AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
THIS AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT (this "Agreement"),
is entered into as of December 12, 2000, between FOOTHILL CAPITAL CORPORATION, a
California corporation ("Foothill"), with a place of business located at 0000
Xxxxxxxx Xxxxxx, Xxxxx 0000 Xxxx, Xxxxx Xxxxxx, Xxxxxxxxxx 00000 and TECSTAR,
LLC, an Indiana limited liability company ("Borrower"), with its chief executive
office located at 0000 Xxxxxxx Xxxxxx, X.X. Xxx 0000, Xxxxxx, Xxxxxxx 00000.
WHEREAS, Tecstar, Inc., an Indiana corporation ("Old Tecstar") and Foothill
are parties to a Loan and Security Agreement dated as of November 20, 1998 (the
"Old Loan Agreement");
WHEREAS, Old Tecstar is a wholly owned subsidiary of Borrower and entered
into a plan of liquidation in connection with which it transferred all of its
assets to Borrower;
WHEREAS, upon such transfer, Borrower acquired all of the assets of Old
Tecstar and assumed all of the liabilities of Old Tecstar (including, without
limitation, the "Obligations" (as defined in the Old Loan Agreement));
WHEREAS, this Agreement amends and restates the Old Loan Agreement in its
entirety;
NOW, THEREFORE, the parties agree as follows:
1. DEFINITIONS AND CONSTRUCTION.
1.1. Definitions.
As used in this Agreement, the following terms shall have the following
definitions:
"Account Debtor" means any Person who is or who may become obligated under,
with respect to, or on account of, an Account.
"Accounts" means all currently existing and hereafter arising accounts,
contract rights, and all other forms of obligations owing to Borrower arising
out of the sale or lease of goods or the rendition of services by Borrower,
irrespective of whether earned by performance, and any and all credit insurance,
guaranties, or security therefor.
"Accounts Advance Rate" means 85%; provided, that at all times on and after
February 1, 2001, the Accounts Advance Rate means 80%.
"Additional Availability Amount" means $500,000; provided, that at all
times on and after February 1, 2001, Additional Availability Amount shall mean
an amount equal to zero.
"Adjusted Eurodollar Rate" means, with respect to each Interest Period for
any Eurodollar Rate Loan, the rate per annum (rounded upwards, if necessary, to
the next 1/16%) determined by dividing (a) the Eurodollar Rate for such Interest
Period by (b) a percentage equal to (i) 100% minus (ii) the Reserve Percentage.
The Adjusted Eurodollar Rate shall be adjusted on and as of the effective day of
any change in the Reserve Percentage.
"Advances" has the meaning set forth in Section 2.1(a).
"Affiliate" means, as applied to any Person, any other Person who directly
or indirectly controls, is controlled by, is under common control with or is a
director or officer of such Person. For purposes of this definition, "control"
means the possession, directly or indirectly, of the power to vote 15% or more
of the securities having ordinary voting power for the election of directors or
the direct or indirect power to direct the management and policies of a Person.
"Agreement" has the meaning set forth in the preamble hereto.
"Authorized Person" means any officer or other employee of Borrower.
"Average Unused Portion of the Maximum Revolving Amount" means, as of any
date of determination, (a) $7,500,000, less (b) the sum of (i) the average Daily
Balance of Loans that were outstanding during the immediately preceding month,
plus (ii) the average Daily Balance of the undrawn Letters of Credit that were
outstanding during the immediately preceding month.
"Bankruptcy Code" means the United States Bankruptcy Code (11 X.X.X.xx. 101
et seq.), as amended, and any successor statute.
"Benefit Plan" means a "defined benefit plan" (as defined in Section 3(35)
of ERISA) for which Borrower, any Subsidiary of Borrower, or any ERISA Affiliate
has been an "employer" (as defined in Section 3(5) of ERISA) within the past six
years.
"Borrower" has the meaning set forth in the preamble to this Agreement.
"Borrower's Books" means all of Borrower's books and records including:
ledgers; records indicating, summarizing, or evidencing Borrower's properties or
assets (including the Collateral) or liabilities; all information relating to
Borrower's business operations or financial condition; and all computer
programs, disk or tape files, printouts, runs, or other computer prepared
information.
"Borrowing Base" has the meaning set forth in Section 2.1(a).
"Business Day" means any day that is not a Saturday, Sunday or other day on
which national banks are authorized or required to close, except that if a
determination of a Business Day shall relate to any Eurodollar Rate Loans, the
term Business Day shall also exclude any day on which banks are closed for
dealings in dollar deposits in the London interbank market or other applicable
Eurodollar Rate market.
"Change of Control" shall be deemed to have occurred at such time as
Starcraft Corporation shall cease to own at least 50% of the membership
interests then outstanding of Borrower, except that if Borrower exercises its
rights under the Subordinated Starcraft Loan Documents and obtains 2.5% of the
membership interests then outstanding of Borrower it shall not constitute a
Change of Control so long as Starcraft Corporation owns at least 47.5% of the
membership interests then outstanding of Borrower.
"Closing Date" means the date hereof.
"Code" means the Illinois Uniform Commercial Code.
"Collateral" means each of the following:
(a) Accounts,
(b) Borrower's Books,
(c) Equipment,
(d) General Intangibles,
(e) Inventory,
(f) Negotiable Collateral,
(g) any money, or other assets of Borrower that now or hereafter come
into the possession, custody, or control of Foothill, and
(h) the proceeds and products, whether tangible or intangible, of any
of the foregoing, including proceeds of insurance covering any or
all of the Collateral, and any and all Accounts, Borrower's
Books, Equipment, General Intangibles, Inventory, Negotiable
Collateral, money, deposit accounts, or other tangible or
intangible property resulting from the sale, exchange,
collection, or other disposition of any of the foregoing, or any
portion thereof or interest therein, and the proceeds thereof.
"Collateral Access Agreement" means a landlord waiver, mortgagee waiver,
bailee letter, or acknowledgment agreement of any warehouseman, processor,
lessor, consignee, or other Person in possession of, having a Lien upon, or
having rights or interests in the Equipment or Inventory, in each case, in form
and substance satisfactory to Foothill.
"Collections" means all cash, checks, notes, instruments, and other items
of payment (including, insurance proceeds, proceeds of cash sales, rental
proceeds, and tax refunds).
"Compliance Certificate" means a certificate substantially in the form of
Exhibit C-1 and delivered by the chief accounting officer of Borrower to
Foothill.
"Daily Balance" means the amount of an Obligation owed at the end of a
given day.
"deems itself insecure" means that the Person deems itself insecure in
accordance with the provisions of Section 1208 of the Code.
"Default" means an event, condition, or default that, with the giving of
notice, the passage of time, or both, would be an Event of Default.
"Designated Account" means an account at Borrower's Designated Account
Bank, or such other deposit account of Borrower (located within the United
States) which has been designated, in writing and from time to time, by Borrower
to Foothill.
"Designated Account Bank" means a bank selected by Borrower and acceptable
to Foothill.
"Dilution" means, in each case based upon the experience of the immediately
prior 3 fiscal months, the result of dividing the Dollar amount of (a) bad debt
write-downs, discounts from the invoice amount of any Account, advertising,
returns, promotions, credits, or other dilutive items with respect to the
Accounts of Borrower by (b) Borrower's Collections (excluding extraordinary
items) plus the Dollar amount of clause (a).
"Dilution Reserve" means, as of any date of determination, an amount
sufficient to reduce Foothill's advance rate against Eligible Accounts and
Eligible Tooling and/or Engineering Service Accounts by one percentage point for
each percentage point by which Dilution is in excess of 5%.
"Disbursement Letter" means an instructional letter executed and delivered
by Borrower to Foothill regarding the extensions of credit to be made on the
Closing Date, the form and substance of which shall be satisfactory to Foothill.
"Dollars or $" means United States dollars.
"Early Termination Premium" has the meaning set forth in Section 3.6.
"EBITDA" means, for any period, the operating net income (exclusive of
extraordinary items) of Borrower for such period, plus depreciation,
amortization, interest and taxes deducted in determining operating net income
for such period.
"Eligible Accounts" means those Accounts created by Borrower in the
ordinary course of business, that arise out of Borrower's sale of goods or
rendition of services, that strictly comply with each and all of the
representations and warranties respecting Accounts made by Borrower to Foothill
in the Loan Documents, and that are and at all times continue to be acceptable
to Foothill in all respects; provided, however, that standards of eligibility
may be fixed and revised from time to time by Foothill in Foothill's reasonable
credit judgment. Eligible Accounts shall not include the following:
(a) Accounts that the Account Debtor has failed to pay within 60 days
of invoice date or Accounts with selling terms of more than 30
days;
(b) Accounts owed by an Account Debtor or its Affiliates where 50% or
more of all Accounts owed by that Account Debtor (or its
Affiliates) to Borrower are deemed ineligible under clause (a)
above;
(c) Accounts with respect to which the Account Debtor is an employee,
Affiliate, or agent of Borrower;
(d) Accounts with respect to which goods are placed on consignment,
guaranteed sale, sale or return, sale on approval, xxxx and hold,
or other terms by reason of which the payment by the Account
Debtor may be conditional;
(e) Accounts that are not payable in Dollars or with respect to which
the Account Debtor: (i) does not maintain its chief executive
office in the United States, or (ii) is not organized under the
laws of the United States or any State thereof, or (iii) is the
government of any foreign country or sovereign state, or of any
state, province, municipality, or other political subdivision
thereof, or of any department, agency, public corporation, or
other instrumentality thereof, unless (y) the Account is
supported by an irrevocable letter of credit satisfactory to
Foothill (as to form, substance, and issuer or domestic
confirming bank) that has been delivered to Foothill and is
directly drawable by Foothill, or (z) the Account is covered by
credit insurance in form and amount, and by an insurer,
satisfactory to Foothill;
(f) Accounts with respect to which the Account Debtor is either (i)
the United States or any department, agency, or instrumentality
of the United States (exclusive, however, of Accounts with
respect to which Borrower has complied, to the satisfaction of
Foothill, with the Assignment of Claims Act, 31 U.S.C. ss. 3727),
or (ii) any State of the United States (exclusive, however, of
Accounts owed by any State that does not have a statutory
counterpart to the Assignment of Claims Act);
(g) Accounts with respect to which the Account Debtor is a creditor
of Borrower, has or has asserted a right of setoff (unless such
Account Debtor has executed and delivered to Foothill a no offset
letter in form and substance satisfactory to Foothill), has
disputed its liability, or has made any claim with respect to the
Account (but only to the extent of the amount of the liability
owing to such Account Debtor, the amount of the set off that has
or may be asserted, the amount of the disputed liability or the
amount of the claim, as the case may be);
(h) Accounts whose total obligations owing to Borrower exceeds 10% of
all Eligible Accounts, to the extent of the obligations owing by
such Account Debtor in excess of such percentage (unless such
Account Debtor is General Motors Corporation, or upon prior
written notice to Foothill, Ford Motor Company or Daimler
Chrysler Corporation);
(i) Accounts with respect to which the Account Debtor is subject to
any Insolvency Proceeding, or becomes insolvent, or goes out of
business;
(j) Accounts the collection of which Foothill, in its reasonable
credit judgment, believes to be doubtful by reason of the Account
Debtor's financial condition;
(k) Accounts with respect to which the goods giving rise to such
Account have not been shipped and billed to the Account Debtor,
Accounts with respect to which the Account Debtor has been billed
but the goods giving rise to such Accounts have not been shipped,
the services giving rise to such Account have not been performed
and accepted by the Account Debtor, or the Account otherwise does
not represent a final sale;
(l) Accounts with respect to which the Account Debtor is located in
the states of New Jersey, Minnesota or West Virginia (or any
other state that requires a creditor to file a Business Activity
Report or similar document in order to bring suit or otherwise
enforce its remedies against such Account Debtor in the courts or
through any judicial process of such state), unless Borrower has
qualified to do business in New Jersey, Minnesota, West Virginia,
or such other states, or has filed a Notice of Business
Activities Report with the applicable division of taxation, the
department of revenue, or with such other state offices, as
appropriate, for the then-current calendar year, or is exempt
from such filing requirement; and
(m) Accounts that represent progress payments or other advance
xxxxxxxx that are due prior to the completion of performance by
Borrower of the subject contract for goods or services;
(n) Accounts representing rebate obligations owing to Borrower;
(o) Accounts that are billed to an Account Debtor for services or
goods provided to Borrower and/or such Account Debtor by
Wheel-To-Wheel, Inc.; and
(p) Tooling and/or Engineering Service Accounts.
"Eligible Inventory" means Inventory consisting of first quality finished
goods held for sale in the ordinary course of Borrower's business and raw
materials for such finished goods, that are located at or in-transit between
Borrower's premises identified on Schedule E-1, that strictly comply with each
and all of the representations and warranties respecting Inventory made by
Borrower to Foothill in the Loan Documents, and that are and at all times
continue to be acceptable to Foothill in all respects; provided, however, that
standards of eligibility may be fixed and revised from time to time by Foothill
in Foothill's reasonable credit judgment. In determining the amount to be so
included, Inventory shall be valued at the lower of cost or market on a basis
consistent with Borrower's current and historical accounting practices. An item
of Inventory shall not be included in Eligible Inventory if: it is not owned
solely by Borrower or Borrower does not have good, valid, and marketable title
thereto; it is not located at one of the locations set forth on Schedule E-1; it
is not located on property owned or leased by Borrower or in a contract
warehouse, in each case, subject to a Collateral Access Agreement executed by
the mortgagee, lessor, the warehouseman, or other third party, as the case may
be, and segregated or otherwise separately identifiable from goods of others, if
any, stored on the premises; it is not subject to a valid and perfected first
priority security interest in favor of Foothill; it consists of goods returned
or rejected by Borrower's customers or goods in transit; and it is obsolete or
slow moving, work-in-process, a component that is not part of finished goods, or
constitutes spare parts, packaging and shipping materials, supplies used or
consumed in Borrower's business, Inventory subject to a Lien in favor of any
third Person, xxxx and hold goods, defective goods, "seconds," or Inventory
acquired on consignment.
"Eligible Tooling and/or Engineering Service Accounts" means those Tooling
and/or Engineering Service Accounts created by Borrower in the ordinary course
of business, that arise out of Borrower's sale of goods or rendition of
services, that strictly comply with each and all of the representations and
warranties respecting Accounts made by Borrower to Foothill in the Loan
Documents, and that are and at all times continue to be acceptable to Foothill
in all respects; provided, however, that standards of eligibility may be fixed
and revised from time to time by Foothill in Foothill's reasonable credit
judgment. Eligible Tooling and/or Engineering Service Accounts shall not include
any Tooling Account that fails to satisfy any of the criteria of Eligible
Accounts (other than clauses (k), (m) and (p) of the definition of Eligible
Accounts).
"Equipment" means all of Borrower's present and hereafter acquired
machinery, machine tools, motors, equipment, furniture, furnishings, fixtures,
vehicles (including motor vehicles and trailers), tools, parts, goods (other
than consumer goods, farm products, or Inventory), wherever located, including,
(a) any interest of Borrower in any of the foregoing, and (b) all attachments,
accessories, accessions, replacements, substitutions, additions, and
improvements to any of the foregoing.
"ERISA" means the Employee Retirement Income Security Act of 1974, 29
U.S.C.ss.ss.1000 et seq., amendments thereto, successor statutes, and
regulations or guidance promulgated thereunder.
"ERISA Affiliate" means (a) any corporation subject to ERISA whose
employees are treated as employed by the same employer as the employees of
Borrower under IRC Section 414(b), (b) any trade or business subject to ERISA
whose employees are treated as employed by the same employer as the employees of
Borrower under IRC Section 414(c), (c) solely for purposes of Section 302 of
ERISA and Section 412 of the IRC, any organization subject to ERISA that is a
member of an affiliated service group of which Borrower is a member under IRC
Section 414(m), or (d) solely for purposes of Section 302 of ERISA and Section
412 of the IRC, any party subject to ERISA that is a party to an arrangement
with Borrower and whose employees are aggregated with the employees of Borrower
under IRC Section 414(o).
