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EXHIBIT 10.40
EXECUTION COPY
CREDIT AGREEMENT
Dated as of October 24, 1997
among
CODE-ALARM, INC.,
as Borrower,
THE OTHER CREDIT PARTIES SIGNATORY HERETO,
as Credit Parties,
THE LENDERS SIGNATORY HERETO
FROM TIME TO TIME,
as Lenders,
and
GENERAL ELECTRIC CAPITAL CORPORATION,
as Agent and Lender
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TABLE OF CONTENTS
Page
1. AMOUNT AND TERMS OF CREDIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Credit Facilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.3 Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
1.4 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
1.5 Interest and Applicable Margins. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
1.6 Eligible Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
1.7 Eligible Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
1.8 Cash Management Systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
1.9 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
1.10 Receipt of Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
1.11 Application and Allocation of Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
1.12 Loan Account and Accounting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
1.13 Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
1.14 Access . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
1.15 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
1.16 Capital Adequacy; Increased Costs; Illegality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
1.17 Single Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
2. CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
2.1 Conditions to the Initial Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
2.2 Further Conditions to Term Loan B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
2.3 Further Conditions to Incurrence of Litigation L/C Obligations . . . . . . . . . . . . . . . . . . . . . 27
2.4 Further Conditions to Each Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
3. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
3.1 Corporate Existence; Compliance with Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
3.2 Executive Offices; FEIN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
3.3 Corporate Power, Authorization, Enforceable Obligations . . . . . . . . . . . . . . . . . . . . . . . . 30
3.4 Financial Statements and Projections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
3.5 Material Adverse Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
3.6 Ownership of Property; Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
3.7 Labor Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
3.8 Ventures, Subsidiaries and Affiliates; Outstanding Stock and Indebtedness . . . . . . . . . . . . . . . 33
3.9 Government Regulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
3.10 Margin Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
3.11 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
3.12 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
3.13 No Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
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3.14 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
3.15 Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
3.16 Full Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
3.17 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
3.18 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
3.19 Deposit and Disbursement Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
3.20 Government Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
3.21 Customer and Trade Relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
3.22 Agreements and Other Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
3.23 Solvency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
3.24 Series A Preferred Stock Issuance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
3.25 Series B Preferred Stock Issuance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
4. FINANCIAL STATEMENTS AND INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
4.1 Reports and Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
4.2 Communication with Accountants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
5. AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
5.1 Maintenance of Existence and Conduct of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
5.2 Payment of Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
5.3 Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
5.4 Insurance; Damage to or Destruction of Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
5.5 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
5.6 Supplemental Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
5.7 Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
5.8 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
5.9 Landlords' Agreements, Mortgagee Agreements and Bailee Letters . . . . . . . . . . . . . . . . . . . . . 43
5.10 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
5.11 OEM Contracts and Accreditations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
5.12 Tessco Liquidation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
6. NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
6.1 Mergers, Subsidiaries, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
6.2 Investments; Loans and Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
6.3 Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
6.4 Employee Loans and Affiliate Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
6.5 Capital Structure and Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
6.6 Guaranteed Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
6.7 Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
6.8 Sale of Stock and Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
6.9 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
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6.10 Financial Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
6.11 Hazardous Materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
6.12 Sale-Leasebacks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
6.13 Cancellation of Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
6.14 Restricted Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
6.15 Change of Corporate Name or Location; Change of Fiscal Year . . . . . . . . . . . . . . . . . . . . . . 49
6.16 No Impairment of Intercompany Transfers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
6.17 No Speculative Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
6.18 Changes Relating to Preferred Stock and Subordinated Debt. . . . . . . . . . . . . . . . . . . . . . . 50
7. TERM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
7.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
7.2 Survival of Obligations Upon Termination of Financing Arrangements . . . . . . . . . . . . . . . . . . . 50
8. EVENTS OF DEFAULT; RIGHTS AND REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
8.1 Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
8.2 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
8.3 Waivers by Credit Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
9. ASSIGNMENT AND PARTICIPATIONS; APPOINTMENT OF AGENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
9.1 Assignment and Participations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
9.2 Appointment of Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
9.3 Agent's Reliance, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
9.4 GE Capital and Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
9.5 Lender Credit Decision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
9.6 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
9.7 Successor Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
9.8 Setoff and Sharing of Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
9.9 Advances; Payments; Non-Funding Lenders; Information; Actions in Concert . . . . . . . . . . . . . . . . 60
10. SUCCESSORS AND ASSIGNS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
10.1 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
11. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
11.1 Complete Agreement; Modification of Agreement and Pegasus Litigation Guaranty . . . . . . . . . . . . . 63
11.2 Amendments and Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
11.3 Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
11.4 No Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
11.5 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
11.6 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
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11.7 Conflict of Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
11.8 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
11.9 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
11.10 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
11.11 Section Titles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
11.12 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
11.13 WAIVER OF JURY TRIAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
11.14 Press Releases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
11.15 Reinstatement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
11.16 Advice of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
11.17 No Strict Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
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INDEX OF APPENDICES
Exhibit 1.1(a)(i) - Form of Notice of Revolving Credit Advance
Exhibit 1.1(a)(ii) - Form of Revolving Note
Exhibit 1.1(b) - Form of Term A Note
Exhibit 1.1(c)(i) - Form of Term B Note
Exhibit 1.1(c)(ii) - Form of Notice of Term Loan B Advance
Exhibit 1.1(d) - Form of Notice of Term Loan C Advance
Exhibit 1.1(e) - Form of Swing Line Note
Exhibit 1.5(e) - Form of Notice of Conversion/Continuation
Exhibit 4.1(b - Form of Borrowing Base Certificate
Exhibit 9.1(a) - Form of Assignment Agreement
Schedule 1.1 - Responsible Individual
Schedule 1.4 - Sources and Uses; Funds Flow Memorandum
Schedule 3.2 - Executive Offices; FEIN
Schedule 3.4(A) - Financial Statements
Schedule 3.4(B) - Pro Forma
Schedule 3.4(C) - Projections
Schedule 3.4(D) - Fair Salable Balance Sheet
Schedule 3.6 - Real Estate and Leases
Schedule 3.7 - Labor Matters
Schedule 3.8 - Ventures, Subsidiaries and Affiliates; Outstanding Stock
Schedule 3.11 - Tax Matters
Schedule 3.12 - ERISA Plans
Schedule 3.13 - Litigation
Schedule 3.15 - Intellectual Property
Schedule 3.17 - Hazardous Materials
Schedule 3.18 - Insurance
Schedule 3.19 - Deposit and Disbursement Accounts
Schedule 3.20 - Government Contracts
Schedule 3.21 - Customer and Trade Relations
Schedule 3.22 - Material Agreements
Schedule 5.1 - Trade Names
Schedule 6.2 - Investments
Schedule 6.3 - Indebtedness
Schedule 6.4 - Transactions with Affiliates
Schedule 6.7 - Existing Liens
Annex A (Recitals) - Definitions
Annex B (Section 1.2) - Letters of Credit
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Annex C (Section 1.8) - Cash Management System
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Annex D (Section 2.1(a)) - List of Closing Documents
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Annex E (Section 4.1(a)) - Financial Statements and Projections -- Reporting
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Annex F (Section 4.1(b)) - Collateral Reports
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Annex G (Section 6.10) - Financial Covenants
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Annex H (Section 9.9(a)) - Lenders' Wire Transfer Information
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Annex I (Section 11.10) - Notice Addresses
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CREDIT AGREEMENT, dated as of October 24, 1997 among
Code-Alarm, Inc., a Michigan corporation (a "Borrower"); THE OTHER CREDIT
PARTIES SIGNATORY HERETO; GENERAL ELECTRIC CAPITAL CORPORATION, a New York
corporation (in its individual capacity, "GE Capital"), for itself, as Lender,
and as Agent for Lenders, and the other Lenders signatory hereto from time to
time.
RECITALS
WHEREAS, Borrower desires that Lenders extend revolving letter
of credit and term credit facilities to Borrower of up to Twenty-Five Million
Five Hundred Thousand Dollars ($25,500,000.00) in the aggregate for the purpose
of (a) refinancing certain indebtedness of Borrower, (b) providing working
capital financing for Borrower, (c) providing funds to satisfy, or letters of
credit to secure the issuance of a supersedeas or appeal bond or similar
obligation with, a certain potentially adverse judgment or judgments which may
be entered against one or more Credit Parties in certain pending litigation,
and (d) providing funds for other general corporate purposes of Borrower; and
for these purposes, Lenders are willing to make certain loans and other
extensions of credit to Borrower of up to such amount upon the terms and
conditions set forth herein; and
WHEREAS, Borrower desires to secure all of its obligations
under the Loan Documents by granting to Agent, for the benefit of Agent and
Lenders, security interests in and liens upon all of its existing and
after-acquired personal and real property; and
WHEREAS, capitalized terms used in this Agreement shall have
the meanings ascribed to them in Annex A. All Annexes, Disclosure Schedules,
Exhibits and other attachments (collectively, "Appendices") hereto, or
expressly identified to this Agreement, are incorporated herein by reference,
and taken together, shall constitute but a single agreement. These Recitals
shall be construed as part of the Agreement.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants hereinafter contained, and for other good and valuable
consideration, the parties hereto agree as follows:
1. AMOUNT AND TERMS OF CREDIT
1.1 Credit Facilities.
(a) Revolving Credit Facility. (i) Subject to the terms
and conditions hereof, each Revolving Lender agrees to make available from time
to time until the Commitment Termination Date its Pro Rata Share of revolving
credit advances (other than revolving credit advances made under Section
1.1(e)) (each, a "Revolving Credit Advance"). The Pro Rata Share of the
Revolving Loan of each Revolving Lender shall not at any time exceed its
separate Revolving Loan Commitment. The obligations of each Revolving Lender
hereunder shall be
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several and not joint. The aggregate amount of Revolving Credit Advances
outstanding shall not exceed at any time the lesser of (A) the Maximum Amount
and (B) the Borrowing Base, in each case less the sum of the Letter of Credit
Obligations and the Swing Line Loan outstanding at such time ("Borrowing
Availability"). Until the Commitment Termination Date, Borrower may from time
to time borrow, repay and reborrow under this Section 1.1(a). Each Revolving
Credit Advance shall be made on notice by Borrower to the representative of
Agent identified on Schedule 1.1 at the address specified thereon. Those
notices must be given no later than (1) 11:00 a.m. (Chicago time) on the
Business Day of the proposed Revolving Credit Advance, in the case of an Index
Rate Loan, or (2) 11:00 a.m. (Chicago time) on the date which is three (3)
Business Days prior to the proposed Revolving Credit Advance, in the case of a
LIBOR Loan. Each such notice (a "Notice of Revolving Credit Advance") must be
given in writing (by telecopy or overnight courier) substantially in the form
of Exhibit 1.1(a)(i), and shall include the information required in such
Exhibit and such other information as may be required by Agent. If Borrower
desires to have the Revolving Credit Advances bear interest by reference to a
LIBOR Rate, Borrower must comply with Section 1.5(e).
(ii) Borrower shall execute and deliver to each
Revolving Lender a note to evidence the Revolving Loan Commitment of that
Revolving Lender. Each note shall be in the principal amount of the Revolving
Loan Commitment of the applicable Revolving Lender, dated the Closing Date and
substantially in the form of Exhibit 1.1(a)(ii) (each a "Revolving Note" and,
collectively, the "Revolving Notes"). Each Revolving Note shall represent the
obligation of Borrower to pay the amount of each Revolving Lender's Revolving
Loan Commitment or, if less, the applicable Revolving Lender's Pro Rata Share
of the aggregate unpaid principal amount of all Revolving Credit Advances to
Borrower together with interest thereon as prescribed in Section 1.5. The
entire unpaid balance of the aggregate Revolving Loan and all other non-
contingent Obligations shall be immediately due and payable in full in
immediately available funds on the Commitment Termination Date.
(iii) At the request of Borrower, in its discretion
Agent may (but shall have absolutely no obligation to), make Revolving Credit
Advances to Borrower on behalf of Revolving Lenders in amounts which cause the
outstanding balance of the aggregate Revolving Loan to exceed the Borrowing
Base (less the Swing Line Loan) (such excess Revolving Credit Advances are
herein referred to collectively as "Overadvances"), and no such event or
occurrence shall cause or constitute a waiver by Agent or Lenders of any
Default or Event of Default that may result therefrom or of Agent's, Swing Line
Lender's or Revolving Lenders' right to refuse to make any further
Overadvances, Swing Line Advances or Revolving Credit Advances, or incur any
Letter of Credit Obligations, as the case may be, at any time that an
Overadvance exists or would result therefrom. In addition, Overadvances may be
made even if the applicable conditions to lending set forth in Section 2 have
not been met. All Overadvances shall constitute Index Rate Loans, shall bear
interest at the Default Rate and shall be payable on demand. Except as
otherwise provided in Section 1.11(b), the authority of Agent to make
Overadvances is limited to an aggregate amount not to exceed $1,000,000 at any
time, shall not cause the aggregate Revolving Loan to exceed the Maximum
Amount, and may be revoked prospectively by a
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written notice to Agent signed by Revolving Lenders holding fifty percent (50%)
or more of the Revolving Loan Commitments.
(b) Term Loan A. (i) Subject to the terms and
conditions hereof, each Term Lender agrees to make a term loan on the Closing
Date to Borrower in the original principal amount of its Term Loan A Commitment
(collectively, the "Term Loan A"). The obligations of each Term Lender
hereunder shall be several and not joint. Each such Term Loan shall be
evidenced by promissory notes substantially in the form of Exhibit 1.1(b) (each
a "Term A Note" and collectively the "Term A Notes"), and Borrower shall
execute and deliver a Term A Note to each applicable Term Lender. Each Term A
Note shall represent the obligation of Borrower to pay the amount of the
applicable Term Lender's Term Loan A, together with interest thereon as
prescribed in Section 1.5.
(ii) Borrower shall pay the principal amount of the Term
Loan A in twelve (12) equal, consecutive quarterly installments of $125,000
each, on the first day of January, April, July and October of each year,
commencing on January 1, 1998.
(iii) Notwithstanding the foregoing clause (ii), the
aggregate outstanding principal balance of the Term Loan A shall be due and
payable in full in immediately available funds on the Commitment Termination
Date, if not sooner paid in full.
(iv) Each payment of principal with respect to the Term
Loan A shall be paid to Agent for the ratable benefit of each Term Lender
making a Term Loan A, ratably in proportion to each such Term Lender's
respective Term Loan A Commitment.
(c) Term Loan B. (i) Subject to the terms and
conditions hereof, each Term Lender agrees to make a term loan on the Term Loan
B Funding Date to Borrower (the "Term Loan B") in the original principal amount
of its Term Loan B Commitment. The obligations of each Term Lender hereunder
shall be several and not joint. Each Term Loan B shall be evidenced by
promissory notes substantially in the form of Exhibit 1.1(c)(i) (each a "Term B
Note" and collectively the "Term B Notes"), and Borrower shall execute and
deliver a Term B Note to the applicable Term Lender on the Closing Date in an
amount equal to such Term Lender's Term B Commitment. Each Term B Note shall
represent the obligation of Borrower to pay the amount of the applicable Term
Lender's Term Loan B, together with interest thereon as prescribed in Section
1.5. The Term Loan B shall be made on notice by Borrower to the representative
of Agent identified on Schedule 1.1 at the address specified thereon. Such
notice (a "Notice of Term Loan B Advance") must be given no later than 11:00
a.m. (Chicago time) on the date which is three (3) Business Days prior to the
Term Loan B Funding Date whether such Term Loan B shall be an Index Rate Loan
or a LIBOR Loan and shall be given in writing (by telecopy or overnight
courier) substantially in the form of Exhibit 1.1(c)(i), and shall include the
information required in such Exhibit and such other information as may be
required by Agent.
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(ii) Borrower shall pay the aggregate principal amount of
the Term Loan B in equal, consecutive quarterly installments equal to
one-twelfth (1/12) of the aggregate original principal amount of such Loan on
the first day of January, April, July and October of each year, commencing on
the first of such dates occurring after the Term Loan B Funding Date (unless
the first of such dates is less than forty-five (45) days following the Term
Loan B Funding Date, in which case such installments shall commence on the
second of such dates occurring after the Term Loan B Funding Date).
(iii) Notwithstanding the foregoing clause (ii), the
aggregate outstanding principal balance of the Term Loan B, shall be due and
payable in full in immediately available funds on the Commitment Termination
Date, if not sooner paid in full.
(iv) Each payment of principal with respect to the Term
Loan B shall be paid to Agent for the ratable benefit of each Term Lender
making a Term Loan B ratably in proportion to each such Term Lender's
respective Term Loan B Commitment.
(d) Reimbursement of Litigation L/C Obligations; Term
Loan C. (i) The issuance of the Litigation L/C, the advancing of Term Loan C
and terms of repayment of the Litigation L/C Obligations, Term Loan C and the
other Litigation Obligations shall be governed by and construed in accordance
with the Litigation L/C Agreement, pursuant to which Agent and term Lender may
either cause the issuance of the Litigation L/C or directly advance "Term Loan
C" (as defined below) pursuant to the Term Loan C Commitments. Each of the
Credit Parties acknowledges and agrees that, notwithstanding anything contained
herein to the contrary, Borrower's Litigation L/C Obligations shall arise, and
shall be deemed to arise, immediately upon Borrower's execution of the
Litigation L/C Agreement.
