GUARANTY AGREEMENT
THIS GUARANTY AGREEMENT, dated as of September 24, 1997 (this "Agreement"),
by and between ELXSI CORPORATION, a Delaware corporation ("Guarantor") and BANK
OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, a National banking
corporation (the "Bank").
W I T N E S S E T H:
WHEREAS, the Orange County Industrial Development Authority, (the
"Issuer"), pursuant to authority granted under Chapter 159, Part II, Florida
Statutes, and other applicable provisions of law, will issue, sell and deliver
its $2,500,000 aggregate principal amount Industrial Development Revenue Bonds,
Series 1997 (ELXSI Project) (the "Bonds") to finance the costs of acquiring,
constructing, rehabilitating, equipping and furnishing a facility (the
"Project") located within the corporate boundaries of Orange County, Florida;
WHEREAS, the Issuer has loaned or will lend the proceeds received from the
sale of the Bonds to ELXSI, a California corporation and wholly-owned subsidiary
of Guarantor (the "Account Party"), pursuant to that certain Loan Agreement,
dated as of September 24, 1997 (the "Loan Agreement"), between the Issuer and
the Account Party and pursuant to that certain promissory note of the Account
Party in favor of the Issuer dated as of September 24, 1997 (the "Note");
WHEREAS, the Bonds were issued and secured by that certain Trust Indenture,
dated as of September 24, 1997 (as amended, restated, supplemented or otherwise
modified from time to time, hereinafter called the "Indenture"), between the
Issuer, Sun Trust Bank, Central Florida, National Association, as Trustee (the
"Trustee");
WHEREAS, the Bonds have been or will be purchased by the Bank from the
Issuer pursuant to a Bond Purchase Agreement dated as of September 24, 1997
between the Issuer, the Account Party and the Bank (the "Bond Purchase
Agreement");
WHEREAS, it is a condition to the Bank's obligation to purchase the Bonds
under the Bond Purchase Agreement that Guarantor enter into this Guaranty
Agreement;
WHEREAS, Guarantor will derive substantial benefit from the loaning of the
Bond proceeds to the Account Party to acquire, construct, rehabilitate, equip
and furnish the Project and the purchase by the Bank of the Bonds; and
WHEREAS, in order to induce the Bank to purchase the Bonds, the Guarantor,
pursuant to this Agreement, has issued a continuing, absolute, unconditional and
irrevocable guarantee of payment of the Account Party's obligations to the
Issuer under the Loan Agreement, the Note, the Mortgage (as defined herein), the
Security Agreement (as defined herein) and the Environmental Indemnity Agreement
(as defined herein), which obligations have been assigned to the Trustee for the
benefit of the Bank as the purchaser of the Bonds;
NOW THEREFORE, in consideration of the premises and to induce the Bank to
purchase the Bonds, and intending to be legally bound hereby, the Guarantor and
the Bank hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01 Certain Terms. The following terms (whether or not
underscored) when used in this Agreement, including its preamble and recitals,
shall have the following meanings (such definitions to be equally applicable to
the singular and plural:
"Account Party Agreement" means any of the Loan Agreement, the Note ,
the Mortgage, the Security Agreement and the Environmental Indemnity
Agreement.
"Affiliate" means any Person (other than a Subsidiary) which directly
or indirectly through one or more intermediaries controls, or is controlled
by, or is under common control with the Account Party or with the
Guarantor. The term "control" means the possession, directly or indirectly,
of the power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of voting securities,
by contract or otherwise.
"Agreement" is defined in the preamble.
"Bank" is defined in the preamble.
"Bond Purchase Agreement" is defined in the fourth recital.
"Bonds" is defined in the first recital.
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"Capitalized Lease" means a lease of property, real or personal,
which, in accordance with generally accepted accounting principles, would
be required to be capitalized on a balance sheet of the lessee.
"Environmental Indemnity Agreement" means the environmental indemnity
agreement dated as of September 24, 1997, between the Issuer and the
Account Party.
"Environmental Laws" shall mean any federal, state, local or other
laws, statutes, rules, regulations, orders, consent decrees, permits or
licenses, relating to prevention, remediation, reduction or control of
pollution, or protection of the environment, natural resources and/or human
health and safety, including without limitation, such laws, statutes,
rules, regulations, orders, consent decrees, permits or licenses relating
to (i) solid waste and/or Hazardous Material treatment, storage, disposal,
generation and transportation, (ii) air, water and noise pollution, (iii)
soil, ground, water or groundwater contamination, (iv) the generation,
handling, storage, transportation or release into the environment of
Hazardous Materials, and (v) regulation of underground and aboveground
storage tanks.
"ERISA" is defined in Section 3.11.
"Event of Default" is defined in Article V.
"Fiscal Quarter End" shall mean, for the first fiscal quarter, the
Saturday next preceding or next following (whichever is closer) March 31 of
any calendar year, for the second fiscal quarter, the Saturday next
preceding or next following (whichever is closer) June 30 of any calendar
year, and for the third fiscal quarter, the Saturday next preceding or next
following (whichever is closer) September 30 of any calendar year. The
Fiscal Quarter End for the fourth quarter will be the same date as the
Fiscal Year End, as defined in the definition "Fiscal Year End".