"ERISA Event" means (a) a Reportable Event with respect to any Benefit Plan
or Multiemployer Plan, (b) the withdrawal of Borrower, any of its Subsidiaries
or ERISA Affiliates from a Benefit Plan during a plan year in which it was a
"substantial employer" (as defined in Section 4001(a)(2) of ERISA), (c) the
providing of notice of intent to terminate a Benefit Plan in a distress
termination (as described in Section 4041(c) of ERISA), (d) the institution by
the PBGC of proceedings to terminate a Benefit Plan or Multiemployer Plan, (e)
any event or condition (i) that provides a basis under Section 4042(a)(1), (2),
or (3) of ERISA for the termination of, or the appointment of a trustee to
administer, any Benefit Plan or Multiemployer Plan, or (ii) that may result in
termination of a Multiemployer Plan pursuant to Section 4041A of ERISA, (f) the
partial or complete withdrawal within the meaning of Sections 4203 and 4205 of
ERISA, of Borrower, any of its Subsidiaries or ERISA Affiliates from a
Multiemployer Plan, or (g) providing any security to any Plan under Section
401(a)(29) of the IRC by Borrower or its Subsidiaries or any of their ERISA
Affiliates.
"Eurodollar Rate" means, with respect to the Interest Period for a
Eurodollar Rate Loan, the interest rate per annum at which United States dollar
deposits are offered to Foothill (or its Affiliate) by major banks in the London
interbank market (or other Eurodollar Rate market selected by Foothill) on or
about 11:00 a.m. (California time) 2 Business Days prior to the commencement of
such Interest Period in amounts comparable to the amount of the Eurodollar Rate
Loans requested by and available to Borrower in accordance with this Agreement,
with a maturity of comparable duration to the Interest Period selected by
Borrower.
"Eurodollar Rate Loans" means any Loan (or any portion thereof) made or
outstanding hereunder during any period when interest on such Loan (or portion
thereof) is payable based on the Adjusted Eurodollar Rate.
"Event of Default" has the meaning set forth in Section 8.
"FEIN" means Federal Employer Identification Number.
"Foothill" has the meaning set forth in the preamble to this Agreement.
"Foothill Account" has the meaning set forth in Section 2.7.
"Foothill Expenses" means all: costs or expenses (including taxes, and
insurance premiums) required to be paid by Borrower under any of the Loan
Documents that are paid or incurred by Foothill; fees or charges paid or
incurred by Foothill in connection with Foothill's transactions with Borrower,
including, fees or charges for photocopying, notarization, couriers and
messengers, telecommunication, public record searches (including tax lien,
litigation, and UCC searches and including searches with the patent and
trademark office, the copyright office, or the department of motor vehicles),
filing, recording, publication, appraisal (including periodic Collateral
appraisals), real estate surveys, real estate title policies and endorsements,
and environmental audits; costs and expenses incurred by Foothill in the
disbursement of funds to Borrower (by wire transfer or otherwise); charges paid
or incurred by Foothill resulting from the dishonor of checks; costs and
expenses paid or incurred by Foothill to correct any default or enforce any
provision of the Loan Documents, or in gaining possession of, maintaining,
handling, preserving, storing, shipping, selling, preparing for sale, or
advertising to sell the Collateral, or any portion thereof, irrespective of
whether a sale is consummated; costs and expenses paid or incurred by Foothill
in examining Borrower's Books; costs and expenses of third party claims or any
other suit paid or incurred by Foothill in enforcing or defending the Loan
Documents or in connection with the transactions contemplated by the Loan
Documents or Foothill's relationship with Borrower or any guarantor; and
Foothill's reasonable attorneys fees and expenses incurred in advising,
structuring, drafting, reviewing, administering, amending, terminating,
enforcing (including attorneys fees and expenses incurred in connection with a
"workout," a "restructuring," or an Insolvency Proceeding concerning Borrower or
any guarantor of the Obligations), defending, or concerning the Loan Documents,
irrespective of whether suit is brought.
"GAAP" means generally accepted accounting principles as in effect from
time to time in the United States, consistently applied.
"General Intangibles" means all of Borrower's present and future general
intangibles and other personal property (including contract rights, rights
arising under common law, statutes, or regulations, choses or things in action,
goodwill, patents, trade names, trademarks, servicemarks, copyrights,
blueprints, drawings, purchase orders, customer lists, monies due or recoverable
from pension funds, route lists, rights to payment and other rights under any
royalty or licensing agreements, infringement claims, computer programs,
information contained on computer disks or tapes, literature, reports, catalogs,
deposit accounts, insurance premium rebates, tax refunds, and tax refund
claims), other than goods, Accounts, and Negotiable Collateral.
"Governing Documents" means the certificate or articles of incorporation,
by-laws, or other organizational or governing documents of any Person.
"Governmental Authority" means any nation or government, any state or other
political subdivision thereof and any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government.
"Guaranties" means (i) the Guaranty of even date herewith executed by
Starcraft Corporation, (ii) the Guaranty of even date herewith executed by
Starcraft Automotive Group, Inc., (iii) the Guaranty of even date herewith
executed by National Mobility Corporation, and (iv) the Guaranty of even date
herewith executed by Imperial Automotive Group, Inc.
"Hazardous Materials" means (a) substances that are defined or listed in,
or otherwise classified pursuant to, any applicable laws or regulations as
"hazardous substances," "hazardous materials," "hazardous wastes," "toxic
substances," or any other formulation intended to define, list, or classify
substances by reason of deleterious properties such as ignitability,
corrosivity, reactivity, carcinogenicity, reproductive toxicity, or "EP
toxicity", (b) oil, petroleum, or petroleum derived substances, natural gas,
natural gas liquids, synthetic gas, drilling fluids, produced waters, and other
wastes associated with the exploration, development, or production of crude oil,
natural gas, or geothermal resources, (c) any flammable substances or explosives
or any radioactive materials, and (d) asbestos in any form or electrical
equipment that contains any oil or dielectric fluid containing levels of
polychlorinated biphenyls in excess of 50 parts per million.
"Indebtedness" means: (a) all obligations of Borrower for borrowed money,
(b) all obligations of Borrower evidenced by bonds, debentures, notes, or other
similar instruments and all reimbursement or other obligations of Borrower in
respect of letters of credit, bankers acceptances, interest rate swaps, or other
financial products, (c) all obligations of Borrower under capital leases, (d)
all obligations or liabilities of others secured by a Lien on any property or
asset of Borrower, irrespective of whether such obligation or liability is
assumed, and (e) any obligation of Borrower guaranteeing or intended to
guarantee (whether guaranteed, endorsed, co-made, discounted, or sold with
recourse to Borrower) any indebtedness, lease, dividend, letter of credit, or
other obligation of any other Person.
"Insolvency Proceeding" means any proceeding commenced by or against any
Person under any provision of the Bankruptcy Code or under any other bankruptcy
or insolvency law, assignments for the benefit of creditors, formal or informal
moratoria, compositions, extensions generally with creditors, or proceedings
seeking reorganization, arrangement, or other similar relief.
"Intangible Assets" means, with respect to any Person, that portion of the
book value of all of such Person's assets that would be treated as intangibles
under GAAP.
"Interest Period" shall mean for any Eurodollar Rate Loan, a period of
approximately 30, 60 or 90 days duration as Borrower may elect, the exact
duration to be determined in accordance with the customary practice in the
applicable Eurodollar Rate market; provided, that, Borrower may not elect an
Interest Period which will end after the last day of the then-current term of
this Agreement.
"Inventory" means all present and future inventory in which Borrower has
any interest, including goods held for sale or lease or to be furnished under a
contract of service and all of Borrower's present and future raw materials, work
in process, finished goods, and packing and shipping materials, wherever
located.
"Inventory Advance Rate" means 60%; provided, that at all times on and
after February 1, 2001, Inventory Advance Rate means 40%.
"IRC" means the Internal Revenue Code of 1986, as amended, and the
regulations thereunder.
"L/C" has the meaning set forth in Section 2.2(a).
"L/C Guaranty" has the meaning set forth in Section 2.2(a).
"Letter of Credit" means an L/C or an L/C Guaranty, as the context
requires.
"Lien" means any interest in property securing an obligation owed to, or a
claim by, any Person other than the owner of the property, whether such interest
shall be based on the common law, statute, or contract, whether such interest
shall be recorded or perfected, and whether such interest shall be contingent
upon the occurrence of some future event or events or the existence of some
future circumstance or circumstances, including the lien or security interest
arising from a mortgage, deed of trust, encumbrance, pledge, hypothecation,
assignment, deposit arrangement, security agreement, adverse claim or charge,
conditional sale or trust receipt, or from a lease, consignment, or bailment for
security purposes and also including reservations, exceptions, encroachments,
easements, rights-of-way, covenants, conditions, restrictions, leases, and other
title exceptions and encumbrances affecting real property of Borrower.
"Loan Account" has the meaning set forth in Section 2.10.
"Loan Documents" means this Agreement, the Letters of Credit, the Lockbox
Agreements, the Guaranties, any note or notes executed by Borrower and payable
to Foothill, and any other agreement entered into, now or in the future, in
connection with this Agreement.
"Loans" means the Advances.
"Lockbox Account" shall mean a depository account established pursuant to
one of the Lockbox Agreements.
"Lockbox Agreements" means those certain Lockbox Operating Procedural
Agreements and those certain Depository Account Agreements, in form and
substance satisfactory to Foothill, each of which is among Borrower, Foothill,
and one of the Lockbox Banks.
"Lockbox Banks" means such banks as are acceptable to Foothill.
"Lockboxes" has the meaning set forth in Section 2.7.
"Material Adverse Change" means (a) a material adverse change in the
business, prospects, operations, results of operations, assets, liabilities or
condition (financial or otherwise) of Borrower, (b) the material impairment of
Borrower's ability to perform its obligations under the Loan Documents to which
it is a party or of Foothill to enforce the Obligations or realize upon the
Collateral, (c) a material adverse effect on the value of the Collateral or the
amount that Foothill would be likely to receive (after giving consideration to
delays in payment and costs of enforcement) in the liquidation of such
Collateral, or (d) a material impairment of the priority of Foothill's Liens
with respect to the Collateral.
"Maximum Revolving Amount" means $8,000,000.
"Multiemployer Plan" means a "multiemployer plan" (as defined in Section
4001(a)(3) of ERISA) to which Borrower, any of its Subsidiaries, or any ERISA
Affiliate has contributed, or was obligated to contribute, within the past six
years.
"Negotiable Collateral" means all of Borrower's present and future letters
of credit, notes, drafts, instruments, investment property, security
entitlements, securities (including the shares of stock of Subsidiaries of
Borrower), documents, personal property leases (wherein Borrower is the lessor),
chattel paper, and Borrower's Books relating to any of the foregoing.
"Obligations" means all loans, Advances, debts, principal, interest
(including any interest that, but for the provisions of the Bankruptcy Code,
would have accrued), guaranties, contingent reimbursement obligations under any
outstanding Letters of Credit, premiums (including Early Termination Premiums),
liabilities (including all amounts charged to Borrower's Loan Account pursuant
hereto), obligations, fees, charges, costs, or Foothill Expenses (including any
fees or expenses that, but for the provisions of the Bankruptcy Code, would have
accrued), lease payments, guaranties, covenants, and duties owing by Borrower to
Foothill of any kind and description (whether pursuant to or evidenced by the
Loan Documents or pursuant to any other agreement between Foothill and Borrower,
and irrespective of whether for the payment of money), whether direct or
indirect, absolute or contingent, due or to become due, now existing or
hereafter arising, and including any debt, liability, or obligation owing from
Borrower to others that Foothill may have obtained by assignment or otherwise,
and further including all interest not paid when due and all Foothill Expenses
that Borrower is required to pay or reimburse by the Loan Documents, by law, or
otherwise.
"Overadvance" has the meaning set forth in Section 2.5.
"Participant" means any Person to which Foothill has sold a participation
interest in its rights under the Loan Documents.
"PBGC" means the Pension Benefit Guaranty Corporation as defined in Title
IV of ERISA, or any successor thereto.
"Permitted Liens" means (a) Liens held by Foothill, (b) Liens for unpaid
taxes that either (i) are not yet due and payable or (ii) are the subject of
Permitted Protests, (c) Liens set forth on Schedule P-1, (d) the interests of
lessors under operating leases and purchase money Liens of lessors under capital
leases to the extent that the acquisition or lease of the underlying asset
occurs after the Closing Date and is permitted under Section 7.21 and so long as
the Lien only attaches to the asset purchased or acquired and only secures the
purchase price of the asset, (e) Liens arising by operation of law in favor of
warehousemen, landlords, carriers, mechanics, materialmen, laborers, or
suppliers, incurred in the ordinary course of business of Borrower and not in
connection with the borrowing of money, and which Liens either (i) are for sums
not yet due and payable, or (ii) are the subject of Permitted Protests, (f)
Liens arising from deposits made in connection with obtaining worker's
compensation or other unemployment insurance, (g) Liens or deposits to secure
performance of bids, tenders, or leases (to the extent permitted under this
Agreement), incurred in the ordinary course of business of Borrower and not in
connection with the borrowing of money, (h) Liens arising by reason of security
for surety or appeal bonds in the ordinary course of business of Borrower, (i)
Liens of or resulting from any judgment or award that would not have a Material
Adverse Effect and as to which the time for the appeal or petition for rehearing
of which has not yet expired, or in respect of which Borrower is in good faith
prosecuting an appeal or proceeding for a review, and in respect of which a stay
of execution pending such appeal or proceeding for review has been secured, and
(j) with respect to any real property that is not part of the Collateral,
easements, rights of way, zoning and similar covenants and restrictions, and
similar encumbrances that customarily exist on properties of Persons engaged in
similar activities and similarly situated and that in any event do not
materially interfere with or impair the use or operation of the Collateral by
Borrower or the value of Foothill's Lien thereon or therein, or materially
interfere with the ordinary conduct of the business of Borrower.
"Permitted Protest" means the right of Borrower to protest any Lien other
than any such Lien that secures the Obligations, tax (other than payroll taxes
or taxes that are the subject of a United States federal tax lien), or rental
payment, provided that (a) a reserve with respect to such obligation is
established on the books of Borrower in an amount that is reasonably
satisfactory to Foothill, (b) any such protest is instituted and diligently
prosecuted by Borrower in good faith, and (c) Foothill is satisfied that, while
any such protest is pending, there will be no impairment of the enforceability,
validity, or priority of any of the Liens of Foothill in and to the Collateral.
"Person" means and includes natural persons, corporations, limited
liability companies, limited partnerships, general partnerships, limited
liability partnerships, joint ventures, trusts, land trusts, business trusts, or
other organizations, irrespective of whether they are legal entities, and
governments and agencies and political subdivisions thereof.
"Plan" means any employee benefit plan, program, or arrangement maintained
or contributed to by Borrower or with respect to which it may incur liability.
"Reference Rate" means the variable rate of interest, per annum, most
recently announced by Norwest Bank Minnesota, National Association, or any
successor thereto, as its "base rate," irrespective of whether such announced
rate is the best rate available from such financial institution.
"Reference Rate Loan" means any Loan (or any portion thereof) made or
outstanding hereunder during any period when interest on such Loan (or portion
thereof) is payable based on the Reference Rate.
"Renewal Date" has the meaning set forth in Section 3.4.
"Reportable Event" means any of the events described in Section 4043(c) of
ERISA or the regulations thereunder other than a Reportable Event as to which
the provision of 30 days notice to the PBGC is waived under applicable
regulations.
"Reserve Percentage" means and refers to, as of the date of determination
thereof, the maximum percentage (rounded upward, if necessary to the nearest
1/100th of 1%), as determined by Foothill (or its Affiliate) in accordance with
its (or their) usual procedures (which determination shall be conclusive in the
absence of manifest error), that is in effect on such date as prescribed by the
Federal Reserve Board for determining the reserve requirements (including
supplemental, marginal, and emergency reserve requirements) with respect to
eurocurrency funding (currently referred to as "eurocurrency liabilities") by
Foothill or its Affiliates.
"Retiree Health Plan" means an "employee welfare benefit plan" within the
meaning of Section 3(1) of ERISA that provides benefits to individuals after
termination of their employment, other than as required by Section 601 of ERISA.