(ii) If Agent and Term Lenders shall have incurred
Litigation L/C Obligations, then, upon payment by the L/C Issuer under the
Litigation L/C, and regardless of whether an Event of Default or Default shall
then exist and notwithstanding the failure of Borrower to satisfy any of the
conditions set forth in Section 2.4, each Term Lender shall fund its Pro Rata
Share of such payment to Agent pursuant to Annex B hereof and the Litigation
L/C Agreement and in accordance with their respective Term Loan C Commitments,
and, upon such payments, Borrower's Obligations to reimburse Agent for the
Litigation L/C Obligations shall thereafter be payable directly to such Term
Lenders pursuant to the terms of the Litigation L/C Agreement and Annex B
(which Obligations to the Term Lenders shall thereafter constitute "Term Loan
C" hereunder and thereunder), which Term Loan C shall be an Index Rate Loan.
Borrower's request for Agent's and Term Lenders' incurrence of Litigation L/C
Obligations shall be made on notice by Borrower to Agent two (2) Business Days
prior to incurrence pursuant to Annex B. Notwithstanding anything herein to
the contrary, such recharacterization of Borrower's Litigation L/C Obligations
hereunder shall occur solely for purposes of references herein, in the
Litigation L/C Agreement and in the other Loan Documents, to such Obligations
and shall not be construed to constitute a refinancing, repayment or novation
of any such Obligations. All liens and security interests in the Collateral
which are granted to Agent under the Litigation Collateral Documents
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to secure the Litigation L/C Obligations shall continue to secure Borrower's
Obligations with respect to Term Loan C as so recharacterized. The obligations
of the Term Lenders to pay to Agent their respective Pro Rata Shares of
payments under the Litigation L/C hereunder shall be several and not joint.
(iii) If Agent shall not have incurred Litigation L/C
Obligations or shall have terminated the Litigation L/C prior to its being
drawn, Borrower may request Term Lenders to directly advance Term Loan C
pursuant to this subparagraph. Subject to the terms and conditions hereof
(including, without limitation, the conditions set forth in Sections 2.1,
2.3(II) and 2.4), each Term Lender agrees to make a Term Loan C on the Term
Loan C Funding Date to Borrower in the original principal amount of its Term
Loan C Commitment. The obligations of each Term Lender hereunder shall be
several and not joint. If the Term Loan C is advanced under this subparagraph,
it shall be made on notice by Borrower to the representative of Agent
identified on Schedule 1.1 at the address specified thereon. Such notice (a
"Notice of Term Loan C Advance") must be given no later than 11:00 a.m.
(Chicago time) on the date which is three (3) Business Days prior to the Term
Loan C Funding Date whether such Term Loan C shall be an Index Rate Loan or a
LIBOR Loan and shall be given in writing (by telecopy or overnight courier)
substantially in the form of Exhibit 1.1(d), and shall include the information
required in such Exhibit and such other information as may be required by
Agent.
(iv) Each Term Loan C shall be evidenced by a promissory
note substantially in the form of Exhibit A to the Litigation L/C Agreement
(each a "Term C Note" and collectively the "Term C Notes"), and Borrower shall
execute and deliver its Term C Note to each Term Lender on the Closing Date as
provided in the Litigation L/C Agreement in an amount equal to such Term
Lender's Term Loan C Commitment. Each Term C Note, following the applicable
Term Lender's payment to Agent of its Pro Rata Share of payment under the
Litigation L/C, shall represent the Obligation of Borrower to pay the amount of
the applicable Term Lender's Term Loan C, together with interest thereon as
prescribed in Section 1.5.
(v) As provided in the Litigation L/C Agreement, Borrower
shall pay the aggregate principal amount of the Term Loan C in equal,
consecutive quarterly installments equal to the lesser of $250,000 and
one-twelfth (1/12) of the aggregate original principal amount of such Loan, on
the first day of January, April, July and October of each year, commencing on
the first of such dates occurring after the date on which the L/C Issuer make
payment under the Litigation L/C (unless the first of such dates is less than
forty-five (45) days following the date of such payment by the L/C Issuer, in
which case such installments shall commence on the second of such dates
occurring after the date of such payment).
(vi) Notwithstanding the foregoing clause (ii) and as
provided in the Litigation L/C Agreement, the aggregate outstanding principal
balance of the Term Loan C, shall be due and payable in full in immediately
available funds on the Commitment Termination Date, if not sooner paid in full.
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(vii) As provided in the Litigation L/C Agreement, each
payment of principal with respect to the Term Loan C shall be paid to Agent for
the ratable benefit of each Term Lender making a Term Loan C ratably in
proportion to each such Term Lender's respective Term Loan C Commitment.
(e) Swing Line Facility. (i) Agent shall notify the
Swing Line Lender upon Agent's receipt of any Notice of Revolving Credit
Advance. Subject to the terms and conditions hereof, the Swing Line Lender
may, in its discretion, make available from time to time until the Commitment
Termination Date revolving credit advances (other than revolving credit
advances made under Section 1.1(a)) (each, a "Swing Line Advance") in
accordance with any such notice. The aggregate amount of Swing Line Advances
outstanding shall not exceed the lesser of (A) the Swing Line Commitment and
(B) the Borrowing Base less the outstanding balance of the Revolving Loan at
such time ("Swing Line Availability"). Until the Commitment Termination Date,
Borrower may from time to time borrow, repay and reborrow under this Section
1.1(e). Each Swing Line Advance shall be made pursuant to a Notice of
Revolving Credit Advance delivered to Agent by Borrower in accordance with
Section 1.1(a). Those notices must be given no later than 11:00 a.m. (Chicago
time) on the Business Day of the proposed Swing Line Advance. Notwithstanding
any other provision of this Agreement or the other Loan Documents, the Swing
Line Loan shall constitute an Index Rate Loan. Borrower shall repay the
aggregate outstanding principal amount of the Swing Line Loan upon demand
therefor by Agent.
(ii) Borrower shall execute and deliver to the Swing Line
Lender a promissory note with respect to the Swing Line Commitment. Such note
shall be in the principal amount of the Swing Line Commitment of the Swing Line
Lender, dated the Closing Date and substantially in the form of Exhibit 1.1(e)
(each a "Swing Line Note" and, collectively, the "Swing Line Notes"). The
Swing Line Note shall represent the obligation of Borrower to pay the amount of
the Swing Line Commitment or, if less, the aggregate unpaid principal amount of
all Swing Line Advances made to Borrower together with interest thereon as
prescribed in Section 1.5. The entire unpaid balance of the Swing Line Loan
and all other non-contingent Obligations shall be immediately due and payable
in full in immediately available funds on the Commitment Termination Date if
not sooner paid in full.
(iii) Refunding of Swing Line Loans. The Swing Line
Lender, at any time and from time to time in its sole and absolute discretion,
may on behalf of Borrower (and Borrower hereby irrevocably authorizes the Swing
Line Lender to so act on its behalf) request each Revolving Lender (including
the Swing Line Lender) to make a Revolving Credit Advance to Borrower (which
shall be an Index Rate Loan) in an amount equal to such Revolving Lender's Pro
Rata Share of the principal amount of the Swing Line Loan (the "Refunded Swing
Line Loan") outstanding on the date such notice is given. Unless any of the
events described in Sections 8.1(h) or 8.1(i) shall have occurred (in which
event the procedures of Section 1.1(e)(iv) shall apply) and regardless of
whether the conditions precedent set forth in this Agreement to the making of a
Revolving Credit Advance are then satisfied, each Revolving Lender shall
disburse directly to Agent, its Pro Rata Share of a Revolving Credit Advance on
behalf of the Swing Line
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Lender, prior to 2:00 p.m. (Chicago time), in immediately available funds on
the Business Day next succeeding the date such notice is given. The proceeds
of such Revolving Credit Advances shall be immediately paid to the Swing Line
Lender and applied to repay the Refunded Swing Line Loan of Borrower.
(iv) Participation in Swing Line Loans. If, prior to
refunding a Swing Line Loan with a Revolving Credit Advance pursuant to Section
1.1(e)(iii), one of the events described in Sections 8.1(h) or 8.1(i) shall
have occurred, then, subject to the provisions of Section 1.1(e)(v) below, each
Revolving Lender will, on the date such Revolving Credit Advance was to have
been made for the benefit of Borrower, purchase from the Swing Line Lender an
undivided participation interest in the Swing Line Loan to Borrower in an
amount equal to its Pro Rata Share of such Swing Line Loan. Upon request, each
Revolving Lender will promptly transfer to the Swing Line Lender, in
immediately available funds, the amount of its participation.
(v) Revolving Lenders' Obligations Unconditional. Each
Revolving Lender's obligation to make Revolving Credit Advances in accordance
with Section 1.1(e)(iii) and to purchase participating interests in accordance
with Section 1.1(e)(iv) shall be absolute and unconditional and shall not be
affected by any circumstance, including (A) any setoff, counterclaim,
recoupment, defense or other right which such Revolving Lender may have against
the Swing Line Lender, Borrower or any other Person for any reason whatsoever;
(B) the occurrence or continuance of any Default or Event of Default; (C) any
inability of Borrower to satisfy the conditions precedent to borrowing set
forth in this Agreement on the date upon which such participating interest is
to be purchased or (D) any other circumstance, happening or event whatsoever,
whether or not similar to any of the foregoing. If any Revolving Lender does
not make available to Agent or the Swing Line Lender, as applicable, the amount
required pursuant to Section 1.1(e)(iii) or 1.1(e)(iv), as the case may be, the
Swing Line Lender shall be entitled to recover such amount on demand from such
Revolving Lender, together with interest thereon for each day from the date of
non-payment until such amount is paid in full at the Federal Funds Rate for the
first two Business Days and at the Index Rate thereafter.
(f) Reliance on Notices. Agent shall be entitled to rely
upon, and shall be fully protected in relying upon, any Notice of Revolving
Credit Advance, Notice of Conversion/Continuation, Notice of Term Loan B
Advance, requests for the incurrence of Letter of Obligations or Litigation L/C
Obligations under Annex B and the Litigation L/C Agreement, or similar notice
believed by Agent to be genuine. Agent may assume that each Person executing
and delivering such a notice was duly authorized, unless the responsible
individual acting thereon for Agent has actual knowledge to the contrary.
1.2 Letters of Credit. Subject to and in accordance with
the terms and conditions contained herein and in Annex B or the Litigation L/C
Agreement, as applicable, Borrower shall have the right to request, and Lenders
agree to incur, or purchase participations in, Letter of Credit Obligations and
Litigation L/C Obligations.
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1.3 Prepayments.
(a) Voluntary Prepayments. Borrower may at any time on
at least five (5) days' prior written notice by Borrower to Agent (i)
voluntarily prepay all or part of the Term Loans and/or (ii) voluntarily prepay
all or part of the Revolving Loan and permanently reduce (but not terminate)
the Revolving Loan Commitment; provided that (A) any such prepayments or
reductions shall be in a minimum amount of $250,000 and integral multiples of
$100,000 in excess of such amount and (B) the Revolving Loan Commitment shall
not be reduced to an amount less than the greater of (x) $4,000,000 and (y) the
L/C Sublimit. In addition, Borrower may at any time on at least ten (10) days'
prior written notice by Borrower to Agent terminate the Revolving Loan
Commitment; provided that upon such termination, all Loans and other
Obligations shall be immediately due and payable in full. Any such voluntary
prepayment and any such reduction or termination of the Revolving Loan
Commitment must be accompanied by the payment of the fee required by Section
1.9(c), if any, plus the payment of any LIBOR funding breakage costs in
accordance with Section 1.13(b). Upon any such reduction or termination of the
Revolving Loan Commitment, Borrower's right to request Revolving Credit
Advances, or request that Letter of Credit Obligations be incurred on its
behalf, or request Swing Line Advances, shall simultaneously be permanently
reduced or terminated, as the case may be; provided that a permanent reduction
of the Revolving Loan Commitment shall not require a corresponding pro rata
reduction in the L/C Sublimit (as defined in Annex B). Each notice of partial
prepayment shall designate the Loans or other Obligations to which such
prepayment is to be applied, provided that any partial prepayments of any Term
Loan made by or on behalf of Borrower shall be applied to prepay the scheduled
installments of such Term Loan in inverse order of their respective maturities.
(b) Mandatory Prepayments. (i) If at any time the
outstanding balance of the aggregate Revolving Loan exceeds the lesser of (A)
the Maximum Amount and (B) the Borrowing Base, less, in each case, the
aggregate outstanding Swing Line Loan at such time, Borrower shall immediately
repay the aggregate outstanding Revolving Credit Advances to the extent
required to eliminate such excess. If any such excess remains after repayment
in full of the aggregate outstanding Revolving Credit Advances, Borrower shall
provide cash collateral for the Letter of Credit Obligations in the manner set
forth in Annex B to the extent of such remaining excess. Notwithstanding the
foregoing, any Overadvance made pursuant to Section 1.1(a)(iii) shall be repaid
on demand.
(ii) Immediately upon receipt by any Credit Party of
proceeds of any asset disposition (including condemnation proceeds, other than
asset dispositions with respect to which no prepayments are required under
Section 6.8, and excluding proceeds of casualty insurance and proceeds of other
claims for damage and destruction) or any sale of Stock of any Subsidiary of
any Credit Party, Borrower shall prepay the Obligations in an amount equal to
all such proceeds, net of (A) commissions and other reasonable and customary
transaction costs, fees and expenses properly attributable to such transaction
and payable by Borrower in connection therewith (in each case, paid to
non-Affiliates), (B) transfer taxes, (C) amounts
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payable to holders of senior Liens (to the extent such Liens constitute
Permitted Encumbrances hereunder), if any, and (D) an appropriate reserve for
income taxes in accordance with GAAP in connection therewith. Any such
prepayment shall be applied in accordance with Section 1.3(c).
(iii) If Borrower issues Stock or any debt securities
(other than Stock or debt securities issued pursuant to Section 2.2 and applied
to the payment of the portion of the Net Litigation Liability which exceeds
$3,000,000), then, not later than the Business Day following the date of
receipt of the proceeds thereof, Borrower shall prepay the Obligations (or cash
collateralize the Letter of Credit Obligations or Litigation L/C Obligations)
in an aggregate amount equal to all such proceeds, net of underwriting
discounts and commissions and other reasonable costs paid to non-Affiliates in
connection therewith. Any such prepayment (or cash collateralization) shall be
applied in accordance with Section 1.3(c).
(iv) Borrower shall prepay the outstanding principal
balance of the Term Loan B or Term Loan C (whichever is outstanding), or
provide cash collateral with respect to the Litigation L/C Obligations, on the
earlier of the date which is ten (10) days after (A) the date on which
Borrower's annual audited Financial Statements for the immediately preceding
Fiscal Year are delivered pursuant to Annex E or (B) the date on which such
annual audited Financial Statements were required to be delivered pursuant to
Annex E, in an amount equal to Excess Cash Flow for the immediately preceding
Fiscal Year. Any prepayments (or cash collateralization) paid pursuant to this
clause (iv) shall be applied in accordance with Section 1.3(c). Each such
prepayment (or cash collateralization) shall be accompanied by a certificate
signed by Borrower's chief financial officer certifying the manner in which
Excess Cash Flow and the resulting prepayment were calculated, which
certificate shall be in form and substance satisfactory to Agent.
(v) Immediately upon receipt by any Credit Party of
proceeds of any money judgment or other payment ordered by a court of law or
other Governmental Authority arising out of any litigation or other proceedings
involving patents or other intellectual property (including, without
limitation, with respect to the California Award), (i) Borrower shall prepay
the Loans or cash collateralize the Litigation L/C in an amount equal to fifty
percent (50%) of all such proceeds if, at the time of such prepayment or cash
collateralization, neither the Term Loan B or the Term Loan C shall have been
advanced by the Term Lenders and the Litigation L/C shall not have been issued,
or the Term Loan B shall have been previously repaid in full, or the Term Loan
C shall have been previously repaid in full or (ii) Borrower shall prepay the
Term Loan B or Term Loan C (whichever is outstanding) or provide cash
collateral with respect to the Litigation L/C Obligations, in an amount equal
to all of such proceeds if, at the time of such prepayment, any principal
portion of the Term Loan B or Term Loan C shall remain outstanding or the
Litigation L/C shall be outstanding. If any prepayment or cash
collateralization under clause (ii) above results in a prepayment in full of
the Term Loan B or Term Loan C, or full cash collateralization of the
Litigation L/C Obligations and the aggregate of such proceeds exceeds the
amount of such prepayment or cash collateralization, then the Borrower shall
further prepay the Loans or cash collateralize the Letter of Credit Obligations
in an amount equal to fifty
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percent (50%) of such excess proceeds as a prepayment or cash collateralization
under clause (i) above. All such prepayments shall be applied in accordance
with Section 1.3(c).
