EXECUTION COPY
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SECURED CREDIT AGREEMENT
Dated as of August 31, 2001
between
XXXXX-XXXXXXX ELECTRONICS CORPORATION,
an Illinois corporation,
AMERICAN GAMING & ELECTRONICS, INC.,
a Nevada corporation,
and
AMERICAN NATIONAL BANK AND
TRUST COMPANY OF CHICAGO
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS ........................................ 1
1.1 Definitions........................................... 1
1.2 Other Interpretive Provisions......................... 15
1.3 Accounting Principles................................. 16
ARTICLE II THE CREDITS ........................................ 16
2.1 Description of Facility............................... 16
2.1.1 Revolving Facility............................. 16
2.1.2 Term Facility.................................. 16
2.1.3 Use of Proceeds................................ 16
2.2 Advances.............................................. 16
2.2.1 Commitment..................................... 16
2.2.2 Termination.................................... 16
2.2.3 [INTENTIONALLY OMITTED]........................ 17
2.2.4 Types of Advances.............................. 17
2.2.5 Minimum Amount of Each Advance................. 17
2.2.6 Method of Selecting Types and Interest Periods
for New Advances............................... 17
2.2.7 Conversion and Continuation of Outstanding
Advances....................................... 17
2.3 Facility Letters of Credit............................ 18
2.3.1 Obligation to Issue............................ 18
2.3.2 Types and Amounts.............................. 18
2.3.3 Conditions..................................... 19
2.3.4 Procedure for Issuance of Facility Letters of
Credit......................................... 19
2.3.5 Reimbursement Obligations...................... 20
2.3.6 Participation.................................. 20
2.3.7 Payment of Reimbursement Obligations........... 21
2.3.8 Compensation for Facility Letters of Credit.... 21
2.3.9 Facility Letter of Credit Collateral Account... 21
2.4 General Facility Terms................................ 22
2.4.1 Fees; Reductions in Aggregate Commitment....... 22
2.4.2 Optional Principal Payments; Mandatory
Principal Payments............................. 23
2.4.3 Changes in Interest Rate, etc.................. 23
2.4.4 Rates Applicable After Default................. 23
2.4.5 Method of Payment.............................. 23
2.4.6 Recovery of Payment............................ 24
2.4.7 Collateral..................................... 24
2.4.8 Notes; Telephonic Notices...................... 24
2.4.9 Interest Payment Dates; Interest and Fee Basis. 24
2.4.10 Principal and Interest Payments Upon The Term
Loan.......................................... 25
2.4.11 Notification of Advances, Interest Rates, and
Prepayments................................... 25
2.4.12 Lending Institutions.......................... 25
2.4.13 Non-Receipt of Funds by the Lender............ 25
2.4.14 Withholding Tax Exemption..................... 25
2.4.15 Maintenance of Balances and Lock Box Account.. 26
ARTICLE III CHANGE IN CIRCUMSTANCES ............................ 26
3.1 Yield Protection...................................... 26
3.2 Changes in Capital Adequacy Regulations............... 27
3.3 Taxes................................................. 27
3.4 Lender Statements; Survival of Indemnity.............. 28
ARTICLE IV CONDITIONS PRECEDENT ............................... 29
4.1 Initial Advance and Facility Letter of Credit......... 29
4.2 Each Advance and Facility Letter of Credit............ 31
ARTICLE V REPRESENTATIONS AND WARRANTIES ..................... 31
5.1 Corporate Existence and Standing...................... 31
5.2 Authorization and Validity............................ 32
5.3 No Conflict; Government Consent....................... 32
5.4 Financial Statements.................................. 32
5.5 Material Adverse Change............................... 32
5.6 Taxes................................................. 33
5.7 Litigation and Contingent Obligations................. 33
5.8 Subsidiaries.......................................... 33
5.9 ERISA................................................. 33
5.10 Accuracy of Information............................... 34
5.11 Regulation U.......................................... 34
5.12 Material Agreements................................... 34
5.13 Compliance With Laws.................................. 34
5.14 Ownership of Properties............................... 34
5.15 Environmental Matters................................. 34
5.16 Investment Company Act................................ 35
5.17 Public Utility Holding Company Act.................... 35
5.18 Intentionally Omitted................................. 35
5.19 Intellectual Property................................. 35
5.20 Labor................................................. 35
5.21 Solvency.............................................. 35
5.22 Post-Retirement Benefits.............................. 35
5.23 Insurance............................................. 36
5.24 Insurance Certificate................................. 36
ARTICLE VI COVENANTS .......................................... 36
6.1 Financial Reporting................................... 36
6.2 Use of Proceeds....................................... 38
6.3 Notice of Default..................................... 39
6.4 Conduct of Business................................... 39
6.5 Taxes................................................. 39
6.6 Insurance............................................. 39
6.7 Compliance with Laws.................................. 39
6.8 Maintenance of Properties............................. 39
6.9 Inspection............................................ 39
6.10 Financial Covenants................................... 40
6.10.1 Leverage Ratio................................ 40
6.10.2 Interest Coverage Ratio....................... 40
6.10.3 Fixed Charge Coverage Ratio................... 40
6.10.4 Capital Expenditures.......................... 40
6.11 [Intentionally Omitted]............................... 40
6.12 Indebtedness.......................................... 40
6.13 Merger................................................ 41
6.14 Sale of Assets........................................ 41
6.15 Investments and Acquisitions.......................... 41
6.16 Liens................................................. 42
6.17 Prohibition of Negative Pledge........................ 43
6.18 Affiliates............................................ 43
6.19 Amendments to Agreements.............................. 43
6.20 Sale of Accounts...................................... 43
6.21 Fiscal Year........................................... 43
6.22 Limitation on the Creation of Subsidiaries............ 43
6.23 Subsidiary Dividends.................................. 44
6.24 Repayment of Subordinated Debt........................ 44
ARTICLE VII DEFAULTS ........................................... 44
ARTICLE VIII ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES..... 47
8.1 Acceleration.......................................... 47
8.2 Amendments............................................ 47
8.3 Preservation of Rights................................ 48
ARTICLE IX GENERAL PROVISIONS ................................. 48
9.1 Survival of Representations........................... 48
9.2 Governmental Regulation............................... 48
9.3 Taxes................................................. 48
9.4 Headings.............................................. 48
9.5 Entire Agreement...................................... 49
9.6 Several Obligations; Benefits of this Agreement....... 49
9.7 Expenses; Indemnification............................. 49
9.8 Numbers of Documents.................................. 49
9.9 Accounting............................................ 49
9.10 Severability of Provisions............................ 49
9.11 Nonliability of Lenders............................... 50
9.12 Confidentiality....................................... 50
9.13 Nonreliance........................................... 50
ARTICLE X SETOFF; RATABLE PAYMENTS ........................... 50
10.1 Setoff................................................ 50
10.2 Ratable Payments...................................... 50
ARTICLE XI BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATION ... 51
11.1 Successors and Assigns................................ 51
11.2 Participation......................................... 51
11.2.1 Permitted Participants; Effect................ 51
11.2.2 Voting Rights................................. 52
11.2.3 Benefit of Setoff............................. 52
11.3 Assignments........................................... 52
11.3.1 Permitted Assignments......................... 52
11.3.2 Effect; Effective Date........................ 52
11.4 Dissemination of Information.......................... 53
11.5 Tax Treatment......................................... 53
ARTICLE XII NOTICES ............................................ 53
12.1 Notices............................................... 53
12.2 Change of Address..................................... 53
ARTICLE XIIICOUNTERPARTS ....................................... 54
ARTICLE XIV CHOICE OF LAW, CONSENT TO JURISDICTION, WAIVER OF
JURY TRIAL ......................................... 54
14.1 Choice of Law......................................... 54
14.2 Consent to Jurisdiction............................... 54
14.3 Waiver of Jury Trial.................................. 54
14.4 Joint and Several Obligations......................... 54
SCHEDULE 1 [Deleted]
SCHEDULE 2 [Deleted]
SCHEDULE 5.5 Material Adverse Changes since June 30, 2001
SCHEDULE 5.6 Exceptions to Tax Representations
SCHEDULE 5.7 Pending Litigation
SCHEDULE 5.8 Borrower's Subsidiaries
SCHEDULE 5.9 Exceptions to ERISA Representation with respect to Plan
Withdrawals
SCHEDULE 5.14 Exceptions to Representation Concerning Ownership of
Properties
SCHEDULE 5.15 Exceptions to Representation Concerning Environmental
Matters
SCHEDULE 6.12 Permitted Indebtedness
SCHEDULE 6.15 (viii) Description of Existing Investments
SCHEDULE 6.18 Transactions with Affiliates
EXHIBIT A Form of Compliance Certificate
EXHIBIT B Form of Revolving Note and Term Note
EXHIBIT C Form of Security Agreement
EXHIBIT D Form of Facility Letter of Credit Request
EXHIBIT E Form of Opinion of Outside Counsel For Borrower
EXHIBIT F Form of Written Money Transfer Instructions
EXHIBIT G Form of Stock Pledge Agreement
EXHIBIT H Borrowing Base Certificate
EXHIBIT I Authorization to File UCC Financing Statements
CREDIT AGREEMENT
This Credit Agreement (this "Agreement"), dated as of August 31, 2001,
is between XXXXX-XXXXXXX ELECTRONICS CORPORATION, an Illinois corporation
("W-G"), AMERICAN GAMING & ELECTRONICS, INC., a Nevada corporation ("AGE")
((W-G and AGE herein together with their successors and assigns (if and as
permitted hereunder) are referred to both jointly and individually as the
"Borrower")), and AMERICAN NATIONAL BANK AND TRUST COMPANY OF CHICAGO (the
"Lender"). The parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. As used in this Agreement, the following terms shall
have the meanings herein specified unless the context otherwise requires:
"Account" means any right to payment for goods sold or for services
rendered which is not evidenced by an instrument or chattel paper, whether
or not it has been earned by performance or delivery.
"Account Debtor" has the meaning stated therefor in the Security
Agreement.
"Acquisition" means any transaction, or any series of related
transactions, consummated on or after the date of this Agreement, by which
the Borrower or any of its respective Subsidiaries (i) acquires any going
concern business or all or substantially all of the assets of any firm,
corporation or division thereof, whether through the purchase of assets,
merger or otherwise or (ii) directly or indirectly acquires (in one
transaction or as the most recent transaction in a series of transactions)
at least a majority (in number of votes) of the securities of a corporation
which have ordinary voting power for the election of directors (other than
securities having such power only by reason of the happening of a
contingency) or a majority (by percentage or voting power) of the
outstanding partnership interests of a partnership or membership interests
in a limited liability company.
"Advance" means a borrowing hereunder consisting of the amount of the
Loan made by the Lender to the Borrower on the same Borrowing Date.
"Affiliate" of any Person means any other Person directly or indirectly
controlling, controlled by or under common control with such Person. A
Person shall be deemed to control another Person if the controlling Person
owns 10% or more of any class of voting securities (or other ownership
interests) of the controlled Person or possesses, directly or indirectly,
the power to direct or cause the direction of the management or policies of
the controlled Person, whether through ownership of stock, by contract or
otherwise.
"AGE" is defined in the preamble.
"Aggregate Available Revolving Commitment" means, at any date of
determination thereof, the Aggregate Revolving Commitment minus the sum of
(i) the Facility Letter of Credit Obligations then outstanding and (ii) the
aggregate principal amount of all Revolving Advances then outstanding.
"Aggregate Commitment" means the aggregate of the Lender's Commitments
as reduced from time to time pursuant to the terms hereof.
"Aggregate Revolving Commitment" means $12,000,000.
"Agreement" means this Credit Agreement, as it may be amended or
modified and in effect from time to time.
"Applicable Fee Rate" means, at any time, the percentage rate per annum
at which Commitment Fees are accruing on the unused portion of the Aggregate
Commitment as set forth in the Pricing Schedule.
"Applicable Letter of Credit Percentage" means at any time the
percentage set forth on the Pricing Schedule for Letters of Credit.
"Applicable Margin" means, with respect to Advances of any Type at any
time, the percentage rate per annum which is applicable at such time with
respect to Advances of such Type as set forth in the Pricing Schedule.
"Article" means an article of this Agreement unless another document is
specifically referenced.
"Authorized Officer" means any of the Chairman, President, Executive
Vice President, Vice President, Chief Financial Officer, Secretary or
Treasurer of the Borrower, or any other senior officer of the Borrower
designated as such in writing to the Lender by the Borrower, in each case
acting singly.
"Bank One" means Bank One Corporation.
"Benefit Plan" means each employee benefit plan as defined in Section
3(3) of ERISA of the Borrower and each of their respective Subsidiaries.
"Borrower" has the meaning stated in the preamble.
"Borrowing Base" means an amount equal to the lesser of (1) $12,000,000
or (2) an amount, adjusted as described below, equal to (a) 85% of the face
amount (less maximum discounts, credits and allowances which may be taken
by or granted to the Account Debtor thereof in connection therewith)
of all existing Eligible Accounts that are set forth in the Schedule of
Accounts then most recently delivered by the Borrower to the Lender
and all existing Eligible Accounts that are set forth in any Schedule of
Accounts delivered by the Borrower to the Lender since the date of such
Schedule of Accounts, which amount shall be reduced by 100% of the face
amount of all payments which the Borrower has received on or in connection
with its Eligible Accounts since the date of such Schedule of Accounts, plus
(b) the lesser of (i) $6,000,000 or (ii) 35% of Eligible Raw Material
Inventory plus 50% of Eligible Finished Goods Inventory all as set forth in
the Schedule of Inventory then most recently delivered by the Borrower to
the Lender and all existing Eligible Inventory set forth in any Schedule of
Inventory delivered by the Borrower to the Lender since the date of such
Schedule of Inventory; provided, however, that, notwithstanding any contrary
provision contained herein, the Lender may elect at any time after five days
prior notice to the Borrower, in its reasonable discretion exercised in good
faith, to change the foregoing method of calculating the Borrowing Base by
reducing advances against Eligible Accounts and Eligible Inventory, or to
deduct additional reserves from the Borrowing Base. For purposes hereof,
unless otherwise notified by the Borrower, the Lender will assume that all
monies collected in the Lock Box (as defined in the Security Agreement) are
payments of Eligible Accounts.
"Borrowing Date" means a date on which an Advance is made hereunder.
"Business Day" means (i) with respect to any borrowing, payment and for
all other purposes, a day (other than a Saturday or Sunday) on which banks
generally are open in Chicago, Illinois for the conduct of substantially all
of their commercial lending activities.
"Borrowing Notice" is defined in Section 2.2.6.
"Capital Expenditures" means, without duplication, any expenditures for
any purchase or other acquisition of any asset which would be classified as
a fixed or capital asset on a consolidated balance sheet of the Borrower and
its Subsidiaries prepared in accordance with GAAP.
"Capitalized Lease" of a Person means any lease of Property by such
Person as lessee which would be capitalized on a balance sheet of such
Person prepared in accordance with GAAP.
"Capitalized Lease Obligations" of a Person means the amount of the
obligations of such Person under Capitalized Leases which would be shown as
a liability on a balance sheet of such Person prepared in accordance with
GAAP.
"Change" means (i) any change after the date of this Agreement in the
Risk-Based Capital Guidelines or (ii) any adoption of or change in any other
law, governmental or quasi-governmental rule, regulation, policy, guideline,
interpretation, or directive (whether or not having the force of law) after
the date of this Agreement which affects the amount of capital required or
expected to be maintained by any Lender or any Lending Institution or any
corporation controlling any Lender.
"Closing Date" means August 31, 2001.
"Code" means the Internal Revenue Code of 1986, as amended, reformed or
otherwise modified from time to time.
"Collateral" means all property and interests in property and proceeds
thereof now owned or hereafter acquired by the Borrower and its Subsidiaries
(other than the Property of WEA) in or upon which a Lien now or hereafter
exists in favor of the Lender.
"Commercial Letter of Credit" means any Facility Letter of Credit that
is a commercial or trade Letter of Credit.
"Commitment" means the obligation of Lender to make Loans and issue
Facility Letters of Credit in an aggregate amount not exceeding the
Aggregate Commitment, as such amount may be modified from time to time
pursuant to the terms hereof.
"Commitment Fee" has the meaning stated in Section 2.4.1.1(ii).
"Compliance Certificate" means a compliance certificate, substantially
in the form of Exhibit A hereto, signed by the chief financial officer or
treasurer of the Borrower, showing the calculations necessary to determine
compliance with this Agreement and stating that no Default or Unmatured
Default exists, or if any Default or Unmatured Default exists, stating the
nature and status thereof.
"Condemnation" is defined in Section 7.8.
"Consolidated Capital Expenditures" means, with reference to any
period, the Capital Expenditures of the Borrower and its Subsidiaries
calculated on a consolidated basis for such period.
"Consolidated Funded Indebtedness" means at any time the aggregate
dollar amount of Consolidated Indebtedness which has actually been funded
and is outstanding at such time, whether or not such amount is due or
payable at such time.
"Consolidated Indebtedness" means at any time the Indebtedness of the
Borrower and its Subsidiaries calculated on a consolidated basis as of such
time.
"Contingent Obligation" of a Person means, without duplication, any
agreement, undertaking or arrangement by which such Person directly or
indirectly assumes guarantees, endorses, contingently agrees to purchase or
provide funds for the payment of, or otherwise becomes or is contingently
liable upon, the obligation or liability of any other Person, or agrees to
maintain the net worth or working capital or other financial condition of
any other Person, or otherwise assures any creditor of such other Person
against loss, including, without limitation, any operating agreement,
comfort letter, take-or-pay contract or application or reimbursement
agreement for a Letter of Credit but excluding any endorsement of
instruments for deposit or collection in the ordinary course of business.
"Controlled Group" means all members of a controlled group of
corporations and all trades or businesses (whether or not incorporated)
under common control which, together with the Borrower or any of its
Subsidiaries, are treated as a single employer under Section 414 of the
Code.
"Credit Party" means the Borrower.
"Current Assets" means the value of the current assets of Borrower and
its Subsidiaries determined in accordance with GAAP.
"Current Liabilities" means as of any date, the aggregate amount of all
liabilities of Borrower and its Subsidiaries determined in accordance with
GAAP which would, in accordance with GAAP, be classified as current
liabilities by a Person conducting a business the same as or substantially
similar to that of Borrower. Current Liabilities include, but are not
limited to, all outstanding Revolving Advances and Reimbursement
Obligations.
"Debt" means as of any time the aggregate of all indebtedness,
obligations, liabilities, reserves and any other items which would be listed
as a liability on a consolidated balance sheet of the Borrower in accordance
with GAAP consistently applied, and in any event including all indebtedness
and liabilities of any other person which the Borrower or any of its
Subsidiaries may guarantee or otherwise be responsible or liable for (other
than any liability arising out of the endorsement of commercial paper for
deposit or collection in the ordinary course of business), all indebtedness
and liabilities secured by any lien on any property of the Borrower or any
of its Subsidiaries, whether or not the same would be classified as a
liability on a balance sheet, the liability of the Borrower or any of its
Subsidiaries, in respect to banker's acceptances and letters of credit, and
the aggregate amount of rentals or other consideration payable by the
Borrower or any of its Subsidiaries over the remaining unexpired term of all
capital leases (determined in accordance with GAAP), but excluding all
general contingency reserves and reserves for deferred income taxes and
investment credit.
"Default" means an event described in Article VII.
"Dollars", "U.S. Dollars" and "$" mean dollars in lawful currency of
the United States of America.
"Debt Service Coverage Ratio" for a given period means the ratio of (i)
EBIT plus depreciation and amortization minus unfunded Consolidated Capital
Expenditures and paid cash taxes, to (ii) Interest Expense, plus scheduled
principal payments upon Consolidated Funded Indebtedness (excluding Excess
Cash Flow Payments).
"EBIT" means for the applicable period earnings before interest and
taxes of the Borrower and its Subsidiaries taken as a whole.
"EBITDA" means for the applicable period, earnings before interest,
taxes, depreciation and amortization of the Borrower and its Subsidiaries
taken as a whole calculated, unless otherwise provided herein based upon
such items for the rolling twelve months immediately preceding the date of
calculation.