"Solvent" means, with respect to any Person on a particular date, that on
such date (a) at fair valuations, all of the properties and assets of such
Person are greater than the sum of the debts, including contingent liabilities,
of such Person, (b) the present fair salable value of the properties and assets
of such Person is not less than the amount that will be required to pay the
probable liability of such Person on its debts as they become absolute and
matured, (c) such Person is able to realize upon its properties and assets and
pay its debts and other liabilities, contingent obligations and other
commitments as they mature in the normal course of business, (d) such Person
does not intend to, and does not believe that it will, incur debts beyond such
Person's ability to pay as such debts mature, and (e) such Person is not engaged
in business or a transaction, and is not about to engage in business or a
transaction, for which such Person's properties and assets would constitute
unreasonably small capital after giving due consideration to the prevailing
practices in the industry in which such Person is engaged. In computing the
amount of contingent liabilities at any time, it is intended that such
liabilities will be computed at the amount that, in light of all the facts and
circumstances existing at such time, represents the amount that reasonably can
be expected to become an actual or matured liability.
"Starcraft Loan Agreement" means the Loan and Security Agreement dated as
of October 30, 1998, as amended, among Foothill, Starcraft Corporation,
Starcraft Automotive Group, Inc., Imperial Automotive Group, Inc. an National
Mobility Corporation.
"Starcraft Obligations" means the "Obligations" (as defined in the
Starcraft Loan Agreement) under the Starcraft Loan Agreement.
"Subordinated Starcraft Loan Documents" means that certain promissory note
dated December 12, 2000 executed by Starcraft Corporation in favor of Borrower,
that certain pledge agreement dated as of December 12, 2000 between Starcraft
Corporation and Borrower, and all other related instruments, documents and
agreements delivered herewith or at any time hereafter.
"Subsidiary" of a Person means a corporation, partnership, limited
liability company, or other entity in which that Person directly or indirectly
owns or controls the shares of stock or other ownership interests having
ordinary voting power to elect a majority of the board of directors (or appoint
other comparable managers) of such corporation, partnership, limited liability
company, or other entity.
"Tangible Net Worth" means, as of any date of determination, the result of
(a) Borrower's total stockholder's equity, minus (b) the sum of (i) all
Intangible Assets of Borrower, (ii) all of Borrower's prepaid expenses, and
(iii) all amounts due to Borrower from Affiliates.
"Tooling Advance Rate" means 85%; provided, that at all times on and after
February 1, 2001, Tooling Advance Rate means 70%.
"Tooling and/or Engineering Service Accounts" means Accounts arising under
a Tooling Purchase Order and with respect to which Borrower has issued an
invoice for the amount of such Account.
"Tooling Purchase Order" means a purchase order and related documentation,
in form and substance satisfactory to Foothill, entered into at arm's length
between Borrower and General Motors Corporation pursuant to which Borrower has
agreed to manufacture and assemble tooling for automotive platforms awarded by
General Motors Corporation to Borrower.
"Voidable Transfer" has the meaning set forth in Section 15.8.
1.2. Accounting Terms.
All accounting terms not specifically defined herein shall be construed in
accordance with GAAP. When used herein, the term "financial statements" shall
include the notes and schedules thereto.
1.3. Code.
Any terms used in this Agreement that are defined in the Code shall be
construed and defined as set forth in the Code unless otherwise defined herein.
1.4. Construction.
Unless the context of this Agreement clearly requires otherwise, references
to the plural include the singular, references to the singular include the
plural, the term "including" is not limiting, and the term "or" has, except
where otherwise indicated, the inclusive meaning represented by the phrase
"and/or." The words "hereof," "herein," "hereby," "hereunder," and similar terms
in this Agreement refer to this Agreement as a whole and not to any particular
provision of this Agreement. An Event of Default shall "continue" or be
"continuing" until such Event of Default has been waived in writing by Foothill.
Section, subsection, clause, schedule, and exhibit references are to this
Agreement unless otherwise specified. Any reference in this Agreement or in the
Loan Documents to this Agreement or any of the Loan Documents shall include all
alterations, amendments, changes, extensions, modifications, renewals,
replacements, substitutions, and supplements, thereto and thereof, as
applicable.
1.5. Schedules and Exhibits.
All of the schedules and exhibits attached to this Agreement shall be
deemed incorporated herein by reference.
2. LOAN AND TERMS OF PAYMENT.
2.1. Revolving Advances.
(a) Subject to the terms and conditions of this Agreement, Foothill agrees
to make advances ("Advances") to Borrower in an amount outstanding not to exceed
at any one time the lesser of (i) the Maximum Revolving Amount less the
outstanding balance of all undrawn or unreimbursed Letters of Credit, or (ii)
the Borrowing Base less the aggregate amount of all undrawn or unreimbursed
Letters of Credit. For purposes of this Agreement, "Borrowing Base", as of any
date of determination, shall mean the result of:
(w) the lesser of (i) the sum of (A) the product of the Accounts
Advance Rate multiplied by the amount of Eligible Accounts of Borrower and
(B) the product of the Tooling and/or Engineering Service Accounts Advance
Rate multiplied by the amount of Eligible Tooling and/or Engineering
Service Accounts of Borrower, less the amount, if any, of the Dilution
Reserve, and (ii) an amount equal to Borrower's Collections with respect to
Accounts of Borrower for the immediately preceding 60 day period (provided,
that the limitation set forth in this clause (ii) shall not be applicable
during the months of December and January), plus
(x) the lower of (i) $2,500,000, and (ii) the product of the Inventory
Advance Rate multiplied by of the value of Eligible Inventory; provided,
that at all times on and after February 1, 2001, Advances with respect to
Eligible Inventory shall not exceed 80% of the orderly liquidation value
(as determined by an appraiser and an appraisal methodology acceptable to
Foothill) of the Eligible Inventory, plus
(y) the Additional Availability Amount, minus
(z) the aggregate amount of reserves, if any, established by Foothill
under Section 2.1(b); --------------
(b) Anything to the contrary in Section 2.1(a) above notwithstanding,
Foothill may create reserves against the Borrowing Base or reduce its advance
rates based upon Eligible Accounts, Eligible Tooling and/or Engineering Service
Accounts or Eligible Inventory without declaring an Event of Default (i) for any
amount subject to a Permitted Protest, (ii) for amounts owing to landlords or
similar Persons that could assert a statutory lien that would have priority over
Foothill's Lien in respect of any of the Collateral, (iii) for such amounts as
Foothill deems appropriate for finished goods that may be located with a
processor, and/or (iv) as determined by Foothill in its reasonable credit
judgment.
(c) Each Loan shall be made upon Borrower's request (pursuant to the terms
of Section 2.9), which request shall be irrevocable except as set forth in
Section 2.12, specifying (i) the amount of the requested Loan; (ii) the
requested funding date of such Loan; (iii) whether the Loan is to constitute a
Eurodollar Rate Loan or a Reference Rate Loan; and (iv) if such Loan is to
constitute a Eurodollar Rate Loan, the requested Interest Period therefor. If a
requested Loan constitutes a Eurodollar Rate Loan, such request must be
delivered to Foothill no later than 11:00 a.m. (California time) 2 Business Days
prior to the requested funding date therefor.
(d) Amounts borrowed pursuant to this Section 2.1 may be repaid and,
subject to the terms and conditions of this Agreement, reborrowed at any time
during the term of this Agreement.
2.2. Letters of Credit.
(a) Subject to the terms and conditions of this Agreement, Foothill agrees
to issue letters of credit for the account of Borrower (each, an "L/C") or to
issue guarantees of payment (each such guaranty, an "L/C Guaranty") with respect
to letters of credit issued by an issuing bank for the account of Borrower.
Foothill shall have no obligation to issue a Letter of Credit if any of the
following would result:
(i) the aggregate amount of all undrawn and unreimbursed Letters of
Credit, would exceed the Borrowing Base less the amount of ----
outstanding Advances; or
(ii) the aggregate amount of all undrawn or unreimbursed Letters of
Credit would exceed the lower of: (x) the Maximum Revolving
Amount less the amount of outstanding Advances; or (y) $0; or
----
(iii)the outstanding Obligations would exceed the Maximum Revolving
Amount.
Borrower expressly understands and agrees that Foothill shall have no obligation
to arrange for the issuance by issuing banks of the letters of credit that are
to be the subject of L/C Guarantees. Borrower and Foothill acknowledge and agree
that certain of the letters of credit that are to be the subject of L/C
Guarantees may be outstanding on the Closing Date. Each Letter of Credit shall
have an expiration date no later than 60 days prior to the date on which this
Agreement is scheduled to terminate under Section 3.4 (without regard to any
potential renewal term) and all such Letters of Credit shall be in form and
substance acceptable to Foothill in its sole discretion. If Foothill is
obligated to advance funds under a Letter of Credit, Borrower immediately shall
reimburse such amount to Foothill and, in the absence of such reimbursement, the
amount so advanced immediately and automatically shall be deemed to be an
Advance hereunder and, thereafter, shall bear interest at the rate then
applicable to Advances under Section 2.6.
(b) Borrower hereby agrees to indemnify, save, defend, and hold Foothill
harmless from any loss, cost, expense, or liability, including payments made by
Foothill, expenses, and reasonable attorneys fees incurred by Foothill arising
out of or in connection with any Letter of Credit. Borrower agrees to be bound
by the issuing bank's regulations and interpretations of any Letters of Credit
guarantied by Foothill and opened to or for Borrower's account or by Foothill's
interpretations of any L/C issued by Foothill to or for Borrower's account, even
though this interpretation may be different from Borrower's own, and Borrower
understands and agrees that Foothill shall not be liable for any error,
negligence, or mistake, whether of omission or commission, in following
Borrower's instructions or those contained in the Letter of Credit or any
modifications, amendments, or supplements thereto. Borrower understands that the
L/C Guarantees may require Foothill to indemnify the issuing bank for certain
costs or liabilities arising out of claims by Borrower against such issuing
bank. Borrower hereby agrees to indemnify, save, defend, and hold Foothill
harmless with respect to any loss, cost, expense (including reasonable attorneys
fees), or liability incurred by Foothill under any L/C Guaranty as a result of
Foothill's indemnification of any such issuing bank.
(c) Borrower hereby authorizes and directs any bank that issues a letter of
credit guaranteed by Foothill to deliver to Foothill all instruments, documents,
and other writings and property received by the issuing bank pursuant to such
letter of credit, and to accept and rely upon Foothill's instructions and
agreements with respect to all matters that it would otherwise accept and rely
upon Borrower's instructions and agreements, arising in connection with such
letter of credit and the related application. Borrower may or may not be the
"applicant" or "account party" with respect to such letter of credit.
(d) Any and all charges, commissions, fees, and costs incurred by Foothill
relating to the letters of credit guaranteed by Foothill shall be considered
Foothill Expenses for purposes of this Agreement and immediately shall be
reimbursable by Borrower to Foothill.
(e) Immediately upon the termination of this Agreement, Borrower agrees to
either (i) provide cash collateral to be held by Foothill in an amount equal to
102% of the maximum amount of Foothill's obligations under Letters of Credit, or
(ii) cause to be delivered to Foothill releases of all of Foothill's obligations
under outstanding Letters of Credit. At Foothill's discretion, any proceeds of
Collateral of Borrower received by Foothill after the occurrence and during the
continuation of an Event of Default may be held as the cash collateral required
by this Section 2.2(e).
(f) If by reason of (i) any change in any applicable law, treaty, rule, or
regulation or any change in the interpretation or application by any
governmental authority of any such applicable law, treaty, rule, or regulation,
or (ii) compliance by the issuing bank or Foothill with any direction, request,
or requirement (irrespective of whether having the force of law) of any
governmental authority or monetary authority including, without limitation,
Regulation D of the Board of Governors of the Federal Reserve System as from
time to time in effect (and any successor thereto):
(A) any reserve, deposit, or similar requirement is or shall be
imposed or modified in respect of any Letters of Credit issued
hereunder, or
(B) there shall be imposed on the issuing bank or Foothill any other
condition regarding any letter of credit, or Letter of Credit, as
applicable, issued pursuant hereto;
and the result of the foregoing is to increase, directly or indirectly, the cost
to the issuing bank or Foothill of issuing, making, guaranteeing, or maintaining
any letter of credit, or Letter of Credit, as applicable, or to reduce the
amount receivable in respect thereof by such issuing bank or Foothill, then, and
in any such case, Foothill may, at any time within a reasonable period after the
additional cost is incurred or the amount received is reduced, notify Borrower,
and Borrower shall pay on demand such amounts as the issuing bank or Foothill
may specify to be necessary to compensate the issuing bank or Foothill for such
additional cost or reduced receipt, together with interest on such amount from
the date of such demand until payment in full thereof at the rate set forth in
Section 2.6(a)(i) or (c)(i), as applicable. The determination by the issuing
bank or Foothill, as the case may be, of any amount due pursuant to this Section
2.2(f), as set forth in a certificate setting forth the calculation thereof in
reasonable detail, shall, in the absence of manifest or demonstrable error, be
final and conclusive and binding on all of the parties hereto.
2.3. Intentionally Omitted.
2.4. Intentionally Omitted.
2.5. Overadvances.
If, at any time or for any reason, the amount of Obligations owed by
Borrower to Foothill pursuant to Sections 2.1 and 2.2 is greater than either the
Dollar or percentage limitations set forth in Sections 2.1 and 2.2 (an
"Overadvance"), Borrower immediately shall pay to Foothill, in cash, the amount
of such excess to be used by Foothill first, to repay Advances outstanding under
Section 2.1 and, thereafter, to be held by Foothill as cash collateral to secure
Borrower's obligation to repay Foothill for all amounts paid pursuant to Letters
of Credit.
2.6. Interest: Rates, Payments and Calculations.
(a) Interest Rate. Except as provided in clause (c) below, all outstanding
Obligations (except for undrawn Letters of Credit) shall bear interest as
follows:
(i) Each Eurodollar Rate Loan shall bear interest at a per annum rate
of 3 percentage points above the Adjusted Eurodollar Rate, and
(ii) all other outstanding Obligations shall bear interest at a per
annum rate of 0.5 percentage points above the Reference Rate;
provided that, during any period that no Event of Default exists and the most
recent financial statements of Borrower received by Lender pursuant to Section
6.3 reflect Tangible Net Worth of at least $4,000,000, the per annum rate of
interest on all Obligations shall, during such period, be reduced by 1
percentage point 10 days following the delivery of such financial statements.
(b) Letter of Credit Fee. Borrower shall pay Foothill a fee (in addition to
the charges, commissions, fees, and costs set forth in Section 2.2(d)) equal to
1.75% per annum times the aggregate undrawn amount of all outstanding Letters of
Credit.
(c) Default Rate. Upon the occurrence and during the continuation of an
Event of Default, (i) all Obligations (except for undrawn Letters of Credit)
shall bear interest at a per annum rate equal to 3.5 percentage points above the
Reference Rate, and (ii) the Letter of Credit fee provided in Section 2.6(b)
shall be increased to 4.75% per annum times the amount of the undrawn Letters of
Credit that were outstanding during the immediately preceding calendar month.
(d) Minimum Interest. In no event shall the rate of interest chargeable
hereunder for any day be less than 6% per annum. To the extent that interest
accrued hereunder at the rate set forth herein would be less than the foregoing
minimum daily rate, the interest rate chargeable hereunder for such day
automatically shall be deemed increased to the minimum rate.
(e) Payments. Interest in respect of Reference Rate Loans and Letter of
Credit Fees shall be due and payable, in arrears, on the first day of each
calendar month during the term hereof. Interest in respect of each Eurodollar
Rate Loan shall be due and payable, in arrears, on the last day of the Interest
Period applicable thereto. Borrower hereby authorizes Foothill, at its option,
without prior notice to Borrower, to charge such interest and Letter of Credit
Fees, all Foothill Expenses (as and when incurred), the fees and charges
provided for in Section 2.11 (as and when accrued or incurred), and all
installments or other payments due under any Loan Document to Borrower's Loan
Account, which amounts thereafter shall accrue interest at the rate then
applicable to Advances hereunder. Any interest not paid when due and shall be
compounded and shall thereafter accrue interest at the rate then applicable to
Advances hereunder.