(c) Application of Certain Mandatory Prepayments.
Subject to the provisions of Section 1.3(d):
(i) All prepayments and cash collateral payments made by
Borrower pursuant to Sections 1.3(b)(ii), 1.3(b)(iii), or 1.3(b)(v)(i), or the
second sentence of Section 1.3(b)(v), shall be applied as follows: first, to
Fees and reimbursable expenses of Agent then due and payable pursuant to any of
the Loan Documents; second, to interest then due and payable on the Term Loan B
or Term Loan C, if any; third, to prepay the scheduled installments of the Term
Loan B or Term Loan C, if any, in inverse order of maturity, until such Loan
shall have been prepaid in full or to any Litigation L/C Obligations to provide
cash collateral therefor in the manner set forth in Annex B and the Litigation
L/C Agreement, until all such Litigation L/C Obligations have been fully cash
collateralized in the manner set forth in Annex B and the Litigation L/C
Agreement; fourth, to interest then due and payable on the Term Loan A; fifth,
to prepay the scheduled installments of the Term Loan A in inverse order of
maturity, until such Loan shall have been prepaid in full (or, in the case of
an application of the proceeds of the California Award pursuant to Section
1.3(b)(v), not to exceed an amount equal to $750,000 minus the aggregate amount
of principal of the Term Loan A therefore repaid by Borrower); sixth, to
interest then due and payable on the Swing Line Loan; seventh, to the principal
balance of the outstanding Swing Line Loan until the same shall have been
repaid in full; eighth, to interest then due and payable on Revolving Credit
Advances; ninth, to the principal balance of outstanding Revolving Credit
Advances until the same shall have been paid in full; and tenth, to any Letter
of Credit Obligations to provide cash collateral therefor in the manner set
forth in Annex B, until all such Letter of Credit Obligations have been fully
cash collateralized in the manner set forth in Annex B; it being understood and
agreed that neither the Revolving Loan Commitment nor the Swing Line Commitment
shall be permanently reduced by the amount of any such prepayments; and
(ii) Any prepayments and cash collateral payments made by
Borrower pursuant to Section 1.3(b)(iv) or 1.3(b)(v)(ii) above shall be
applied to prepay the scheduled installments of the Term Loan B or Term Loan C
(whichever is outstanding) in inverse order of maturity, until such Loan shall
have been prepaid in full, or to its Litigation L/C Obligations to provide cash
collateral therefor in the manner set forth in Annex B and the Litigation L/C
Agreement, until all such Litigation L/C Obligations have been fully cash
collateralized in the manner set forth in Annex B and the Litigation L/C
Agreement.
(iii) All cash collateral paid pursuant to this Section 1.3
shall be held by Agent in an interest bearing account subject to such
agreements and documents as may be reasonably acceptable to Agent.
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(d) Application of Prepayments from Insurance and Damage
Claim Proceeds. Prepayments from insurance proceeds in accordance with Section
5.4(c) and from proceeds of other claims for damage and destruction shall be
applied as follows: insurance proceeds and proceeds of other claims for damage
and destruction from casualties or losses to cash or Inventory shall be applied
first, to the Swing Line Loans and second to the Revolving Credit Advances;
insurance proceeds and proceeds of other claims for damage and destruction from
casualties or losses to Equipment, Fixtures and Real Estate shall be applied to
the Term Loans and Litigation L/C Obligations (first to Borrower's Term Loan B,
Term Loan C or Litigation L/C Obligations (as cash collateral), if any, and
then to its Term Loan A). Neither the Revolving Loan Commitment nor the Swing
Line Loan Commitment shall be permanently reduced by the amount of any such
prepayments. If the insurance proceeds and proceeds of other claims for damage
and destruction received exceed the outstanding principal balances of the
Loans, if the insurance proceeds and proceeds of other claims for damage and
destruction do not specifically relate to cash, Inventory, Equipment, Fixtures
or Real Estate, or if the precise amount of insurance proceeds and proceeds of
other claims for damage and destruction allocable to Inventory as compared to
Equipment, Fixtures and Real Estate is not otherwise determined, the allocation
and application of those proceeds shall be determined by Agent, subject to the
approval of Requisite Lenders.
(e) Nothing in this Section 1.3 shall be construed to
constitute Agent's or any Lender's consent to any transaction referred to in
Section 1.3(b)(ii) and 1.3(b)(iii) above which is not permitted by other
provisions of this Agreement or the other Loan Documents.
1.4 Use of Proceeds. Borrower shall utilize the
proceeds of the Revolving Loan and the Swing Line Advances solely for the
financing of Borrower's ordinary working capital and general corporate needs,
including capital expenditures (to the extent not prohibited by this
Agreement), but excluding the payment of any judgments relating to the DEI
Litigation, and the proceeds of the Term Loan A and the Revolving Loans and
Swing Line Advances made on the Closing Date, for the Refinancing or for the
financing of Borrower's ordinary working capital and general corporate needs
(including capital expenditures not prohibited by this Agreement), but
excluding the payment of any judgments relating to the DEI Litigation;
provided, however, that Borrower may utilize proceeds of Revolving Loans to pay
judgments relating to the DEI Litigation in an amount not to exceed the
aggregate amount of proceeds of the California Award which has been applied to
the Revolving Loan pursuant to Section 1.3(b)(v) if, after giving effect to any
such payment, the Net Borrowing Availability minus the Letter of Credit
Obligations exceeds $500,000. Borrower shall utilize the proceeds of the Term
Loan B solely for the payment of the Final Judgment and shall utilize the
Litigation L/C solely to obtain and secure a supersedeas bond issued to prevent
the creation, enforcement and execution of any judicial lien with respect to
the Lower Court Judgment in connection with an appeal of such judgment.
Disclosure Schedule (1.4) contains a description of Borrower's sources and uses
of funds as of the Closing Date, including Loans and Letter of Credit
Obligations to be made or incurred on that date, and a funds flow memorandum
detailing how funds from each source are to be transferred to particular uses.
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1.5 Interest and Applicable Margins. (a) Borrower shall
pay interest to Agent, for the ratable benefit of Lenders in accordance with
the various Loans being made by each Lender, in arrears on each applicable
Interest Payment Date, at the following rates: (i) with respect to the
Revolving Credit Advances, the Index Rate plus the Applicable Revolver Index
Margin per annum or, at the election of Borrower, the applicable LIBOR Rate
plus the Applicable Revolver LIBOR Margin per annum, based on the aggregate
Revolving Credit Advances outstanding from time to time; (ii) with respect to
the Term Loans, the Index Rate plus the Applicable Term Loan Index Margin per
annum or, at the election of Borrower, the applicable LIBOR Rate plus the
Applicable Term Loan LIBOR Margin per annum; and (iii) with respect to the
Swing Line Loan, the Index Rate plus the Applicable Revolver Index Margin per
annum.
(b) If any payment on any Loan becomes due and payable on
a day other than a Business Day, the maturity thereof will be extended to the
next succeeding Business Day (except as set forth in the definition of LIBOR
Period) and, with respect to payments of principal, interest thereon shall be
payable at the then applicable rate during such extension.
(c) All computations of Fees calculated on a per annum
basis and interest shall be made by Agent on the basis of a three hundred and
sixty (360) day year, in each case for the actual number of days occurring in
the period for which such interest and Fees are payable. The Index Rate shall
be determined each day based upon the Index Rate as in effect each day. Each
determination by Agent of an interest rate hereunder shall be conclusive,
absent manifest error.
(d) At the election of Agent (or upon the written request
of Requisite Lenders) confirmed by written notice from Agent to Borrower, and
so long as any Default or Event of Default shall have occurred and be
continuing, the interest rates applicable to the Loans and the Letter of Credit
Fees shall be increased by two percentage points (2%) per annum above the rates
of interest or the rate of such Fees otherwise applicable hereunder ("Default
Rate"), and all outstanding Obligations shall bear interest at the Default Rate
applicable to such Obligations. Interest and Letter of Credit Fees at the
Default Rate shall accrue from the date of such notice until such Default or
Event of Default is cured or waived, or the Agent (upon written authorization
therefor from the Requisite Lenders) notifies Borrower that the Default Rate no
longer applies, and shall be payable upon demand.
(e) So long as no Default or Event of Default shall have
occurred and be continuing, and subject to the additional conditions precedent
set forth in Section 2.4, Borrower shall have the option to (i) request that
any Revolving Credit Advances be made as a LIBOR Loan, (ii) convert at any time
all or any part of outstanding Loans (other than the Swing Line Loan) from
Index Rate Loans to LIBOR Loans, (iii) convert any LIBOR Loan to an Index Rate
Loan, subject to payment of LIBOR breakage costs in accordance with Section
1.13(b) if such conversion is made prior to the expiration of the LIBOR Period
applicable thereto, or (iv) continue all or any portion of any Loan (other than
the Swing Line Loan) as a LIBOR Loan upon
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the expiration of the applicable LIBOR Period and the succeeding LIBOR Period
of that continued Loan shall commence on the last day of the LIBOR Period of
the Loan to be continued. Any Loan to be made or continued as, or converted
into, a LIBOR Loan must be in a minimum amount of $1,000,000 and integral
multiples of $100,000 in excess of such amount. Any such election must be made
by 11:00 a.m. (Chicago time) on the third (3rd) Business Day prior to (1) the
date of any proposed Advance which is to bear interest at the LIBOR Rate, (2)
the end of each LIBOR Period with respect to any LIBOR Loans to be continued as
such, or (3) the date on which Borrower wishes to convert any Index Rate Loan
to a LIBOR Loan for a LIBOR Period designated by Borrower in such election. If
no election is received with respect to a LIBOR Loan by 11:00 a.m. (Chicago
time) on the third (3rd) Business Day prior to the end of the LIBOR Period with
respect thereto (or if a Default or an Event of Default shall have occurred and
be continuing or if the additional conditions precedent set forth in Section
2.4 shall not have been satisfied), that LIBOR Loan shall be converted to an
Index Rate Loan at the end of its LIBOR Period. Borrower must make such
election by notice to Agent in writing, by telecopy or overnight courier. In
the case of any conversion or continuation, such election must be made pursuant
to a written notice (a "Notice of Conversion/Continuation") in the form of
Exhibit 1.5(e).
(f) Notwithstanding anything to the contrary set forth in
this Section 1.5, if a court of competent jurisdiction determines in a final
order that the rate of interest payable hereunder exceeds the highest rate of
interest permissible under law (the "Maximum Lawful Rate"), then so long as the
Maximum Lawful Rate would be so exceeded, the rate of interest payable
hereunder shall be equal to the Maximum Lawful Rate; provided, however, that if
at any time thereafter the rate of interest payable hereunder is less than the
Maximum Lawful Rate, Borrower shall continue to pay interest hereunder at the
Maximum Lawful Rate until such time as the total interest received by Agent, on
behalf of Lenders, is equal to the total interest which would have been
received had the interest rate payable hereunder been (but for the operation of
this paragraph) the interest rate payable since the Closing Date as otherwise
provided in this Agreement. Thereafter, interest hereunder shall be paid at
the rate(s) of interest and in the manner provided in Sections 1.5(a) through
(e) above, unless and until the rate of interest again exceeds the Maximum
Lawful Rate, and at that time this paragraph shall again apply. In no event
shall the total interest received by any Lender pursuant to the terms hereof
exceed the amount which such Lender could lawfully have received had the
interest due hereunder been calculated for the full term hereof at the Maximum
Lawful Rate. If the Maximum Lawful Rate is calculated pursuant to this
paragraph, such interest shall be calculated at a daily rate equal to the
Maximum Lawful Rate divided by the number of days in the year in which such
calculation is made. If, notwithstanding the provisions of this Section
1.5(f), a court of competent jurisdiction shall finally determine that a Lender
has received interest hereunder in excess of the Maximum Lawful Rate, Agent
shall, to the extent permitted by applicable law, promptly apply such excess in
the order specified in Section 1.11 and thereafter shall refund any excess to
Borrower or as a court of competent jurisdiction may otherwise order.
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1.6 Eligible Accounts. Based on the most recent
Borrowing Base Certificate delivered by Borrower to Agent and on other
information available to Agent, Agent shall in its reasonable credit judgment
determine which Accounts of Borrower and Tessco shall be "Eligible Accounts"
for purposes of this Agreement; provided, however, and notwithstanding anything
in this section or this Agreement to the contrary, no Accounts of Tessco shall
constitute Eligible Accounts from and after the earlier of June 30, 1998 and
the completion of the Tessco Liquidation. In determining whether a particular
Account of Borrower or Tessco constitutes an Eligible Account, Agent shall not
include any such Account to which any of the exclusionary criteria set forth
below applies. Agent reserves the right, at any time and from time to time
after the Closing Date, to adjust any such criteria, to establish new criteria
and to adjust advance rates with respect to Eligible Accounts, in its
reasonable credit judgment, subject to the approval of Supermajority Revolving
Lenders in the case of adjustments or new criteria or changes in advance rates
which have the effect of making more credit available. Unless Agent shall have
otherwise agreed in writing, Eligible Accounts shall not include any Account of
Borrower or Tessco:
(a) which does not arise from the sale of goods or the
performance of services by Borrower or Tessco in the ordinary course of its
business;
(b) upon which (i) Borrower's or Tessco's right to
receive payment is not absolute or is contingent upon the fulfillment of any
condition whatsoever or (ii) Borrower or Tessco is not able to bring suit or
otherwise enforce its remedies against the Account Debtor through judicial
process;
(c) to the extent any defense, counterclaim, setoff or
dispute is asserted as to such Account or if the Account represents a progress
billing consisting of an invoice for goods sold or used or services rendered
pursuant to a contract under which the Account Debtor's obligation to pay that
invoice is subject to Borrower's or Tessco's completion of further performance
under such contract;
(d) that is not a true and correct statement of bona fide
indebtedness incurred in the amount of the Account for merchandise sold to or
services rendered and accepted by the applicable Account Debtor;
(e) with respect to which an invoice or other electronic
communication (with respect to which, in the case of an electronic
communication, tangible evidence of the existence and terms of such Account can
be reproduced by Borrower or Tessco), in any case acceptable to Agent in form
and substance, has not been sent to the applicable Account Debtor;
(f) that (i) is not owned by Borrower or Tessco or (ii)
is subject to any right, claim, security interest or other interest of any
other Person, other than Liens in favor of Agent, on behalf of itself and
Lenders;
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(g) that arises from a sale to any Credit Party or any
Affiliate of any Credit Party, or to any director, officer, other employee of
any Credit Party or any Affiliate of any Credit Party, or to any other entity
which has any common officer or director with any Credit Party;
(h) that is the obligation of an Account Debtor that is
the United States government or a political subdivision thereof, or any state
or municipality or department, agency or instrumentality thereof unless Agent,
in its sole discretion, has agreed to the contrary in writing and Borrower or
Tessco, if necessary or desirable, has complied with the Federal Assignment of
Claims Act of 1940, and any amendments thereto, or any applicable state statute
or municipal ordinance of similar purpose and effect, with respect to such
obligation;
(i) that is the obligation of an Account Debtor located
in a foreign country other than Canada (excluding the provinces of Quebec,
Newfoundland, Nova Scotia and ▇▇▇▇▇▇ ▇▇▇▇▇▇ Island) unless payment thereof is
assured by a letter of credit or bankers' acceptance satisfactory to Agent as
to form, amount and issuer;
(j) to the extent Borrower or any Subsidiary thereof is
liable for goods sold or services rendered by the applicable Account Debtor to
Borrower or any Subsidiary thereof, but only to the extent of the potential
offset;
(k) that arises with respect to goods which are delivered
on a ▇▇▇▇-and-hold, cash-on-delivery basis or placed on consignment, guaranteed
sale or other terms by reason of which the payment by the Account Debtor is or
may be conditional;
(l) that is in default; provided, that, without limiting
the generality of the foregoing, an Account shall be deemed in default upon the
occurrence of any of the following:
(i) it is not paid within the earlier of: sixty (60) days
following its due date or ninety (90) days following its original
invoice date net of credit balances, unless assured by a letter of
credit satisfactory to Agent as to form, amount and issuer;
(ii) if any Account Debtor obligated upon such Account
suspends business, makes a general assignment for the benefit of
creditors or fails to pay its debts generally as they come due; or
(iii) if any petition is filed by or against any Account
Debtor obligated upon such Account under any bankruptcy law or any
other federal, state or foreign (including any provincial)
receivership, insolvency relief or other law or laws for the relief of
debtors;
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(m) which is the obligation of an Account Debtor if fifty
percent (50%) or more of the dollar amount of all Accounts in excess of $2,500
and owing by that Account Debtor to Borrower and Tessco are ineligible under
the other criteria set forth in this Section 1.6;
(n) to the extent the Dollar amount of such Account, when
aggregated with the Dollar amount of all other Accounts owing by that Account
Debtor (other than Ford Motor Company, General Motors Corporation, Chrysler
Corporation, Mitsubishi Motor Sales of America, Inc., Volkswagen of America,
Inc., and Subaru of America, Inc.) to Borrower and Tessco, exceeds ten percent
(10%) of the aggregate gross amount of all Accounts;
(o) as to which Agent's interest, on behalf of itself and
Lenders, therein is not a first priority perfected security interest;
(p) as to which any of the representations or warranties
pertaining to Accounts set forth in this Agreement or the Security Agreement is
untrue;
(q) to the extent such Account is evidenced by a
judgment, Instrument or Chattel Paper;
(r) which is payable in any currency other than Dollars;
(s) to the extent Borrower or Tessco has received
payments with respect to such Account, the goods sold with respect to such
Account have not been delivered or such Account remains indicated on Borrower's
or Tessco's most recent trial balance delivered to Agent pursuant to Annex F
hereto;
(t) to the extent such Account may be offset by warranty
expenses with respect to the goods sold and giving rise to such Account; or
(u) which is unacceptable to Agent in its reasonable
credit judgment.