"Fiscal Year End" shall mean, as of any fiscal year of the Guarantor,
the Saturday next preceding or next following (whichever is closer)
December 31 of any calendar year.
"Guaranteed Obligations" is defined in Section 2.01.
"Guarantor" is defined in the preamble.
"Hazardous Material" is defined in Section 3.10.
"Indebtedness" means: (i) all items of indebtedness for borrowed
money, (ii) all indebtedness for borrowed money secured by any mortgage,
pledge or lien existing on
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property whether or not the indebtedness secured thereby shall have been
assumed, (iii) Capitalized Lease obligations (but not operating lease
obligations), and (iv) all guarantees, letters of credit, and endorsements
and other agreements or obligations (other than of notes, bills and checks
presented to banks for collection or deposit in the ordinary course of
business or operating lease obligations), in each case to support
Indebtedness of other Persons, including any partnership or joint venture
of which the Guarantor or any of its Subsidiaries is a general partner or
joint venturer. For purposes of Sections 3.03, 4.05 and 4.06,
"Indebtedness" shall not include Intercompany Indebtedness.
"Indenture" is defined in the third recital.
"Interim Financials" is defined in Section 3.03.
"Issuer" is defined in the first recital.
"Loan Agreement" is defined in the second recital.
"Material Subsidiary" means (i) each of ELXSI, a California
corporation; and (ii) any Subsidiary which now or hereafter has on any
given date total assets equal to or greater than ten percent (10%) of the
consolidated assets of the Guarantor and its Subsidiaries on such date. For
the purposes of this Agreement, a Subsidiary which now or hereafter
qualifies as a Material Subsidiary under clause (ii) of the foregoing
definition shall continue to be deemed to be a Material Subsidiary
notwithstanding the fact that its total assets may at any given time
subsequent to such qualification as a Material Subsidiary be equal to or
less than ten percent (10%) of the consolidated assets of the Guarantor and
its Subsidiaries.
"Mortgage" means the mortgage and security agreement dated as of
September 24, 1997 between the Account Party and the Issuer.
"1996 Financials" is defined in Section 3.03.
"Person" means any individual, corporation, limited liability company
partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political
subdivision thereof.
"Project" is defined in the first recital.
"Revolving Credit Agreement" means the Amended and Restated Loan and
Security Agreement dated as of December 30, 1996 between the Account Party
and Bank of America Illinois as subsequently modified, amended and/or
restated.
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"Security Agreement" means the security agreement dated as of
September 24, 1997, between the Account Party and the Issuer.
"Subsidiary" means any Person of which greater than 50% of the
outstanding shares of voting stock are owned or controlled by the
Guarantor.
"Trustee" is defined in the third recital.
"Unmatured Event of Default" means an event which would become an
Event of Default with notice or the passage of time or both.
Except as and unless otherwise specifically provided herein, all accounting
terms in this Agreement shall have the meanings given to them by generally
accepted United States accounting principles and shall be applied and all
reports required by this Agreement shall be prepared, in a manner consistent
with the most recent financial statements provided to the Bank before this
Agreement was signed.
Section 1.02 Loan Agreement Definitions. Unless otherwise defined herein or
the context otherwise requires, terms used in this Agreement, including its
preamble and recitals, shall have the meanings provided in the Loan Agreement.
ARTICLE II
THE GUARANTY
Section 2.01 Guaranty. The Guarantor hereby absolutely, unconditionally and
irrevocably (a) guarantees the prompt payment in full when due (whether at
stated maturity, by required prepayment, declaration, acceleration, demand or
otherwise) of all obligations of the Account Party now or hereafter existing
which arise out of or in connection with the Loan Agreement, whether for
principal, interest, fees, expenses or otherwise and all other Liabilities of
the Account Party and all other amounts from time to time owing to the Issuer or
any other person under the Loan Agreement or obligations under any other Account
Party Agreement, howsoever created, arising or evidenced whether direct or
indirect, absolute or contingent or now or hereafter existing or due or to
become due (including in all cases all such amounts which would become due but
for the operation of the automatic stay under Section 362(a) of the United
States Bankruptcy Code 11 U.S.C. ss. 362(a), and the operation of Sections
502(b) and 506(b) of the United States Bankruptcy Code 11 U.S.C. ss. 502(b) and
ss. 506(b), and (b) indemnifies and holds harmless the Bank for any and all
reasonable costs and expenses (including reasonable attorney fees (including the
allocated cost of internal legal services and all disbursements of internal
counsel) and expenses) incurred by the Bank in enforcing any rights under this
Guaranty, in each
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case strictly in accordance with the terms thereof (such obligations being
herein collectively called the "Guaranteed Obligations").
This Guaranty constitutes a guaranty of payment when due and not of
collection, and the Guarantor specifically agrees that it shall not be necessary
or required that the Bank exercise any right, assert any claim or demand or
enforce any remedy whatsoever against the Account Party (or any other Person)
before or as a condition to the obligations of the Guarantor hereunder.
Section 2.02 Obligations Unconditional. The obligations of the Guarantor
under Section 2.01 shall in all respects be a continuing, absolute,
unconditional and irrevocable guaranty of payment, and shall remain in full
force and effect until all Guaranteed Obligations have been paid in full and all
obligations of the Guarantor hereunder shall have been paid in full.