"Eligible Account" means any of the Accounts of the Borrower or any of
its Subsidiaries which meets each of the following requirements: (i) if it
arises from the sale of goods, such goods have been shipped or delivered to
the Account Debtor thereof or such goods are being invoiced in accordance
with the Borrower's or such Subsidiary's customary progress xxxxxxxx in
accordance with GAAP; (ii) it is a valid, legally enforceable obligation of
the Account Debtor thereunder, and is not subject to any offset,
counterclaim or other defense on such Account Debtor's part or to any claim
on such Account Debtor's part denying liability thereunder in whole or in
part; (iii) it is subject to a perfected Lien in the Lender's favor and is
not subject to any other Lien whatsoever, except for Permitted Liens; (iv)
it is evidenced by an invoice (dated not later than the date of shipment to
the Account Debtor or performance and having a due date not more than 60
days after the date of invoice (except for progress payments due from
Tropical Gaming, which payments are secured by a security interest in
equipment sold to Tropical Gaming, and Lender has received an assignment of
such security interest in form acceptable to Lender) rendered to such
Account Debtor, and is not evidenced by any instrument or chattel paper; (v)
it is payable in Dollars; (vi) it is not accounts owing by any governmental
agency or body, (vii) it is not owing by any Account Debtor residing,
located or having its principal activities or place of business outside the
United States of America or Canada (excluding the Province of Quebec, and
excluding any other province of Canada unless UCC type filings acceptable to
Lender's counsel are already on file in the province of Canada where the
Account Debtor resides), or who is not subject to service of process within
the continental United States of America, unless it is secured by a letter
of credit in form and substance acceptable to the Lender in the Lender's
sole discretion or, it is an account owing by one or more of the Account
Debtors listed on Schedule 1.1 hereto and such accounts in the aggregate do
not exceed twenty percent (20%) of the total of Eligible Accounts; (viii) it
is not owing by any Account Debtor involved in any bankruptcy or insolvency
proceeding; (ix) it is not owing by any of the Borrower's Affiliates; (x) it
is not unpaid more than 90 days after the date of such invoice; (xi) it is
not owing by an Account Debtor which shall have failed to pay in full any
invoice evidencing any Account within 90 days after the date of such
invoice, unless the total invoice amounts of such Account Debtor which have
not been paid within 90 days of the date of such invoice represent less than
25% of the total invoice amounts (or in the case of WMS/Midway Gaming, less
than 50% of the total invoice amounts) then outstanding of such Account
Debtor; (xii) it is not an account upon which the Account Debtor is any of
the Borrower's Subsidiaries; (xiii) it is the Aristocrat Receivable; and
(xiv) it is not an Account as to which the Lender, at any time or times
hereafter, determines, in good faith, that the prospect of payment or
performance by the Account Debtor thereof is or will be impaired. An
Account of the Borrower which is at any time an Eligible Account, but which
subsequently fails to meet any of the foregoing requirements, shall
forthwith cease to be an Eligible Account.
"Eligible Finished Goods Inventory" means Eligible Inventory which
consists of Finished Goods ready for immediate sale in the Borrower's and
its Subsidiaries' ordinary course of business and is not greater in amount
than the Borrower's Inventory sold during the prior twelve month period.
"Eligible Inventory" means the Borrower's and its Subsidiaries' raw
materials and finished goods at cost which meets each of the following
requirements: (i) it is in the Borrower's possession actual or constructive
and in such condition that it may be sold in the ordinary course of the
Borrower's and its Subsidiaries' business (after processing, in the case of
raw materials); (ii) in the case of goods held for sale, it is unused
(except as the Bank may otherwise consent in writing) except in the case of
refurbished parts, games and monitors held for resale in the ordinary course
of Borrower's business; (iii) it is owned by the Borrower or its
Subsidiaries and is subject to a perfected Lien in the Lender's favor and is
not subject to any other Lien whatsoever, except for Permitted Liens; (iv)
it is not an item awaiting return to vendors; (v) it is not a Non-Stock
Item; (vi) it is maintained in compliance with all governmental and
governmental agency regulations; and (vii) the Lender, in good faith, has
determined, in accordance with the Lender's customary business practices,
that it is not unacceptable due to age, type, category and/or quantity. Any
of the Borrower's and its Subsidiaries Inventory which is Eligible Inventory
at any time, but which subsequently fails to meet any of the foregoing
requirements, shall forthwith cease to be Eligible Inventory.
"Eligible Raw Material Inventory" means all Eligible Inventory which is
not Eligible Finished Goods Inventory.
"Environmental Laws" means any and all federal, state, local and
foreign statutes, laws, judicial decisions, regulations, ordinances, rules,
judgments, orders, decrees, injunctions, permits, grants, franchises,
licenses, agreements and other governmental restrictions relating to (i) the
protection of the environment, (ii) the effect of the environment on human
health, (iii) emissions, discharges or releases of pollutants, contaminants,
hazardous substances or wastes into surface water, ground water or land, or
(iv) the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of pollutants, contaminants, hazardous
substances or wastes or the clean-up or other remediation thereof.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any rule or regulation issued thereunder.
"Eurodollar Advance" means an Advance which, except as otherwise
provided herein, bears interest at the applicable Eurodollar Rate.
"Eurodollar Base Rate" means, with respect to a Eurodollar Advance for
the relevant Interest Period, the rate determined by the Lender to be the
rate at which Bank One offers to place deposits in U.S. dollars with first-
class banks in the London interbank market at approximately 11:00 a.m.
(London time) two Business Days prior to the first day of such Interest
Period, in the approximate amount of Bank One's relevant Eurodollar Loan and
having a maturity equal to such Interest Period.
"Eurodollar Loan" means a Loan which, except as otherwise provided in
Section 2.11, bears interest at the applicable Eurodollar Rate.
"Eurodollar Rate" means, with respect to a Eurodollar Advance for the
relevant Interest Period, the sum of (i) the quotient of (a) the Eurodollar
Base Rate applicable to such Interest Period, divided by (b) one minus the
Reserve Requirement (expressed as a decimal) applicable to such Interest
Period, plus the Applicable Margin. The Eurodollar Rate shall be rounded to
the next higher multiple of 1/16 of 1.0% if the rate is not such a multiple.
"Excess Cash Flow" means for a period, Borrower's and its Subsidiaries'
EBIT for such period plus depreciation and amortization expense for such
period minus (a) interest expense for such period, (b) required principal
payments on Indebtedness from borrowed funds for such period (including
Capitalized Lease Obligations and voluntary prepayments of the Term Loan
during such period), and (c) income tax expense for such period.
"Excess Cash Flow Payments" is defined in Section 2.4.10.
"Excluded Taxes" means, in the case of the Lender or applicable Lending
Installation, taxes imposed on its overall net income, and franchise taxes
imposed on it, by (i) the jurisdiction under the laws of which such Lender
is incorporated or organized, (ii) the jurisdiction in which the Lender's
principal executive office or applicable Lending Institution is located, or
(iii) any other taxes to which the Lender or its applicable Lending
Institution would be subject without regard to any Loan made pursuant to
this Agreement.
"Facility Letter of Credit Collateral Account" is defined in Section
2.3.9.
"Facility Letter of Credit Obligations" means, at any date of
determination thereof, all liabilities, whether actual or contingent, of the
Borrower in respect of the Facility Letters of Credit, including, without
limitation, the sum of (i) Reimbursement Obligations and (ii) the aggregate
undrawn face amount of any outstanding Facility Letters of Credit.
"Facility Letter of Credit Request" is defined in Section 2.3.4.
"Facility Letters of Credit" means, collectively, the Letters of Credit
issued by the Lender pursuant to Section 2.3.
"Fiscal Year" means, with respect to the Borrower or any of its
Subsidiaries, the one year fiscal period beginning on January 1 and ending
on the last day of each calendar year.
"Floating Rate" means, for any day, a rate per annum equal to the
Prime Rate for such day plus the Applicable Margin, in each case changing
when and as the Prime Rate changes.
"Floating Rate Advance" means an Advance, which except as otherwise
provided herein, bears interest at the Floating Rate.
"Funded Debt to EBITDA Ratio" is defined in the Pricing Schedule.
"GAAP" means generally accepted accounting principles in the United
States of America as in effect from time to time; it being understood and
agreed that determinations in accordance with GAAP for purposes of Section
6.10, including defined terms as used therein, shall utilize accounting
principles and policies in effect at the time of the preparation of, and in
conformity with those used to prepare, the December 31, 2000 consolidated
financial statements of the Borrower and its Subsidiaries heretofore
delivered to the Lender.
"Gross Up Event" means the occurrence of any of the events stated in
Sections 3.1 or 3.2 hereof.
"Indebtedness" of a Person means, without duplication, such Person's
(i) obligations for borrowed money, (ii) obligations representing the
deferred purchase price of Property or services (other than accounts payable
arising in the ordinary course of such Person's business payable on terms
customary in the trade), (iii) obligations, whether or not assumed, secured
by Liens, or payable out of the proceeds or production from property now or
hereafter owned or acquired by such Person, (iv) obligations which are
evidenced by notes, acceptances, or other instruments, (v) Capitalized Lease
Obligations, (vi) Rate Hedging Obligations, (vii) Contingent Obligations and
(viii) Subordinated Debt.
"Intangible Assets" means the amount (to the extent reflected in
determining consolidated stockholders' equity) of (i) all write-ups in the
book value of any asset owned or acquired by the Borrower or a Subsidiary,
(ii) all goodwill, covenants not to compete, prepayments, deferred charges,
franchises, patents, trademarks, service marks, trade names, brand names and
copyrights, (iii) all deferred financing costs (including, but not limited
to, unamortized debt discount and expense, organization expense and
experimental and development expenses, but excluding prepaid expenses), and
(iv) leasehold improvements not recoverable at the expiration of a lease.
"Intellectual Property" is defined in Section 5.19 hereof.
"Interest Expense" means, for any period of calculation, all interest
expense on Indebtedness, calculated for such period for the Borrower and its
Subsidiaries on a consolidated basis in accordance with GAAP.
"Interest Period" means, with respect to a Eurodollar Advance, a period
of one, two, three or six months commencing on a Business Day selected by
the Borrower pursuant to this Agreement. Such Interest Period shall end on
the day which corresponds numerically to such date one, two, three or six
months thereafter, provided, however, that if there is no such numerically
corresponding day in such next, second, third or sixth succeeding month,
such Interest Period shall end on the last Business Day of such next,
second, third or sixth succeeding month. If an Interest Period would
otherwise end on a day which is not a Business Day, such Interest Period
shall end on the next succeeding Business Day, provided, however, that if
said next succeeding Business Day falls in a new calendar month, such
Interest Period shall end on the immediately preceding Business Day.
"Internally Generated by Borrower's Operations" means with respect to
funds, funds which are (i) derived from Borrower's and its Subsidiaries'
ordinary course of business operations; or (ii) proceeds of sales of
Borrower's and its Subsidiaries' assets permitted hereunder.
"Inventory" shall have the meaning stated therefor in the Security
Agreement.
"Investment" of a Person means any loan, advance (other than
commission, travel and similar advances to officers, employees and sales
Lenders made in the ordinary course of business), extension of credit (other
than accounts receivable arising in the ordinary course of business on terms
customary in the trade) or contribution of capital by such Person, stocks,
bonds, mutual funds, partnership interests, notes, debentures or other
securities owned by such Person.
"Issuance Date" means, with respect to any Facility Letter of Credit,
the date on which such Facility Letter of Credit is issued hereunder.
"Issuance Fee" means, with respect to any Letter of Credit on the
Issuance Date thereof, the Applicable Letter of Credit Percentage times the
maximum amount of such Letter of Credit or such other issuance fee as the
Borrower and the Lender shall have agreed upon in writing.
"Lender" is defined in the preamble to this Agreement.
"Lending Installation" means any office, branch, subsidiary or
affiliate of the Lender.
"Letter of Credit" of a Person means a letter of credit, or similar
instrument which is issued upon the application of such Person or upon which
such Person is an account party or for which such Person is in any way
liable.
"Lien" means any lien (statutory or other), mortgage, pledge,
hypothecation, filed financing statement, assignment, encumbrance or
preference, priority or other security agreement or preferential arrangement
of any kind or nature whatsoever (including, without limitation, the
interest of a vendor or lessor under any conditional sale, Capitalized Lease
or other title retention agreement).
"Loan" means a loan or any continuation thereof made by Lender pursuant
to Article II.
"Loan Documents" means this Agreement, the Notes, the Security
Agreement and any other documents and agreements contemplated hereby and
executed by the Borrower or a Subsidiary in favor of the Lender or any
Lender.
"Material Adverse Effect" means a material adverse effect on (i) the
business, Property, financial condition or results of operations of the
Borrower and its Subsidiaries taken as a whole, (ii) the ability of the
Borrower to perform its respective obligations under any of the Loan
Documents, or (iii) the validity or enforceability of any of the Loan
Documents or the rights or remedies of the Lender or the Lenders thereunder.
"Material Indebtedness" is defined in Section 7.5.
"Multiemployer Plan" means a Plan defined in Section 3(37) of ERISA to
which the Borrower or any member of the Controlled Group may have any
liability.
"Net Income" shall mean, for any period, the net income (or loss),
after provision for taxes, of the Borrower and its Subsidiaries on a
consolidated basis for such period taken as a single accounting period but
excluding any unrealized losses and gains for such period resulting from
xxxx-to-market of Rate Hedging Agreements.
"Net Proceeds" of a sale means the gross proceeds from such sale minus
the ordinary and customary out of pocket costs paid to third parties with
respect to such sale.
"Note" means collectively, the Term Note and Revolving Note,
substantially in the form of Exhibit B hereto, with appropriate insertions,
duly executed and delivered to the Lender by the Borrower and payable to the
order of Lender in the amount of its Commitment, including any amendment,
modification, renewal or replacement of such promissory notes.
"Non-stock Item" is an item of Inventory that is so customized for a
particular anticipated purchaser that it would not generally be marketable
to Persons other than such purchaser.
"Obligations" means all unpaid principal of and accrued and unpaid
interest on the Loans, all accrued and unpaid fees arising under the Loan
Documents, all Facility Letter of Credit Obligations, Rate Hedging
Obligations, and all expenses, reimbursements, indemnities and other
obligations of the Borrower to the Lender or any indemnified party hereunder
arising under the Loan Documents or under any Rate Hedging Agreement.
"Operating Cash Flow" for a given period means EBITDA less Consolidated
Capital Expenditures, measured to date and annualized before March 31, 2001
and thereafter measured for the immediately preceding trailing twelve
months.
"Operating Lease" of a Person means any lease of Property (other than a
Capitalized Lease) by such Person as lessee which has an original term
(including any required renewals effective at the option of the lessor) of
one year or more.
"Other Taxes" is defined in Section 3.3(ii).
"Participants" is defined in Section 12.2.1.
"Payment Date" means the last Business Day of each month commencing
August 31, 2001, and ending on the later to occur of the Revolving Facility
Termination Date and the Term Facility Termination Date.
"PBGC" means the Pension Benefit Guaranty Corporation, or any successor
thereto.
"Permitted Lien" is defined in Section 6.16.
"Person" means any natural person, corporation, limited liability
company, firm, joint venture, partnership, association, enterprise, trust or
other entity or organization, or any government or political subdivision or
any agency, department or instrumentality thereof.
"Plan" means an employee pension benefit plan which is covered by Title
IV of ERISA or subject to the minimum funding standards under Section 302 of
ERISA or Section 412 of the Code as to which the Borrower or any member of
the Controlled Group may have any liability.
"Prepayment Date" is defined in Section 2.4.1.
"Pricing Schedule" means the Schedule attached hereto identified as
such.
"Prime Rate" means a rate per annum equal to the prime rate or base
rate of interest announced by Lender from time to time, changing when and as
said corporate base rate changes. Any change in the Prime Rate shall take
effect at the opening of business on the date specified in the announcement
of such change. The Prime Rate is a reference rate and does not necessarily
represent the lowest or best rate actually charged to any customer. Lender
may make commercial loans or other loans at rates of interest at, above or
below the Prime Rate.
"Property" of a Person means any and all property, whether real,
personal, tangible, intangible, or mixed, of such Person, or other assets
owned, leased or operated by such Person.
"Rate Hedging Agreement" means an agreement, device or arrangement
providing for payments which are related to fluctuations of interest rates,
exchange rates or forward rates. including, but not limited to, dollar-
denominated or cross-currency interest rate exchange agreements, forward
currency exchange agreements, interest rate cap or collar protection
agreements, forward rate currency or interest rate options, puts and
warrants.
"Rate Hedging Obligations" of a Person means any and all obligations of
such Person, whether absolute or contingent and howsoever and whensoever
created, arising, evidenced or acquired (including all renewals, extensions
and modifications thereof and substitutions therefor), under (i) any and all
Rate Hedging Agreements, and (ii) any and all cancellations, buy backs,
reversals, terminations or assignments of any Rate Hedging Agreement.
"Regulation D" means Regulation D of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor
thereto or other regulation or official interpretation of said Board of
Governors relating to reserve requirements applicable to member banks of the
Federal Reserve System.
"Regulation U" means Regulation U of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor or
other regulation or official interpretation of said Board of Governors
relating to the extension of credit by banks for the purpose of purchasing
or carrying margin stocks applicable to member banks of the Federal Reserve
System.
"Reimbursement Obligations" means, at any time, the aggregate of the
obligations of the Borrower to the Lender in respect of all unreimbursed
payments or disbursements made by the Lender under or in respect of drawings
or payments otherwise under the Facility Letters of Credit.
"Rent" of a Person means for any given period the aggregate amounts
paid by such Person under all Operating Leases.
"Rentals" of a Person means the aggregate fixed amounts payable by such
Person under any Operating Lease.
"Reportable Event" means a reportable event as defined in Section 4043
of ERISA and the regulations issued under such section, with respect to a
Plan, excluding, however, such events as to which the PBGC by regulation
waived the requirement of Section 4043(a) of ERISA that it be notified
within 30 days of the occurrence of such event, provided, however, that a
failure to meet the minimum funding standard of Section 412 of the Code and
of Section 302 of ERISA shall be a Reportable Event regardless of the
issuance of any such waiver of the notice requirement in accordance with
either Section 4043(a) of ERISA or Section 412(d) of the Code.
"Reserve Requirement" means, with respect to a Eurodollar Interest
Period, the maximum aggregate reserve requirement (including all basic,
supplemental, marginal and other reserves) which is imposed under Regulation
D on Eurocurrency liabilities.
"Revolving Advance" means an Advance under the Revolving Facility
pursuant to Section 2.1.1.
"Revolving Facility Termination Date" means with respect to Revolving
Advances and Facility Letter of Credit Obligations, August 31, 2003 or any
earlier date on which the Aggregate Revolving Commitment is reduced to zero
or otherwise terminated pursuant to the terms hereof.
"Revolving Note" is defined in Section 2.1.4.
"Risk-Based Capital Guidelines" means (i) the risk-based capital
guidelines in effect in the United States on the date of this Agreement,
including transition rules, and (ii) the corresponding capital regulations
promulgated by regulatory authorities outside the United States implementing
the July 1988 report of the Basle Committee on Banking Regulation and
Supervisory Practices Entitled "International Convergence of Capital
Measurements and Capital Standards," including transition rules, and any
amendments to such regulations adopted prior to the date of this Agreement.
"Schedule of Accounts" means an aged trial balance and reconciliation
to the Borrowing Base in form and substance satisfactory to the Lender
(which may at the Lender's discretion include copies of original invoices)
listing the Borrower's and its Subsidiaries' Accounts, to be delivered to
the Lender by the Borrower and its Subsidiaries pursuant to Section 6.1(iv).
"Schedule of Inventory" means a schedule in form and substance
satisfactory to the Lender listing the Borrower's and its Subsidiaries'
Inventory, to be delivered to the Lender by the Borrower pursuant to Section
6.1(iv), describing such Inventory by category, age and type.
"Schedule of Payables" means a detailed aged schedule in form and
substance satisfactory to the Lender listing the Borrower's and its
Subsidiaries' accounts payable, to be delivered on a monthly basis to the
Lender by the Borrower pursuant to Section 6.1(iv).
"SEC" means the Securities and Exchange Commission, or any Person
succeeding to any of its principal functions.
"Section" means a numbered section of this Agreement, unless another
document is specifically referenced.
"Security Agreements" means the Security Agreement and Financing
Statement to be delivered to Lender by the Borrower substantially in the
form of Exhibit C hereto.
"Single Employer Plan" means a Plan maintained by the Borrower or any
member of the Controlled Group for employees of the Borrower or any member
of the Controlled Group.
"Standby Letter of Credit" means any Facility Letter of Credit that is
a standby Letter of Credit.
"Stock Pledge Agreement" means the agreement to be delivered by
Borrower to Lender in the form of Exhibit G hereto.
