Exhibit 10.51
SECOND AMENDED AND RESTATED BUSINESS LOAN AGREEMENT
This Second Amended and Restated Business Loan Agreement (this
"Agreement") dated as of June 24, 2002, is between Bank of America, N.A. (the
"Bank") and IMPCO Technologies, Inc. (the "Borrower").
RECITALS
A. The Borrower, its wholly owned subsidiary, Quantum Fuel Systems
Technologies Worldwide, Inc. ("Quantum") (under its former name, Quantum
Technologies, Inc.), and the Bank have heretofore entered into an Amended and
Restated Business Loan Agreement dated as of April 30, 2001 (as previously
amended, the "Existing Loan Agreement"), pursuant to which the Bank extended
joint credit facilities to the Borrower and Quantum.
B. As of the date of this Agreement, Quantum owns no substantial
assets, has no substantial liabilities, and produces no substantial revenue,
rather the assets, liabilities and revenues associated with the Quantum
business, as described on Schedule A hereto, are owned and operated by the
Quantum Division of Borrower.
C. It is anticipated that, on or before August 15, 2002, and pursuant
to documentation acceptable to the Bank, the Borrower shall (a) transfer
ownership of Quantum to the shareholders of Borrower (who will own 80.1%) and to
General Motors Corporation (who will directly or indirectly own 19.9%) and (b)
effect a one-time transfer to Quantum of $15,000,000 in cash along with all
accounts receivable, fixed assets, machinery, equipment and inventory associated
with the Borrower's Quantum operating division, as identified on Schedule A
hereto (as further described in Section 11.18, the "Quantum Spin-Off").
D. The parties hereto agree to amend and restate the Existing Loan
Agreement in its entirety to restructure the obligations of the Borrower under
the Existing Loan Agreement and to remove Quantum as a borrower.
In consideration of the foregoing and of the mutual covenants and
agreements herein contained, the parties hereto covenant and agree as follows:
DEFINITIONS
As used in this Agreement, the following terms shall have the meanings set forth
below:
"Annualized Core EBITDA" means (a) as of any date on or prior to prior
to April 30, 2003, Core EBITDA for the period beginning on May 1, 2002 and
ending on that date, annualized on a straight line basis, and (b) for any
period ending on or following April 30, 2003, Core EBITDA for the one year
period then ended.
-1-
"Borrower" means IMPCO Technologies, Inc.
"Capital Expenditures" means any expenditures which are
properly treated as capital expenditures under generally accepted
accounting principles, including any expenditures in respect of
capital lease obligations.
"Core EBITDA" means, for any period, Borrower's consolidated
net income for that period from continuing operations and investments,
determined in accordance with generally accepted accounting principles
consistently applied, plus, to the extent deducted (or subtracted) in
arriving at such net income, Borrower's consolidated income tax
expense or credit, interest expense, minority interest, depreciation
and amortization, provided that in computing "Core EBITDA" the results
of operations of Quantum and the Quantum Division of Borrower shall be
excluded.
"Current Ratio" means, as of each date of determination, the
ratio of (a) Borrower's current assets, to (b) Borrower's current
liabilities (including without limitation the current portion of
Borrower's indebtedness for borrowed money), in each case, determined
in accordance with generally accepted accounting principles,
consistently applied, provided that the current assets and the current
liabilities associated with the Quantum Division of Borrower shall be
excluded.
"Debt Service Coverage Ratio" means, as of each date of
determination, the ratio of (a) Annualized Core EBITDA less unfinanced
Capital Expenditures for the period for which Annualized Core EBITDA
has been determined (annualized on the same basis), to (b) the sum of
(i) the current portion of Borrower's consolidated indebtedness for
borrowed money and capital lease obligations as of the last day of
then most recently ended fiscal year of Borrower, plus (ii) Borrower's
interest expense for the same period for which Annualized Core EBITDA
has been determined (annualized on the same basis), in each case,
determined in accordance with generally accepted accounting
principles, consistently applied.
"Default" means any event or circumstance which, with the
passage of time or the giving of notice, will constitute an Event of
Default.
"Event of Default" shall have the meaning set forth in Section
13 hereof.
"Funded Debt to EBITDA Ratio" means, as of each date of
determination, the ratio of (a) Borrower's consolidated indebtedness
for borrowed money and capital lease obligations as of that date, to
(b) Annualized Core EBITDA as of that date.
"Offshore Margin" means during each Pricing Period, the
interest rate margin set forth in the Pricing Matrix in the column so
headed opposite the Funded Debt to EBITDA Ratio in effect as of the
last day of the fiscal quarter of the Borrower ending two months prior
to the first day of such Pricing Period, provided that during each
Pricing Period from the date of this Agreement through the Pricing
Period beginning immediately following the receipt by the Bank of
Borrower's Compliance Certificate for the Borrower's fiscal quarter
ended October 31, 2002, Offshore Margin shall be 5.00%.
-2-
"Permitted Liens" means as applied to any person or entity:
(b) Any lien in favor of the Bank given to secure the
obligations hereunder and under the Quantum pledge;
(c) Liens (i) arising by operation of law on real estate for
real estate taxes not yet delinquent and (ii) liens for taxes,
assessments, judgments, governmental charges or levies or claims the
non-payment of which is being diligently contested in good faith by
appropriate proceedings and for which adequate reserves have been
set aside on such person's or entities' books, but only so long as
no foreclosure, distraint, sale or similar proceedings have been
commenced with respect thereto and remain unstayed for a period of
thirty days after their commencement;
(d) Liens of landlords, carriers, warehousemen, mechanics,
laborers and materialmen incurred in the ordinary course of business
for sums not yet due or being diligently contested in good faith, so
long as and to the extent that reserves or appropriate provisions
shall have been made therefor;
(e) Restrictions on the transfer of assets imposed by any
applicable law or regulation;
(f) Easements, rights-of-way, restrictions and other similar
encumbrances on the use of real property which do not in the
aggregate materially interfere with the ordinary conduct of the
business of such person or entity, or liens incidental to the
conduct of the business of such person or entity or to the ownership
of its properties which were not incurred in connection with
indebtedness or other extensions of credit and which do not in the
aggregate materially detract from the value of such properties or
materially impair their use in the operation of the business of such
person or entity;
(g) Purchase money security interests, which are perfected
automatically by operation of law, only for the period (not to
exceed twenty (20) days) of automatic perfection under the law of
the applicable jurisdiction, and limited to liens on assets so
purchased;
(h) Liens arising from precautionary UCC financing statement
filings regarding operating leases entered into by such person or
entity;
(i) Judgment and other similar liens arising in connection
with court proceedings to the extent the attachment or enforcement
of such liens would not result in an Event of Default hereunder;
(j) Liens securing indebtedness which is incurred to extend,
refinance, renew, replace, defease or refund indebtedness which has
been secured by an existing lien permitted under this Agreement and
is permitted to be extended, refinanced, renewed, replaced, defeased
or refunded under this Agreement, provided, that the scope of
collateral encumbered by such liens shall not exceed the scope of
collateral encumbered by the existing lien replaced thereby;
-3-
(k) Licenses, leases or subleases granted to third parties in
the ordinary course of business not materially interfering with the
conduct of the business of such person or entity;
(l) Any interest or title of a lessor, sublessor, licensee or
licensor under any lease or license agreement; and
(m) Inchoate liens in favor of a banking institution
encumbering deposits (including the right of setoff) held by such
banking institution.