The Guarantor guarantees that the Guaranteed Obligations will be paid
strictly in accordance with the terms of the Account Party Agreement under which
they arise, regardless of any law, regulation or order now or hereafter in
effect in any jurisdiction affecting any of such terms or the rights of the Bank
with respect thereto. The liability of the Guarantor under this Guaranty shall
be absolute, unconditional and irrevocable irrespective of:
(a) any lack of validity, legality or enforceability of the Loan
Agreement or any other Account Party Agreement or any other agreement or
instrument evidencing Guaranteed Obligations;
(b) the failure of the Bank
(i) to assert any claim or demand or to enforce any right or
remedy against the Account Party or any other Person (including any
other guarantor) under the provisions of the Loan Agreement or any
other Account Party Agreement or any other agreement or instrument
evidencing Guaranteed Obligations or otherwise, or
(ii) to exercise any right or remedy against any other guarantor
of, or collateral securing, any Guaranteed Obligations;
(c) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Guaranteed Obligations, or any other
extension, compromise or renewal of any Guaranteed Obligation;
(d) any reduction, limitation, impairment or termination of any
Guaranteed Obligations for any reason including any claim of waiver,
release, surrender, alteration or compromise, and the Guaranty shall not be
subject to (and the Guarantor hereby waives any right to or claim of) any
defense or setoff, counterclaim, recoupment or termination
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whatsoever by reason of the invalidity, illegality, nongenuineness,
irregularity, compromise, unenforceability of, or any other event or
occurrence affecting, any Guaranteed Obligations other than payment
thereon;
(e) any amendment to, rescission, waiver, or other modification of, or
any consent to departure from, any of the terms of the Loan Agreement or
any other Account Party Agreement;
(f) any addition, exchange, release, surrender or nonperfection of any
collateral, or any amendment to or waiver or release or addition of, or
consent to departure from, any other guaranty, held by the Bank securing
any of the Guaranteed Obligations; or
(g) any other circumstance which might otherwise constitute a defense
available to, or a legal or equitable discharge of, the Account Party, any
surety or any of the Guaranteed Obligations.
Section. 2.03 Waiver, etc. The Guarantor hereby expressly waives
promptness, diligence, presentment, demand of payment upon the Account Party,
protest and all notices whatsoever (other than demand of payment upon the
Guarantor), and any requirement that the Bank protect, secure, perfect or insure
any security interest or lien upon any property subject thereto, or exhaust any
right, power or remedy or proceed against (i) the Account Party under the Loan
Agreement, the other Account Party Agreements or any other agreement or
instrument referred to herein or therein or (ii) against any other Person under
any other guarantee of, or security for, any of the Guaranteed Obligations.
Section 2.04 Reinstatement. The obligations of the Guarantor under this
Article II shall be automatically reinstated if and to the extent that for any
reason any payment by or on behalf of the Account Party in respect of any of the
Guaranteed Obligations is rescinded or must be otherwise restored by any holder
of any of the Guaranteed Obligations, whether as a result of any proceedings in
bankruptcy or reorganization or otherwise, and the Guarantor agrees that it will
indemnify the Bank on demand for all reasonable costs and expenses (including,
without limitation, reasonable fees of counsel) incurred by the Bank in
connection with such rescission or restoration.
Section 2.05 Subrogation, etc. The Guarantor will not exercise any rights
which it may acquire by reason of any payment made hereunder, whether by way of
subrogation, reimbursement or otherwise, until the prior payment, in full and in
cash, of all Guaranteed Obligations. Any amount paid to the Guarantor on account
of any payment made hereunder prior to the payment in full of all Guaranteed
Obligations shall be held in trust for the benefit of the Bank and shall
immediately be paid to the Bank and credited and applied against the Guaranteed
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Obligations, whether matured or unmatured, in accordance with the terms of the
Agreement (or the Pledge Agreement); provided, however, that if
(a) the Guarantor has made payment to the Bank of all or any part of
the Guaranteed Obligations, and
(b) all Guaranteed Obligations have been paid in full,
the Bank agrees that, at the Guarantor's request, the Bank will execute and
deliver to the Guarantor appropriate documents (without recourse and without
representation or warranty) necessary to evidence the transfer by subrogation to
the Guarantor of an interest in the Guaranteed Obligations resulting from such
payment by the Guarantor. In furtherance of the foregoing, for so long as any
Guaranteed Obligations remain outstanding, the Guarantor shall refrain from
taking any action or commencing any proceeding against the Guarantor (or its
successors or assigns, whether in connection with a bankruptcy proceeding or
otherwise) to recover any amounts in respect of payments made under this
Agreement to the Bank.
Section 2.06 Remedies. The Guarantor agrees that, as between the Guarantor
and the Bank, the Liabilities of the Account Party under the Loan Agreement may
be declared to be forthwith due and payable as provided in Section 9.2 of the
Loan Agreement (and shall be deemed to have become automatically due and payable
in the circumstances provided in said Section 9.2) for purposes of Section 2.01,
notwithstanding any stay, injunction or other prohibition preventing such
declaration (or such obligations from becoming automatically due and payable) as
against the Account Party and that, in the event of such declaration (or such
obligations being deemed to have become automatically due and payable), such
obligations (whether or not due and payable by the Account Party) shall
forthwith become due and payable by the Guarantor for purposes of Section 2.01.