"Subordinated Debt" means any unsecured Indebtedness of the Borrower
(a) no part of the principal of which is stated to be payable or is required
to be paid (whether by way of mandatory sinking fund, mandatory redemption,
mandatory prepayment or otherwise) prior to the later of the Revolving
Facility Termination Date or the Term Facility Termination Date, and the
payment of the principal of and interest on which and other obligations of
the Borrower in respect thereof are subordinated to the prior payment in
full of principal of and interest (including post-petition interest) on the
Notes and all other obligations and liabilities of the Borrower to the
Lender and the Lenders hereunder on terms and conditions first approved in
writing by the Required Lenders and (b) otherwise containing terms,
covenants and conditions satisfactory in form and substance to the Required
Lenders, as evidenced by their prior written approval thereof, including
without limitation the Indebtedness evidenced by the Subordinated Notes.
"Subordinated Notes" means collectively all notes evidencing
Subordinated Debt whether now existing or hereafter arising and
substitutions or replacements therefor.
"Subsidiary" of any Person means (i) any corporation more than 50% of
whose stock of any class or classes having by the terms thereof ordinary
voting power to elect a majority of the directors of such corporation
(irrespective of whether or not at the time stock of any class or classes of
such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time owned by such Person directly
or indirectly through Subsidiaries and (ii) any partnership, association
(including business trusts), joint venture, limited liability company or
other entity in which such Person directly or indirectly through
Subsidiaries, has more than 50% voting or equity interest at the time.
"Substantial Portion" means, with respect to the Property of the
Borrower and its Subsidiaries, Property which (i) represents more than five
percent (5%) of the consolidated assets of the Borrower and its Subsidiaries
as at the last day of the calendar month ending on or most recently ended
prior to the date on which such determination is made, or (ii) is
responsible for more than five percent (5%) of the consolidated net sales or
of the consolidated net income of the Borrower and its Subsidiaries for the
period of twelve complete consecutive calendar months ending on or most
recently ended prior to the date on which such determination is made.
"Tangible Net Worth" means at any time, Borrower's and its Subsidiaries
consolidated (a) Total Assets minus (b) Total Liabilities, Intangible
Assets, notes receivable from Affiliate and prepaid expenses, all computed
in accordance with GAAP.
"Taxes" means any and all present or future taxes, duties, levies,
imposts, deductions, charges or withholdings, and any and all liabilities
with respect to the foregoing, but excluding Excluded Taxes.
"Term Commitment" means $4,700,000.
"Term Facility Termination Date" means the earlier of (i) the date on
which all Obligations become due and payable under Section 8.1 hereof or
(ii) August 31, 2003.
"Term Loan" is defined in Section 2.1.2.
"Term Note" is defined in Section 2.1.4.
"Total Assets" means Borrower's and Subsidiaries' consolidated total
assets calculated in accordance with GAAP.
"Total Liabilities" means Borrower's and its Subsidiaries' consolidated
total liabilities calculated in accordance with GAAP.
"Transferee" is defined in Section 12.4.
"Type" means with respect to any Advance, its nature as a Floating Rate
Advance or a Eurodollar Advance.
"Unfunded Liabilities" means the amount (if any) by which the present
value of all vested and unvested accrued benefits under all Single Employer
Plans exceeds the fair market value of all such Plan assets allocable to
such benefits, all determined as of the then most recent valuation date for
such Plans as if such Plans were terminating on such date under Section 4041
of ERISA.
"Unmatured Default" means an event which but for the lapse of time or
the giving of notice, or both, would constitute a Default.
"WEA" means Xxxxx Eastern Asia Displays, a Malaysian corporation.
"Wholly-Owned Subsidiary" of a Person means (i) any Subsidiary all of
the outstanding voting securities of which shall at the time be owned or
controlled, directly or indirectly, by such Person or one or more Wholly-
Owned Subsidiaries of such Person, or by such Person and one or more Wholly-
Owned Subsidiaries of such Person, or (ii) any partnership, association,
joint venture or similar business organization 100% of the ownership
interests having ordinary voting power of which shall at the time be so
owned or controlled.
1.2 Other Interpretive Provisions.
(a) The meanings of defined terms are equally applicable to the
singular and plural forms of the defined terms.
(b) The words "hereof", "herein", "hereunder" and similar words
refer to this Agreement as a whole and not to any particular provision of
this Agreement, and subsection, Section, Schedule and Exhibit references are
to this Agreement unless otherwise specified.
(c) Error! Bookmark not defined. The term "documents" includes
any and all instruments, documents, agreements, certificates, indentures,
notices and other writings, however evidenced.
(i) The term "including" is not limiting and means
"including without limitation."
(ii) In the computation of periods of time from a specified
date to a later specified date, the word "from" means "from and
including"; the words "to" and "until" each mean "to but
excluding", and the word "through" means "to and including."
(iii) The term "property" includes any kind of property
or asset, real, personal or mixed, tangible or intangible.
(d) Unless otherwise expressly provided herein, (i) references to
agreements (including this Agreement) and other contractual instruments
shall be deemed to include all subsequent amendments and other modifications
thereto, but only to the extent such amendments and other modifications are
not prohibited by the terms of any Loan Document, and (ii) references to any
statute or regulation are to be construed as including all statutory and
regulatory provisions consolidating, amending, replacing, supplementing or
interpreting the statute or regulation.
(e) The captions and headings of this Agreement are for
convenience of reference only and shall not affect the interpretation of
this Agreement.
(f) This Agreement and other Loan Documents may use several
different limitations, tests or measurements to regulate the same or similar
matters. All such limitations, tests and measurements are cumulative and
shall each be performed in accordance with their terms. Unless otherwise
expressly provided, any reference to any action of the Lender or the Lenders
by way of consent, approval or waiver shall be deemed modified by the phrase
"in its/their sole discretion."
(g) This Agreement and the other Loan Documents are the result of
negotiations between and have been reviewed by counsel to the Lender and
Borrower and are the products of all parties. Accordingly, they shall not
be construed against the Lender merely because of the Lender's involvement
in their preparation.
1.3 Accounting Principles. Error! Bookmark not defined. Unless the
context otherwise clearly requires, all accounting terms not expressly
defined herein shall be construed, and all financial computations required
under this Agreement shall be made, in accordance with GAAP, consistently
applied.
(a) References herein to "fiscal year" and "fiscal quarter" refer
to such fiscal periods of the Borrower.
ARTICLE II
THE CREDITS
2.1 Description of Facility.
2.1.1 Revolving Facility. Upon the terms and subject to the
conditions set forth in this Agreement, the Lender hereby grants to the
Borrower a revolving credit facility pursuant to which prior to the
Revolving Facility Termination Date: (i) Lender agrees to make Revolving
Advances to the Borrower in accordance with Section 2.2; and (ii) Lender
agrees to issue Facility Letters of Credit in accordance with Section 2.3;
provided, however, that in no event may the sum of (1) the aggregate
principal amount of all outstanding Revolving Advances and (2) the Facility
Letter of Credit Obligations exceed the Aggregate Revolving Commitment.
2.1.2 Term Facility. Lender agrees, on the terms and
conditions set forth herein, to make a single loan to the Borrower ("Term
Loan") on the Closing Date in an amount not to exceed the Term Commitment.
Amounts borrowed upon the Term Loan which are repaid by the Borrower or from
any other source may not be reborrowed.
2.1.3 Use of Proceeds. The proceeds of the Revolving Advances
and the Term Loan will be used solely to refinance the Borrower's existing
Indebtedness to Lender and for Borrower's general business purposes.
2.1.4 Notes Evidencing Loans.
(a) The Revolving Loans shall be evidenced by a promissory note
(herein, as the same may be amended, modified or supplemented from time to
time, and together with any renewals thereof or exchanges or substitutions
therefor, called the "Revolving Note"), substantially in the form set forth
in Exhibit B, with appropriate insertions, dated the Closing Date (or such
other date prior thereto as shall be satisfactory to the Lender), payable to
the order of the Lender in the principal amount of $12,000,000, or the
aggregate unpaid principal amount of all Revolving Loans, whichever is less.
The date and amount of each Revolving Loan made by the Lender and of each
repayment of principal thereon received by the Lender shall be recorded by
the Lender in its records or, at its option, on a schedule attached to the
Revolving Note. The aggregate unpaid principal amount so recorded shall be
presumptive evidence of the principal amount owing and unpaid on the
Revolving Note. The failure so to record any such amount or any error in so
recording any such amount, however, shall not limit or otherwise affect the
Borrower's obligations hereunder or under the Revolving Note to repay the
principal amount of the Revolving Loans together with all interest accruing
thereon.
(b) The Term Loan shall be evidenced by a term note (herein, as
amended, modified or supplemented from time to time, and together with any
renewals thereof or exchanges or substitutions therefor, called the "Term
Note"), substantially in the form set forth in Exhibit B, with appropriate
insertions, dated the Closing Date, payable to the order of the Lender in
the original principal amount of the Term Loan. The Term Note will be
payable in monthly principal installments of (i) $80,000 plus accrued and
unpaid interest, commencing on the last Business Day of September, 2001 and
on the last Business Day of each and every consecutive month thereafter
through December 31, 2001, and (ii) $100,000 commencing on the last Business
Day of January, 2002, and on the last Business Day of each and every
consecutive month thereafter, together with a final installment of any
amount then outstanding, payable on August 31, 2003.
2.2 Advances.
2.2.1 Commitment. From and including the date of this
Agreement and prior to the Revolving Facility Termination Date, Lender
agrees, on the terms and conditions set forth in this Agreement, to make
Loans to the Borrower from time to time in amounts not to exceed in the
aggregate at any one time outstanding (after giving effect to the intended
use of proceeds of any Loan used to repay any outstanding Reimbursement
Obligations) the amount of the Borrowing Base. Subject to the terms of this
Agreement, the Borrower may borrow, repay, and reborrow Revolving Advances
only from Lender at any time prior to the Revolving Facility Termination
Date. The Commitment of Lender to lend hereunder shall expire on the
Revolving Facility Termination Date.
2.2.2 Termination. All outstanding Revolving Advances owing
to Lender shall be paid in full by the Borrower on the Revolving Facility
Termination Date. All outstanding Term Loans owing to Lender shall be paid
in full by the Borrower on the Term Facility Termination Date. All other
unpaid Obligations owing to Lender shall be paid on the later to occur of
the Revolving Facility Termination Date and the Term Facility Termination
Date.
2.2.3 Types of Advances. The Revolving Advances may be
Floating Rate Advances or Eurodollar Advances, or a combination thereof
(unless Level III Status or Level IV Status is in existence, in which event
Revolving Advances shall be Floating Rate Advances only), selected by the
Borrower in accordance with Sections 2.2.5 and 2.2.6. The Term Loan shall
be a Floating Rate Advance.
2.2.4 Minimum Amount of Each Advance. Each Eurodollar Advance
shall be in the minimum amount of $100,000 (and in multiples of $100,000 if
in excess thereof) and each Floating Advance shall be in the minimum amount
of $10,000 (and in multiples of $10,000 if in excess thereof); provided,
however, that any Advance may be in the amount of the unused Aggregate
Available Revolving Commitment should the Aggregate Available Revolving
Commitment be less than $100,000.
2.2.5 Method of Selecting Types and Interest Periods for New
Advances. The Borrower shall select the Type of Advance and, in the case of
each Eurodollar Advance, the Interest Period applicable thereto from time to
time. The Borrower shall give the Lender irrevocable notice (a "Borrowing
Notice") not later than 10:00 a.m. (Chicago time) on the Borrowing Date of
each Floating Rate Advance and three Business Days before the Borrowing Date
for each Eurodollar Advance, specifying:
(i) the Borrowing Date, which shall be a Business Day, of
such Advance,
(ii) the aggregate amount of such Advance,
(iii) the Type of Advance selected, and
(iv) in the case of each Eurodollar Advance, the Interest
Period applicable thereto.
Not later than noon (Chicago time) on each Borrowing Date, Lender shall make
available its Loan or Loans in funds immediately available in Chicago to the
Borrower at Lender's address specified pursuant to Article XIII.
2.2.6 Conversion and Continuation of Outstanding Advances.
Floating Rate Advances shall continue as Floating Rate Advances unless and
until such Floating Rate Advances are converted into Eurodollar Advances
pursuant to this Section 2.2.6 or are repaid in accordance with Section
2.3.6. Each Eurodollar Advance shall continue as a Eurodollar Advance until
the end of the then applicable Interest Period therefor, at which time such
Eurodollar Advance shall be automatically converted into a Floating Rate
Advance unless (x) such Eurodollar Advance is or was repaid in accordance
with Section 2.3.6 or (y) the Borrower shall have given the Lender a
Conversion/Continuation Notice (as defined below) requesting that, at the
end of such Interest Period, such Eurodollar Advance continue as a
Eurodollar Advance for the same or another Interest Period. Subject to the
terms of Section 2.2.5, the Borrower may elect from time to time to convert
all or any part of a Floating Rate Advance into a Eurodollar Advance. The
Borrower shall give the Lender irrevocable notice (a
"Conversion/Continuation Notice") of each conversion of a Floating Rate
Advance into a Eurodollar Advance or continuation of a Eurodollar Advance
not later than 10:00 a.m. (Chicago time) at least three Business Days prior
to the date of the requested conversion or continuation, specifying:
(i) the requested date, which shall be a Business Day, of
such conversion or continuation,
(ii) the aggregate amount and Type of the Advance which is to
be converted or continued, and
(iii) the amount of such Advance which is to be converted
into or continued as a Eurodollar Advance and the duration of the
Interest Period applicable thereto.
2.3 Facility Letters of Credit.
2.3.1 Obligation to Issue. From and including the date of
this Agreement and prior to the Business Day prior to the Revolving Facility
Termination Date, the Lender agrees, on the terms and conditions set forth
in this Agreement, to issue for the account of the Borrower or one or more
of its Subsidiaries, one or more Letters of Credit not exceeding either of
the limits stated in Sections 2.1.1 and 2.3.2(iv).
2.3.2 Types and Amounts. The Lender shall not have any
obligation to and shall not:
(i) issue any Facility Letter of Credit if the aggregate
maximum amount then available for drawing under Facility Letters
of Credit issued by the Lender, after giving effect to the
Facility Letter of Credit requested hereunder, shall exceed any
limit imposed by law or regulation upon the Lender;
(ii) issue any Facility Letter of Credit if, after giving
effect thereto, the sum of (a) the Facility Letter of Credit
Obligations and (b) the aggregate unpaid principal balance of the
Revolving Advances would exceed the Aggregate Revolving
Commitment;
(iii) issue any Facility Letter of Credit which has an
expiry date (a) later than twelve months after the Issuance Date
thereof or (b) after the Facility Termination Date; or
(iv) issue any Facility Letter of Credit if, after giving
effect to such Facility Letter of Credit requested hereunder, the
Facility Letter of Credit Obligations would exceed $2,000,000 in
the aggregate.
2.3.3 Conditions. In addition to being subject to the
satisfaction of the conditions contained in Sections 4.1 and 4.2, the
obligation of the Lender to issue any Facility Letter of Credit is subject
to the satisfaction in full of each of the following conditions:
(i) the Borrower shall have delivered to the Lender at such
times and in such manner as the Lender may reasonably prescribe
such documents and materials as may be required pursuant to the
terms of the requested Facility Letter of Credit (it being
understood that if any inconsistency exists between the Lender's
Facility Letter of Credit documents and the Loan Documents, the
terms of the Loan Documents shall govern and control) and the
requested Facility Letter of Credit shall be reasonably
satisfactory to the Lender as to form and content; and
(ii) as of the Issuance Date, no order, judgment or decree of
any court, arbitrator or governmental authority shall purport by
its terms to enjoin or restrain the Lender from issuing the
requested Facility Letter of Credit and no law, rule or regulation
applicable to the Lender and no request or directive (whether or
not having the force of law) from any governmental authority with
jurisdiction over the Lender shall prohibit or request that the
Lender refrain from the issuance of Letters of Credit generally or
the issuance of such requested Facility Letter of Credit in
particular.
2.3.4 Procedure for Issuance of Facility Letters of Credit.
(a) The Borrower shall give the Lender written notice not later
than noon (Chicago time) at least three Business Days before the Issuance
Date of any requested Facility Letter of Credit (each a "Facility Letter of
Credit Request") (except that, in lieu of such written notice, the Borrower
may give the Lender notice of such request by tested telex or other tested
arrangement satisfactory to the Lender). Such Facility Letter of Credit
Request shall be irrevocable and shall specify:
(1) the stated amount of such requested Facility Letter of
Credit;
(2) the Issuance Date (which day shall be a Business Day);
(3) the date on which such requested Facility Letter of Credit is
to expire (which date shall be a Business Day and shall in no
event be later than either (i) twelve months after its
Issuance Date or (ii) the Revolving Facility Termination
Date);
(4) the purpose for which such Facility Letter of Credit is to be
issued;
(5) the Person for whose benefit the requested Facility Letter of
Credit is to be issued; and
(6) whether the requested Facility Letter of Credit will be a
Commercial Letter of Credit or a Standby Letter of Credit.
Prior to the issuance of the requested Facility Letter of Credit, the
Borrower shall provide the Lender with a copy of the form of the Facility
Letter of Credit it is requesting to be issued.
(b) Subject to the terms and conditions of this Section 2.3.4 and
provided that the applicable conditions set forth in Sections 4.1 (in the
case of the initial Facility Letter of Credit), 4.2 and 2.3.3 have been
satisfied, the Lender shall, on the applicable Issuance Date, issue a
Facility Letter of Credit on behalf of the Borrower in accordance with the
Lender's usual and customary business practices.
(c) The Lender shall not extend or amend any Facility Letter of
Credit unless the requirements of Sections 2.3.2 and 2.3.4 are met.
2.3.5 Reimbursement Obligations.
(a) Error! Bookmark not defined. The Lender shall promptly
notify the Borrower of any draw or other payment under any
Facility Letter of Credit. The Borrower shall reimburse the
Lender for drawings under any such Letters of Credit or payments
under Bankers Acceptances (including the Lender's issuing costs)
no later than the Business Day after the payment in respect of
such Facility Letter of Credit by the Lender, together with
interest thereon at the Prime Rate plus 2% per annum from the date
of payment on such Facility Letter of Credit by the Lender to and
including the date on which the Lender is reimbursed for such
payment by the Borrower.
(i) Any Reimbursement Obligation with respect to any
Facility Letter of Credit which is not paid on the date when due
in accordance with Section 2.3.5(a)(i) shall (A) if there is
availability for such an Advance pursuant to Section 2.1.1, be
automatically converted on such date into a Revolving Advance and
shall bear interest at the Floating Rate or (B) if there is no
availability for an Advance pursuant to Section 2.1.1, be payable
on demand and bear interest until paid at a rate per annum equal
to the sum of (a) the Prime Rate plus (b) 3% per annum.
(b) Any action taken or omitted to be taken by the Lender under
or in connection with any Facility Letter of Credit, if taken or omitted in
the absence of willful misconduct or gross negligence, shall not put the
Lender under any resulting liability to any Lender or, assuming that the
Lender has complied with the procedures specified in Section 2.3.4(b) and
such Lender has not given a notice contemplated by Section 2.3.6(a) that
continues in full force and effect, relieve such Lender of its obligations
hereunder to the Lender. In determining whether to pay under any Facility
Letter of Credit, the Lender shall have no obligation relative to the
Borrower other than to confirm that any documents required to be delivered
under such Facility Letter of Credit appear to comply on their face with the
requirements of such Facility Letter of Credit.
2.3.6 [Intentionally Omitted]
2.3.7 Payment of Reimbursement Obligations.
(a) The Borrower agrees to pay to the Lender the amount of all
Reimbursement Obligations, interest and other amounts payable to the Lender
under or in connection with each Facility Letter of Credit immediately when
due, irrespective of any claim, set-off, defense or other right which the
Borrower or any Subsidiary may have at any time against the Lender, the
Lender or any other Person, under all circumstances, including without
limitation, any of the following circumstances:
(i) any lack of validity or enforceability of this Agreement
or any of the other Loan Documents;
(ii) the existence of any claim, setoff, defense or other
right which the Borrower or any Subsidiary may have at any time
against a beneficiary named in a Facility Letter of Credit or any
transferee of any Facility Letter of Credit (or any Person for
whom any such transferee may be acting), the Lender, any Lender,
or any other Person, whether in connection with this Agreement,
any Facility Letter of Credit, the transactions contemplated
herein or any unrelated transactions (including any underlying
transactions between the Borrower or any Subsidiary and the
beneficiary named in any Facility Letter of Credit);
(iii) any draft, certificate or any other document
presented under the Facility Letter of Credit proving to be
forged, fraudulent, invalid or insufficient in any respect or any
statement therein being untrue or inaccurate in any respect;
(iv) the surrender or impairment of any security for the
performance or observance of any of the terms of any of the Loan
Documents;
(v) the occurrence of any Default or Unmatured Default.