"Pricing Matrix" means the following pricing matrix:
--------------------------------------------------------------------------------------------
Unused
Funded Debt to Commitment
Pricing Level EBITDA Ratio Fee Offshore Margin Prime Rate Margin
--------------------------------------------------------------------------------------------
I Greater or equal to 0.50% 2.75% 0.75%
2.00:1.00
--------------------------------------------------------------------------------------------
II Less than 2.00:1.00 or
greater than or equal 0.375% 2.50% 0.50%
to 1.50:1:00
--------------------------------------------------------------------------------------------
III Less than 1.50:1.00 or
greater than or equal 0.25% 2.25% 0.25%
to 1.25:1:00
--------------------------------------------------------------------------------------------
IV Less than 1.25:1.00 0.25% 2.00% 0.00%
--------------------------------------------------------------------------------------------
"Pricing Period" means the successive three month periods
beginning on the first day of each July, October, January and April.
"Prime Rate" means the rate of interest publicly announced
from time to time by the Bank as its Prime Rate. The Prime Rate is set
by the Bank based on various factors, including the Bank's costs and
desired return, general economic conditions and other factors, and is
used as a reference point for pricing some loans. The Bank may price
loans to its customers at, above, or below the Prime Rate. Any change
in the Prime Rate shall take effect at the opening of business on the
day specified in the public announcement of a change in the Prime
Rate.
"Prime Rate Margin" means during each Pricing Period, the
interest rate margin set forth in the Pricing Matrix in the column so
headed opposite the Funded Debt to EBITDA ratio in effect as of the
last day of the fiscal quarter of the Borrower ending two months prior
to the first day of such Pricing Period, provided that during the
Pricing Period from the date of this Agreement through the Pricing
Period beginning immediately following the receipt by the Bank of
Borrower's Compliance Certificate for the Borrower's fiscal quarter
ended October 31, 2002, the Prime Rate Margin shall be 2.25%.
"Quantum Spin-Off" means the transaction described in Recital
C hereto, which transaction is subject to the conditions specified in
Section 11.18.
-4-
"Swap Agreement" means the ISDA Master Agreement dated as of
December 2, 1996, between Borrower and the Bank (under its former
name, Bank of America National Trust and Savings Association), as at
any time amended.
"Unused Commitment Fee Rate" means during each Pricing Period,
the rate margin set forth in the Pricing Matrix in the column so
headed opposite the Funded Debt to EBITDA in effect as of the last day
of the fiscal quarter of the Borrower ending two months prior to the
first day of such Pricing Period, provided that during each Pricing
Period from the date of this Agreement through the receipt by the Bank
of Borrower's 10-Q Quarterly Report for the Borrower's fiscal quarter
ended October 31, 2002, the Unused Commitment Fee Rate shall be 0.50%
per annum.
1. FACILITY NO. 1: REVOLVING LINE OF CREDIT AMOUNT AND TERMS
1.1 Line of Credit Amount.
(a) During the availability period described below, the Bank
will provide a line of credit ("Facility No. 1") to the Borrower. The
amount of the line of credit (the "Facility No. 1 Commitment") is
initially $8,000,000. The Facility No. 1 Commitment shall
automatically and permanently reduce on each of (i) September 30,
2002, (ii) December 31, 2002, and (iii) March 31, 2003, in an amount
equal to $1,000,000.
(b) This is a revolving line of credit. During the
availability period, the Borrower may repay principal amounts and
reborrow them.
(c) The Borrower agrees not to permit the outstanding
principal balance of advances under the line of credit to exceed the
Facility No. 1 Commitment as reduced from time to time pursuant to
paragraph (a) above.
1.2 Availability Period. The line of credit is available between
the date of this Agreement and May 31, 2003 (the "Revolving Line Expiration
Date") unless a Default or Event of Default has occurred and remains continuing.
1.3 Repayment Terms.
(a) The Borrower will pay interest with respect to Facility
No. 1 monthly on the last banking day of each calendar month until
payment in full of all outstanding principal.
(b) The Borrower will immediately repay the amount, if any, by
which the principal with respect to Facility No. 1 at any time exceeds
the Facility No. 1 Commitment as reduced from time to time pursuant to
Section 1.1(a).
(c) The Borrower will repay in full all principal and any
unpaid interest or other charges outstanding under this line of credit
no later than the Revolving Line Expiration Date.
-5-
1.4 Interest Rate. Facility No. 1 shall bear interest in the manner
provided in Section 5 of this Agreement.
2. FACILITY NO. 2: TERM LOAN AMOUNT AND TERMS
2.1 Term Loan Amount. As of the date of this Agreement, a term loan in the
aggregate principal amount of $6,353,060.78 is outstanding under Facility No. 2
of the Existing Loan Agreement. In order to refinance the Borrower's obligations
under Facility No. 2 of the Existing Loan Agreement, the Bank hereby extends to
the Borrower a Term Loan Facility No. 2 in the amount of $6,353,060.78
("Facility No. 2").
2.2 Repayment Terms.
(a) The Borrower will pay interest monthly on the last banking day of
each calendar month until payment in full of any principal outstanding
under Facility No. 2.
(b) The Borrower will repay principal in eight successive quarterly
installments of $635,306 to be paid on each March 31, June 30, September
30, and December 31, commencing June 30, 2002. On September 30, 2004, the
Borrower will repay the remaining principal balance plus any interest then
due. Amounts repaid or prepaid under Facility No. 2 may not be reborrowed.
(c) The Borrower may prepay the loan in full or in part at any time.
The prepayment will be applied to the most remote installment of principal
due under this Agreement.
2.3 Interest Rate. Facility No. 2 shall bear interest in the manner
provided in Section 5 of this Agreement.
3. FACILITY NO. 3: TERM LOAN AMOUNT AND TERMS
3.1 Term Loan Amount. As of the date of this Agreement, advances in the
aggregate principal amount of $1,515,625.00 are outstanding under Facility No. 3
(Non-Revolving Capital Expenditures Line of Credit) of the Existing Loan
Agreement. In order to refinance the Borrower's obligations under Facility No. 3
of the Existing Loan Agreement, the Bank hereby extends to the Borrower a Term
Loan Facility No. 3 in the amount of $1,515,625.00 ("Facility No. 3").
3.2 Repayment Terms.
(a) The Borrower will pay interest monthly on the last banking day of
each calendar month until payment in full of any principal outstanding on
Facility No. 3.
(b) The Borrower will repay the principal amount outstanding on
Facility No. 3 in twelve successive equal quarterly installments of
$125,000 each, to be paid each March 31, June 31, September 30, and
December 31, commencing June 30, 2002. On June 30, 2005, the Borrower will
repay the remaining principal balance plus any interest then due. Amounts
repaid or prepaid under Facility No. 3 may not be reborrowed.
-6-
(c) The Borrower may prepay the loan in full or in part at any time.
The prepayment will be applied to the most remote payment of principal due
under this Agreement.
3.3 Interest Rate. Facility No. 3 shall bear interest in the manner
provided in Section 5 of this Agreement.
4. FACILITY NO. 4: NON-REVOLVING LINE OF CREDIT AMOUNT AND TERMS
4.1 Line of Credit Amount.
(a) During the availability period described below, the Bank will
provide a line of credit ("Facility No. 4") to the Borrower. The amount of
the line of credit (the "Facility No. 4 Commitment") is $1,000,000.
(b) This is a non-revolving line of credit. Amounts repaid under
Facility No. 4 may not be reborrowed.