(f) Computation. The Reference Rate as of the date of this Agreement is
9.50% per annum. In the event the Reference Rate is changed from time to time
hereafter, the applicable rate of interest hereunder automatically and
immediately shall be increased or decreased by an amount equal to such change in
the Reference Rate. All interest and fees chargeable under the Loan Documents
shall be computed on the basis of a 360 day year for the actual number of days
elapsed.
(g) Intent to Limit Charges to Maximum Lawful Rate. In no event shall the
interest rate or rates payable under this Agreement, plus any other amounts paid
in connection herewith, exceed the highest rate permissible under any law that a
court of competent jurisdiction shall, in a final determination, deem
applicable. Borrower and Foothill, in executing and delivering this Agreement,
intend legally to agree upon the rate or rates of interest and manner of payment
stated within it; provided, however, that, anything contained herein to the
contrary notwithstanding, if said rate or rates of interest or manner of payment
exceeds the maximum allowable under applicable law, then, ipso facto as of the
date of this Agreement, Borrower is and shall be liable only for the payment of
such maximum as allowed by law, and payment received from Borrower in excess of
such legal maximum, whenever received, shall be applied to reduce the principal
balance of the Obligations to the extent of such excess.
2.7. Collection of Accounts.
Borrower shall at all times maintain lockboxes (the "Lockboxes") and,
immediately shall instruct all Account Debtors with respect to the Accounts,
General Intangibles, and Negotiable Collateral of Borrower to remit all
Collections in respect thereof to such Lockboxes. Borrower, Foothill, and the
Lockbox Banks shall enter into the Lockbox Agreements, which among other things
shall provide for the opening of a Lockbox Account for the deposit of
Collections at a Lockbox Bank. Borrower agrees that all Collections and other
amounts received by Borrower from any Account Debtor or any other source
immediately upon receipt shall be deposited into a Lockbox Account. No Lockbox
Agreement or arrangement contemplated thereby shall be modified by Borrower
without the prior written consent of Foothill. Upon the terms and subject to the
conditions set forth in the Lockbox Agreements, all amounts received in each
Lockbox Account after all applicable collection periods shall be wired each
Business Day into an account (the "Foothill Account") maintained by Foothill at
a depository selected by Foothill.
2.8. Crediting Payments; Application of Collections.
The receipt of any Collections by Foothill (whether from transfers to
Foothill by the Lockbox Banks pursuant to the Lockbox Agreements or otherwise)
immediately shall be applied provisionally to reduce the Obligations
outstanding, but shall not be considered a payment on account unless such
Collection item is a wire transfer of immediately available federal funds and is
made to the Foothill Account or unless and until such Collection item is honored
when presented for payment. From and after the Closing Date, Foothill shall be
entitled to charge Borrower for 2 Business Days of `clearance' or `float' at the
rate set forth in Section 2.6(a)(i) or Section 2.6(c)(i), as applicable, on all
Collections that are received by Foothill (regardless of whether forwarded by
the Lockbox Banks to Foothill, whether provisionally applied to reduce the
Obligations, or otherwise). This across-the-board 2 Business Day clearance or
float charge on all Collections is acknowledged by the parties to constitute an
integral aspect of the pricing of Foothill's financing of Borrower, and shall
apply irrespective of the characterization of whether receipts are owned by
Borrower or Foothill, and whether or not there are any outstanding Advances, the
effect of such clearance or float charge being the equivalent of charging 2
Business Days of interest on such Collections. Should any Collection item not be
honored when presented for payment, then Borrower shall be deemed not to have
made such payment, and interest shall be recalculated accordingly. Anything to
the contrary contained herein notwithstanding, any Collection item shall be
deemed received by Foothill only if it is received into the Foothill Account on
a Business Day on or before 11:00 a.m. California time. If any Collection item
is received into the Foothill Account on a non-Business Day or after 11:00 a.m.
California time on a Business Day, it shall be deemed to have been received by
Foothill as of the opening of business on the immediately following Business
Day.
2.9. Designated Account.
Foothill is authorized to make the Advances and the Letters of Credit under
this Agreement based upon telephonic or other instructions received from anyone
purporting to be an Authorized Person, or without instructions if pursuant to
Section 2.6(e). Borrower agrees to establish and maintain the Designated Account
with the Designated Account Bank for the purpose of receiving the proceeds of
the Advances requested by Borrower and made by Foothill hereunder. Unless
otherwise agreed by Foothill and Borrower, any Advance requested by Borrower and
made by Foothill hereunder shall be made to the Designated Account.
2.10. Maintenance of Loan Account; Statements of Obligations.
Foothill shall maintain an account on its books in the name of Borrower
(the "Loan Account") on which Borrower will be charged with all Advances made by
Foothill to Borrower or for Borrower's account, including, accrued interest,
Foothill Expenses, and any other payment Obligations of Borrower. In accordance
with Section 2.8, the Loan Account will be credited with all payments received
by Foothill from Borrower or for Borrower's account, including all amounts
received in the Foothill Account from any Lockbox Bank. Foothill shall render
statements regarding the Loan Account to Borrower, including principal,
interest, fees, and including an itemization of all charges and expenses
constituting Foothill Expenses owing, and such statements shall be conclusively
presumed to be correct and accurate and constitute an account stated between
Borrower and Foothill unless, within 30 days after receipt thereof by Borrower,
Borrower shall deliver to Foothill written objection thereto describing the
error or errors contained in any such statements.
2.11. Fees.
Borrower shall pay to Foothill the following fees:
(a) Modification Fee. On the date hereof, a modification fee in an amount
equal to $50,000;
(b) Financial Examination, Documentation, and Appraisal Fees. Foothill's
customary fee of $650 per day per examiner, plus out-of-pocket expenses for each
financial analysis and examination (i.e., audits) of Borrower performed by
personnel employed by Foothill; Foothill's customary appraisal fee of $1,500 per
day per appraiser, plus out-of-pocket expenses for each appraisal of the
Collateral performed by personnel employed by Foothill; and, the actual charges
paid or incurred by Foothill if it elects to employ the services of one or more
third Persons to perform such financial analyses and examinations (i.e., audits)
of Borrower or to appraise the Collateral; and
(c) Unused Line Fee. On the first day of each month during the term of this
Agreement, an unused line fee in an amount equal to 0.25% per annum times the
Average Unused Portion of the Maximum Revolving Amount.
2.12. Eurodollar Rate Loans.
Any other provisions herein to the contrary notwithstanding, the following
provisions shall govern with respect to Eurodollar Rate Loans as to the matters
covered:
(a) Borrowing; Conversion; Continuation. Borrower may from time to time, on
or after the Closing Date, request in a written or telephonic communication with
Foothill: (i) Loans to constitute Eurodollar Rate Loans (pursuant to Section
2.12(c)); (ii) that Reference Rate Loans be converted into Eurodollar Rate
Loans; or (iii) that existing Eurodollar Rate Loans continue for an additional
Interest Period. Any such request shall specify the aggregate amount of the
requested Eurodollar Rate Loans, the proposed funding date therefor (which shall
be a Business Day, and with respect to continued Eurodollar Rate shall be the
last day of the Interest Period of the existing Eurodollar Rate loans being
continued), and the proposed Interest Period, in each case subject to the
limitations set forth below). Eurodollar Rate Loans may only be made, continue,
or extended if, as of the proposed funding date therefor each of the following
conditions is satisfied:
(v) no Event of Default exists;
(w) no more than 3 Interest Periods may be in effect at any one time;
(x) the amount of each Eurodollar Rate Loan borrowed, converted, or
continued must be in an amount not less than $1,000,000 and
integral multiples of $500,000 in excess thereof;
(y) Foothill shall have determined that the Interest Period or
Adjusted Eurodollar Rate is available to Foothill and can be
readily determined as of the date of the request for such
Eurodollar Rate Loan by Borrower; and
(z) Foothill shall have received such request at least 2 Business
Days prior to the proposed funding date therefor.
Any request by Borrower to borrow Eurodollar Rate Loans, to convert Reference
Rate Loans to Eurodollar Rate Loans, or to continue any existing Eurodollar Rate
Loans shall be irrevocable, except to the extent that Foothill shall determine
under Sections 2.12(a), 2.13 or 2.14 that such Eurodollar Rate Loans cannot be
made or continued.
(b) Determination of Interest Period. By giving notice as set forth in
Section 2.12(a), the Borrower shall have the option of selecting an Interest
Period for such Eurodollar Rate Loan. The determination of Interests Periods
shall be subject to the following provisions:
(i) in the case of immediately successive Interest Periods, each
successive Interest Period shall commence on the date on which
the next preceding Interest Period expires;
(ii) if any Interest period would otherwise expire on a day which is
not a Business Day, the Interest Period shall be extended to
expire on the next succeeding Business Day; provided, however,
that if the next succeeding Business Day occurs in the following
calendar month, then such Interest Period shall expire on the
immediately preceding Business Day;
(iii)if any Interest Period begins on the last Business Day of a
calendar month, or on a day for which there is no numerically
corresponding day in the calendar month at the end of such
Interest Period, then the Interest Period shall end on the last
Business Day of the calendar month at the end of such Interest
Period; and
(iv) Borrower may not select an Interest period which expires later
than the last day of the current term of this Agreement.
(c) Automatic Conversion; Optional Conversion by Foothill. Any Eurodollar
Rate Loan shall automatically convert to a Reference Rate Loan upon the last day
of the applicable Interest Period, unless Foothill has received a request to
continue such Eurodollar Rate Loan at least 2 Business Days prior to the end of
such Interest period in accordance with the terms of Section 2.12(a). Any
Eurodollar Rate Loan shall, at Foothill's option, upon notice to Borrower,
convert to a Reference Rate Loan in the event that (i) an Event of Default shall
have occurred and be continuing as of the last day of the Interest Period for
such Eurodollar Rate Loan, or (ii) this Agreement shall terminate, and Borrower
shall pay to Foothill any amounts required by Section 2.15 as a result thereof.
2.13. Illegality.
Any other provision herein to the contrary notwithstanding, if the adoption
of or any change in any law or in the interpretation or application thereof
shall make it unlawful for Foothill to make or maintain Eurodollar Rate Loans as
contemplated by this Agreement, (a) the obligation of Foothill hereunder to make
Eurodollar Rate loans, continue Eurodollar Rate Loans as such, and convert
Reference Rate Loans to Eurodollar Rate Loans shall forthwith be cancelled and
(b) Foothill's then outstanding Eurodollar Rate Loans, if any, shall be
converted automatically to Reference Rate Loans on the respective last days of
the then current Interest Periods with respect thereto or within such earlier
period as required by law; provided, however, that before making any such
demand, Foothill agrees to use reasonable efforts (consistent with its internal
policy and legal and regulatory restrictions and so long as such efforts would
not be disadvantageous to it, in its reasonable discretion, in any legal,
economic or regulatory manner) to designate a different lending office if the
making of such a designation would allow Foothill or its lending office to
continue to perform its obligations to make Eurodollar Rate Loans. If any such
conversion of a Eurodollar Rate Loan occurs on a day which is not the last day
of the then current Interest period with respect thereto, Borrower shall pay to
Foothill such amounts, if any, as may be required pursuant to Section 2.15. If
circumstances subsequently change so that Foothill shall determine that it is no
longer so affected, Foothill will promptly notify Borrower, and upon receipt of
such notice, the obligations of Foothill to make or continue Eurodollar Rate
Loans or to convert Reference Rate Loans into Eurodollar Rate Loans shall be
reinstated.
2.14. Requirements of Law.
(a) If the adoption of or any change in any law or in the interpretation or
application thereof or compliance by Foothill with any request or directive
(whether or not having the force of law) from any central bank or other
Governmental Authority made subsequent to the date hereof:
(i) shall subject Foothill to any tax, levy, charge, fee, reduction
or withholding of any kind whatsoever with respect to this
Agreement or any Loan, or change the basis of taxation of
payments to Foothill in respect thereof (except for taxes and the
establishment of a tax based on the net income of Foothill or
changes in the rate of tax on the net income of Foothill);
(ii) shall impose, modify or hold applicable any reserve, special
deposit, compulsory loan or similar requirement against assets
held by, deposits or other liabilities in or for the account of,
Loans or other extensions of credit by, or any other acquisition
of funds by, any office of Foothill; or
(iii)shall impose on Foothill any other condition with respect to
this Agreement or any Loan;
and the result of any of the foregoing is to increase the cost to Foothill, by
an amount which Foothill deems to be material, of making, converting into,
continuing or maintaining Loans or to increase the cost to Foothill, by an
amount which Foothill deems to be material, or to reduce any amount receivable
hereunder in respect of Loans, or to forego any other sum payable thereunder or
make any payment on account thereof, then, in any such case, Borrower shall
promptly pay Foothill, upon its demand, any additional amounts necessary to
compensate Foothill for such increased cost or reduced amount receivable;
provided, however, that before making any such demand, Foothill agrees to use
reasonable efforts (consistent with its internal policy and legal and regulatory
restrictions and so long as such efforts would not be disadvantageous to it, in
its reasonable discretion, in any legal, economic or regulatory manner) to
designate a different Eurodollar lending office if the making of such
designation would allow Foothill or its Eurodollar lending office to continue to
perform its obligations to make Eurodollar Rate Loans or to continue to fund or
maintain Eurodollar Rate Loans and avoid the need for, or materially reduce the
amount of, such increased cost. If Foothill becomes entitled to claim any
additional amounts pursuant to this Section 2.14, Foothill shall promptly notify
Borrower of the event by reason of which it has become so entitled. A
certificate as to any additional amounts payable pursuant to this Section 2.14
submitted by Foothill to Borrower shall be conclusive in the absence of manifest
error. If Borrower so notifies Foothill within 5 Business Days after Foothill
notifies Borrower of any increased cost pursuant to the foregoing provisions of
this Section 2.14, Borrower may convert all Eurodollar Rate Loans then
outstanding into Reference Rate loans in accordance with Section 2.12 and,
additionally, reimburse Foothill for any cost in accordance with Section 2.15.
(b) If Foothill shall have determined that the adoption of or any change in
any law regarding capital adequacy or in the interpretation or application
thereof or compliance by Foothill or any Person controlling Foothill with any
request or directive regarding capital adequacy (whether or not having the force
of law) from any Governmental Authority made subsequent to the date hereof does
or shall have the effect of increasing the amount of capital required to be
maintained or reducing the rate of return on Foothill's or such Person's capital
as a consequence of its obligations hereunder to a level below that which such
Foothill or such Person could have achieved but for such change or compliance
(taking into consideration Foothill's or such Person's policies with respect to
capital adequacy) by an amount deemed by Foothill to be material, then from time
to time, after submission by Foothill to Borrower of a prompt written request
therefor, Borrower shall pay to Foothill such additional amount or amounts as
will compensate Foothill or such Person for such reduction.
2.15. Indemnity.
Borrower agrees to indemnify Foothill and to hold Foothill harmless from
any loss or expense which Foothill may sustain or incur as a consequence of (a)
default by Borrower in payment when due of the principal amount of or interest
on any Eurodollar Rate Loan, (b) default by Borrower in making a borrowing of,
conversion into, or continuation of Eurodollar Rate Loans after Borrower has
given a notice requesting the same in accordance with the provisions of this
Agreement, (c) default by Borrower in making any prepayment after Borrower has
given a notice thereof in accordance with the provisions of this Agreement, or
(d) the making of a prepayment of Eurodollar Rate Loans on a day which is not
the last day of an Interest Period with respect thereto (whether due to the
termination of this Agreement upon the Event of Default or otherwise),
including, in each case, any such loss or expense (but excluding loss of margin)
arising from the reemployment of funds obtained by it or from fees payable to
terminate the deposits from which such funds were obtained. Calculation of all
amounts payable to Foothill under this Section 2.15 shall be made as though
Foothill had actually funded the relevant Eurodollar Rate Loan through the
purchase of a deposit bearing interest at the Eurodollar Rate in an amount equal
to the amount of such Eurodollar Rate Loan and having a maturity comparable to
the relevant Interest Period; provided, however, that Foothill may fund each of
the Eurodollar Rate Loans in any manner it sees fit, and the foregoing
assumption shall be utilized only for the calculation of amounts payable under
this Section 2.15.