Section 2.07 Continuing Guaranty. The guaranty in this Article II is a
continuing guaranty, and shall apply to all Guaranteed Obligations whenever
arising.
ARTICLE III
GUARANTOR'S REPRESENTATIONS
The Guarantor represents to the Bank that:
Section 3.01 Organization. The Guarantor is a corporation existing and in
good standing under the laws of the State of Delaware; each Material Subsidiary
is a corporation duly existing and in good standing under the laws of the state
of its incorporation; the Guarantor and each Material Subsidiary are duly
qualified, in good standing and authorized to do business in
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each jurisdiction where failure to so qualify would have a material adverse
effect on their business or properties and because of the nature of their
activities or properties, such qualification is required; and the Guarantor and
each Material Subsidiary have the corporate power and authority to own their
properties and to carry on their businesses in a manner substantially the same
as now being conducted.
Section 3.02 Authorization; No Conflict; Binding Effect. The execution and
delivery of this Agreement and the performance by the Guarantor of its
obligations under this Agreement are within the Guarantor's corporate powers,
have been authorized by all necessary corporate action, have received all
necessary governmental approval (if any shall be required) and do not and will
not contravene or conflict with any provision of law or of the charter or
by-laws of the Guarantor or any Subsidiary or of any agreement binding upon the
Guarantor or any Subsidiary. This Agreement has been duly executed and delivered
by Guarantor and is the legal, valid and binding obligation of Guarantor
enforceable against Guarantor in accordance with its terms.
Section 3.03 Financial Statements; Contingent Liabilities; Indebtedness.
The Guarantor's audited consolidated and consolidating (as applicable) financial
statements as of and for the fiscal year ended December 31, 1996 (the "1996
Financials"), as certified by Price Waterhouse L.L.P., the Guarantor's certified
public accountants for such period, copies of which have been furnished to the
Bank, have been prepared in conformity with generally accepted accounting
principles applied on a basis consistent with that of the preceding fiscal year,
and fairly present the financial condition of the Guarantor and its Subsidiaries
as of such dates and the results of their operations for the periods then ended.
To the best of the Guarantor's knowledge, the Guarantor's unaudited consolidated
and consolidating (as applicable) financial statement as of June 30, 1997 (the
"Interim Financials") a copy of which has been furnished to the Bank, fairly
presents the financial condition of the Guarantor and its Subsidiaries as of
such date and the results of their operations for the period then ended. Since
the date of the 1996 Financials, no material adverse change in the business,
properties, assets, operations, conditions or prospects of the Guarantor and its
Subsidiaries taken as a whole has occurred of which the Bank has not been
advised in writing before this Agreement was signed. There is no known
contingent liability of the Guarantor or any Subsidiary which is known to be in
an amount in excess of $50,000 which is not reflected in the 1996 Financials or
which is not set forth in Schedule 3.03.
Section 3.04 Taxes. No examination of any Federal income tax return filed
by or on behalf of the Guarantor or any Material Subsidiary is pending or, to
the best knowledge of the Guarantor, threatened. The Guarantor and its
Subsidiaries have filed or caused to be filed all federal, state and local tax
returns which, to the knowledge of the Guarantor or its Subsidiaries, are
required to be filed, and have paid or have caused to be paid all taxes as shown
on such returns or on any assessment received by them, to the extent that such
taxes have become due (except for current taxes not delinquent and taxes being
contested in good faith and by appropriate proceedings for which adequate
reserves have been provided on the books of the
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Guarantor or the appropriate Subsidiary, and as to which no foreclosure,
distraint, sale or similar proceedings have been commenced).
Section 3.05 Liens. None of the material assets of the Guarantor or its
Subsidiaries are subject to any mortgage, pledge, title retention lien, or other
lien, encumbrance or security interest, except for: (a) current taxes not
delinquent or taxes being contested in good faith and by appropriate
proceedings; (b) liens arising in the ordinary course of business for sums not
due or sums being contested in good faith and by appropriate proceedings, but
not involving any deposits or advances or borrowed money or the deferred
purchase price of property or services; (c) to the extent specifically shown in
the financial statements referred to above; and (d) as shown on Schedule 3.05.
Section 3.06 Adverse Contracts. Neither the Guarantor nor any of its
Subsidiaries is a party to any agreement or instrument or subject to any charter
or other corporate restriction, nor is any of them subject to any judgment,
decree or order of any court or governmental body, which may have a material,
adverse effect on the business, assets, liabilities, financial condition,
operations or business prospects of the Guarantor and its Subsidiaries taken as
a whole or on the ability of the Guarantor to perform its obligations under this
Agreement. Neither the Guarantor nor its Subsidiaries has, nor with reasonable
diligence should have had, knowledge of or notice that it is in default in the
performance, observance or fulfillment of any of the obligations, covenants or
conditions contained in any such agreement, instrument, restriction, judgment,
decree or order.