(c) The Borrower agrees not to permit the aggregate amount of advances
borrowed under this line of credit to exceed the Facility No. 4 Commitment.
4.2 Availability Period.
(a) The line of credit is available between the date of the Agreement
and May 31, 2003 (the "Facility No. 4 Expiration Date") unless a Default or
Event of Default has occurred and remains continuing.
(b) During the availability period described above, the Borrower may
request advances under Facility No. 4 in an amount no greater than the face
amount of invoices for related Capital Expenditures presented to the Bank
in connection with such request. The Bank's issuance of advances hereunder
shall be at the Bank's sole discretion.
4.3 Repayment Terms.
(a) The Borrower will repay interest monthly on the last banking day of
each calendar month until payment in full of all outstanding principal
under Facility No. 4.
(b) The Borrower will repay the principal balance outstanding as of the
Facility No. 4 Expiration Date in successive quarterly installments of
$125,000 to be paid on each March 31, June 30, September 30 and December
31, commencing June 30, 2003. On March 31, 2005, the Borrower will repay
any remaining principal balance and any interest then due.
(c) The Borrower may prepay the loan in full or in part at any time.
The prepayment will be applied to the most remote installment of principal
due under this Agreement.
4.4 Interest Rate. Facility No. 4 shall bear interest in the manner
provided in Section 5 of this Agreement.
-7-
5. INTEREST RATES
5.1 Prime Rate Loans. The interest rate payable with respect to loans under
Facility Xx. 0, Xxxxxxxx Xx. 0, Xxxxxxxx Xx. 0 and Facility No. 4 is the Prime
Rate plus the Prime Rate Margin then in effect.
5.2 LIBOR Rate. From the date hereof through November 30, 2002, instead of
the interest rate based on the Prime Rate, the Borrower may elect the LIBOR Rate
listed below for Facility No. 2 during interest periods agreed to by the Bank
and the Borrower provided that no Default or Event of Default exists. On or
following December 1, 2002, instead of the interest rate based on the Prime
Rate, the Borrower may elect the LIBOR Rate listed below for any of the
Facilities during interest periods agreed to by the Bank and the Borrower
provided that no Default or Event of Default exists. The LIBOR Rate shall be
subject to the terms and conditions described later in this Agreement. Any
principal amount bearing interest at an optional rate under this Agreement is
referred to as a "Portion." Borrower may select interest Portions each of which
shall bear interest at the LIBOR Rate plus the Offshore Margin then in effect.
The LIBOR Rate is a rate per year. Interest will be paid on the last
day of each interest period, and on the last day of each month during the
interest period. At the end of any interest period, the interest rate will
revert to the rate based on the Prime Rate, unless the Borrower has designated
another interest period for the Portion. No Portion will be converted to a
different interest rate during the applicable interest period. Upon the
occurrence of an Event of Default under this Agreement, the Bank may terminate
the availability of the LIBOR Rate for interest periods commencing after the
Event of Default occurs.
The election of LIBOR Rates shall be subject to the following terms and
requirements:
(a) The interest period during which the LIBOR Rate will be in effect
will be one, two, three, six or twelve months. The first day of the
interest period must be a day other than a Saturday or a Sunday on which
the Bank is open for business in California, New York and London and
dealing in offshore dollars (a "LIBOR Banking Day"). The last day of the
interest period and the actual number of days during the interest period
will be determined by the Bank using the practices of the London inter-bank
market.
(b) Each LIBOR Rate portion will be for an amount not less than
$500,000.
(c) The "LIBOR Rate" means the interest rate determined by the
following formula, rounded upward to the nearest 1/100 of one percent. (All
amounts in the calculation will be determined by the Bank as of the first
day of the interest period.)
LIBOR Rate = London Inter-Bank Offered Rate
------------------------------
(1.00 - Reserve Percentage)
Where,
(i) "London Inter-Bank Offered Rate" means the average per
annum interest rate at which U.S. dollar deposits would be offered for
the applicable interest period by major banks in the London
-8-
inter-bank market, as shown on the Telerate Page 3750 (or such
other page as may replace it) at approximately 11:00 a.m.
London time two (2) London Banking Days before the
commencement of the interest period. If such rate does not
appear on the Telerate Page 3750 (or such other page that may
replace it), the rate for that interest period will be
determined by such alternate method as reasonably selected by
the Bank. A "London Banking Day" is a day on which the Bank's
London Branch is open for business and dealing in offshore
dollars.
(ii) "Reserve Percentage" means the total of the
maximum reserve percentages for determining the reserves to be
maintained by member banks of the Federal Reserve System for
Eurocurrency Liabilities, as defined in Federal Reserve Board
Regulation D, rounded upward to the nearest 1/100 of one
percent. The percentage will be expressed as a decimal, and
will include, but not be limited to, marginal, emergency,
supplemental, special, and other reserve percentages.
(d) The Borrower shall irrevocably request a LIBOR Rate
portion no later than 12:00 noon San Francisco time on the LIBOR
Banking Day preceding the day on which the London Inter-Bank Offered
Rate will be set, as specified above.
(e) The Borrower may not elect a LIBOR Rate with respect to
any principal amount which is scheduled to be repaid before the last
day of the applicable interest period.
(f) Any portion of the principal balance already bearing
interest at the LIBOR Rate will not be converted to a different rate
during its interest period.
(g) Each prepayment of a LIBOR Rate portion, whether
voluntary, by reason of acceleration or otherwise, will be accompanied
by the amount of accrued interest on the amount prepaid and a
prepayment fee as described below. A "prepayment" is a payment of an
amount on a date earlier than the scheduled payment date for such
amount as required by this Agreement. The prepayment fee shall be equal
to the amount (if any) by which:
(i) the additional interest which would have been
payable during the interest period on the amount prepaid had
it not been prepaid, exceeds
(ii) the interest which would have been recoverable
by the Bank by placing the amount prepaid on deposit in the
domestic certificate of deposit market, the eurodollar deposit
market, or other appropriate money market selected by the
Bank, for a period starting on the date on which it was
prepaid and ending on the last day of the interest period for
such portion (or the scheduled payment date for the amount
prepaid, if earlier).
(h) The Bank will have no obligation to accept an election for
a LIBOR Rate portion if any of the following described events has
occurred and is continuing:
-9-
(i) Dollar deposits in the principal amount, and for periods
equal to the interest period, of a LIBOR Rate portion are not available
in the London inter-bank market; or
(ii) the LIBOR Rate does not accurately reflect the cost of a
LIBOR Rate portion.
6. FEES, EXPENSES AND COSTS
6.1 Loan Fee. The Borrower agrees to pay to the Bank a non-refundable fee
of $35,000 which is earned and payable as of the date hereof.
6.2 Unused Commitment Fee. The Borrower agrees to pay a fee on any
difference between the Facility No. 1 Commitment and the Facility No. 4
Commitment and the amount of credit it actually uses under such facilities,
determined by the weighted average credit outstanding during the specified
period at the Unused Commitment Fee Rate as in effect from time to time. This
fee shall be payable on June 30, 2002, and the last day of each calendar quarter
and on the Revolving Line Expiration Date.
6.3 Expenses. The Borrower agrees to immediately repay the Bank for
reasonable expenses that include, but are not limited to, filing, recording and
search fees, appraisal fees, title report fees, and documentation fees (it being
acknowledged that no appraisals or title reports are presently contemplated).