3. CONDITIONS; TERM OF AGREEMENT.
3.1. Conditions Precedent to the Initial Advance and Letter of Credit.
The obligation of Foothill to make the initial Advance after this Agreement
is executed, or to issue the initial Letter of Credit after this Agreement is
executed, is subject to the fulfillment, to the satisfaction of Foothill and its
counsel, of each of the following conditions on or before the Closing Date:
(a) Foothill shall have received an opinion of counsel of Old Tecstar and
Borrower that the assets and liabilities of Old Tecstar have been acquired by
Borrower;
(b) Foothill shall have received searches reflecting the filing of its
financing statements and fixture filings for Borrower;
(c) Foothill shall have received each of the following documents, duly
executed, and each such document shall be in full force and effect:
(i) the Lockbox Agreements; and
(ii) the Guaranties.
(d) Foothill shall have received a certificate from an officer of Borrower
attesting to the resolutions of Borrower's Board of Managers authorizing its
execution, delivery, and performance of this Agreement and the other Loan
Documents to which Borrower is a party and authorizing specific officers of
Borrower to execute the same;
(e) Foothill shall have received copies of Borrower's Governing Documents,
as amended, modified, or supplemented to the Closing Date, certified by an
officer of Borrower;
(f) Foothill shall have received a certificate of status with respect to
Borrower, dated within 30 days of the Closing Date, such certificate to be
issued by the appropriate officer of the jurisdiction of organization of
Borrower, which certificate shall indicate that Borrower is in good standing in
such jurisdiction;
(g) Foothill shall have received certificates of status with respect to
Borrower, each dated within 30 days of the Closing Date, such certificates to be
issued by the appropriate officer of the jurisdictions in which its failure to
be duly qualified or licensed would constitute a Material Adverse Change, which
certificates shall indicate that Borrower is in good standing in such
jurisdictions;
(h) Foothill shall have received a certificate of insurance, together with
the endorsements thereto, as are required by Section 6.10, the form and
substance of which shall be satisfactory to Foothill and its counsel;
(i) Foothill shall have received such Collateral Access Agreements from
lessors, warehousemen, bailees, and other third parties as Foothill may require;
(j) Foothill shall have received an opinion of Borrower's counsel in form
and substance satisfactory to Foothill in its sole discretion;
(k) all other documents and legal matters in connection with the
transactions contemplated by this Agreement shall have been delivered, executed,
or recorded and shall be in form and substance satisfactory to Foothill and its
counsel.
3.2. Conditions Precedent to all Advances and all Letters of Credit.
The following shall be conditions precedent to all Advances and all Letters
of Credit hereunder:
(a) the representations and warranties contained in this Agreement and the
other Loan Documents shall be true and correct in all respects on and as of the
date of such extension of credit, as though made on and as of such date (except
to the extent that such representations and warranties relate solely to an
earlier date);
(b) no Default or Event of Default shall have occurred and be continuing on
the date of such extension of credit, nor shall either result from the making
thereof; and (c) no injunction, writ, restraining order, or other order of any
nature prohibiting, directly or indirectly, the extending of such credit shall
have been issued and remain in force by any governmental authority against
Borrower, Foothill, or any of their Affiliates.
3.3. Condition Subsequent.
As a condition subsequent to initial closing hereunder, Borrower shall
perform or cause to be performed the following (the failure by Borrower to so
perform or cause to be performed constituting an Event of Default) within:
(a) 30 days of the Closing Date, deliver to Foothill the certified copies
of the policies of insurance, together with the endorsements thereto, as are
required by Section 6.10, the form and substance of which shall be satisfactory
to Foothill and its counsel.
3.4. Term; Automatic Renewal.
This Agreement shall become effective upon the execution and delivery
hereof by Borrower and Foothill and shall continue in full force and effect for
a term ending on November 19, 2004 (the "Renewal Date") and automatically shall
be renewed for successive one year periods thereafter, unless sooner terminated
pursuant to the terms hereof. Borrower or Foothill may terminate this Agreement
effective on the Renewal Date or on any one year anniversary of the Renewal Date
by giving the other parties at least 90 days prior written notice. The foregoing
notwithstanding, Foothill shall have the right to terminate its obligations
under this Agreement immediately and without notice upon the occurrence and
during the continuation of an Event of Default.
3.5. Effect of Termination.
On the date of termination of this Agreement, all Obligations (including
contingent reimbursement obligations of Borrower with respect to any outstanding
Letters of Credit) immediately shall become due and payable without notice or
demand. No termination of this Agreement, however, shall relieve or discharge
Borrower of its duties, Obligations, or covenants hereunder, and Foothill's
continuing security interests in the Collateral shall remain in effect until all
Obligations have been fully and finally discharged and Foothill's obligation to
provide additional credit hereunder is terminated. If Borrower has sent a notice
of termination pursuant to the provisions of Section 3.4, but Borrower fails to
pay the Obligations in full on the date set forth in said notice, then Foothill
may, but shall not be required to, renew this Agreement for an additional term
of one year.
3.6. Early Termination by Borrower.
The provisions of Section 3.4 that allow termination of this Agreement by
Borrower only on the Renewal Date and certain anniversaries thereof
notwithstanding, Borrower has the option, at any time upon 90 days prior written
notice to Foothill, to terminate this Agreement by paying to Foothill, in cash,
the Obligations (including an amount equal to 102% of the undrawn amount of the
Letters of Credit), in full, together with a premium (the "Early Termination
Premium") equal to (a) 2% of the Maximum Revolving Amount if terminated on or
before November 20, 2001; (b) 1 1/2% of the Maximum Revolving Amount if
terminated after November 20, 2001 but on or before November 20, 2002; (c) 1% of
the Maximum Revolving Amount if terminated after November 20, 2002 but on or
before November 20, 2003; and (d) 0.5% of the Maximum Revolving Amount if
terminated after November 20, 2003 but before the Renewal Date.
3.7. Termination Upon Event of Default.
If Foothill terminates this Agreement upon the occurrence of an Event of
Default, in view of the impracticability and extreme difficulty of ascertaining
actual damages and by mutual agreement of the parties as to a reasonable
calculation of Foothill's lost profits as a result thereof, Borrower shall pay
to Foothill upon the effective date of such termination, a premium in an amount
equal to the Early Termination Premium, if any, that would be payable under
Section 3.6 had Borrower terminated on such date. The Early Termination Premium
shall be presumed to be the amount of damages sustained by Foothill as the
result of the early termination and Borrower agrees that it is reasonable under
the circumstances currently existing. The Early Termination Premium provided for
in this Section 3.7 shall be deemed included in the Obligations.
4. CREATION OF SECURITY INTEREST.
4.1. Grant of Security Interest.
Borrower hereby grants to Foothill a continuing security interest in all
currently existing and hereafter acquired or arising Collateral of Borrower in
order to secure prompt repayment of any and all Obligations and in order to
secure prompt performance by Borrower of each of its covenants and duties under
the Loan Documents. Foothill's security interests in the Collateral shall attach
to all Collateral without further act on the part of Foothill or Borrower.
Anything contained in this Agreement or any other Loan Document to the contrary
notwithstanding, except for the sale of Inventory to buyers in the ordinary
course of business and as permitted under Section 7.4, Borrower has no
authority, express or implied, to dispose of any item or portion of the
Collateral.
4.2. Negotiable Collateral.
In the event that any Collateral, including proceeds, is evidenced by or
consists of Negotiable Collateral, Borrower, immediately upon the request of
Foothill, shall endorse and deliver physical possession of such Negotiable
Collateral to Foothill.
4.3. Collection of Accounts, General Intangibles, and Negotiable
Collateral.
At any time, Foothill or Foothill's designee may (a) notify customers or
Account Debtors of Borrower that the Accounts, General Intangibles, or
Negotiable Collateral have been assigned to Foothill or that Foothill has a
security interest therein, and (b) collect the Accounts, General Intangibles,
and Negotiable Collateral directly and charge the collection costs and expenses
to the Loan Account. Borrower agrees that it will hold in trust for Foothill, as
Foothill's trustee, any Collections that it receives and immediately will
deliver said Collections to the Lockbox or to Foothill in their original form as
received by Borrower.
4.4. Delivery of Additional Documentation Required.
At any time upon the request of Foothill, Borrower shall execute and
deliver to Foothill all financing statements, continuation financing statements,
fixture filings, security agreements, pledges, assignments, endorsements of
certificates of title, applications for title, affidavits, reports, notices,
schedules of accounts, letters of authority, and all other documents that
Foothill reasonably may request, in form satisfactory to Foothill, to perfect
and continue perfected Foothill's security interests in the Collateral, and in
order to fully consummate all of the transactions contemplated hereby and under
the other the Loan Documents.
4.5. Power of Attorney.
Borrower hereby irrevocably makes, constitutes, and appoints Foothill (and
any of Foothill's officers, employees, or agents designated by Foothill) as
Borrower's true and lawful attorney, with power to (a) if Borrower refuses to,
or fails timely to execute and deliver any of the documents described in Section
4.4, sign the name of Borrower on any of the documents described in Section 4.4,
(b) at any time that an Event of Default has occurred and is continuing or
Foothill deems itself insecure, sign Borrower's name on any invoice or xxxx of
lading relating to any Account, drafts against Account Debtors, schedules and
assignments of Accounts, verifications of Accounts, and notices to Account
Debtors, (c) send requests for verification of Accounts, (d) endorse Borrower's
name on any Collection item that may come into Foothill's possession, (e) at any
time that an Event of Default has occurred and is continuing or Foothill deems
itself insecure, notify the post office authorities to change the address for
delivery of Borrower's mail to an address designated by Foothill, to receive and
open all mail addressed to Borrower, and to retain all mail relating to the
Collateral and forward all other mail to Borrower, (f) at any time that an Event
of Default has occurred and is continuing or Foothill deems itself insecure,
make, settle, and adjust all claims under Borrower's policies of insurance and
make all determinations and decisions with respect to such policies of
insurance, and (g) at any time that an Event of Default has occurred and is
continuing or Foothill deems itself insecure, settle and adjust disputes and
claims respecting the Accounts directly with Account Debtors, for amounts and
upon terms that Foothill determines to be reasonable, and Foothill may cause to
be executed and delivered any documents and releases that Foothill determines to
be necessary. The appointment of Foothill as Borrower's attorney, and each and
every one of Foothill's rights and powers, being coupled with an interest, is
irrevocable until all of the Obligations have been fully and finally repaid and
performed and Foothill's obligation to extend credit hereunder is terminated.
4.6. Right to Inspect.
Foothill (through any of its officers, employees, or agents) shall have the
right, from time to time hereafter to inspect Borrower's Books and to check,
test, and appraise the Collateral in order to verify Borrower's financial
condition or the amount, quality, value, condition of, or any other matter
relating to, the Collateral.
5. REPRESENTATIONS AND WARRANTIES.
In order to induce Foothill to enter into this Agreement, Borrower makes
the following representations and warranties which shall be true, correct, and
complete in all respects as of the date hereof, and shall be true, correct, and
complete in all respects as of the Closing Date, and at and as of the date of
the making of each Advance or Letter of Credit made thereafter, as though made
on and as of the date of such Advance, Letter of Credit (except to the extent
that such representations and warranties relate solely to an earlier date) and
such representations and warranties shall survive the execution and delivery of
this Agreement:
5.1. No Encumbrances.
Borrower has good and indefeasible title to its Collateral, free and clear
of Liens except for Permitted Liens.
5.2. Eligible Accounts and Eligible Tooling and/or Engineering Service
Accounts.
The Eligible Accounts and Eligible Tooling and/or Engineering Service
Accounts of Borrower are bona fide existing obligations created by the sale and
delivery of Inventory or the rendition of services to Account Debtors in the
ordinary course of Borrower's business, unconditionally owed to Borrower without
defenses, disputes, offsets, counterclaims, or rights of return or cancellation.
The property giving rise to such Eligible Accounts or Eligible Tooling and/or
Engineering Service Accounts has been delivered to the Account Debtor, or to the
Account Debtor's agent for immediate shipment to and unconditional acceptance by
the Account Debtor. Borrower has not received notice of actual or imminent
bankruptcy, insolvency, or material impairment of the financial condition of any
Account Debtor regarding any Eligible Account or Eligible Tooling Account.
5.3. Eligible Inventory.
All Eligible Inventory is of good and merchantable quality, free from
defects.
5.4. Equipment.
All of the Equipment of Borrower is used or held for use in Borrower's
respective business and is fit for such purposes.
5.5. Location of Inventory and Equipment.
The Inventory and Equipment are not stored with a bailee, warehouseman, or
similar party (without Foothill's prior written consent) and are located only at
the locations identified on Schedule 6.12 or otherwise permitted by Section
6.12.
5.6. Inventory Records.
Borrower keeps correct and accurate records itemizing and describing the
kind, type, quality, and quantity of the Inventory, and Borrower's cost
therefor.
5.7. Location of Chief Executive Office; FEIN.
The address of Borrower's chief executive office and FEIN is as set forth
on Schedule 5.7.
5.8. Due Organization and Qualification; Subsidiaries.
(a) Borrower is duly organized and existing and in good standing under the
laws of the jurisdiction of its organization and qualified and licensed to do
business in, and in good standing in, any state where the failure to be so
licensed or qualified reasonably could be expected to have a Material Adverse
Change.
(b) Set forth on Schedule 5.8, is a complete and accurate list of
Borrower's direct and indirect Subsidiaries, showing: (i) the jurisdiction of
their incorporation; (ii) the number of shares of each class of common and
preferred stock authorized for each of such Subsidiaries; and (iii) the number
and the percentage of the outstanding shares of each such class owned directly
or indirectly by Borrower. All of the outstanding capital stock of each such
Subsidiary has been validly issued and is fully paid and non-assessable.
(c) Except as set forth on Schedule 5.8, no capital stock (or any
securities, instruments, warrants, options, purchase rights, conversion or
exchange rights, calls, commitments or claims of any character convertible into
or exercisable for capital stock) of any direct or indirect Subsidiary of
Borrower is subject to the issuance of any security, instrument, warrant,
option, purchase right, conversion or exchange right, call, commitment or claim
of any right, title, or interest therein or thereto.
5.9. Due Authorization; No Conflict.
(a) The execution, delivery, and performance by Borrower of this Agreement
and the Loan Documents to which it is a party have been duly authorized by all
necessary action.
(b) The execution, delivery, and performance by Borrower of this Agreement
and the Loan Documents to which it is a party do not and will not (i) violate
any provision of federal, state, or local law or regulation (including
Regulations G, T, U, and X of the Federal Reserve Board) applicable to Borrower,
the Governing Documents of Borrower, or any order, judgment, or decree of any
court or other Governmental Authority binding on Borrower, (ii) conflict with,
result in a breach of, or constitute (with due notice or lapse of time or both)
a default under any material contractual obligation or material lease of
Borrower, (iii) result in or require the creation or imposition of any Lien of
any nature whatsoever upon any properties or assets of Borrower, other than
Permitted Liens, or (iv) require any approval of members or any approval or
consent of any Person under any material contractual obligation of Borrower.
(c) Other than the filing of appropriate financing statements, fixture
filings, and mortgages, the execution, delivery, and performance by Borrower of
this Agreement and the Loan Documents to which Borrower is a party do not and
will not require any registration with, consent, or approval of, or notice to,
or other action with or by, any federal, state, foreign, or other Governmental
Authority or other Person.
(d) This Agreement and the Loan Documents to which Borrower is a party, and
all other documents contemplated hereby and thereby, when executed and delivered
by Borrower will be the legally valid and binding obligations of Borrower,
enforceable against Borrower in accordance with their respective terms, except
as enforcement may be limited by equitable principles or by bankruptcy,
insolvency, reorganization, moratorium, or similar laws relating to or limiting
creditors' rights generally.
(e) The Liens granted by Borrower to Foothill in and to its properties and
assets pursuant to this Agreement and the other Loan Documents are validly
created, perfected, and first priority Liens, subject only to Permitted Liens.
5.10. Litigation.
There are no actions or proceedings pending by or against Borrower before
any court or administrative agency and Borrower has no knowledge or belief of
any pending, threatened, or imminent litigation, governmental investigations, or
claims, complaints, actions, or prosecutions involving Borrower or any guarantor
of the Obligations, except for: (a) ongoing collection matters in which Borrower
is the plaintiff; (b) matters disclosed on Schedule 5.10; and (c) matters
arising after the date hereof that, if decided adversely to Borrower, would not
have a Material Adverse Change.
