AMENDED AND RESTATED
CREDIT AGREEMENT
among
XXXXXXXXXX INDUSTRIES, INC.
as Borrower
THE LENDERS NAMED HEREIN,
as Lenders
KEYBANK NATIONAL ASSOCIATION,
as Administrative Lender
as L/C Bank
as Swingline Lender
and
XXXXXX FINANCIAL, INC.,
as Syndication Agent
TOTAL COMMITMENT -- $40,000,000
April 8, 1999
CONTENTS
ARTICLE I. DEFINITIONS ................................................... 1
---------
SECTION 1.1 DEFINED TERMS ............................................ 1
SECTION 1.2 HEADINGS ................................................. 18
ARTICLE II. THE CREDITS ................................................... 19
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SECTION 2.1 REVOLVING CREDITS ........................................ 19
SECTION 2.2 LETTER OF CREDIT FACILITY ................................ 21
SECTION 2.3 INTEREST/FEES ............................................ 24
SECTION 2.4 INTEREST OPTIONS ......................................... 25
SECTION 2.5 OTHER PAYMENT TERMS ...................................... 26
SECTION 2.6 FUNDING .................................................. 27
SECTION 2.7 PRO RATA TREATMENT ....................................... 28
SECTION 2.8 CHANGE OF CIRCUMSTANCES .................................. 29
SECTION 2.9 TAXES ON PAYMENTS ........................................ 31
SECTION 2.10 DUTY TO MITIGATE, ASSIGNMENT OF COMMITMENTS
UNDER CERTAIN CIRCUMSTANCES .............................. 32
SECTION 2.11 FUNDING LOSS INDEMNIFICATION ............................. 32
SECTION 2.12 AUTHORIZED REPRESENTATIVES ............................... 33
ARTICLE III. COLLECTION AND ADMINISTRATION ................................. 34
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SECTION 3.1 CASH COLLATERAL ACCOUNT .................................. 34
SECTION 3.2 STATEMENTS ............................................... 34
SECTION 3.3 PAYMENTS ................................................. 35
PAGE i
ARTICLE IV. SECURITY ...................................................... 35
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SECTION 4.1 GRANT OF SECURITY INTEREST ............................... 35
SECTION 4.2 PERFECTION; DUTY OF CARE ................................. 35
SECTION 4.3 SUBORDINATION ............................................ 36
ARTICLE V. REPRESENTATIONS AND WARRANTIES ................................ 37
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SECTION 5.1 LEGAL STATUS; SUBSIDIARIES ............................... 37
SECTION 5.2 AUTHORIZATION AND VALIDITY ............................... 37
SECTION 5.3 NO VIOLATION ............................................. 37
SECTION 5.4 LITIGATION ............................................... 38
SECTION 5.5 CORRECTNESS OF FINANCIAL STATEMENT ....................... 38
SECTION 5.6 TAXES .................................................... 38
SECTION 5.7 NO SUBORDINATION ......................................... 38
SECTION 5.8 ERISA .................................................... 38
SECTION 5.9 OTHER OBLIGATIONS ........................................ 39
SECTION 5.10 ENVIRONMENTAL MATTERS .................................... 39
SECTION 5.11 LIENS .................................................... 39
SECTION 5.12 NO BURDENSOME RESTRICTIONS; NO DEFAULTS .................. 39
SECTION 5.13 NO OTHER VENTURES ........................................ 39
SECTION 5.14 INVESTMENT COMPANY ACT ................................... 40
SECTION 5.15 INSURANCE ................................................ 40
SECTION 5.16 LABOR MATTERS ............................................ 40
SECTION 5.17 FORCE MAJEURE ............................................ 41
PAGE ii
SECTION 5.18 INTELLECTUAL PROPERTY .................................... 41
SECTION 5.19 CERTAIN INDEBTEDNESS ..................................... 41
SECTION 5.20 SOLVENCY ................................................. 41
SECTION 5.21 TRUTH, ACCURACY OF INFORMATION ........................... 42
SECTION 5.22 CHIEF EXECUTIVE OFFICE AND OTHER LOCATIONS ............... 42
SECTION 5.23 ACCOUNTS ................................................. 42
SECTION 5.24 FISCAL YEAR .............................................. 42
ARTICLE VI. CONDITIONS .................................................... 42
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SECTION 6.1 CONDITIONS OF INITIAL EXTENSION OF CREDIT ................ 42
SECTION 6.2 CONDITIONS OF EACH EXTENSION OF CREDIT ................... 44
ARTICLE VII. AFFIRMATIVE COVENANTS ......................................... 45
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SECTION 7.1 PUNCTUAL PAYMENTS ........................................ 45
SECTION 7.2 ACCOUNTING RECORDS ....................................... 45
SECTION 7.3 FINANCIAL STATEMENTS AND REPORTS ......................... 45
SECTION 7.4 COMPLIANCE ............................................... 47
SECTION 7.5 INSURANCE ................................................ 47
SECTION 7.6 FACILITIES ............................................... 48
SECTION 7.7 TAXES AND OTHER LIABILITIES .............................. 48
SECTION 7.8 LITIGATION ............................................... 49
SECTION 7.9 NOTICE TO ADMINISTRATIVE LENDER .......................... 49
PAGE iii
SECTION 7.10 CONDUCT OF BUSINESS ...................................... 49
SECTION 7.11 PRESERVATION OF CORPORATE EXISTENCE, ETC. ................ 50
SECTION 7.12 ACCESS ................................................... 50
SECTION 7.13 PERFORMANCE AND COMPLIANCE WITH OTHER COVENANTS........... 51
SECTION 7.14 FISCAL YEAR; ACCOUNTING PRACTICES ........................ 51
SECTION 7.15 ENVIRONMENTAL ............................................ 51
SECTION 7.16 FINANCIAL CONDITION ...................................... 51
SECTION 7.17 LIENS .................................................... 53
SECTION 7.18 INTEREST RATE PROTECTION ................................. 53
SECTION 7.19 FURTHER ASSURANCES ....................................... 53
ARTICLE VIII. NEGATIVE COVENANTS ........................................... 54
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SECTION 8.1 LIENS .................................................... 54
SECTION 8.2 INDEBTEDNESS ............................................. 54
SECTION 8.3 RESTRICTED PAYMENTS, REDEMPTIONS ......................... 55
SECTION 8.4 MERGERS, STOCK ISSUANCES, SALE OF ASSETS, ETC. ........... 55
SECTION 8.5 INVESTMENTS IN OTHER PERSONS ............................. 56
SECTION 8.6 CHANGE IN NATURE OF BUSINESS ............................. 57
SECTION 8.7 GUARANTIES ............................................... 57
SECTION 8.8 PLANS .................................................... 57
SECTION 8.9 CANCELLATION OF INDEBTEDNESS OWED TO IT .................. 57
PAGE iv
SECTION 8.10 MARGIN REGULATIONS ....................................... 57
SECTION 8.11 ENVIRONMENTAL ............................................ 57
SECTION 8.12 TRANSACTIONS WITH AFFILIATES ............................. 58
SECTION 8.13 NEW COLLATERAL LOCATION; NAME CHANGE ..................... 58
ARTICLE IX. EVENTS OF DEFAULT ............................................. 58
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SECTION 9.1 EVENTS OF DEFAULT ........................................ 58
SECTION 9.2 REMEDIES ................................................. 62
SECTION 9.3 ADMINISTRATIVE LENDER AS BORROWER'S ATTORNEY ............. 64
ARTICLE X. ADMINISTRATIVE LENDER ......................................... 65
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SECTION 10.1 AUTHORIZATION AND ACTION ................................. 65
SECTION 10.2 RELIANCE BY ADMINISTRATIVE LENDER ........................ 66
SECTION 10.3 DEFAULTS ................................................. 66
SECTION 10.4 INDEMNIFICATION .......................................... 66
SECTION 10.5 NON-RELIANCE ON ADMINISTRATIVE LENDER .................... 67
SECTION 10.6 SUCCESSOR ADMINISTRATIVE LENDER .......................... 68
SECTION 10.7 ADMINISTRATIVE LENDER IN ITS INDIVIDUAL CAPACITY........... 68
SECTION 10.8 MATTERS REGARDING COLLATERAL ............................. 68
SECTION 10.9 AGENCY FOR PERFECTION .................................... 69
SECTION 10.10 EXERCISE OF REMEDIES ..................................... 70
SECTION 10.11 SYNDICATION AGENT ........................................ 70
PAGE v
ARTICLE XI. MISCELLANEOUS ................................................. 70
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SECTION 11.1 NOTICES .................................................. 70
SECTION 11.2 COSTS, EXPENSES, ATTORNEYS' FEES ......................... 71
SECTION 11.3 INDEMNIFICATION .......................................... 71
SECTION 11.4 WAIVERS, AMENDMENTS ...................................... 72
SECTION 11.5 SUCCESSORS AND ASSIGNS ................................... 73
SECTION 11.6 SETOFF ................................................... 76
SECTION 11.7 NO WAIVER; CUMULATIVE REMEDIES ........................... 76
SECTION 11.8 ENTIRE AGREEMENT, AMENDMENT .............................. 77
SECTION 11.9 NO THIRD PARTY BENEFICIARIES ............................. 77
SECTION 11.10 TIME ..................................................... 77
SECTION 11.11 SEVERABILITY OF PROVISIONS ............................... 77
SECTION 11.12 GOVERNING LAW ............................................ 77
SECTION 11.13 SUBMISSION TO JURISDICTION ............................... 77
SECTION 11.14 WAIVER OF JURY TRIAL ..................................... 78
SECTION 11.15 COUNTERPARTS ............................................. 78
SECTION 11.16 OREGON STATUTORY NOTICE .................................. 79
SCHEDULES
I Lenders
II Disclosure Schedule
III. Pricing Schedule
EXHIBITS
A Borrowing Base Certificate
B Note
C Notice of Borrowing
D Letter of Credit Request
E Notice of Conversion or Continuation
F Notice of Authorized Representatives
G Form of Chief Financial Officer's Certificate
H Assignment Agreement
I Excluded Equipment
PAGE vi
AMENDED AND RESTATED CREDIT AGREEMENT
THIS AMENDED AND RESTATED CREDIT AGREEMENT is entered into as of April 8,
1999, by and among XXXXXXXXXX INDUSTRIES, INC., an Oregon corporation,
("Borrower"), each of the financial institutions from time to time listed on
Schedule I attached hereto, as amended from time to time (collectively
"Lenders"), KEYBANK NATIONAL ASSOCIATION ("KeyBank"), as the administrator for
the Lenders (in such capacity, "Administrative Lender"), and XXXXXX FINANCIAL,
INC., a Delaware corporation ("Xxxxxx"), as Syndication Agent.
RECITALS
Borrower and KeyBank are parties to that certain Credit Agreement dated
March 31, 1998 as amended by the First, Second and Third Amendments thereto
(collectively, "Existing Credit Agreement"). Borrower has requested that the
Existing Credit Agreement be amended in certain respects and has requested the
credit facilities described herein.
KeyBank has elected to assign certain of its rights under the Existing
Credit Agreement and desires to evidence those assignments in the form of this
Agreement.
Lenders and Administrative Lender have agreed to continue the credit
facilities described in the Existing Credit Agreement provided they are amended
and restated in the manner set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and promises of
the parties contained herein, Administrative Lender, Lenders and Borrower hereby
amend and restate the Existing Credit Agreement in its entirety to read as
follows:
ARTICLE I. DEFINITIONS
---------
SECTION 1.1 DEFINED TERMS
All terms defined above shall have the meanings set forth above. Any
accounting term used in this Agreement that is not specifically defined herein
shall have the meaning customarily given to it under GAAP, and all other terms
contained in this Agreement that are not defined herein shall, unless the
context indicates otherwise, have the meanings provided in the Code to the
extent such terms are defined therein. The following terms shall have the
meanings set forth below (with all
PAGE 1
such meanings to be equally applicable to both the singular and plural forms of
the terms defined):
"Accounts" shall have the meaning attributed to the term "accounts" in the
Code and shall include, without limitation, all presently existing and hereafter
arising rights to payment for goods sold or leased or for services rendered,
which are not evidenced by instruments or chattel paper, whether or not they
have been earned by performance.
"Administrative Lender's Office" means (i) initially, Administrative
Lender's office designated as such in Schedule I hereto, and (ii) subsequently,
such other office designated as such in writing by Administrative Lender to
Lenders and Borrower.
"Agreement" means this Credit Agreement as amended, modified or
supplemented from time to time.
"Applicable Lending Office" means, with respect to each Lender, (i)
initially, its office designated as such in Schedule I hereto, and (ii)
subsequently, such other office designated as such in writing by such Lender to
Administrative Lender.
"Authorized Representative" means a person designated by Borrower on the
most current Notice of Authorized Representatives delivered by Borrower to
Administrative Lender as being authorized to request any borrowing or make any
interest rate selection on behalf of Borrower hereunder, or to give
Administrative Lender any other notice hereunder which is required by the terms
hereof to be made through an Authorized Representative.
"Available Credit" means, at any time, the amount by which the aggregate of
the outstanding principal amount of the Loans at such time and the Letter of
Credit Obligations at such time is less than the lesser of (a) the Total
Commitments or (b) the Borrowing Base.
"Bankruptcy Code" means the Bankruptcy Reform Act, Title 11 of the United
States Code, as amended or recodified from time to time, including (unless the
context otherwise requires) any rules or regulations promulgated thereunder.
"Borrowing Base" means, as of any date of determination, an amount equal to
the following amount:
(a) 85% of an amount equal to (i) the face amount of the most recently
reported outstanding Eligible Accounts less (ii) returns, discounts,
PAGE 2
claims, credits and allowances of any nature at any time issued, owing,
granted, outstanding, available or claimed with respect thereto;
(b) plus the lesser of (i) $9,000,000 ("Inventory Sublimit") or
(ii) 50% of the most recently reported amount of Eligible Inventory valued
at the lower of cost (determined on a "first in, first out" basis) or
market value; and
(c) less all Borrowing Base Reserves.
"Borrowing Base Certificate" means a certificate substantially in the form
of Exhibit A attached hereto.
"Borrowing Base Reserves" means, as of any date of determination, such
amounts (expressed as either a specified amount or as a percentage of a
specified category or item) as either (a) Administrative Lender, in its Good
Faith discretion, may, or (b) Administrative Lender, at the direction of
Majority Lenders (in their Good Faith discretion) shall, from time to time
establish in determining the Borrowing Base to reflect contingencies or risks
which may affect the Collateral, the business, business prospects or financial
condition of Borrower, or the security of the loans made hereunder.
"Business Day" means (a) for all purposes other than as covered by clause
(b) below, any day other than a Saturday, Sunday or other day on which
commercial banks are authorized or required to be closed in Portland, Oregon,
Seattle, Washington or Cleveland, Ohio, and (b) with respect to all notices,
determinations, fundings and payments in connection with any LIBOR interest
selection or LIBOR Loan, any day that is a Business Day described in clause (a)
above and that also is a day for trading by and between banks in U.S. dollar
deposits in the London interbank eurocurrency market.
"Capitalized Lease" means, as to any Person, any lease of property by such
Person as lessee that would be capitalized on a balance sheet of such Person
prepared in accordance with GAAP.
"Capitalized Lease Obligations" means, as to any Person, the capitalized
amount of all obligations of such Person and its subsidiaries under Capitalized
Leases, as determined on a consolidated basis in accordance with GAAP.
"Cash Collateral Account" has the meaning set forth in Section 3.1.
"Change of Law" means the adoption of any Governmental Rule, any change in
any Governmental Rule or the application or requirements thereof (whether such
PAGE 3
change occurs in accordance with the terms of such Governmental Rule as enacted,
as a result of amendment or otherwise), any change in the interpretation or
administration of any Governmental Rule by any Governmental Authority, or
compliance by any Lender (or any entity controlling a Lender) with any request,
guideline or directive (whether or not having the force of law) of any
Governmental Authority.
"Closing Date" means the date of this Agreement.
"Code" means the Uniform Commercial Code of the State of Oregon as amended
from time to time.
"Collateral" means (a) all of Borrower's property and rights in and to
property, including, without limitation, all Rights to Payment, Inventory,
General Intangibles, Equipment (except the Equipment described on Exhibit I
hereto), Records, money, instruments, chattel paper, deposit accounts, documents
and investment property; (b) all products, proceeds, rents and profits of the
foregoing; and (c) all of the foregoing, whether now owned or existing or
hereafter acquired or arising or in which any Borrower now has or hereafter
acquires any rights.
"Commitment" means, as to any Lender, the obligation of such Lender to
advance credit hereunder in an aggregate principal amount and/or amount of
Letter of Credit Obligations at any one time outstanding not to exceed the
amount set opposite such Lender's name on Schedule I, as such amount may be
reduced from time to time pursuant to this Agreement or as such amount may be
adjusted pursuant to Section 11.5.
"Commodity Contracts" means commodity options, futures, swaps, and other
similar agreements and arrangements designed to provide protection against
fluctuations in commodity prices.
"Contaminant" means any pollutant, hazardous substance, toxic substance,
hazardous waste or other substance regulated or forming the basis of liability
under any Environmental Law.
"Contingent Obligation" means, as applied to any Person, any direct or
indirect liability, contingent or otherwise, of such Person with respect to any
Indebtedness or Contractual Obligation of another Person, if the purpose or
intent of such Person in incurring the Contingent Obligation is to provide
assurance to the obligee of such Indebtedness or Contractual Obligation that
such Indebtedness or Contractual Obligation will be paid or discharged, or that
any agreement entered into by such other Person relating to such Indebtedness or
Contingent Obligation will be
PAGE 4
complied with, or that any holder of such Indebtedness or Contractual Obligation
will be protected against loss in respect thereof. Contingent Obligations of a
Person include, without limitation, (a) the direct or indirect guarantee,
endorsement (other than for collection or deposit in the ordinary course of
business), co-making, discounting with recourse or sale with recourse by such
Person of an obligation of another Person, and (b) any liability of such Person
for an obligation of another Person through any agreement (contingent or
otherwise) (i) to purchase, repurchase or otherwise acquire such obligation or
any security therefor, or to provide funds for the payment or discharge of such
obligation (whether in the form of a loan, advance, stock purchase, capital
contribution or otherwise), (ii) to maintain the solvency or any balance sheet
item, level of income or financial condition of another Person, (iii) to make
take-or-pay or similar payments, if required, regardless of non-performance by
any other party or parties to an agreement, (iv) to purchase, sell or lease (as
lessor or lessee) property, or to purchase or sell services, primarily for the
purpose of enabling the debtor to make payment of such obligation or to assure
the holder of such obligation against loss, or (v) to supply funds to or in any
other manner invest in such other Person (including, without limitation, to pay
for property or services irrespective of whether such property is received or
such services are rendered), if in the case of any agreement or liability
described under subclauses (i) through (v) of this sentence the primary purpose
or intent thereof is as described in the preceding sentence. The amount of any
Contingent Obligation shall be equal to the lesser of (A) the amount payable
under such Contingent Obligation (if quantifiable), or (B) the portion of the
obligation so guaranteed or otherwise supported.
"Contractual Obligation" of any Person means any obligation, agreement,
undertaking or similar provision of any security issued by such Person or of any
agreement, undertaking, contract, lease, indenture, mortgage, deed of trust or
other instrument to which such Person is a party or by which it or any of its
property is bound or to which any of its property is subject.
"Default" means an Event of Default or an event or condition that with the
giving of notice or the passage of time, or both, would constitute an Event of
Default.
"Disclosure Schedule" means Schedule II attached hereto.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended or recodified from time to time, including (unless the context otherwise
requires) any rules or regulations promulgated thereunder.
"Eligible Accounts" means those Accounts that either Administrative Lender
determines in the Good Faith exercise of its discretion, or Majority Lenders
determine
PAGE 5
in the Good Faith exercise of their discretion, to be eligible for inclusion in
the Borrowing Base. General criteria for Eligible Accounts may be established
and revised from time to time by Administrative Lender or Majority Lenders in
Good Faith. Without limiting such discretion as to other Accounts, the following
Accounts shall not be Eligible Accounts:
(i) Accounts that do not consist of ordinary trade accounts receivable
owned by Borrower, payable in cash in United States dollars and arising out
of the final sale of Inventory or provision of services in the ordinary
course of Borrower's business as presently conducted by it;
(ii) Accounts with respect to which the services covered thereby have
not been rendered or the goods covered thereby have not been delivered to
the account debtor or its designee or with respect to which Borrower failed
to issue an original invoice at the agreed-upon purchase price to the
account debtor promptly after rendering such services or delivering such
goods to the account debtor;
(iii) Accounts that are not due and payable, absolutely and
unconditionally, within sixty (60) days from the date of the original
invoice applicable thereto;
(iv) Accounts with respect to which more than ninety (90) days have
elapsed since the date of the original invoice applicable thereto;
(v) Accounts with respect to which the account debtor is an affiliate
of Borrower or any officer, employee or agent of the account debtor is an
officer, employee or agent of or affiliated with Borrower directly or
indirectly by virtue of family membership, ownership, control, management
or otherwise;
(vi) Accounts with respect to which the account debtor is a
Governmental Authority, except for those Accounts as to which Borrower has
assigned its right to payment thereof to Administrative Lender, and the
assignment has been acknowledged, pursuant to the Assignment of Claims Act
of 1940, as amended (31 U.S.C. ss. 3727);
(vii) the chief executive office of the account debtor with respect to
such Account is not located in the United States of America, unless (A) the
account debtor has delivered to Borrower an irrevocable letter of credit
issued or confirmed by a bank satisfactory to Administrative Lender,
sufficient to cover such Account, in form and substance satisfactory to
Administrative Lender or Majority Lenders and, if required by
Administrative Lender or
PAGE 6
Majority Lenders, the original of such letter of credit has been delivered
to Administrative Lender or Administrative Lender's agent and the issuer
thereof notified of the assignment of the proceeds of such letter of credit
to Administrative Lender, (B) such Account is subject to credit insurance
payable to Administrative Lender issued by an insurer and on terms and in
an amount acceptable to Administrative Lender or Majority Lenders, (C) the
account debtor resides in a province of Canada that recognizes
Administrative Lender's perfection and enforcement rights as to Accounts by
reason of the filing of a UCC-1 in Oregon, or (D) such Account is otherwise
acceptable in all respects to Administrative Lender or Majority Lenders
(subject to such lending formula with respect thereto as Administrative
Lender or Majority Lenders may determine);
(viii) Accounts for which the prospect of payment or performance by
the account debtor is or will be impaired in the Good Faith determination
of Administrative Lender;
(ix) Accounts with respect to which Administrative Lender does not
have a valid and prior, fully perfected lien or which are not free of all
liens or other claims of all other Persons;
(x) Accounts with respect to which the account debtor is the subject
of bankruptcy or a similar insolvency proceeding, or has made an assignment
for the benefit of creditors, or whose assets have been conveyed to a
receiver or trustee, or who has failed or suspended or gone out of
business;
(xi) Accounts with respect to which the account debtor's obligation to
pay the Accounts is conditional upon the account debtor's approval;
(xii) Accounts from an account debtor to the extent (and only to the
extent) that the account debtor's indebtedness to Borrower (whether
evidenced by such Accounts or otherwise) exceeds an amount which is greater
than 20% of the face amount (less maximum discounts, credits and allowances
which may be taken by or granted to account debtors in connection
therewith) of all then outstanding Eligible Accounts;
(xiii) Accounts owed by a particular account debtor if less than 50%
of the aggregate Accounts then owed to Borrower by that account debtor and
its affiliates constitute Eligible Accounts;
PAGE 7
(xiv) Accounts of a particular account debtor in excess of a credit
limit established as to that account debtor by Borrower or by
Administrative Lender or Majority Lenders;
(xv) Accounts that represent a prepayment or progress payment or a
partial payment under an installment contract;
(xvi) Accounts that are evidenced by a promissory note or other
instrument;
(xvii) Accounts with respect to which the terms or conditions prohibit
or restrict assignment or collection rights;
(xviii) Accounts with respect to which the account debtor is located
in any jurisdiction requiring the timely filing by Borrower of a report or
document before such Account is created in order to bring suit or otherwise
enforce its remedies against such account debtor in the courts or through
any judicial process of such jurisdiction, unless Borrower has filed, or is
exempt from filing, such a report; and
(xix) Accounts with respect to which the account debtor is also a
creditor of Borrower, but only to the extent of the amount owed by Borrower
to such account debtor if such amount is less than the amount of all
Accounts with respect to such account debtor that otherwise would be
Eligible Accounts.