1.7 Eligible Inventory. Based on the most recent
Borrowing Base Certificate delivered by Borrower to Agent and on other
information available to Agent, Agent shall in its reasonable credit judgment
determine which Inventory of Borrower and Tessco shall be "Eligible Inventory"
for purposes of this Agreement; provided, however, that, notwithstanding
anything in this section or this Agreement to the contrary, no Inventory of
Tessco shall constitute Eligible Inventory from and after the earlier of June
30, 1998 and the completion of the Tessco Liquidation. In determining whether
any particular Inventory of Borrower or Tessco constitutes Eligible Inventory,
Agent shall not include any such Inventory to which any of the exclusionary
criteria set forth below applies. Agent reserves the right, at any time and
from time to time after the Closing Date, to adjust any such criteria, to
establish new criteria and to adjust advance rates with respect to Eligible
Inventory, in its reasonable credit judgment, subject to the approval of
Supermajority Revolving Lenders in the case of adjustments or new criteria or
changes in
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advance rates which have the effect of making more credit available. Unless
Agent shall have otherwise agreed in writing, Eligible Inventory shall not
include any Inventory of Borrower or Tessco:
(a) that is not owned by Borrower or Tessco free and
clear of all Liens and rights of any other Person (including the rights of a
purchaser that has made progress payments and the rights of a surety that has
issued a bond to assure Borrower's or Tessco's performance with respect to that
Inventory), except the Liens in favor of Agent, on behalf of itself and
Lenders;
(b) (i) that is located at a premises at which Borrower
maintains Inventory having an aggregate book value of less than $100,000 or
(ii) that is located on premises which are not owned and operated by Borrower
or Tessco, or stored with a bailee, warehouseman or similar Person, or located
on premises that are leased to Borrower or Tessco, or located on premises which
are owned by Borrower or Tessco and subject to a Lien securing Indebtedness of
Borrower or Tessco, unless in any such case under this clause (b)(ii), (x) a
satisfactory bailee letter, landlord waiver or mortgagee's waiver has been
delivered to Agent, or (y) Reserves satisfactory to Agent have been established
with respect thereto;
(c) that is placed on consignment or is in transit (other
than Inventory which is in transit for not more than ten (10) days from Tessco
to Borrower or Borrower to Tessco in the ordinary course of business or in
connection with the Tessco Liquidation);
(d) that is covered by a negotiable document of title,
unless such document has been delivered to Agent;
(e) that in Agent's reasonable determination, is excess,
obsolete, unsalable, shopworn, seconds, damaged or unfit for sale;
(f) that consists of display items or packing, labels,
inserts or shipping materials, manufacturing supplies, work-in-process
Inventory or replacement parts;
(g) that consists of goods which have been returned by
the buyer;
(h) that is not of a type held for sale in the ordinary
course of Borrower's or Tessco's business;
(i) as to which Agent's Lien, on behalf of itself and
Lenders, therein is not a first priority perfected Lien;
(j) as to which any of the representations or warranties
pertaining to Inventory set forth in this Agreement or the Security Agreement
is untrue;
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(k) to the extent that it consists of any costs
associated with "freight-in" charges;
(l) to the extent that it consists of Hazardous Materials
or goods that can be transported or sold only with licenses that are not
readily available;
(m) to the extent that it is not covered by casualty
insurance acceptable to Agent;
(n) to the extent that it is physically counted annually
or quarterly and carried forward on the perpetual inventory as constant until
the next physical count; or
(o) to the extent reserves are established with respect
to it for variances resulting from physical inventory counts or standard cost
adjustments.
(p) that is otherwise unacceptable to Agent in its
reasonable credit judgment.
1.8 Cash Management Systems. On or prior to the
Closing Date, Borrower will establish and will maintain until the Termination
Date, the cash management systems described on Annex C (the "Cash Management
Systems").
1.9 Fees. (a) Borrower shall pay to GE Capital,
individually, the Fees specified in that certain fee letter of even date
herewith between Borrower and GE Capital (the "GE Capital Fee Letter"), at the
times specified for payment therein.
(b) As additional compensation for the Revolving Lenders,
Borrower agrees to pay to Agent, for the ratable benefit of such Lenders, in
arrears, on the first Business Day of each month prior to the Commitment
Termination Date and on the Commitment Termination Date, a fee for Borrower's
non-use of available funds in an amount equal to two-fifths of one percent
(0.40%) per annum (calculated on the basis of a 360 day year for actual days
elapsed) of the difference between (x) the Maximum Amount (as it may be reduced
from time to time) and (y) the average for the period of the daily closing
balances of the aggregate Revolving Loan and the Swing Line Loan outstanding
during the period for which such fee is due.
(c) If, prior to the second anniversary of the Closing
Date, the Revolving Loan Commitment is reduced or terminated, whether
voluntarily or involuntarily and whether before or after acceleration of the
Obligations, Borrower shall pay to Agent, for the benefit of Lenders as
liquidated damages and compensation for the costs of being prepared to make
funds available hereunder an amount equal to two percent (2.00%) of the amount
of the reduction of the Revolving Loan Commitment ; provided, however, that (i)
if Borrower requests Agent and Lenders to consent to permitting Borrower to
voluntarily redeem the Series A Preferred Stock pursuant to the terms and
conditions of the Series A Preferred Stock Documents and Agent and Lenders
refuse to consent thereto, and Borrower terminates the Commitments and repays
the
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Obligations in their entirety within ninety (90) days of such refusal, the
amount payable under this section shall be one percent (1.00%) of the amount of
the Revolving Loan Commitment immediately prior to such termination and
repayment and (ii) if Borrower shall have notified the Agent in writing that it
objects to the assignee of any assignment effected under Section 9.1 within ten
(10) days of such assignment and Borrower terminates the Commitments and repays
the Obligations in their entirety within ninety (90) days of such notification,
no amount shall be payable under this section.
1.10 Receipt of Payments. Borrower shall make each
payment under this Agreement not later than 2:00 p.m. (New York time) on the
day when due in immediately available funds in Dollars to the Collection
Account. For purposes of computing interest and Fees and determining Borrowing
Availability or Net Borrowing Availability as of any date, all payments shall
be deemed received on the day of receipt of immediately available funds
therefor in the Collection Account prior to 2:00 p.m. (New York time).
Payments received after 2:00 p.m. (New York time) on any Business Day shall be
deemed to have been received on the following Business Day.
1.11 Application and Allocation of Payments. (a) So long
as no Event of Default shall have occurred and be continuing, (i) payments
consisting of proceeds of Accounts received in the ordinary course of business
shall be applied to the Swing Line Loan and the Revolving Loan; (ii) payments
matching specific scheduled payments then due shall be applied to those
scheduled payments; (iii) voluntary prepayments shall be applied as determined
by Borrower, subject to the provisions of Section 1.3(a); and (iv) mandatory
prepayments shall be applied as set forth in Section 1.3. As to each other
payment, and as to all payments made when an Event of Default shall have
occurred and be continuing or following the Commitment Termination Date,
Borrower hereby irrevocably waives the right to direct the application of any
and all payments received from or on behalf of Borrower, and Borrower hereby
irrevocably agrees that Agent shall have the continuing exclusive right to
apply, reverse and reapply any and all such payments against the Obligations of
Borrower as Agent may deem advisable notwithstanding any previous entry by
Agent in the Loan Account or any other books and records. In the absence of a
specific determination by Agent with respect thereto, payments shall be applied
to amounts then due and payable in the following order: (1) to Fees and Agent's
expenses reimbursable hereunder; (2) to interest on the Swing Line Loan; (3) to
principal payments on the Swing Line Loan; (4) to interest on the other Loans,
ratably in proportion to the interest accrued as to each Loan; (5) to principal
payments on the other Loans and to provide cash collateral for Letter of Credit
Obligations and Litigation L/C Obligations in the manner described in Annex B
and the Litigation L/C Agreement, ratably to the aggregate, combined principal
balance of the other Loans and outstanding Letter of Credit Obligations and
Litigation L/C Obligations; and (6) to all other Obligations including expenses
of Lenders to the extent reimbursable under Section 11.3.
(b) Agent is authorized to, and at its sole election may,
charge to the Revolving Loan balance on behalf of Borrower and cause to be paid
all Fees, expenses, Charges,
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costs (including insurance premiums in accordance with Section 5.4(a)) and
interest and principal, other than principal of the Revolving Loan, owing by
Borrower under this Agreement or any of the other Loan Documents if and to the
extent Borrower fails to promptly pay any such amounts as and when due, even if
such charges would cause the balance of the aggregate Revolving Loan and the
Swing Line Loan to exceed Borrowing Availability. At Agent's option and to the
extent permitted by law, any charges so made shall constitute part of the
Revolving Loan hereunder.
1.12 Loan Account and Accounting. Agent shall maintain a
loan account (the "Loan Account") on its books to record: (a) all Advances and
the Term Loans, (b) all payments made by Borrower, and (c) all other debits and
credits as provided in this Agreement with respect to the Loans or any other
Obligations. All entries in the Loan Account shall be made in accordance with
Agent's customary accounting practices as in effect from time to time. The
balance in the Loan Account, as recorded on Agent's most recent printout or
other written statement, shall be presumptive evidence of the amounts due and
owing to Agent and Lenders by Borrower; provided that any failure to so record
or any error in so recording shall not limit or otherwise affect Borrower's
duty to pay the Obligations. Agent shall render to Borrower a monthly
accounting of transactions with respect to the Loans setting forth the balance
of the Loan Account as to Borrower. Unless Borrower notifies Agent in writing
of any objection to any such accounting (specifically describing the basis for
such objection), within thirty (30) days after the date thereof, each and every
such accounting shall (absent manifest error) be deemed final, binding and
conclusive upon Borrower in all respects as to all matters reflected therein.
Only those items expressly objected to in such notice shall be deemed to be
disputed by Borrower.
1.13 Indemnity. (a) Each Credit Party that is a signatory
hereto shall jointly and severally indemnify and hold harmless each of Agent,
Lenders and their respective Affiliates, and each such Person's respective
officers, directors, employees, attorneys, agents and representatives (each, an
"Indemnified Person"), from and against any and all suits, actions,
proceedings, claims, damages, losses, liabilities and expenses (including
attorneys' fees and disbursements and other costs of investigation or defense,
including those incurred upon any appeal) which may be instituted or asserted
against or incurred by any such Indemnified Person as the result of credit
having been extended, suspended or terminated under this Agreement and the
other Loan Documents and the administration of such credit, and in connection
with or arising out of the transactions contemplated hereunder and thereunder
and any actions or failures to act in connection therewith, including any and
all Environmental Liabilities and legal costs and expenses arising out of or
incurred in connection with disputes between or among any parties to any of the
Loan Documents (collectively, "Indemnified Liabilities"); provided, that no
such Credit Party shall be liable for any indemnification to an Indemnified
Person to the extent that any such suit, action, proceeding, claim, damage,
loss, liability or expense results from that Indemnified Person's gross
negligence or willful misconduct, as finally determined by a court of competent
jurisdiction. NO INDEMNIFIED PERSON SHALL BE RESPONSIBLE OR LIABLE TO ANY
OTHER PARTY TO ANY LOAN DOCUMENT, ANY SUCCESSOR,
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ASSIGNEE OR THIRD PARTY BENEFICIARY OF SUCH PERSON OR ANY OTHER PERSON
ASSERTING CLAIMS DERIVATIVELY THROUGH SUCH PARTY, FOR INDIRECT, PUNITIVE,
EXEMPLARY OR CONSEQUENTIAL DAMAGES WHICH MAY BE ALLEGED AS A RESULT OF CREDIT
HAVING BEEN EXTENDED, SUSPENDED OR TERMINATED UNDER ANY LOAN DOCUMENT OR AS A
RESULT OF ANY OTHER TRANSACTION CONTEMPLATED HEREUNDER OR THEREUNDER.
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(b) To induce Lenders to provide the LIBOR Rate option on
the terms provided herein, if (i) any LIBOR Loans are repaid in whole or in
part prior to the last day of any applicable LIBOR Period (whether that
repayment is made pursuant to any provision of this Agreement or any other Loan
Document or is the result of acceleration, by operation of law or otherwise);
(ii) Borrower shall default in payment when due of the principal amount of or
interest on any LIBOR Loan; (iii) Borrower shall default in making any
borrowing of, conversion into or continuation of LIBOR Loans after Borrower has
given notice requesting the same in accordance herewith; or (iv) Borrower shall
fail to make any prepayment of a LIBOR Loan after Borrower has given a notice
thereof in accordance herewith, Borrower shall indemnify and hold harmless each
Lender from and against all losses, costs and expenses resulting from or
arising from any of the foregoing. Such indemnification shall include any loss
(including loss of margin) or expense arising from the reemployment of funds
obtained by it or from fees payable to terminate deposits from which such funds
were obtained. For the purpose of calculating amounts payable to a Lender
under this subsection, each Lender shall be deemed to have actually funded its
relevant LIBOR Loan through the purchase of a deposit bearing interest at the
LIBOR Rate in an amount equal to the amount of that LIBOR Loan and having a
maturity comparable to the relevant Interest Period; provided, however, that
each Lender may fund each of its LIBOR Loans in any manner it sees fit, and the
foregoing assumption shall be utilized only for the calculation of amounts
payable under this subsection. This covenant shall survive the termination of
this Agreement and the payment of the Notes and all other amounts payable
hereunder. As promptly as practicable under the circumstances, each Lender
shall provide Borrower with its written calculation of all amounts payable
pursuant to this Section 1.13(b), and such calculation shall be binding on the
parties hereto unless Borrower shall object in writing within ten (10) Business
Days of receipt thereof, specifying the basis for such objection in detail.
1.14 Access. Each Credit Party which is a party hereto
shall, during normal business hours, from time to time: (a) provide Agent and
any of its officers, employees and agents access to its properties, facilities,
advisors and employees (including officers) of each Credit Party and to the
Collateral, (b) permit Agent, and any of its officers, employees and agents, to
inspect, audit and make extracts from any Credit Party's books and records, (c)
permit Agent, and its officers, employees and agents, to inspect, review,
evaluate and make test verifications and counts of the Accounts, Inventory and
other Collateral of any Credit Party, (d) make available to Agent and its
counsel, as quickly as is possible under the circumstances, originals or copies
of all books and records which Agent may request, and (e) deliver any document
or instrument necessary for Agent, as it may from time to time request, to
obtain records from any service bureau or other Person which maintains records
for such Credit Party, and shall maintain duplicate records or supporting
documentation on media, including computer tapes and discs owned by such Credit
Party. If a Default or Event of Default shall have occurred and be continuing,
each such Credit Party shall provide such access and make such deliveries to
Agent and to each Lender at all times and without advance notice. If no
Default or Event of Default shall have occurred and be continuing, each such
Credit Party shall provide such access and make such deliveries to Agent upon
three (3) Business Days' prior notice and not more frequently than once during
any twelve month period. Borrower shall pay Agent, within thirty
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(30) days of Agent's demand therefor, an amount equal to $600 per person, per
day, plus all of Agent's out-of-pocket expenses, for each on-site inspection by
Agent pursuant to this section, provided that such payments to Agent shall not
exceed $15,000 for any on-site inspection occurring prior to the occurrence of
a Default or Event of Default. Furthermore, so long as any Event of Default
shall have occurred and be continuing, Borrower shall provide Agent and each
Lender with access to their suppliers and customers. Representatives of other
Lenders may accompany Agent's representatives on regularly scheduled audits at
no charge to Borrower.
1.15 Taxes. (a) Any and all payments by Borrower
hereunder or under the Notes shall be made, in accordance with this Section
1.15, free and clear of and without deduction for any and all present or future
Taxes. If Borrower shall be required by law to deduct any Taxes from or in
respect of any sum payable hereunder or under the Notes, (i) the sum payable
shall be increased as much as shall be necessary so that after making all
required deductions (including deductions applicable to additional sums payable
under this Section 1.15) Agent or Lenders, as applicable, receive an amount
equal to the sum they would have received had no such deductions been made,
(ii) Borrower shall make such deductions, and (iii) Borrower shall pay the full
amount deducted to the relevant taxing or other authority in accordance with
applicable law. Within thirty (30) days after the date of any payment of
Taxes, Borrower shall furnish to Agent the original or a certified copy of a
receipt evidencing payment thereof.