(b) In the event any payment by the Borrower or any Subsidiary
received by the Lender with respect to a Facility Letter of Credit is
thereafter set aside, avoided or recovered from the Lender for any reason or
under any circumstances including without limitation, in connection with any
receivership, liquidation, reorganization or bankruptcy proceeding, such
amount shall immediately become a Reimbursement Obligation immediately due
and payable to Lender from Borrower.
2.3.8 Compensation for Facility Letters of Credit. Borrower
shall pay to the Lender on or before the Issuance Date of each Letter of
Credit (or such later date as the Borrower and such Lender shall agree upon
in writing), and shall also pay from time to time Lender's reasonable and
customary costs of, and fees for, issuing and servicing such Letter of
Credit.
2.3.9 Facility Letter of Credit Collateral Account. The
Borrower hereby agrees that it will, until the final expiration date of any
Facility Letter of Credit and thereafter as long as any Facility Letter of
Credit Obligation is outstanding or payable to the Lenders, maintain a
special cash collateral account (the "Facility Letter of Credit Collateral
Account") at the Lender's office at the address specified pursuant to
Article XIII, in the name of the Borrower but under the sole dominion and
control of the Lender, for the benefit of the Lender and in which the
Borrower shall have no interest other than as set forth in Section 8.1.
Upon demand of the Lender after (a) an Event of Default has occurred and is
continuing, (b) the Maturity Date, or (c) any time the Lender determines it
does not have adequate collateral, the Borrower shall deposit funds into the
Facility Letter of Credit Collateral Account up to the amount of the
Facility Letter of Credit Obligations in existence from time to time.
Nothing in this Section 2.3.9 shall either obligate the Lender to require
the Borrower to deposit any funds in the Facility Letter of Credit
Collateral Account or limit the right of the Lender to release any funds
held in the Facility Letter of Credit Collateral Account other than as
required by Section 8.1.
2.4 General Facility Terms.
2.4.1 Fees; Reductions in Aggregate Commitment.
2.4.1.1 Fees. The Borrower agrees to pay to the Lender the
following fees:
(i) Closing Fee. On the Closing Date, the Borrower shall
pay to the Lender a one time non-refundable closing fee of
$50,000.
(ii) Commitment Fee. A nonrefundable quarterly commitment
fee equal to the product of the figure designated on the Pricing
Schedule as the Applicable Fee Rate and (b) the average non-
utilized portion of the Aggregate Revolving Commitment during such
quarter, which commitment fee shall be deemed earned in its
entirety on the date of this Agreement (the "Commitment Fee").
The Commitment Fee shall be payable quarterly in arrears on
November 1, 2001 and on the first Business Day of each February,
May, August and November thereafter prior to the Facility
Termination Date for Revolving Advances with the outstanding
unpaid balance of such fee due on the Facility Termination Date
for Revolving Advances.
2.4.1.2 Reductions in Aggregate Revolving Commitment. The
Borrower may permanently reduce the Aggregate Revolving Commitment in whole,
or in part ratably among the Lenders in integral multiples of $1,000,000,
upon at least three Business Days' written notice to the Lender, which
notice shall specify the amount of any such reduction, provided, however,
that the amount of the Aggregate Revolving Commitment may not be reduced
below an amount equal to the sum of (a) the aggregate principal amount of
the outstanding Revolving Advances plus (b) the outstanding Facility Letter
of Credit Obligations.
2.4.2 Optional Principal Payments; Mandatory Principal
Payments. In addition to funds collected in the Lock Box, the Borrower may
from time to time pay all outstanding Floating Rate Advances, or, pay in a
minimum aggregate amount of $300,000 or any integral multiple of $100,000 in
excess thereof, without penalty or premium, any portion of the outstanding
Floating Rate Advances upon prior notice to the Lender not later than 10:30
a.m. (Chicago time) at least one (1) Business Day before the date of such
prepayment. Notwithstanding anything in this Section 2.4.2 to the contrary,
(a) if at any time (i) the sum of the aggregate unpaid principal balance of
the Advances plus the Facility Letter of Credit Obligations exceeds the
Aggregate Commitment, or (ii) the sum of the aggregate unpaid principal
balance of the Revolving Advances plus the Facility Letter of Credit
Obligations exceeds the Aggregate Revolving Commitment, the Borrower shall,
make an immediate mandatory payment on the Advances and/or Revolving
Advances equal to such excess; (b) if Borrower or any of its Subsidiaries
sell one or more assets having an aggregate value in excess of $100,000
(except for the sale of Inventory in the ordinary course of business)
Borrower shall make an immediate mandatory prepayment upon the Term Loan in
the amount of Net Proceeds (less the amount of such Net Proceeds reinvested
by Borrower in the purchase of replacement assets which are the same in type
and use as the assets sold) received by Borrower (or its Subsidiaries as the
case may be) from such sale; (c) if Borrower or any Subsidiary receives
directly or indirectly Net Proceeds from the sale or issuance of equity or
debt securities of Borrower or any of its Subsidiaries or from Indebtedness
for borrowed money incurred by Borrower or any of its Subsidiaries (other
than Permitted Indebtedness), Borrower shall make an immediate mandatory
prepayment upon the Term Loan in the amount of such Net Proceeds received by
Borrower (or its Subsidiaries as the case may be); and (d) Borrower shall
make the mandatory prepayments stated in Section 2.4.10.
2.4.3 Changes in Interest Rate, etc. Each Floating Rate
Advance shall bear interest on the outstanding principal amount thereof, for
each day from and including the date such Advance is made or is
automatically converted from a Eurodollar Advance into a Floating Rate
Advance pursuant to Section 2.2.7, to but excluding the date it is paid or
is converted into a Eurodollar Advance pursuant to Section 2.2.7 hereof, at
a rate per annum equal to the Floating Rate for such day. Changes in the
rate of interest on that portion of any Advance maintained as a Floating
Rate Advance will take effect simultaneously with each change in the Base
Rate. Each Eurodollar Advance shall bear interest on the outstanding
principal amount thereof from and including the first day of the Interest
Period applicable thereto to (but not including) the last day of such
Interest Period at the interest rate determined by the Lender as applicable
to such Eurodollar Advance based upon the Borrower's selections under
Sections 2.2.6 and 2.2.7 and otherwise in accordance with the terms hereof.
No Interest Period may end after the Facility Termination Date.
2.4.4 Rates Applicable After Default. During the continuance
of a Default, each Advance shall bear interest at a rate per annum equal to
the rate otherwise applicable to the Advance plus, to the extent permitted
by law, 3% per annum.
2.4.5 Method of Payment. All payments of the Obligations
hereunder shall be made, without setoff, deduction, or counterclaim, in
immediately available funds to the Lender at the Lender's address specified
pursuant to Article XII, or at any other Lending Institution of the Lender
specified in writing by the Lender to the Borrower, by noon (local time at
the relevant Lending Institution) on the date when due. The Lender is
hereby authorized to charge the account of the Borrower maintained with
Lender for each payment of principal, interest and fees as it becomes due
hereunder.
2.4.6 Deposits to the Borrower's Account. The Lender shall
have the right to deposit all proceeds of the Loans to any of the Borrower's
accounts with the Lender and shall have the right to charge such account (or
any other account in the Borrower's name) for all Obligations due from and
payable by the Borrower.
2.4.7 Collateral and Audits.
(a) Payment and performance of all of the Obligations shall be
secured by the Collateral pursuant to the Security Agreements, and the Stock
Pledge Agreements.
(b) The Borrower agrees that it will, at its sole expense,
(i) without any request by the Lender, immediately deliver, or cause to be
delivered to the Lender, in due form for transfer (e.g., endorsed in blank
or accompanied by duly executed blank stock or bond powers), all securities
(including those hereafter acquired), chattel paper, instruments and
documents of title, if any, at any time representing all or any of the
Collateral, (ii) without request by the Lender, cause the Lender's security
interest under the Loan Documents to be at all times duly noted on any
certificate of title issuable with respect to any of the Collateral and
forthwith deliver or cause to be delivered to the Lender each such
certificate of title provided, that this section shall not apply to motor
vehicles with a purchase price less than $50,000 individually and $200,000
in the aggregate, and (iii) upon the Lender's request, forthwith execute and
deliver, or cause to be executed and delivered to the Lender, in due form
for filing or recording (the Borrower hereby agreeing to pay the cost of
filing or recording the same in all public offices deemed necessary by the
Lender), such assignments, security agreements, mortgages, deeds of trust,
pledge agreements, warehouse receipts, bailee letters, consents, waivers,
financing statements, stock or bond powers and other documents, and do such
other acts and things, all as the Lender may from time to time reasonably
request, to establish and maintain to the Lender's satisfaction a valid,
first perfected security interest in all of the Borrower's present and/or
future assets (free of all other Liens whatsoever except Permitted Liens) to
secure payment of the Liabilities. The Borrower hereby irrevocably makes,
constitutes and appoints the Lender (and all other persons designated by the
Lender for that purpose) as the Borrower's true and lawful agent and
attorney-in-fact to sign the Borrower's name on any such agreements,
instruments and documents referred to in clause (iii) above and to deliver
such agreements, instruments and documents to such Persons as the Lender in
its sole discretion may elect.
(c) At any time and from time to time the Lender may, in its
reasonable discretion, conduct or have conducted by a reputable appraiser
acting on the Lender's behalf, at the Borrower's expense, appraisals and
audits of the Collateral; provided that prior to the occurrence and
continuance of a Default or an Unmatured Default, such appraisals shall not
occur more than once annually at an aggregate cost to the Company not
exceeding $5,000.
2.4.8 Telephonic Notices. The Borrower hereby authorizes the
Lender to extend, or continue Revolving Advances and to transfer funds and
issue Facility Letters of Credit in each case based on telephonic notices
made by any Authorized Officer or Authorized Officers the Lender in good
faith believes to be acting on behalf of the Borrower. The Borrower agrees
to deliver promptly to the Lender a written confirmation if such
confirmation is requested by the Lender, of each telephonic notice signed by
an Authorized Officer. If the written confirmation differs in any material
respect from the action taken by the Lender, the records of the Lender shall
govern absent manifest error.
2.4.9 Interest Payment Dates; Interest and Fee Basis.
Interest accrued on each Advance shall be payable on each Payment Date,
commencing with the first such date to occur after the date hereof, on any
date on which such Advance is prepaid, whether due to acceleration or
otherwise, and at maturity. Interest accrued on that portion of the
outstanding principal amount of any Advance optionally prepaid on a day
other than a Payment Date, shall be payable on the Payment Date next
succeeding the date of such prepayment. Interest on all Advances and fees
shall be calculated for actual days elapsed on the basis of a 360-day year.
Interest shall be payable for the day an Advance is made but not for the day
of any payment on the amount paid if payment is received prior to noon
(local time) at the place of payment. If any payment of principal on an
Advance shall become due on a day which is not a Business Day and, such
payment shall be made on the next succeeding Business Day and such extension
of time shall be included in computing interest in connection with such
payment.
2.4.10 Principal and Interest Payments Upon The Term Loan.
Commencing September 30, 2001 and on each Payment Date thereafter Borrower
shall pay to Lender in addition to all interest and other payments due on
such date, the monthly principal amount of $80,000.00 upon the Term Loan
with a final installment of any amount then outstanding due and payable on
August 31, 2003. Interest on the Term Loan shall be calculated based upon a
five year amortization with all accrued interest due and payable on each
Payment Date. Commencing with (and including) January 15, 2001 and on each
July 15th and January 15th thereafter, the Borrower shall make a mandatory
principal prepayment (the "Excess Cash Flow Payments") of fifty percent
(50%) of the Excess Cash Flow for the Borrower's fiscal six months just
ended at the end of the month immediately preceding each such January 15th
and July 15th. Such payments will be applied to the outstanding principal
balance upon the Term Note in inverse order to maturity.
2.4.11 [INTENTIONALLY OMITTED]
2.4.12 Lending Institutions. Lender may book its Loans at any
Lending Institution selected by Lender and may change its Lending
Institution from time to time. All terms of this Agreement shall apply to
any such Lending Institution and the Notes shall be deemed held by Lender
for the benefit of such Lending Institution. Lender may, by written or
telex notice to the Borrower, designate a Lending Institution through which
Loans will be made by it and for whose account Loan payments are to be made.
2.4.13 Maintenance of Balances and Lock Box Account.
Throughout the term of this Agreement the Borrower agrees (i) to utilize the
Lender as its primary depository and remittance point, (ii) at all times to
maintain the Lock Box and Lock Box Account (as defined in the Security
Agreement) with the Lender and (iii) in the event depository accounts for
collection purposes are maintained with other Persons, to cause such Persons
to enter blocked account agreements with Lender, reasonably acceptable to
Lender.
2.4.14 Service Charges. The Borrower acknowledges that the
Bank will charge the Borrower monthly service charges for various services
performed by the Bank in connection with any aspect of the relationship
between the Borrower and the Bank, and the Borrower hereby agrees that if
such service charge arising in any month exceed the credit to the Borrower
in that month arising from earnings attributable to funds on deposit with
the Bank in demand deposit accounts, such service charge deficiency shall be
deducted by the Bank from the Borrower's operating account. All of the
Bank's charges to the Borrower pursuant to this Section 2.4.14 shall be its
usual and customary charges to companies of a similar size for services of a
similar nature.
ARTICLE III
CHANGE IN CIRCUMSTANCES
3.1 Yield Protection. If any law or any governmental or quasi-
governmental rule, regulation, policy, guideline or directive (whether or
not having the force of law) adopted, enacted, modified or otherwise
becoming effective after the date hereof, or any interpretation thereof, or
the compliance of Lender therewith,
(i) subjects Lender or any applicable Lending Institution to
any tax, duty, charge or withholding on or from payments due from
the Borrower (excluding any Excluded Tax), or changes the basis of
taxation of payments to Lender in respect of its Loans, the
Facility Letters of Credit or other amounts due it hereunder, or
(ii) imposes or increases or deems applicable any reserve,
assessment, insurance charge, special deposit or similar
requirement against assets of, deposits with or for the account
of, or credit extended by, Lender or any applicable Lending
Institution (other than reserves and assessments taken into
account in determining the interest rate applicable to Eurodollar
Advances), or
(iii) imposes any other condition the result of which is
to increase the cost to Lender or any applicable Lending
Institution of making, funding, maintaining, issuing or
participating in loans or Letters of Credit or reduces any amount
receivable by Lender or any applicable Lending Institution in
connection with loans or Letters of Credit, or requires Lender or
any applicable Lending Institution to make any payment calculated
by reference to the amount of loans held, Letters of Credit issued
or interest received by it, in each case by an amount deemed
material by Lender,
then, within 15 days of written demand by Lender, the Borrower shall pay
Lender that portion of such increased expense incurred or reduction in an
amount received which Lender reasonably determines is attributable to
making, funding and maintaining its Loans and its Commitment; provided that,
Borrower shall not be obligated to pay Lender any amount described in this
Section to the extent such amount is incurred prior to the 120th day
preceding the day on which Borrower received written demand from Lender to
pay such amount, unless such amount became due or payable during such 120
day period and retroactively applies to a date occurring prior to such 120
day period, in which case Borrower shall compensate Lender for such amount
pursuant to this Section.
3.2 Changes in Capital Adequacy Regulations. If Lender determines the
amount of capital required or expected to be maintained by Lender, any
Lending Institution of Lender or any corporation controlling Lender is
increased as a result of a Change, then, within 15 days of written demand by
Lender, the Borrower shall pay Lender the amount necessary to compensate for
any shortfall in the rate of return on the portion of such increased capital
which Lender determines is attributable to this Agreement, its Loans or its
obligation to make Loans hereunder (after taking into account Lender's
policies as to capital adequacy); provided that, Borrower shall not be
obligated to pay Lender any amount described in this Section to the extent
such amount is incurred prior to the 120th day preceding the day on which
Borrower received written demand from Lender to pay such amount, unless such
amount became due or payable during such 120 day period and retroactively
applies to a date occurring prior to such 120 day period, in which case
Borrower shall compensate Lender for such amount pursuant to this Section.
3.3 Taxes.
(i) All payments by the Borrower to or for the account of
Lender hereunder or under any Note shall be made free and clear of
and without deduction for any and all Taxes. If the Borrower
shall be required by law to deduct any Taxes from or in respect of
any sum payable hereunder to Lender, (a) the sum payable shall be
increased as necessary so that after making all required
deductions (including deductions applicable to additional sums
payable under this Section 3.3) the Lender receives an amount
equal to the sum it would have received had no such deductions
been made, (b) the Borrower shall make such deductions, (c) the
Borrower shall pay the full amount deducted to the relevant
authority in accordance with applicable law and (d) the Borrower
shall furnish to the Lender the original copy of a receipt
evidencing payment thereof within 30 days after such payment is
made.
(ii) In addition, the Borrower hereby agrees to pay any
present or future stamp or documentary taxes and any other excise
or property taxes, charges or similar levies which arise from any
payment made hereunder or under any Note or from the execution or
delivery of, or otherwise with respect to, this Agreement or any
Note ("Other Taxes").
(iii) The Borrower hereby agrees to indemnify the Lender
for the full amount of Taxes or Other Taxes (including, without
limitation, any Taxes or Other Taxes imposed on amounts payable
under this Section 3.3) paid by the Lender and any liability
(including penalties, interest and expenses) arising therefrom or
with respect thereto. Payments due under this indemnification
shall be made within 30 days of the date the Lender makes written
demand therefor pursuant to Section 3.4.
3.4 Lender Statements; Survival of Indemnity. Lender shall deliver a
written statement to the Borrower as to the amount due, if any, under
Section 3.1, 3.2 or, 3.3. Such written statement shall set forth in
reasonable detail the calculations upon which Lender determined such amount
and shall be final, conclusive and binding on the Borrower. Unless
otherwise provided herein, the amount specified in the written statement of
Lender shall be payable on demand after receipt by the Borrower of such
written statement. The obligations of the Borrower under Sections 3.1, 3.2
and 3.3 shall survive the payment in full of the Obligations and the
termination of this Agreement, for a period of 365 days in the case of
Sections 3.1, 3.2 and 3.3 provided that any obligation discovered or
asserted during such 365 day period shall survive thereafter.
ARTICLE IV
CONDITIONS PRECEDENT
4.1 Initial Advance and Facility Letter of Credit. The Lender shall
not be required to make the initial Advance hereunder and, if the initial
Advance shall not have been made, the Lender shall not be required to issue
any Facility Letter of Credit hereunder unless the Borrower has complied
with the following conditions precedent:
(i) the Borrower has furnished to the Lender the following,
each dated as of the initial Borrowing Date or Issuance Date, as
the case may be (or such earlier date as shall be acceptable to
the Lender):
(a) Copies of the articles of incorporation of
Borrower, together with all amendments thereto, and certificates
of good standing of Borrower from each jurisdiction in which
Borrower is qualified to do business, all certified by the
appropriate governmental officers in their respective
jurisdiction.
(b) Copies, certified by the Secretary or an Assistant
Secretary of Borrower, of its by-laws, operating agreements and of
Board of Directors' and members' resolutions (and resolutions of
other bodies, if any are deemed necessary by counsel for the
Lender) authorizing the execution of each of the Loan Documents to
which such Borrower is a party.
(c) Incumbency certificates, executed by the Secretary
or an Assistant Secretary of each Borrower, which shall identify
by name and title and bear the signature of the officers of
Borrower authorized to sign the Loan Documents to which it is a
party and, with respect to the Borrower, to make borrowings
hereunder, upon which certificates the Lender and the Lenders
shall be entitled to rely until informed of any change in writing
by the Borrower.
(d) A certificate, signed by the president or chief
financial officer of the Borrower, stating that on the initial
Borrowing Date that the Borrower is solvent and that no Default or
Unmatured Default has occurred and is continuing.
(e) A written opinion of outside counsel to the
Borrower addressed to the Lender in substantially the form of
Exhibit E hereto.
(f) This Agreement and the Notes fully executed and
payable to the order of the Lender.