Administrative Lender and Majority Lenders shall have the right, but not
the duty, to declare particular accounts ineligible. The fact that neither
Administrative Lender nor Majority Lenders has declared a particular account
ineligible shall not be deemed to be a determination or representation by
Administrative Lender or any Lender as to the creditworthiness or financial
condition of any account debtor. Because of banking relationships between
account debtors of Borrower and Administrative Lender or a Lender,
Administrative Lender or a Lender may have information about the
creditworthiness of such account debtors; however, neither Administrative Lender
nor any Lender shall have any duty to Borrower to disclose information it may
have about any of Borrower's account debtors and Borrower shall have no right to
rely upon any action or inaction of Administrative Lender or any Lender
concerning the creditworthiness or financial condition of Borrower's account
debtors. BORROWER HEREBY COVENANTS NOT TO XXX AND TO HOLD HARMLESS LENDERS AND
ADMINISTRATIVE LENDER AND THEIR OFFICERS, DIRECTORS, EMPLOYEES, AGENTS,
SUCCESSORS AND ASSIGNS FOR AND FROM ANY AND ALL DAMAGES, LIABILITY, OR CLAIMS OF
LIABILITY, WHETHER KNOWN OR UNKNOWN, OF
PAGE 8
WHATSOEVER NATURE ARISING OUT OF OR BASED IN WHOLE OR IN PART UPON
ADMINISTRATIVE LENDER'S OR ANY LENDER'S FAILURE TO DISCLOSE UNFAVORABLE
INFORMATION ABOUT AN ACCOUNT DEBTOR OF BORROWER'S TO BORROWER, OR ADMINISTRATIVE
LENDER'S OR MAJORITY LENDERS' FAILURE TO TREAT AS INELIGIBLE THE ACCOUNT OF AN
ACCOUNT DEBTOR OF BORROWER ABOUT WHOM ADMINISTRATIVE LENDER OR ANY LENDER HAS
UNFAVORABLE INFORMATION.
"Eligible Inventory" means Inventory that either Administrative Lender
determines in the Good Faith exercise of its discretion, or Majority Lenders
determine in the Good Faith exercise of their discretion, to be eligible for
inclusion in the Borrowing Base. General criteria for Eligible Inventory may be
established and revised from time to time by Administrative Lender or Majority
Lenders in Good Faith. Without limiting such discretion as to other Inventory,
the following Inventory shall in any event not constitute Eligible Inventory:
(i) finished goods that are not held by Borrower for sale as Inventory
in the ordinary course of Borrower's business as presently conducted by it
or that are obsolete, not in good condition, not of merchantable quality or
not salable in the ordinary course of Borrower's business or that are
subject to defects that would affect their market value;
(ii) Inventory that Administrative Lender, in the Good Faith exercise
of its discretion, determines, or Majority Lenders in the Good Faith
exercise of their discretion, determine to be unacceptable due to age,
type, category or quantity;
(iii) Inventory in transit or otherwise in the possession of any
Person other than Borrower, except (subject to any additional requirements
imposed by Administrative Lender, in the Good Faith exercise of its
discretion, determines, or Majority Lenders in the Good Faith exercise of
their discretion, determine to protect Borrower's title thereto or
Administrative Lender's Lien therein) goods held in storage solely for the
account of Borrower (subject to Administrative Lender's Lien), if the
Person in possession has acknowledged in writing Administrative Lender's
Lien thereon and has not issued a negotiable document of title as to the
goods;
(iv) Inventory with respect to which Administrative Lender does not
have a valid and prior, fully perfected Lien and that is not free of all
other Liens, other than Permitted Liens;
PAGE 9
(v) Inventory in the possession of a warehouseman or other bailee if
Administrative Lender has not received a bailee letter acceptable to
Administrative Lender from such warehouseman or bailee; and
(vi) Inventory located on premises leased by Borrower if
Administrative Lender has not received a landlord's waiver acceptable to
Administrative Lender with respect to such premises.
"Environmental Law" means all applicable federal, state and local laws,
statutes, ordinances and regulations, and any applicable judicial or
administrative interpretation, order, consent decree or judgment, relating to
the regulation and protection of the environment. Environmental Laws include but
are not limited to the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended (42 U.S.C. ss. 9601 et seq.); the Hazardous
Material Transportation Act, as amended (49 U.S.C. ss. 180 et seq.); the Federal
Insecticide, Fungicide, and Rodenticide Act, as amended (7 U.S.C. ss. 136 et
seq.); the Resource Conservation and Recovery Act, as amended (42 U.S.C. ss.
6901 et seq.); the Toxic Substance Control Act, as amended (42 U.S.C. ss. 7401
et seq.); the Clean Air Act, as amended (42 U.S.C. ss. 740 et seq.); the Federal
Water Pollution Control Act, as amended (33 U.S.C. ss. 1251 et seq.); and the
Safe Drinking Water Act, as amended (42 U.S.C. ss. 300f et seq.), and their
state and local counterparts or equivalents and any applicable transfer of
ownership notification or approval statutes.
"Environmental Liabilities and Costs" means, as to any Person, all
liabilities, obligations, responsibilities, Remedial Actions, losses, damages,
punitive damages, consequential damages, treble damages, costs and expenses
(including, without limitation, all fees, disbursements and expenses of counsel,
experts and consultants and costs of investigation and feasibility studies),
fines, penalties, sanctions and interest incurred as a result of any claim or
demand by any other Person, whether based in contract, tort, implied or express
warranty, strict liability, criminal or civil statute, including, without
limitation, any thereof arising under any Environmental Law, Permit, order or
agreement with any Governmental Authority or other Person, and which relate to
any violation or alleged violation of an Environmental Law or a Permit, or a
Release or threatened Release.
"Equipment" shall have the meaning attributed to the term "equipment" in
the Code and shall include, without limitation, all now owned and hereafter
acquired equipment, machinery, computers and computer hardware and software
(whether owned or licensed), vehicles, tools, furniture, fixtures, all
attachments, accessions and property now or hereafter affixed thereto or used in
connection therewith, and substitutions and replacements thereof, wherever
located.
PAGE 10
"Event of Default" has the meaning set forth in Section 9.1 hereof.
"Federal Funds Rate" means, for any day, the weighted average of the per
annum rates on overnight Federal funds transactions with member banks of the
Federal Reserve System arranged by Federal funds brokers as published by the
Federal Reserve Bank of New York for such day (or, if such rate is not so
published for any day, the average rate quoted to Administrative Lender on such
day by three (3) Federal funds brokers of recognized standing selected by
Administrative Lender).
"Fixed Rate Term" means a period of one, two, three or six months, as
designated by Borrower, during which a Loan bears interest determined in
relation to LIBOR; provided however, that no Fixed Rate Term may extend beyond
the Maturity Date, and if the last day of a Fixed Rate Term is not a Business
Day, such term shall be extended to the next succeeding Business Day, or if the
next succeeding Business Day falls in another calendar month, such term shall
end on the next preceding Business Day.
"GAAP" means generally accepted accounting principles as in effect in the
United States from time to time, applied in a manner materially consistent with
Borrower's December 31, 1998 financial statements.
"General Intangibles" shall have the meaning attributed to the term
"general intangibles" in the Code, and shall include, without limitation, all
tax and duty refunds, registered and unregistered patents, trademarks, service
marks, copyrights, trade names, applications for the foregoing, trade secrets,
goodwill, processes, drawings, blueprints, customer lists, licenses, whether as
licensor or licensee, choses in action and other claims and existing and future
leasehold interests in equipment.
"Good Faith" means honesty in fact in the conduct or transaction concerned,
without regard to whether standards that might be deemed commercially reasonable
have been observed.
"Governmental Authority" means any domestic or foreign national, state or
local government, any political subdivision thereof, any department, agency,
authority or bureau of any of the foregoing, or any other entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government, including the Federal Deposit Insurance Corporation,
the Federal Reserve Board, the Comptroller of the Currency, any central bank or
any comparable authority.
"Governmental Rule" means any applicable law, rule, regulation, ordinance,
order, code interpretation, judgment, decree, directive, guidelines, policy or
similar form of decision of any Governmental Authority.
PAGE 11
"Indebtedness" of any Person means, without duplication, (a) all
indebtedness of such Person for borrowed money (including, without limitation,
reimbursement and all other obligations with respect to surety bonds, letters of
credit and bankers' acceptances, whether or not matured) or for the deferred
purchase price of property or services, (b) all obligations of such Person
evidenced by notes, bonds, debentures or similar instruments, (c) all
indebtedness of such Person created or arising under any conditional sale or
other title retention agreement with respect to property acquired by such Person
(even though the rights and remedies of the seller or lender under such
agreement in the event of default are limited to repossession or sale of such
property), (d) all Capitalized Lease Obligations of such Person, (e) all
Obligations of such Person under Other Leases, (f) all Contingent Obligations of
such Person, (g) all obligations of such Person to purchase, redeem, retire,
defease or otherwise acquire for value any Stock or Stock Equivalents of such
Person with a mandatory repurchase or redemption date of less than ten years
from the date of issuance thereof, (h) all obligations of such Person under
Interest Rate Contracts and Commodity Contracts, (i) all Indebtedness referred
to in clauses (a) through (h) above secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be secured by)
any Lien upon or in property (including, without limitation, Accounts and
General Intangibles) owned by such Person, even though such Person has not
assumed or become liable for the payment of such Indebtedness, (j) in the case
of Borrower, its obligations under the Loan Documents, (k) all liabilities of
such Person that would be shown on a balance sheet of such Person prepared in
accordance with GAAP, and (l) all liabilities of such Person in connection with
the failure to make when due any contribution or payment pursuant to or under
any Plan. For purposes of determining the amount of Indebtedness in a
circumstance when the creditor has recourse only to specified assets, the amount
shall be the lesser of (i) the amount of such obligation or (ii) the fair market
value of such assets.
"Indemnitees" has the meaning set forth in Section 11.3 hereof.
"Interest Rate Contracts" means interest rate swap agreements, interest
rate cap agreements, interest rate collar agreements, interest rate insurance,
and other agreements or arrangements designed to provide protection against
fluctuations in interest rates.
"Inventory" shall have the meaning attributed to the term "inventory" in
the Code and, in addition, means all now owned and hereafter acquired inventory,
goods, merchandise and other personal property wherever located, while in the
possession of Borrower, a bailee, or other Person, furnished under any contract
of service or intended for sale or lease, including, without limitation, raw
materials, work in process, spare parts, component parts, finished goods and
materials and supplies of
PAGE 12
any kind, nature or description which are or might be used or consumed in
Borrower's business or are or might be used in connection with the manufacture,
packing, shipping, advertising, selling or finishing of such goods, merchandise
and other personal property and all documents of title or documents representing
the same.
"L/C Bank" means KeyBank.
"Letter of Credit" means a standby letter of credit issued by L/C Bank
pursuant to Section 2.2 hereof.
"Letter of Credit Agreement" means L/C Bank's standard letter of credit
application and documentation modified to such extent, if any, as L/C Bank deems
necessary.
"Letter of Credit Obligations" means, at any time, all liabilities at such
time of Borrower to L/C Bank with respect to Letters of Credit, whether or not
any such liability is contingent.
"Letter of Credit Request" has the meaning set forth in Section 2.2(d)
hereof.
"LIBOR" means, for each Fixed Rate Term, the rate per annum (rounded upward
if necessary to the nearest whole 1/16 of 1%) and determined pursuant to the
following formula:
LIBOR = Base LIBOR
-------------------------------
100% - LIBOR Reserve Percentage
As used herein, (a) "Base LIBOR" means the rate per annum determined by the
Administrative Lender to be the offered rate for deposits in U.S. dollars with a
term comparable to such Fixed Rate Term that appears on the applicable Telerate
Page at approximately 11:00 a.m., London time, two Business Days prior to the
beginning of such Fixed Rate Term, and (b) "LIBOR Reserve Percentage" means, for
any day, the aggregate (without duplication) of the maximum rates (expressed as
a decimal fraction) of reserve requirements in effect on such day (including
basic, supplemental, marginal and emergency reserves under any regulations of
the Federal Reserve Board or other Governmental Authority having jurisdiction
with respect thereto) dealing with reserve requirements prescribed for
eurocurrency funding (currently referred to as "Eurocurrency Liabilities" in
Regulation D of the Federal Reserve Board) maintained by a member bank of the
Federal Reserve System.
PAGE 13
"LIBOR Loan" means any Loan that bears interest with reference to LIBOR.
"LIBOR Margin" means the number of basis points determined in accordance
with Schedule III.
"Lien" means any mortgage, deed of trust, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, lien (statutory or other),
security interest, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever, including, without limitation, any
conditional sale or other title retention agreement or the interest of a lessor
under a Capitalized Lease Obligation or any Other Lease.
"Loan" means an advance made by a Lender to Borrower pursuant to Section
2.1.
"Loan Documents" means this Agreement, the Letter of Credit Agreements, the
Notes and each other agreement, note, notice, document, contract or instrument
to which Borrower now or hereafter is a party and is required in connection with
this Agreement.
"Majority Lenders" means any Lender or Lenders having more than sixty
percent (60%) (seventy percent (70%) if there are only two Lenders) of the Total
Commitments.
"Material Adverse Effect" means a material adverse effect on (a) the
condition (financial or otherwise), business, performance, operations or
properties of Borrower, (b) the ability of Borrower to perform its obligations
under the Loan Documents, or (c) the rights and remedies of the Lenders, L/C
Bank, Swingline Lender or the Administrative Lender under the Loan Documents.
"Maturity Date" means March 31, 2001.
"Note" means a promissory note executed by Borrower in favor of a Lender or
Swingline Lender evidencing Loans, substantially in one of the forms attached as
Exhibit B hereto.
"Notice of Authorized Representatives" has the meaning set forth in Section
2.12 hereof.
"Notice of Borrowing" has the meaning set forth in Section 2.1(a)(iii)
hereof.
"Notice of Conversion or Continuation" has the meaning set forth in Section
2.4(c) hereof.
PAGE 14
"Obligations" means all of Borrower's obligations under the Loan Documents,
whether direct or indirect, absolute or contingent, due or to become due, now
existing or hereafter arising.
"Other Lease" means any synthetic lease or any financing lease having
substantially the same economic effect as a conditional sale, title retention
agreement or similar arrangement, but such term shall not include any operating
lease.
"PBGC" means the Pension Benefit Guaranty Corporation established pursuant
to Title IV of ERISA.
"Permit" means any permit, approval, authorization, license, variance or
permission required from a Governmental Authority under an applicable
Governmental Rule.
"Permitted Liens" means
(a) Liens arising by operation of law for taxes, assessments or
governmental charges not yet due;
(b) statutory Liens of mechanics, materialmen, shippers, warehousemen,
carriers, and other similar persons for services or materials arising in
the ordinary course of business for which payment is not yet due;
(c) non-consensual Liens incurred or deposits made in the ordinary
course of business in connection with workers' compensation, unemployment
insurance and other types of social security;
(d) Liens for taxes or statutory Liens of mechanics, materialmen,
shippers, warehousemen, carriers and other similar persons for services or
materials that are due but are being contested in good faith and by
appropriate and lawful proceedings promptly initiated and diligently
conducted and for which reserves satisfactory to Administrative Lender have
been established;
(e) Liens listed on the Disclosure Schedule;
(f) Liens in favor of Administrative Lender;
(g) purchase money Liens upon or in any property of Borrower and used
by Borrower in the ordinary course of business and Liens to secure
Capitalized Lease Obligations and Other Leases and any related payment and
performance obligations if, in each case, the incurrence of such
Indebtedness is permitted by Section 8.2; provided, however, that: (i) any
such Lien is created
PAGE 15
solely for the purpose of securing Indebtedness representing, or incurred
to finance, refinance or refund, the cost (including, without limitation,
the cost of construction and the reasonable fees and expenses relating to
such Indebtedness) of the property subject thereto, (ii) the principal
amount of the Indebtedness secured by such Lien does not exceed 100% of
such cost, and (iii) such Lien does not extend to or cover any other
property other than such item of property and any improvements on such
item;
(h) Liens existing upon or in any property of Borrower at the time of
its acquisition by Borrower, provided such property is used by Borrower in
the ordinary course of Borrower's business;
(i) zoning restrictions, easements, rights of way, survey exceptions,
encroachments, covenants, licenses, reservations, leasehold interests,
restrictions on the use of real property or minor irregularities incident
thereto which do not in the aggregate materially detract from the value or
use of the property or assets of Borrower or impair, in any material
manner, the use of such property for the purposes for which such property
is held by Borrower;
(j) the interests of lessors or lessees of property leased pursuant to
leases permitted hereunder;
(k) Liens of a depository institution arising solely by virtue of any
statutory or common law provision relating to banker's liens, rights of
set-off, or similar rights and remedies as to deposit accounts or other
funds maintained with such institution, provided that (i) such deposit
account is not a dedicated cash collateral account and is not subject to
restrictions against access by Borrower in excess of those set forth by
regulations promulgated by any Government Authority, and (ii) such deposit
account is not intended by Borrower to provide collateral to the depository
institution;
(l) judgment Liens to the extent the existence of such Liens is not an
Event of Default under Section 9.1(g): and
(m) Liens arising in connection with Sale/Leaseback Transactions.
"Person" means an individual, partnership, corporation (including, without
limitation, a business trust), joint stock company, limited liability company,
trust, unincorporated association, joint venture or other entity, or a
Governmental Authority.
PAGE 16
"Plan" means an employee benefit plan, as defined in Section 3(3) of ERISA,
which any Borrower maintains, contributes to or has an obligation to contribute
to on behalf of participants who are or were employed by any of them.
"Prime Rate" means, for any day, an interest rate per annum equal to the
rate of interest most recently announced within KeyBank at its principal office,
as its prime rate, with any change in the prime rate to be effective as of the
day such change is announced within KeyBank and with the understanding that the
prime rate is one of KeyBank's base rates used to price some loans and may not
be the lowest rate at which KeyBank makes any loan, and is evidenced by the
recording thereof in such internal publication or publications as KeyBank may
designate.
"Prime Rate Loan" means any Loan that bears interest at the Prime Rate.
"Ratable Portion" or "ratably" means, with respect to any Lender, the
quotient obtained by dividing such Lender's Commitment by the Total Commitments.
"Records" means all of Borrower's present and future records and books of
account of every kind or nature, purchase and sale agreements, invoices, ledger
cards, bills of lading and other shipping evidence, statements, correspondence,
memoranda, credit files and other data relating to the Collateral or any account
debtor, together with the tapes, disks, diskettes and other data and software
storage media and devices, file cabinets or containers in or on which the
foregoing are stored (including any rights of Borrower with respect to the
foregoing maintained with or by any other Person).
"Release" means, as to any Person, any unpermitted spill, emission,
leaking, pumping, injection, deposit, disposal, discharge, dispersal, leaching
or migration of a Contaminant into the environment.
"Remedial Action" means all actions required to clean up, remove, prevent
or minimize a Release or threat of Release or to perform pre-remedial studies
and investigations and post-remedial monitoring and care.
"Revolving Credit Loan" means a Loan made by a Lender to Borrower pursuant
to Section 2.1(a).
"Rights to Payment" means all Accounts, General Intangibles, contract
rights, chattel paper, documents, instruments, letters of credit, bankers
acceptances and guaranties, and all present and future liens, security
interests, rights, remedies, title and interest in, to and in respect of
Accounts and other Collateral, and shall include without limitation, (a) rights
and remedies under or relating to guaranties, contracts of suretyship, letters
of credit and credit and other insurance related to the Collateral, (b)
PAGE 17
rights of stoppage in transit, replevin, repossession, reclamation and other
rights and remedies of an unpaid vendor, lienor or secured party, (c) goods
described in invoices, documents, contracts or instruments with respect to, or
otherwise representing or evidencing, Accounts or other Collateral, including
without limitation, returned, repossessed and reclaimed goods, and (d) deposits
by and property of account debtors or other persons securing the obligations of
account debtors, monies, securities, credit balances, deposits, deposit accounts
and other property of Borrower now or hereafter held or received by or in
transit to Administrative Lender or any of its affiliates or at any other
depository or other institution from or for the account of Borrower, whether for
safekeeping, pledge, custody, transmission, collection or otherwise.
"Sale/Leaseback Transaction" means any transaction in which (i) Borrower
conveys Equipment to another Person, (ii) Borrower contemporaneously leases such
equipment from such Person, (iii) Borrower at all times retains exclusive use
and possession of such Equipment and (iv) the terms of such conveyance and lease
are, in Administrative Lender's reasonable judgment, no less favorable to
Borrower than those of a commercially reasonable, arm's length sale/leaseback
transaction between unrelated parties.