(b) Each Credit Party that is a signatory hereto shall
jointly and severally indemnify and, within ten (10) days of demand therefor,
pay Agent and each Lender for the full amount of Taxes (including any Taxes
imposed by any jurisdiction on amounts payable under this Section 1.15) paid by
Agent or such Lender, as appropriate, and any liability (including penalties,
interest and expenses) arising therefrom or with respect thereto, whether or
not such Taxes were correctly or legally asserted, unless the payment of such
Taxes by Agent or such Lender was made with gross negligence or willful
misconduct by Agent or such Lender. Agent or such Lender shall use its best
efforts to give Borrower as much advance notice of each such payment of Taxes
in excess of $2,500 under this subsection as is reasonably possible under the
circumstances.
(c) Each Lender organized under the laws of a
jurisdiction outside the United States (a "Foreign Lender") as to which
payments to be made under this Agreement or under the Notes are exempt from
United States withholding tax under an applicable statute or tax treaty shall
provide to Borrower and Agent a properly completed and executed IRS Form 4224
or Form 1001 or other applicable form, certificate or document prescribed by
the IRS or the United States certifying as to such Foreign Lender's entitlement
to such exemption (a "Certificate of Exemption"). Any foreign Person that
seeks to become a Lender under this Agreement shall provide a Certificate of
Exemption to Representative and Agent prior to becoming a Lender hereunder. No
foreign Person may become a Lender hereunder if such Person is unable to
deliver a Certificate of Exemption.
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1.16 Capital Adequacy; Increased Costs; Illegality. (a)
If any Lender shall have determined that the adoption after the date hereof of
any law, treaty, governmental (or quasi-governmental) rule, regulation,
guideline or order regarding capital adequacy, reserve requirements or similar
requirements or compliance by any Lender with any request or directive
regarding capital adequacy, reserve requirements or similar requirements
(whether or not having the force of law) from any central bank or other
Governmental Authority increases or would have the effect of increasing the
amount of capital, reserves or other funds required to be maintained by such
Lender and thereby reducing the rate of return on such Lender's capital as a
consequence of its obligations hereunder, then Borrower shall from time to time
upon demand by such Lender (with a copy of such demand to Agent) pay to Agent,
for the account of such Lender, additional amounts sufficient to compensate
such Lender for such reduction. A certificate as to the amount of that
reduction and showing the basis of the computation thereof submitted by such
Lender to Borrower and to Agent shall, absent manifest error, be final,
conclusive and binding for all purposes.
(b) If, due to either (i) the introduction of or any
change in any law or regulation (or any change in the interpretation thereof)
or (ii) the compliance with any guideline or request from any central bank or
other Governmental Authority (whether or not having the force of law), there
shall be any increase in the cost to any Lender of agreeing to make or making,
funding or maintaining any Loan or incurring any Letter of Credit Obligations
or Litigation L/C Obligations, then Borrower shall from time to time, upon
demand by such Lender (with a copy of such demand to Agent), pay to Agent for
the account of such Lender additional amounts sufficient to compensate such
Lender for such increased cost. A certificate as to the amount of such
increased cost, submitted to Borrower and to Agent by such Lender, shall be
conclusive and binding on Borrower for all purposes, absent manifest error.
Each Lender agrees that, as promptly as practicable after it becomes aware of
any circumstances referred to above which would result in any such increased
cost, the affected Lender shall, to the extent not inconsistent with such
Lender's internal policies of general application, use reasonable commercial
efforts to minimize costs and expenses incurred by it and payable to it by
Borrower pursuant to this Section 1.16(b).
(c) Notwithstanding anything to the contrary contained
herein, if the introduction of or any change in any law or regulation (or any
change in the interpretation thereof) shall make it unlawful, or any central
bank or other Governmental Authority shall assert that it is unlawful, for any
Lender to agree to make or to make or to continue to fund or maintain any LIBOR
Loan, then, unless that Lender is able to make or to continue to fund or to
maintain such LIBOR Loan at another branch or office of that Lender without, in
that Lender's opinion, adversely affecting it or its Loans or the income
obtained therefrom, on notice thereof and demand therefor by such Lender to
Borrower through Agent, (i) the obligation of such Lender to agree to make or
to make or to continue to fund or maintain LIBOR Loans shall terminate and (ii)
Borrower shall forthwith prepay in full all outstanding LIBOR Loans owing by
Borrower to such Lender, together with interest accrued thereon, unless
Borrower, within five (5) Business
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Days after the delivery of such notice and demand, converts all such Loans into
a Loan bearing interest based on the Index Rate.
1.17 Single Loan. Except with respect to the
Litigation Obligations, all Loans to Borrower and all of the other Obligations
of Borrower arising under this Agreement and the other Loan Documents (other
than the Litigation Collateral Documents) shall constitute one general
obligation of Borrower secured, until the Termination Date, by all of the
Collateral pursuant to the Collateral Documents other than the Litigation
Collateral Documents. The Litigation Obligations shall constitute a single,
but separate, general obligation of Borrower secured, until the Termination
Date, by all of the Collateral pursuant to the Litigation Collateral Documents.
2. CONDITIONS PRECEDENT
2.1 Conditions to the Initial Loans.
No Lender shall be obligated to make or incur its initial
Loans or Letter of Credit Obligations or Litigation L/C Obligations hereunder
on or after the Closing Date, unless and until the following conditions have
been satisfied or provided for in a manner satisfactory to Agent, or waived in
writing by Agent and Lenders:
(a) Credit Agreement; Loan Documents. This Agreement or
counterparts hereof shall have been duly executed by, and delivered to,
Borrower, Agent and Lenders; and Agent shall have received such documents,
instruments, agreements and legal opinions as Agent shall request in connection
with the transactions contemplated by this Agreement and the other Loan
Documents, including all those listed in the Closing Checklist attached hereto
as Annex D, each in form and substance satisfactory to Agent.
(b) Repayment of Prior Lender Obligations; Satisfaction
of Outstanding L/Cs. (i) Agent shall have received a fully executed original
of a pay-off letter satisfactory to Agent confirming that all of the Prior
Lender Obligations will be repaid in full from the proceeds of the Term Loan A
and the initial Revolving Credit Advance and all Liens upon any of the property
of Borrower or any of its Subsidiaries in favor of Prior Lender shall be
terminated by Prior Lender immediately upon such payment; and (ii) all letters
of credit issued or guaranteed by Prior Lender shall have been cash
collateralized, supported by a guaranty of Agent or supported by a Letter of
Credit issued pursuant to Annex B, or terminated, as mutually agreed upon by
Agent, Borrower and Prior Lender.
(c) Approvals. Agent shall have received (i)
satisfactory evidence that the Credit Parties have obtained all required
consents and approvals of all Persons including all requisite Governmental
Authorities, to the execution, delivery and performance of this Agreement and
the other Loan Documents and the consummation of the Related Transactions or
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(ii) an officer's certificate in form and substance satisfactory to Agent
affirming that no such consents or approvals are required.
(d) Opening Availability. The Eligible Accounts and
Eligible Inventory of Borrower and Tessco supporting the initial Revolving
Credit Advance and the initial Letter of Credit Obligations incurred and the
amount of the Reserves to be established on the Closing Date shall be
sufficient in value, as determined by Agent, to provide Borrower, with Net
Borrowing Availability of at least $1,000,000, after giving effect to the
initial Revolving Credit Advance made to Borrower, the incurrence of any
initial Letter of Credit Obligations, the payment of all fees and expenses
incurred or owing by Borrower to Agent and Lenders and to the purchasers of the
Series A Preferred Stock as of the Closing Date, and the consummation of the
Related Transactions (on a pro forma basis, with trade payables being paid
currently, and expenses and liabilities being paid in the ordinary course of
business and without acceleration of sales).
(e) Payment of Fees. Borrower shall have paid the Fees
required to be paid on the Closing Date in the respective amounts specified in
Section 1.9 (including the Fees specified in the GE Capital Fee Letter), and
shall have reimbursed Agent for all fees, costs and expenses of closing
presented as of the Closing Date.
(f) Capital Structure: Other Indebtedness. The capital
structure of each Credit Party and the terms and conditions of all Indebtedness
of each Credit Party shall be acceptable to Agent in its sole discretion.
Without limiting the foregoing, the aggregate consolidated Indebtedness,
together with all other consolidated liabilities of Borrower (other than trade
payables), shall not exceed $10,000,000 as of the Closing Date after giving
effect to the consummation of all of the Related Transactions.
(g) Consummation of Related Transactions. Agent shall
have received fully executed copies of the Series A Preferred Stock Documents,
the Series B Preferred Stock Documents, and each of the other Related
Transactions Documents, each of which shall be in form and substance
satisfactory to Agent and its counsel. The Related Transactions shall have been
consummated in accordance with the terms of the Related Transactions Documents
and Borrower shall have received $6,999,850 of cash proceeds (before deduction
of expenses) from the issuance of the Series A Preferred Stock, which proceeds
shall be accounted for as a contribution to Borrower's equity capital.
(h) Pegasus Guaranties. Each of the Litigation Guaranty
and the Supplemental Guaranty shall have been duly executed and delivered to
Agent and Agent shall have received all documents, instruments, certificates
and opinions as may be required by the terms thereof or as Agent shall
otherwise require with respect thereto.
2.2 Further Conditions to Term Loan B. No Lender shall
be obligated to fund its Term Loan B, unless and until the following conditions
shall have been satisfied or provided for in a manner satisfactory to Agent, or
waived in writing by Agent and Lenders:
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(a) Entry of Final Judgment. The Final Judgment shall
have been entered or established by settlement agreement and Agent shall have
received satisfactory evidence of (i) such entry or settlement, (ii) the amount
of Borrower's and each other Credit Party's liability with respect thereto,
(iii) the amount and timing of any proceeds of insurance, indemnification or
contribution expected to be received by Borrower and each of the other Credit
Parties with respect thereto and (iv) the aggregate amount of accrued and
unpaid expenses (including, without limitation, legal fees) incurred by the
Credit Parties with respect to the DEI Litigation as of the Term Loan B Funding
Date.
(b) Additional Equity or Subordinated Debt. If the
aggregate amount of the Final Judgment, minus the amount of any proceeds of
insurance, indemnification or contribution actually received by the Credit
Parties with respect thereto on or prior to the Term Loan B Funding Date plus
the amount determined pursuant to clause (iv) of Section 2.2(a) (provided,
however, that such amount shall not be added to Net Litigation Liability to the
extent that, as the date of determination of Net Litigation Liability
hereunder, the Net Borrowing Base Availability minus the Letter of Credit
Obligations and minus such amount, exceeds $500,000) (the "Net Litigation
Liability"), exceeds $3,000,000, Borrower shall have received, or will
simultaneously receive, additional net capital contributions or net proceeds of
Subordinated Debt, or a combination thereof, in an aggregate amount at least
equal to such excess, and shall have applied, or will simultaneously apply,
such contributions and proceeds to the payment in part of the Net Litigation
Liability. Agent shall have received, or will simultaneously receive,
satisfactory evidence of the application of such contributions and proceeds to
the Net Litigation Liability. The structure of, and documentation governing,
such additional net capital contributions and Subordinated Debt shall be in
form and substance acceptable in all respects to Agent and the Requisite
Lenders, and the identity of the Credit Parties or other obligors and issuers
with respect to the securities issued in exchange for such capital
contributions and for such Subordinated Debt shall be selected only with the
written approval of Agent and the Requisite Lenders. Without limiting the
foregoing, (i) any such Subordinated Debt shall not exceed $1,000,000 in
aggregate principal, shall be unsecured, no principal or interest with respect
thereto shall be required to be paid in cash to the holders of such
Subordinated Debt on or prior to its maturity date, and its maturity date shall
be no earlier than the July 24, 2003 and (ii) any such equity securities shall
not require dividends to be paid in cash or mandatory redemptions to be made
prior to July 24, 2003.
(c) Timing of Request for Advance. Each of the other
conditions described in this Section 2.2 shall have been satisfied, and
Borrower shall have delivered the Notice of Term Loan B Advance, on or prior to
the earlier of (i) the ninth (9th) day following the entry settlement of the
Final Judgment and (ii) December 31, 1998.
(d) Minimum Availability. The Net Borrowing Availability
minus the Letter of Credit Obligations shall be not less than $500,000.
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(e) Term Loan C Not Outstanding. No Litigation L/C
Obligations nor any Obligations with respect to Term Loan C shall be
outstanding. If the Litigation L/C shall have been theretofore issued, it
shall have been theretofore terminated or expired.
2.3 Further Conditions to Incurrence of Litigation L/C
Obligations. The Agent and Term Lenders shall not be obligated to incur
Litigation L/C Obligations or cause the Litigation L/C to be issued or renewed,
extended or modified, or directly advance the Term Loan C pursuant to Section
1.1(c) of the Litigation L/C Agreement, unless and until the following
conditions shall have been satisfied or provided for in a manner satisfactory
to Agent, or waived in writing by Agent and Lenders:
(I) In the case of a request to incur Litigation L/C Obligations
in connection with the issuance of the Litigation L/C pursuant to the
Litigation L/C Agreement:
(a) Entry of Lower Court Judgment. The Lower Court
Judgment shall have been entered and Agent shall have received satisfactory
evidence (i) of such entry, (ii) of the amount of Borrower's and each other
Credit Party's liability with respect thereto, (iii) of the aggregate amount of
accrued and unpaid expenses (including, without limitation, legal fees)
incurred by the Credit Parties with respect to the DEI Litigation as of the
proposed Litigation L/C Issuance Date, (iv) that the sum of the amounts
described in clauses (ii) and (iii) of this subparagraph is less than or equal
to $12,000,000 (provided, however, the amount determined pursuant to clause
(iii) shall not be included in such addition to the extent that, as the date of
determination hereof, the Net Borrowing Base Availability minus the Letter of
Credit Obligations and minus such amount, exceeds $500,000), (v) that,
notwithstanding anything contained in Section 2.3(I)(a)(iv) to the contrary,
the Litigation L/C, shall be in a face amount which is less than or equal to
$12,000,000, (vi) that the Litigation L/C shall be sufficient in amount and in
such terms and conditions as to permit Borrower to obtain and secure a
supersedeas or appeal bond or similar obligation pursuant to Federal Rule of
Civil Procedure 62(d) or otherwise which will have the effect of enjoining or
preventing the creation, attachment, perfection, enforcement, levy, execution
and foreclosure of any judicial or judgment lien which could otherwise arise
with respect to the Lower Court Judgment under applicable law and procedure
pending Borrower's appeal of such Lower Court Judgment; provided, however, that
any such supersedeas or appeal bond or similar obligation shall not dissolve,
or have the effect of dissolving, any judicial or judgment lien in connection
with the Lower Court Judgment under applicable law and procedure (the "Bond"),
(vii) that the form of the Bond shall be reasonably satisfactory to Agent,
(viii) that, prior to the expiration of ten (10) days after the entry of the
Lower Court Judgment, the Bond shall have been approved by the Lower Court and
shall be in full force and effect, (ix) that, upon the issuance and posting of
the Litigation L/C and upon the approval of the Bond by the Lower Court and the
issuance of the Bond, no such judicial lien or judgment shall have in fact been
created, attached or perfected under applicable law and procedure, and (x)
that, upon the issuance and posting of the Litigation L/C and Bond, Borrower
will have taken all actions as are necessary to timely and properly appeal the
Lower Court Judgment.
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(b) Pegasus Litigation Guaranty. The Pegasus Litigation
Guaranty shall be effective in accordance with its terms, and shall be valid
and enforceable severally against the Pegasus Funds in an amount not less than
the proposed aggregate face amount of the Litigation L/C and neither Pegasus
Fund shall be in default or breach of any term or condition of the Pegasus
Litigation Guaranty.
(c) Timing of Request for Advance. Each of the other
conditions described in this Section 2.3(I) shall have been satisfied, and
Borrower shall have requested that the Litigation L/C and Bond be issued, and
the Litigation L/C and Bond will be issued, on or prior to the earlier of (i)
the ninth (9th) day following the entry of the Lower Court Judgment and (ii)
December 31, 1998.
(d) Minimum Availability. The Net Borrowing Availability
minus the Letter of Credit Obligations shall be not less than $500,000.
(e) Term Loan B Note Outstanding. No Obligations with
respect to Term Loan B shall be outstanding.
(II) In the case of a request to advance the Term Loan C pursuant
to Section 1.1(c) of the Litigation L/C Agreement:
(a) Entry of Final Judgment. The Final Judgment shall
have been entered or established by settlement agreement and Agent shall have
received satisfactory evidence of (i) such entry or settlement, (ii) the amount
of the Net Litigation Liability and (iii) the Net Litigation Liability shall be
less than or equal to $12,000,000.