Section 3.07 Regulation U. The Guarantor is not engaged principally in, nor
is one of the Guarantor's important activities, the business of extending credit
for the purpose of purchasing or carrying "margin stock" within the meaning of
Regulation U of the Board of Governors of the Federal Reserve System as now and
from time to time hereinafter in effect.
Section 3.08 Litigation. No litigation (including derivative actions but
excluding product liability claims as to which the amount claimed is completely
covered by satisfactory insurance other than self-insurance), arbitration
proceedings or governmental proceedings or investigations are pending or, to the
best knowledge of the Guarantor, threatened against the Guarantor which would
(singly or in the aggregate) if adversely determined, have a material, adverse
effect on the financial condition, continued operations or prospects of the
Guarantor and its Subsidiaries taken as a whole, except as set forth (including
estimates of the dollar amounts involved) on Schedule 3.08.
Section 3.09 Subsidiaries. Schedule 3.09 sets forth a correct and complete
list of all Subsidiaries and Affiliates of the Guarantor.
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Section 3.10 Environmental Matters. Except as disclosed on Schedule 3.10,
(i) the Guarantor and its Material Subsidiaries and all properties owned or
operated by the Guarantor or its Material Subsidiaries comply in all material
respects with all Environmental Laws; (ii) neither the Guarantor nor any
Material Subsidiary is subject to any actual or threatened judicial or
administrative proceeding, investigation or inquiry into the possibility of
violation of any Environmental Laws; (iii) neither the Guarantor nor any
Material Subsidiary is the subject of an actual or threatened federal, state or
local investigation or inquiry evaluating whether any remedial action is needed
under any Environmental Laws to respond to a release of any material classified
as "hazardous" by any Environmental Laws ("Hazardous Material") into the
environment; (iv) neither the Guarantor nor any Material Subsidiary has
knowledge or notice of the presence of any Hazardous Material on or under any
property owned or operated by the Guarantor or any Material Subsidiary; (v)
there is no claim pending or threatened against the Guarantor or any Material
Subsidiary relating to damage, contribution, cost recovery compensation, loss,
or injury resulting from the release of, or exposure to, any Hazardous Material;
(vi) neither the Guarantor nor any Material Subsidiary has any known contingent
liability in connection with any release of Hazardous Material into the
environment; and (vii) neither the Guarantor nor any Material Subsidiary has
received notice, nor has reasons to expect notice, of any potential liability
under federal, state or local laws, arising from or relating to any release into
the environment of any Hazardous Material.
Section 3.11 ERISA. The Guarantor and each Material Subsidiary is in
compliance with all material requirements of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA") and the regulations promulgated
thereunder as to any employee benefit plan defined in Section 3(3) of ERISA, and
there exists no event described in Section 4043(b) of ERISA, excluding
subsections 4043(b)(2) and 4043(b)(3) thereof, with respect to which the
Guarantor or any Material Subsidiary has any obligation, which could result in
such Person incurring any liability, fine or penalty, other than a liability
reflected in the funding schedule for such plan which is not yet due and
payable. Within the past five years, neither the Guarantor nor any Material
Subsidiary has terminated or withdrawn from, nor is the Guarantor aware of any
withdrawal liability assessed against the Guarantor or any Material Subsidiary
with respect to, any multi-employer employee benefit plan.
Section 3.12 True and Complete Disclosure. (i) All factual information
relating to the Guarantor furnished to the Bank heretofore or contemporaneously
herewith by or on behalf of the Guarantor for purposes of or in connection with
this Agreement or any transaction contemplated hereby is true and complete in
every material respect on the date as of which such information is dated or
certified and not incomplete by omitting to state any material fact necessary to
make such information not misleading at such time provided, however, the dated
date of the Schedules shall be the date hereof and (ii) there is no fact known
to the Guarantor on the date hereof that, in the reasonable judgment of the
Guarantor, materially adversely affects the business or financial prospects of
the Guarantor that has not been disclosed in writing to the Bank.
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Section 3.13 Solvency. Guarantor is solvent and will continue to be solvent
following the consummation of the transactions contemplated by this Agreement.
Section 3.14 Survival. All representations and warranties contained in this
Agreement shall survive the execution and delivery of this Agreement.
ARTICLE IV
GUARANTORS' COVENANTS
Section 4.01 Corporate Existence, Mergers Etc. The Guarantor and each of
its Material Subsidiaries shall preserve and maintain its corporate existence,
rights, franchises, licenses and privileges, and will not liquidate, dissolve,
or merge, or consolidate with or into any other corporation, or sell, lease,
transfer or otherwise dispose of all or a substantial part of its assets, except
that:
(ii) Any Subsidiary may merge or consolidate with or into any one or
more wholly-owned subsidiaries;
(iii) Any Subsidiary which is not a Material Subsidiary may liquidate
or dissolve upon the prior written consent of the Bank (which consent shall
not be unreasonably withheld); and
(iv) In any given fiscal year of the Guarantor, the Guarantor and its
Material Subsidiaries may sell, transfer, or otherwise dispose of a portion
of their respective assets and those Subsidiaries which are not Material
Subsidiaries may sell, transfer or otherwise dispose of all or a portion of
their respective assets; provided, however, that the aggregate net book
value of assets so sold, transferred or disposed of by the Guarantor and
its subsidiaries (including both Material Subsidiaries and Subsidiaries
which are not Material Subsidiaries) in such fiscal year shall not exceed
ten percent (10%) of the net book value of the total consolidated assets of
the Guarantor and its Subsidiaries in the immediately preceding fiscal
year. The restrictions of this subsection 4.01(iii) shall not apply to the
lease (as lessor) of any assets of the Guarantor and its Subsidiaries.