"Significant Subsidiary" means any Subsidiary having at least $1,000,000 of
assets.
"Stock" means shares of capital stock, beneficial or partnership interests,
participations or other equivalents (regardless of how designated) of or in a
corporation or other entity, whether voting or non-voting, and includes, without
limitation, common stock and preferred stock.
"Stock Equivalents" means all securities convertible into or exchangeable
for Stock and all warrants, options or other rights to purchase or subscribe for
any Stock, whether or not presently convertible, exchangeable or exercisable.
"Subsidiary" means any corporation, association, partnership, joint venture
or other business entity of which more than fifty percent (50%) of the voting
stock or other equity interest is owned directly or indirectly by Borrower.
"Swing Loan" means a Loan made by the Swingline Lender to Borrower pursuant
to Section 2.1(b).
"Swing Loan Available Credit" means the lesser of (i) $3,000,000 or (ii)
the Swingline Lender's Ratable Portion of the Available Credit.
"Swing Loan Borrowing" means a borrowing consisting of a Swing Loan.
PAGE 18
"Swingline Lender" means KeyBank.
"Total Commitments" means the total of all Commitments.
"Tranche" means a collective reference to LIBOR Loans, the then-current
Fixed Rate Term with respect to all of which begin on the same date and end on
the same later date (whether or not such LIBOR Loans shall have originally been
made on the same day).
SECTION 1.2 HEADINGS
Headings in this Agreement and each of the other Loan Documents are for
convenience of reference only and are not part of the substance hereof or
thereof.
ARTICLE II. THE CREDITS
----------
SECTION 2.1 REVOLVING CREDITS
(a) The Revolving Credit Loans.
--------------------------
(i) On the terms and subject to the conditions contained in this
Agreement, each Lender severally agrees to make loans (each a "Revolving
Credit Loan") to Borrower from time to time until the Maturity Date in an
aggregate amount not to exceed at any time outstanding such Lender's
Commitment; provided, however, that at no time shall any Lender be
obligated to make a Revolving Credit Loan in excess of such Lender's
Ratable Portion of the Available Credit. Borrower may from time to time
borrow, partially or wholly repay its outstanding borrowings, and reborrow,
subject to all the limitations, terms and conditions contained herein. The
Revolving Credit Loans of each Lender shall be evidenced by a Note payable
to the order of such Lender.
(ii) If at any time the Available Credit is negative, Borrower,
without demand or notice, shall immediately repay that portion of the Loans
necessary to cause the Available Credit to be zero. Borrower shall repay
the outstanding principal balance of the Loans, together with all accrued
and unpaid interest and related fees on the earlier of the Maturity Date or
the due date determined pursuant to Section 9.2.
(iii) Borrower, through an Authorized Representative, shall request
each advance of a Revolving Credit Loan by giving Administrative Lender
irrevocable written notice or telephonic notice (confirmed promptly in
writing),
PAGE 19
in the form of Exhibit C attached hereto (each, a "Notice of Borrowing"),
which specifies, among other things:
(A) the principal amount of the requested advance (which amount
must be a minimum of $250,000 with increments above $250,000 being in
integral multiples of $100,000);
(B) the proposed date of borrowing, which shall be a Business
Day;
(C) whether such advance is to be a Prime Rate Loan or a LIBOR
Loan; and
(D) if such advance is to be a LIBOR Loan, the length of the
Fixed Rate Term applicable thereto.
Each such Notice of Borrowing must be received by Administrative Lender not
later than (x) 10:00 a.m. (Seattle time) at least one Business Day prior to the
date of borrowing if a Prime Rate Loan, or (y) at least three Business Days
prior to the date of borrowing if a LIBOR Loan. Administrative Lender shall
promptly notify each Lender of the contents of each Notice of Borrowing and of
the amount of the advance to be made by such Lender no later than 1:00 p.m.
(Seattle time) on the Business Day of receipt for Prime Rate Loans and noon
(Seattle time) the Business Day after receipt with respect to LIBOR Loans.
(b) The Swing Loans.
---------------
(i) In lieu of making Revolving Credit Loans, the Swingline Lender, in
its sole discretion, on the terms and subject to the conditions contained in
this Agreement, may make loans (each a "Swing Loan") to Borrower from time to
time until the Maturity Date as provided herein in an aggregate amount not to
exceed at any time outstanding the Swing Loan Available Credit. Each Swing Loan
Borrowing shall be made and prepaid upon such notice as the Swingline Lender and
Borrower shall agree, except that Swing Loan Borrowings may be made
automatically (A) pursuant to certain cash management arrangements made from
time to time by Borrower with Administrative Lender and/or (B) for the purposes
described in item (iii) below. All Swing Loan Borrowings shall be made as Prime
Rate Loans and shall be evidenced by a Note payable to the order of the
Swingline Lender.
(ii) If the aggregate outstanding balance of the Swing Loans exceeds
$2,000,000 for seven (7) consecutive days or at any time upon the request of the
Swingline Lender to Administrative Lender that some or all of the Swing Loans be
PAGE 20
converted to Revolving Credit Loans, then, on the next Business Day, the
Administrative Lender shall notify each Lender of the principal amount of Swing
Loans outstanding as of 10:00 a.m. (Seattle time) on such Business Day (or of
the principal amount of the Swing Loans which Swingline Lender desires to be
converted) and each Lender's Ratable Portion thereof. Each Lender shall, before
10:00 a.m. (Seattle time) on the next Business Day, make available to the
Administrative Lender, in immediately available funds, the amount of its Ratable
Portion of such principal amount of such Swing Loans. Upon such payment by a
Lender, such Lender shall be deemed to have made a Revolving Credit Loan as a
Prime Rate Loan to Borrower, notwithstanding any failure by Borrower to satisfy
the conditions contained in Section 6.2 (without regard to the minimum amount of
Prime Rate Loans). The Administrative Lender shall use such funds to repay the
principal amount of Swing Loans to the Swingline Lender. All interest due on the
Swing Loans shall be payable to the Swingline Lender. With respect to the Swing
Loans, after receipt of payment of principal or interest thereon, the
Administrative Lender will promptly distribute the same to the Swingline Lender
at its Applicable Lending Office.
(iii) The Lenders and Borrower agree that Swing Loans may be made to
allow the Administrative Lender to pay each Lender its share of fees, interest
and other amounts due hereunder to the extent (x) such fees, interest and other
amounts are then due and payable and (y) collected funds in account no.
370211003436 of Borrower with Administrative Lender, or a successor account, are
insufficient to pay such interest, fees and other amounts.
SECTION 2.2 LETTER OF CREDIT FACILITY
(a) On the terms and subject to the conditions contained in this Agreement,
the L/C Bank agrees promptly to issue one or more Letters of Credit at the
request of Borrower for the account of Borrower from time to time until 30 days
prior to the Maturity Date; provided, however, that L/C Bank shall not issue any
Letter of Credit if:
(i) any order, judgment or decree of any Governmental Authority or
arbitrator of which the L/C Bank is aware shall purport by its terms to
enjoin or restrain the L/C Bank from issuing such Letter of Credit or any
Governmental Rule applicable to the L/C Bank or any request or directive
(whether or not having the force of law) from any Governmental Authority
with jurisdiction over the L/C Bank shall prohibit, or request that the L/C
Bank refrain from, the issuance of letters of credit generally or such
Letter of Credit in particular or shall impose upon the L/C Bank with
respect to such Letter of Credit any restriction or reserve or capital
requirement (for which the L/C Bank is not
PAGE 21
otherwise compensated) not in effect on the date hereof or result in any
loss, cost or expense which (A) was not applicable, in effect or known to
the L/C Bank on the Closing Date and which the L/C Bank in good xxxxx xxxxx
material to it, and (B) the reimbursement of which is not provided for
hereunder;
(ii) the L/C Bank shall have received written notice from the
Administrative Lender or Borrower, on or before the Business Day prior to
the requested date of issuance of such Letter of Credit, that one or more
of the applicable conditions contained in Article VI is not then satisfied;
(iii) after giving effect to the issuance of such Letter of Credit,
the Letter of Credit Obligations exceed $5,000,000;
(iv) the amount of the Letter of Credit requested exceeds the
Available Credit; or
(v) fees due in connection with a requested issuance have not been
paid.
None of the Lenders (other than a Lender which becomes the L/C Bank) shall
have any obligation to issue any Letters of Credit.
(b) In no event shall the expiry date of any Letter of Credit be more than
one year or fall after 10 days prior to the Maturity Date.
(c) Prior to the issuance of each Letter of Credit, Borrower shall have
delivered to the L/C Bank, if requested by the L/C Bank, a Letter of Credit
Agreement, signed by Borrower, and such other documents or items as L/C Bank may
reasonably require pursuant to the terms thereof.
(d) In connection with the issuance of each Letter of Credit, Borrower,
through an Authorized Representative, shall give the L/C Bank and the
Administrative Lender at least four Business Days' prior written notice (a
"Letter of Credit Request"), in substantially the form of Exhibit D, of the
requested issuance of such Letter of Credit. Such notice shall be irrevocable
and binding on Borrower and shall specify (i) the stated amount of the Letter of
Credit requested, (ii) the date of issuance of such requested Letter of Credit
(which day shall be a Business Day), (iii) the date on which such Letter of
Credit is to expire (which date shall be a Business Day), (iv) the Person for
whose benefit the requested Letter of Credit is to be issued, and (v) such other
terms and conditions of the proposed Letter of Credit as are requested by
Borrower and acceptable to the L/C Bank. Such notice, to be effective, must be
received by the
PAGE 22
L/C Bank and the Administrative Lender not later than 10:00 a.m. (Seattle time)
on the last Business Day on which notice can be given under the immediately
preceding sentence.
(e) Subject to the terms and conditions of this Section 2.2 and provided
that the applicable conditions set forth in Article VI have been satisfied, the
L/C Bank shall, on the requested date, issue a Letter of Credit on behalf of
Borrower in accordance with the applicable Letter of Credit Request and the L/C
Bank's usual and customary business practices and in a final form reasonably
satisfactory to Borrower.
(f) Immediately upon the issuance by the L/C Bank of a Letter of Credit,
the L/C Bank shall be deemed to have sold and transferred to each Lender, and
each Lender shall be deemed irrevocably and unconditionally to have purchased
and received from the L/C Bank, without recourse or warranty, an undivided
interest and participation, to the extent of such Lender's Ratable Portion, in
such Letter of Credit and the obligations of Borrower with respect thereto
(including, without limitation, all Letter of Credit Obligations with respect
thereto) and any security therefor and guaranty pertaining thereto and each
Lender's Commitment shall be deemed used to the extent of such Lender's Ratable
Portion of such Letter of Credit Obligations.
(g) In determining whether to pay under any Letter of Credit, the L/C Bank
shall not have any obligation relative to the Lenders other than to confirm that
any documents required to be delivered under such Letter of Credit appear to
have been delivered and that they appear to comply on their face with the
requirements of such Letter of Credit. Any action taken or omitted to be taken
by the L/C Bank under or in connection with any Letter of Credit, if taken or
omitted in the absence of gross negligence or willful misconduct, shall not put
the L/C Bank under any resulting liability to any Lender.
(h) If the L/C Bank makes any payment under any Letter of Credit, the L/C
Bank shall promptly notify the Administrative Lender, who shall promptly notify
each Lender, and each Lender shall promptly and unconditionally pay to the
Administrative Lender for the account of the L/C Bank the amount of such
Lender's Ratable Portion of such payment in same day funds (and upon receipt,
the Administrative Lender shall promptly pay the same to the L/C Bank), which
payment shall be deemed to be and shall constitute a Prime Rate Loan made by
such Lender to Borrower; provided, however, that if the Swingline Lender so
elects, and if a Swing Loan can be made in such amount, the Administrative
Lender shall promptly notify the Swingline Lender of such payment by the L/C
Bank, and the Swingline Lender shall, and Borrower hereby authorizes the
Swingline Lender to, pay to the Administrative Lender for the account of the L/C
Bank the amount of such payment in same day funds, which
PAGE 23
payment shall be deemed to be and shall constitute a Swing Loan made by the
Swingline Lender to Borrower. The Prime Rate Loans shall be made, or the Swing
Loan may be made, as contemplated in the preceding sentence notwithstanding
Borrower's failure to satisfy the conditions set forth in Section 6.2. If the
Administrative Lender so notifies such Lender prior to 10:00 a.m. (Seattle time)
on any Business Day, such Lender shall make available to the Administrative
Lender for the account of the L/C Bank its Ratable Portion of the amount of such
payment by 1:00 p.m. (Seattle time) on such Business Day in same day funds. If
and to the extent such Lender shall not have so made such Lender's Ratable
Portion of the amount of such payment available to the Administrative Lender for
the account of the L/C Bank, such Lender agrees to repay to the Administrative
Lender for the account of such L/C Bank forthwith on demand such amount together
with interest thereon, for each day from such date until the date such amount is
repaid to the Administrative Lender for the account of the L/C Bank, at the
Federal Funds Rate. The failure of any Lender to make available to the
Administrative Lender for the account of the L/C Bank its Ratable Portion of any
such payment shall not relieve any other Lender of its obligation hereunder to
make available to the Administrative Lender for the account of the L/C Bank its
Ratable Portion of any payment on the date such payment is to be made, but no
Lender shall be responsible for the failure of any other Lender to make
available to the Administrative Lender for the account of the L/C Bank such
other Lender's Ratable Portion of any such payment.
(i) The obligations of the Lenders to make payments to the Administrative
Lender for the account of the L/C Bank with respect to Letters of Credit shall
be irrevocable and not subject to any qualification or exception whatsoever and
shall be made in accordance with the terms and conditions of this Agreement
under all circumstances (except as expressly provided in Section 2.2(g)),
including, without limitation, any of the following circumstances:
(i) any lack of validity or enforceability of any of the other Loan
Documents;
(ii) the existence of any claim, set-off, defense or other right which
Borrower may have at any time against a beneficiary named in a Letter of
Credit, any transferee of any Letter of Credit (or any Person for whom any
such transferee may be acting), the Administrative Lender, the L/C Bank,
the Swingline Lender, any Lender or any other Person, whether in connection
with this Agreement, any Letter of Credit, the transactions contemplated
herein or any unrelated transactions (including, without limitation, any
underlying transaction between Borrower and the beneficiary named in any
Letter of Credit);
PAGE 24
(iii) any draft, certificate or any other document presented under the
Letter of Credit proving to be forged, fraudulent, invalid or insufficient
in any respect or any statement therein being untrue or inaccurate in any
respect; or
(iv) the occurrence of any Default.
SECTION 2.3 INTEREST/FEES
(a) Interest. The outstanding principal balance of each Prime Rate Loan
shall bear interest at a fluctuating rate per annum equal to the Prime Rate in
effect from time to time. The outstanding principal balance of each LIBOR Loan
shall bear interest at a fixed rate per annum determined by Administrative
Lender to be equal to the aggregate of (i) LIBOR in effect on the first day of
the Fixed Rate Term for such Loan plus (ii) the applicable LIBOR Margin in
effect on the second Business Day before the first day of such Fixed Rate Term.
The foregoing notwithstanding, the rate of interest applicable at all times
during the continuation of an Event of Default shall be a fluctuating rate per
annum equal to the Prime Rate in effect from time to time, plus 200 basis
points. All fees, expenses and other amounts not paid when due shall bear
interest (from the date due until paid) at the rate set forth in the preceding
sentence.
(b) Letter of Credit Fees. With respect to each Letter of Credit, upon the
issuance, renewal and/or amendment thereof, Borrower shall pay to Administrative
Lender, for the ratable benefit of Lenders, a fee equal to the face amount
thereof (or, with respect to an amendment increasing the face amount, the
increase in the face amount only) multiplied by a rate per annum equal to the
LIBOR Margin applied for the period equal to the term of such Letter of Credit
(or, with respect to an amendment increasing the term, the increase in the term
only). In addition, upon the occurrence of any other activity with respect to
any Letter of Credit, Borrower shall pay to L/C Bank a fee determined in
accordance with L/C Bank's standard fees and charges then in effect for such
activity.
(c) Administrative Lender's Fee. Borrower shall pay to Administrative
Lender, for Administrative Lender's own account, the fees set forth in that
certain fee letter from KeyBank to Borrower dated April 8, 1999.
(d) Commitment Fee. Borrower shall pay to Administrative Lender, for the
ratable benefit of Lenders, a commitment fee equal to 25 basis points per annum
multiplied by the average daily amount by which the Total Commitments exceed the
sum of the outstanding principal amount of the Loans and the Letter of Credit
Obligations. Such fee shall be payable in arrears on the first day of each
calendar quarter.
PAGE 25
(e) Computation and Payment. All interest and per annum fees shall be
computed on the basis of a 360-day year, actual days elapsed. Interest on Prime
Rate Loans shall be payable quarterly, in arrears, on the first day of each
January, April, July and October and upon the conversion of a Prime Rate Loan to
a LIBOR Loan. Interest on LIBOR Loans shall be paid on the last day of each
Fixed Rate Term and at the end of the third month with respect to each Fixed
Rate Term of six months.
SECTION 2.4 INTEREST OPTIONS
(a) Election. Subject to the requirement that each LIBOR Loan be in a
minimum amount of $250,000 and in integral multiples of $100,000 and the
limitation in Section 2.4(b) regarding the number of Tranches outstanding at any
time, (i) except as otherwise provided herein, at any time when a Default is not
continuing Borrower may convert all or any portion of a Prime Rate Loan to a
LIBOR Loan for a Fixed Rate Term designated by Borrower, and (ii) at any time
Borrower may convert all or a portion of a LIBOR Loan at the end of the Fixed
Rate Term applicable thereto to a Prime Rate Loan or, if no Default is
continuing, to a LIBOR Loan for a new Fixed Rate Term designated by Borrower. If
Borrower has not made the required interest rate conversion or continuation
election prior to the last day of any Fixed Rate Term, Borrower shall be deemed
to have elected to convert such LIBOR Loan to a Prime Rate Loan.
(b) Maximum Number of Tranches. At no time shall there be more than three
Tranches outstanding at any time.
(c) Notice to Administrative Lender. Borrower, through an Authorized
Representative, shall request each interest rate conversion or continuation by
giving Administrative Lender irrevocable written notice or telephonic notice
(confirmed promptly in writing), in the form of Exhibit E attached hereto (a
"Notice of Conversion or Continuation"), that specifies, among other things: (i)
the Loan to which such Notice of Conversion or Continuation applies; (ii) the
principal amount that is the subject of such conversion or continuation; (iii)
the proposed date of such conversion or continuation, which shall be a Business
Day; and (iv) if such Notice pertains to a LIBOR interest selection, the length
of the applicable Fixed Rate Term. Any such Notice of Conversion or Continuation
must be received by Administrative Lender not later than (i) 10:00 a.m. (Seattle
time) at least one (1) Business Day prior to the effective date of any Prime
Rate interest selection, and (ii) at least three (3) Business Days prior to the
effective date of any LIBOR interest selection. Administrative Lender shall
promptly notify each Lender of the contents of each such Notice of Conversion or
Continuation, or if timely notice is not received from
PAGE 26
Borrower prior to the last day of any Fixed Rate Term, of the automatic
conversion of such LIBOR Loan to a Prime Rate Loan.
SECTION 2.5 OTHER PAYMENT TERMS
(a) Automatic Debit. Administrative Lender may, and Borrower hereby
authorizes Administrative Lender to, debit any deposit account of Borrower with
Administrative Lender for all payments of principal, interest, fees and other
amounts due under the Loan Documents as they become due, provided that
Administrative Lender shall first debit Borrower's account no. 370211003436 with
KeyBank, or a successor account, before debiting any other account.
(b) Place and Manner. Borrower shall make all payments due to each Lender
under the Loan Documents by payment to Administrative Lender at Administrative
Lender's Office, for the account of such Lender, in lawful money of the United
States and in same day or immediately available funds not later than 12:00 noon
(Seattle time) on the date due. Administrative Lender shall promptly disburse to
each Lender at such Lender's Applicable Lending Office each such payment
received by Administrative Lender for such Lender no later than 2:00 p.m.
(Seattle time) on the Business Day received if received before noon (Seattle
time), or if received later, by 2:00 p.m. (Seattle time) on the next Business
Day.
(c) Date. Whenever any payment due hereunder shall fall due on a day other
than a Business Day, such payment shall be made on the next succeeding Business
Day, and such extension of time shall be included in the computation of interest
or fees, as the case may be.
(d) Application of Payments. All payments under the Loan Documents
(including prepayments) shall be applied first to unpaid fees, costs and
expenses then due and payable under the Loan Documents, second to accrued
interest then due and payable under the Loan Documents (applied first to
interest due and payable on the Swing Loans and then to the other Loans), third
to the outstanding principal of the Swing Loans and finally to reduce the
principal amount of the other outstanding Loans.
(e) Failure to Pay Administrative Lender. Unless Administrative Lender
shall have received notice from Borrower at least one (1) Business Day prior to
the date on which any payment is due to the Lenders hereunder that Borrower will
not make such payment in full, Administrative Lender may assume that Borrower
has made such payment in full to Administrative Lender on such date and
Administrative Lender may, in reliance upon such assumption, cause to be
distributed to each Lender on such due date an amount equal to the amount then
due such Lender. If and to the
PAGE 27
extent Borrower shall not have made such payment in full to Administrative
Lender, such Lender shall repay to Administrative Lender forthwith on demand
such amount distributed to such Lender together with interest thereon, for each
day from the date such amount is distributed to such Lender until the date such
Lender repays such amount to Administrative Lender, at the Federal Funds Rate. A
certificate of Administrative Lender submitted to any Lender with respect to any
amounts owing by such Lender under this Section 2.5(e) shall be rebuttably
presumptive evidence of such amounts.
SECTION 2.6 FUNDING
(a) Lender Funding and Disbursement. Each Lender shall, before 10:00 a.m.
(Seattle time) on the date of each borrowing under Section 2.1(a) make available
to Administrative Lender at Administrative Lender's Office, in same day or
immediately available funds, such Lender's Ratable Portion thereof. After
Administrative Lender's receipt of such funds and upon fulfillment of the
applicable conditions set forth in Article VI hereof, Administrative Lender will
promptly disburse such funds in same day or immediately available funds to
Borrower. Unless otherwise directed by Borrower in writing, Administrative
Lender shall disburse the proceeds of each borrowing to Borrower by deposit to
any demand deposit account maintained by Borrower with Administrative Lender.