5.11. No Material Adverse Change.
All financial statements relating to Borrower or any guarantor of the
Obligations that have been delivered by Borrower to Foothill have been prepared
in accordance with GAAP (except, in the case of unaudited financial statements,
for the lack of footnotes and being subject to year-end audit adjustments) and
fairly present Borrower's (or such guarantor's, as applicable) financial
condition as of the date thereof and Borrower's results of operations for the
period then ended. There has not been a Material Adverse Change with respect to
Borrower (or such guarantor, as applicable) since the date of the latest
financial statements submitted to Foothill on or before the Closing Date.
5.12. Solvency.
Borrower is Solvent. No transfer of property is being made by Borrower and
no obligation is being incurred by Borrower in connection with the transactions
contemplated by this Agreement or the other Loan Documents with the intent to
hinder, delay, or defraud either present or future creditors of Borrower.
5.13. Employee Benefits.
Neither Borrower, its Subsidiaries, nor its ERISA Affiliates maintains or
contributes to any Benefit Plan, other than those listed on Schedule 5.13.
Borrower, its Subsidiaries and any ERISA Affiliate have satisfied the minimum
funding standards of ERISA and the IRC with respect to each Benefit Plan to
which it is obligated to contribute. No ERISA Event has occurred nor has any
other event occurred that may result in an ERISA Event that reasonably could be
expected to result in a Material Adverse Change. Neither Borrower nor its
Subsidiaries, any ERISA Affiliate, nor any fiduciary of any Plan is subject to
any direct or indirect liability with respect to any Plan under any applicable
law, treaty, rule, regulation, or agreement. Neither Borrower nor its
Subsidiaries nor any ERISA Affiliate is required to provide security to any Plan
under Section 401(a)(29) of the IRC.
5.14. Environmental Condition.
Neither Borrower's properties or assets has ever been used by such Company
nor, to the best of Borrower's knowledge, by previous owners or operators in the
disposal of, nor to produce, store, handle, treat, release, or transport, any
Hazardous Materials, except in compliance with applicable laws or as described
on Schedule 5.14, and Borrower's properties or assets have never been designated
or identified in any manner pursuant to any environmental protection statute as
a Hazardous Materials disposal site, or a candidate for closure pursuant to any
environmental protection statute. No Lien arising under any environmental
protection statute has attached to any revenues or to any real or personal
property owned or operated by Borrower. Except as described on Schedule 5.14,
Borrower has not received a summons, citation, notice, or directive from the
Environmental Protection Agency or any other federal or state governmental
agency concerning any action or omission by Borrower resulting in the releasing
or disposing of Hazardous Materials into the environment.
6. AFFIRMATIVE COVENANTS.
Borrower covenants and agrees that, so long as any credit hereunder shall
be available and until full and final payment of the Obligations, and unless
Foothill shall otherwise consent in writing, Borrower shall do all of the
following:
6.1. Accounting System.
Maintain a standard and modern system of accounting that enables Borrower
to produce financial statements in accordance with GAAP, and maintain records
pertaining to the Collateral that contain information as from time to time may
be requested by Foothill. Borrower also shall keep a modern inventory reporting
system that shows all additions, sales, claims, returns, and allowances with
respect to the Inventory.
6.2. Collateral Reporting.
Provide Foothill with the following documents at the following times in
form satisfactory to Foothill: (a) on a weekly basis, a sales journal,
collection journal, and credit register since the last such schedule and a
calculation of the Borrowing Base as of such date, (b) on a monthly basis and,
in any event, by no later than the 10th day of each fiscal month during the term
of this Agreement, (i) a detailed calculation of the Borrowing Base, and (ii) a
detailed aging by due date, by total, of the Accounts (such aging to segregate
the Tooling and/or Engineering Service Accounts from the other Accounts) of
Borrower, together with a reconciliation to the detailed calculation of the
Borrowing Base previously provided to Foothill, (c) on a monthly basis and, in
any event, by no later than the 10th day of each fiscal month during the term of
this Agreement, a summary aging, by vendor, of Borrower's accounts payable and
any book overdraft, (d) on a weekly basis, Inventory reports specifying
Borrower's cost and the wholesale market value of its Inventory by category,
with additional detail showing additions to and deletions from the Inventory,
(e) on a weekly basis a report identifying those Accounts which have been
invoiced to the customer thereof but with respect to which the Inventory has not
yet been shipped, (f) on each Business Day if requested by Foothill, notice of
all returns, disputes or claims (other than claims described in the warranty
claims report delivered to Foothill pursuant to clause (h) below), (g) upon
request, copies of invoices in connection with the Accounts, customer
statements, credit memos, remittance advices and reports, deposit slips,
shipping and delivery documents in connection with the Accounts and for
Inventory and Equipment acquired by Borrower, purchase orders and invoices, (h)
on a quarterly basis, a detailed list of Borrower's customers and a warranty
claims report in form and substance satisfactory to Foothill, (i) on a monthly
basis, a calculation of the Dilution for the prior fiscal month; and (j) such
other reports as to the Collateral or the financial condition of each Borrower
as Foothill may request from time to time. Original sales invoices evidencing
daily sales shall be mailed by Borrower to each Account Debtor and, at
Foothill's direction, the invoices shall indicate on their face that the Account
has been assigned to Foothill and that all payments are to be made directly to
Foothill. In addition to the foregoing, Borrower shall promptly provide to
Foothill any report that Borrower delivers to General Motors Corporation.
6.3. Financial Statements, Reports, Certificates.
Deliver to Foothill: (a) as soon as available, but in any event within 30
days after the end of each fiscal month during each of Borrower's fiscal years,
a company prepared balance sheet, income statement, and statement of cash flow
covering Borrower's consolidated operations during such period; (b) as soon as
available, but in any event within 90 days after the end of each of Borrower's
fiscal years, consolidated financial statements of Borrower for each such fiscal
year, audited by independent certified public accountants reasonably acceptable
to Foothill and certified, without any qualifications, by such accountants to
have been prepared in accordance with GAAP, together with a certificate of such
accountants addressed to Foothill stating that such accountants do not have
knowledge of the existence of any Default or Event of Default; and (c) at the
end of a fiscal year a monthly budget for the following fiscal year. Such
audited financial statements shall include a balance sheet, profit and loss
statement, and statement of cash flow and, if prepared, such accountants' letter
to management. The financial statements referred to above shall be prepared on a
consolidated basis for Borrower and its Subsidiaries.
Each fiscal month, together with the financial statements provided pursuant
to Section 6.3(a), Borrower shall deliver to Foothill a certificate signed by
its chief financial officer to the effect that: (i) all financial statements
delivered or caused to be delivered to Foothill hereunder have been prepared in
accordance with GAAP (except, in the case of unaudited financial statements, for
the lack of footnotes and being subject to year-end audit adjustments) and
fairly present the financial condition of Borrower, (ii) the representations and
warranties of Borrower contained in this Agreement and the other Loan Documents
are true and correct in all material respects on and as of the date of such
certificate, as though made on and as of such date (except to the extent that
such representations and warranties relate solely to an earlier date), (iii) for
each month that also is the date on which a financial covenant in Section 7.20
is to be tested, a Compliance Certificate demonstrating in reasonable detail
compliance at the end of such period with the applicable financial covenants
contained in Section 7.20, and (iv) on the date of delivery of such certificate
to Foothill there does not exist any condition or event that constitutes a
Default or Event of Default (or, in the case of clauses (i) or (ii), to the
extent of any non-compliance, describing such non-compliance as to which he or
she may have knowledge and what action Borrower has taken, is taking, or
proposes to take with respect thereto).
Borrower shall have issued written instructions to its independent
certified public accountants authorizing them to communicate with Foothill and
to release to Foothill whatever financial information concerning Borrower that
Foothill may request. Borrower hereby irrevocably authorizes and directs all
auditors, accountants, or other third parties to deliver to Foothill, at
Borrower's expense, copies of Borrower's financial statements, papers related
thereto, and other accounting records of any nature in their possession, and to
disclose to Foothill any information they may have regarding Borrower's business
affairs and financial conditions.
6.4. Tax Returns.
Deliver to Foothill copies of each of Borrower's future federal income tax
returns, and any amendments thereto, within 30 days of the filing thereof with
the Internal Revenue Service.
6.5. Guarantor Reports.
Cause any guarantor of any of the Obligations (other than IAG) to deliver
its annual financial statements at the time when Borrower provides its audited
financial statements to Foothill and copies of all federal income tax returns as
soon as the same are available and in any event no later than 30 days after the
same are required to be filed by law.
6.6. Returns.
Cause returns and allowances, if any, as between Borrower and its Account
Debtors to be on the same basis and in accordance with the usual customary
practices of Borrower, as they exist at the time of the execution and delivery
of this Agreement. If, at a time when no Event of Default has occurred and is
continuing, any Account Debtor returns any Inventory to Borrower, Borrower
promptly shall determine the reason for such return and, if Borrower accepts
such return, issue a credit memorandum (with a copy to be sent to Foothill) in
the appropriate amount to such Account Debtor. If, at a time when an Event of
Default has occurred and is continuing, any Account Debtor returns any Inventory
to Borrower, Borrower promptly shall determine the reason for such return and,
if Foothill consents (which consent shall not be unreasonably withheld), issue a
credit memorandum (with a copy to be sent to Foothill) in the appropriate amount
to such Account Debtor.
6.7. Title to Equipment.
Upon Foothill's request, Borrower immediately shall deliver to Foothill,
properly endorsed, any and all evidences of ownership of, certificates of title,
or applications for title to any items of Equipment.
6.8. Maintenance of Equipment.
Maintain the Equipment in good operating condition and repair (ordinary
wear and tear excepted), and make all necessary replacements thereto so that the
value and operating efficiency thereof shall at all times be maintained and
preserved. Other than those items of Equipment that constitute fixtures on the
Closing Date, Borrower shall not permit any item of Equipment to become a
fixture to real estate or an accession to other property, and such Equipment
shall at all times remain personal property.
6.9. Taxes.
Cause all assessments and taxes, whether real, personal, or otherwise, due
or payable by, or imposed, levied, or assessed against Borrower or any of its
property to be paid in full, before delinquency or before the expiration of any
extension period, except to the extent that the validity of such assessment or
tax shall be the subject of a Permitted Protest. To the extent that Borrower
fails timely to make payment of such taxes or assessments, Foothill shall be
entitled, in its discretion, to reserve an amount equal to such unpaid amounts
against the Borrowing Base. Borrower shall make due and timely payment or
deposit of all such federal, state, and local taxes, assessments, or
contributions required of it by law, and will execute and deliver to Foothill,
on demand, appropriate certificates attesting to the payment thereof or deposit
with respect thereto. Borrower will make timely payment or deposit of all tax
payments and withholding taxes required of it by applicable laws, including
those laws concerning F.I.C.A., F.U.T.A., state disability, and local, state,
and federal income taxes, and will, upon request, furnish Foothill with proof
satisfactory to Foothill indicating that Borrower has made such payments or
deposits.
6.10. Insurance.
(a) At its expense, keep the Collateral insured against loss or damage by
fire, theft, explosion, sprinklers, and all other hazards and risks, and in such
amounts, as are ordinarily insured against by other owners in similar
businesses. Borrower also shall maintain business interruption, public
liability, product liability, and property damage insurance relating to
Borrower's ownership and use of the Collateral, as well as insurance against
larceny, embezzlement, and criminal misappropriation.
(b) All such policies of insurance shall be in such form, with Borrower,
and in such amounts as may be reasonably satisfactory to Foothill. All hazard
insurance and such other insurance as Foothill shall specify, shall contain a
Form 438BFU (NS) mortgagee endorsement, or an equivalent endorsement
satisfactory to Foothill, showing Foothill as sole loss payee thereof, and shall
contain a waiver of warranties. Every policy of insurance referred to in this
Section 6.10 shall contain an agreement by the insurer that it will not cancel
such policy except after 30 days prior written notice to Foothill and that any
loss payable thereunder shall be payable notwithstanding any act or negligence
of Borrower or Foothill which might, absent such agreement, result in a
forfeiture of all or a part of such insurance payment. Borrower shall deliver to
Foothill certified copies of such policies of insurance and evidence of the
payment of all then due premiums therefor.
(c) Original policies or certificates thereof satisfactory to Foothill
evidencing such insurance shall be delivered to Foothill at least 30 days prior
to the expiration of the existing or preceding policies. Borrower shall give
Foothill prompt notice of any loss covered by such insurance, and Foothill shall
have the right to adjust any loss. Foothill shall have the exclusive right to
adjust all losses payable under any such insurance policies without any
liability to Borrower whatsoever in respect of such adjustments. Any monies
received in respect of any Collateral as payment for any loss under any
insurance policy including the insurance policies mentioned above, shall be paid
over to Foothill to be applied at the option of Foothill either to the
prepayment of the Obligations without premium, in such order or manner as
Foothill may elect, or shall be disbursed to Borrower under stage payment terms
satisfactory to Foothill for application to the cost of repairs, replacements,
or restorations; provided, that so long as no Event of Default exists the
proceeds of a casualty involving less than $50,000 shall be remitted to
Borrower. All repairs, replacements, or restorations shall be effected with
reasonable promptness and shall be of a value at least equal to the value of the
items or property destroyed prior to such damage or destruction. Upon the
occurrence of an Event of Default, Foothill shall have the right to apply all
prepaid premiums to the payment of the Obligations in such order or form as
Foothill shall determine.
(d) Borrower shall not take out separate insurance concurrent in form or
contributing in the event of loss with that required to be maintained under this
Section 6.10, unless Foothill is included thereon as named insured with the loss
payable to Foothill under a standard 438BFU (NS) Mortgagee endorsement, or its
local equivalent. Borrower immediately shall notify Foothill whenever such
separate insurance is taken out, specifying the insurer thereunder and full
particulars as to the policies evidencing the same, and originals of such
policies immediately shall be provided to Foothill.
6.11. No Setoffs or Counterclaims.
Make payments hereunder and under the other Loan Documents by or on behalf
of Borrower without setoff or counterclaim and free and clear of, and without
deduction or withholding for or on account of, any federal, state, or local
taxes. 6.12. Location of Inventory and Equipment.
Keep the Inventory and Equipment only at the locations identified on
Schedule 6.12; provided, however, that Borrower may amend Schedule 6.12 to add a
new location so long as such amendment occurs by written notice to Foothill not
less than 30 days prior to the date on which the Inventory or Equipment is moved
to such new location, so long as such new location is within the continental
United States, and so long as, at the time of such written notification,
Borrower provides any financing statements or fixture filings necessary to
perfect and continue perfected Foothill's security interests in such assets and
also provide to Foothill a Collateral Access Agreement.
6.13. Compliance with Laws.
Comply with the requirements of all applicable laws, rules, regulations,
and orders of any governmental authority, including the Fair Labor Standards Act
and the Americans With Disabilities Act, other than laws, rules, regulations,
and orders the non-compliance with which, individually or in the aggregate,
would not have and could not reasonably be expected to have a Material Adverse
Change.
6.14. Employee Benefits.
(a) Promptly, and in any event within 10 Business Days after Borrower or
any of its Subsidiaries knows or has reason to know that an ERISA Event has
occurred that reasonably could be expected to result in a Material Adverse
Change, deliver a written statement of the chief financial officer of Borrower
describing such ERISA Event and any action that is being taken with respect
thereto by Borrower, any such Subsidiary or ERISA Affiliate, and any action
taken or threatened by the IRS, Department of Labor, or PBGC. Borrower or such
Subsidiary, as applicable, shall be deemed to know all facts known by the
administrator of any Benefit Plan of which it is the plan sponsor, shall
promptly, and in any event within 3 Business Days after the filing thereof with
the IRS, deliver a copy of each funding waiver request filed with respect to any
Benefit Plan and all communications received by Borrower, any of its
Subsidiaries or, to the knowledge of Borrower, any ERISA Affiliate with respect
to such request, and shall promptly, and in any event within 3 Business Days
after receipt by Borrower, any of its Subsidiaries or, to the knowledge of
Borrower, any ERISA Affiliate, of the PBGC's intention to terminate a Benefit
Plan or to have a trustee appointed to administer a Benefit Plan, deliver copies
of each such notice.