6.4 Reimbursement Costs.
(a) The Borrower agrees to reimburse the Bank for any reasonable
expenses it incurs in the preparation of this Agreement and any agreement
or instrument required by this Agreement. Expenses include, but are not
limited to, reasonable attorneys' fees, including any allocated costs of
the Bank's in-house counsel.
(b) The Borrower agrees to reimburse the Bank for the reasonable cost
of periodic audits and appraisals of the personal property collateral
securing this Agreement, at such intervals as the Bank may reasonably
require. The audits and appraisals may be performed by employees of the
Bank or by independent appraisers.
7. COLLATERAL
7.1 Personal Property. The Borrower's obligations to the Bank under this
Agreement and the Swap Agreement will be secured by personal property the
Borrower and Quantum now own or will own in the future as listed below (in the
case of Quantum, only until the Quantum Spin-Off Date). The collateral is
further defined in the security agreements executed by the Borrower and Quantum.
In addition, all personal property collateral securing this Agreement shall also
secure all other present and future obligations of the Borrower to the Bank. All
personal property collateral securing any other present or future obligations of
the Borrower to the Bank shall also secure this Agreement. In order to secure
the obligations under this Agreement and the Swap
-10-
Agreement, the Borrower hereby confirms and regrants to the Bank a security
interest in and to all of its now owned and hereafter acquired:
(a) Machinery, equipment, and fixtures;
(b) Inventory;
(c) Accounts Receivable;
(d) Patents, trademarks and other general intangibles;
(e) Deposit Accounts; and
the products and proceeds thereof. Following the occurrence of an Event of
Default, Borrower agrees to assemble all such collateral at a location to be
designated by the Bank.
8. DISBURSEMENTS, PAYMENTS AND COSTS
8.1 Requests for Credit. Each request for an extension of credit will be
made in writing in a manner acceptable to the Bank, or by another means
acceptable to the Bank.
8.2 Disbursements and Payments. Each disbursement by the Bank and each
payment by the Borrower will be:
(a) made at the Bank's branch (or other location) selected by the
Bank from time to time;
(b) made for the account of the Bank's branch selected by the Bank
from time to time;
(c) made in immediately available funds, or such other type of
funds selected by the Bank;
(d) evidenced by records kept by the Bank. In addition, the Bank
may, at its discretion, require the Borrower to sign one or more
promissory notes.
8.3 Telephone and Telefax Authorization.
(a) The Bank may honor telephone or telefax instructions for
advances or repayments or for the designation of optional interest rates
and telefax requests for the issuance of letters of credit given by any one
of the individuals authorized to sign loan agreements on behalf of the
Borrower or any other individual designated by any one of such authorized
signers.
(b) Advances will be deposited in and repayments will be withdrawn
from the Borrower's account number 12331-16650 or such other of the
Borrower's accounts with the Bank as designated in writing by the Borrower.
-11-
(c) The Borrower indemnifies and excuses the Bank (including its
officers, employees, and agents) from all liability, loss, and costs in
connection with any act resulting from telephone or telefax instructions it
reasonably believes are made by any individual authorized by the Borrower
to give such instructions. This indemnity and excuse will survive this
Agreement's termination.
8.4 Direct Debit (Pre-Billing).
(a) The Borrower agrees that the Bank will debit the Borrower's
deposit account number 12331-16650 or such other of the Borrower's accounts
with the Bank as designated in writing by the Borrower (the "Designated
Account") on the date each payment of principal and interest and any fees
from the Borrower becomes due (the "Due Date"). If the Due Date is not a
banking day, the Designated Account will be debited on the next banking
day.
(b) Approximately 10 days prior to each Due Date, the Bank will
mail to the Borrower a statement of the amounts that will be due on that
Due Date (the "Billed Amount"). The calculation will be made on the
assumption that no new extensions of credit or payments will be made
between the date of the billing statement and the Due Date, and that there
will be no changes in the applicable interest rate.
(c) The Bank will debit the Designated Account for the Billed
Amount, regardless of the actual amount due on that date (the "Accrued
Amount"). If the Billed Amount debited to the Designated Account differs
from the Accrued Amount, the discrepancy will be treated as follows:
(i) If the Billed Amount is less than the Accrued
Amount, the Billed Amount for the following Due Date will be
increased by the amount of the discrepancy. No Default or Event of
Default shall exist by reason of any such discrepancy.
(ii) If the Billed Amount is more than the Accrued
Amount, the Billed Amount for the following Due Date will be
decreased by the amount of the discrepancy.
Regardless of any such discrepancy, interest will continue to accrue
based on the actual amount of principal outstanding without
compounding. The Bank will not pay the Borrower interest on any
overpayment.
(d) The Borrower will maintain sufficient funds in the Designated
Account to cover each debit. If there are insufficient funds in the
Designated Account on the date the Bank enters any debit authorized by this
Agreement, the debit will be reversed.
8.5 Banking Days. Unless otherwise provided in this Agreement, a banking
day is a day other than a Saturday or a Sunday on which the Bank is open for
business in California. For amounts bearing interest at an offshore rate (if
any), a banking day is a day other than a Saturday or a Sunday on which the Bank
is open for business in California and dealing in offshore dollars. All payments
and disbursements which would be due on a day which is not a banking day will be
due on the next banking day. All
-12-
payments received on a day which is not a banking day will be applied to the
credit on the next banking day. For amounts bearing interest at a LIBOR Rate, a
banking day is a day other than a Saturday or a Sunday on which the Bank is open
for business in California, New York and London and dealing in offshore dollars.
8.6 Taxes. If any payments to the Bank under this Agreement are
made from outside the United States, the Borrower will not deduct any foreign
taxes from any payments it makes to the Bank. If any such taxes are imposed on
any payments made by the Borrower (including payments under this Section), the
Borrower will pay the taxes and will also pay to the Bank, at the time interest
is paid, any additional amount which the Bank specifies as necessary to preserve
the after-tax yield the Bank would have received if such taxes had not been
imposed. The Borrower will confirm that it has paid the taxes by giving the Bank
official tax receipts (or notarized copies) within 30 days after the due date.
8.7 Additional Costs. The Borrower will pay the Bank, on demand,
for the Bank's costs or losses arising from any statute or regulation, or any
request or requirement of a regulatory agency which is applicable to all
national banks or a class of all national banks, in each case to the extent that
such statute or regulation was enacted or promulgated following the date hereof
or the request or requirement was made or became effective following the date
hereof. The costs and losses will be allocated to the loan in a manner
determined by the Bank, using any reasonable method. The costs include the
following:
(a) any reserve or deposit requirements to the extent
resulting from the foregoing; and
(b) any capital requirements relating to the Bank's assets and
commitments for credit to the extent resulting from the foregoing.
8.8 Interest Calculation. Except as otherwise stated in this
Agreement, all interest and fees, if any, will be computed on the basis of a
360-day year and the actual number of days elapsed. This results in more
interest or a higher fee than if a 365-day year is used.
8.9 Default Rate. Upon the occurrence and during the continuation
of any Event of Default under this Agreement, principal amounts outstanding
under this Agreement will at the option of the Bank bear interest at a rate
which is three percentage points higher than the rate of interest otherwise
provided under this Agreement. This will not constitute a waiver of any Default
or Event of Default. Installments of principal which are not paid when due under
this Agreement shall continue to bear interest until paid. Any interest, fees or
costs which are not paid when due shall bear interest at the Prime Rate plus
three percentage points. This may result in compounding of interest.