Section 4.02 Reports, Certificates and Other Information. The Guarantor
shall furnish to the Bank:
(i) Interim Reports. Within forty-five (45) days after the end of the
first, second, and third quarters of each fiscal year of the Guarantor, a
copy of an unaudited financial statement of the Guarantor and its
Subsidiaries prepared on a
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consolidated and consolidating (as applicable) basis consistent with the
unaudited consolidated and consolidating (as applicable) financial
statement of the Guarantor and its Subsidiaries as at June 30, 1997
referred to above, signed by an authorized officer of the Guarantor and
consisting of at least (i) a balance sheet as at such Fiscal Quarter End,
and (ii) a consolidated cash flow statement of the Guarantor and its
Subsidiaries for such quarter and for the period from the beginning of such
fiscal year to such Fiscal Quarter End.
(ii) Annual Report. As soon as available and in any event within
ninety (90) days after each Fiscal Year End of the Guarantor, a copy of a
consolidated and consolidating (as applicable) balance sheet and profit and
loss statement of the Guarantor and its Subsidiaries as of such Fiscal Year
End and the related consolidated statement of cash flows for such fiscal
year, in each case setting forth in comparative form figures for the
preceding fiscal year, all in reasonable detail, prepared in accordance
with generally accepted accounting principles consistently applied
throughout the period involved (including disclosure required by Accounting
Principles Board Statement 28) (except for such changes as are disclosed in
such financial statements or in the notes thereto and concurred in by
independent certified public accountants) and accompanied by an audit
report of any firm of independent public accountants of recognized national
standing selected by the Guarantor; provided, however, that such audit
report shall not be required with respect to the consolidating financial
statements.
(iii) Notice of Default, Litigation and ERISA Matters. Immediately
upon learning of the occurrence of any of the following, written notice
describing the same and the steps being taken by the Guarantor or any one
of its Subsidiaries affected in respect thereof to remedy or cure: (i) the
occurrence of an "Event of Default" or an "Unmatured Event of Default"
(each as defined in the Loan Agreement) or an Event of Default or Unmatured
Event of Default; or (ii) the institution of, or any adverse determination
in, any litigation, arbitration or governmental proceeding which is
material to the Guarantor or any one of its Subsidiaries on a consolidated
basis; or (iii) the occurrence of a reportable event under, or the
institution of steps by the Guarantor or any one of its Subsidiaries to
withdraw from, or the institution of any steps to terminate, any employee
benefit plans as to which the Guarantor or any of its Subsidiaries may have
any liability.
(v) Subsidiaries. Promptly from time to time a written report of any
changes in Schedule 3.09 hereto.
(vi) Other Information. From time to time such other information,
financial or otherwise, concerning the Guarantor or any of its Subsidiaries
as the Bank may reasonably request.
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Section 4.03 Inspection. Upon reasonable prior notice from the Bank and its
agents, the Guarantor and its Subsidiaries shall permit the Bank and its agents
at any time during normal business hours to inspect their respective properties
and to inspect and make copies of their respective books and records so long as
no unnecessary interruption is caused to the operation of the business of the
Guarantor and its Subsidiaries by any such inspection.
ARTICLE V
EVENT OF DEFAULT
Section 5.01 Events of Default. Each of the following shall constitute an
Event of Default under this Agreement:
b. Nonpayment of Guaranteed Obligations. Default by the Guarantor in
the payment when due of any Guaranteed Obligation.
c. Noncompliance With this Agreement. (i) Failure by the Guarantor to
comply with or to perform any provision of Section 4.01, Section 4.02 or
Section 4.03 or (ii) failure by the Guarantor to comply with or to perform
any other provision of this Agreement (if such failure does not constitute
an Event of Default under any of the other subsections and clauses of this
Section, including, without limitation, clause (i) of this subsection) and
continuance of such failure for 30 days after notice thereof to the
Guarantors from the Bank.