(g) A Security Agreement executed by the Borrower and
(if applicable) the Subsidiaries (other than WEA) in favor of the
Lender together with:
(i) original copies of Uniform Commercial Code
financing statements (Form UCC-1), dated a date
reasonably near (but not subsequent to) to the Closing
Date naming the Borrower as Debtor and the Lender as the
secured party, in a form sufficient to be filed under
the Uniform Commercial Code of all jurisdictions as may
be necessary or, in the reasonable opinion of the Lender
or Required Lenders, desirable to perfect the security
interest of the Lender and Lenders pursuant to the
Security Agreement;
(ii) executed copies of proper Uniform Commercial
Code termination statements (Form UCC-3) and such other
instruments or agreements to release all Liens and other
rights of any Person in any collateral covered by the
Collateral Documents;
(iii) certified copies of Uniform Commercial
Code Requests for Information or copies, or a similar
search report certified by the Borrower, dated a date
reasonably near (but not subsequent to) to the Closing
Date, listing all effective financing statements which
name Borrower as the debtor none of which financing
statements (other than those described in subsection
(ii) of this Section) shall cover any collateral covered
by the Security Agreement, unless such financing
statements evidence Permitted Liens.
(iv) an Authorization to File UCC Financing
Statements in the form of Exhibit I hereto.
(h) Subordination agreements in form and substance
acceptable to the Lender with respect to Subordinated Debt.
(i) Written money transfer instructions addressed to the
Lender and signed by an Authorized Officer, together with such
other related money transfer authorizations as the Lender may have
reasonably requested.
(j) An updated field audit conducted by Lender, the results
of which are satisfactory to Lender, and payment by Borrower to
Lender of the full cost of such field audit.
(k) The Stock Pledge Agreement executed by Borrower in favor
of Lender pledging to Lender all of Borrower's right title and
interest in and to the capital stock of AGE, together with (i) the
original stock certificates evidencing Borrower's ownership of
such stock, and (ii) stock powers in blank with respect to such
stock executed by the Borrower.
(l) Such other documents as Lender or its counsel may have
reasonably requested.
(ii) Evidence satisfactory to the Lender that the Borrower shall have
paid, or concurrently with the making of the initial Advance or the issuance
of the initial Facility Letter of Credit shall pay, in full, all fees
required to be paid pursuant to Section 2.4.1 on or before the initial
Borrowing Date or Issuance Date, as the case may be.
(iii) The insurance certificate described in Section 5.24 along
with evidence that the Lender has been named as loss payee under all
policies of casualty insurance, and as additional insured under all policies
of liability insurance required in accordance with Section 5.23 and under
the Security Agreement (in the form of certificates of insurance, with
standard lenders' loss payable endorsements acceptable to Lender or other
instruments or documents evidencing such insurance coverage).
(iv) Lender has received such consents, estoppels, subordination
agreements and other documents and instruments executed by landlords,
tenants and other Persons party to material contracts relating to any
Collateral as to which the Lender shall be granted a Lien for the benefit of
the Lenders, as requested by the Lender or any Lender.
(v) Evidence that all other actions necessary or, in the opinion of
the Lender or the Lenders, desirable to perfect and protect the first
priority Lien created by the Security Agreement, and to enhance the Lender's
ability to preserve and protect its interests in and access to the
Collateral, have been taken.
(vi) Upon the Closing Date, the Borrower shall have a minimum
availability of $500,000 under the Revolving Credit Commitment after the
funding of the initial Revolving Loans.
(vii) On the Closing Date, the Total Assets of the Borrower at a
fair valuation at their then present fair salable value, determined in a
manner and based on assumptions satisfactory to Lender, shall be materially
greater than the Total Liabilities of Borrower, and Lender shall be
satisfied that Borrower's assets at a fair valuation and at their fair
salable value will continue to be materially greater than the total
Liabilities of Borrower thereafter.
4.2 Each Advance and Facility Letter of Credit. The Lender shall not
be required to make any Advance to issue any Facility Letter of Credit,
unless on the applicable Borrowing Date or Issuance Date, as the case may
be:
(i) There exists no Default or Unmatured Default.
(ii) The representations and warranties contained in Article
V are true and correct as of such Borrowing Date except to the
extent any such representation or warranty is stated to relate
solely to an earlier date, in which case such representation or
warranty shall be true and correct on and as of such earlier date.
Each Borrowing Notice with respect to each such Advance and each Facility
Letter of Credit Request with respect to each such Facility Letter of Credit
shall constitute a representation and warranty by the Borrower that the
conditions contained in Sections 4.2(i) and (ii) have been satisfied.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Lenders that:
5.1 Corporate Existence and Standing. W-G is a corporation duly
formed, validly existing and in good standing under the laws of the State of
Illinois, AGE is a corporation duly formed, validly existing and in good
standing under the laws of the State of Nevada, and each Subsidiary (if any)
is a corporation duly formed, or a corporation duly incorporated, validly
existing and in good standing under the laws of its respective state or
country of formation or incorporation. Each of the Borrower and the
Subsidiaries is duly qualified and in good standing as a foreign
corporation, as the case may be, authorized to do business in each
jurisdiction where such qualification is required because of the nature of
its activities or properties and where the failure to maintain such
qualification would singly or in the aggregate cause a Material Adverse
Effect.
5.2 Authorization and Validity. The Borrower has the power and
authority and legal right to execute and deliver the Loan Documents to which
it is a party and to perform its obligations thereunder. The execution and
delivery by the Borrower of the Loan Documents and the performance of its
obligations thereunder have been duly authorized by proper corporate
proceedings, and the Loan Documents constitute legal, valid and binding
obligations of the Borrower, enforceable against the Borrower in accordance
with the terms thereof, except as enforceability may be limited by
bankruptcy, insolvency or similar laws or general principles of equity
relating to remedies affecting or relating to the enforcement of creditors'
rights generally.
5.3 No Conflict; Government Consent. Neither the execution and
delivery by the Borrower of the Loan Documents, nor the consummation of the
transactions therein contemplated, nor compliance with the provisions
thereof will violate any law, rule, regulation, order, writ, judgment,
injunction, decree or award binding on the Borrower or any of its
Subsidiaries, or violate the Borrower's or any Subsidiary's articles of
incorporation or by-laws, or the provisions of any indenture, instrument or
agreement to which the Borrower or any of its Subsidiaries is a party or is
subject, or by which it or its Property is bound, or conflict with or
constitute a default thereunder, or result in the creation or imposition of
any Lien in, of or on the Property of the Borrower or a Subsidiary pursuant
to the terms of any such indenture, instrument or agreement, except for any
such violation or conflict which would not singly or in the aggregate cause
a Material Adverse Effect. No order, consent, approval, license
authorization, or validation of, or filing, recording or registration with,
or exemption by, or other action in respect of any governmental or public
body or authority, or any subdivision thereof, is required to authorize, or
is required in connection with the execution, delivery and performance of,
or the legality, validity, binding effect of, any of the Loan Documents,
except as may be applicable because of the Lender being a party thereto or
except as may be required with respect to particular Facility Letters of
Credit, and except for any failure to obtain any such order, consent,
approval, license, authorization or exemption or to make any such filing or
recordation or to take any such other action which would not singly or in
the aggregate cause a Material Adverse Effect.
5.4 Financial Statements. The June 30, 2001 consolidated financial
statements of the Borrower and its Subsidiaries heretofore delivered to the
Lender were prepared in accordance with GAAP as in effect on the date such
statements were prepared and fairly present the consolidated financial
condition and operations of the Borrower and its Subsidiaries at such date
and the consolidated results of their operations for the period then ended.
5.5 Material Adverse Change. Except as set forth as of the date of
this Agreement on Schedule 5.5 hereto, since June 30, 2001, there has been
no change in the business, Property, financial condition or results of
operations of the Borrower and its Subsidiaries, taken as a whole, which
could reasonably be expected to have a Material Adverse Effect.
5.6 Taxes. Except as set forth as of the date of this Agreement on
Schedule 5.6 hereto, the Borrower and its Subsidiaries have filed (or joined
in the filing of) all United States federal income tax returns and all other
tax returns which are required to be filed and have paid all taxes due
pursuant to said returns or pursuant to any assessment received by the
Borrower or any of its Subsidiaries, except such taxes, if any, as are being
contested in good faith and as to which adequate reserves have been provided
in accordance with GAAP and as to which no Lien exists, except for failures
to file or pay which could not be reasonably expected to have a Material
Adverse Effect. No tax liens (other than those, if any, which are Permitted
Liens) have been filed and no claims are being asserted with respect to any
such taxes. The charges, accruals and reserves on the books of the Borrower
and its Subsidiaries in respect of any taxes or other governmental charges
are adequate.
5.7 Litigation and Contingent Obligations. Except as set forth as of
the date of this Agreement on Schedule 5.7 hereto, there is no litigation,
arbitration, governmental investigation, proceeding or inquiry pending or,
to the best knowledge of any of their officers, threatened against or
affecting the Borrower or any of its Subsidiaries which could be reasonably
expected to have a Material Adverse Effect or which seeks to prevent, enjoin
or delay the making of the Loans or Advances. Other than any liability
incidental to such litigation, arbitration or proceedings, neither the
Borrower nor any Subsidiary has any material contingent obligations not
provided for or disclosed in the financial statements referred to in Section
5.4.
5.8 Subsidiaries. Except as otherwise disclosed to the Lender in
writing on or prior to the date hereof, Schedule 5.8 hereto contains an
accurate list of all Subsidiaries of the Borrower as of the date of this
Agreement, setting forth their respective jurisdictions of formation or
incorporation and the percentage of their respective equity interests owned
by the Borrower or other Subsidiaries. Such Subsidiaries (other than WEA)
do not own any Collateral or if any Collateral is owned (other than WEA),
have delivered to Lender a Security Agreement and UCC financing statements
required by Lender. All of the issued and outstanding equity interests of
such Subsidiaries have been duly authorized and issued and those equity
interests which are owned by Borrower or one or more of its Subsidiaries are
fully paid and non-assessable.
5.9 ERISA. The Unfunded Liabilities of all Single Employer Plans as
reflected in the most recent actuarial valuation report for each Single
Employer Plan do not in the aggregate exceed $100,000. Neither the Borrower
nor any other member of the Controlled Group has incurred, or is reasonably
expected to incur, any withdrawal liability to Multiemployer Plans in excess
of $100,000 in the aggregate. Each Benefit Plan complies in all material
respects with all applicable requirements of law and regulations, no
Reportable Event has occurred with respect to any Plan, neither the Borrower
nor any other members of the Controlled Group has withdrawn from any Plan,
except as set forth as of the date of this Agreement on Schedule 5.9 hereto,
or initiated steps to do so, and no steps have been taken to reorganize or
terminate any Plan. Each Benefit Plan is in substantial compliance with
ERISA and the Code and the Borrower has not received any notice from the
government or any agency or department thereof asserting that any Benefit
Plan is not in compliance with either ERISA or the Code.
5.10 Accuracy of Information. No information, exhibit or report
furnished by the Borrower or any of its Subsidiaries to the Lender in
connection with the negotiation of, or compliance with, the Loan Documents
contained any material misstatement of fact or omitted to state a material
fact or any fact necessary to make the statements contained therein not
misleading, provided that this Section 5.10 shall not apply to any plan,
forecast, projection or pro forma financial information contained in such
materials that is based upon good faith estimates and assumptions believed
by the Borrower or such Subsidiary to be reasonable at the time made.
5.11 Regulation U. Margin stock (as defined in Regulation U)
constitutes less than 25% of those assets of the Borrower and each of its
Subsidiaries which are subject to any limitation on sale, pledge, or other
restriction hereunder.
5.12 Material Agreements. Neither the Borrower nor any Subsidiary is a
party to any agreement or instrument or subject to any charter or other
corporate restriction which could reasonably be expected to have a Material
Adverse Effect. Neither the Borrower nor any Subsidiary is in default in the
performance, observance or fulfillment of any of the obligations, covenants
or conditions contained in any agreement to which it is a party, except such
default which could not reasonably be expected to have a Material Adverse
Effect.
5.13 Compliance With Laws. The Borrower and each of its Subsidiaries
have complied with all applicable statutes, rules, regulations, orders and
restrictions of any domestic or foreign government or any instrumentality or
agency thereof, having jurisdiction over the conduct of their respective
businesses or the ownership of their respective Property except for any
failure to comply with any of the foregoing which could not reasonably be
expected to have a Material Adverse Effect.
5.14 Ownership of Properties. Except as set forth on Schedule 5.14
hereto and except for sales of inventory and other assets made in the
ordinary course of business since June 30, 2001, on the date of this
Agreement, the Borrower and its Subsidiaries will have good title, free of
all Liens (other than those permitted by Section 6.16), to all of the
Property and assets reflected as owned by it in the Borrower's June 30, 2001
consolidated balance sheet heretofore delivered to the Lenders.
5.15 Environmental Matters. Except as set forth as of the date of this
Agreement on Schedule 5.15 hereto, in the ordinary course of its business,
the officers of the Borrower consider the effect of Environmental Laws on
the business of the Borrower and its Subsidiaries, in the course of which
they identify and evaluate potential risks and liabilities accruing to the
Borrower due to Environmental Laws. On the basis of this consideration, the
Borrower has concluded that Environmental Laws cannot reasonably be expected
to have a Material Adverse Effect. Neither the Borrower nor any Subsidiary
has any reason to believe that its operations are not in material compliance
with any of the requirements of applicable Environmental Laws or are the
subject of any federal or state investigation evaluating whether any
remedial action is needed to respond to a release of any toxic or hazardous
waste or substance into the environment, which non-compliance or remedial
action could reasonably be expected to have a Material Adverse Effect.
5.16 Investment Company Act. Neither the Borrower nor any Subsidiary
thereof is an "investment company" or a company "controlled" by an
"investment company", within the meaning of the Investment Company Act of
1940, as amended.
5.17 Public Utility Holding Company Act. Neither the Borrower nor any
Subsidiary is a "holding company" or a "subsidiary company" of a "holding
company", or an "affiliate" of a "holding company" or of a "subsidiary
company" of a "holding company", within the meaning of the Public Utility
Holding Company Act of 1935, as amended.
5.18 Intentionally Omitted.
5.19 Intellectual Property. Borrower owns, is licensed under, or
otherwise has the rights to, all patents, trademarks, trade names,
copyrights, technology, know-how and processes used in or necessary for the
conduct of its business as currently conducted (collectively, "Intellectual
Property"), except where the failure to own, be licensed under or otherwise
have the rights to any such Intellectual Property could not reasonably be
expected to have a Material Adverse Effect. All such patents, federally-
registered trademarks and registered copyrights included in the Intellectual
Property are properly registered, filed or issued in the appropriate office
and jurisdictions for such registrations, filing or issuances. No material
claim has been asserted by any Person with respect to the use of any
Intellectual Property, or challenging or questioning the validity or
effectiveness of any Intellectual Property, and to the knowledge of
Borrower, the use of such Intellectual Property by Borrower does not
infringe on the rights of any Person.
5.20 Labor. There are no strikes, work stoppages, unfair labor
charges, equal employment opportunity proceedings, wage payment or material
unemployment compensation proceedings, material workmen's compensation
proceedings or other material labor or employee related controversies,
pending or, to Borrower's knowledge, threatened involving Borrower and any
of its employees, except for any of the foregoing which would not in the
aggregate have a Material Adverse Effect.
5.21 Solvency. After giving effect to the consummation of the
transactions contemplated by this Agreement, Borrower has capital sufficient
to carry on its business and transactions and all businesses and
transactions in which it is about to engage and is solvent and able to pay
its debts as they mature and Borrower owns property the fair saleable value
of which is greater than the amount required to pay Borrower's Indebtedness.
No transfer of property is being made and no Indebtedness is being incurred
in connection with the transactions contemplated by this Agreement with the
intent to hinder, delay or defraud either present or future creditors of
Borrower or any Affiliate.
5.22 Post-Retirement Benefits. The present value of the expected cost
to the Borrower and its Subsidiaries of post-retirement medical and
insurance benefits provided by the Borrower and its Subsidiaries to its
employees and former employees, as estimated by the Borrower in accordance
with procedures and assumptions deemed reasonable by the Lender, does not
exceed $250,000.
5.23 Insurance. In addition to insurance requirements set forth in the
Security Agreement, the Borrower shall maintain, and shall cause each of its
Subsidiaries to maintain, with financially sound and reputable independent
insurers, insurance with respect to its properties and business against loss
or damage of the kinds customarily insured against by Persons engaged in the
same or similar business, of such types and in such amounts as are
customarily carried under similar circumstances by such other Persons;
including workers' compensation insurance, public liability and property and
casualty insurance which amount shall not be reduced by the Borrower in the
absence of 10 days' prior notice to the Lender other than in the ordinary
course of business. All such insurance shall name the Lender as loss
payee/mortgagee and as additional insured. All casualty and key man
insurance maintained by the Borrower shall name the Lender as loss payee and
all liability insurance shall name the Lender as additional insured. Upon
request of the Lender, the Borrower shall furnish the Lender at reasonable
intervals (but not more than once per calendar year) a certificate of a
Responsible Officer of the Borrower (and, if requested by the Lender, any
insurance broker of the Borrower) setting forth the nature and extent of all
insurance maintained by the Borrower and its Subsidiaries in accordance with
this Section or the Security Agreement (and which, in the case of a
certificate of a broker, were placed through such broker).
5.24 Insurance Certificate. The certificate delivered at Closing
signed by the President or Chief Financial Officer of the Borrower, that
attests to the existence and adequacy of, and summarizes, the property and
casualty insurance program carried by the Borrower with respect to itself
and its Subsidiaries and that has been furnished by the Borrower to the
Lender is complete and accurate. This summary includes the insurer's or
insurers' name(s), policy number(s), expiration date(s), amount(s) of
coverage, type(s) of coverage, exclusion(s), and deductibles. This summary
also includes similar information, and describes any reserves, relating to
any self-insurance program that is in effect.
ARTICLE VI
COVENANTS
During the term of this Agreement, unless the Required Lenders shall
otherwise consent in writing:
6.1 Financial Reporting. The Borrower will maintain, for itself and
each Subsidiary, a system of accounting established and administered in
accordance with GAAP, and furnish to the Lender:
(i) Within 90 days after the close of each of its Fiscal Years,
an unqualified (except for qualifications relating to changes in
generally accepted accounting principles or practices reflecting
changes in generally accepted accounting principles) audit report
certified by KPMG, or by other independent certified public accountants
reasonably acceptable to the Lender, prepared in accordance with GAAP
on a consolidated basis for itself and its Subsidiaries, including
balance sheets as of the end of such period, related profit and loss
and reconciliation of surplus statements, and a statement of cash
flows;
(ii) Within 20 days after the end of each month of each of its
Fiscal Years, for itself and its Subsidiaries, consolidated and
consolidating unaudited balance sheets as at the close of such month
most recently ended and consolidated and consolidating profit and loss
and reconciliation of surplus statements, and for itself and its
Subsidiaries, a statement of cash flows for the period from the
beginning of such Fiscal Year to the end of such month, all prepared in
accordance with GAAP and certified by the chief financial officer of
the Borrower;
(iii) Together with the financial statements required under
Sections 6.1(i) and (ii), submitted at the end of each of the
Borrower's fiscal quarters, a Compliance Certificate, and together with
the financial statements required under Section 6.1(i), a detailed
business plan for the Borrower's and its Subsidiaries' current Fiscal
year detailing expected financial results.
(iv) Schedules of Accounts, Inventory and Payables. On or before
the twentieth day of each calendar month a Schedule of Accounts, a
Schedule of Inventory and a Schedule of Payables as at the last day of
the immediately preceding calendar month, each showing an aging of
Accounts, Inventory and accounts payable respectively and otherwise in
form and substance satisfactory to the Lender.
(v) Sales and Collection Reports. Not less frequently than
weekly (and more frequently in the Lender's reasonable discretion, if a
Default has occurred and is continuing), a sales and collection report
for the immediately preceding week, each in form and substance
satisfactory to the Lender.
(vi) Borrowing Base Certificate. Not less frequently than weekly
(and more frequently in the Lender's reasonable discretion) a Borrowing
Base Certificate in the form of Exhibit H hereto listing all Accounts
generated by the Borrower during the immediately prior week. Unless
the Lender provides notification otherwise, such Borrowing Base
Certificate shall be delivered to Lender at least once each week.
(vii) Forthwith upon Borrower's having knowledge, the
occurrence of a Default or Unmatured Default written notice describing
in detail such event.