9. CONDITIONS
The Bank must receive the following items, in form and content
acceptable to the Bank, before it is required to extend any credit to the
Borrower under this Agreement on the date of this Agreement:
-13-
9.1 Authorizations. Evidence that the execution, delivery and
performance by the Borrower of this Agreement and any instrument or agreement
required of Borrower under this Agreement have been duly authorized.
9.2 Insurance. Evidence of insurance coverage, as required in the
"Covenants" section of this Agreement.
9.3 Evidence of Priority. Evidence that security interests and
liens in favor of the Bank are valid, enforceable, and prior to all others'
rights and interests, except those the Bank consents to in writing and any
Permitted Liens.
9.4 Loan Fee. Payment of the Loan Fee described in Section 6.1
hereto.
9.5 Cash Collateral Deposit. A deposit of cash collateral in the
amount of $2,000,000. This amount shall be held in an interest bearing account
as collateral security for the obligations of the Borrower to the Bank, the
Borrower hereby granting to the Bank a security interest in such account and its
contents. Provided that no Default or Event of Default then exists, the Bank
shall release the collateral contained in such account promptly and in any event
within three Business Days following receipt by the Bank of Compliance
Certificates from the Borrower as of the following dates:
Date for which Compliance Certificate Prepared Amount
Released
December 31, 2002 $1,000,000
March 31, 2003 Remainder
9.6 Other Items. Any other items that the Bank reasonably requires.
In addition to the foregoing, it shall be a condition to each
new advance of credit under this Agreement (whether on the date hereof or on any
later date), that (a) each of the representations and warranties set forth
herein are true and correct as of such date (other than any representations
which expressly relate only to another date) and (b) that no Default or Event of
Default has occurred and remains continuing.
10. REPRESENTATIONS AND WARRANTIES
When the Borrower signs this Agreement, Borrower makes the following
representations and warranties. Each request for an extension of credit
constitutes a renewed representation, provided that following the effective date
of the Quantum Spin-Off, no representations shall be deemed to be made as to
Quantum:
10.1 Organization. Each of the Borrower and Quantum is a corporation
duly formed and existing under the laws of the state where organized.
10.2 Authorization. This Agreement, and any instrument or agreement
required hereunder, are within the Borrower's powers, have been duly authorized,
and do not conflict with any of its organizational papers.
-14-
10.3 Enforceable Agreement. This Agreement is a legal, valid and
binding agreement of the Borrower, enforceable in accordance with its terms, and
any instrument or agreement required of Borrower hereunder, when executed and
delivered, will be similarly legal, valid, binding and enforceable.
10.4 Good Standing. In each state in which the Borrower and Quantum
do business, they are properly licensed, in good standing, and, where required,
in compliance with fictitious name statutes.
10.5 No Conflicts. This Agreement does not conflict with any law,
agreement, or obligation by which the Borrower, or its properties are bound.
10.6 Financial Information. All financial and other information that
has been or will be supplied to the Bank is:
(a) sufficiently complete to give the Bank accurate knowledge
of the Borrower's and Quantum's financial condition.
(b) in compliance with all government regulations that apply.
10.7 Lawsuits. There is no lawsuit, tax claim or other dispute
pending or threatened against the Borrower which, if lost, would materially
impair the Borrower's financial condition or would impair Borrower's ability to
repay the loans and letters of credit contemplated herein, except as have been
disclosed in writing to the Bank.
10.8 Collateral. All collateral required in this Agreement is owned
by the grantor of the security interest free of any title defects or any liens
or interests of others (other than Permitted Liens).
10.9 Permits, Franchises. The Borrower and Quantum possess all
permits, memberships, franchises, contracts and licenses required and all
trademark rights, trade name rights, patent rights and fictitious name rights
necessary to enable each of them to conduct the business in which it is now
engaged.
10.10 Other Obligations. Neither the Borrower nor Quantum is in
default on any obligation for borrowed money, any purchase money obligation or
any other material lease, commitment, contract, instrument or obligation.
10.11 Income Tax Returns. The Borrower has no knowledge of any
pending assessments or adjustments of their income tax for any year.
10.12 No Default. No Default or Event of Default exists.
10.13 Locations. The Borrower's place of business (or its chief
executive office) is located at the address listed under its signature on this
Agreement.
11. COVENANTS
The Borrower agrees that it shall comply with the covenants set forth
in this Section 11 (and shall cause each its subsidiaries to so comply, except
that following the effective date of the Quantum Spin-Off, no such compliance
shall be required by or as to
-15-
Quantum), so long as credit is available under this Agreement and until the Bank
is repaid in full:
11.1 Use of Proceeds. To use the proceeds of (i) Facility No. 1 only
for the Borrower's working capital and other general corporate purposes; (ii)
Facility No. 2 to refinance the existing term loan outstandings under Facility
No. 2 of the Existing Loan Agreement, (iii) Facility No. 3 to refinance the
existing term loan outstandings under Facility No. 3 of the Existing Loan
Agreement, and Facility No. 4 only for Capital Expenditures permitted by this
Agreement.
11.2 Financial Information. To provide the following financial
information and statements in form and content acceptable to the Bank, and such
additional information as requested by the Bank from time to time:
(a) Within 90 days of Borrower fiscal year end April 30, 2002,
and each fiscal year end thereafter, the Borrower's annual financial
statements. These financial statements must be audited by a certified
public accountant acceptable to the Bank. The statements shall be
prepared on a consolidated and consolidating basis.
(b) Within 45 days of each fiscal quarter's end, the
Borrower's quarterly financial statements. These financial statements
may be Borrower prepared. The statements shall be prepared on a
consolidated and consolidating basis.
(c) Within 90 days of each fiscal year end, copies of the
Borrower's Form 10-K Annual Report.
(d) Within 45 days of each fiscal quarter's end, copies of the
Borrower's Form 10-Q Quarterly Report.
(e) Within 90 days of each fiscal year end, consolidated and
consolidating projections for the then current fiscal year of the
Borrower.
(f) Promptly and in any event within 10 days of the date when
filed, copies of any registration statements or other documents filed
with the Securities and Exchange Commission.
(g) Within 45 days of each fiscal quarter's end, a detailed
aging report of consolidated accounts receivable and accounts payable.
(h) Any other such additional information as may be reasonably
requested by Bank from time to time; and
(i) Within the period(s) provided in subsections (a) and (b)
above, a compliance certificate signed by an authorized financial
officer of the Borrower setting forth (i) the information and
computations (in sufficient detail) to establish that the Borrower is
in compliance with all financial covenants at the end of the period
covered by the financial statements then being furnished and (ii)
whether there existed as of the date of such financial statements and
whether there exists as of the date of the certificate, any Default or
Event of Default under this Agreement and, if any such Default or
Event of Default exists, specifying the
-16-
nature thereof and the action the Borrower is taking and proposes to
take with respect thereto.
11.3 Current Ratio. Cause the Current Ratio, as of the last day of
each fiscal quarter, commencing with the quarterly period ending July 31, 2002,
to be not less than 2.00:1.00.
11.4 Funded Debt to EBITDA Ratio. Cause the Funded Debt to EBITDA
Ratio, as of the last day of each fiscal quarter, commencing with the quarterly
period ending July 31, 2002, to be less than 2.25:1.00.