(b) Cause to be delivered to Foothill, upon Foothill's request, each of the
following: (i) a copy of each Plan (or, where any such plan is not in writing,
complete description thereof) (and if applicable, related trust agreements or
other funding instruments) and all amendments thereto, all written
interpretations thereof and written descriptions thereof that have been
distributed to employees or former employees of Borrower or its Subsidiaries;
(ii) the most recent determination letter issued by the IRS with respect to each
Benefit Plan; (iii) for the three most recent plan years, annual reports on Form
5500 Series required to be filed with any governmental agency for each Benefit
Plan; (iv) all actuarial reports prepared for the last three plan years for each
Benefit Plan; (v) a listing of all Multiemployer Plans, with the aggregate
amount of the most recent annual contributions required to be made by Borrower
or any ERISA Affiliate to each such plan and copies of the collective bargaining
agreements requiring such contributions; (vi) any information that has been
provided to Borrower or any ERISA Affiliate regarding withdrawal liability under
any Multiemployer Plan; and (vii) the aggregate amount of the most recent annual
payments made to former employees of Borrower or its Subsidiaries under any
Retiree Health Plan.
6.15. Leases.
Pay when due all rents and other amounts payable under any leases to which
Borrower is a party or by which Borrower's properties and assets are bound,
unless such payments are the subject of a Permitted Protest. To the extent that
Borrower fails timely to make payment of such rents and other amounts payable
when due under its leases, Foothill shall be entitled, in its discretion, to
reserve an amount equal to such unpaid amounts against the Borrowing Base.
7. NEGATIVE COVENANTS.
Borrower covenants and agrees that, so long as any credit hereunder shall
be available and until full and final payment of the Obligations, Borrower will
not do any of the following without Foothill's prior written consent:
7.1. Indebtedness.
Create, incur, assume, permit, guarantee, or otherwise become or remain,
directly or indirectly, liable with respect to any Indebtedness, except:
(a) Indebtedness evidenced by this Agreement, together with Indebtedness to
issuers of letters of credit that are the subject of L/C Guarantees;
(b) Indebtedness set forth on Schedule 7.1;
(c) Indebtedness secured by Permitted Liens; and
(d) refinancings, renewals, or extensions of Indebtedness permitted under
clauses (b) and (c) of this Section 7.1 (and continuance or renewal of any
Permitted Liens associated therewith) so long as: (i) the terms and conditions
of such refinancings, renewals, or extensions do not materially impair the
prospects of repayment of the Obligations by Borrower, (ii) the net cash
proceeds of such refinancings, renewals, or extensions do not result in an
increase in the aggregate principal amount of the Indebtedness so refinanced,
renewed, or extended, (iii) such refinancings, renewals, refundings, or
extensions do not result in a shortening of the average weighted maturity of the
Indebtedness so refinanced, renewed, or extended, and (iv) to the extent that
Indebtedness that is refinanced was subordinated in right of payment to the
Obligations, then the subordination terms and conditions of the refinancing
Indebtedness must be at least as favorable to Foothill as those applicable to
the refinanced Indebtedness.
7.2. Liens.
Create, incur, assume, or permit to exist, directly or indirectly, any Lien
on or with respect to any of its property or assets, of any kind, whether now
owned or hereafter acquired, or any income or profits therefrom, except for
Permitted Liens (including Liens that are replacements of Permitted Liens to the
extent that the original Indebtedness is refinanced under Section 7.1(d) and so
long as the replacement Liens only encumber those assets or property that
secured the original Indebtedness).
7.3. Restrictions on Fundamental Changes.
Enter into any merger, consolidation, reorganization, or recapitalization,
or reclassify its capital stock, or liquidate, wind up, or dissolve itself (or
suffer any liquidation or dissolution), or convey, sell, assign, lease,
transfer, or otherwise dispose of, in one transaction or a series of
transactions, all or any substantial part of its property or assets, or amend or
modify its operating agreement, by-laws or articles of organization.
7.4. Disposal of Assets.
Sell, lease, assign, transfer, or otherwise dispose of any of Borrower's
properties or assets other than (i) sales of Inventory to buyers in the ordinary
course of Borrower's business as currently conducted and (ii) so long as no
Event of Default exists or would be caused thereby, sales of obsolete or
unuseful Equipment in the aggregate amount not to exceed $50,000 in any fiscal
year.
7.5. Change Name.
Change Borrower's name, FEIN, corporate structure (within the meaning of
Section 9402(7) of the Code), or identity, or add any new fictitious name.
7.6. Guarantee.
Except as described on Schedule 7.6, guarantee or otherwise become in any
way liable with respect to the obligations of any third Person except by
endorsement of instruments or items of payment for deposit to the account of
Borrower or which are transmitted or turned over to Foothill.
7.7. Nature of Business.
Make any change in the principal nature of Borrower's business.
7.8. Prepayments and Amendments.
(a) Except in connection with a refinancing permitted by Section 7.1(d),
prepay, redeem, retire, defease, purchase, or otherwise acquire any Indebtedness
owing to any third Person, other than the Obligations in accordance with this
Agreement, and
(b) Directly or indirectly, amend, modify, alter, increase, or change any
of the terms or conditions of any agreement, instrument, document, indenture, or
other writing evidencing or concerning Indebtedness permitted under Sections
7.1(b), (c) or (d).
7.9. Change of Control.
Cause, permit, or suffer, directly or indirectly, any Change of Control.
7.10. Consignments.
Consign any Inventory or sell any Inventory on xxxx and hold, sale or
return, sale on approval, or other conditional terms of sale.
7.11. Distributions.
Except for distributions described on Schedule 7.11, make any distribution
or declare or pay any dividends (in cash or other property, other than capital
stock) on, or purchase, acquire, redeem, or retire any of Borrower's capital
stock, of any class, whether now or hereafter outstanding.
7.12. Accounting Methods.
Modify or change its method of accounting or enter into, modify, or
terminate any agreement currently existing, or at any time hereafter entered
into with any third party accounting firm or service bureau for the preparation
or storage of Borrower's accounting records without said accounting firm or
service bureau agreeing to provide Foothill information regarding the Collateral
or Borrower's financial condition. Borrower waives the right to assert a
confidential relationship, if any, it may have with any accounting firm or
service bureau in connection with any information requested by Foothill pursuant
to or in accordance with this Agreement, and agrees that Foothill may contact
directly any such accounting firm or service bureau in order to obtain such
information.
7.13. Investments.
Except for a loan in the amount of $1,500,000 pursuant to the Subordinated
Starcraft Loan Documents, directly or indirectly make, acquire, or incur any
liabilities (including contingent obligations) for or in connection with (a) the
acquisition of the securities (whether debt or equity) of, or other interests
in, a Person, (b) loans, advances, capital contributions, or transfers of
property to a Person, or (c) the acquisition of all or substantially all of the
properties or assets of a Person.
7.14. Transactions with Affiliates.
Except as described on Schedule 7.14, directly or indirectly enter into or
permit to exist any material transaction with any Affiliate of Borrower except
for transactions that are in the ordinary course of Borrower's business, upon
fair and reasonable terms, that are fully disclosed to Foothill, and that are no
less favorable to Borrower than would be obtained in an arm's length transaction
with a non-Affiliate.
7.15. Suspension.
Suspend or go out of a substantial portion of its business.
7.16. Compensation.
Increase the annual fee or per-meeting fees paid to directors of Borrower
during any fiscal year by more than 15% over the prior fiscal year; pay or
accrue total cash compensation, during any fiscal year, to officers and senior
management employees of Borrower in an aggregate amount in excess of 115% of
that paid or accrued in the prior fiscal year.
7.17. Use of Proceeds.
Use the proceeds of the Advances made hereunder for any purpose other than
consistent with the terms and conditions hereof, for its lawful and permitted
corporate purposes.
7.18. Change in Location of Chief Executive Office; Inventory and Equipment
with Bailees.
Relocate its chief executive office to a new location without providing 30
days prior written notification thereof to Foothill and so long as, at the time
of such written notification, Borrower provides any financing statements or
fixture filings necessary to perfect and continue perfected Foothill's security
interests and also provides to Foothill a Collateral Access Agreement with
respect to such new location. The Inventory and Equipment shall not at any time
now or hereafter be stored with a bailee, warehouseman, or similar party without
Foothill's prior written consent.
7.19. No Prohibited Transactions Under ERISA.
Directly or indirectly:
(a) engage, or permit any Subsidiary of Borrower to engage, in any
prohibited transaction which is reasonably likely to result in a civil penalty
or excise tax described in Sections 406 of ERISA or 4975 of the IRC for which a
statutory or class exemption is not available or a private exemption has not
been previously obtained from the Department of Labor;
(b) permit to exist with respect to any Benefit Plan any accumulated
funding deficiency (as defined in Sections 302 of ERISA and 412 of the IRC),
whether or not waived;
(c) fail, or permit any Subsidiary of Borrower to fail, to pay timely
required contributions or annual installments due with respect to any waived
funding deficiency to any Benefit Plan;
(d) terminate, or permit any Subsidiary of Borrower to terminate, any
Benefit Plan where such event would result in any liability of Borrower, any of
its Subsidiaries or any ERISA Affiliate under Title IV of ERISA;
(e) fail, or permit any Subsidiary of Borrower to fail, to make any
required contribution or payment to any Multiemployer Plan;
(f) fail, or permit any Subsidiary of Borrower to fail, to pay any required
installment or any other payment required under Section 412 of the IRC on or
before the due date for such installment or other payment;
(g) amend, or permit any Subsidiary of Borrower to amend, a Plan resulting
in an increase in current liability for the plan year such that Borrower, any
Subsidiary of Borrower or any ERISA Affiliate is required to provide security to
such Plan under Section 401(a)(29) of the IRC; or
(h) withdraw, or permit any Subsidiary of Borrower to withdraw, from any
Multiemployer Plan where such withdrawal is reasonably likely to result in any
liability of any such entity under Title IV of ERISA;
which, individually or in the aggregate, results in or reasonably would be
expected to result in a claim against or liability of Borrower, any of its
Subsidiaries or any ERISA Affiliate in excess of $100,000.
7.20. Financial Covenants.
Fail to maintain EBITDA of at least (i) negative $100,000 for the fiscal
quarter ending on the Sunday closest to December 31, 2000; (ii) $1,400,000 for
the fiscal quarter ending on the Sunday closest to March 31, 2001; (iii)
$1,900,000 for the fiscal quarter ending on the Sunday closest to June 30, 2001;
and (iv) $1,100,000 for the fiscal quarter ending on the Sunday closest to
September 30, 2001. For each fiscal quarter ending after the Sunday closest to
September 30, 2001, Companies shall maintain EBITDA at a level to be determined
by Foothill, which level will be based on Companies' projections (but in no
event shall EBITDA for any fiscal quarter be less than the level of EBITDA
required for the corresponding fiscal quarter in the immediate preceding fiscal
year).
Companies agree to deliver to Foothill projections for each fiscal year
prior to the beginning of such fiscal year and such projections shall be in form
and substance acceptable to Foothill.
8. EVENTS OF DEFAULT.
Any one or more of the following events shall constitute an event of
default (each, an "Event of Default") under this Agreement:
8.1. If Borrower fails to pay when due and payable or when declared due and
payable, any portion of the Obligations (whether of principal, interest
(including any interest which, but for the provisions of the Bankruptcy Code,
would have accrued on such amounts), fees and charges due Foothill,
reimbursement of Foothill Expenses, or other amounts constituting Obligations);
8.2. (a) If Borrower fails or neglects to perform, keep or observe any
term, provision, condition, covenant or agreement contained in Sections 6.1
(Accounting System), 6.2 (Collateral Reporting), 6.3 (Financial Statements,
Reports, Certificates), 6.4 (Tax Returns), 6.7 (Title to Equipment), 6.8
(Maintenance of Equipment), 6.12 (Location of Inventory and Equipment), 6.13
(Compliance with Laws), 6.14 (Employee Benefits) or 6.15 (Leases) of this
Agreement and such failure continues for a period of 5 Business Days; or (b) if
Borrower or any other Obligor fails or neglects to perform, keep, or observe any
other term, provision, condition, covenant or agreement contained in this
Agreement, or in any of the other Loan Documents; in each case, other than any
such term, provision, condition, covenant, or agreement that is the subject of
another provision of this Section 8, in which event such other provision of this
Section 8 shall govern; provided, that during any period of time that any such
failure or neglect of Borrower or such other Obligor referred to in this
paragraph exists, even if such failure or neglect is not yet an Event of Default
by virtue of the existence of a grace or cure period or the pre-condition of the
giving of a notice, Foothill shall not be required during such period to make
Advances to Borrower.
8.3. If there is a Material Adverse Change;
8.4. If any material portion of Borrower's properties or assets is
attached, seized, subjected to a writ or distress warrant, or is levied upon, or
comes into the possession of any third Person;
8.5. If an Insolvency Proceeding is commenced by Borrower;
8.6. If an Insolvency Proceeding is commenced against Borrower and any of
the following events occur: (a) Borrower consents to the institution of the
Insolvency Proceeding against it; (b) the petition commencing the Insolvency
Proceeding is not timely controverted; (c) the petition commencing the
Insolvency Proceeding is not dismissed within 60 calendar days of the date of
the filing thereof; provided, however, that, during the pendency of such period,
Foothill shall be relieved of its obligation to extend credit hereunder; (d) an
interim trustee is appointed to take possession of all or a substantial portion
of the properties or assets of, or to operate all or any substantial portion of
the business of, Borrower; or (e) an order for relief shall have been issued or
entered therein;
8.7. If Borrower is enjoined, restrained, or in any way prevented by court
order from continuing to conduct all or any material part of its business
affairs;
8.8. If a notice of Lien, levy, or assessment is filed of record with
respect to any of Borrower's properties or assets by the United States
Government, or any department, agency, or instrumentality thereof, or by any
state, county, municipal, or governmental agency, or if any taxes or debts owing
at any time hereafter to any one or more of such entities becomes a Lien,
whether xxxxxx or otherwise, upon any of Borrower's properties or assets and the
same is not paid on the payment date thereof;
8.9. If a judgment or other claim in excess of $50,000 becomes a Lien or
encumbrance upon any material portion of Borrower's properties or assets;
8.10. If there is a default under any of the agreements between General
Motors Acceptance Corporation or any of its Affiliates, on the one hand, and
Borrower, on the other hand; or if there is a default under any other material
agreement to which Borrower is a party with one or more third Persons and such
default (a) occurs at the final maturity of the obligations thereunder, or (b)
results in a right by such third Person(s), irrespective of whether exercised,
to accelerate the maturity of Borrower's obligations thereunder; or if any of
the Intercreditor Agreements is terminated;
8.11. If Borrower makes any payment on account of Indebtedness that has
been contractually subordinated in right of payment to the payment of the
Obligations, except to the extent such payment is permitted by the terms of the
subordination provisions applicable to such Indebtedness;
8.12. If any warranty, representation, statement, or report made to
Foothill by Borrower or any officer, employee, agent, or director of Borrower,
is untrue or misleading in any material respect when made, or if any such
warranty or representation is withdrawn; or
8.13. If the obligation of any guarantor under its guaranty or other third
Person under any Loan Document is limited or terminated by operation of law or
by the guarantor or other third Person thereunder, or any such guarantor or
other third Person becomes the subject of an Insolvency Proceeding.