(b) Lender Failure to Fund. Unless Administrative Lender shall have
received notice from a Lender on or before the date of any borrowing hereunder
that such Lender will not make available to Administrative Lender such Lender's
Ratable Portion thereof, Administrative Lender may assume that such Lender has
made such portion available to Administrative Lender on the date of such
borrowing in accordance with Section 2.6(a) hereof, and Administrative Lender
may, in reliance upon such assumption, make available to Borrower (or otherwise
disburse) on such date a corresponding amount. If any Lender does not make the
amount of its Ratable Portion of any borrowing available to Administrative
Lender on the date of such borrowing, such Lender shall pay to Administrative
Lender, on demand, interest which shall accrue on such amount until made
available to Administrative Lender at rates equal to (i) the daily Federal Funds
Rate during the period from the date of such borrowing through the third
Business Day thereafter, and (ii) thereafter, the Prime Rate in effect from time
to time. A certificate of Administrative Lender submitted to any Lender with
respect to any amounts owing under this Section 2.6(b) shall be rebuttably
presumptive evidence of such amounts. If any Lender's Ratable Portion of any
borrowing is not in fact made available to Administrative Lender by such Lender
within three (3) Business Days after the date of such borrowing, Borrower shall
pay to Administrative Lender, on demand, an amount equal to such Ratable Portion
together
PAGE 28
with interest thereon, for each day from the date such amount was made available
to Borrower until the date such amount is repaid to Administrative Lender, at
the rate of interest then applicable thereto.
(c) Lenders' Obligations Several. The obligation of each Lender hereunder
is several. The failure of any Lender to make available its Ratable Portion of
any borrowing shall not relieve any other Lender of its obligation hereunder to
do so on the date requested, but no Lender shall be responsible for the failure
of any other Lender to make available the Ratable Portion to be funded by such
other Lender.
SECTION 2.7 PRO RATA TREATMENT
(a) Borrowings. Except as otherwise provided herein, each Loan, except a
Swing Loan, shall be made or shared among the Lenders ratably.
(b) Sharing of Payments, Etc. Except as otherwise provided herein, each
payment of principal, interest or fees shall be made or shared among the Lenders
ratably. If any Lender obtains any payment (whether voluntary, involuntary,
through the exercise of any right of setoff or otherwise) on account of a Loan
in excess of its Ratable Portion of payments on the Loans obtained by all
Lenders, such Lender ("Purchasing Lender") shall forthwith purchase from the
other Lenders sufficient participations to cause the Purchasing Lender's
interest in the Loans to be equivalent to the excess payment received; provided
however, that if all or any portion of such excess payment is thereafter
recovered from the Purchasing Lender, the purchased participation shall be
rescinded and each other Lender shall repay to the Purchasing Lender (i) the
purchase price to the extent of such recovery together with (ii) an amount equal
to such other Lender's ratable share (according to the proportion of (A) the
amount of such other Lender's required repayment to (B) the total amount so
recovered from the Purchasing Lender) of any interest or other amount paid or
payable by the Purchasing Lender in respect of the total amount so recovered.
Borrower agrees that any Purchasing Lender may, to the fullest extent permitted
by law, exercise all its rights of payment (including the right of setoff) with
respect to such participation as fully as if the Purchasing Lender were the
direct creditor of Borrower in the amount of such participation.
SECTION 2.8 CHANGE OF CIRCUMSTANCES
(a) Inability to Determine Rate. If Administrative Lender at any time shall
determine that adequate and reasonable means do not exist for ascertaining
LIBOR, or the Majority Lenders shall determine at any time that LIBOR does not
accurately reflect the cost to Lenders of making or maintaining LIBOR interest
rates hereunder, then Administrative Lender shall give telephonic notice
(promptly
PAGE 29
confirmed in writing) to Borrower and each Lender of such determination. If such
notice is given and until such notice has been withdrawn in writing by
Administrative Lender, then no LIBOR interest option may be selected by Borrower
and each LIBOR Loan, subsequent to the end of the Fixed Rate Term applicable
thereto, shall bear interest determined in relation to the Prime Rate pursuant
to the terms and conditions of this Agreement.
(b) Illegality: Termination of Commitment. Notwithstanding any other
provisions herein, if any Change of Law shall make it unlawful for any Lender
(i) to make a LIBOR interest rate available, or (ii) to maintain LIBOR interest
rates hereunder, then, in the former event, any obligation of such Lender
hereunder to make available such unlawful LIBOR interest rate shall forthwith be
suspended until such time as it is once again lawful to make such rate
available, and in the latter event, any such unlawful LIBOR interest rate then
outstanding shall be converted so that interest is determined in relation to the
Prime Rate pursuant to the terms of this Agreement; provided however, if any
such Change in Law shall permit a LIBOR interest rate until the expiration of
the Fixed Rate Term relating thereto, then such permitted LIBOR interest rate
shall continue as such until the end of such Fixed Rate Term. If as a result of
this Section 2.8(b) a LIBOR interest rate is converted to a lower interest rate,
Borrower shall pay to each Lender immediately upon demand such amount or amounts
as may be necessary to compensate such Lender for any loss in connection
therewith.
(c) Charges: Illegality. Upon the occurrence of any event described in
Section 2.8(b) hereof, Borrower shall pay to each Lender, immediately upon
demand, such amount or amounts as may be necessary to compensate such Lender for
any fines, fees, charges, penalties or other amounts payable by such Lender as a
result thereof and that are attributable to LIBOR interest rates made available
to Borrower hereunder. In determining which amounts payable by any Lender and/or
losses incurred by any Lender are attributable to LIBOR interest rates made
available to Borrower hereunder, any reasonable allocation made by any Lender
among its operations shall, in the absence of manifest error, be conclusive and
binding upon Borrower.
(d) Charges: Change of Law. If, after the Closing Date, any Change of Law:
(i) shall subject any Lender to any tax, duty or other charge with
respect to any LIBOR interest rate, or shall change the basis of taxation
of payments by Borrower to any Lender of principal, interest, fees or any
other amount payable hereunder (except for changes in the rate of taxation
on the
PAGE 30
overall net income of any Lender imposed by the jurisdiction of such
Lender's incorporation or by any jurisdiction in which its Applicable
Lending Office is located); or
(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, advances or loans
by, or any other acquisition of funds by any Lender; or
(iii) shall impose on any Lender any other condition;
and the effect of any of the foregoing is to increase the cost to such Lender of
making, renewing or maintaining any LIBOR Loan hereunder or to reduce any amount
receivable by such Lender in connection therewith, then Borrower shall,
immediately upon demand, pay to such Lender such amount or amounts as may be
necessary to reimburse such Lender for such increased costs or to compensate
such Lender for such reduced amounts. A certificate as to the amount of such
increased costs or reduced amounts, delivered by such Lender to Borrower (which
delivery shall be through Administrative Lender) shall, in the absence of
manifest error, be conclusive and binding on Borrower for all purposes.
(e) Capital Requirements. If any Lender shall have determined that any
Change of Law regarding capital adequacy which occurs after the Closing Date has
or shall have the effect of reducing the rate of return on the capital of such
Lender (or any entity controlling such Lender) as a consequence of such Lender's
obligations hereunder to a level below that which such Lender or such entity
would have achieved but for such Change of Law (taking into consideration such
Lender's or such entity's policies with respect to capital adequacy), by an
amount deemed by such Lender to be material, then from time to time, within
fifteen (15) days after demand by such Lender (with a copy to Administrative
Lender), Borrower shall pay to such Lender or such entity such additional
amounts as shall compensate such Lender or such entity for such reduction. Any
such request by a Lender under this Section shall set forth the basis of the
calculation of such additional amounts and shall, in the absence of manifest
error, be conclusive and binding on Borrower for all purposes.
SECTION 2.9 TAXES ON PAYMENTS
(a) Payments Free of Taxes. All payments made by Borrower under the Loan
Documents shall be made free and clear of, and without deduction or withholding
for or on account of, any present or future income, stamp or other taxes,
levies, imposts, duties, charges, fees, deductions or withholdings, now or
hereafter imposed, levied, collected, withheld or assessed by any Governmental
Authority
PAGE 31
(except taxes based on net income imposed on Administrative Lender or any
Lender) (with all such non-excluded taxes, levies, imposts, duties, charges,
fees, deductions and withholdings being hereinafter referred to herein as
"Taxes"). If any Taxes are required to be withheld from any amounts payable to
Administrative Lender or any Lender under the Loan Documents, the amounts so
payable to Administrative Lender or such Lender shall be increased to the extent
necessary to yield to Administrative Lender or such Lender (after payment of all
Taxes) interest or any such other amounts payable hereunder at the rates or in
the amounts specified in the Loan Documents. Whenever any Taxes are payable by
Borrower, as promptly as possible thereafter, Borrower shall send to
Administrative Lender for its own account or for the account of such Lender, as
the case may be, a certified copy of an original official receipt received by
Borrower showing payment thereof. If Borrower fails to pay any Taxes when due to
the appropriate taxing authority or fails to remit to Administrative Lender the
required receipts or other required documentary evidence, Borrower shall
indemnify Administrative Lender and the Lenders for any incremental taxes,
interest or penalties that may become payable by Administrative Lender or any
Lender as a result of any such failure. This Section 2.9(a) shall survive the
payment in full and performance of all of Borrower's other Obligations.
(b) Withholding Exemption Certificates. Each Lender agrees that it will
deliver to Borrower and Administrative Lender, upon the reasonable request of
Borrower or Administrative Lender, either (i) a statement that it is
incorporated under the laws of the United States of America or a state thereof,
or (ii) if it is not so incorporated, two duly completed copies of United States
Internal Revenue Service Form 1001 or 4224 or successor applicable form, as the
case may be, certifying in each case that such Lender is entitled to receive
payments under this Agreement without deduction or withholding of any United
States federal income taxes.
SECTION 2.10 DUTY TO MITIGATE, ASSIGNMENT OF COMMITMENTS
UNDER CERTAIN CIRCUMSTANCES
(a) Any Lender claiming any additional amount payable pursuant to Sections
2.8 or 2.9 shall use reasonable efforts (consistent with Governmental Rules) to
file, at Borrower's expense, any certificate or document requested by Borrower
or to change the jurisdiction of its Applicable Lending Office if the making of
such filing or change would avoid the need for or reduce the amount of any such
additional amounts that may thereafter accrue or avoid the circumstances giving
rise to such additional amounts and would not, in the sole determination of such
Lender, require it to incur additional costs or be otherwise disadvantageous to
such Lender.
PAGE 32
(b) If Borrower is required to make additional payments to any Lender
pursuant to either Section 2.8 or Section 2.9, Borrower shall have the right,
but not the obligation, at Borrower's expense, upon notice to such Lender and
the Administrative Lender, to replace such Lender with an assignee (in
accordance with and subject to the restrictions contained in Section 11.5)
approved by the Administrative Lender in its sole discretion, and such Lender
hereby agrees to transfer and assign, pursuant to the provisions of Section
11.5, all of such Lender's interests, rights, and obligations under this
Agreement to such assignee; provided, however, that no Lender shall be obligated
to make any such assignment unless (i) such assignment does not conflict with
any Governmental Rule, (ii) such assignee pays to such Lender in immediately
available funds on the date of such assignment the principal amount of all Loans
made by such Lender, and (iii) Borrower pays to such Lender in immediately
available funds on the date of such assignment all interest accrued on such
Loans to the date of payment and all other fees and other amounts accrued for
such Lender's account or owed to it hereunder.
SECTION 2.11 FUNDING LOSS INDEMNIFICATION
(a) Borrower may prepay the principal of any portion of a LIBOR Loan at any
time and in the minimum amount of $250,000, or, if less, the entire principal
amount of a Tranche. In consideration of Lenders providing this prepayment
option to Borrower or if any portion of a LIBOR Loan becomes due and payable at
any time before the last day of the Fixed Rate Term applicable thereto by
acceleration or otherwise, then Borrower shall pay Lenders a fee if the rate at
which Lenders can reinvest the principal being repaid for the balance of the
Fixed Rate Term, as determined by Administrative Lender in its Good Faith
discretion, ("Reinvestment Rate") is lower than the interest rate then
applicable to such LIBOR Loan ("Existing Rate"). If such circumstance exists,
Borrower shall pay to Administrative Lender, for the benefit of Lenders,
immediately upon demand a fee equal to the product of (i) a rate equal to the
difference between the Existing Rate and the Reinvestment Rate, times (ii) the
principal amount which is to be paid, times (iii) (A) the number of days
remaining in the Fixed Rate Term of the LIBOR Loan which is to be paid divided
by (B) 360. In addition, Borrower shall pay to Administrative Lender, for the
benefit of Lenders, the amount of any additional costs or expenses (including,
without limitation, costs of telex, wires, or cables) incurred by Administrative
Lender or the Lenders in connection with such payment, upon Borrower's receipt
of a written statement therefor from Administrative Lender. If Borrower fails to
pay any such amount when due, the unpaid portion shall thereafter bear interest
until paid at a rate per annum equal to the Prime Rate plus 200 basis points.
PAGE 33
(b) If Borrower shall (i) fail to borrow the full amount set forth in any
Notice of Borrowing that has been delivered to Administrative Lender (whether as
a result of the failure to satisfy any applicable conditions or otherwise), or
(ii) fail to convert or continue at the LIBOR interest option any portion of a
Loan in accordance with a Notice of Conversion or Continuation delivered to
Administrative Lender (whether as a result of the failure to satisfy any
applicable conditions or otherwise), Borrower shall, upon demand by any Lender,
reimburse such Lender and hold such Lender harmless for all costs and losses
incurred by such Lender as a result of such repayment, prepayment or failure.
Borrower understands that such costs and losses may include, without limitation,
losses incurred by a Lender as a result of funding and other contracts entered
into by such Lender to fund any LIBOR Loan. Each Lender demanding payment under
this Section shall deliver to Borrower a certificate setting forth the amount of
costs and losses for which demand is made. Such certificate shall, in the
absence of manifest error, be conclusive and binding on Borrower as to the
amount of such loss for all purposes. This Section 2.11 shall survive the
payment in full and performance of all of Borrower's other Obligations.
SECTION 2.12 AUTHORIZED REPRESENTATIVES
On the Closing Date, and from time to time subsequent thereto at Borrower's
option, Borrower shall deliver to Administrative Lender a written notice in the
form of Exhibit F attached hereto, which designates by name each of Borrower's
Authorized Representatives and includes each of their respective specimen
signatures (each, a "Notice of Authorized Representatives"). Administrative
Lender shall be entitled to rely conclusively on the authority of each officer
or employee designated as an Authorized Representative in the most current
Notice of Authorized Representatives delivered by Borrower to Administrative
Lender, to request borrowings and select interest rate options hereunder, and to
give to Administrative Lender such other notices as are specified herein as
being made through one of Borrower's Authorized Representatives, until such time
as Borrower has delivered to Administrative Lender, and Administrative Lender
has actual receipt of, a new written Notice of Authorized Representatives.
Administrative Lender shall have no duty or obligation to Borrower to verify the
authenticity of any signature appearing on any Notice of Borrowing, Notice of
Conversion or Continuation or any other written notice from an Authorized
Representative or to verify the authenticity of any person purporting to be an
Authorized Representative giving any telephonic notice permitted hereby.
PAGE 34
ARTICLE III. COLLECTION AND ADMINISTRATION
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SECTION 3.1 CASH COLLATERAL ACCOUNT
(a) Lock Box Account(s). Borrower shall, at Borrower's expense and in the
manner requested by Administrative Lender from time to time, direct that all
payments, remittances and all other collections and proceeds of Borrower's
Rights to Payment and other Collateral ("Proceeds") shall be delivered to one or
more lock box account(s) maintained in Administrative Lender's name. In
connection therewith, Borrower shall execute such lockbox agreement(s) as
Administrative Lender shall require, which agreement(s) shall provide for the
daily deposit into the Cash Collateral Account (as defined in Section 3.1(b)) of
amounts delivered to the lock boxes.
(b) Cash Collateral Account. Borrower shall maintain with Administrative
Lender, and Borrower hereby grants to Administrative Lender a security interest
in, a non-interest bearing deposit account over which Borrower shall have no
control ("Cash Collateral Account"). Borrower and all of its affiliates,
Subsidiaries, shareholders, directors, employees or agents shall, acting as
trustee for Lenders, receive, as the property of Lenders, all Proceeds that come
into their possession or under their control and immediately upon receipt
thereof, shall deposit or cause the same to be deposited in the Cash Collateral
Account, or remit the same or cause the same to be remitted, in kind, to
Administrative Lender. In no event shall Borrower permit any Proceeds to be
commingled with Borrower's own funds.
(c) Application of Proceeds. All Proceeds received by Administrative Lender
in the Cash Collateral Account on any Business Day shall be applied against the
Obligations on such Business Day if received on or before 1:00 p.m. (Seattle
time) on such Business Day or on the next Business Day if received after 1:00
p.m. (Seattle time), in either event subject to collection thereof in good
funds.
SECTION 3.2 STATEMENTS
Administrative Lender shall render to Borrower each month a statement
setting forth the balance in the loan account(s) maintained by Administrative
Lender for Borrower pursuant to this Agreement, including principal, interest,
fees, costs and expenses. Each such statement shall be subject to subsequent
adjustment by Administrative Lender but shall, absent manifest errors or
omissions, be considered correct and deemed accepted by Borrower and
conclusively binding upon Borrower as an account stated except to the extent
that Administrative Lender receives a written notice from Borrower of any
specific exceptions thereto within thirty (30) days after the date such
statement has been mailed by Administrative Lender. Until such time as
Administrative Lender shall have rendered to Borrower a written statement as
PAGE 35
provided above, the balance in the loan account(s) shall be presumptive evidence
of the amounts due and owing to Lenders by Borrower.
SECTION 3.3 PAYMENTS
All amounts due under any of the Loan Documents shall be payable to the
Cash Collateral Account as provided in Section 3.1 hereof or such other place as
Administrative Lender may designate from time to time. Borrower shall make all
payments due hereunder free and clear of, and without deduction or withholding
for or on account of, any setoff, counterclaim, defense, duties, taxes, levies,
imposts, fees, deductions, withholding, restrictions or conditions of any kind.
If after receipt of any payment of, or proceeds of Collateral applied to the
payment of, any of the Obligations any Lender is required to surrender or return
such payment or proceeds to any person or entity for any reason, then the
Obligations intended to be satisfied by such payment or proceeds shall be
reinstated and continue and this Agreement shall continue in full force and
effect as if such payment or proceeds had not been received by such Lender.
Borrower hereby indemnifies and holds Lenders harmless for the amount of any
payments or proceeds surrendered or returned. This Section shall remain
effective notwithstanding any contrary action which may be taken by any Lender
in reliance upon such payment or proceeds. This Section 3.3 shall survive the
payment in full and performance of all of Borrower's other Obligations.
ARTICLE IV. SECURITY
----------
SECTION 4.1 GRANT OF SECURITY INTEREST
Borrower hereby grants to Administrative Lender, for the benefit of and on
behalf of the Lenders, a security interest in all of the Collateral as security
for the full and prompt payment in cash and performance of the Obligations.
SECTION 4.2 PERFECTION; DUTY OF CARE
(a) Until all the Obligations have been fully satisfied and paid in cash,
Borrower shall perform all steps requested by Administrative Lender to perfect,
maintain and protect Administrative Lender's security interest in the
Collateral, including, without limitation, (i) executing and filing financing
and continuation statements in form and substance satisfactory to Administrative
Lender, and (ii) delivering all Collateral in which Administrative Lender's
security interest may be perfected by possession together with such endorsements
as Administrative Lender may request.
PAGE 36
(b) Administrative Lender shall have the right at all times, and from time
to time, to contact Borrower's account debtors to verify Rights to Payment.
(c) Borrower shall pay or cause to be paid all taxes, assessments and
governmental charges levied or assessed or imposed upon or with respect to the
Collateral or any part thereof; provided, however, Borrower shall not be
required to pay any tax if the validity and/or amount thereof is being contested
in good faith and by appropriate and lawful proceedings promptly initiated and
diligently conducted of which Borrower has given prior notice to Administrative
Lender and for which appropriate reserves have been established and so long as
levy and execution have been and continue to be stayed. If Borrower fails to pay
or so contest and reserve for such taxes, assessments and governmental charges,
Administrative Lender may (but shall not be required to) pay the same and add
the amount of such payment to the principal of the Loan.
(d) In order to protect or perfect the security interest which
Administrative Lender is granted hereunder, Administrative Lender may discharge
any Lien that is not a Permitted Lien or bond the same, pay for any insurance
that Borrower has failed to maintain as required by this Agreement, maintain
guards, pay any service bureau, or obtain any record and add the same to the
principal of the Loan.
(e) Administrative Lender shall have no duty of care with respect to the
Collateral, except that Administrative Lender shall exercise reasonable care
with respect to the Collateral in Administrative Lender's custody, but shall be
deemed to have exercised reasonable care if such property is accorded treatment
substantially equal to that which Administrative Lender accords its own
property, or if Administrative Lender takes such action with respect to the
Collateral as Borrower shall request in writing, provided that no failure to
comply with any such request nor any omission to do any such act requested by
Borrower shall be deemed a failure to exercise reasonable care. Administrative
Lender's failure to take steps to preserve rights against any parties or
property shall not be deemed to be a failure to exercise reasonable care with
respect to the Collateral in Administrative Lender's custody.
SECTION 4.3 SUBORDINATION
If any Equipment is the subject of a Sale/Leaseback Transaction,
Administrative Lender, upon Borrower's request and provided no Default exists,
will subordinate its security interest in such Equipment to the interests
therein of the lessor on such terms as are reasonably acceptable to such lessor.
PAGE 37
ARTICLE V. REPRESENTATIONS AND WARRANTIES
---------
Borrower makes the following representations and warranties to
Administrative Lender and Lenders, subject to the exceptions set forth on the
Disclosure Schedule, which representations and warranties shall survive the
execution of this Agreement and shall continue in full force and effect until
the full and final payment in cash, and satisfaction and discharge, of all
Obligations.
SECTION 5.1 LEGAL STATUS; SUBSIDIARIES
It is a corporation, duly organized and validly existing under Oregon law,
and is qualified or licensed to do business (and is in good standing as a
foreign corporation, if applicable) in all jurisdictions in which such
qualification or licensing is required or in which the failure to so qualify or
to be so licensed could have a Material Adverse Effect. It is not and has not,
during the preceding five (5) years, been known as or used any other corporate
or fictitious name and has not acquired any of its assets in a bulk transfer.