11.5 Debt Service Coverage Ratio. Cause the Debt Service Coverage
Ratio, as of the last day of each fiscal quarter, commencing with the quarterly
period ending July 31, 2002, to be not less than the ratio set forth below
opposite that fiscal quarter:
Fiscal Quarters Ending Minimum Ratio
July 31, 2002 1.05:1.00
October 31, 2002 1.30:1.00
January 31, 2003 1.35:1.00
April 30, 2003 1.50:1.00
and thereafter
11.6 Other Debts. Not to have outstanding or incur any direct or
contingent liabilities (other than those to the Bank and/or any other subsidiary
or affiliate of Bank of America Corporation), or become liable for the
liabilities of others without the Bank's written consent. This does not
prohibit:
(a) Acquiring goods, supplies, or merchandise on normal trade
credit, and incurring indebtedness for services rendered, similar in
nature and amount to such indebtedness incurred by the Borrower in the
past.
(b) Endorsing negotiable instruments received in the usual course
of business.
(c) Obtaining performance bonds, trade letters of credit, or
surety bonds in the usual course of business.
(d) Liabilities in existence on the date of this Agreement
disclosed in writing to the Bank.
(e) Additional debts for purchase money transactions including
capital leases, conditional sales or other title retention contracts
with respect to property used or acquired, which do not exceed a total
principal amount of $500,000 for each annual accounting period.
-17-
(f) a line of credit not in excess of $2,000,000 for IMPCO BV
from Fortis or another institution acceptable to the Bank.
(g) guarantees in respect of obligations incurred by Borrower's
subsidiaries and permitted by this Section 11.6, provided that, in the
case of Quantum, such guarantees are terminated concurrently with the
Quantum Spin-Off.
11.7 Other Liens. Not to create, assume, or allow any security
interest or lien (including judicial liens) on property the Borrower or its
subsidiaries now or later own, except:
(a) Deeds of trust and security agreements in favor of the Bank.
(b) Liens for taxes not yet due.
(c) Additional purchase money security interests and similar
liens in property acquired after the date of this Agreement, to secure
transactions permitted under Section 11.5(e).
(d) Permitted Liens.
11.8 Notices to Bank. To promptly notify the Bank in writing of:
(a) any lawsuit under which Borrower's or, prior to the effective
date of the Quantum Spin-Off, Quantum, may reasonably be expected to be
in excess of $250,000 in excess of any applicable insurance coverage.
(b) any actual or potential contingent liability to the Borrower
or, prior to the effective date of the Quantum Spin-Off, Quantum in
excess of $250,000.
(c) any substantial dispute between the Borrower or, prior to the
effective date of the Quantum Spin-Off, Quantum and any government
authority.
(d) any failure to comply with this Agreement.
(e) any material adverse change in the Borrower's or, prior to
the effective date of the Quantum Spin-Off, Quantum's business
condition (financial or otherwise), operations, properties or
prospects, or (in Borrower's case) ability to repay the credit.
(f) any change in the Borrower's or, prior to the effective date
of the Quantum Spin-Off, Quantum's name, legal structure, place of
business, or chief executive office if either of them has more than one
place of business.
11.9 Books and Records. To maintain adequate books and records.
11.10 Audits. To allow the Bank and its agents to inspect the
Borrower's and, prior to the effective date of the Quantum Spin-Off, Quantum's
properties and examine, audit and make copies of books and records at any
reasonable time. If any of the Borrower's and, prior to the effective date of
the Quantum Spin-Off, Quantum's
-18-
properties, books or records are in the possession of a third party, the
Borrower authorizes that third party to permit the Bank or its agents to have
access to perform inspections or audits and to respond to the Bank's requests
for information concerning such properties, books and records.
11.11 Compliance with Laws. To comply with the laws (including any
fictitious name statute), regulations, and orders of any government body with
authority over the Borrower's business.
11.12 Preservation of Rights. To maintain and preserve all rights,
privileges, and franchises the Borrower now has.
11.13 Maintenance of Properties. To make any repairs, renewals, or
replacements to keep the Borrower's properties in good working condition.
11.14 Perfection of Liens. To help the Bank perfect and protect its
security interests and liens, and reimburse it for related costs it incurs to
protect its security interests and liens.
11.15 Cooperation. To take any action reasonably requested by the Bank
to carry out the intent of this Agreement.
11.16 Insurance.
(a) Insurance Covering Collateral. To maintain all risk property
damage insurance policies covering the tangible property comprising the
collateral. Each insurance policy must be in an amount acceptable to
the Bank. The insurance must be issued by an insurance company
acceptable to the Bank and must include a lender's loss payable
endorsement in favor of the Bank in a form acceptable to the Bank.
(b) General Business Insurance. To maintain insurance
satisfactory to the Bank as to amount, nature and carrier covering
property damage (including loss of use and occupancy) to any of the
Borrower's properties, public liability insurance including coverage
for contractual liability, product liability and workers' compensation,
and any other insurance which is usual for the Borrower's business.
(c) Evidence of Insurance. Upon the request of the Bank, to
deliver to the Bank a copy of each insurance policy, or, if permitted
by the Bank, a certificate of insurance listing all insurance in force.
11.17 Capital Expenditures. During any fiscal year, beginning with the
fiscal year ending April 30, 2003, make Capital Expenditures (on a consolidated
basis, but exclusive of Quantum) which are not in excess of $2,500,000.
Quantum Spin-Off. Not less than ten Business Days prior to the
proposed effective date of the Quantum Spin-Off, Borrower shall deliver drafts
of each material instrument, document and agreement to be executed by Borrower
and Quantum in connection therewith (the "Quantum Spin-Off Documents") to the
Bank for its review, and shall thereafter keep the Bank promptly apprised of any
changes thereto.
-19-
Upon the proposed effective date of the Quantum Spin-Off, and as a condition to
the effectiveness thereof, Borrower shall deliver to the Bank a certificate,
signed by an authorized financial officer of the Borrower, certifying that the
Quantum Spin-Off has occurred and is effective pursuant to such instruments,
documents and agreements, and, giving effect to the Quantum Spin-Off, no Default
or Event of Default has occurred or remains continuing, along with all the final
form of the Quantum Spin-Off Documents, which shall be in form and substance
acceptable to the Bank. Subject to the Bank's approval of the form and substance
of the Quantum Spin-Off Documents, and to the other conditions specified in this
Section, the Bank shall deliver to Quantum a writing evidencing the release of
Quantum from any liabilities in respect of this Agreement and releasing the
Bank's liens on the assets of Quantum (including any assets transferred by
Borrower to Quantum in connection with the Quantum Spin-Off).
11.18 Additional Negative Covenants. Not to, without the Bank's written
consent:
(a) engage in any business activities substantially different
from the Borrower's present business.
(b) liquidate or dissolve the Borrower's or Quantum's business.
(c) enter into any consolidation, merger, or other combination,
or become a partner in a partnership, a member of a joint venture, or a
member of a limited liability company, provided that the Borrower may
enter into joint ventures in the ordinary course of business to the
extent the same would not result in any Default or Event of Default.
(d) sell, lease, transfer or dispose of all or a substantial part
of the Borrower's business or the Borrower's assets except in an
aggregate amount not exceeding $500,000 in any fiscal year, other than
the Quantum Spin-Off.
(e) acquire or purchase a business or its assets for a
consideration (including assumption of debt) which would exceed
$1,000,000 (and then only to the extent that it would not result in any
Default or Event of Default).
(f) sell, assign, lease, transfer or otherwise dispose of any
assets for less than fair market value, or enter into any agreement to
do so.