9. FOOTHILL'S RIGHTS AND REMEDIES.
9.1. Rights and Remedies.
Upon the occurrence, and during the continuation, of an Event of Default
Foothill may, at its election, without notice of its election and without
demand, do any one or more of the following, all of which are authorized by
Borrower:
(a) Declare all Obligations, whether evidenced by this Agreement, by any of
the other Loan Documents, or otherwise, immediately due and payable;
(b) Cease advancing money or extending credit to or for the benefit of
Borrower under this Agreement, under any of the Loan Documents, or under any
other agreement between Borrower and Foothill;
(c) Terminate this Agreement and any of the other Loan Documents as to any
future liability or obligation of Foothill, but without affecting Foothill's
rights and security interests in the Collateral and without affecting the
Obligations;
(d) Settle or adjust disputes and claims directly with Account Debtors for
amounts and upon terms which Foothill considers advisable, and in such cases,
Foothill will credit Borrower's Loan Account with only the net amounts received
by Foothill in payment of such disputed Accounts after deducting all Foothill
Expenses incurred or expended in connection therewith;
(e) Cause Borrower to hold all returned Inventory in trust for Foothill,
segregate all returned Inventory from all other property of Borrower or in
Borrower's possession and conspicuously label said returned Inventory as the
property of Foothill;
(f) Without notice to or demand upon Borrower or any guarantor, make such
payments and do such acts as Foothill considers necessary or reasonable to
protect its security interests in the Collateral. Borrower agrees to assemble
the Collateral if Foothill so requires, and to make the Collateral available to
Foothill as Foothill may designate. Borrower authorizes Foothill to enter the
premises where the Collateral is located, to take and maintain possession of the
Collateral, or any part of it, and to pay, purchase, contest, or compromise any
encumbrance, charge, or Lien that in Foothill's determination appears to
conflict with its security interests and to pay all expenses incurred in
connection therewith. With respect to any of Borrower's owned or leased
premises, Borrower hereby grants Foothill a license to enter into possession of
such premises and to occupy the same, without charge, in order to exercise any
of Foothill's rights or remedies provided herein, at law, in equity, or
otherwise;
(g) Without notice to Borrower (such notice being expressly waived), and
without constituting a retention of any collateral in satisfaction of an
obligation (within the meaning of Section 9505 of the Code), set off and apply
to the Obligations any and all (i) balances and deposits of Borrower held by
Foothill (including any amounts received in the Lockbox Accounts), or (ii)
indebtedness at any time owing to or for the credit or the account of Borrower
held by Foothill;
(h) Hold, as cash collateral, any and all balances and deposits of Borrower
held by Foothill, and any amounts received in the Lockbox Accounts, to secure
the full and final repayment of all of the Obligations;
(i) Ship, reclaim, recover, store, finish, maintain, repair, prepare for
sale, advertise for sale, and sell (in the manner provided for herein) the
Collateral. Foothill is hereby granted a license or other right to use, without
charge, Borrower's labels, patents, copyrights, rights of use of any name, trade
secrets, trade names, trademarks, service marks, and advertising matter, or any
property of a similar nature, as it pertains to the Collateral, in completing
production of, advertising for sale, and selling any Collateral and Borrower's
rights under all licenses and all franchise agreements shall inure to Foothill's
benefit;
(j) Sell the Collateral at either a public or private sale, or both, by way
of one or more contracts or transactions, for cash or on terms, in such manner
and at such places (including Borrower's premises) as Foothill determines is
commercially reasonable. It is not necessary that the Collateral be present at
any such sale;
(k) Foothill shall give notice of the disposition of the Collateral as
follows:
(i) Foothill shall give Borrower and each holder of a security
interest in the Collateral who has filed with Foothill a written
request for notice, a notice in writing of the time and place of
public sale, or, if the sale is a private sale or some other
disposition other than a public sale is to be made of the
Collateral, then the time on or after which the private sale or
other disposition is to be made;
(ii) The notice shall be personally delivered or mailed, postage
prepaid, to Borrower as provided in Section 12, at least 10 days
before the date fixed for the sale, or at least 10 days before
the date on or after which the private sale or other disposition
is to be made; no notice needs to be given prior to the
disposition of any portion of the Collateral that is perishable
or threatens to decline speedily in value or that is of a type
customarily sold on a recognized market. Notice to Persons other
than Borrower claiming an interest in the Collateral shall be
sent to such addresses as they have furnished to Foothill;
(iii)If the sale is to be a public sale, Foothill also shall give
notice of the time and place by publishing a notice one time at
least 10 days before the date of the sale in a newspaper of
general circulation in the county in which the sale is to be
held;
(l) Foothill may credit bid and purchase at any public sale; and
(m) Any deficiency that exists after disposition of the Collateral as
provided above will be paid immediately by Borrower. Any excess will be
returned, without interest and subject to the rights of third Persons, by
Foothill to Borrower.
9.2. Remedies Cumulative.
Foothill's rights and remedies under this Agreement, the Loan Documents,
and all other agreements shall be cumulative. Foothill shall have all other
rights and remedies not inconsistent herewith as provided under the Code, by
law, or in equity. No exercise by Foothill of one right or remedy shall be
deemed an election, and no waiver by Foothill of any Event of Default shall be
deemed a continuing waiver. No delay by Foothill shall constitute a waiver,
election, or acquiescence by it.
10. TAXES AND EXPENSES.
If Borrower fails to pay any monies (whether taxes, assessments, insurance
premiums, or, in the case of leased properties or assets, rents or other amounts
payable under such leases) due to third Persons, or fails to make any deposits
or furnish any required proof of payment or deposit, all as required under the
terms of this Agreement, then, to the extent that Foothill determines that such
failure by Borrower could result in a Material Adverse Change, in its discretion
and without prior notice to Borrower, Foothill may do any or all of the
following: (a) make payment of the same or any part thereof; (b) set up such
reserves in Borrower's Loan Account as Foothill deems necessary to protect
Foothill from the exposure created by such failure; or (c) obtain and maintain
insurance policies of the type described in Section 6.10, and take any action
with respect to such policies as Foothill deems prudent. Any such amounts paid
by Foothill shall constitute Foothill Expenses. Any such payments made by
Foothill shall not constitute an agreement by Foothill to make similar payments
in the future or a waiver by Foothill of any Event of Default under this
Agreement. Foothill need not inquire as to, or contest the validity of, any such
expense, tax, or Lien and the receipt of the usual official notice for the
payment thereof shall be conclusive evidence that the same was validly due and
owing.
11. WAIVERS; INDEMNIFICATION.
11.1. Demand; Protest; etc.
Borrower waives demand, protest, notice of protest, notice of default or
dishonor, notice of payment and nonpayment, nonpayment at maturity, release,
compromise, settlement, extension, or renewal of accounts, documents,
instruments, chattel paper, and guarantees at any time held by Foothill on which
Borrower may in any way be liable.
11.2. Foothill's Liability for Collateral.
So long as Foothill complies with its obligations, if any, under Section
9207 of the Code, Foothill shall not in any way or manner be liable or
responsible for: (a) the safekeeping of the Collateral; (b) any loss or damage
thereto occurring or arising in any manner or fashion from any cause; (c) any
diminution in the value thereof; or (d) any act or default of any carrier,
warehouseman, bailee, forwarding agency, or other Person. All risk of loss,
damage, or destruction of the Collateral shall be borne by Borrower.
11.3. Indemnification.
Borrower shall pay, indemnify, defend, and hold Foothill, each Participant
and each of their respective officers, directors, employees, counsel, agents,
and attorneys-in-fact (each, an "Indemnified Person") harmless (to the fullest
extent permitted by law) from and against any and all claims, demands, suits,
actions, investigations, proceedings, and damages, and all reasonable attorneys
fees and disbursements and other costs and expenses actually incurred in
connection therewith (as and when they are incurred and irrespective of whether
suit is brought), at any time asserted against, imposed upon, or incurred by any
of them in connection with or as a result of or related to the execution,
delivery, enforcement, performance, and administration of this Agreement and any
other Loan Documents or the transactions contemplated herein, and with respect
to any investigation, litigation, or proceeding related to this Agreement, any
other Loan Document, or the use of the proceeds of the credit provided hereunder
(irrespective of whether any Indemnified Person is a party thereto), or any act,
omission, event or circumstance in any manner related thereto (all the
foregoing, collectively, the "Indemnified Liabilities"). Borrower shall not have
any obligation to any Indemnified Person under this Section 11.3 with respect to
any Indemnified Liability that a court of competent jurisdiction finally
determines to have resulted from the gross negligence or willful misconduct of
such Indemnified Person. This provision shall survive the termination of this
Agreement and the repayment of the Obligations.
12. NOTICES.
Unless otherwise provided in this Agreement, all notices or demands by any
party relating to this Agreement or any other Loan Document shall be in writing
and (except for financial statements and other informational documents which may
be sent by first-class mail, postage prepaid) shall be personally delivered or
sent by registered or certified mail (postage prepaid, return receipt
requested), overnight courier, or facsimile to Borrower or to Foothill, as the
case may be, at its address set forth below:
If to Borrower: TECSTAR, LLC
c/o Starcraft Corporation
0000 Xxxxxxx Xxxxxx
Xxxxxx, Xxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxxxxxx
Fax No. (000) 000-0000
with copies to: XXXXXX & XXXXXXXXX
000 Xxxx Xxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attn: Xxxx X. Xxxxxxx
Fax No. (000) 000-0000
If to Foothill: FOOTHILL CAPITAL CORPORATION
0000 Xxxxxxxx Xxxxxx
Xxxxx 0000 Xxxx
Xxxxx Xxxxxx, Xxxxxxxxxx 00000
Attn: Business Finance Division Manager
Fax No. (000) 000-0000
with copies to: GOLDBERG, KOHN, BELL, BLACK,
XXXXXXXXXX & MORITZ, LTD.
00 Xxxx Xxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxx Xxxxxxx, Esq.
Fax No. (000) 000-0000
The parties hereto may change the address at which they are to receive
notices hereunder, by notice in writing in the foregoing manner given to the
other. All notices or demands sent in accordance with this Section 12, other
than notices by Foothill in connection with Sections 9504 or 9505 of the Code,
shall be deemed received on the earlier of the date of actual receipt or 3 days
after the deposit thereof in the mail. Borrower acknowledges and agrees that
notices sent by Foothill in connection with Sections 9504 or 9505 of the Code
shall be deemed sent when deposited in the mail or personally delivered, or,
where permitted by law, transmitted facsimile or other similar method set forth
above.
13. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.
THE VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS
(UNLESS EXPRESSLY PROVIDED TO THE CONTRARY IN AN ANOTHER LOAN DOCUMENT), THE
CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT HEREOF AND THEREOF, AND THE RIGHTS
OF THE PARTIES HERETO AND THERETO WITH RESPECT TO ALL MATTERS ARISING HEREUNDER
OR THEREUNDER OR RELATED HERETO OR THERETO SHALL BE DETERMINED UNDER, GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF ILLINOIS. THE
PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION WITH THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE TRIED AND LITIGATED ONLY IN THE
STATE AND FEDERAL COURTS LOCATED IN THE COUNTY OF XXXX, STATE OF ILLINOIS OR, AT
THE SOLE OPTION OF FOOTHILL, IN ANY OTHER COURT IN WHICH FOOTHILL SHALL INITIATE
LEGAL OR EQUITABLE PROCEEDINGS AND WHICH HAS SUBJECT MATTER JURISDICTION OVER
THE MATTER IN CONTROVERSY. EACH OF BORROWER AND FOOTHILL WAIVES, TO THE EXTENT
PERMITTED UNDER APPLICABLE LAW, ANY RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE
OF FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS
BROUGHT IN ACCORDANCE WITH THIS SECTION 13. BORROWER AND FOOTHILL HEREBY WAIVE
THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED
UPON OR ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS
CONTEMPLATED THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY
CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS. EACH OF BORROWER AND
FOOTHILL REPRESENTS THAT IT HAS REVIEWED THIS WAIVER AND EACH KNOWINGLY AND
VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL
COUNSEL. IN THE EVENT OF LITIGATION, A COPY OF THIS AGREEMENT MAY BE FILED AS A
WRITTEN CONSENT TO A TRIAL BY THE COURT.
14. DESTRUCTION OF BORROWER'S DOCUMENTS.
All documents, schedules, invoices, agings, or other papers delivered to
Foothill may be destroyed or otherwise disposed of by Foothill 4 calendar months
after they are delivered to or received by Foothill, unless Borrower requests,
in writing, the return of said documents, schedules, or other papers and makes
arrangements, at Borrower's expense, for their return.
15. GENERAL PROVISIONS.
15.1. Effectiveness.
This Agreement shall be binding and deemed effective when executed by each
Borrower and Foothill.
15.2. Successors and Assigns.
This Agreement shall bind and inure to the benefit of the respective
successors and assigns of each of the parties; provided, however, that Borrower
may not assign this Agreement or any rights or duties hereunder without
Foothill's prior written consent and any prohibited assignment shall be
absolutely void. No consent to an assignment by Foothill shall release Borrower
from its Obligations. Foothill may assign this Agreement and its rights and
duties hereunder and no consent or approval by Borrower is required in
connection with any such assignment. Foothill reserves the right to sell,
assign, transfer, negotiate, or grant participations in all or any part of, or
any interest in Foothill's rights and benefits hereunder. In connection with any
such assignment or participation, Foothill may disclose all documents and
information which Foothill now or hereafter may have relating to Borrower or
Borrower's business. To the extent that Foothill assigns its rights and
obligations hereunder to a third Person, Foothill thereafter shall be released
from such assigned obligations to Borrower.
15.3. Section Headings.
Headings and numbers have been set forth herein for convenience only.
Unless the contrary is compelled by the context, everything contained in each
Section applies equally to this entire Agreement.
15.4. Interpretation.
Neither this Agreement nor any uncertainty or ambiguity herein shall be
construed or resolved against Foothill or Borrower, whether under any rule of
construction or otherwise. On the contrary, this Agreement has been reviewed by
all parties and shall be construed and interpreted according to the ordinary
meaning of the words used so as to fairly accomplish the purposes and intentions
of all parties hereto.
15.5. Severability of Provisions.
Each provision of this Agreement shall be severable from every other
provision of this Agreement for the purpose of determining the legal
enforceability of any specific provision.
15.6. Amendments in Writing.
This Agreement can only be amended by a writing signed by both Foothill and
Borrower.
15.7. Counterparts; Facsimile Execution.
This Agreement may be executed in any number of counterparts and by
different parties on separate counterparts, each of which, when executed and
delivered, shall be deemed to be an original, and all of which, when taken
together, shall constitute but one and the same Agreement. Delivery of an
executed counterpart of this Agreement by facsimile shall be equally as
effective as delivery of an original executed counterpart of this Agreement. Any
party delivering an executed counterpart of this Agreement by facsimile also
shall deliver an original executed counterpart of this Agreement but the failure
to deliver an original executed counterpart shall not affect the validity,
enforceability, and binding effect of this Agreement.
15.8. Revival and Reinstatement of Obligations.
If the incurrence or payment of the Obligations by Borrower or any
guarantor of the Obligations or the transfer by either or both of such parties
to Foothill of any property of either or both of such parties should for any
reason subsequently be declared to be void or voidable under any state or
federal law relating to creditors' rights, including provisions of the
Bankruptcy Code relating to fraudulent conveyances, preferences, and other
voidable or recoverable payments of money or transfers of property
(collectively, a "Voidable Transfer"), and if Foothill is required to repay or
restore, in whole or in part, any such Voidable Transfer, or elects to do so
upon the reasonable advice of its counsel, then, as to any such Voidable
Transfer, or the amount thereof that Foothill is required or elects to repay or
restore, and as to all reasonable costs, expenses, and attorneys fees of
Foothill related thereto, the liability of Borrower or such guarantor
automatically shall be revived, reinstated, and restored and shall exist as
though such Voidable Transfer had never been made.
15.9. Integration.
This Agreement, together with the other Loan Documents, reflects the entire
understanding of the parties with respect to the transactions contemplated
hereby and shall not be contradicted or qualified by any other agreement, oral
or written, before the date hereof.
16. AMENDMENT AND RESTATEMENT OF OLD LOAN AGREEMENT; CONTINUATION OF
SECURITY INTERESTS
Upon the date hereof, this Agreement will amend and restate the Old Loan
Agreement. This Agreement is in no way intended, nor shall it be construed, to
affect, impair or extinguish the creation, attachment, perfection or priority of
the security interests in, and other Liens on, the "Collateral" (as defined in
the Old Loan Agreement) in favor of Foothill, which security interests and other
Liens Borrower, by this Agreement, acknowledges, reaffirms and confirms to
Foothill.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in Chicago, Illinois.
TECSTAR, LLC,
an Indiana corporation
By /s/ Xxxxxxx X. Xxxxxxxxxx
----------------------------------------
Title Senior Vice President
--------------------------------------
FOOTHILL CAPITAL CORPORATION,
a California corporation
By /s/ Xxxxxxx X. XxXxxx
----------------------------------------
Title Vice President
--------------------------------------