The Disclosure Schedule lists each Subsidiary as of the Closing Date. Except as
set forth on the Disclosure Schedule, as of the Closing Date, Borrower has no
Subsidiaries and does not own or hold, directly or indirectly, any capital stock
or equity security of, or any equity interest in, any Person.
SECTION 5.2 AUTHORIZATION AND VALIDITY
The Loan Documents have been duly authorized and the performance by it of
its obligations under the Loan Documents constitute a proper corporate purpose
under all applicable law. The Loan Documents upon their execution and delivery
in accordance with the provisions hereof will constitute legal, valid and
binding agreements and obligations of it enforceable against it in accordance
with their respective terms.
SECTION 5.3 NO VIOLATION
The execution, delivery and performance by it of each of the Loan Documents
does not violate or contravene any provision of its Articles of Incorporation or
By-Laws and does not violate any Governmental Rule or result in a breach of or
constitute a default under any contract, obligation, indenture or other
instrument to which it or any Subsidiary of it is a party or by which it may be
bound, which violation, breach or default would have a Material Adverse Effect.
PAGE 38
SECTION 5.4 LITIGATION
There are no pending, or to its knowledge threatened, actions, claims,
investigations, suits or proceedings, by or before any governmental authority,
arbitrator, court or administrative agency that could have a Material Adverse
Effect.
SECTION 5.5 CORRECTNESS OF FINANCIAL STATEMENT
The consolidated financial statements of Borrower dated as of December 31,
1998, heretofore delivered by Borrower to Administrative Lender, (a) present
fairly the financial condition of Borrower and its affiliates; (b) disclose all
liabilities of Borrower that are required to be reflected or reserved against
under GAAP, whether liquidated or unliquidated, fixed or contingent; and (c)
have been prepared in accordance with GAAP (except as otherwise noted therein).
Except as disclosed to Administrative Lender pursuant to Section 7.3, since the
date of such financial statements there has been no change or changes which have
resulted in a Material Adverse Effect.
SECTION 5.6 TAXES
It has filed, or caused to be filed, all federal, state, local and foreign
tax returns required to be filed by it, and has paid, or caused to be paid, all
taxes as are shown on such returns, or on any assessment received by it, to the
extent that such taxes have become due, except as otherwise contested in good
faith. It has set aside proper amounts on its books, determined in accordance
with GAAP, for the payment of all taxes for the years that have not been audited
by the respective tax authorities and for taxes being contested by it.
SECTION 5.7 NO SUBORDINATION
There is no agreement, indenture, contract or instrument to which it or any
Subsidiary is a party or by which it or any Subsidiary may be bound that
requires the subordination in right of payment of any of its obligations subject
to this Agreement to any other obligation of it or such Subsidiary.
SECTION 5.8 ERISA
It is in compliance in all material respects with the applicable provisions
of ERISA. It has not violated any provision of any Plan maintained or
contributed to by it in a manner that could result in a Material Adverse Effect.
No "reportable event" (as defined in Title IV of ERISA) has occurred and is
continuing with respect to any Plan initiated by it.
PAGE 39
SECTION 5.9 OTHER OBLIGATIONS
It is not in default with respect to any Indebtedness in excess of $100,000
or any of its material Contractual Obligations.
SECTION 5.10 ENVIRONMENTAL MATTERS
It and each Subsidiary of it is in compliance in all material respects with
all Environmental Laws applicable to it, other than such noncompliance as in the
aggregate will not have a Material Adverse Effect. Neither it nor any Subsidiary
of it has received notice that it is the subject of any federal or state
investigation evaluating whether any Remedial Action is needed, except for such
notices received that in the aggregate do not refer to Remedial Actions that
would reasonably be expected to result in a Material Adverse Effect. There have
been no Releases by it or a Subsidiary of it that could reasonably be expected
to result in a Material Adverse Effect.
SECTION 5.11 LIENS
It has good, indefeasible, and merchantable title to and ownership of the
Collateral, free and clear of all Liens, except Permitted Liens. There are no
Liens of any nature whatsoever on any of its properties other than Permitted
Liens.
SECTION 5.12 NO BURDENSOME RESTRICTIONS; NO DEFAULTS
(a) It is not a party to any Contractual Obligation the compliance with
which would have a Material Adverse Effect or the performance of which, either
unconditionally or upon the happening of an event, will result in the creation
of a Lien (other than Permitted Liens) on its property or assets.
(b) No facts or circumstances exist which would constitute a breach of any
obligation, representation or warranty of Borrower hereunder if this Agreement
were in effect immediately prior to Borrower's execution hereof.
(c) There is no Governmental Rule the compliance with which by it is
reasonably likely to have a Material Adverse Effect.
SECTION 5.13 NO OTHER VENTURES
It is not engaged in any joint venture or partnership with any other
Person.
PAGE 40
SECTION 5.14 INVESTMENT COMPANY ACT
It is not an "investment company" or an "affiliated person" of, or
"promoter" or "principal underwriter" for, an "investment company", as such
terms are defined in the Investment Company Act of 1940, as amended.
SECTION 5.15 INSURANCE
All current policies of insurance of any kind or nature owned by or issued
to it, including, without limitation, policies of fire, theft, product
liability, public liability, property damage, other casualty, employee fidelity,
workers' compensation and employee health and welfare insurance, are in full
force and effect and are of a nature and provide such coverage as is sufficient
and as is customarily carried by companies of its size and character. It has no
reason to believe that it will be unable to comply with Section 7.5.
SECTION 5.16 LABOR MATTERS
(a) Other than any of the following which in the aggregate have no
reasonable likelihood of having a Material Adverse Effect: (i) there are no
strikes, work stoppages, slowdowns or lockouts pending or to its knowledge
threatened against or involving it; (ii) there are no arbitrations or grievances
pending or to its knowledge threatened against or involving it; (iii) there is
no organizing activity involving it pending or to its knowledge threatened by
any labor union or group of employees; (iv) there are no representation
proceedings pending against it or to its knowledge threatened with the National
Labor Relations Board; (v) no labor organization or group of its employees has
made a pending demand on it for recognition; (vi) there are no unfair labor
practice charges, grievances or complaints pending or in process or to its
knowledge threatened by or on behalf of any employee or group of its employees;
(vii) there are no complaints or charges against it pending or to its knowledge
threatened to be filed with any federal, state or local court, governmental
agency or arbitrator based on, arising out of, in connection with, or otherwise
relating to its employment of any individual; and (viii) it is in material
compliance with all Governmental Rules, and all orders of any Governmental
Authority or arbitrator, relating to the employment of labor including all such
laws relating to wages, hours, collective bargaining, discrimination, civil
rights, and the payment of withholding and/or social security and similar taxes.
(b) As of the date hereof it is not a party to, and has no obligations
under, any collective bargaining agreement.
PAGE 41
SECTION 5.17 FORCE MAJEURE
Neither its business nor its properties are currently suffering from the
effects of any fire, explosion, accident, strike, lockout or other labor
dispute, drought, storm, hail, earthquake, embargo, act of God or of the public
enemy or other casualty (whether or not covered by insurance), other than those
the consequences of which in the aggregate would have no Material Adverse
Effect.
SECTION 5.18 INTELLECTUAL PROPERTY
It owns or licenses or otherwise has the right to use all material
licenses, Permits, patents, patent applications, trademarks, trademark
applications, service marks, trade names, copyrights, copyright applications,
franchises, authorizations and other intellectual property rights that are
necessary for the operation of its businesses, without infringement upon or
conflict with the rights of any other Person with respect thereto, including,
without limitation, all trade names. No slogan or other advertising device,
product, process, method, substance, part or other material now employed, or now
contemplated to be employed, by it infringes upon or conflicts with any rights
owned by any other Person, which infringement or conflict is reasonably likely
to have a Material Adverse Effect, and no claim or litigation regarding any of
the foregoing is pending or, to its knowledge, threatened, the existence of
which is reasonably likely to have a Material Adverse Effect. No patent,
invention, device, application, principle or any statute, law, rule, regulation,
standard or code is pending or, to its knowledge, proposed, other than those the
consequences of which in the aggregate have no reasonable likelihood of having a
Material Adverse Effect.
SECTION 5.19 CERTAIN INDEBTEDNESS
The Disclosure Schedule identifies as of the Closing Date all Indebtedness
of it which is either (a) for borrowed money or (b) incurred outside of the
ordinary course of the business.
SECTION 5.20 SOLVENCY
It has received consideration which is the reasonable equivalent value of
the obligations and liabilities that it has incurred to Lenders. It is not
insolvent as defined in any applicable state or federal statute, nor will it be
rendered insolvent by the execution and delivery of this Agreement or the other
Loan Documents. It does not intend to, nor does it believe that it will, incur
debts beyond its ability to pay them as they mature. It has capital sufficient
to carry on its business and transactions and all business and transactions in
which it is about to engage.
PAGE 42
SECTION 5.21 TRUTH, ACCURACY OF INFORMATION
All financial and other information furnished to Lenders in connection with
this Agreement is accurate in all material respects and does not contain any
untrue statement of a material fact or omit to state a material fact necessary
in order to make the information furnished, in light of the circumstances under
which furnished, not misleading.
SECTION 5.22 CHIEF EXECUTIVE OFFICE AND OTHER LOCATIONS
As of the date hereof, its chief executive office and principal place of
business is 0000 X.X. Xxxxxxxx Xxxxxx, Xxxxxx, Xxxxxx 00000-0000. Its books and
records are located at its chief executive office, and the only other offices
and/or locations where it keeps the Collateral (except for Inventory which is in
transit) or conducts any of its business are set forth in Section 5.22 of the
Disclosure Schedule.
SECTION 5.23 ACCOUNTS
Unless otherwise noted by it, each Right to Payment listed or referred to
on its trial balance, balance sheet or the books or records, or referred to in
any report to Administrative Lender (other than Rights to Payment which are
proceeds of letters of credit, insurance proceeds, contract rights, chattel
paper, instruments and documents not arising directly out of a sale or lease of
goods or services) is and will be free and clear of Liens in favor of any Person
other than Administrative Lender, will cover a bona fide sale or lease and
delivery of goods usually dealt in by it in the ordinary course of its business
or will cover the rendition of services by it to customers of a kind ordinarily
rendered in the ordinary course of its business, and will be for a liquidated
amount from a customer competent to contract therefor and maturing as stated by
it.
SECTION 5.24 FISCAL YEAR
Borrower's fiscal year ends on June 30.
ARTICLE VI. CONDITIONS
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SECTION 6.1 CONDITIONS OF INITIAL EXTENSION OF CREDIT
The obligation of Lenders to extend any credit contemplated by this
Agreement is subject to the fulfillment to Administrative Lender's and each
Lender's satisfaction of all of the following conditions:
PAGE 43
(a) Approval of Counsel. All legal matters incidental to the extension of
credit hereunder shall be reasonably satisfactory to counsel for Administrative
Lender and each Lender.
(b) Documentation. Administrative Lender and each Lender shall have
received, in form and substance satisfactory to Administrative Lender and each
Lender, each of the following duly executed:
(i) this Agreement, a Letter of Credit Agreement for any Letter of
Credit to be issued on the Closing Date and the Notes;
(ii) corporate borrowing resolution from Borrower;
(iii) a good standing certificate and certified copy of the Articles
of Incorporation for Borrower;
(iv) a copy of the bylaws of Borrower certified by its secretary as
correct and complete;
(v) certificate of incumbency from Borrower;
(vi) Notice of Authorized Representatives;
(vii) an opinion of Stoel Rives LLP counsel to Borrower, as to such
matters as Administrative Lender and each Lender shall reasonably require;
(viii) a Borrowing Base Certificate; and
(ix) such other documents as Administrative Lender and each Lender may
require.
(c) Financial Condition. There is no event or circumstance that can
reasonably be expected to have a Material Adverse Effect.
(d) Fees and Expenses. Borrower shall have paid all fees and invoiced costs
and expenses then due pursuant to the terms of this Agreement and otherwise
owing to KeyBank and its affiliates and to Xxxxxx.
(e) Insurance. Borrower shall have delivered to Administrative Lender
evidence of the insurance coverage, including loss payable endorsements,
required pursuant to Section 7.5.
PAGE 44
(f) Xxxxxx.
(i) Borrower shall have amended the terms of its separate equipment
and real estate financing arrangement with Xxxxxx to provide for a leverage
covenant (excluding subordinated debt) not more onerous on Borrower than
3.75:1 and otherwise on terms acceptable to Administrative Lender; and
(ii) Xxxxxx shall have entered into an intercreditor agreement with
Administrative Lender on terms satisfactory to Administrative Lender.
(g) Availability. Immediately after the initial funding of the Loans and
the issuance of the Letters of Credit, and after payment of all transaction
expenses, Borrower shall have Available Credit of at least $4,000,000.
SECTION 6.2 CONDITIONS OF EACH EXTENSION OF CREDIT
The obligation of each Lender to make any Loan (including any Loan being
made by such Lender on the Closing Date) and of the L/C Bank to issue any Letter
of Credit shall be subject to the further conditions precedent that:
(a) the following statements shall be true on the date of such Loan or
issuance, both before and after giving effect thereto and to the application of
the proceeds therefrom (and the acceptance by Borrower of the proceeds of such
Loan or by the beneficiary thereof or its designee of such Letter of Credit
shall constitute a representation and warranty by Borrower that on the date of
such Loan or such issuance such statements are true):
(i) the representations and warranties of Borrower contained in the
Loan Documents are correct in all material respects on and as of such date
as though made on and as of such date or, as to those representations and
warranties limited by their terms to a specified date, were correct in all
material respects on and as of such date; and
(ii) no Default is continuing or would result from the Loans being
made or the Letter of Credit being issued on such date;
(b) the making of the Loans or the issuance of such Letter of Credit on
such date does not violate any Governmental Rules and is not enjoined,
temporarily, preliminarily or permanently;
(c) the Administrative Lender shall have received such additional
documents, information and materials as any Lender or the L/C Bank, through the
Administrative Lender, may reasonably request; and
PAGE 45
(d) no event or circumstance exists that can reasonably be expected to have
a Material Adverse Effect.
ARTICLE VII. AFFIRMATIVE COVENANTS
-----------
Borrower covenants that so long as Lenders remain committed to extend
credit to Borrower pursuant to the terms hereof or any liabilities (whether
direct or contingent, liquidated or unliquidated) of Borrower under any of the
Loan Documents remain outstanding, and until payment in full, in cash, of all
Obligations, Borrower shall, unless Majority Lenders shall otherwise consent in
writing:
SECTION 7.1 PUNCTUAL PAYMENTS
Punctually pay all principal, interest, fees and other liabilities due
under any of the Loan Documents at the times and place and in the manner
specified therein.
SECTION 7.2 ACCOUNTING RECORDS
Keep accurate books and records of the financial affairs of it and its
Subsidiaries sufficient to permit the preparation of financial statements
therefrom in accordance with GAAP.
SECTION 7.3 FINANCIAL STATEMENTS AND REPORTS
Provide to each Lender all of the following, in form and detail reasonably
satisfactory to Administrative Lender:
(a) not later than 90 days after the end of each fiscal year, a copy of its
Form 10K filed with the Securities and Exchange Commission, together with its
accountant's unqualified opinion with respect to the annual audited financial
statements included within the Form 10K;
(b) not later than twenty-five (25) days after and as of the end of each
month, a copy of its monthly management package distributed to its directors
and, if not included in the management package, financial statements of Borrower
in accordance with GAAP (subject to normal year-end adjustments and, if Borrower
so elects, without footnotes) together with a comparison of Borrower's financial
condition for the year to date with respect to the same period of the
immediately preceding fiscal year;
(c) not later than forty-five (45) days and as of the end of each fiscal
quarter, a copy of its Form 10Q filed with the Securities and Exchange
Commission;
PAGE 46
(d) contemporaneously with the delivery of each Form 10K and Form 10Q
required hereby, a certificate of Borrower's chief financial officer or
treasurer substantially in the form of Exhibit G attached hereto (i) stating
that no Default existed at any time during the period covered by such statement,
except for those events or conditions, if any, described in such certificate in
reasonable detail together with a statement of any action taken or proposed to
be taken with respect thereto and (ii) setting forth the calculations required
to establish compliance by Borrower with the covenants set forth in Section
7.16;
(e) not later than twenty-five (25) days after and as of the end of each
month: (i) a Borrowing Base Certificate; (ii) a report of Borrower's inventory,
valued at cost determined on the first-in, first-out basis as of the end of the
preceding month, which report shall separately identify, by category, raw
materials, work in process and finished goods; (iii) a report of the aging of
Borrower's accounts payable as of the end of the preceding month in the
following categories: 0-30 days, 31-60 days, 61-90 days and over 90 days; and
(iv) a report of the aging of Borrower's Accounts as of the end of the preceding
month in the following categories: 0-30 days, 31-60 days, 61-90 days and over 90
days;
(f) except as otherwise provided above, within twenty (20) days after the
sending or filing thereof, copies of all reports and statements sent to or filed
by Borrower with the Securities and Exchange Commission;
(g) not later than forty-five (45) days before the beginning of each fiscal
year, or sooner if available, Borrower shall furnish to Administrative Lender
detailed projections for Borrower's next fiscal year setting forth projected
income, cash flow and borrowing availability under this Agreement for each
quarter and the projected balance sheet as of the end of each quarter, together
with a certificate of Borrower's chief financial officer or treasurer setting
forth the assumptions on which such projections are based and certifying that,
in the judgment of such officer, such assumptions are reasonable based on
careful consideration and on the information known to Borrower at the time such
projections were prepared;
(h) promptly upon becoming aware thereof, a copy of each Schedule 13D and
13G filed with the Securities and Exchange Commission with respect to Borrower;
and
(i) from time to time such other information as Administrative Lender may
reasonably request.
PAGE 47
SECTION 7.4 COMPLIANCE
Preserve and maintain all licenses, Permits, governmental approvals,
rights, privileges and franchises necessary for the conduct of its business and
comply in all material respects, with all Governmental Rules, Contractual
Obligations, commitments, instruments, licenses, Permits and franchises, other
than such failure to preserve or maintain or non-compliance the consequences of
which in the aggregate are not reasonably likely to have a Material Adverse
Effect.
SECTION 7.5 INSURANCE
(a) At all times, Borrower shall maintain property insurance insuring all
Collateral which is tangible property against loss or damage by fire, theft,
burglary, pilferage, loss in transit and such other hazards as Administrative
Lender shall specify in an amount equal to the full insurable value of the
Collateral with reasonable deductible amounts. Such insurance shall contain
extra expense and business interruption endorsements, shall contain a lender's
loss payable endorsement acceptable to Administrative Lender, shall be evidenced
by policies containing terms reasonably acceptable to Administrative Lender and
shall be provided by insurers acceptable to Administrative Lender. The policies
or a certificate thereof signed by the insurer shall be delivered to
Administrative Lender within five (5) Business Days after the issuance or
renewal of the policies to Borrower. Each such policy shall provide that such
policy may not be amended or canceled without thirty (30) days prior written
notice to Administrative Lender. At least fifteen (15) days before the
expiration of a policy, Borrower shall deliver to Administrative Lender a binder
(or other evidence reasonably acceptable to Administrative Lender) indicating
that such policy has been renewed or that a substitute for such policy will be
issued effective upon the expiration of such policy. If Borrower fails to do so,
Administrative Lender may (but shall not be required to) procure such insurance
and add the cost thereof to the Loan.
(b) At all times, Borrower shall maintain in full force and effect such
liability and other insurance with respect to its activities as may be
reasonably required by Administrative Lender. Such liability insurance shall
name Administrative Lender as an additional insured with respect to the
activities of Borrower and shall be provided by insurer(s) acceptable to
Administrative Lender.
(c) OREGON STATUTORY NOTICE. The following is inserted pursuant to ORS
746.201:
PAGE 48
WARNING
Unless Borrower provides Administrative Lender with evidence of
the insurance coverage as required by this Agreement, Administrative
Lender may purchase insurance at Borrower's expense to protect
Administrative Lender's interest. This insurance may, but need not,
also protect Borrower's interest. If the collateral becomes damaged,
the coverage Administrative Lender purchases may not pay any claim
Borrower makes or any claim made against Borrower. Borrower may later
cancel this coverage by providing evidence that Borrower has obtained
property coverage elsewhere.
Borrower is responsible for the cost of any insurance purchased
by Administrative Lender. The cost of this insurance may be added to
Borrower's contract or loan balance. If the cost is added to
Borrower's contract or loan balance, the interest rate on the
underlying contract or loan will apply to this added amount. The
effective date of coverage may be the date Borrower's prior coverage
lapsed or the date Borrower failed to provide proof of coverage.
The coverage Administrative Lender purchases may be considerably
more expensive than insurance Borrower can obtain on its own and may
not satisfy any need for property damage coverage or any mandatory
liability insurance requirements imposed by applicable law.
SECTION 7.6 FACILITIES
Keep all properties useful or necessary to its business in good repair and
condition, and from time to time make necessary repairs, renewals and
replacements thereto so that such property shall be fully and efficiently
preserved and maintained.
SECTION 7.7 TAXES AND OTHER LIABILITIES
Pay and discharge when due any and all indebtedness, obligations,
assessments and taxes, both real or personal, including without limitation
Federal and state income taxes and state and local property taxes and
assessments, except such as a Borrower may in good faith contest or as to which
a bona fide dispute may arise, and for which Borrower has made provision for
adequate reserves in accordance with GAAP.
PAGE 49
SECTION 7.8 LITIGATION
Promptly give notice in writing to Administrative Lender of any litigation
pending or threatened against Borrower or any Subsidiary with a claim in excess
of $250,000 in the aggregate for Borrower and all Subsidiaries.
SECTION 7.9 NOTICE TO ADMINISTRATIVE LENDER
(a) Promptly (but in no event more than three (3) Business Days after the
occurrence of each such event or matter) give written notice to Administrative
Lender in reasonable detail of: (i) the occurrence of any Default; (ii) any
termination or cancellation of any insurance policy which Borrower is required
to maintain, unless such policy is replaced without any break in coverage with
an equivalent or better policy; (iii) any uninsured or partially uninsured loss
or losses through liability or property damage, or through fire, theft or any
other cause affecting the property of Borrower in excess of an aggregate of
$500,000 during any twelve month period; (iv) any change in the name or the
organizational structure of Borrower or any Significant Subsidiary; or (v) the
occurrence of any event that could reasonably be expected to have a Material
Adverse Effect.