(b) Pegasus Litigation Guaranty. The Pegasus Litigation
Guaranty shall be effective in accordance with its terms, and shall be valid
and enforceable severally against the Pegasus Funds in an amount not less than
the requested principal amount of the Term Loan C and neither Pegasus Fund
shall be in default or breach of any term or condition of the Pegasus
Litigation Guaranty.
(c) Timing of Request for Advance. Each of the other
conditions described in this Section 2.3(II) shall have been satisfied, and
Borrower shall have delivered the Notice of Term Loan C Advance, on or prior to
the earlier of (i) the ninth (9th) day following the entry or settlement of the
Final Judgment and (ii) December 31, 1998.
(d) Minimum Availability. The Net Borrowing Availability
minus the Letter of Credit Obligations shall be not less than $500,000.
(e) Term Loan B and Litigation L/C Not Outstanding. No
Litigation L/C Obligations nor any Obligations with respect to Term Loan B
shall be outstanding. If the
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Litigation L/C shall have been theretofore issued, it shall have been
theretofore terminated or expired.
2.4 Further Conditions to Each Loan. Except as otherwise
expressly provided herein, no Lender shall be obligated to fund any Loan (other
than its Pro Rata Share of payments under the Litigation L/C as the Term Loan C
under Section 1.1(b) of the Litigation L/C Agreement), convert or continue any
Loan as a LIBOR Loan or incur any Letter of Credit Obligation or Litigation L/C
Obligations (whether initially or by renewal, extension or other modification),
if, as of the date thereof:
(a) Any representation or warranty by any Credit Party
contained herein or in any of the other Loan Documents shall be untrue or
incorrect as of such date, except to the extent that such representation or
warranty expressly relates to an earlier date, or if the proceeds of the
requested Loan or use of the requested Letter of Credit is inconsistent with
the provisions of Section 1.4; or
(b) Any event or circumstance having a Material Adverse
Effect shall have occurred since the date hereof; or
(c) (i) Any Event of Default shall have occurred and be
continuing or would result after giving effect to such Loan (or the incurrence
of such Letter of Credit Obligations or Litigation L/C Obligations), or (ii) a
Default shall have occurred and be continuing or would result after giving
effect to such Loan, and Agent or Requisite Revolving Lenders shall have
determined, in its or their sole and absolute discretion, not to make such Loan
or incur such Letter of Credit Obligations or Litigation L/C Obligations so
long as that Default is continuing; or
(d) After giving effect to such Advance (or the
incurrence of such Letter of Credit Obligations), the outstanding principal
amount of the aggregate Revolving Loan would exceed the lesser of the Borrowing
Base and the Maximum Amount, less, in each case, the then outstanding principal
amount of the Swing Line Loan; or
(e) After giving effect to such Swing Line Advance, the
outstanding principal amount of the Swing Line Loan would exceed Swing Line
Availability.
The request and acceptance by Borrower of the proceeds of any Loan, the
incurrence of any Letter of Credit Obligations or Litigation L/C Obligations or
the conversion or continuation of any Loan into, or as, a LIBOR Loan, as the
case may be, shall be deemed to constitute, as of the date of such request,
acceptance, conversion or continuation, (i) a representation and warranty by
Borrower that the conditions in this Section 2.4 have been satisfied (and that
the conditions set forth in Section 2.2 have been satisfied in the case of a
request for the Term Loan B, that the conditions set forth in Section 2.3(I)
have been satisfied in the case of a request for the incurrence of the
Litigation L/C Obligations, and that the conditions set forth in Section
2.3(II)
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have been satisfied in the case of a request for a direct advance of Term Loan
C) and (ii) a reaffirmation by Borrower of the granting and continuance of
Agent's Liens, on behalf of itself and Lenders, pursuant to the Collateral
Documents or Litigation Collateral Documents, as the case may be.
3. REPRESENTATIONS AND WARRANTIES
To induce Lenders to make the Loans and to incur Letter of
Credit Obligations and Litigation L/C Obligations, the Credit Parties executing
this Agreement, jointly and severally, make the following representations and
warranties to Agent and each Lender with respect to all Credit Parties, each
and all of which shall survive the execution and delivery of this Agreement.
3.1 Corporate Existence; Compliance with Law. Each
Credit Party (excluding, except in the case of clause (f) below, each of
Borrower's Subsidiaries which are organized under the laws of jurisdictions
outside of the United States) (a) is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation; (b) is duly qualified to conduct business and is in good
standing in each other jurisdiction where its ownership or lease of property or
the conduct of its business requires such qualification; (c) has the requisite
corporate power and authority and the legal right to own, pledge, mortgage or
otherwise encumber and operate its properties, to lease the property it
operates under lease and to conduct its business as now, heretofore and
proposed to be conducted; (d) has all licenses, permits, consents or approvals
from or by, and has made all filings with, and has given all notices to, all
Governmental Authorities having jurisdiction, to the extent required for such
ownership, operation and conduct; (e) is in compliance with its charter and
by-laws; and (f) subject to specific representations set forth herein regarding
ERISA, Environmental Laws, tax and other laws, is in compliance with all
applicable provisions of law, except where the failure to comply, individually
or in the aggregate, could not reasonably be expected to have a Material
Adverse Effect.
3.2 Executive Offices; FEIN. As of the Closing Date, the
current location of each Credit Party's chief executive office and principal
place of business is set forth in Disclosure Schedule (3.2), and, except as set
forth in such schedule, none of such locations have changed within the twelve
(12) months preceding the Closing Date. In addition, Disclosure Schedule (3.2)
lists the federal employer identification number of each Credit Party.
3.3 Corporate Power, Authorization, Enforceable
Obligations. The execution, delivery and performance by each Credit Party of
the Loan Documents to which it is a party and the creation of all Liens
provided for therein, the execution, delivery and performance by each Credit
Party of the other Related Transaction Documents to which it is a party, and
their consummation of each Related Transaction pursuant thereto: (a) are within
such Person's corporate power; (b) have been duly authorized by all necessary
or proper corporate and shareholder action; (c) do not contravene any provision
of such Person's charter or bylaws; (d) do
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not violate any law or regulation, or any order or decree of any court or
Governmental Authority; (e) do not conflict with or result in the breach or
termination of, constitute a default under or accelerate or permit the
acceleration of any performance required by, any indenture, mortgage, deed of
trust, lease, agreement or other instrument to which such Person is a party or
by which such Person or any of its property is bound; (f) do not result in the
creation or imposition of any Lien upon any of the property of such Person
other than those in favor of Agent, on behalf of itself and Lenders, pursuant
to the Loan Documents; and (g) do not require the consent or approval of any
Governmental Authority or any other Person, except those referred to in Section
2.1(c), all of which will have been duly obtained, made or complied with prior
to the Closing Date. On or prior to the Closing Date, each of the Loan
Documents shall have been duly executed and delivered by each Credit Party
thereto and each such Loan Document shall then constitute a legal, valid and
binding obligation of such Credit Party enforceable against it in accordance
with its terms.
3.4 Financial Statements and Projections. Except for the
Projections and the Fair Salable Balance Sheet, all Financial Statements
concerning Borrower and its Subsidiaries which are referenced below have been
prepared in accordance with GAAP consistently applied throughout the periods
covered (except as disclosed therein and except, with respect to unaudited
Financial Statements, for the absence of footnotes and normal year-end audit
adjustments) and present fairly in all material respects the financial position
of the Persons covered thereby as at the dates thereof and the results of their
operations and cash flows for the periods then ended.
(a) The following Financial Statements attached hereto as
Disclosure Schedule (3.4(A)) have been delivered on the date hereof:
(i) The audited consolidated balance sheets at December
31, 1996 and 1995 and the related statements of income and cash flows
of Borrower and its Subsidiaries for the Fiscal Years then ended,
certified by Deloitte & Touche LLP.
(ii) The unaudited balance sheet(s) at March 31, 1997,
April 30, 1997, May 31, 1997, June 30, 1997, July 31, 1997 and August
31, 1997 and the related statement(s) of income and cash flows of
Borrower and its Subsidiaries for the Fiscal Quarter then ended in the
case of the March 31, 1997 statements, and the months then ended in
the case of the April 30, 1997, May 31, 1997, June 30, 1997, July 31,
1997 and August 31, 1997 statements.
(b) Pro Forma. The Pro Forma delivered on the date
hereof and attached hereto as Disclosure Schedule (3.4(B)) was prepared by
Borrower giving pro forma effect to the Related Transactions, was based on the
unaudited consolidated and consolidating balance sheets of Borrower and its
Subsidiaries dated August 31, 1997 and was prepared in accordance with GAAP,
with only such adjustments thereto as would be required in accordance with
GAAP.
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(c) Projections. The Projections delivered on the date
hereof and attached hereto as Disclosure Schedule (3.4(C)) have been prepared
by Borrower in light of the past operations of its and its Subsidiaries'
businesses, but including future payments of known contingent liabilities
reflected on the Fair Salable Balance Sheet, and reflect projections for the
twelve (12) months ending December 31, 1997 and December 31, 1998 on a month by
month basis and for the fiscal years ending December 31, 1998, 1999 and 2000 on
an annual basis. The Projections are based upon estimates and assumptions
stated therein, all of which Borrower believes to be reasonable and fair in
light of current conditions and current facts known to Borrower and, as of the
Closing Date, reflect Borrower's good faith and reasonable estimates of the
future financial performance of Borrower and its Subsidiaries and of the other
information projected therein for the period set forth therein.
(d) Fair Salable Balance Sheet. The Fair Salable Balance
Sheet delivered on the date hereof and attached hereto as Disclosure Schedule
(3.4(D)) was prepared by Borrower on the same basis as the Pro Forma, except
that Borrower's assets are set forth therein at their fair salable values on a
going concern basis and the liabilities set forth therein include all
contingent liabilities of Borrower and its Subsidiaries stated at the
reasonably estimated present values thereof.
3.5 Material Adverse Effect. Between December 31, 1996
and the Closing Date, (a) no Credit Party has incurred any obligations,
contingent or non-contingent liabilities, liabilities for Charges, long-term
leases or unusual forward or long-term commitments which are not reflected in
the Pro Forma and which, alone or in the aggregate, could reasonably be
expected to have a Material Adverse Effect, (b) no contract, lease or other
agreement or instrument has been entered into by any Credit Party or has become
binding upon any Credit Party's assets and no law or regulation applicable to
any Credit Party has been adopted which has had or could reasonably be expected
to have a Material Adverse Effect, and (c) no Credit Party is in default and to
the best of Borrower's knowledge no third party is in default under any
material contract, lease or other agreement or instrument, which alone or in
the aggregate could reasonably be expected to have a Material Adverse Effect.
Between December 31, 1996 and the Closing Date no event has occurred, which
alone or together with other events, could reasonably be expected to have a
Material Adverse Effect.
3.6 Ownership of Property; Liens. As of the Closing
Date, the real estate ("Real Estate") listed on Disclosure Schedule (3.6)
constitutes all of the real property owned, leased, subleased, or occupied by
any Credit Party. Each Credit Party owns good and marketable fee simple title
to all of its owned real estate, and valid and marketable leasehold interests
in all of its leased Real Estate, all as described on Disclosure Schedule
(3.6), and copies of all such leases or a summary of terms thereof satisfactory
to Agent have been delivered to Agent. Disclosure Schedule (3.6) further
describes any Real Estate with respect to which any Credit Party is a lessor,
sublessor or assignor as of the Closing Date. Each Credit Party also has good
and marketable title to, or valid leasehold interests in, all of its personal
properties and assets. As of the Closing Date, none of the properties and
assets of any Credit Party is subject to any Liens
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other than Permitted Encumbrances, and there are no facts, circumstances or
conditions known to any Credit Party that may result in any Liens (including
Liens arising under Environmental Laws) other than Permitted Encumbrances.
Each Credit Party has received all deeds, assignments, waivers, consents,
non-disturbance and recognition or similar agreements, bills of sale and other
documents, and has duly effected all recordings, filings and other actions
necessary to establish, protect and perfect such Credit Party's right, title
and interest in and to all such Real Estate and other properties and assets.
Disclosure Schedule (3.6) also describes any purchase options, rights of first
refusal or other similar contractual rights pertaining to any Real Estate. As
of the Closing Date, no portion of any Credit Party's Real Estate has suffered
any material damage by fire or other casualty loss which has not heretofore
been repaired and restored in all material respects to its original condition
or otherwise remedied. As of the Closing Date, all material permits required
to have been issued or appropriate to enable the Real Estate to be lawfully
occupied and used for all of the purposes for which they are currently occupied
and used have been lawfully issued and are in full force and effect.
3.7 Labor Matters. As of the Closing Date (a) no strikes
or other material labor disputes against any Credit Party are pending or, to
any Credit Party's knowledge, threatened; (b) hours worked by and payment made
to employees of each Credit Party comply with the Fair Labor Standards Act and
each other federal, state, local or foreign law applicable to such matter; (c)
all payments due from any Credit Party for employee health and welfare
insurance have been paid or accrued as a liability on the books of such Credit
Party; (d) except as set forth in Disclosure Schedule (3.7), no Credit Party is
a party to or bound by any collective bargaining agreement, management
agreement, consulting agreement or any employment agreement (and true and
complete copies of any agreements described on Disclosure Schedule (3.7) have
been delivered to Agent); (e) there is no organizing activity involving any
Credit Party pending or, to any Credit Party's knowledge, threatened by any
labor union or group of employees; (f) there are no representation proceedings
pending or, to any Credit Party's knowledge, threatened with the National Labor
Relations Board, and no labor organization or group of employees of any Credit
Party has made a pending demand for recognition; and (g) except as set forth in
Disclosure Schedule (3.7), there are no complaints or charges against any
Credit Party pending or, to the knowledge of any Credit Party, threatened to be
filed with any Governmental Authority or arbitrator based on, arising out of,
in connection with, or otherwise relating to the employment or termination of
employment by any Credit Party of any individual.
3.8 Ventures, Subsidiaries and Affiliates; Outstanding
Stock and Indebtedness. Except as set forth in Disclosure Schedule (3.8), no
Credit Party has any Subsidiaries, is engaged in any joint venture or
partnership with any other Person, or is an Affiliate of any other Person. All
of the issued and outstanding Stock of each Credit Party (other than Borrower)
is owned by each of the Persons and in the amounts set forth on Disclosure
Schedule (3.8). As of the Closing Date, after giving effect to the Related
Transactions, the names of each Person which owns of record five percent
(5.00%) or more (on a fully-diluted basis) of the outstanding shares of any
class of Stock issued by Code Alarm, and the aggregate amounts of such Stock
owned by such Persons, is set forth on Disclosure Schedule (3.8). Except
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as set forth in Disclosure Schedule (3.8), as of the Closing Date, after giving
effect to the Related Transactions, there are no outstanding rights to
purchase, options, warrants or similar rights or agreements pursuant to which
any Credit Party may be required to issue, sell, repurchase or redeem any of
its Stock or other equity securities or any Stock or other equity securities of
its Subsidiaries. All outstanding Indebtedness and all known and probable
contingent liabilities of each Credit Party as of the Closing Date (after
giving effect to the Related Transactions) are described in Section 6.3
(including Disclosure Schedule (6.3)).
3.9 Government Regulation. No Credit Party is 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. No Credit Party is subject to
regulation under the Public Utility Holding Company Act of 1935, the Federal
Power Act, or any other federal or state statute that restricts or limits its
ability to incur Indebtedness or to perform its obligations hereunder. The
making of the Loans by Lenders to Borrower, the incurrence of the Letter of
Credit Obligations or Litigation L/C Obligations on behalf of Borrower, the
application of the proceeds thereof and repayment thereof and the consummation
of the Related Transactions will not violate any provision of any such statute
or any rule, regulation or order issued by the Securities and Exchange
Commission.
3.10 Margin Regulations. No Credit Party is engaged, nor
will it engage, principally or as one of its important activities, in the
business of extending credit for the purpose of "purchasing" or "carrying" any
"margin security" as such terms are defined in Regulation U or G of the Federal
Reserve Board as now and from time to time hereafter in effect (such securities
being referred to herein as "Margin Stock"). No Credit Party owns any Margin
Stock, and none of the proceeds of the Loans or other extensions of credit
under this Agreement will be used, directly or indirectly, for the purpose of
purchasing or carrying any Margin Stock, for the purpose of reducing or
retiring any Indebtedness which was originally incurred to purchase or carry
any Margin Stock or for any other purpose which might cause any of the Loans or
other extensions of credit under this Agreement to be considered a "purpose
credit" within the meaning of Regulation G, T, U or X of the Federal Reserve
Board. No Credit Party will take or permit to be taken any action which might
cause any Loan Document to violate any regulation of the Federal Reserve Board.