c. Cross-Default. The occurrence of a default or event of default
under Section 9.1 of the Loan Agreement or a default or event of default
shall occur under any other Account Party Agreement, the occurrence of a
default or event of default under Section 6.1 of the Revolving Credit
Agreement or there shall occur any default or event of default, or any
event which might become such with notice or the passage of time or both,
or any similar event, or any event which requires the prepayment of
borrowed money (other than prepayment of loans under the Revolving Credit
Agreement) in a principal amount in excess of $200,000 in the aggregate or
the acceleration of maturity thereof, under the terms of any evidence of
Indebtedness or other agreement issued or assumed or entered into by the
Guarantor or any of its Subsidiaries or under the terms of any indenture,
agreement or instrument under which any such evidence of Indebtedness or
other agreement is issued, assumed, secured or guaranteed (and such event
shall continue beyond any applicable period of grace; or
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d. Dissolutions, etc. The Guarantor shall fail to comply with any
provision concerning its existence or that of any of its Material
Subsidiaries or any prohibition against dissolution, liquidation, merger,
consolidation or sale of assets; or
e. Warranties. Any material representation, warranty, schedule,
certificate, financial statement, report, notice or other writing furnished
by or on behalf of the Guarantor to the Bank is false or misleading in any
material respect on the date as of which the facts therein set forth are
stated or certified; or
f. Change in Control. A majority of the outstanding voting stock of
the Guarantor shall be acquired, directly or indirectly, by a Person or
group of Persons acting in concert, who own on the date hereof less than 5%
of such voting stock; or
g. ERISA. The Pension Benefit Guaranty Corporation, or any entity
succeeding to any or all of its functions under ERISA, applies to a United
States District Court for the appointment of a trustee to administer any
Plan or for a decree adjudicating that any such Plan must be terminated; a
trustee is appointed to administer any such Plan; any action is taken to
terminate any such Plan or any such Plan is permitted or caused to be
terminated if, at the time such action is taken or such termination of any
such Plan occurs, the Plan's "vested liabilities", as defined in Section
3(25) of ERISA, exceed the then value of its assets at the time of such
termination (for purposes of this Section 5.01(g), "Plan" shall have the
meaning given to such term in Section 3(3) of ERISA and established or
maintained by the Guarantor or any of its Material Subsidiaries and
includes any Plan as to which the Guarantor or any of its Material
Subsidiaries may have any liability); or
h. Litigation. Any suit, action or other proceeding (judicial or
administrative) shall be commenced against the Guarantor or any of its
Subsidiaries, or with respect to any assets of the Guarantor or any of its
Subsidiaries, and such proceeding shall, in the reasonable opinion of the
Bank and its counsel, threaten to have a material, adverse effect on the
future operations of the Guarantor and its Subsidiaries taken as a whole,
or a final judgment in excess of $250,000 shall be entered or a settlement
in excess of $250,000 shall be reached in any such suit, action or
proceeding; provided, however, that such occurrence shall not be deemed an
Event of Default if as to the amount involved, claimed, awarded in final
judgment or agreed to in settlement, one hundred percent (100%) of that
portion (if any) of such amount which exceeds $250,000 is, in the
reasonable opinion of the Bank and its counsel, completely covered by
satisfactory insurance (other than self-insurance); or
i. Bankruptcy - Filing of Petition.
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(i) The Guarantor or any of its Material Subsidiaries shall file
a petition or answer or otherwise commence any action or proceeding
seeking reorganization, arrangement or readjustment of its debts or
for any other relief under the federal Bankruptcy Code, as amended, or
under any other bankruptcy or insolvency act or law, federal, state or
foreign, now or hereafter existing, or the Guarantor or any Material
Subsidiary shall consent to, approve of, or acquiesce in, any such
petition, action or proceeding; or the Guarantor or any of its
Material Subsidiaries shall consent to the institution of such
proceedings or the filing of any such petition or to the appointment
of a receiver, liquidator, assignee, trustee, custodian, sequestrator
or similar official for all or any part of the property of the
Guarantor or any of its Material Subsidiaries; or
(ii) an involuntary petition shall be filed or an action or
proceeding otherwise commenced seeking reorganization, arrangement or
readjustment of the debts of the Guarantor or any Material Subsidiary
or for any other relief under the federal Bankruptcy Code, as amended,
or under any other bankruptcy or insolvency act or law, federal, state
or foreign, now or hereafter existing, and such action has not been
stayed within thirty (30) days of the filing or commencement, as the
case may be; or
j. Bankruptcy - Entry of Order for Relief. There shall be entered a
decree or order by a court (i) constituting an order for relief in respect
of the Guarantor or any of its Material Subsidiaries under the federal
Bankruptcy Code, as amended, or under any other bankruptcy or insolvency
act or law, federal, state or foreign, now or hereafter existing; or (ii)
appointing a receiver, liquidator, assignee, trustee, custodian,
sequestrator or similar official for all or any part of the property of the
Guarantor or any of its Material Subsidiaries, or (iii) ordering the
winding-up of or liquidation of the affairs of the Guarantor or any of its
Material Subsidiaries; and any such decree or order shall continue unstayed
and in effect for a period of thirty (30) consecutive days; or
k. Insolvency. The Guarantor or any of its Material Subsidiaries shall
become insolvent or shall fail or be unable to pay its debts as they
mature, or shall admit in writing its inability to pay its debts as they
mature, or shall make a general assignment for the benefit of its
creditors, or shall enter into any composition or similar agreement, or
shall suspend the transaction of all or a substantial portion of its usual
business.
Section 5.02 Effect of Events of Default. The Guarantor acknowledges and
agrees that the occurrence of an Event of Default under Section 5.01 hereof
shall also constitute an event of default for purposes of Section 9.1 of the
Loan Agreement.
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ARTICLE VI
MISCELLANEOUS
Section 6.1 Binding on Successors, Transferees and Assigns; Assignment of
Guaranty. This Agreement shall be binding upon the Guarantor and its successors,
transferees and assigns and shall inure to the benefit of and be enforceable by
the Bank and its successors, transferees and assigns; provided, however, that
the Guarantor may not assign any of its obligations hereunder without the prior
written consent of the Bank.