(b) As soon as possible and in any event within ten (10) days after
Borrower knows or has reason to know that any "reportable event" (as defined in
Title IV of ERISA) that triggers an obligation to file a notice with the PBGC
with respect to any Plan has occurred, deliver to Administrative Lender a
statement of the President or chief financial officer of Borrower setting forth
details as to such reportable event and the action which Borrower proposes to
take with respect thereto, together with a copy of the notice of such reportable
event to the PBGC.
(c) Promptly, upon receipt (but in no event more than three (3) Business
Days after receipt) of a notice by Borrower, any affiliate of Borrower or any
administrator of any Plan that the PBGC has instituted proceedings to terminate
a Plan or to appoint a trustee to administer a Plan, provide to Administrative
Lender a copy of such notice.
SECTION 7.10 CONDUCT OF BUSINESS
Except as otherwise permitted by this Agreement, (a) conduct its business
in a regular manner and (b) use its reasonable efforts in the ordinary course
and consistent with past practice to (i) preserve its business and the goodwill
and business of the customers, advertisers, suppliers and others with whom it
has business relations, (ii) keep available the services and goodwill of its
present employees, and (iii) preserve all rights, Permits, licenses, approvals,
privileges, registered patents, trademarks, trade
PAGE 50
names, copyrights and service marks and other intellectual property with respect
to its business.
SECTION 7.11 PRESERVATION OF CORPORATE EXISTENCE, ETC.
Preserve and maintain its corporate existence, rights (charter and
statutory) and material franchises, unless the failure to so preserve and
maintain is not reasonably likely to have a Material Adverse Effect.
SECTION 7.12 ACCESS
(a) At any reasonable time and from time to time upon at least two (2)
Business Days' prior notice from Administrative Lender (unless a Default shall
have occurred and be continuing, in which case no prior notice is necessary),
permit Administrative Lender, or any agents or representatives thereof, to (i)
examine and make copies of and abstracts from Borrower's records and books of
account, (ii) visit Borrower's properties, (iii) discuss Borrower's affairs,
finances and accounts with any of its officers or directors who may then be
reasonably available, (iv) communicate directly with Borrower's independent
certified public accountants, (v) arrange for verification of Borrower's Rights
to Payment under reasonable procedures directly with the obligors thereon or by
other methods, and (vi) examine and inspect Borrower's Inventory and the
Equipment wherever located. Each Lender shall have the right, at its own
expense, to accompany Administrative Lender on any audit by Administrative
Lender of the Collateral. Borrower acknowledges that Administrative Lender, in
the exercise of the foregoing rights, intends to audit the Collateral at least
once every six (6) months. Borrower shall authorize its independent certified
public accountants to disclose to Administrative Lender any and all financial
statements and other information of any kind, including, without limitation,
copies of any management letter, or the substance of any oral information that
such accountants may have with respect to the business, financial condition,
results of operations or other affairs of Borrower and each of its Subsidiaries.
(b) Borrower shall execute and deliver at the request of Administrative
Lender such instruments as may be necessary for Administrative Lender to obtain
such information concerning the business of Borrower as Administrative Lender
may require from accountants, service bureaus or others having custody of or
maintaining records or assets of Borrower. Borrower shall furnish Administrative
Lender at reasonable intervals with such statements and reports regarding the
Collateral, Borrower's financial condition and the results of Borrower's
operations, in addition to those otherwise herein required, as Administrative
Lender may request from time to time.
PAGE 51
SECTION 7.13 PERFORMANCE AND COMPLIANCE WITH OTHER COVENANTS
Perform and observe all the terms, covenants and conditions required to be
performed and observed by it under its Contractual Obligations (including,
without limitation, to pay all rent and other charges payable under any lease
and all debts and other obligations as the same become due), and do all things
necessary to preserve and to keep unimpaired its rights under such Contractual
Obligations, other than such failures the consequences of which in the aggregate
are not reasonably likely to have a Material Adverse Effect.
SECTION 7.14 FISCAL YEAR; ACCOUNTING PRACTICES
Notify Administrative Lender of any material change in its accounting
practices.
SECTION 7.15 ENVIRONMENTAL
(a) Promptly give notice to Administrative Lender upon obtaining knowledge
of (i) any claim, injury, proceeding, investigation or other action, including a
request for information or a notice of potential environmental liability, by or
from any Governmental Authority or any third-party claimant that could result in
Borrower or any Subsidiary incurring Environmental Liabilities and Costs or (ii)
the discovery of any Release at, on, under or from any real property, facility
or equipment owned or leased by Borrower or a Subsidiary in excess of reportable
or allowable standards or levels under any applicable Environmental Law, or in
any manner or amount that could reasonably be expected to result in Borrower or
any Subsidiary incurring Environmental Liabilities and Costs.
(b) Upon discovery of the presence on any property owned or leased by
Borrower or a Subsidiary of any Contaminant that reasonably could be expected to
result in Environmental Liabilities and Costs, take all Remedial Action required
by applicable Environmental Law.
SECTION 7.16 FINANCIAL CONDITION
(a) Maintain Borrower's financial condition on a consolidated basis as
follows using GAAP consistently with prior practices, except to the extent
modified by the definitions herein:
(i) a Fixed Charge Coverage Ratio of not less than 1.5:1;
PAGE 52
(ii) the ratio of EBITDAR to Interest Expense and Rents of not less
than 1.75:1;
(iii) a Funded Debt Ratio of not more than 4.5:1;
(iv) a Senior Funded Debt Ratio of not more than 3.75:1; and
(v) consolidated net worth of not less than the sum of (A) $42,049,000
less, (B) the one-time restructuring charge for the Redmond, Washington
facility for the quarter ending March 31, 1999 plus (C) 50% of Borrower's
positive consolidated net income for each quarter beginning with the
quarter ended March 31, 1999.
(b) As used herein, the following terms shall have the meanings set forth
below:
(i) "Debt for Borrowed Money" means, without duplication, as of any
date, all of Borrower's (A) indebtedness for borrowed money (including, without
limitation, reimbursement and all other obligations with respect to surety
bonds, letters of credit and bankers' acceptances, whether or not matured) or
for the deferred purchase price of property or services, (B) obligations
evidenced by notes, bonds, debentures or similar instruments, (C) indebtedness
created or arising under any conditional sale or other title retention agreement
with respect to property acquired, (D) Capitalized Lease Obligations and (E)
obligations under Other Leases.
(ii) "EBITDA" means, as of the end of a fiscal quarter, Borrower's
consolidated net income after taxes for the twelve months ending with such
quarter plus (A) the sum of the amounts for such twelve month period included in
determining such net income of (i) consolidated interest expense, (ii)
consolidated income tax expense, (iii) consolidated depreciation expense, (iv)
consolidated amortization expense, (v) extraordinary non-cash losses and charges
and other non-recurring non-cash losses and charges and (vi) if the quarter
ending March 31, 1999 is included within such twelve month period, the lesser of
$4,000,000 or the cash portion of the one-time restructuring charge for the
Redmond, Washington facility for the quarter ending March 31, 1999; less (B)
gains on sales of assets (excluding sales in the ordinary course of business)
and other extraordinary non-cash gains for such twelve month period.
(iii) "EBITDAR" means, as of the end of a fiscal quarter, EBITDA plus
the sum of consolidated operating lease expense and consolidated synthetic lease
expense for the twelve months ending with such quarter.
PAGE 53
(iv) "Fixed Charge Coverage Ratio" means, as of the end of a fiscal
quarter, the ratio of EBITDA to the sum of the following for the twelve months
ending with such quarter: (A) consolidated scheduled or required principal
payments of long-term debt, (B) consolidated scheduled or required payments of
Capitalized Lease Obligations and (C) consolidated interest expense.
(v) "Funded Debt" means, as of any date, all outstanding Debt for
Borrowed Money (including the current portion thereof) with an original maturity
in excess of one year or extendible at a creditor's option for a period of more
than one year from the date of creation thereof less the outstanding balance of
the 9.0% Subordinated Convertible facility issued in December, 1998.
(vi) "Funded Debt Ratio" means, as of the end of a fiscal quarter, the
ratio of Funded Debt outstanding on such date to EBITDA.
(vii) "Interest Expense and Rents" means, as of the end of a fiscal
quarter, the sum of the following for the twelve months ending with such
quarter: (A) interest expense, (B) operating lease expense and (C) synthetic
lease expense.
(viii) "Senior Funded Debt" means, as of any date, Funded Debt less
indebtedness that has been subordinated in writing on terms acceptable to
Administrative Lender in favor of the prior payment in full in cash of the
Obligations.
(ix) "Senior Funded Debt Ratio" means, as of the end of a fiscal
quarter, the ratio of Senior Funded Debt to EBITDA.
SECTION 7.17 LIENS
Keep the Collateral free and clear of all Liens, except Permitted Liens.
SECTION 7.18 INTEREST RATE PROTECTION
Maintain at all times an interest rate protection agreement with respect to
not less than $20,000,000 of variable rate debt on terms and with one or more
counterparties reasonably acceptable to Administrative Lender.
SECTION 7.19 FURTHER ASSURANCES
At the request of Administrative Lender at any time and from time to time,
duly execute and deliver, or cause to be duly executed and delivered, such
further agreements, documents and instruments, and do or cause to be done such
further acts as may be necessary or proper to evidence, perfect, maintain and
enforce the security interests and the priority thereof in the Collateral and to
otherwise effectuate the
PAGE 54
provisions or purposes of this Agreement or any of the other Loan Documents, at
Borrower's expense. Administrative Lender may at any time and from time to time
request a certificate from an officer of Borrower representing that all
conditions precedent to the making of Loans and issuing Letters of Credit
contained herein are satisfied. In the event of such request by Administrative
Lender, each Lender may, at its option, cease to make any further Loans or
provide any further Letters of Credit until Administrative Lender has received
such certificate and, in addition, Administrative Lender has determined that
such conditions are satisfied. Where permitted by law, Borrower hereby
authorizes Administrative Lender to execute and file one or more UCC financing
statements signed only by Administrative Lender.
ARTICLE VIII. NEGATIVE COVENANTS
------------
Borrower covenants that so long as Lenders remain committed to extend
credit to Borrower pursuant to the terms hereof or any liabilities (whether
direct or contingent, liquidated or unliquidated) of Borrower under any of the
Loan Documents remain outstanding, and until payment in full, in cash, of all
Obligations, Borrower will not, without the prior written consent of Majority
Lenders:
SECTION 8.1 LIENS
Create or suffer to exist any Lien upon or with respect to any of its
properties, whether now owned or hereafter acquired, or assign any right to
receive income, except Permitted Liens.
SECTION 8.2 INDEBTEDNESS
Borrower and Subsidiaries, on a consolidated basis, create or suffer to
exist any Indebtedness except:
(a) the Obligations;
(b) current liabilities in respect of taxes, assessments and governmental
charges or levies incurred, or liabilities for labor, materials, inventory,
services, supplies and rentals incurred, or for goods or services purchased, in
the ordinary course of business consistent with industry practice in respect of
arm's length transactions and the past practice of Borrower
(c) Indebtedness of Borrower outstanding on the Closing Date and reflected
on its December 31, 1998 financial statements or on Section 5.19 of the
Disclosure Schedule and all renewals, extensions, refinancing or refunding of
such Indebtedness in a principal amount which does not exceed the then
outstanding principal amount,
PAGE 55
together with all prepayment fees, penalties and expenses in respect of the
Indebtedness being renewed, extended, refinanced or refunded, provided each such
renewal, extension, refinancing or refunding is on terms and conditions no less
favorable to the creditors than the Indebtedness being renewed, extended,
refinanced or refunded;
(d) Indebtedness in an aggregate principal amount at any time outstanding
not in excess of the lesser of (i) $10,000,000 (in addition to the Indebtedness
otherwise described in this Section 8.2) or (ii) an amount which, after giving
pro forma effect to the incurrence thereof and the application of the proceeds
thereof, would not cause a breach of the covenants in Section 7.16;
(e) Indebtedness arising by virtue of a Sale/Leaseback Transaction;
(f) Indebtedness subordinated in writing on terms acceptable to
Administrative Lender and Majority Lenders in favor of the prior payment in full
in cash of the Obligations; and
(g) Indebtedness under Interest Rate Contracts with KeyBank.
SECTION 8.3 RESTRICTED PAYMENTS, REDEMPTIONS
(a) Declare or make any dividend payment or other distribution of assets,
properties, cash, rights, obligations or securities on account or in respect of
any of its Stock or Stock Equivalents except (i) dividends paid to Borrower and
(ii) dividends paid by Borrower solely in Stock or Stock Equivalents of
Borrower;
(b) purchase, redeem or otherwise acquire for value any of Borrower's Stock
or Stock Equivalents;
(c) make any change in its capital structure, including, without
limitation, the creation of new classes or types of Stock or Stock Equivalents;
or
(d) prepay or redeem any Indebtedness that is subordinated to the
Obligations or make any payment in respect of such Indebtedness at any time that
a Default is continuing or would be caused by such payment.
SECTION 8.4 MERGERS, STOCK ISSUANCES, SALE OF ASSETS, ETC.
(a) Merge or consolidate with any Person or acquire all or substantially
all of (i) the Stock or Stock Equivalents of any Person, (ii) the assets of any
Person or (iii) the assets constituting the business of a division, branch or
other unit operation of any
PAGE 56
Person, except for transactions involving aggregate consideration from Borrower
of less than $8,000,000 of Borrower's Stock and $3,000,000 of other
consideration (including, without limitation, assumption of liabilities and
non-competition payments), in each event provided that no Default results from
such transaction and provided that Borrower takes such action, if any, as is
necessary to perfect Administrative Lender's Lien therein for the benefit of the
Lenders; or
(b) Sell, convey, transfer, lease or otherwise dispose of any of its assets
or any interest therein to any Person, or permit or suffer any other Person to
acquire any interest in any of the assets of Borrower, except (i) Permitted
Liens, (ii) the sale or disposition of inventory in the ordinary course of
business and/or assets which have become obsolete or are replaced in the
ordinary course of business, (iii) during any fiscal year of Borrower, the sale
or other disposition of equipment having an aggregate book value of less than
$1,000,000, (iv) real property having an aggregate net book value of $3,500,000,
(v) Sale/Leaseback Transactions and (vi) as permitted by Section 8.4(a) or
Section 8.5.
SECTION 8.5 INVESTMENTS IN OTHER PERSONS
Directly or indirectly, make or maintain any loan or advance to any other
Person or own, purchase or otherwise acquire any Stock, Stock Equivalents, other
equity interest, obligations or other securities of, or otherwise invest in, any
other Person (any such transaction being an "Investment"), except:
(a) Investments in Accounts, contract rights and chattel paper, notes
receivable and similar items arising or acquired in the ordinary course of
business consistent with Borrower's past practice;
(b) incidental advances to employees of Borrower in the ordinary
course of business;
(c) Investments in direct obligations to the United States of America
or any agency thereof, banker's acceptances and certificates of deposit issued
by any commercial bank in the United States of America;
(d) loans to others not exceeding $250,000 in the aggregate
outstanding at any time;
(e) Investments referenced on Section 8.5 of the Disclosure Schedule;
PAGE 57
(f) Investments in Subsidiaries not exceeding $4,000,000 in the
aggregate; and
(g) Investments that would otherwise be prohibited by this Section 8.5
provided that the aggregate outstanding amount of such Investments made in any
fiscal year is less than $1,000,000.
SECTION 8.6 CHANGE IN NATURE OF BUSINESS
Directly or indirectly engage in any business activity not directly related
to its current business activity.
SECTION 8.7 GUARANTIES
Except for up to $5,000,000 of guaranties of the obligations of its
Malaysian Subsidiary, guarantee or become liable in any way as surety, endorser
(other than as endorser of negotiable instruments for deposit or collection in
the ordinary course of business), accommodation endorser or otherwise for, nor
pledge or hypothecate any assets of Borrower as security for, any liabilities or
obligations of any other Person except any of the foregoing required by this
Agreement.
SECTION 8.8 PLANS
(a) Adopt or become obligated to contribute to any Plan subject to Title IV
or any multiemployer Plan or any other Plan subject to Section 412 of the
Internal Revenue Code (except for any such Plan listed on the Disclosure
Schedule on the Closing Date), (b) establish or become obligated with respect to
any new welfare benefit Plan, or modify any existing welfare benefit Plan, which
is reasonably likely to result in an increase of the present value of future
liabilities for post-retirement life insurance and medical benefits, or (c)
establish or become obligated to contribute to any new unfunded pension Plan, or
modify any existing unfunded pension Plan, which is reasonably likely to result
in an increase in the present value of future unfunded liabilities under all
such plans.
SECTION 8.9 CANCELLATION OF INDEBTEDNESS OWED TO IT
Cancel any claim or Indebtedness owed to it except for legitimate business
purposes in the reasonable judgment of Borrower and in the ordinary course of
business.
PAGE 58
SECTION 8.10 MARGIN REGULATIONS
Use the proceeds of any Loans to purchase or carry any margin stock (within
the meaning of Regulation U of the Board of Governors of the Federal Reserve
System).
SECTION 8.11 ENVIRONMENTAL
Permit any lessee or any other Person to dispose of any Contaminant by
placing it in or on the ground or waters of any property owned or leased by
Borrower or any of its Subsidiaries, except in material compliance with
Environmental Law or the terms of any Permit or other than those which in the
aggregate have no reasonable likelihood of having a Material Adverse Effect.
SECTION 8.12 TRANSACTIONS WITH AFFILIATES
Enter into any transaction directly or indirectly with or for any affiliate
except in the ordinary course of business on a basis no less favorable to such
affiliate than would be obtained in a comparable arm's length transaction with a
Person not an affiliate involving assets that are not material to the business
and operations of Borrower.
SECTION 8.13 NEW COLLATERAL LOCATION; NAME CHANGE
Open any new location or change its name unless (i) Borrower gives
Administrative Lender (a) thirty (30) days prior written notice of the intended
name change, (b) thirty (30) days prior written notice of the intended opening
of such new location if the assets of Borrower to be located at such location
will be, or are expected to be, in excess of $1,000,000 or (c) written notice of
such new location within ten (10) days after the opening thereof if advance
notice is not required under item (b) above and if the location is not in a
state in which Administrative Lender has previously filed a UCC-1 financing
statement, and (ii) Borrower executes and delivers to Administrative Lender such
agreements, documents and instruments as Administrative Lender may deem
reasonably necessary or desirable to protect its interests in the Collateral,
including, without limitation, UCC-1 financing statements. Borrower hereby gives
Administrative Lender notice that Borrower will relocate its chief executive
office and principal place of business on or about May 15, 1999 to 00000 X.X.
00xx Xxxxxx, Xxxxx 000, Xxxxxxxx, Xxxxxx.
PAGE 59
ARTICLE IX. EVENTS OF DEFAULT
----------
SECTION 9.1 EVENTS OF DEFAULT
The occurrence of any of the following shall constitute an "Event of
Default" under this Agreement:
(a) Borrower shall fail to pay when due any amount payable under any of the
Loan Documents;
(b) any financial statement or certificate furnished to Administrative
Lender or any Lender in connection with, or any representation or warranty made
by Borrower under any of the Loan Documents shall prove to be false or
misleading in any material respect when furnished or made;
(c) Borrower shall fail to provide any certificate, report or other
information which it is required to provide pursuant to Section 7.3 or Section
7.9 on the date specified in Section 7.3 or Section 7.9; provided that unless
Borrower has previously failed to provide any required certificate, report or
other information by the required date on two prior occasions within the
preceding 12 months such failure shall be considered an Event of Default only if
Borrower fails to provide such certificate, report or other information within
five Business Days (two Business Days with respect to Section 7.9(a)) of the
earlier of (i) the date Borrower has knowledge of its failure to so provide such
certificate, report or other information, or (ii) the date Administrative
Lender, at the request of a Lender, notifies Borrower of such failure;
(d) any default by Borrower in the performance of or compliance with any
obligation, agreement or other provision contained in Sections 7.5, 7.10, 7.11,
7.12, 7.14, 7.16, 8.2, 8.3, 8.4, 8.5, 8.7 and 8.13;
(e) any default by Borrower in the performance of or compliance with any
obligation, agreement or other provision contained in any Loan Document (other
than those referred to in subsections (a) through (d) above) for 10 days after
written notice thereof has been given to Borrower by the Administrative Lender
at the request of any Lender;
(f) any breach by Borrower in the payment or performance of any obligation
under the terms of any contract or instrument (other than any of the Loan
Documents) evidencing Indebtedness in excess of $100,000 if such breach has not
been cured to the satisfaction of the affected creditor or waived by such
creditor within the later of any applicable cure period provided under the
contract or instrument or 15 days after the breach occurred;
PAGE 60
(g) any judgment(s), order(s) or writ(s) in excess of an aggregate of
$500,000 is/are rendered or entered against Borrower and/or one or more
Significant Subsidiaries, except any judgment for which Borrower is fully
insured and with respect to which the insurer has admitted in writing its
liability for the full amount thereof or except if the enforcement of such
judgment, order or writ has been stayed or the liability thereon bonded in a
manner and on terms reasonably satisfactory to Administrative Lender; or the
service of notice(s) of levy and/or of writ(s) of attachment or execution, or
other like process, against any of the assets of Borrower and/or one or more
Significant Subsidiaries with respect to obligations in excess of an aggregate
of $500,000;
(h) Borrower shall become insolvent, or shall suffer or consent to or apply
for the appointment of a receiver, trustee, custodian or liquidator of itself or
any of its property, or shall generally be unable to or fail to pay its debts as
they become due, or shall make a general assignment for the benefit of
creditors; Borrower shall file a voluntary petition in bankruptcy, or seek to
effect a plan or other arrangement with creditors or any other relief under the
Bankruptcy Code, or under any state or other Federal law granting relief to
debtors, whether now or hereafter in effect; or any involuntary petition or
proceeding pursuant to the Bankruptcy Code or any other applicable state or
other Federal law relating to bankruptcy, reorganization or other relief for
debtors is filed or commenced against Borrower and is not dismissed, stayed or
vacated within sixty (60) days thereafter; Borrower shall file an answer
admitting the jurisdiction of the court and the material allegations of any
involuntary petition; or Borrower shall be adjudicated a bankrupt, or an order
for relief shall be entered by any court of competent jurisdiction under the
Bankruptcy Code or any other applicable state or Federal law relating to
bankruptcy, reorganization or other relief for debtors; as used herein;
(i) any tax lien (other than a Permitted Lien) greater than $50,000 shall
have been filed against Borrower or any of its property by any federal, state,
or municipal authority;
(j) if any of the following events occur: (a) any Plan incurs any
"accumulated funding deficiency" (as defined in ERISA) whether waived or not,
(b) Borrower or any affiliate engages in any "prohibited transaction" (as
defined in ERISA), (c) any Plan is terminated, (d) a trustee is appointed by an
appropriate United States district court to administer any Plan, or (e) the PBGC
institutes proceedings to terminate any Plan or to appoint a trustee to
administer any Plan;
PAGE 61
(k) the dissolution or liquidation of Borrower, or Borrower or its
directors or stockholders shall take action seeking to effect the dissolution or
liquidation of Borrower;
(l) there shall exist or occur any event or condition that Majority Lenders
in Good Faith believe impairs, or is substantially likely to impair, the
prospect of payment or performance by Borrower of any of the Obligations; or
(m) any Person becomes an Acquiring Person, and at such time or at any time
thereafter, any Person is or becomes the Beneficial Owner of that number of
shares of Borrower's common stock ("Shares") that is more than 90% of the number
of Shares beneficially owned at such time by Xxxxxx Xxxxxxxxxx. For purposes of
this item (m), the following terms have the meanings indicated:
(A) "Acquiring Person" means any Person (other than a Person who
owns 10% or more of the Shares on the Closing Date) who or which, together
with all Affiliates and Associates of such Person, is the Beneficial Owner
of 15% or more of the Shares then outstanding, but shall not include
Borrower, any Subsidiary, any employee benefit plan of Borrower or any
Subsidiary, or any entity holding Shares for or pursuant to the terms of
any such plan. Notwithstanding the foregoing, no Person shall become an
"Acquiring Person" as the result of an acquisition of Shares which, by
reducing the number of Shares outstanding, increases the proportionate
number of Shares beneficially owned by such Person to 15% or more of the
outstanding Shares; provided, however, that if a Person becomes the
Beneficial Owner of 15% or more of the outstanding Shares by reason of
Share purchases by Borrower and, after such Share purchases by Borrower,
becomes the Beneficial Owner of any additional Shares, then such Person
shall be deemed to be an "Acquiring Person." Notwithstanding the foregoing,
if Borrower's Board of Directors determines in good faith that a Person who
would otherwise be an "Acquiring Person" has become such inadvertently, and
such Person divests as promptly as practicable a sufficient number of
Shares so that such Person would no longer be an "Acquiring Person" then
such Person shall not be deemed to be an "Acquiring Person" for any
purposes of this Agreement.