(g) enter into any sale and leaseback agreement covering any of
its fixed or capital assets.
(h) voluntarily suspend its business for any period.
(i) make any investment in Quantum which is not existing as of
the date of this Agreement, other than investments made in the ordinary
course of the Borrower's business and prior to the effective date of
the Quantum Spin-Off in an amount no greater than $1,500,000 in any
calendar month (provided that following the Quantum Spin-Off, no
further such investments shall be made).
(j) make any distributions to shareholders of Borrower or Quantum
(whether in cash or other property) or repurchase or acquire any
capital stock or
-20-
other indebtedness of Borrower or Quantum from such shareholders.
Notwithstanding the provisions herein, this does not prohibit the
Quantum Spin-Off.
(k) Fail to maintain at all times prior to the effective date of
the Quantum Spin-Off a liquidity reserve, consisting of cash and cash
equivalents, in an aggregate amount which is not less than $2,000,000
at any time.
(l) Make any loans or advances to officers or shareholders which
would result in the aggregate principal amount of such loans and
advances being increased by an amount which is in excess of $300,000
over the amounts outstanding as of December 31, 2001.
12. HAZARDOUS WASTE INDEMNIFICATION
The Borrower will indemnify and hold harmless the Bank from any loss or
liability directly or indirectly arising out of the use, generation,
manufacture, production, storage, release, threatened release, discharge,
disposal or presence of a hazardous substance. This indemnity will apply whether
the hazardous substance is on, under or about the Borrower's property or
operations or property leased to the Borrower. The indemnity includes but is not
limited to reasonable attorneys' fees (including the reasonable estimate of the
allocated cost of in-house counsel and staff). The indemnity extends to the
Bank, its parent, subsidiaries and all of their directors, officers, employees,
agents, successors, attorneys and assigns. For these purposes, the term
"hazardous substances" means any substance, material, or waste which is or
becomes designated as "hazardous," "toxic," "pollutant,", or "contaminant" or a
similar designation or regulation under any federal, state or local law (whether
under common law, statute, regulation, or otherwise) or judicial interpretation
of such, including without limitation petroleum or natural gas. This indemnity
will survive repayment of the Borrower's obligations to the Bank.
13. DEFAULT
If any of the events or circumstances described in this Section 13
occurs (any such event or circumstance being referred to as an "Event of
Default", the Bank may do one or more of the following: declare the Borrower to
be in default, stop making any additional credit available to the Borrower, and
require the Borrower to repay their entire debt hereunder immediately and
without prior notice and to provide cash collateral for all letters of credit
issued hereunder. If an Event of Default occurs under Section 13.3 with respect
to the Borrower, then the entire debt outstanding under this Agreement will
automatically be due immediately.
13.1 Failure to Pay. The Borrower fails to make a payment under this
Agreement when due.
13.2 Lien Priority. The Bank fails to have an enforceable first lien
(except for any prior liens to which the Bank has consented in writing) on or
security interest in any property given as security for this loan.
-21-
13.3 False Information. The Borrower gives the Bank false or
misleading information or representations.
13.4 Bankruptcy. (i) The Borrower or, prior to the effective date of
the Quantum Spin-Off, Quantum files a bankruptcy petition, (ii) a bankruptcy
petition is filed against the Borrower or, prior to the effective date of the
Quantum Spin-Off, Quantum, or (iii) the Borrower or, prior to the effective date
of the Quantum Spin-Off, Quantum makes a general assignment for the benefit of
creditors. The Event of Default will be deemed cured if any such involuntary
bankruptcy petition is dismissed within a period of 60 days after the filing;
provided, however, that the Bank will not be obligated to extend any additional
credit under this Agreement during that period.
13.5 Receivers. A receiver or similar official is appointed for the
Borrower's or, prior to the effective date of the Quantum Spin-Off, Quantum's
business, or the business is terminated.
13.6 Lawsuits. Any lawsuit or lawsuits are filed on behalf of one or
more trade creditors against the Borrower or, prior to the effective date of the
Quantum Spin-Off, Quantum in an aggregate amount of $500,000 or more in excess
of any insurance coverage.
13.7 Judgments. (i) Any judgments or arbitration awards are entered
against the Borrower or, prior to the effective date of the Quantum Spin-Off,
Quantum, or (ii) the Borrower or, prior to the effective date of the Quantum
Spin-Off, Quantum enters into any settlement agreements with respect to any
litigation or arbitration, in an aggregate amount of $500,000 or more in excess
of any insurance coverage, which is not fully bonded or stayed within 10
business days of the entry thereof.
13.8 Government Action. Any government authority takes action that the
Bank believes materially adversely affects the Borrower's or, prior to the
effective date of the Quantum Spin-Off, Quantum's financial condition or
Borrower's ability to repay the obligations hereunder.
13.9 Failure to Cause Quantum Spin-Off. The Borrower fails to (i)
cause the Quantum Spin-Off to occur and (ii) deliver to the Bank the Quantum
Spin-off Documents on or before August 15, 2002.
13.10 Material Adverse Change. A material adverse change occurs in the
Borrower's or, prior to the effective date of the Quantum Spin-Off, Quantum's
business condition (financial or otherwise), operations, properties or
prospects, or ability to repay the credit on a consolidated basis.
13.11 Cross-default. Any default occurs under any agreement in
connection with any credit the Borrower or, prior to the effective date of the
Quantum Spin-Off, Quantum has obtained from anyone else or which the Borrower
or, prior to the effective date of the Quantum Spin-Off, Quantum has guaranteed
and such default is not cured or waived within any cure period applicable
thereto.
13.12 Default under Related Documents. Any guaranty, subordination
agreement, security agreement, or other document required by this Agreement is
violated or no longer in effect.
-22-
13.13 Other Bank Agreements. The Borrower or Quantum fails to meet the
conditions of, or fails to perform any obligation under any other agreement the
Borrower or Quantum has with the Bank or any affiliate of the Bank.
13.14 Other Breach Under Agreement. The Borrower fails to meet the
conditions of, or fails to perform any obligation under, any term of this
Agreement not specifically referred to in this Article. This includes any
failure or anticipated failure by the Borrower to comply with any financial
covenants set forth in this Agreement, whether such failure is evidenced by
financial statements delivered to the Bank or is otherwise known to the Borrower
or the Bank. If, in the Bank's opinion, the breach is capable of being remedied,
the breach will not be considered an Event of Default for a period of fifteen
days after the date on which the Bank gives written notice of the breach to the
Borrower; provided, however, that the Bank will not be obligated to extend any
additional credit under this Agreement during that period.
14. ENFORCING THIS AGREEMENT; MISCELLANEOUS
14.1 GAAP. Except as otherwise stated in this Agreement, all financial
information provided to the Bank and all financial covenants will be made under
generally accepted accounting principles, consistently applied.
14.2 California Law. This Agreement is governed by California law.
14.3 Successors and Assigns. This Agreement is binding on the Borrower's
and the Bank's successors and assignees. The Borrower agrees that it may not
assign this Agreement without the Bank's prior consent. The Bank may sell
participations in or assign this loan, and may exchange financial information
about the Borrower and, prior to the effective date of the Quantum Spin-Off,
Quantum with actual or potential participants or assignees. If a participation
is sold or the loan is assigned, the purchaser will have the right of set-off
against the Borrower.