(viii) Forthwith upon Borrower's having knowledge of the
institution of, or any adverse determination in any litigation,
arbitration proceeding or court proceeding in which any injunctive
relief is sought or in which money damages in excess of $500,000 in the
aggregate are sought, written notice describing such matter and the
Borrower's intended response.
(ix) If the Borrower or any member of the Controlled Group
maintains a Single Employer Plan, within 270 days after the close of
each Fiscal Year, a statement of the Unfunded Liabilities of each
Single Employer Plan, if any, certified as correct by a plan
administrator enrolled under ERISA.
(x) As soon as possible and in any event within 10 days after the
Borrower knows that any Reportable Event has occurred with respect to
any Benefit Plan, a statement, signed by the chief financial officer of
the Borrower, describing said Reportable Event and the action which the
Borrower proposes to take with respect thereto.
(xi) As soon as possible and in any event within 10 days after the
Borrower or any Controlled Group member withdraws from a Multiemployer
Plan and the liability from such withdrawal could reasonably be
expected to exceed $100,000.
(xii) As soon as possible and in any event within 10 days
after the Borrower terminates a Single Employer Plan under Section 4041
of ERISA or the Borrower knows that any Controlled Group Member has
terminated a Single Employer Plan that could result in the imposition
of a Lien on the property of Alleghany, the Borrower or any Subsidiary.
(xiii) As soon as possible and in any event within 10 days
after receipt by the Borrower of a written notice from the government
or any agency or department thereof that any Benefit Plan of Borrower
has violated the provisions of ERISA or the Code, which violation could
result in liability to the Borrower in excess of $100,000.
(xiv) As soon as possible and in any event within 10 days
after receipt by the Borrower, a copy of (a) any notice or claim to the
effect that the Borrower or any of its Subsidiaries is or may be liable
to any Person as a result of the release by the Borrower, any of its
Subsidiaries, or any other Person of any toxic or hazardous waste or
substance into the environment, and (b) any notice alleging any
violation of any federal, state or local environmental, health or
safety law or regulation by the Borrower or any of its Subsidiaries,
which, in either case, could reasonably be expected to have a Material
Adverse Effect.
(xv) Within thirty days following delivery to the Borrower, a copy
of each of the Borrower's auditor's management letters, if prepared.
(xvi) Promptly, copies of all material financial statements
and reports that the Borrower sends to its shareholders.
(xvii) Such other information (including non-financial
information) as the Lender may from time to time reasonably request.
6.2 Use of Proceeds. The Borrower will, and will cause each
Subsidiary to, use the proceeds of the Revolving Advances and the Facility
Letters of Credit for working capital and for general corporate purposes.
The Borrower will not, nor will it permit any Subsidiary to, use any of the
proceeds of the Advances or the Facility Letters of Credit to purchase or
carry any "margin stock" (as defined in Regulation U).
6.3 Notice of Default. The Borrower will give prompt notice in
writing to the Lenders of the occurrence of (i) any Default or Unmatured
Default and (ii) any other development, financial or otherwise, which
development could reasonably be expected to have a Material Adverse Effect.
6.4 Conduct of Business. The Borrower will, and will cause each
Subsidiary to, carry on and conduct its business in substantially the same
manner and in substantially the same fields of enterprise as it is presently
conducted and to do all things necessary to remain duly incorporated,
validly existing and in good standing as a domestic corporation in its
jurisdiction of incorporation and maintain all requisite authority to
conduct its business in each jurisdiction in which its business is conducted
unless failure to maintain such authority could not reasonably be expected
to have a Material Adverse Effect.
6.5 Taxes. The Borrower will, and will cause each Subsidiary to,
timely file (or join in the filing of) complete and correct United States
federal and applicable foreign, state and local tax returns required by law
and pay when due all taxes, assessments and governmental charges and levies
upon it or its income, profits or Property, except those which are being
contested in good faith by appropriate proceedings and with respect to which
adequate reserves have been set aside in accordance with GAAP, and except to
the extent that the failure to file any return or the nonpayment of any tax
could not reasonably be expected to have a Material Adverse Effect.
6.6 Insurance. The Borrower will, and will cause each Subsidiary to,
maintain with financially sound and reputable insurance companies insurance
on all their Property in such amounts and covering such risks as is
consistent with sound business practice, and the Borrower will furnish to
any Lender upon request full information as to the insurance carried.
6.7 Compliance with Laws. The Borrower will, and will cause each
Subsidiary to, comply with all laws, rules, regulations, orders, writs,
judgments, injunctions, decrees or awards to which it may be subject
including, without limitation, all Environmental Laws, except to the extent
that noncompliance could not reasonably be expected to have a Material
Adverse Effect.
6.8 Maintenance of Properties. The Borrower will, and will cause each
Subsidiary to, do all things necessary to maintain, preserve, protect and
keep its Property in good repair, working order and condition, and make all
necessary and proper repairs, renewals and replacements so that its business
carried on in connection therewith may be properly conducted at all times,
except to the extent that failure to maintain such Property or make such
repair could not reasonably be expected to have a Material Adverse Effect.
6.9 Inspection. The Borrower will, and will cause each Subsidiary to,
permit the Lender and any Lender, by their respective representatives and
Lenders, to inspect any of the Property, corporate books and financial
records of the Borrower and each Subsidiary, to examine and make copies of
the books of accounts and other financial records of the Borrower and each
Subsidiary, and to discuss the affairs, finances and accounts of the
Borrower and each Subsidiary with, and to be advised as to the same by,
their respective officers at such reasonable times and intervals as the
Lender or any Lender may designate. Borrower shall upon written demand
reimburse Lender for each field audit in an amount equal to $500 per auditor
per day plus expenses, provided that Borrower's field audit costs shall not
exceed $2500 plus expenses in any calendar year.
6.10 Financial Covenants. The financial covenants referred to in this
Section 6.10 shall each be computed at the end of each fiscal quarter
(unless stated otherwise) by the Borrower, and such calculations shall be
included in the Compliance Certificate referred to in Section 6.1(iii). For
purposes of calculating the financial covenants in this Section 6.10,
current liabilities shall include but not be limited to all outstanding
Revolving Advances and Reimbursement Obligations.
6.10.1 Debt Service Coverage. The Borrower will maintain a
Debt Service Coverage Ratio, at all times, of not less than the following:
For the Fiscal Quarters Ending Debt Service Coverage Ratio
------------------------------ ---------------------------
March 31, 2002
and thereafter 1.00:1.00
The first Debt Service Coverage test date will be March 31, 2002 and include
only the first calendar quarter 2002 financial performance. The June 30,
2002 test will include the prior two calendar quarters. The September 30,
2002 test will include the prior three calendar quarters and the December
31, 2002 test and each test thereafter will include the immediately prior
twelve trailing calendar months.
6.10.2 Total Liabilities to Tangible Net Worth. The Borrower
will maintain a Ratio of Total Liabilities to Tangible Net Worth of (a) not
greater than 3.75 to 1.00 measured at September 30, 2001, (b) not greater
than 4.15 to 1.00 measured at December 31, 2001, (c) 3.75 to 1.00 measured
at Xxxxx 00, 0000, (x) 3.50 to 1.00 measured at June 30, 2002, and (e) 3.25
to 1.00 measured at September 30, 2002 and at all times thereafter.
6.10.3 Tangible Net Worth. The Borrower will maintain a
Tangible Net Worth of not less than (a) $4,500,000 measured at September 30,
2001 and (b) $4,600,000 measured at December 31, 2001. With respect to each
calendar quarter during calendar year 2002 and thereafter, Borrower will
maintain a Tangible Net Worth (measured on the last day of such calendar
quarter) of not less than (x) the Tangible Net Worth required to have been
maintained at the end of the previous calendar quarter plus (y) fifty
percent (50%) of the Net Income of Borrower earned during the calendar
quarter in question.
6.11 Purchase and Redemption of the Borrower's Securities; Dividend and
Interest Restrictions. Not purchase or redeem any shares of the Borrower's
or any Subsidiary's capital stock or any options or warrants with respect
thereto, declare or pay any dividends thereon (other than an annual 5% stock
dividend with the Lender's consent, not to be unreasonably withheld), make
any distribution or payment to stockholders or holders of options or
warrants in respect of the Borrower's or any Subsidiary's capital stock or
set aside any funds for any such purpose without the Lender's prior written
consent.
6.12 Indebtedness. The Borrower will not, nor will it permit any
Subsidiary to, create, incur or suffer to exist any Indebtedness, except:
(i) Advances and Facility Letter of Credit Obligations hereunder;
(ii) Indebtedness which (a) exists on the date hereof, (b) is
described in Schedule 6.12 hereto, and (c) has been previously approved
by the Lender;
(iii) Subordinated Debt which is subordinated to the Advances
and Facility Letter of Credit Obligations on terms which are
satisfactory to the Required Lenders;
(iv) Indebtedness incurred to refinance existing Indebtedness
permitted pursuant to this Section 6.12; provided, however, that the
maturity date of such new Indebtedness is no earlier than the maturity
date of the Indebtedness being refinanced and the terms of such new
Indebtedness (including, but not limited to, the amount, the term, the
amount of the annual loan payment or provision for collateral or
additional collateral) are no more disadvantageous to the Lenders, the
Borrower and its Subsidiaries than the terms of the Indebtedness being
refinanced;
(v) Indebtedness not exceeding $75,000 in the aggregate evidenced
by loans and advances to employees of the Borrower and its Subsidiaries
(other than WEA) provided that no such loans will be made when there
exists an Unmatured Default or Default;
(vi) Indebtedness not to exceed $150,000 in the aggregate at any
time outstanding secured by purchase money Liens;
(vii) Capital Lease Obligations not to exceed $150,000 in the
aggregate at any time outstanding;
(viii) Rate Hedging Obligations not to exceed $100,000 in the
aggregate at any time outstanding;
(ix) The following Contingent Obligations:
(1) those resulting from endorsement of negotiable
instruments for collection in the ordinary course of business;
(2) those arising under indemnity agreements to title
insurers to cause such title insurers to issue to Lender title
insurance polices, if applicable;
(3) those arising with respect to customary indemnification
obligations incurred in connection with asset dispositions
permitted under this Agreement;
(4) those incurred in the ordinary course of business with
respect to surety and appeal bonds, performance and return-of-
money bonds and other similar obligations not exceeding at any
time outstanding $100,000 in aggregate liability;
(5) any other Contingent Obligations not expressly permitted
by subclauses (1) through (4) above, so long as any such other
Contingent Obligations in the aggregate at any time outstanding,
do not exceed $50,000; and
(x) unsecured indebtedness not described in clauses (i) thorough
(ix) above not to exceed $250,000 in the aggregate at any time
outstanding which is subordinated to the Obligations in a manner
satisfactory to Lender in Lender's sole discretion.
6.13 Merger. The Borrower will not, nor will it permit any Subsidiary
to, merge or consolidate with or into any other Person, except that a
Subsidiary may amalgamate, merge or consolidate with or into the Borrower or
a Wholly-Owned Subsidiary.
6.14 Sale of Assets. The Borrower will not, nor will it permit any
Subsidiary to, lease, sell or otherwise dispose of Property, to any other
Person, except:
(i) Sales of inventory in the ordinary course of business.
(ii) Leases, sales or other dispositions of Property that,
together with all other Property of the Borrower and its Subsidiaries
previously leased, sold or disposed of (other than inventory in the
ordinary course of business) as permitted by this Section during the
twelve-month period ending with the month in which any such lease, sale
or other disposition occurs, do not constitute a Substantial Portion of
the Property of the Borrower and its Subsidiaries.
6.15 Investments and Acquisitions. The Borrower will not, nor will it
permit any Subsidiary to, make or suffer to exist any Investments (including
without limitation, loans and advances to, and other Investments in,
Subsidiaries), or commitments therefor, or to become or remain a partner in
any partnership or joint venture, or member in a limited liability company,
or to make any Acquisition of any Person, except:
(i) Short-term obligations of, or fully guaranteed by, the United
States of America.
(ii) Commercial paper rated A-1 or better by Standard and Poor's
Corporation or P-1 or better by Xxxxx'x Investors Service, Inc.
(iii) Demand deposit accounts maintained in the ordinary
course of business.
(iv) Certificates of deposit issued by and time deposits with
commercial banks (whether domestic or foreign) having capital and
surplus in excess of $100,000,000.
(v) Investments not to exceed $5 million in the aggregate at any
one time outstanding in the common stock and investment grade bonds of
publicly held corporations which stock and bonds are traded on the New
York, American or NASDAQ stock exchanges.
(vi) Loans to employees of the Borrower or of any of its
Subsidiaries which do not exceed, in the aggregate for all such
employees at any one time outstanding, $75,000.
(vii) Existing Investments which (a) are in existence on the
date hereof, (b) are described in Schedule 6.15(viii) hereto and (c)
have been previously approved by the Lender and the Lenders.
(viii) Investments consisting of security deposits with lessors
and utilities and other similar Persons in the ordinary course of
business.
6.16 Liens. The Borrower will not, nor will it permit any Subsidiary
to create, incur, or suffer to exist any Lien in, of or on the Property of
the Borrower or any of its Subsidiaries, except the following ("Permitted
Liens"):
(i) Liens for taxes, assessments or governmental charges or
levies on its Property if the same shall not at the time be delinquent
or thereafter can be paid without penalty, or are being contested in
good faith and by appropriate proceedings and for which adequate
reserves in accordance with GAAP shall have been set aside on its
books.
(ii) Liens imposed by law, such as statutory Liens of landlords,
carriers', warehousemen's and mechanics' liens and other similar liens
arising in the ordinary course of business which secure payment of
obligations not more than 60 days past due and which are being
contested in good faith by appropriate proceedings and for which
adequate reserves shall have been set aside on its books.
(iii) Liens arising out of pledges or deposits under worker's
compensation laws, unemployment insurance, old age pensions, or other
social security or retirement benefits, or similar legislation.
(iv) Liens arising from a judgment rendered or claim filed, not in
excess, singly or in the aggregate, of $200,000 against the Borrower or
any of its Subsidiaries which the Borrower or such Subsidiary shall be
contesting diligently in good faith by proper legal proceedings.
(v) Liens which exist on the date hereof incurred by Borrower or
its Subsidiaries in the ordinary course of business securing
Indebtedness less than $100,000 in the aggregate.
(vi) Liens securing obligations which are excluded from Subsection
(iii) of the definition of Indebtedness herein.
(vii) Easements, rights of way, building restrictions and such
other encumbrances or charges against real property which do not in any
material way interfere with the use thereof by the Borrower.
(viii) Liens incurred or deposits made in the ordinary course
of business to secure the performance of tenders, statutory
obligations, surety, stay, customs and appeal bonds, bids, government
contracts, trade contracts, performance and return of money bonds,
leases and other similar obligations (exclusive of obligations for the
payment of borrowed money.
(ix) Deposits, in an aggregate amount not to exceed $75,000, made
in the ordinary course of business to secure liability to insurance
carriers.
(x) Liens for purchase money obligations or under capital leases;
provided that (1) the Indebtedness secured by any such Lien is
permitted under Subsection 6.12 and (2) any such Lien encumbers only
the asset so purchased.
(xi) Liens in favor of Lender.
(xii) Contractual liens of lessors under leases encumbering
solely the assets which are the subject of such leases.
(xiii) Any extension, renewal or substitution of or for any of
the foregoing Liens described in this Section 6.16, provided in each
case that (a) the Indebtedness or other obligation or liability secured
by the applicable Lien shall not exceed the Indebtedness or other
obligation or liability existing immediately prior to such extension,
renewal or substitution and (b) the Lien securing such Indebtedness or
other obligation or liability shall be limited to the Property which,
immediately prior to such extension, renewal or substitution, secured
such Indebtedness or other obligation or liability, and improvements on
or additions to such Property.
6.17 Prohibition of Negative Pledge. The Borrower will not, nor will
it permit any of its Subsidiaries to agree, covenant, warrant, represent,
pledge or otherwise commit with or to any entity other than the Lender, to
not incur, create, assume or permit to exist, any mortgage, pledge, lien
charge or other encumbrance of any nature whatsoever on all or any of its
assets now or hereafter owned.
6.18 Affiliates. The Borrower will not, nor will it permit any
Subsidiary to, enter into any transaction (including, without limitation,
the purchase or sale of any Property or service) with, or make any payment
or transfer to, any Affiliate except in the ordinary course of business and
pursuant to the reasonable requirements of the Borrower's or such
Subsidiary's business and upon fair and reasonable terms no less favorable
to the Borrower or such Subsidiary than the Borrower or such Subsidiary
would obtain in a comparable arms-length transaction.
6.19 Amendments to Agreements. The Borrower will not, nor will it
permit any Subsidiary to, amend any term or provision of any Subordinated
Debt except with the consent of Lenders. The Borrower shall deliver to the
Lender all amendments to the Subordinated Debt within five (5) days of such
amendment.
6.20 Sale of Accounts. The Borrower will not, nor will it permit any
Subsidiary to, sell or otherwise dispose of any notes receivable or
Accounts, with or without recourse, except for Accounts which are past due
in an aggregate amount not exceeding three hundred thousand dollars
($300,000) for each of the Borrower's fiscal years placed with a collection
agent for collection at a commission not exceeding forty-five percent (45%)
of the amount of such notes or Accounts recovered.
6.21 Fiscal Year. The Borrower will not, nor will it permit any
Subsidiary to, change its Fiscal Year.
6.22 Limitation on the Creation of Subsidiaries. Notwithstanding
anything to the contrary contained in this Agreement, the Borrower will not,
and will not permit any of its Subsidiaries to, establish, create or acquire
any Subsidiary, unless such Subsidiary delivers to Lender a Security
Agreement along with all other documentation required by Lender to perfect a
first priority security interest in all Collateral owned or to be owned by
such Subsidiary.
6.23 Subsidiary Dividends. The Borrower's Subsidiaries shall not in
any manner either directly or indirectly incur or be bound by any
restrictions on dividends from such Subsidiaries to the Borrower, other than
those restrictions required by applicable law.
6.24 Repayment of Subordinated Debt. The Borrower's and its
Subsidiaries' amounts of Subordinated Debt which become due and remain
unpaid plus the amount of the Borrower's and its Subsidiaries' actual
payment of Subordinated Debt, shall not exceed interest only on such
Subordinated Debt in amounts not exceeding the amounts permitted by the
applicable subordination agreements with respect to such Subordinated Debt.
6.25 Advances to Affiliates. Borrower shall not make any advances to
its Affiliates.
6.26 Consulting Services. Borrower shall at Borrower's expense
continually engage the services of Xxxxxx and Xxxxxx Consulting Inc. to
prepare and deliver to Lender Borrower's consolidated monthly balance
sheets, income statements and cash flow projections for the remainder of
Fiscal Years 2001 and 2002, no later than October 31, 2001.
ARTICLE VII
DEFAULTS
The occurrence of any one or more of the following events shall
constitute a Default:
7.1 Any representation or warranty made (or deemed made pursuant to
Article IV) by or on behalf of the Borrower or any of its Subsidiaries to
the Lenders, the Lender or the Lender under or in connection with this
Agreement, any Loan, any Facility Letter of Credit or any certificate or
information delivered in connection with this Agreement or any other Loan
Document shall be false in any material respect on the date as of which made
(or deemed made).
7.2 Nonpayment of principal of any Note or of any Reimbursement
Obligation when due (or in the case of any Reimbursement Obligation due
pursuant to Section 2.3.5(a)(ii)(B), upon demand), or nonpayment of interest
upon any Note or of any facility fee, Lender fee, Issuance Fee or other
obligations (other than Reimbursement Obligations which have been converted
into Advances pursuant to Section 2.3.5(a)(ii)(A)) under any of the Loan
Documents within three (3) days after the same becomes due.
7.3 The breach by the Borrower of any of the terms or provisions of
Sections 6.2, 6.3, 6.6, 6.10, 6.11, 6.12, 6.13, 6.14, 6.15, 6.16, 6.17,
6.19, 6.20, 6.23, 6.24 and 6.25.
7.4 The breach by the Borrower (other than a breach which constitutes
a Default under Section 7.1, 7.2 or 7.3) of any of the terms or provisions
of this Agreement which is not remedied within fifteen (15) days after
written notice from the Lender.