(B) "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), as in effect on the date of this Agreement.
PAGE 62
(C) A Person shall be deemed the "Beneficial Owner" of and shall
be deemed to "beneficially own" any securities:
(i) which such Person or any of such Person's Affiliates or Associates
beneficially owns, directly or indirectly;
(ii) which such Person or any of such Person's Affiliates or
Associates has (x) the right to acquire (whether such right is exercisable
immediately or only after the passage of time) pursuant to any agreement,
arrangement or understanding (other than customary agreements with and
between underwriters and selling group members with respect to a bona fide
public offering of securities), or upon the exercise of conversion rights,
exchange rights, rights, warrants or options, or otherwise; provided,
however, that a Person shall not be deemed the Beneficial Owner of, or to
beneficially own, securities tendered pursuant to a tender or exchange
offer made by or on behalf of such Person or any of such Person's
Affiliates or Associates until such tendered securities are accepted for
purchase or exchange; or (y) the right to vote pursuant to any agreement,
arrangement or understanding; provided, however, that a Person shall not be
deemed the Beneficial Owner of, or to beneficially own, any security if the
agreement, arrangement or understanding to vote such security (1) arises
solely from a revocable proxy or consent given to such Person in response
to a public proxy or consent solicitation made pursuant to, and in
accordance with, the applicable rules and regulations promulgated under the
Exchange Act and (2) is not also then reportable on Schedule 13D under the
Exchange Act (or any comparable or successor report); or
(iii) which are beneficially owned, directly or indirectly, by any
other Person with which such Person or any of such Person's Affiliates or
Associates has any agreement, arrangement or understanding (other than
customary agreements with and between underwriters and selling group
members with respect to a bona fide public offering of securities) for the
purpose of acquiring, holding, voting (except to the extent contemplated by
the proviso to item (C)(ii)(y) above) or disposing of any securities of
Borrower.
Notwithstanding anything in this definition of Beneficial Ownership to
the contrary, the phrase "then outstanding," when used with reference to a
Person's Beneficial Ownership of securities of Borrower, shall mean the
number of such securities then issued and outstanding together with the
number of such securities not then actually issued and outstanding which
such Person would be deemed to own beneficially hereunder.
PAGE 63
SECTION 9.2 REMEDIES
(a) During the continuance of any Event of Default (other than an Event of
Default referred to in Section 9.1(h) hereof), Administrative Lender may, with
the consent of the Majority Lenders, or shall, upon instructions from the
Majority Lenders, by written notice to Borrower, (i) terminate the obligations
of the Lenders to extend any further credit under any of the Loan Documents,
(ii) declare all indebtedness of Borrower under the Loan Documents to be
immediately due and payable without presentment, demand, protest or any other
notice of any kind, all of which are hereby expressly waived by Borrower, and/or
take such enforcement action as is permitted under this Section 9.2. Upon the
occurrence or existence of any Event of Default described in Section 9.1(h)
hereof, immediately and without notice, (A) the obligations, if any, of Lenders
to extend any further credit under any of the Loan Documents shall automatically
cease and terminate, and (B) all indebtedness of Borrower under the Loan
Documents shall automatically become immediately due and payable, without
presentment, demand, protest or any other notice of any kind, all of which are
hereby expressly waived by Borrower. In addition to the foregoing remedies,
during the continuance of any Event of Default, Administrative Lender may
exercise any other right, power or remedy granted to it or the Lenders under any
Loan Document or permitted to it or the Lenders by law, either by suit in equity
or by action at law, or both. Immediately after taking any action under this
Section 9.2, Administrative Lender shall notify each Lender of such action.
(b) During the continuance of an Event of Default, Administrative Lender,
in addition to any other rights and remedies contained in the Loan Documents,
shall have all of the rights and remedies of a secured party under the Code and
all other applicable law, all of which rights and remedies shall be cumulative
and nonexclusive to the extent permitted by law. Administrative Lender may cause
the Collateral to remain on Borrower's premises, at Borrower's expense, pending
sale or other disposition thereof. Administrative Lender shall have the right to
conduct such sales on Borrower's premises or elsewhere, at Borrower's expense,
on such occasion(s) as Administrative Lender may see fit, and Borrower, at
Administrative Lender's request, will, at Borrower's expense, assemble the
Collateral and make it available to Administrative Lender at such place(s) as
Administrative Lender may reasonably designate from time to time. Any sale,
lease or other disposition by Administrative Lender of the Collateral, or any
part thereof, may be for cash or other value. Borrower shall execute and
deliver, or cause to be executed and delivered, such instruments, documents,
assignments, deeds, waivers, certificates and affidavits and take such further
action as Administrative Lender shall reasonably require in connection with such
sale, and Borrower hereby constitutes Administrative Lender as its
attorney-in-fact to execute any such instrument, document, assignment, deed,
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waiver, certificate or affidavit on behalf of Borrower and in its name. Borrower
acknowledges that portions of the Collateral may be difficult to preserve and
dispose of and may be subject to complex maintenance and management;
accordingly, Administrative Lender shall have the widest possible latitude in
the exercise of its rights and remedies hereunder.
(c) Administrative Lender is hereby granted a license and right to use,
without charge upon the occurrence and during the continuance of an Event of
Default and until the Obligations are fully and finally paid in cash, Borrower's
labels, patents, copyrights, rights of use of any name, trade secrets, trade
names, trademarks, service marks, advertising material or any property of a
similar nature in completing the production, advertising for sale and sale of
any Collateral.
(d) Any notice required to be given by Administrative Lender with respect
to any of the Collateral which notice is given pursuant to Section 11.1 and
deemed received pursuant to Section 11.1 at least ten (10) days before a sale,
lease, disposition or other intended action by Administrative Lender with
respect to any of the Collateral shall constitute fair and reasonable notice to
Borrower of any such action. A public sale in the following fashion shall be
conclusively presumed to be reasonable: (i) the sale is held in a county where
any part of the Collateral is located or in which Borrower has a place of
business; (ii) the sale is conducted by auction, but it need not be by a
professional auctioneer; and (iii) any Collateral is sold as is and without any
preparation for sale; and (iv) Borrower is given notice of such public sale
pursuant to the preceding sentence.
(e) Upon the occurrence and during the continuance of an Event of Default,
Administrative Lender shall have, with respect to Rights to Payment, all rights
and powers to: (i) direct any and all account debtors to make all payments in
respect of the Rights to Payment directly to Administrative Lender or otherwise
demand payment of any or all of the Rights to Payment; (ii) enforce payment of
any or all of the Rights to Payment by legal proceedings or otherwise; (iii)
exercise Borrower's rights and remedies with respect to any actions or
proceedings brought to collect a Right to Payment; (iv) sell or assign any Right
to Payment upon such terms, for such amount and at such time or times as
Administrative Lender deems advisable; (v) settle, adjust, compromise, extend or
renew a Right to Payment; (vi) discharge or release any Right to Payment; and
(vii) prepare, file and sign Borrower's name on any proof of claim in bankruptcy
or any similar document against an account debtor, and to otherwise exercise the
rights granted herein.
(f) Administrative Lender shall have no obligation to preserve any rights
to the Collateral against any Person. Administrative Lender shall be under no
obligation
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to make any demand upon or pursue or exhaust any rights or remedies
against Borrower or others with respect to payment of the Obligations, or to
pursue or exhaust any rights or remedies with respect to any of the Collateral
or any other security for the Obligations, or to marshal any assets in favor of
Borrower or any other Person against or in payment of any or all of the
Obligations.
(g) Borrower shall pay to Administrative Lender (for distribution to the
Lenders, as appropriate), on demand and as part of the Obligations, all costs
and expenses, including court costs and costs of sale, incurred by
Administrative Lender or any Lender in exercising any of its rights or remedies
hereunder, and all costs and expenses incurred in connection with any review of
any part of the Collateral by a collateral analyst employed by Administrative
Lender (including, without limitation, Administrative Lender's then customary
per diem charges for such analysts) if such review was conducted at any time
during the continuation of an Event of Default.
SECTION 9.3 ADMINISTRATIVE LENDER AS BORROWER'S ATTORNEY
Borrower hereby appoints Administrative Lender or any other Person whom
Administrative Lender may designate, as Borrower's attorney, with power during
the continuation of an Event of Default: to indorse Borrower's name on any
checks, notes, acceptances, money orders, drafts or other forms of payment or
security that may come into Administrative Lender's possession; to sign
Borrower's name on any invoice or xxxx of lading relating to any Right to
Payment, on drafts against customers, on schedules and assignments of Rights to
Payment, on notices of assignment, financing statements and other public
records, and on notices to customers; to notify the post office authorities to
change the address for delivery of Borrower's mail to an address designated by
Administrative Lender; to receive, open and process all mail addressed to
Borrower; and to do all things necessary to perfect Administrative Lender's
security interest in the Collateral, to preserve and protect the Collateral and
to otherwise carry out this Agreement. Provided Administrative Lender acts in a
reasonable manner, Borrower ratifies and approves all acts of such attorney, and
neither Administrative Lender nor the attorney will be liable for any acts or
omissions nor for any error of judgment or mistake of fact or law. This power
being coupled with an interest is irrevocable until the Obligations have been
fully paid in cash or the financing arrangements between Administrative Lender
and Borrower are terminated, whichever shall later occur.
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ARTICLE X. ADMINISTRATIVE LENDER
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SECTION 10.1 AUTHORIZATION AND ACTION
Each Lender hereby appoints KeyBank as Administrative Lender and authorizes
Administrative Lender to perform the functions of the Administrative Lender
under the Loan Documents, and to take such actions on such Lender's behalf and
to exercise such powers and perform such duties under the Loan Documents as are
expressly delegated to Administrative Lender by the terms thereof, together with
such other powers as are reasonably incidental thereto. Administrative Lender
shall have no duties or responsibilities except those expressly set forth in the
Loan Documents, and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into any Loan Document or otherwise
exist against Administrative Lender. Notwithstanding anything to the contrary
contained herein, Administrative Lender shall not be required to take any action
which is contrary to any Loan Document or applicable law. Neither Administrative
Lender nor any Lender shall be responsible to any other Lender for any recitals,
statements, representations or warranties made by Borrower contained in any Loan
Document, for the value, validity, effectiveness, genuineness, enforceability or
sufficiency of any Loan Document or for any failure by Borrower to perform its
respective obligations hereunder or thereunder. Administrative Lender may employ
agents and attorneys-in-fact and shall not be responsible to any Lender for the
negligence or misconduct of any such agents or attorneys-in-fact selected by it
with reasonable care. Neither Administrative Lender nor any of its directors,
officers, employees or agents shall be responsible to any Lender for any action
taken or omitted to be taken by it or them under any Loan Document or in
connection therewith, except for its or their own gross negligence or willful
misconduct. Except as otherwise provided under this Agreement, Administrative
Lender shall take such action with respect to the Loan Documents as shall be
directed by the Majority Lenders. Upon the request of a Lender, Administrative
Lender shall request information from Borrower under Section 7.3(i).
SECTION 10.2 RELIANCE BY ADMINISTRATIVE LENDER
Administrative Lender shall be entitled to rely upon any certificate,
notice or other document (including any cable, telegram, fax, or telex) or
telephonic notice believed by it in good faith to be genuine and correct and to
have been signed, sent or made by or on behalf of the proper person or persons,
and upon advice and statements of legal counsel (including opinions of
Borrower's counsel), independent accountants and other experts selected by
Administrative Lender with reasonable care. As to any matters not expressly
provided for by this Agreement, Administrative Lender shall not
PAGE 67
be required to take any action or exercise any discretion, but shall be required
to act or to refrain from acting upon instructions of the Majority Lenders and
shall in all cases be fully protected by the Lenders in acting, or in refraining
from acting, hereunder or under any other Loan Document in accordance with the
instructions of the Majority Lenders, and such instructions of the Majority
Lenders and any action taken or failure to act pursuant thereto shall be binding
on all of the Lenders.
SECTION 10.3 DEFAULTS
Administrative Lender shall not be deemed to have knowledge or notice of
the occurrence of a Default unless Administrative Lender has received a notice
from a Lender or Borrower referring to this Agreement, describing such Default
and expressly stating that such notice is a "notice of default". If
Administrative Lender receives such notice of the occurrence of a Default,
Administrative Lender shall promptly give notice thereof to the Lenders.
Administrative Lender thereupon shall take such action with respect to such
Default as shall be reasonably directed by the Majority Lenders; provided
however, that unless and until Administrative Lender shall have received
directions, Administrative Lender may (but shall not be obligated to) take such
action, or refrain from taking such action, with respect to such Default as it
shall deem advisable in the best interests of the Lenders.
SECTION 10.4 INDEMNIFICATION
Without limiting the obligations of Borrower hereunder, each Lender agrees
to indemnify Administrative Lender, ratably, for any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever which may at any time
(including at any time following payment of such obligations) be imposed on,
incurred by or asserted against Administrative Lender in any way relating to or
arising out of this Agreement or any documents contemplated by or referred to
herein or therein or the transactions contemplated hereby or thereby or the
enforcement of any of the terms hereof or thereof or of any such other documents
or any action taken or omitted by Administrative Lender under or in connection
herewith or therewith; provided however, that no Lender shall be liable for any
of the foregoing to the extent they arise from Administrative Lender's gross
negligence or willful misconduct. Without limiting the foregoing, each Lender
agrees to reimburse Administrative Lender promptly on demand for its ratable
share of any amounts payable but not paid by Borrower under Section 11.2 hereof.
Administrative Lender shall be fully justified in refusing to take or to
continue to take any action hereunder unless it shall first be indemnified to
its satisfaction by the Lenders against any and all liability and expense which
may be incurred by Administrative Lender by reason of taking or continuing to
PAGE 68
take any such action. This Section 10.4 shall survive the payment in full and
performance of all of Borrower's other Obligations.
SECTION 10.5 NON-RELIANCE ON ADMINISTRATIVE LENDER
Each Lender represents that it has, independently and without reliance on
Administrative Lender or any other Lender, and based on such documents and
information as such Lender has deemed appropriate, made its own appraisal of and
investigation into the financial condition and affairs of Borrower and decision
to enter into this Agreement. Each Lender agrees that such Lender will,
independently and without reliance upon Administrative Lender or any other
Lender, and based on such documents and information as it shall deem appropriate
at the time, continue to make its own appraisals and decisions in taking or not
taking action under this Agreement. Each Lender acknowledges that Administrative
Lender has not made any representation or warranty to it with respect to the
financial condition or affairs of Borrower or any Loan Document, and that no act
by Administrative Lender hereafter, including any review of any of such matters,
shall be deemed to constitute any such representation or warranty by
Administrative Lender to any Lender. Neither Administrative Lender nor any
Lender shall be required to keep informed as to the performance or observance by
Borrower of the obligations under this Agreement or any other document referred
to or provided for herein or to make inquiry of, or to inspect the properties or
books of Borrower. Except for notices, reports and other documents and
information expressly required to be furnished to the Lenders by Administrative
Lender hereunder, neither Administrative Lender nor any Lender shall have any
duty or responsibility to provide any Lender with any credit or other
information concerning Borrower, which may come into the possession of
Administrative Lender or such Lender, or any of its or their affiliates.
SECTION 10.6 SUCCESSOR ADMINISTRATIVE LENDER
Administrative Lender may resign at any time by giving thirty (30) days'
written notice thereof to the Lenders. Upon any such resignation or removal, the
Majority Lenders shall have the right to appoint a successor Administrative
Lender. If no successor Administrative Lender shall have been appointed by the
Majority Lenders and shall have accepted such appointment within thirty (30)
days after the retiring Administrative Lender's giving of notice of resignation,
then the retiring Administrative Lender may, on behalf of the Lenders, appoint a
successor Administrative Lender to serve until such time as Majority Lenders
appoint a successor Administrative Lender. Upon the acceptance of any
appointment as Administrative Lender hereunder by a successor Administrative
Lender, such successor Administrative Lender shall thereupon succeed to and
become vested with
PAGE 69
all the rights, powers, privileges and duties of the retiring Administrative
Lender, and the retiring Administrative Lender shall be discharged from its
duties and obligations hereunder. The provisions of this Article X shall
continue in effect for the benefit of any retired Administrative Lender in
respect of any actions taken or omitted to be taken by it while it was acting
as Administrative Lender.
SECTION 10.7 ADMINISTRATIVE LENDER IN ITS INDIVIDUAL CAPACITY
Administrative Lender and its affiliates may make loans to, accept deposits
from, own securities of and generally engage in any kind of business with
Borrower, as though Administrative Lender were not Administrative Lender
hereunder, without any duty to give notice thereof or account therefor to any
Lender. KeyBank as a Lender shall have the same rights and powers under this
Agreement and the other Loan Documents as any other Lender and may exercise the
same as though it were not Administrative Lender, and the terms "Lender" or
"Lenders" shall include KeyBank in each such capacity.
SECTION 10.8 MATTERS REGARDING COLLATERAL
(a) Administrative Lender is hereby irrevocably authorized at its option
and in its discretion, to release any Lien granted to or held by Administrative
Lender upon any Collateral (i) upon termination of the Commitments, satisfaction
of all Obligations and termination of this Agreement, (ii) constituting property
being sold or disposed of in accordance with this Agreement if Borrower
certifies to Administrative Lender that the sale or disposition is made in
compliance with the provisions of this Agreement (and Administrative Lender may
rely in Good Faith conclusively on any such certificate, without further
inquiry), or (iii) constituting property leased to Borrower under a lease which
has expired or been terminated in a transaction permitted under this Agreement
or is about to expire and which has not been, and is not intended by Borrower to
be, renewed or extended. In addition, Administrative Lender, with the consent of
all Lenders, may release all or any portion of the Collateral.
(b) So long as no Event of Default is continuing, upon confirmation from
the requisite percentage set forth above of Lenders, of Administrative Lenders'
authority to release any Collateral, and upon at least ten Business Days prior
written request by Borrower, Administrative Lender shall, and is hereby
irrevocably authorized by Lenders to, execute such documents as may be necessary
to evidence the release of the Liens upon such Collateral; provided, however,
that Administrative Lender shall not be required to execute any such document on
terms which, in Administrative Lender's opinion, would expose Administrative
Lender to liability or
PAGE 70
create any obligation or entail any consequence other than the release of such
Liens without recourse or warranty.
(c) Administrative Lender shall have no obligation to any Person to assure
that the Collateral exists or is owned by Borrower or is cared for, protected or
insured or has been encumbered or that the Liens granted to an Administrative
Lender on behalf of Lenders have been properly, sufficiently or lawfully
created, perfected, protected or enforced or entitled to any particular priority
or to exercise at all or in any particular manner or under any duty of care,
disclosure or fidelity, or to continue exercising, any of the rights,
authorities and powers granted or available to Administrative Lender in any of
the Loan Documents, it being understood and agreed that in respect of the
Collateral or any act, omission or event related thereto, Administrative Lender
may act in any manner it may deem appropriate, in its discretion, given
Administrative Lender's own interest in the Collateral as one of the Lenders and
that Administrative Lender shall have no duty or liability whatsoever to any of
the other Lenders with respect thereto.
SECTION 10.9 AGENCY FOR PERFECTION
Each Lender hereby appoints each other Lender as agent for the purpose of
perfecting Administrative Lender's and Lenders' security interests in Collateral
which, under any applicable law, can be perfected only by possession. Should any
Lender obtain possession of any such Collateral, such Lender shall notify
Administrative Lender thereof, and, promptly upon Administrative Lender's
request therefor, shall deliver such Collateral to Administrative Lender or in
accordance with Administrative Lender's instructions. Administrative Lender may
file such proofs of claim or documents as may be necessary or advisable in order
to have the claims of Administrative Lender and the Lenders (including any claim
for the reasonable compensation, expenses, disbursements and advances of the
Administrative Lender and Lenders, their respective agents, financial advisors
and counsel), allowed in judicial proceedings relative to Borrower and/or the
Subsidiaries, or any of their respective creditors or property, and shall be
entitled and empowered to collect, receive and distribute any monies, securities
or other property payable or deliverable on any such claims. Any custodian in
any judicial proceeding relative to Borrower and/or the Subsidiaries is hereby
authorized by each Lender to make payment to the Administrative Lender and if
the Administrative Lender shall consent to the making of such payments directly
to the Lenders, to pay to the Administrative Lender any amount due for the
reasonable compensation, expenses, disbursements and advances of Administrative
Lender, its agents, financial advisors and counsel, and any other amounts due
Administrative Lender. Nothing contained in the Loan Documents shall be deemed
to authorize Administrative Lender to authorize or consent to or accept or
PAGE 71
adopt on behalf of any Lender any plan of reorganization, arrangement,
adjustment or composition affecting the Obligations, or the rights of any holder
thereof, or to advise Administrative Lender to vote in respect of the claim of
any Lender in any such proceeding, except as specifically permitted herein.