3.11 Taxes. All tax returns, reports and statements,
including information returns, required by any Governmental Authority to be
filed by any Credit Party have been filed with the appropriate Governmental
Authority and all Charges have been paid prior to the date on which any fine,
penalty, interest or late charge may be added thereto for nonpayment thereof
(or any such fine, penalty, interest, late charge or loss has been paid),
excluding Charges or other amounts being contested in accordance with Section
5.2(b). Proper and accurate amounts have been withheld by each Credit Party
from its respective employees for all periods in full and complete compliance
with all applicable federal, state, local and foreign law and such withholdings
have been timely paid to the respective Governmental Authorities. Disclosure
Schedule (3.11) sets forth as of the Closing Date those taxable years for which
any Credit Party's
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tax returns are currently being audited by the IRS or any other applicable
Governmental Authority and any assessments or threatened assessments in
connection with such audit, or otherwise currently outstanding. Except as
described on Disclosure Schedule (3.11), no Credit Party has executed or filed
with the IRS or any other Governmental Authority any agreement or other
document extending, or having the effect of extending, the period for
assessment or collection of any Charges. None of the Credit Parties and their
respective predecessors are liable for any Charges: (a) under any agreement
(including any tax sharing agreements) or (b) to each Credit Party's knowledge,
as a transferee. As of the Closing Date, no Credit Party has agreed or been
requested to make any adjustment under IRC Section 481(a), by reason of a
change in accounting method or otherwise, which would have a Material Adverse
Effect.
3.12 ERISA. (a) Disclosure Schedule (3.12) lists and
separately identifies all Title IV Plans, Multiemployer Plans, ESOPs and
Retiree Welfare Plans. Copies of all such listed Plans, together with a copy
of the latest form 5500 for each such Plan, have been delivered to Agent. Each
Qualified Plan has been determined by the IRS to qualify under Section 401 of
the IRC, and the trusts created thereunder have been determined to be exempt
from tax under the provisions of Section 501 of the IRC, and nothing has
occurred which would cause the loss of such qualification or tax-exempt status.
Except as set forth in Disclosure Schedule (3.12), each Plan is in compliance
with the applicable provisions of ERISA and the IRC, including the filing of
reports required under the IRC or ERISA. No Credit Party or ERISA Affiliate has
failed to make any contribution or pay any amount due as required by either
Section 412 of the IRC or Section 302 of ERISA or the terms of any such Plan.
No Credit Party or ERISA Affiliate has engaged in a prohibited transaction, as
defined in Section 4975 of the IRC, in connection with any Plan, which would
subject any Credit Party to a material tax on prohibited transactions imposed
by Section 4975 of the IRC.
(b) Except as set forth in Disclosure Schedule (3.12):
(i) no Title IV Plan has any Unfunded Pension Liability; (ii) no ERISA Event or
event described in Section 4062(e) of ERISA with respect to any Title IV Plan
has occurred or is reasonably expected to occur; (iii) there are no pending, or
to the knowledge of any Credit Party, threatened claims (other than claims for
benefits in the normal course), sanctions, actions or lawsuits, asserted or
instituted against any Plan or any Person as fiduciary or sponsor of any Plan;
(iv) no Credit Party or ERISA Affiliate has incurred or reasonably expects to
incur any liability as a result of a complete or partial withdrawal from a
Multiemployer Plan; (v) within the last five years no Title IV Plan with
Unfunded Pension Liabilities has been transferred outside of the "controlled
group" (within the meaning of Section 4001(a)(14) of ERISA) of any Credit Party
or ERISA Affiliate; and (vi) no liability under any Title IV Plan has been
satisfied with the purchase of a contract from an insurance company that is not
rated AAA by the Standard & Poor's Corporation or the equivalent by another
nationally recognized rating agency.
3.13 No Litigation. No action, claim, lawsuit, demand,
investigation or proceeding is now pending or, to the knowledge of any Credit
Party, threatened against any Credit Party, before any Governmental Authority
or before any arbitrator or panel of arbitrators
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(collectively, "Litigation"), (a) which challenges any Credit Party's right or
power to enter into or perform any of its obligations under the Loan Documents
to which it is a party, or the validity or enforceability of any Loan Document
or any action taken thereunder, or (b) which could reasonably be expected to
have a Material Adverse Effect. Except as set forth on Disclosure
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Schedule (3.13), as of the Closing Date there is no Litigation pending or
threatened which seeks damages in excess of $100,000 or injunctive relief or
alleges criminal misconduct of any Credit Party.
3.14 Brokers. No broker or finder acting on behalf of any
Credit Party brought about the obtaining, making or closing of the Loans or the
Related Transactions, and no Credit Party has any obligation to any Person in
respect of any finder's or brokerage fees in connection therewith.
3.15 Intellectual Property. Except as set forth on
Disclosure Schedule (3.15), (a) as of the Closing Date, each Credit Party owns
or has rights to use all Intellectual Property necessary to continue to conduct
its business as now or heretofore conducted by it or proposed to be conducted
by it, and each Patent, Trademark, Copyright and License is listed, together
with application or registration numbers, as applicable, in Disclosure Schedule
(3.15) hereto and (b) each Credit Party conducts its business and affairs
without infringement of or interference with any Intellectual Property of any
other Person. Notwithstanding the foregoing, none of the matters set forth in
Disclosure Schedule (3.15) could reasonably be expected to have a Material
Adverse Effect.
3.16 Full Disclosure. No information contained in this
Agreement, any of the other Loan Documents, any Projections, Financial
Statements or Collateral Reports or other reports from time to time delivered
hereunder or any written statement furnished by or on behalf of any Credit
Party to Agent or any Lender pursuant to the terms of this Agreement contains
or will contain any untrue statement of a material fact or omits or will omit
to state a material fact necessary to make the statements contained herein or
therein not misleading in light of the circumstances under which they were
made. The Liens granted to Agent, on behalf of itself and Lenders, pursuant to
the Collateral Documents will at all times be fully perfected first priority
Liens in and to the Collateral described therein, subject, as to priority, only
to Permitted Encumbrances with respect to the Collateral.
3.17 Environmental Matters. (a) Except as set forth in
Disclosure Schedule (3.17), as of the Closing Date: (i) the Real Estate is free
of contamination from any Hazardous Material except for such contamination that
would not adversely impact the value or marketability of such Real Estate and
which would not result in Environmental Liabilities of the Credit Parties which
could reasonably be expected to exceed $50,000; (ii) no Credit Party has caused
or suffered to occur any Release of Hazardous Materials on, at, in, under,
above, to, from or about any of its Real Estate the cleanup of which could
reasonably be expected to exceed $50,000; (iii) the Credit Parties are and have
been in compliance with all Environmental Laws, except for such noncompliance
which would not result in Environmental Liabilities of the Credit Parties which
could reasonably be expected to exceed $50,000; (iv) the Credit Parties have
obtained, and are in compliance with, all Environmental Permits required by
Environmental Laws for the operations of their respective businesses as
presently conducted, except where the failure to so obtain or comply with such
Environmental Permits would not result in
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Environmental Liabilities of the Credit Parties which could reasonably be
expected to exceed $50,000, and all such Environmental Permits are valid,
uncontested and in good standing; (v) no Credit Party is involved in operations
or knows of any facts, circumstances or conditions, including any Releases of
Hazardous Materials, that are likely to result in any Environmental Liabilities
of such Credit Party which could reasonably be expected to exceed $50,000, and
no Credit Party has authorized any current or former tenant of the Real Estate
to engage in any such operations; (vi) there is no Litigation arising under or
related to any Environmental Laws, Environmental Permits or Hazardous Material
which seeks damages, penalties, fines, costs or expenses in excess of $50,000
or injunctive relief, or which alleges criminal misconduct by any Credit Party;
(vii) no notice has been received by any Credit Party identifying it as a
"potentially responsible party" or requesting information under CERCLA or
analogous state statutes, and to the knowledge of the Credit Parties (other
than from customary business operations), there are no facts, circumstances or
conditions that may result in any Credit Party being identified as a
"potentially responsible party" under CERCLA or analogous state statutes; and
(viii) the Credit Parties have provided to Agent copies of all existing written
environmental reports, reviews and audits and all written information
pertaining to actual or potential Environmental Liabilities of the Credit
Parties, in each case relating to any Credit Party.
(b) Each Credit Party hereby acknowledges and agrees that
Agent (i) is not now, and has not ever been, in control of any of the Real
Estate or any Credit Party's affairs, and (ii) does not have the capacity
through the provisions of the Loan Documents or otherwise to influence any
Credit Party's conduct with respect to the ownership, operation or management
of any of its Real Estate or compliance with Environmental Laws or
Environmental Permits.
3.18 Insurance. Disclosure Schedule (3.18) lists all
insurance policies of any nature maintained, as of the Closing Date, for
current occurrences by each Credit Party, as well as a summary of the terms of
each such policy.
3.19 Deposit and Disbursement Accounts. Disclosure
Schedule (3.19) lists all banks and other financial institutions at which any
Credit Party maintains deposits and/or other accounts as of the Closing Date,
including any Disbursement Accounts, and such Schedule correctly identifies the
name, address and telephone number of each depository, the name in which the
account is held, a description of the purpose of the account, and the complete
account number.
3.20 Government Contracts. Except as set forth in
Disclosure Schedule (3.20), as of the Closing Date, no Credit Party is a party
to any contract or agreement with any Governmental Authority and no Credit
Party's Accounts are subject to the Federal Assignment of Claims Act, as
amended (31 U.S.C. Section 3727) or any similar state or local law.
3.21 Customer and Trade Relations. Except as disclosed on
Disclosure Schedule (3.21), as of the Closing Date, there exists no actual or,
to the knowledge of any Credit Party, threatened termination or cancellation
of, or any material adverse modification or change
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in: (a) the business relationship of any Credit Party with any customer or
group of customers whose purchases during the preceding twelve (12) months
caused them to be ranked among the ten largest customers of such Credit Party;
or (b) the business relationship of any Credit Party with any supplier material
to its operations.
3.22 Agreements and Other Documents. As of the Closing
Date, each Credit Party has provided to Agent or its counsel, on behalf of
Lenders, accurate and complete copies (or summaries) of all of the following
agreements or documents to which any it is subject and each of which is listed
on Disclosure Schedule (3.22): (a) supply agreements and purchase agreements
not terminable by such Credit Party within sixty (60) days following written
notice issued by such Credit Party and involving transactions in excess of
$1,000,000 per annum; (b) OEM contracts and similar agreements with customers
pursuant to which revenues have been generated (or are reasonably expected to
be generated) in excess of $1,000,000 per annum, together with schedules
describing, and other evidence of, all accreditations awarded to Borrower or
any other Credit Parties by any of such customers, or any insurance industry
group or similar organization, with respect to any products or services sold or
provided by Borrower or such other Credit Parties pursuant to such OEM
contracts and similar agreements; (c) any lease of Equipment having a remaining
term of one year or longer and requiring aggregate rental and other payments in
excess of $500,000 per annum; (d) licenses and permits held by the Credit
Parties, the absence of which could be reasonably likely to have a Material
Adverse Effect; (e) instruments or documents evidencing Indebtedness (other
than leases of Equipment) of such Credit Party and any security interest
granted by such Credit Party with respect thereto; and (f) instruments and
agreements evidencing the issuance of any equity securities, warrants, rights
or options to purchase equity securities of such Credit Party.
3.23 Solvency. After giving effect to (a) the Loans and
Letter of Credit Obligations to be made or extended on the Closing Date or such
other date as Loans, Letter of Credit Obligations and Litigation L/C
Obligations requested hereunder are made or extended and the execution and
delivery of the Loan Documents, (b) the disbursement and application of the
proceeds of such Loans pursuant to the instructions of Borrower, (c) the
issuance of the Series A Preferred Stock, the Series B Preferred Stock, the
Refinancing and the consummation of the other Related Transactions and (d) the
payment and accrual of all transaction costs in connection with the foregoing,
the Credit Parties, taken as a whole, are Solvent.
3.24 Series A Preferred Stock Issuance. As of the Closing
Date, Borrower have delivered to Agent a complete and correct copy of the
Series A Preferred Stock Documents (including all schedules, exhibits,
amendments, supplements, modifications, assignments and all other documents
delivered pursuant thereto or in connection therewith). As of the Closing Date
the Series A Preferred Stock and the "Attached Warrants" and "Shortfall
Warrants" (as such terms are defined in the Series A Preferred Stock Documents)
have been issued pursuant to the Series A Preferred Stock Documents and not
less than $6,999,850 in cash proceeds (before deduction of expenses) from such
issuance have been received by Borrower. Borrower acknowledge that Agent and
each Lender are entering into this Agreement and are extending the
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Commitments in reliance upon the issuance of the Series A Preferred Stock and
such Series A Warrants pursuant to the Series A Preferred Stock Documents, the
receipt by Borrower of all of the proceeds of such issuance, and this Section
3.24.
3.25 Series B Preferred Stock Issuance. As of the Closing
Date, Borrower has delivered to Agent a complete and correct copy of the Series
B Preferred Stock Documents (including all schedules, exhibits, amendments,
supplements, modifications, assignments and all other documents delivered
pursuant thereto or in connection therewith). As of the Closing Date the
Series B Preferred Stock has been issued pursuant to the Series B Preferred
Stock Documents to the Series B Pledgor, all of the outstanding shares of such
Series B Preferred Stock have been pledged by the Series B Pledgor to Agent,
for itself and Lenders, as security for the Obligations, pursuant to a Pledge
Agreement, and the certificate of designation with respect to the Series B
Preferred Stock shall have been duly approved by Borrower and filed with the
Department of Consumer and Industry Services of the State of Michigan.
Borrower acknowledges that Agent and each Lender are entering into this
Agreement and are extending the Commitments in reliance upon the issuance of
the Series B Preferred Stock pursuant to the Series B Preferred Stock
Documents, the pledge of such Series B Preferred Stock to Agent, and this
Section 3.25.
4. FINANCIAL STATEMENTS AND INFORMATION
4.1 Reports and Notices. (a) Each Credit Party executing
this Agreement hereby agrees that from and after the Closing Date and until the
Termination Date, it shall deliver to Agent and/or Lenders, as required, the
Financial Statements, notices, Projections and other information at the times,
to the Persons and in the manner set forth in Annex E.
(b) Each Credit Party executing this Agreement hereby
agrees that from and after the Closing Date and until the Termination Date, it
shall deliver to Agent and/or Lenders, as required, the various Collateral
Reports (including Borrowing Base Certificates in the form of Exhibit 4.1(b))
at the times, to the Persons and in the manner set forth in Annex F.
4.2 Communication with Accountants. Following the
occurrence and continuation of a Default or Event of Default, each Credit Party
executing this Agreement authorizes Agent and each Lender, to communicate
directly with its independent certified public accountants, including, without
limitation, Deloitte & Touche LLP, and authorizes and shall instruct those
accountants and advisors to disclose and make available to Agent and each
Lender any and all Financial Statements and other supporting financial
documents, schedules and information relating to any Credit Party (including
copies of any issued management letters) with respect to the business,
financial condition and other affairs of any Credit Party.
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5. AFFIRMATIVE COVENANTS
Each Credit Party executing this Credit Agreement jointly and
severally agrees as to all Credit Parties that from and after the date hereof
and until the Termination Date:
5.1 Maintenance of Existence and Conduct of Business.
Each Credit Party shall, except as otherwise permitted by Section 6.1: (a) do
or cause to be done all things necessary to preserve and keep in full force and
effect its corporate existence and its rights and franchises; (b) continue to
conduct its business substantially as now conducted or as otherwise permitted
hereunder; (c) at all times maintain, preserve and protect all of its assets
and properties used or useful in the conduct of its business, and keep the same
in good repair, working order and condition in all material respects (taking
into consideration ordinary wear and tear) and from time to time make, or cause
to be made, all necessary or appropriate repairs, replacements and improvements
thereto consistent with industry practices; and (d) transact business only in
such corporate and trade names as are set forth in Disclosure Schedule (5.1).
5.2 Payment of Obligations. (a) Subject to Section
5.2(b), each Credit Party shall pay and discharge or cause to be paid and
discharged promptly all Charges payable by it, including Charges imposed upon
it, its income and profits, or any of its property (real, personal or mixed)
and all Charges with respect to tax, social security and unemployment
withholding with respect to its employees.
(b) Each Credit Party may in good faith contest, by
appropriate proceedings, the validity or amount of any Charges or claims
described in Section 5.2(a); provided, that (i) adequate reserves with respect
to such contest are maintained on the books of such Credit Party, in accordance
with GAAP, (ii) such contest is maintained and prosecuted continuously and with
diligence and operates to suspend collection or enforcement of such Charges or
claims or any Lien in respect thereof, (iii) none of the Collateral becomes
subject to forfeiture or loss as a result of such contest, (iv) no Lien shall
be imposed to secure payment of such Charges or claims other than Permitted
Encumbrances, (v) such Credit Party shall promptly pay or discharge such
contested Charges or claims and all additional charges, interest, penalties and
expenses, if any, and shall deliver to Agent evidence acceptable to Agent of
such compliance, payment or discharge, if such contest is terminated or
discontinued adversely to such Credit Party or the conditions set forth in this
Section 5.2(b) are no longer met, and (vi) Agent has not advised Borrower in
writing that Agent reasonably believes that nonpayment or nondischarge thereof
could have or result in a Material Adverse Effect.