7.5 Failure of the Borrower or any of its Subsidiaries to pay when due
any Indebtedness to any of the Lenders or any other Indebtedness in excess
of, singly or in the aggregate, $150,000 (any such Indebtedness being herein
defined as "Material Indebtedness"); or the default by the Borrower or any
of its Subsidiaries in the performance of any term, provision or condition
contained in any agreement under which any such Material Indebtedness was
created or is governed, or any other event shall occur or condition exist,
the effect of which is to cause, or to permit the holder or holders of such
Material Indebtedness to cause, such Material Indebtedness to become due
prior to its stated maturity; or any Material Indebtedness of the Borrower
or any of its Subsidiaries shall be declared to be due and payable or
required to be prepaid or repurchased (other than by a regularly scheduled
payment) prior to the stated maturity thereof; or the Borrower or any of its
Subsidiaries shall not pay, or admit in writing its inability to pay, its
debts generally as they become due.
7.6 The Borrower or any of its Subsidiaries shall (i) have an order
for relief entered with respect to it under the Federal bankruptcy laws or
the laws of any other jurisdiction relating to bankruptcy, insolvency,
reorganization or relief of debtors as now or hereafter in effect, (ii) make
an assignment for the benefit of creditors, (iii) apply for, seek, consent
to, or acquiesce in, the appointment of a receiver, custodian, trustee,
examiner, liquidator or similar official for it or any Substantial Portion
of its Property, (iv) institute any proceeding seeking an order for relief
under the Federal bankruptcy laws or the laws of any other jurisdiction
relating to bankruptcy, insolvency, reorganization or relief of debtors as
now or hereafter in effect or seeking to adjudicate it a bankrupt or
insolvent, or seeking dissolution, winding up, liquidation, reorganization,
arrangement, adjustment or composition of it or its debts under any law
relating to bankruptcy, insolvency or reorganization or relief of debtors or
fail to file an answer or other pleading denying the material allegations of
any such proceeding filed against it, (v) take any corporate action to
authorize or effect any of the foregoing actions set forth in this Section
7.6 or (vi) fail to contest in good faith any appointment or proceeding
described in Section 7.7.
7.7 Without the application, approval or consent of the Borrower or
any of its Subsidiaries, a receiver, trustee, examiner, liquidator or
similar official shall be appointed for the Borrower or any of its
Subsidiaries or any Substantial Portion of its Property, or a proceeding
described in Section 7.6(iv) shall be instituted against the Borrower or any
of its Subsidiaries and such appointment continues undischarged or such
proceeding continues undismissed or unstayed for a period of 90 consecutive
days.
7.8 Any court, government or governmental agency shall condemn, seize
or otherwise appropriate, or take custody or control of (each a
"Condemnation"), all or any portion of the Property of the Borrower and its
Subsidiaries which, when taken together with all other Property of the
Borrower and its Subsidiaries so condemned, seized, appropriated, or taken
custody or control of, during the twelve-month period ending with the month
in which any such Condemnation occurs, constitutes a Substantial Portion.
7.9 The Borrower or any of its Subsidiaries fail to pay, bond or
otherwise discharge within 30 days any judgment or order for the payment of
money not covered by Borrower's insurance in excess of, singly or in the
aggregate, $500,000, which is not stayed on appeal or otherwise being
appropriately contested in good faith and as to which no enforcement actions
have been commenced.
7.10 The Unfunded Liabilities of all Single Employer Plans shall exceed
in the aggregate $500,000 or any Reportable Event shall occur in connection
with any Benefit Plan which could result in liability to Borrower in excess
of $100,000 or a Control Group Member has terminated a single employer plan
that could result in the imposition of a Lien on the property of Alleghany,
the Borrower or any Subsidiary in excess of $100,000.
7.11 The Borrower or any other member of the Controlled Group shall
have been notified by the sponsor of a Multiemployer Plan that it has
incurred withdrawal liability to such Multiemployer Plan in an amount which,
when aggregated with all other amounts required to be paid to Multiemployer
Plans by the Borrower or any other member of the Controlled Group as
withdrawal liability (determined as of the date of such notification),
exceeds $500,000.
7.12 The Borrower or any other member of the Controlled Group shall
have been notified by the sponsor of a Multiemployer Plan that such
Multiemployer Plan is in reorganization or is being terminated, within the
meaning of Title IV of ERISA, if as a result of such reorganization or
termination the aggregate annual contributions of the Borrower and the other
members of the Controlled Group (taken as a whole) to all Multiemployer
Plans which are then in reorganization or being terminated have been or will
be increased over the amounts contributed to such Multiemployer Plans for
the respective plan years of each such Multiemployer Plan immediately
preceding the plan year in which the reorganization or termination occurs by
an amount exceeding $100,000.
7.13 The Borrower or any other member of the Controlled Group shall
terminate a Single Employer Plan resulting in Unfunded Liabilities to the
Borrower in excess of $500,000.
7.14 The Borrower or any other member of the Controlled Group shall
incur liability for a violation of ERISA or the Code with respect to any
Benefit Plan which exceeds $250,000.
7.15 The Borrower or any of its Subsidiaries shall be the subject of
any proceeding pertaining to the release by the Borrower or any of its
Subsidiaries, or any other Person of any toxic or hazardous waste or
substance into the environment, or any violation of any federal, state or
local environmental, health or safety law or regulation, which, in either
case, could reasonably be expected to have a Material Adverse Effect.
7.16 [Intentionally Omitted].
7.17 Nonpayment by the Borrower or any of its Subsidiaries of any Rate
Hedging Obligation when due or the default or breach by the Borrower or any
of its Subsidiaries of any term, provision or condition contained in any
Rate Hedging Agreement, which default or breach continues (without being
waived) beyond any period of grace therein provided.
7.18 The occurrence of any "default", as defined in any Loan Document
(other than this Agreement or the Notes) or the breach of any of the terms
or provisions of any Loan Document (other than this Agreement), which
default or breach continues beyond any period of grace therein provided and
has not been waived.
7.19 Any of the Subordination Agreements or the subordination
provisions of any agreement or instrument governing any Subordinated Debt is
for any reason revoked or invalidated, or otherwise cease to be in full
force and effect, any Person contests in any manner the validity or
enforceability thereof or denies that it has any further liability or
obligation thereunder, or the Indebtedness hereunder is for any reason
subordinated or does not have the priority contemplated by this Agreement or
the Subordination Agreement or such subordination provisions.
7.20 Enforceability of Loan Documents. Either:
(i) any material provision of any Loan Document shall for any
reason cease to be valid and binding on or enforceable against the
Company or any Subsidiary party thereto, the Company or any Subsidiary
shall so state in writing or bring an action to limit its obligations
or liabilities thereunder; or
(ii) any Loan Document shall for any reason (other than pursuant
to the terms thereof) cease to create a valid security interest in the
collateral purported to be covered thereby or such security interest
shall for any reason cease to be a perfected and first priority
security interest subject only to Permitted Liens.
ARTICLE VIII
ACCELERATION, AMENDMENTS AND REMEDIES
8.1 Acceleration. If any Default described in Section 7.6 or 7.7
occurs with respect to the Borrower, the obligations of the Lender to make
Loans and to participate in Facility Letters of Credit hereunder, and the
obligation of the Lender to issue Facility Letters of Credit hereunder,
shall automatically terminate and the Obligations shall immediately become
due and payable without any election or action on the part of the Lender.
If any other Default occurs, the Lender (i) may terminate or suspend its
obligation to make Loans, (ii) may terminate or suspend the obligations of
the Lender to issue Facility Letters of Credit hereunder, and/or (iii)
declare the Obligations to be due and payable, whereupon the Obligations
shall become immediately due and payable, without presentment, demand,
protest or notice of any kind, all of which the Borrower hereby expressly
waives.
8.2 Preservation of Rights. No delay or omission of the Lender to
exercise any right under the Loan Documents shall impair such right or be
construed to be a waiver of any Default or an acquiescence therein, and the
making of a Loan or issuance of a Facility Letter of Credit notwithstanding
the existence of a Default or the inability of the Borrower to satisfy the
conditions precedent to such Loan shall not constitute any waiver or
acquiescence. Any single or partial exercise of any such right shall not
preclude other or further exercise thereof or the exercise of any other
right, and no waiver, amendment or other variation of the terms, conditions
or provisions of the Loan Documents whatsoever shall be valid unless in
writing signed by the Lender, and then only to the extent in such writing
specifically set forth. All remedies contained in the Loan Documents or by
law afforded shall be cumulative and all shall be available to the Lender,
until the Obligations have been paid in full.
ARTICLE IX
GENERAL PROVISIONS
9.1 Survival of Representations. All representations and warranties
of the Borrower contained in this Agreement shall survive delivery of the
Notes and the making of the Loans and the issuance of the Facility Letters
of Credit herein contemplated.
9.2 Governmental Regulation. Anything contained in this Agreement to
the contrary notwithstanding, no Lender shall be obligated to extend credit
to the Borrower or participate in Facility Letters of Credit in violation of
any limitation or prohibition provided by any applicable statute or
regulation.
9.3 Taxes. Any taxes (excluding Excluded Taxes) or other similar
assessments or charges made by any governmental or revenue authority in
respect of the Loan Documents shall be paid by the Borrower, together with
interest and penalties, if any unless contested by Borrower in good faith
with appropriate reserves.
9.4 Headings. Section headings in the Loan Documents are for
convenience of reference only, and shall not govern the interpretation of
any of the provisions of the Loan Documents.
9.5 Entire Agreement; Termination of Prior Agreement. The Loan
Documents embody the entire agreement and understanding between among the
Borrower and the Lender and supersede all prior agreements and
understandings between the Borrower and the Lender relating to the subject
matter thereof. Upon execution and delivery of the Loan Documents, the
Amended and Restated Loan Agreement dated as of September 1, 2000 between W-
G and Lender shall terminate except for those terms therein which expressly
survive termination.
9.6 Benefits of this Agreement. This Agreement shall not be construed
so as to confer any right or benefit upon any Person other than the parties
to this Agreement and their respective successors and assigns.
9.7 Expenses; Indemnification. The Borrower shall reimburse the
Lender for any costs, internal charges and out-of-pocket expenses including
reasonable attorneys' fees paid or incurred by the Lender in connection with
the preparation, negotiation, execution, delivery, review, amendment,
modification, and administration of the Loan Documents. The Borrower also
agrees to reimburse the Lender for any costs, internal charges and
out-of-pocket expenses including reasonable attorneys' fees paid or incurred
by the Lender, in connection with the collection and enforcement of the Loan
Documents. The Borrower further agrees to indemnify the Lender, and their
respective directors, officers and employees against all losses, claims,
damages, penalties, judgments, liabilities and expenses (including, without
limitation, all expenses of litigation or preparation therefor whether or
not the Lender is a party thereto) which any of them may pay or incur
arising out of or relating to this Agreement, the other Loan Documents, the
transactions contemplated hereby or thereby or the direct or indirect
application or proposed application of the proceeds of any Loan or the
direct or indirect use or intended use of any Facility Letter of Credit
hereunder except to the extent that they have resulted from the gross
negligence or willful misconduct of the party seeking indemnification. The
obligations of the Borrower under this Section shall survive the termination
of this Agreement for a period of 365 days, provided that any such
obligation discovered or asserted during such 365 day period shall survive
thereafter.
9.8 [Intentionally Omitted].
9.9 Accounting. Except as provided to the contrary herein, all
accounting terms used herein shall be interpreted and all accounting
determinations hereunder shall be made in accordance with GAAP, except that
any calculation or determination which is to be made on a consolidated basis
shall be made for the Borrower and all its Subsidiaries, including those
Subsidiaries, if any, which are unconsolidated on the Borrower's audited
financial statements.
9.10 Severability of Provisions. Any provision in any Loan Document
that is held to be inoperative, unenforceable, or invalid in any
jurisdiction shall, as to that jurisdiction, be inoperative, unenforceable,
or invalid without affecting the remaining provisions in that jurisdiction
or the operation, enforceability, or validity of that provision in any other
jurisdiction, and to this end the provisions of all Loan Documents are
declared to be severable.
9.11 Nonliability of Lender. The relationship between the Borrower and
the Lender shall be solely that of borrower and lender. The Lender shall not
have any fiduciary responsibilities to the Borrower. The Lender does not
undertake any responsibility to the Borrower to review or inform the
Borrower of any matter in connection with any phase of the Borrower's
business or operations. The Borrower agrees the Lender shall have no
liability to the Borrower (whether sounding in tort, contract or otherwise)
for losses suffered by the Borrower in connection with, arising out of, or
in any way related to, the transactions contemplated and the relationship
established by the Loan Documents, or any act, omission or event occurring
in connection therewith, unless it is determined by a court of competent
jurisdiction in a final and non-appealable order that such losses resulted
from the gross negligence or willful misconduct of the party from which
recovery is sought.
ARTICLE X
SETOFF
10.1 Setoff. In addition to, and without limitation of, any rights of
the Lender under applicable law, if the Borrower or any Subsidiary becomes
insolvent, however evidenced or any Default occurs, any and all deposits
(including all account balances, whether provisional or final and whether or
not collected or available) and any other Indebtedness at any time held or
owing by Lender to or for the credit or account of the Borrower or any
Subsidiary may be offset and applied toward the payment of the Obligations
owing to Lender, whether or not the Obligations, or any part hereof, shall
then be due.
ARTICLE XI
BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATION
11.1 Successors and Assigns. The terms and provisions of the Loan
Documents shall be binding upon and inure to the benefit of the Borrower and
the Lender and their respective successors and assigns, except that (i) the
Borrower shall not have the right to assign their respective rights or
obligations under the Loan Documents. Lender may at any time, without the
consent of the Borrower, assign all or any portion of its rights under this
Agreement and its Notes to a Federal Reserve Bank; provided, however, that
no such assignment to a Federal Reserve Bank shall release the transferor
Lender from its obligations hereunder. The Lender may treat the payee of
any Note as the owner thereof for all purposes hereof unless and until such
payee complies with Section 12.3 in the case of an assignment thereof or, in
the case of any other transfer, a written notice of the transfer is filed
with the Lender. Any assignee or transferee of a Note agrees by acceptance
thereof to be bound by all the terms and provisions of the Loan Documents.
Any request, authority or consent of any Person, who at the time of making
such request or giving such authority or consent is the holder of any Note,
shall be conclusive and binding on any subsequent holder, transferee or
assignee of such Note or of any Note or Notes issued in exchange therefor.
11.2 Assignments; Participations. (a) The Lender shall have the right
to assign to one or more banks or other financial institutions all or a
portion of its rights and obligations under this Agreement (including,
without limitation, all or a portion of the Commitment, the Loans, and the
Notes) and the Loan Documents. Upon any such assignment, (i) the assignee
shall become a party hereto and, to the extent of such assignment, have all
rights and obligations of the Lender hereunder and under the Loan Documents,
and (ii) the Lender shall, to the extent of such assignment, relinquish its
rights and be released from its obligations hereunder and under the Loan
Documents. The Borrower hereby agrees to execute and deliver such
documents, and to take such other actions, as the Lender may reasonably
request to accomplish the foregoing.
(b) In addition to the assignments permitted in clause (a) of
this Section 11.2, the Lender and any assignee pursuant to clause (a) above
shall have the right to grant participations, to one or more banks or other
financial institutions in or to any Loan hereunder (and the Loan Documents)
and any Note held by the Lender or such assignee without notice to or
consent from the Borrower. No holder of a participation in all or any part
of the Loans (and the Loan Documents) or the Notes shall have any rights
under this Agreement; provided, however, that, to the extent permitted by
applicable law, each holder of a participation shall have the same rights as
the Lender under Section 10.1.
11.3 (c) The Borrower hereby consents to the disclosure of any
information obtained in connection herewith (i) by the Lender, to any Lender
or other financial institution which is an assignee or potential assignee
pursuant to clause (a) above, and (ii) by the Lender and any assignee
pursuant to clause (a) above, to any bank or other financial institution
which is a participant or potential participant pursuant to clause (b)
above, it being understood that the Lender and each assignee shall advise
any such bank or other financial institution of its obligation to keep
confidential any nonpublic information disclosed to it pursuant to this
Section 14.13. The Lender shall advise the Borrower of each bank or other
financial institution which becomes an assignee pursuant to clause (a)
above, and the Lender and each assignee, as applicable, shall advise the
Borrower of each bank or other financial institution which becomes a
participant pursuant to clause (b) above.
ARTICLE XII
NOTICES
12.1 Notices. Except as otherwise permitted by Section 2.4.10 with
respect to borrowing notices, all notices, requests and other communications
to any party hereunder shall be in writing (including bank wire, telex,
facsimile transmission or similar writing) and shall be given to such party:
(x) in the case of the Borrower, at its address, facsimile number or telex
number set forth on the signature pages hereof with a copy to Xxxxx X.
Xxxxxxx, at Katten, Muchin, Zavis, 000 Xxxx Xxxxxx Xxxxxx, Xxxxx 0000,
Xxxxxxx, Xxxxxxxx 00000, (y) in the case of the Lender, at its address,
facsimile number or telex number set forth on the signature page hereto with
a copy to Xxxx X. Xxxxxxx, at Xxxx, Xxxxxx & Xxxxxxxxx, Two Xxxxx Xx Xxxxx
Xxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxxx 00000, or (z) in the case of any
party, such other address, facsimile number or telex number as such party
may hereafter specify for the purpose by notice to the Lender and the
Borrower. Each such notice, request or other communication shall be
effective (i) if given by telex, when such telex is transmitted to the telex
number specified in this Section and the appropriate answerback is received,
(ii) if given by facsimile transmission, when transmitted to the facsimile
number specified in this Section and confirmation of receipt is received,
(iii) if given by mail, three (3) Business Days after such communication is
deposited in the mails with first class postage prepaid, addressed as
aforesaid or (iv) if given by any other means, when delivered at the address
specified in this Section; provided that notices to the Lender under Article
II shall not be effective until received.
12.2 Change of Address. The Borrower and Lender may each change the
address for service of notice upon it by a notice in writing to the other
parties hereto.
ARTICLE XIII
COUNTERPARTS
This Agreement may be executed in any number of counterparts and by the
different parties hereto on separate counterparts, each of which when so
executed and delivered shall be an original, but all of which shall together
constitute one and the same instrument. This Agreement shall be effective
when it has been executed by the Borrower and the Lender. A complete set of
counterparts executed by all the parties hereto shall be lodged with each of
the Borrower and the Lender.
ARTICLE XIV
CHOICE OF LAW, CONSENT TO JURISDICTION, WAIVER OF JURY TRIAL, JOINT AND
SEVERAL OBLIGATIONS
14.1 Choice of Law. THE LOAN DOCUMENTS (OTHER THAN THOSE CONTAINING A
CONTRARY EXPRESS CHOICE OF LAW PROVISION) SHALL BE CONSTRUED IN ACCORDANCE
WITH THE INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS) OF THE STATE OF
ILLINOIS, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.
14.2 Consent to Jurisdiction. THE PARTIES HERETO HEREBY IRREVOCABLY
SUBMIT TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR
ILLINOIS STATE COURT SITTING IN CHICAGO, ILLINOIS IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENTS AND THE PARTIES
HERETO HEREBY IRREVOCABLY AGREE THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR
PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT AND IRREVOCABLY
WAIVE ANY OBJECTION ANY OF THEM MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF
ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH
COURT IS AN INCONVENIENT FORUM. ANY JUDICIAL PROCEEDING BY THE BORROWER
AGAINST THE LENDER OR ANY AFFILIATE OF THE LENDER INVOLVING, DIRECTLY OR
INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED
WITH ANY LOAN DOCUMENT SHALL BE BROUGHT ONLY IN A COURT IN CHICAGO,
ILLINOIS.
14.3 Waiver of Jury Trial. THE PARTIES HERETO HEREBY WAIVE TRIAL BY
JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY
MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING
OUT OF, RELATED TO, OR CONNECTED WITH ANY LOAN DOCUMENT OR THE RELATIONSHIP
ESTABLISHED THEREUNDER).
14.4 Joint and Several Obligations. All obligations of the Borrower
hereunder and under the Loan documents shall be joint and several
obligations of W-G and AGE.
[BALANCE OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the Borrower and the Lender have executed this
Agreement as of the date first above written.
