
equal payments of such principal. The entire unpaid principal balance,
all accrued and unpaid interest, and all other amounts payable
hereunder shall be due and payable in full on the RLCT Maturity Date.
The "Variable Rate" means the rate per annum equal to the Prime Rate
per annum as in effect from time to time; the Variable Rate shall change on each
day that the "Prime Rate" changes. The LIBOR Based Rate means the rate per annum
equal (A) to the sum of LIBOR and
two hundred thirty-seven and one-half basis points (237.5 bp), divided by (B) a
percentage equal to one hundred percent (100%) minus the Eurodollar Rate Reserve
Percentage with respect to the applicable LIBOR Interest Period. The "RLCT
Maturity Date" means August 5, 2004.
The principal balance of this Note represents a revolving credit all or
any part of which may be advanced to Maker, repaid by Maker, and re-advanced to
Maker from time to time, subject to the other terms hereof and the conditions,
if any, contained in the Credit Agreement, and provided that the principal
balance outstanding at any one time shall not exceed the face amount hereof.
Maker agrees to an effective rate of interest that is the rate stated
above plus any additional rate of interest resulting from any other charges in
the nature of interest paid or to be paid by or on behalf of Maker, or any
benefit received or to be received by Holder, in connection with this Note.
This Note is issued pursuant to that Credit Agreement dated as of
November 5, 1998 (the "Credit Agreement") between Maker, the Banks named therein
and Imperial Bank Arizona, an Arizona banking corporation as Agent and is
secured by the Security Documents. Capitalized terms used and not otherwise
defined herein shall have the meanings assigned to such terms in the Credit
Agreement.
Time is of the essence of this Note.
Maker shall pay all costs and expenses, including reasonable attorneys'
fees and court costs, incurred in the collection or enforcement of all or any
part of this Note. All such costs and expenses shall be secured by the Security
Documents.
Failure of Holder to exercise any option hereunder shall not constitute
a waiver of the right to exercise the same in the event of any subsequent
default or in the event of continuance of any existing default after demand for
strict performance hereof.
Maker and all sureties, guarantors and/or endorsers hereof (or of any
obligation hereunder) and accommodation parties hereon (severally each
hereinafter called a "Surety") each: (a) agree that the liability under this
Note of all parties hereto is joint and several; (b) severally waive any and all
formalities in connection with this Note to the maximum extent allowed by law,
including (but not limited to) demand, diligence, presentment for payment,
protest and demand, and notice of extension, dishonor, protest, demand and
nonpayment of this Note; and (c) consent that Holder may extend the time of
payment or otherwise modify the terms of payment of any part or the whole of the
debt evidenced by this Note, at the request of any other person liable hereon,
and such consent shall not alter nor diminish the liability of any person
hereon.
This Note shall be binding upon Maker and its successors and assigns
and shall inure to the benefit of Payee, and any subsequent holders of this
Note, and their successors and assigns.
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All notices required or permitted in connection with this Note shall be
given at the place and in the manner provided in the Credit Agreement for the
giving of notices.
If any payment of interest and/or principal is not received by the
Holder hereof when such payment is due, then in addition to the remedies
conferred upon the Holder hereof and the other loan documents, a late charge of
five percent (5%) of the amount of the installment due and unpaid will be added
to the delinquent amount to compensate the Holder hereof for the expense of
handling the delinquency for any payment past due in excess of ten (10) days,
regardless of any notice and cure period.
In any action brought under or arising out of this Note, each obligor,
including successor(s) or assign(s), hereby consents to the application of
Arizona law, with the exception of provisions on conflicts of laws, to the
jurisdiction of any competent court within the State of Arizona, and to service
of process by any means authorized by Arizona law.
This Note may be executed in multiple counterparts, each of which, when
so executed, shall be deemed an original but all such counterparts shall
constitute but one and the same instrument.
IN WITNESS WHEREOF, these presents are executed as of the date first
written above.
THREE-FIVE SYSTEMS, INC., a Delaware
corporation
By:
--------------------------------
Name:
-------------------------------
Its:
------------------------------
THREE-FIVE SYSTEMS (BEIJING), LTD.,
a wholly foreign owned enterprise
organized under the laws of the
People's Republic of China
By:
--------------------------------
Name:
-------------------------------
Its:
------------------------------
-3-
THREE-FIVE SYSTEMS PACIFIC, INC., a
Philippine corporation
By:
--------------------------------
Name:
-------------------------------
Its:
------------------------------
THREE-FIVE SYSTEMS, LIMITED, a
corporation organized under the laws
of the United Kingdom
By:
--------------------------------
Name:
-------------------------------
Its:
------------------------------
MAKER
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