14.4 Arbitration.
(a) This paragraph concerns the resolution of any controversies or
claims between the Borrower and the Bank, including but not limited to
those that arise from:
(i) This Agreement (including any renewals,
extensions or modifications of this Agreement);
(ii) Any document, agreement or procedure related to
or delivered in connection with this Agreement;
(iii) Any violation of this Agreement; or
(iv) Any claims for damages resulting from any
business conducted between the Borrower and the Bank, including
claims for injury to persons, property or business interests
(torts).
(b) At the request of the Borrower or the Bank, any such
controversies or claims will be settled by arbitration in accordance with
the United States
-23-
Arbitration Act. The United States Arbitration Act will apply even
though this Agreement provides that it is governed by California law.
(c) Arbitration proceedings will be administered by the American
Arbitration Association and will be subject to its commercial rules of
arbitration.
(d) For purposes of the application of the statute of limitations,
the filing of an arbitration pursuant to this paragraph is the
equivalent of the filing of a lawsuit, and any claim or controversy
which may be arbitrated under this paragraph is subject to any
applicable statute of limitations. The arbitrators will have the
authority to decide whether any such claim or controversy is barred by
the statute of limitations and, if so, to dismiss the arbitration on
that basis.
(e) If there is a dispute as to whether an issue is arbitrable,
the arbitrators will have the authority to resolve any such dispute.
(f) The decision that results from an arbitration proceeding may
be submitted to any authorized court of law to be confirmed and
enforced.
(g) The procedure described above will not apply if the
controversy or claim, at the time of the proposed submission to
arbitration, arises from or relates to an obligation to the Bank
secured by real property located in California. In this case, the
Borrower and the Bank must consent to submission of the claim or
controversy to arbitration. If both parties do not consent to
arbitration, the controversy or claim will be settled as follows:
(i) The Borrower and the Bank will designate a referee
(or a panel of referees) selected under the auspices of the
American Arbitration Association in the same manner as arbitrators
are selected in Association-sponsored proceedings;
(ii) The designated referee (or the panel of referees)
will be appointed by a court as provided in California Code of
Civil Procedure Section 638 and the following related sections;
(iii) The referee (or the presiding referee of the
panel) will be an active attorney or a retired judge; and
(iv) The award that results from the decision of the
referee (or the panel) will be entered as a judgment in the court
that appointed the referee, in accordance with the provisions of
California Code of Civil Procedure Sections 644 and 645.
(h) This provision does not limit the right of the Borrower or the
Bank to:
(i) exercise self-help remedies such as setoff;
(ii) foreclose against or sell any real or personal
property collateral; or
-24-
(iii) act in a court of law, before, during or after the
arbitration proceeding to obtain:
(A) an interim remedy; and/or
(B) additional or supplementary remedies.
(i) The pursuit of or a successful action for interim, additional
or supplementary remedies, or the filing of a court action, does not
constitute a waiver of the right of the Borrower or the Bank, including
the suing party, to submit the controversy or claim to arbitration if
the other party contests the lawsuit. However, if the controversy or
claim arises from or relates to an obligation to the Bank which is
secured by real property located in California at the time of the
proposed submission to arbitration, this right is limited according to
the provision above requiring the consent of the Borrower and the Bank
to seek resolution through arbitration.
(j) If the Bank forecloses against any real property securing this
Agreement, the Bank has the option to exercise the power of sale under
the deed of trust or mortgage, or to proceed by judicial foreclosure.
14.5 Severability; Waivers. If any part of this Agreement is not
enforceable, the rest of the Agreement may be enforced. The Bank retains all
rights, even if it makes a loan after any Default or Event of Default. If the
Bank waives a Default or Event of Default, it may enforce later Defaults or
Events of Default. Any consent or waiver under this Agreement must be in
writing.
14.6 Administration Costs. The Borrower shall pay the Bank for all
reasonable costs incurred by the Bank in connection with administering this
Agreement.
14.7 Attorneys' Fees. The Borrower shall reimburse the Bank for any
reasonable costs and attorneys' fees incurred by the Bank in connection with the
enforcement or preservation of any rights or remedies under this Agreement and
any other documents executed in connection with this Agreement, and including
any amendment, waiver, "workout" or restructuring under this Agreement. In the
event of a lawsuit or arbitration proceeding, the prevailing party is entitled
to recover costs and reasonable attorneys' fees incurred in connection with the
lawsuit or arbitration proceeding, as determined by the court or arbitrator. In
the event that any case is commenced by or against the Borrower or, prior to the
effective date of the Quantum Spin-Off, Quantum under the Bankruptcy Code (Title
11, United States Code) or any similar or successor statute, the Bank is
entitled to recover costs and reasonable attorneys' fees incurred by the Bank
related to the preservation, protection, or enforcement of any rights of the
Bank in such a case. As used in this paragraph, "attorneys' fees" includes the
allocated costs of the Bank's in-house counsel.
14.8 One Agreement. This Agreement and any related security or other
agreements required by this Agreement, collectively:
(a) represent the sum of the understandings and agreements between
the Bank, the Borrower and Quantum concerning this credit;
-25-
(b) replace any prior oral or written agreements between the
Bank, the Borrower and Quantum concerning this credit; and
(c) are intended by the Bank and the Borrower as the final,
complete and exclusive statement of the terms agreed to by them.
In the event of any conflict between this Agreement and any other agreements
required by this Agreement, this Agreement will prevail.
14.9 Indemnification. The Borrower will indemnify and hold the Bank
harmless from any loss, liability, damages, judgments, and costs of any kind
relating to or arising directly or indirectly out of (a) this Agreement or any
document required hereunder, (b) any credit extended or committed by the Bank to
the Borrower hereunder, and (c) any litigation or proceeding related to or
arising out of this Agreement, any such document, or any such credit. This
indemnity includes but is not limited to reasonable attorneys' fees (including
the allocated cost of in-house counsel). This indemnity extends to the Bank, its
parent, subsidiaries and all of their directors, officers, employees, agents,
successors, attorneys, and assigns. This indemnity will survive repayment of the
obligations hereunder to the Bank. All sums due to the Bank hereunder shall be
obligations of the Borrower, due and payable immediately without demand.
14.10 Notices. All notices required under this Agreement shall be
personally delivered or sent by first class mail, postage prepaid, to the
addresses on the signature page of this Agreement, or to such other addresses as
the Bank and the Borrower may specify from time to time in writing.
14.11 Headings. Article and paragraph headings are for reference only and
shall not affect the interpretation or meaning of any provisions of this
Agreement.
-26-
14.12 Counterparts. This Agreement may be executed in as many counterparts
as necessary or convenient, and by the different parties on separate
counterparts each of which, when so executed, shall be deemed an original but
all such counterparts shall constitute but one and the same agreement.
This Agreement is executed as of the date stated at the top of the first
page.
BANK OF AMERICA, N.A. IMPCO TECHNOLOGIES, INC.
By: /s/ Xxxxx Xxxxxxxxx By: /s/ W. Xxxxx Xxxxx
----------------------------- ------------------------------
Name: Xxxxx Xxxxxxxxx Name: W. Xxxxx Xxxxx
Title: Vice President Title: CFO
Address where notices to the Bank are Address where notices to the Borrower
to be sent: are to be sent:
AZ1-200-19-11 00000 Xxxxxxx Xxxxx
000 Xxxx Xxxxxxxxxx Xxxxxx, 00xx Xxxxx Xxxxxxxx, XX 00000-0000
Xxxxxxx, XX 00000 562/000-0000 XXX
602/000-0000 XXX
-27-