BORROWER:
XXXXX-XXXXXXX ELECTRONICS CORPORATION, an
Illinois corporation
By: ______________________________________
Print Name:
Title:
Address: 0000 Xxxx 00xx Xxxxxx, Xxxxx X
XxXxxx, Xxxxxxxx 00000-0000
Telephone No.:
Telecopier No.:
AMERICAN GAMING & ELECTRONICS, INC., a Nevada
corporation
By: ______________________________________
Print Name:
Title:
Address: 0000 Xxxx 00xx Xxxxxx, Xxxxx X
XxXxxx, Xxxxxxxx 00000-0000
Telephone No.:
Telecopier No.:
LENDER:
AMERICAN NATIONAL BANK AND TRUST COMPANY OF
CHICAGO
By: ______________________________________
Print Name:
Title:
Address: 000 Xxxxx Xx Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx Xxxxx
or
Xxxxx Xxxxxxx
Telephone No.: (000) 000-0000
Xxxxx Xxxxx
(000) 000-0000
Xxxxx Xxxxxxx
Telecopier No.: (000) 000-0000 (for both)
SCHEDULE 5.5
Material Adverse Changes since June 30, 2001
None
SCHEDULE 5.6
Exceptions to Tax Representations
none
SCHEDULE 5.7
Pending Litigation
none
SCHEDULE 5.8
Borrower's Subsidiaries
Xxxxx-Xxxxxxx Electronics Corporation:
American Gaming & Electronics, Inc.,
a wholly owned subsidiary of Xxxxx-Xxxxxxx Electronics Corporation
Xxxxx Eastern Asia Displays,
a 50% joint venture in Malaysia
American Gaming & Electronics, Inc.:
none
SCHEDULE 5.9
Exceptions to ERISA Representation with respect to Plan Withdrawals
none
SCHEDULE 5.14
Exceptions to Representation Concerning Ownership of Properties
none
SCHEDULE 5.15
Exceptions to Representation Concerning Environmental Matters
none
SCHEDULE 6.12
Permitted Indebtedness
(not otherwise described in the Credit Agreement)
none
SCHEDULE 6.15(viii)
Description of Existing Investments
(not otherwise described in the Credit Agreement)
none
SCHEDULE 6.18
Transactions with Affiliates
Xxxxx-Xxxxxxx Electronics Corporation:
Intercompany Sales and Purchases between Xxxxx-Xxxxxxx Electronics
Corporation
and
American Gaming & Electronics, Inc.
Intercompany Sales and Purchases between Xxxxx-Xxxxxxx Electronics
Corporation
and
Xxxxx Eastern Asia Displays
American Gaming & Electronics, Inc:
Intercompany sales and Purchases between American Gaming & Electronics, Inc.
and
Xxxxx-Xxxxxxx Electronics Corporation
Exhibits to the Secured Credit Agreement between Xxxxx-Xxxxxxx Electronics
Corporation and American Gaming & Electronics, Inc.
EXHIBIT A
Form of Compliance Certificate
Exhibits to the Secured Credit Agreement between Xxxxx-Xxxxxxx Electronics
Corporation and American Gaming & Electronics, Inc.
EXHIBIT B
Form of Revolving Note and Term Note
Exhibits to the Secured Credit Agreement between Xxxxx-Xxxxxxx Electronics
Corporation and American Gaming & Electronics, Inc.
EXHIBIT C
Form of Security Agreement
Exhibits to the Secured Credit Agreement between Xxxxx-Xxxxxxx Electronics
Corporation and American Gaming & Electronics, Inc.
EXHIBIT D
Form of Facility Letter of Credit Request
Exhibits to the Secured Credit Agreement between Xxxxx-Xxxxxxx Electronics
Corporation and American Gaming & Electronics, Inc.
EXHIBIT E
Form of Opinion of Outside Counsel For Borrower
Exhibits to the Secured Credit Agreement between Xxxxx-Xxxxxxx Electronics
Corporation and American Gaming & Electronics, Inc.
EXHIBIT F
Form of Written Money Transfer Instructions
Exhibits to the Secured Credit Agreement between Xxxxx-Xxxxxxx Electronics
Corporation and American Gaming & Electronics, Inc.
EXHIBIT G
Form of Stock Pledge Agreement
Exhibits to the Secured Credit Agreement between Xxxxx-Xxxxxxx Electronics
Corporation and American Gaming & Electronics, Inc.
EXHIBIT H
Borrowing Base Certificate
Exhibits to the Secured Credit Agreement between Xxxxx-Xxxxxxx Electronics
Corporation and American Gaming & Electronics, Inc.
EXHIBIT I
Authorization to File UCC Financing Statements
EXECUTION COPY
FIRST AMENDMENT TO SECURED CREDIT AGREEMENT DATED AS OF
AUGUST 31, 2001 (AS AMENDED FROM TIME TO TIME, THE
"AGREEMENT"), BY AND BETWEEN XXXXX-XXXXXXX ELECTRONICS
CORPORATION, AN ILLINOIS CORPORATION ("W-G"), AND
AMERICAN GAMING & ELECTRONICS, INC., A NEVADA
CORPORATION ("AGE"), ((W-G AND AGE HEREIN TOGETHER WITH
THEIR SUCCESSORS AND ASSIGNS (IF, AND AS PERMITTED UNDER
THE AGREEMENT)) ARE REFERRED TO JOINTLY AND INDIVIDUALLY
AS THE "BORROWER") AND AMERICAN NATIONAL BANK AND TRUST
COMPANY OF CHICAGO (THE "BANK")
This First Amendment to the Agreement ("Amendment") is entered into as
of September 6, 2001 by and between the Borrower and the Bank.
All capitalized terms stated in this Amendment and not defined herein
shall have the same meaning as set forth in the Agreement.
WHEREAS, the Company and the Bank have agreed to amend the Agreement by
reducing the Aggregate Revolving Commitment to $11,000,000 as stated herein.
Now, therefore, in consideration of the fulfillment of each of the terms and
conditions set forth herein, the parties hereto agree as follows:
Section 1. Amendments to Agreement.
a. The definition of "Aggregate Revolving Commitment" stated in
Section 1.1 of the Agreement is amended to delete the number "$12,000,000"
therefrom and substitute therefor the number "$11,000,000".
b. The definition of "Borrowing Base" stated in Section 1.1 of
the Agreement is amended to delete the number "$12,000,000" therefrom and
substitute therefor the number "$11,000,000".
c. Section 2.1.4(a) of the Agreement is amended to delete the
number "$12,000,000" therefrom and substitute therefor the number
"$11,000,000".
d. The definition of Revolving Note stated in Section 1.1 and
2.1.4(a) of the Agreement is amended to include the note substantially in
the form of the Amended and Restated Revolving Note attached hereto and
incorporated herein.
Section 2. Representations and Warranties. The Borrower
represents and warrants that:
a. The representations and warranties contained in the Agreement are
true and correct in all material respects on and as of the date hereof as if
such representations and warranties had been made on and as of the date
hereof (except to the extent any such representation or warranty is stated
to relate solely to an earlier date, in which case such representation or
warranty is true and correct in all material respects on and as of such
earlier date); and
b. The Borrower is in compliance with all the terms and provisions
set forth in the Agreement and no Default or Unmatured Default has occurred
and is continuing.
Section 3. Conditions to Effectiveness. This Amendment is subject
to the satisfaction in full of the following conditions precedent:
a. The Lender shall have received executed originals of this
Amendment;
b. The Lender shall have received an executed Amended and Restated
Revolving Note; and
c. All legal matters incident to this Amendment shall be reasonably
satisfactory to Xxxx, Xxxxxx & Xxxxxxxxx, counsel for the Bank.
Section 4. Full Force and Effect. Except as expressly amended
herein, the Agreement and the Loan Documents are hereby ratified and
confirmed, and shall continue in full force and effect in accordance with
the provisions thereof on the date hereof. As used in the Agreement and the
Loan Documents, the terms "Agreement", "this Agreement", "herein",
"hereafter", "hereto", "hereof", and words of similar import, shall, unless
the context otherwise requires, mean the Agreement as amended by this
Amendment, and the term "Revolving Note" or "Note" shall mean and include
the Amended and Restated Revolving Note substantially in the form attached
hereto.
Section 5. APPLICABLE LAW. THIS AMENDMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF ILLINOIS.
Section 6. Counterparts. This Amendment may be executed in two or
more counterparts, each of which shall constitute an original, but all of
which when taken together shall constitute one instrument.
Section 7. Headings. The headings of this Amendment are for the
purposes of reference only and shall not affect the construction of this
Amendment.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed by their duly authorized officers, all as of the date and year
first above written.
BORROWER:
---------
XXXXX-XXXXXXX ELECTRONICS CORPORATION, an
Illinois corporation
By: ________________________________________
Its: ________________________________________
AMERICAN GAMING & ELECTRONICS, INC., a Nevada
corporation
By: ________________________________________
Its: ________________________________________
LENDER:
-------
AMERICAN NATIONAL BANK AND TRUST COMPANY OF
CHICAGO
By: ________________________________________
Its: ________________________________________
AMENDED AND RESTATED REVOLVING NOTE
-----------------------------------
$11,000,000.00 Chicago, Illinois September 6, 2001
FOR VALUE RECEIVED, the undersigned, XXXXX-XXXXXXX ELECTRONICS
CORPORATION, an Illinois corporation ("W-G") and AMERICAN GAMING &
ELECTRONICS, INC., a Nevada corporation ("AGE") (W-G and AGE are referred to
herein both individually and jointly as "Borrower") jointly and severally
promise to pay to the order of American National Bank and Trust Company of
Chicago ("Bank"), at Bank's principal office at 000 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000 or at such other place or places as Bank may from
time to time designate in writing, the principal sum of Eleven Million and
No/100 Dollars ($11,000,000.00) or so much thereof as may from time to time
be advanced hereunder, with interest on the principal balance outstanding
from time to time, all as hereinafter set forth. The principal balance
hereof may be borrowed, repaid and borrowed again, all in accordance with
the Agreement (as defined below).
The entire principal balance of this Note then outstanding, plus any
accrued and unpaid interest thereon shall be due and payable on August 31,
2003, or such earlier date on which said amount shall become due and payable
on account of acceleration by Bank (the "Maturity Date"). Borrower promises
to pay to Bank interest in the amounts and at the times provided below.
Borrower agrees that, on the Maturity Date, Borrower will pay to Bank the
entire principal balance of this Note then outstanding, together with all
accrued and unpaid interest, all penalties, charges and late payment fees
hereunder.
Except as hereinafter provided, Borrower's liabilities and obligations
to Bank under this Note ("Borrower's Liabilities") shall bear interest from
the date hereof until paid at a daily rate equal to the daily rate
equivalent of the Prime Rate (as hereinafter defined) per annum or upon
Borrower's proper election of the LIBOR Option (as defined in the Agreement)
at the LIBOR Option Rate (as provided in the Agreement). All interest
hereunder shall be computed on the basis of the actual number of days based
upon a 360 day year. The Prime Rate of interest to be charged hereunder
shall fluctuate hereafter from time to time concurrently with and in an
amount equal to each increase or decrease in the Prime Rate.
Borrower shall make successive monthly installment payments of interest
commencing on August 31, 2001, and on the last day of each and every month
thereafter through and including August 31, 2003.
This Note evidences indebtedness incurred under, and is subject to the
terms and provisions of, that certain Secured Credit Agreement dated as of
August 31, 2001 between the undersigned and the Bank (herein, as the same
may be amended, modified or supplemented from time to time, called the
"Agreement"). The Agreement, to which reference is hereby made, sets forth
certain terms and provisions, including those under which this Note may or
must be paid prior to its due date or may have its due date accelerated.
Payment upon this Note is secured by the property set forth in the Agreement
and the Loan Documents. Terms used but not otherwise defined herein are used
herein as defined in the Agreement. Any terms of this Note which are
inconsistent with the Agreement shall be governed by the Agreement.
If a Default shall occur, interest, in lieu of the interest hereinabove
provided, whether or not a LIBOR Option is in effect, shall accrue hereunder
from the date of the same until cured, if cure is allowed, at the rate of 3%
per annum in excess of the Prime Rate in effect on the date of the Default,
which rate shall change when and as said Prime Rate changes, computed on the
basis of the actual number of days based on a 360 day year (the "Default
Rate"). Such amounts shall be part of Borrower's Liabilities, immediately
due and payable by Borrower to Bank without notice by Bank to or demand by
Bank of Borrower.
Except as provided otherwise in the Agreement, Borrower may prepay all
or any portion of outstanding principal or interest or both under this Note
at any time without notice, premium or penalty, provided that Borrower may
not prepay any principal subject to a LIBOR Option until the termination of
the LIBOR Interest Period for which the LIBOR Option was selected.
Prepayments under this Note will be applied first, to accrued and unpaid
interest and then to principal in inverse order of maturity.
As used herein, the term "Prime Rate" shall mean the per annum rate of
interest announced from time to time by Bank at its principal place of
business as its prime, base or equivalent rate, which may or may not be the
lowest rate of interest charged by Bank.
Any check, draft or similar item of payment by or for the account of
Borrower delivered to Bank on account of Borrower's Liabilities shall,
provided the same is honored by Bank and final settlement thereof is
reflected by irrevocable credit to Bank, be applied by Bank on account of
Borrower's Liabilities when collected.
Borrower warrants and represents to Bank that Borrower shall use the
proceeds represented by this Note solely for proper business purposes, and
consistently with all applicable laws and statutes. Borrower further
warrants and represents to Bank and covenants with Bank that Borrower is not
in the business of extending credit for the purpose of purchasing or
carrying margin stock (within the meaning of Regulation U issued by the
Board of Governors of the Federal Reserve System), and no proceeds
represented by this Note will be used to purchase or carry any margin stock
or to extend credit to others for the purpose of purchasing or carrying any
margin stock.
The occurrence of any one of the following events shall constitute a
default by Borrower ("Default") under this Note: (a) occurrence of a
Default under the Agreement; (b) occurrence of a Default (after the
expiration of any applicable notice, grace or cure periods) or an event of
Default under any agreement, instrument or document heretofore, now or at
any time or times hereafter delivered to Bank by any guarantor (if any) of
Borrower's Liabilities to Bank.
Subject to the terms of the Agreement, upon a Default hereunder,
without notice by Bank to or demand by Bank of Borrower, all of Borrower's
Liabilities shall be due and payable, forthwith. The acceptance by Bank of
any partial payment made hereunder after the time any of Borrower's
Liabilities becomes due and payable will not establish a custom, or waive
any rights of Bank to enforce prompt payment hereof. Borrower and every
endorser hereof waive presentment, demand and protest and notice of
presentment, protest, default, non-payment, maturity, release, compromise,
settlement, extension or renewal of this Note.
This Note and Borrower's Liabilities hereunder are secured by all
security interests, liens and encumbrances heretofore, now or hereafter
granted to Bank by Borrower and/or every guarantor (if any) of Borrower's
Liabilities. Regardless of the adequacy of any collateral securing
Borrower's Liabilities hereunder, any deposits or other sums at any time
credited by or payable or due from Bank to Borrower, or any monies, cash,
cash equivalents, securities, instruments, documents or other assets of
Borrower in possession or control of Bank or its bailee for any purpose may
in the event of a Default, be reduced to cash and applied by Bank to or set-
off by Bank against Borrower's Liabilities hereunder.
If at any time or times after the date of this Note, Bank: (a) employs
counsel for advice or other representation (i) with respect to this Note or
any collateral securing Borrower's Liabilities hereunder, (ii) to represent
Bank in any litigation, contest, dispute, suit or proceeding or to commence,
defend or intervene or to take any other action in or with respect to any
litigation, contest, dispute, suit or proceeding (whether instituted by
Bank, Borrower or any other person) in any way or respect relating to this
Note, any collateral securing Borrower's Liabilities hereunder, or
Borrower's affairs, or (iii) to enforce any rights of Bank against Borrower;
(b) takes any action to protect, collect, sell, liquidate or otherwise
dispose of any collateral securing Borrower's Liabilities hereunder, and/or
(c) attempts to or enforces any of Bank's rights or remedies against
Borrower or any guarantor of Borrower's Liabilities, the reasonable costs
and expenses incurred by Bank in any manner or way with respect to the
foregoing shall be part of Borrower's Liabilities hereunder, payable by
Borrower to Bank on demand. Without limiting the generality of the
foregoing, such expenses, costs, charges and fees include: (i) reasonable
attorneys' fees, costs and expenses; (ii) accountants' fees, costs and
expenses; (iii) court costs and reasonable expenses; (iv) court reporter
fees, costs and expenses; (v) long distance telephone charges; (vi) air
express and fax charges; and (vii) reasonable expenses for travel, lodging
and food.
If any provision of this Note or the application thereof to any party
or circumstance is held invalid or unenforceable, the remainder of this Note
and the application of such provision to other parties or circumstances will
not be affected thereby and the provisions of this Note shall be severable
in any such instance.
The provisions of this paragraph shall govern and control over any
irreconcilably inconsistent provision contained in this Note or in any other
document evidencing or securing the indebtedness evidenced hereby. Bank
shall never be entitled to receive, collect, or apply as interest hereon
(for purposes of this paragraph, the word "interest" shall be deemed to
include any sums treated as interest under applicable law governing matters
of usury and unlawful interest), any amount in excess of the Highest Lawful
Rate (hereinafter defined) and, in the event Bank ever receives, collects,
or applies as interest any such excess, such amount which would be excessive
interest shall be deemed a partial prepayment of principal and shall be
treated hereunder as such; and, if the principal of this Note is paid in
full, any remaining excess shall forthwith be paid to Borrower. In
determining whether or not the interest paid or payable, under any specific
contingency, exceeds the Highest Lawful Rate, Borrower and Bank shall, to
the maximum extent permitted under applicable law, (i) characterize any non-
principal payment as an expense, fee or premium rather than as interest,
(ii) exclude voluntary prepayments and the effects thereof, and (iii) spread
the total amount of interest throughout the entire contemplated term of this
Note, provided, that if this Note is paid and performed in full prior to the
end of the full contemplated term hereof, and if the interest received for
the actual period of existence hereof exceeds the Highest Lawful Rate, Bank
shall refund to Borrower the amount of such excess or credit the amount of
such excess against the principal of this Note, and, in such event, Bank
shall not be subject to any penalties provided by any laws for contracting
for, charging or receiving interest in excess of the Highest Lawful Rate.
"Highest Lawful Rate" shall mean the maximum rate of interest which Bank is
allowed to contract for, charge, take, reserve or receive under applicable
law after taking into account, to the extent required by applicable law, any
and all relevant payments or charges hereunder.
This Note is a renewal and replacement of the Revolving Note in the
original principal amount of $12,000,000 made and delivered by Borrower to
Bank as of August 31, 2001, and nothing contained herein or in the First
Amendment to the Agreement dated as of September 6, 2001, shall be construed
(a) to deem paid or forgiven the unpaid principal balance of, or unpaid
accrued interest on, said Revolving Note outstanding at the time of its
renewal and replacement by this Note, or (b) to release, cancel, terminate
or otherwise adversely affect all or any part of any lien, assignment,
security interest or other encumbrance heretofore granted to or for the
benefit of the payee of said Revolving Note.
This Note is submitted by Borrower to Bank at Bank's principal place of
business and shall be deemed to have been made there at. This Note shall be
governed and controlled by the internal laws of the State of Illinois.
TO INDUCE BANK TO ACCEPT THIS NOTE, BORROWER, IRREVOCABLY, AGREES THAT,
SUBJECT TO BANK'S SOLE AND ABSOLUTE ELECTION, ALL ACTIONS OR PROCEEDINGS IN
ANY WAY, MANNER OR RESPECT, ARISING OUT OF OR FROM OR RELATED TO THIS NOTE,
SHALL BE LITIGATED IN COURTS HAVING SITUS WITHIN THE CITY OF CHICAGO, STATE
OF ILLINOIS. BORROWER HEREBY CONSENTS AND SUBMITS TO THE JURISDICTION OF
ANY LOCAL, STATE OR FEDERAL COURT LOCATED WITHIN SAID CITY AND STATE.
BORROWER HEREBY WAIVES ANY RIGHT BORROWER MAY HAVE TO TRANSFER OR CHANGE THE
VENUE OF ANY LITIGATION BROUGHT AGAINST BORROWER BY BANK IN ACCORDANCE WITH
THIS PARAGRAPH.
All liabilities and obligations of Borrower under this Note (including,
but not limited to, Borrower's Liabilities) are joint and several.
BORROWER HEREBY IRREVOCABLY WAIVES THE RIGHT TO TRIAL BY JURY WITH
RESPECT TO ANY ACTION IN WHICH BORROWER AND BANK ARE PARTIES.
IN WITNESS WHEREOF, the undersigned have executed and delivered this
Note pursuant to proper authority duly granted, as of the date and year
first above written.
XXXXX-XXXXXXX
ELECTRONICS CORPORATION,
an Illinois corporation
By: ________________________________________
Its: ________________________________________
AMERICAN GAMING &
ELECTRONICS, INC., a Nevada corporation
By: ________________________________________
Its: ________________________________________