Section 6.2 Amendments, etc. No amendment to or waiver of any provision of
this Agreement, nor consent to any departure by the Guarantor therefrom, shall
in any event be effective unless the same shall be in writing and signed by the
Bank, and then such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.
Section 6.3 Addresses for Notices to the Guarantor. All notices and other
communications provided for hereunder shall be in writing and shall be given (i)
by first class or certified mail, postage prepaid; (ii) by facsimile
transmission and confirmed by the sender's telephone call to the recipient and
by mailing or delivering a copy as provided in clause (i) , clause (iii) or
clause (iv) hereof; (iii) by hand delivery or (iv) by courier service (including
overnight courier service). Notices to the Guarantor shall be directed as
follows:
ELXSI Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇-▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Controller
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Lowndes Drosdick ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇, P.A.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
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Notices to the Bank shall be directed as follows:
Bank of America National Trust
and Savings Association
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇)▇▇▇-▇▇▇▇
Notice given as provided in clause (i) hereof shall be effective five days from
the date of mailing. Notice given as provided in clauses (ii) and (iii) hereof
shall be effective on the day sent if sent by 4:00 p.m. (local time at Chicago,
Illinois) on a Business Day and otherwise on the next Business Day following the
day of sending. Notice given as provided in clause (iv) hereof shall be
effective on the Business Day following the day of sending.
Section 6.04 No Waiver; Remedies. In addition to, and not in limitation of,
Section 2.3 and Section 2.6, no failure on the part of the Bank to exercise, and
no delay in exercising, any right hereunder shall operate as a waiver thereof;
nor shall any single or partial exercise of any right hereunder preclude any
other or further exercise thereof or the exercise of any other right. The
remedies herein provided are cumulative and not exclusive of any remedies
provided by law.
Section 6.05 Section Captions. Section captions used in this Agreement are
for convenience of reference only, and shall not affect the construction of this
Agreement.
Section 6.06 Right of Set-off. For so long as any amount is due or owing to
the Bank under the Loan Agreement, so long as an Event of Default has occurred
and is continuing, the Bank shall have the right to immediately and without
notice set-off against any of the Guarantor's obligations to it under this
Agreement any sum owed by the Bank in any capacity to the Guarantor. The Bank
shall be deemed to have exercised such right of set-off and to have made a
charge against any such sum immediately upon the occurrence of any Event of
Default, even though the actual book entries may be made at the time subsequent
thereto.
Section 6.07 Severability. Wherever possible each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Guaranty shall be prohibited by or
invalid under such law, such provision shall be ineffective to the extent of
such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.
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Section 6.08 Governing Law; Jury Trial Waiver; Venue. This Agreement shall
be governed by, and construed in accordance with, the law of the State of
Illinois without giving effect to Illinois choice of law principles.
THE GUARANTOR HEREBY IRREVOCABLY WAIVES ANY RIGHT TO TRIAL BY JURY IN ANY
ACTION OR PROCEEDING (I) TO ENFORCE OR DEFEND ANY RIGHTS UNDER OR IN CONNECTION
WITH THIS AGREEMENT, OR ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT
DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH, OR
(II) ARISING FROM ANY DISPUTE OR CONTROVERSY IN CONNECTION WITH OR RELATED TO
THIS AGREEMENT, OR ANY SUCH AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT, AND
AGREES THAT ANY SUCH ACTION OR COUNTERCLAIM SHALL BE TRIED BEFORE A COURT AND
NOT BEFORE A JURY.
THE GUARANTOR IRREVOCABLY AGREES THAT, SUBJECT TO THE BANK'S SOLE AND
ABSOLUTE ELECTION, ANY ACTION OR PROCEEDING IN ANY WAY, MANNER OR RESPECT
ARISING OUT OF THIS AGREEMENT, OR ANY AMENDMENT, INSTRUMENT, DOCUMENT OR
AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION
HEREWITH, OR ARISING FROM ANY DISPUTE OR CONTROVERSY ARISING IN CONNECTION WITH
OR RELATED TO THIS AGREEMENT, OR ANY SUCH AMENDMENT, INSTRUMENT, DOCUMENT OR
AGREEMENT SHALL BE LITIGATED ONLY IN THE COURTS HAVING SITUS WITHIN THE CITY OF
CHICAGO, ILLINOIS, AND THE GUARANTOR HEREBY CONSENTS AND SUBMITS TO THE
JURISDICTION OF ANY LOCAL, STATE OR FEDERAL COURT LOCATED WITHIN SUCH CITY AND
STATE. THE GUARANTOR HEREBY WAIVES ANY RIGHT IT MAY HAVE TO TRANSFER OR CHANGE
THE VENUE OF ANY LITIGATION BROUGHT AGAINST THE GUARANTOR AND/OR BY THE BANK IN
ACCORDANCE WITH THIS SECTION 6.08.
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IN WITNESS WHEREOF, the Guarantor has caused this Agreement to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.
ELXSI CORPORATION
By:____________________________
Its:___________________________
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