SECTION 10.10 EXERCISE OF REMEDIES
Each Lender agrees that it will not have any right individually to enforce
or seek to enforce any Loan Document or to realize upon any Collateral, it being
understood and agreed that such rights and remedies may be exercised only by
Administrative Lender.
SECTION 10.11 SYNDICATION AGENT
None of the Lenders identified as a "Syndication Agent" shall have any
right, power, obligation, liability, responsibility or duty under this Agreement
in such capacity. Each Lender acknowledges that it has not relied on and will
not rely on any Lender identified as a "Syndication Agent" in deciding to enter
into this Agreement or in taking or not taking any action hereunder.
ARTICLE XI. MISCELLANEOUS
----------
SECTION 11.1 NOTICES
Except as specified otherwise herein, all notices, requests and demands
which any party is required or may desire to give to any other party under this
Agreement must be in writing, addressed to Administrative Lender and each Lender
at its address or fax number set forth as the "Address for Notices" for
Administrative Lender or such Lender in Schedule I hereto, and addressed to
Borrower at the following address or fax number:
Borrower: Xxxxxxxxxx Industries, Inc.
0000 X.X. Xxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attn: Vice President, Finance
Fax: (000) 000-0000
or to such other address or fax number as any party may designate for itself by
written notice to all other parties. Each such notice, request and demand shall
be deemed given or made as follows: (a) three Business Days following deposit in
the United States mails, with first class postage prepaid, (b) the next Business
Day after such
PAGE 72
notice was delivered to a regularly scheduled overnight delivery, or (c) upon
receipt of notice given by fax, mailgram, telegram, telex, or personal delivery.
SECTION 11.2 COSTS, EXPENSES, ATTORNEYS' FEES
Borrower shall pay immediately upon demand the full amount of all payments,
advances, charges, costs and expenses, including reasonable attorneys' fees
(whether incurred at the trial or appellate level, in an arbitration proceeding,
in bankruptcy, (including, without limitation, any adversary proceeding,
contested matter or motion) or otherwise), incurred by Administrative Lender,
Swingline Lender, L/C Bank and/or any Lender in connection with (a) the
negotiation and preparation of the Loan Documents, (b) the enforcement,
preservation or protection (or attempted enforcement, preservation or
protection) of Administrative Lender's, Swingline Lender's, L/C Bank's and/or
Lender's rights (except in a dispute solely between Lenders), including, without
limitation, periodic collateral examinations (provided that Borrower shall not
be responsible for the costs and expenses of more than two collateral
examinations conducted in any calendar year unless such examinations were
conducted at a time when a Default was continuing), and/or the collection of any
amounts which become due under any of the Loan Documents, and (c) the
prosecution or defense of any action in any way related to any of the Loan
Documents, including without limitation, any action for declaratory relief, and
including any of the foregoing incurred in connection with any bankruptcy
proceeding relating to Borrower.
SECTION 11.3 INDEMNIFICATION
To the fullest extent permitted by law, Borrower hereby agrees to protect,
indemnify, defend and hold harmless each of the Administrative Lender, Swingline
Lender, L/C Bank and Lenders and each of their respective officers, directors,
shareholders, employees, agents, attorneys and affiliates (collectively,
"Indemnitees") from and against any liabilities, losses, damages or expenses of
any kind or nature and from any suits, claims or demands (including in respect
of or for reasonable attorneys' fees (whether incurred at the trial or appellate
level, in an arbitration proceeding, in bankruptcy (including, without
limitation, any adversary proceeding, contested matter or motion) or otherwise)
and other reasonable expenses, including the allocated costs and expenses of
internal counsel) arising on account of or in connection with any matter or
thing or action or failure to act by Indemnitees, or any of them, arising out of
or relating to this Agreement, any other Loan Document, including without
limitation any use by Borrower of any Loan proceeds, except to the extent such
liability arises from the willful misconduct or gross negligence of the
Indemnitees. Upon receiving knowledge of any suit, claim or demand asserted by a
third party that Administrative Lender, Swingline Lender, L/C Bank and/ or any
Lender believes is covered by this
PAGE 73
indemnity, such Indemnitee shall give Borrower notice of the matter and an
opportunity to defend it, at Borrower's sole cost and expense, with legal
counsel satisfactory to such Lender. Such Lender may also require Borrower to
defend the matter. Any failure or delay of such Lender to notify Borrower of any
such suit, claim or demand shall not relieve Borrower of its obligations under
this Section 11.3 but shall reduce such obligations to the extent of any
increase in those obligations caused solely by an unreasonable failure or delay
in providing such notice. This Section 11.3 shall survive the payment in full
and performance of all of Borrower's other Obligations.
SECTION 11.4 WAIVERS, AMENDMENTS
Any term, covenant, agreement or condition of any Loan Document may be
amended or waived if such amendment or waiver is in writing and is signed by the
Majority Lenders (or by Administrative Lender with written consent of the
Majority Lenders), Borrower and any other party thereto; provided however, that
any amendment, waiver or consent which affects the rights or duties of
Administrative Lender, Swingline Lender or L/C Bank must be in writing and be
signed also by the affected Administrative Lender, Swingline Lender or L/C Bank;
and provided further, that any amendment, waiver or consent which effects any of
the following changes must be in writing and signed by all Lenders (or by
Administrative Lender with the written consent of all Lenders):
(a) increases the maximum amount of credit available hereunder;
(b) extends the maturity date of any Loan;
(c) reduces the principal of, or interest (including default rate interest)
on, any Loan or any fees or other amounts payable for the account of the Lenders
hereunder;
(d) postpones or conditions any date fixed for any payment of the principal
of, or interest on, any Loan or any fees or other amounts payable for the
account of the Lenders hereunder;
(e) waives or amends Section 10.11 or this Section 11.4;
(f) amends the definition of Majority Lenders or any provision of this
Agreement requiring approval of the Majority Lenders or some other specified
amount of Lenders;
PAGE 74
(g) increases or decreases the Commitment or the Ratable Portion of any
Lender (other than through an assignment under Section 11.5 hereof);
(h) changes in any manner the method of computing interest or any fee
payable under this Agreement;
(i) changes or modifies in any manner the amount or application of the
Inventory Sublimit;
(j) increases the advance rates applicable to Eligible Accounts and
Eligible Inventory under the Borrowing Base;
(k) except as permitted in Section 10.8(a), releases any Collateral; or
(l) waives any of the conditions set forth in Article VI.
Unless otherwise specified in such waiver or consent, a waiver or consent
given hereunder shall be effective only in the specific instance and for the
specific purpose for which given.
SECTION 11.5 SUCCESSORS AND ASSIGNS
(a) Binding Effect. The Loan Documents shall be binding upon and inure to
the benefit of Borrower, Administrative Lender, Swingline Lender, L/C Bank, the
Lenders, all future holders of the Notes and their respective successors and
permitted assigns, except that Borrower may not assign or transfer any of its
rights or obligations under any Loan Document without the prior written consent
of Administrative Lender and each Lender. All references in this Agreement to
any Person shall be deemed to include all successors and assigns of such Person.
(b) Participations. Any Lender may, in the ordinary course of its business
and in accordance with applicable law, at any time sell to one or more banks or
other financial institutions ("Participants") participating interests in any
Loan or Letter of Credit Obligations owing to such Lender, any Note held by such
Lender, or any other interest of such Lender under the Loan Documents. In the
event of any such sale by a Lender of a participating interest to a Participant,
(i) such Lender's obligations under this Agreement to the other parties to this
Agreement shall remain unchanged, (ii) such Lender shall remain solely
responsible for the performance thereof, (iii) such Lender shall remain the
holder of any such Note for all purposes under this Agreement, and (iv) Borrower
and Administrative Lender shall continue to deal solely and directly with such
Lender in connection with such Lender's rights and obligations under this
Agreement. Participants shall have no rights under this Agreement or any
PAGE 75
other Loan Document except as provided below. No Lender shall sell any
participating interest under which the Participant shall have any rights to vote
on any amendment or waiver of this Agreement or any other Loan Document;
provided however, that any agreement under which any Lender sells a
participating interest to a Participant may require the selling Lender to obtain
the consent of such Participant in order for such Lender to agree in writing to
any amendment of a type specified in Section 11.4 hereof. No agreement under
which any Lender sells a participating interest to a Participant other than a
Lender may permit the Participant to transfer, pledge, assign, sell
participations in or otherwise encumber its participating interest. If any
amount outstanding under the Loan Documents is due and unpaid, each Participant
shall have all the rights of a "Lender" under Section 11.6 in respect of its
participating interest in amounts owing under the Loan Documents to the same
extent as if the amount of its participating interest were owing directly to it
as a Lender under the Loan Documents; provided however, that such rights of
setoff shall be subject to the obligation of such Participant to share with the
Lenders, and the Lenders agree to share with such Participant, as provided in
Section 2.7(b) hereof. Borrower also agrees that any Lender which has
transferred all or part of its interests in the Loans and the Letter of Credit
Obligations to one or more Participants shall, notwithstanding any such
transfer, be entitled to the full benefits accorded such Lender under Sections
2.8 and 2.11 hereof, as if such Lender had not made such transfer.
(c) Assignments. Any Lender may, in the ordinary course of its business and
in accordance with applicable law, at any time, sell and assign to any Lender,
any affiliate of a Lender or any other bank or financial institution
(individually, an "Assignee") all or any portion of its rights and obligations
under this Agreement and the other Loan Documents (such a sale and assignment to
be referred to herein as an "Assignment") pursuant to an Assignment and
Assumption Agreement in the form of Exhibit H attached hereto (an "Assignment
Agreement") executed by each Assignee and such assignor Lender (an "Assignor")
and delivered to Administrative Lender for its acceptance and recording in the
Register (as defined below); provided however, that: (i) each Assignment shall
be in a minimum amount of $10,000,000; (ii) if the Assignment is not an
assignment of Assignor's entire Commitment, Assignor maintains a minimum
Commitment of $10,000,000; and (iii) each Assignment which is not to an Assignee
which, immediately prior to such assignment is a Lender hereunder or an
affiliate thereof, shall be made only with the written consent of Administrative
Lender, which consent shall not be unreasonably withheld. Upon the execution,
delivery, acceptance and recording of each Assignment Agreement, from and after
the effective date set forth therein, (A) each Assignee thereunder shall be a
Lender hereunder with a Commitment as set forth in Section 1 of such Assignment
Agreement and shall have the rights, duties and obligations of such a Lender
under this Agreement and the other Loan Documents, and (B) the Assignor
thereunder shall
PAGE 76
be a Lender with a Commitment as set forth in Section 1 of such Assignment
Agreement, or, if the Commitment of the Assignor has been reduced to zero, the
Assignor shall cease to be a Lender; provided however, that each Assignor shall
nevertheless be entitled to the indemnification rights contained in Section 11.3
hereof for any events, acts or omissions occurring before the effective date of
its Assignment. Each Assignment Agreement shall be deemed to amend Schedule I
hereto to the extent necessary to reflect the addition of each Assignee and the
resulting adjustment of Commitments arising from the purchase by each Assignee
of all or a portion of the rights and obligations of an Assignor under this
Agreement and the other Loan Documents. On or prior to the effective date of any
Assignment, Borrower, at its own expense, shall execute and deliver to
Administrative Lender, in exchange for the surrendered Note of the Assignor
thereunder, a new Note to the order of the Assignee thereunder (with each new
Note to be in an amount equal to the Commitment assumed by such Assignee) and,
if the Assignor has retained a Commitment hereunder, a new Note to the order of
the Assignor (with the new Note to be in an amount equal to the Commitment
retained by the Assignor), and otherwise in the form of the Note replaced
thereby. Any Note surrendered by the Assignor shall be returned by
Administrative Lender to Borrower marked "Exchanged".
(d) Register. Administrative Lender shall maintain at Administrative
Lender's Office a copy of each Assignment Agreement delivered to and accepted by
Administrative Lender and a register (the "Register") for the recordation of the
names and addresses of the Lenders and the Commitment of each Lender from time
to time. The entries in the Register shall be conclusive and binding for all
purposes, absent manifest error, and Borrower, Administrative Lender and the
Lenders may treat each entity whose name is recorded in the Register as a Lender
hereunder for all purposes of this Agreement. The Register shall be available
for inspection by Borrower or any Lender at any reasonable time and from time to
time upon reasonable prior notice.
(e) Registration. Upon its receipt of an Assignment Agreement executed by
an Assignor and an Assignee (and, in the case of an Assignee that is not then a
Lender or an affiliate of a Lender, by Borrower and Administrative Lender)
together with payment by such Assignee to Administrative Lender of a
registration and processing fee of $2,500, Administrative Lender shall (i)
promptly accept such Assignment Agreement, and (ii) on the effective date of
such Assignment record the information contained therein in the Register and
give notice of such acceptance and recordation to the Lenders and Borrower.
Administrative Lender may, from time to time at its election, prepare and
deliver to the Lenders and Borrower a revised Schedule I reflecting the names,
addresses and respective Commitments of all Lenders then parties hereto.
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(f) Confidentiality. Without limitation, Administrative Lender and the
Lenders may disclose the Loan Documents, and any financial or other information
relating to Borrower, to each other, to their respective affiliates, auditors
and legal counsel, to any potential Participant or Assignee and to governmental
and regulatory authorities to the extent that such disclosure is required by law
and as required in order to comply with a subpoena or order issued by a court of
competent jurisdiction or by a legislative or regulatory body.
SECTION 11.6 SETOFF
In addition to any rights and remedies of the Lenders provided by law, each
Lender shall have the right, with the prior consent of Administrative Lender but
without prior notice to Borrower, any such notice being expressly waived by
Borrower to the extent permitted by applicable law, during the continuance of an
Event of Default, to set-off and apply against any indebtedness, whether matured
or unmatured, of Borrower to such Lender, any amount owing from such Lender or
affiliate thereof to Borrower, at any time during the continuation of an Event
of Default. This right of set-off may be exercised by such Lender against
Borrower or against any trustee in bankruptcy, debtor in possession, assignee
for the benefit of creditors, receiver or execution, judgment or attachment
creditor of Borrower or against anyone else claiming through or against Borrower
or such trustee in bankruptcy, debtor in possession, assignee for the benefit of
creditors, receiver, or execution, judgment or attachment creditor,
notwithstanding the fact that such right of set-off shall not have been
exercised by such Lender prior to the occurrence of an Event of Default. Each
Lender agrees promptly to notify Borrower after any such set-off and application
made by such Lender, provided that the failure to give such notice shall not
affect the validity of such set-off and application.
SECTION 11.7 NO WAIVER; CUMULATIVE REMEDIES
No failure on the part of the Administrative Lender or any Lender to
exercise, and no delay in exercising, any right, power, privilege or remedy
under any Loan Document shall operate as a waiver thereof; nor shall any single
or partial exercise of any such right, power, privilege or remedy preclude any
other or further exercise thereof or the exercise of any other right, power,
privilege or remedy. The rights and remedies under the Loan Documents are
cumulative and not exclusive of any rights, powers, privileges and remedies that
may otherwise be available to the Administrative Lender or any Lender.
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SECTION 11.8 ENTIRE AGREEMENT, AMENDMENT
This Agreement and the other Loan Documents constitute the entire agreement
among Borrower, Administrative Lender and Lenders with respect to the Loans and
the Letters of Credit and supersede all prior negotiations, communications,
discussions, correspondence and agreements concerning the subject matter hereof.
KeyBank and Borrower hereby acknowledge that their [Credit Agreement] dated
April 12, 1996 is terminated and is of no further force or effect. This
Agreement cannot be changed orally or by conduct of the parties and may be
amended or modified only in writing signed by the party against whom enforcement
is sought.
SECTION 11.9 NO THIRD PARTY BENEFICIARIES
This Agreement is made and entered into for the sole protection and benefit
of the parties hereto and their respective permitted successors and assigns, and
no other person or entity shall be a third party beneficiary of, or have any
direct or indirect cause of action or claim in connection with, this Agreement
or any other of the Loan Documents to which it is not a party.
SECTION 11.10 TIME
Time is of the essence of each and every provision of this Agreement and
each other of the Loan Documents.
SECTION 11.11 SEVERABILITY OF PROVISIONS
If any provision of this Agreement shall be prohibited by or invalid under
applicable law, such provision shall be ineffective only to the extent of such
prohibition or invalidity without invalidating the remainder of such provision
or any remaining provisions of this Agreement.
SECTION 11.12 GOVERNING LAW
This Agreement shall be governed by and construed in accordance with the
laws of the State of Oregon.
SECTION 11.13 SUBMISSION TO JURISDICTION
EACH OF BORROWER, ADMINISTRATIVE LENDER, LETTER OF CREDIT ISSUING BANK,
SWINGLINE LENDER AND LENDERS HEREBY: (A) SUBMITS TO THE EXCLUSIVE JURISDICTION
OF THE COURTS OF THE STATE OF OREGON AND THE FEDERAL COURTS OF THE UNITED STATES
SITTING IN THE STATE OF OREGON FOR THE PURPOSE OF ANY ACTION
PAGE 79
OR PROCEEDING ARISING OUT OF OR RELATING TO ANY OF THE LOAN DOCUMENTS;
(B) AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE
HEARD AND DETERMINED IN SUCH COURTS; (C) IRREVOCABLY WAIVES (TO THE FULL EXTENT
PERMITTED BY APPLICABLE LAW) ANY OBJECTION WHICH IT NOW OR HEREAFTER MAY HAVE TO
THE LAYING OF VENUE OF ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY OF THE
FOREGOING COURTS, AND ANY OBJECTION ON THE GROUND THAT ANY SUCH ACTION OR
PROCEEDING IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM; AND
(D) AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE
CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR
IN ANY OTHER MANNER PERMITTED BY LAW.
SECTION 11.14 WAIVER OF JURY TRIAL
EACH OF BORROWER, ADMINISTRATIVE LENDER, LETTER OF CREDIT ISSUING BANK,
SWINGLINE LENDER AND LENDERS, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW,
HEREBY IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION,
PROCEEDING, COUNTERCLAIM OR OTHER LITIGATION IN ANY WAY ARISING OUT OF OR
RELATING TO THIS AGREEMENT, ANY OTHER OF THE LOAN DOCUMENTS OR ANY OF THE
TRANSACTIONS OR EVENTS REFERENCED HEREIN OR THEREIN OR CONTEMPLATED HEREBY OR
THEREBY, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS OR OTHERWISE. THIS
WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR
MODIFICATIONS TO THIS AGREEMENT AND/OR ANY OTHER OF THE LOAN DOCUMENTS. A COPY
OF THIS SECTION MAY BE FILED WITH ANY COURT AS WRITTEN EVIDENCE OF THE WAIVER OF
THE RIGHT TO TRIAL BY JURY AND THE CONSENT TO TRIAL BY COURT.
SECTION 11.15 COUNTERPARTS
This Agreement may be executed in any number of identical counterparts, any
set of which signed by all the parties hereto shall be deemed to constitute a
complete, executed original for all purposes.
SECTION 11.16 OREGON STATUTORY NOTICE
UNDER OREGON LAW, MOST AGREEMENTS, PROMISES AND COMMITMENTS MADE BY LENDER
AFTER OCTOBER 3, 1989
PAGE 80
CONCERNING LOANS AND OTHER CREDIT EXTENSIONS WHICH ARE NOT FOR PERSONAL, FAMILY
OR HOUSEHOLD PURPOSES OR SECURED SOLELY BY THE BORROWER'S RESIDENCE MUST BE IN
WRITING, EXPRESS CONSIDERATION AND BE SIGNED BY THE LENDER TO BE ENFORCEABLE.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first written above.
XXXXXXXXXX INDUSTRIES, INC.
(as Borrower)
By: XXXXX XXXXXXX
--------------------------------
Title: VP, Finance
-----------------------------
KEYBANK BANK NATIONAL ASSOCIATION
(as Administrative Lender)
By: XXXXXX X. XXXXXXXX
--------------------------------
Title: VP
-----------------------------
XXXXXX FINANCIAL, INC.
(as Syndication Agent)
By: XXXXXXXX XXXX
--------------------------------
Title: VP
-----------------------------
PAGE 81
KEYBANK NATIONAL ASSOCIATION
(as a Lender)
By: XXXXXX X. XXXXXXXX
--------------------------------
Title: VP
-----------------------------
XXXXXX FINANCIAL, INC. (as a Lender)
By: XXXXXXXX XXXX
--------------------------------
Title: VP
-----------------------------
PAGE 82
SCHEDULE III
Pricing Schedule
"LIBOR Margin" means, for any day, the number of basis points set forth
below in the column corresponding to the Pricing Level that applies on such day:
Xxxxx X Xxxxx XX Xxxxx XXX Xxxxx XX Xxxxx X
000 225 200 175 150
For purposes of this Pricing Schedule, the following terms have the
following meanings:
"Pricing Level" refers to the determination of which Xxxxx X, Xxxxx XX,
Xxxxx XXX, Xxxxx XX or Level V applies on any day.
"Level I" applies on any day if, on such day, the applicable Funded Debt
Ratio (as defined in Section 7.16 of the Agreement) is equal to or greater than
4:1.
"Level II" applies on any day if, on such day, the applicable Funded Debt
Ratio is equal to or greater than 3.5:1 and less than 4:1.
"Level III" applies on any day if, on such day, the applicable Funded Debt
Ratio is equal to or greater than 3:1 and less than 3.5:1.
"Level IV" applies on any day if, on such day, the applicable Funded Debt
Ratio is equal to or greater than 2.5:1 and less than 3:1.
"Level V" applies on any day if, on such day, the applicable Funded Debt
Ratio is less than 2.5:1.
As of a date, the applicable Funded Debt Ratio is to be based on the
financial information most recently reported by Borrower pursuant to Section 7.3
of the Agreement; provided, however, that if the most recent report required
pursuant to Section 7.3 has not been delivered, or if Administrative Lender
reasonably objects to the accuracy of such report within five days after the
receipt thereof, the next higher Level from the Level then in effect shall apply
until such time as the delinquent report is delivered or Administrative Lender's
objections are resolved to Administrative Lender's or Majority Lender's
reasonable satisfaction.
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