5.3 Books and Records. Each Credit Party shall keep
adequate books and records with respect to its business activities in which
proper entries, reflecting all financial transactions, are made in accordance
with GAAP and on a basis consistent with the Financial Statements attached as
Disclosure Schedule (3.4(A)).
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5.4 Insurance; Damage to or Destruction of Collateral.
(a) The Credit Parties shall, at their sole cost and expense, maintain the
policies of insurance described on Disclosure Schedule (3.18) or substantially
similar replacement policies, in any case in form and with insurers acceptable
to Agent. If any Credit Party at any time or times hereafter shall fail to
obtain or maintain any of the policies of insurance required above or to pay
all premiums relating thereto, Agent may at any time or times thereafter obtain
and maintain such policies of insurance and pay such premiums and take any
other action with respect thereto which Agent deems advisable. Agent shall
have no obligation to obtain insurance for any Credit Party or pay any premiums
therefor. By doing so, Agent shall not be deemed to have waived any Default or
Event of Default arising from any Credit Party's failure to maintain such
insurance or pay any premiums therefor. All sums so disbursed, including
attorneys' fees, court costs and other charges related thereto, shall be
payable by Borrower to Agent within thirty (30) days of demand therefor and
shall be additional Obligations hereunder secured by the Collateral.
(b) Agent reserves the right at any time upon any change
in any Credit Party's risk profile (including any change in the product mix
maintained by any Credit Party or any laws affecting the potential liability of
such Credit Party) to require additional forms and limits of insurance to, in
Agent's reasonable opinion, adequately protect both Agent's and Lender's
interests in all or any portion of the Collateral and to ensure that each
Credit Party is protected by insurance in amounts and with coverage customary
for its industry; provided, however, that, in the event of any such change, the
Credit Parties shall obtain such additional forms and limits not later than
thirty (30) days following Agent's written request therefor. If requested by
Agent, each Credit Party shall deliver to Agent from time to time a report of a
reputable insurance broker, satisfactory to Agent, with respect to its
insurance policies.
(c) Borrower shall deliver to Agent, in form and
substance satisfactory to Agent, endorsements to (i) all "All Risk" and
business interruption insurance naming Agent, on behalf of itself and Lenders,
as loss payee, and (ii) all general liability and other liability policies
naming Agent, on behalf of itself and Lenders, as additional insured. Borrower
irrevocably makes, constitutes and appoints Agent (and all officers, employees
or agents designated by Agent), so long as any Default or Event of Default
shall have occurred and be continuing or the anticipated insurance proceeds
exceed $150,000, as Borrower's true and lawful agent and attorney-in-fact for
the purpose of making, settling and adjusting claims under such "All Risk"
policies of insurance, endorsing the name of Borrower on any check or other
item of payment for the proceeds of such "All Risk" policies of insurance and
for making all determinations and decisions with respect to such "All Risk"
policies of insurance. Agent shall have no duty to exercise any rights or
powers granted to it pursuant to the foregoing power-of- attorney. Borrower
shall promptly notify Agent of any loss, damage, or destruction to the
Collateral in the amount of $150,000 or more, whether or not covered by
insurance. After deducting from such proceeds the expenses, if any, incurred
by Agent in the collection or handling thereof, Agent may, at its option, apply
such proceeds to the reduction of the Obligations in accordance with Section
1.3(d), or permit or require the applicable Borrower to use such money, or any
part thereof, to replace, repair, restore or rebuild the Collateral in a
diligent and expeditious manner
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with materials and workmanship of substantially the same quality as existed
before the loss, damage or destruction. Notwithstanding the foregoing, if the
casualty giving rise to such insurance proceeds would not reasonably be
expected to have a Material Adverse Effect and such insurance proceeds do not
exceed $150,000 in the aggregate, Agent shall permit Borrower to replace,
restore, repair or rebuild the property; provided that if Borrower shall not
have completed or entered into binding agreements to complete such replacement,
restoration, repair or rebuilding within 180 days of such casualty, Agent may
apply such insurance proceeds to the Obligations in accordance with Section
1.3(d). All insurance proceeds which are to be made available to Borrower to
replace, repair, restore or rebuild the Collateral shall be applied by Agent to
reduce the outstanding principal balance of the Revolving Loan (which
application shall not result in a permanent reduction of the Revolving Loan
Commitment) and upon such application, Agent shall establish a Reserve against
the Borrowing Base in an amount equal to the amount of such proceeds so applied
(except in the case of proceeds of Inventory). Thereafter, such funds shall be
made available to that Borrower to provide funds to replace, repair, restore or
rebuild the Collateral as follows: (i) Borrower shall request a Revolving
Credit Advance be made to Borrower in the amount requested to be released; (ii)
so long as the conditions set forth in Section 2.4 have been met, Revolving
Lenders shall make such Revolving Credit Advance; and (iii) the Reserve
established with respect to such insurance proceeds shall be reduced by the
amount of such Revolving Credit Advance. To the extent not used to replace,
repair, restore or rebuild the Collateral, such insurance proceeds shall be
applied in accordance with Section 1.3(d).
5.5 Compliance with Laws. Each Credit Party shall comply
with all federal, state, local and foreign laws and regulations applicable to
it, including those relating to the Communications Act of 1934, as amended,
licensing, ERISA and labor matters and Environmental Laws and Environmental
Permits, except to the extent that the failure to comply, individually or in
the aggregate, could not reasonably be expected to have a Material Adverse
Effect.
5.6 Supplemental Disclosure. From time to time as may be
requested by Agent (which request will not be made more frequently than once
each year absent the occurrence and continuance of a Default or an Event of
Default), the Credit Parties shall supplement each Disclosure Schedule hereto,
or any representation herein or in any other Loan Document, with respect to any
matter hereafter arising which, if existing or occurring at the date of this
Agreement, would have been required to be set forth or described in such
Disclosure Schedule or as an exception to such representation or which is
necessary to correct any information in such Disclosure Schedule or
representation which has been rendered materially inaccurate thereby (and, in
the case of any supplements to any Disclosure Schedule, such Disclosure
Schedule shall be appropriately marked to show the changes made therein);
provided that (a) no such supplement to any such Disclosure Schedule or
representation shall be or be deemed a waiver of any Default or Event of
Default resulting from the matters disclosed therein, except as consented to by
Agent and Requisite Lenders in writing; and (b) no supplement shall be required
as to representations and warranties that relate solely to the Closing Date.
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5.7 Intellectual Property. Each Credit Party will conduct
its business and affairs without infringement of or interference with any
Intellectual Property of any other Person.
5.8 Environmental Matters. Each Credit Party shall and
shall cause each Person within its control to: (a) conduct its operations and
keep and maintain its Real Estate in compliance with all Environmental Laws and
Environmental Permits other than noncompliance which could not reasonably be
expected to have a Material Adverse Effect; (b) implement any and all
investigation, remediation, removal and response actions which are appropriate
or necessary to maintain the value and marketability of the Real Estate or to
otherwise comply with Environmental Laws and Environmental Permits pertaining
to the presence, generation, treatment, storage, use, disposal, transportation
or Release of any Hazardous Material on, at, in, under, above, to, from or
about any of its Real Estate; (c) notify Agent promptly after such Credit Party
becomes aware of any violation of Environmental Laws or Environmental Permits
or any Release on, at, in, under, above, to, from or about any Real Estate
which is reasonably likely to result in Environmental Liabilities of the Credit
Parties in excess of $75,000; and (d) promptly forward to Agent a copy of any
order, notice, request for information or any communication or report received
by such Credit Party in connection with any such violation or Release or any
other matter relating to any Environmental Laws or Environmental Permits that
could reasonably be expected to result in Environmental Liabilities of the
Credit Parties in excess of $75,000, in each case whether or not the
Environmental Protection Agency or any Governmental Authority has taken or
threatened any action in connection with any such violation, Release or other
matter. If Agent at any time has a reasonable basis to believe that there may
be a violation of any Environmental Laws or Environmental Permits by any Credit
Party or any Environmental Liability of the Credit Parties arising thereunder,
or a Release of Hazardous Materials on, at, in, under, above, to, from or about
any of its Real Estate, which, in each case, could reasonably be expected to
have a Material Adverse Effect, then each Credit Party shall, upon Agent's
written request (i) cause the performance of such environmental audits
including subsurface sampling of soil and groundwater, and preparation of such
environmental reports, at Borrower's expense, as Agent may from time to time
request, which shall be conducted by reputable environmental consulting firms
acceptable to Agent and shall be in form and substance acceptable to Agent, and
(ii) permit Agent or its representatives to have access to all Real Estate for
the purpose of conducting such environmental audits and testing as Agent deems
appropriate, including subsurface sampling of soil and groundwater. Borrower
shall reimburse Agent for the costs of such audits and tests and the same will
constitute a part of the Obligations secured hereunder.
5.9 Landlords' Agreements, Mortgagee Agreements and
Bailee Letters. Each Credit Party shall use its best efforts to obtain a
landlord's agreement, mortgagee agreement or bailee letter, as applicable, from
the lessor of each leased property or mortgagee of owned property or with
respect to any warehouse, processor or converter facility or other location
where Collateral is located, which agreement or letter shall contain a waiver
or subordination of all Liens or claims that the landlord, mortgagee or bailee
may assert against the Inventory or Collateral at that location, and shall
otherwise be satisfactory in form and substance to Agent. With respect to such
locations or warehouse space leased or owned as of the Closing Date, if
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Agent has not received a landlord or mortgagee agreement or bailee letter as of
the Closing Date and until such time as such agreement or waiver shall be later
delivered, Borrower's or Tessco's Eligible Inventory at that location shall, in
Agent's discretion, be excluded from the Borrowing Base or be subject to such
Reserves as may be established by Agent in its reasonable credit judgment.
After the Closing Date, no real property or warehouse space shall be leased or
acquired by any Credit Party and no Inventory shall be shipped to a processor
or converter under arrangements established after the Closing Date, unless and
until a satisfactory landlord or mortgagee agreement or bailee letter, as
appropriate, shall first have been obtained with respect to such location;
provided that Borrower may hold Inventory at newly established locations
without such agreements or letters with Agent's prior approval and subject to
such Reserves as are established at Agent's discretion. Each Credit Party
shall timely and fully pay and perform its obligations under all leases and
other agreements with respect to each leased location or public warehouse where
any Collateral is or may be located.
5.10 Further Assurances. Each Credit Party executing this
Agreement agrees that it shall and shall cause each other Credit Party to, at
such Credit Party's expense and upon request of Agent, duly execute and
deliver, or cause to be duly executed and delivered, to Agent such further
instruments and do and cause to be done such further acts as may be necessary
or proper in the reasonable opinion of Agent to carry out more effectually the
provisions and purposes of this Agreement or any other Loan Document.
5.11 OEM Contracts and Accreditations. Each Credit Party
executing and delivering this Agreement shall substantially comply with each
OEM Contract to which it is a party. Each Credit Party shall exert its best
efforts to cause the renewal of each such OEM Contract and each OEM
Accreditation upon its expiration, on such terms and are not less favorable to
the Credit Parties as those governing the OEM Contract or OEM Accreditation
subject to such expiration.
5.12 Tessco Liquidation. Borrower shall promptly notify
Agent of all material developments relating to the Tessco Liquidation, and
promptly provide Agent with complete copies of any and all documents,
instruments, agreements governing such transaction. Borrower shall promptly
provide to Agent all Collateral Documents, Litigation Collateral Documents, UCC
financing statements and UCC financing statement amendments, and other
documents, agreements, and instruments, as may be reasonably requested by Agent
to evidence the continuation of Agent's liens and security interests in the
property subject to such transaction with the same priority as such liens and
security interests had immediately prior to such transaction, together with
such additional operational, financial and legal information as Agent may
reasonably request in connection with such transaction. Borrower agrees to
complete the Tessco Liquidation on or before June 30, 1998.
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6. NEGATIVE COVENANTS
Each Credit Party executing this Agreement jointly and
severally agrees as to all Credit Parties that, without the prior written
consent of Agent and the Requisite Lenders, from and after the date hereof
until the Termination Date:
6.1 Mergers, Subsidiaries, Etc. No Credit Party shall
directly or indirectly, by operation of law or otherwise, (a) form or acquire
any Subsidiary, or (b) merge with, consolidate with, acquire all or
substantially all of the assets or capital stock of, or otherwise combine with
or acquire, any Person, other than (i) the Tessco Liquidation (provided, that
no Default or Event of Default exists and is continuing at the time of such
Tessco Liquidation, or would result therefrom and such transaction shall be
effected in compliance with all applicable laws) and (ii) the merger of
wholly-owned Subsidiaries into Borrower or other wholly-owned Subsidiaries.
6.2 Investments; Loans and Advances. Except as set forth
on Disclosure Schedule (6.2) otherwise expressly permitted by this Section 6,
no Credit Party shall make or permit to exist any investment in, or make,
accrue or permit to exist loans or advances of money to, any Person, through
the direct or indirect lending of money, holding of securities or otherwise,
except (a) that Borrower may hold investments comprised of notes payable, or
stock or other securities issued by Account Debtors to Borrower pursuant to
negotiated agreements with respect to settlement of such Account Debtor's
Accounts in the ordinary course of business, so long as the aggregate amount of
such Accounts so settled by Borrower does not exceed $100,000; (b) that each
Credit Party may maintain its existing investments in its Subsidiaries as of
the Closing Date; (c) investments in the form of loans, permitted under Section
6.4(b) and intercompany advances and investments permitted under Section 6.3,
and (d) for other investments not exceeding $50,000 in the aggregate at any
time outstanding.
6.3 Indebtedness. (a) No Credit Party shall create,
incur, assume or permit to exist any Indebtedness, except (without duplication)
(i) Indebtedness secured by purchase money security interests permitted in
clause (c) of Section 6.7, (ii) the Loans and the other Obligations, (iii)
deferred taxes, (iv) unfunded pension fund and other employee benefit plan
obligations and liabilities to the extent they are permitted to remain unfunded
under applicable law, (v) existing Indebtedness described in Disclosure
Schedule (6.3) to Persons which are not Affiliates and refinancings thereof or
amendments or modifications thereto which do not have the effect of increasing
the principal amount thereof or changing the amortization thereof (other than
to extend the same) and which are otherwise on terms and conditions no less
favorable to any Credit Party, Agent or any Lender, as determined by Agent,
than the terms of the Indebtedness being refinanced, amended or modified, (vi)
Subordinated Debt satisfying the conditions described in Section 2.2(b) and
provided that the proceeds thereof are used solely to satisfy that portion of
the Net Litigation Liability which exceeds $3,000,000, (vii) Borrower may
assume the Indebtedness of Tessco upon the consummation of the Tessco
Liquidation in compliance with Section 6.1, and (viii) Indebtedness of Tessco
owing to Borrower existing on the Closing Date as described in Disclosure
Schedule (6.3), and additional Indebtedness in connection with the
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ongoing business between Tessco and Borrower and in connection with the Tessco
Liquidation consisting of intercompany loans and advances made after the
Closing Date by Borrower to Tessco or Tessco to Borrower, provided that (A)
Borrower and Tessco shall have executed and delivered to each other, on the
Closing Date, a demand note (the "Intercompany Note") to evidence all such
intercompany Indebtedness owing at any time to one another (including all
existing intercompany Indebtedness owing on the Closing Date), which
Intercompany Note shall be in form and substance satisfactory to Agent and
shall be pledged and delivered to Agent pursuant to the Collateral Agreements
executed by Borrower and Tessco and as additional collateral security for the
Obligations (including the Litigation Obligations); (B) Borrower and Tessco
shall record all intercompany transactions on its books and records in a manner
satisfactory to Agent; (C) the obligations of Borrower and Tessco under such
Intercompany Note shall be subordinated to the Obligations of Borrower
hereunder and the obligations of Tessco under its Loan Documents in a manner
satisfactory to Agent; (D) at the time any such intercompany loan or advance is
made by Borrower to Tessco or Tessco to Borrower, and after giving effect
thereto, Borrower shall be Solvent; (E) no Default or Event of Default would
occur and be continuing after giving effect to any such proposed intercompany
loan; and (F) in the case of any intercompany Indebtedness arising as a result
of Borrower making a loan or advance, Borrower shall have Net Borrowing
Availability of not less than $500,000 after giving effect to such intercompany
loan.
(b) No Credit Party shall, directly or indirectly,
voluntarily purchase, redeem, defease or prepay any principal of, premium, if
any, interest or other amount payable in respect of any Indebtedness, other
than (i) the Obligations, (ii) Indebtedness secured by a Permitted Encumbrance
if the asset securing such Indebtedness has been sold or otherwise disposed of
in accordance with Sections 6.8(b) or (c), (iii) intercompany Indebtedness
permitted under Section 6.3 and (iv) other Indebtedness (excluding Subordinated
Debt) not in excess of $500,000.
6.4 Employee Loans and Affiliate Transactions.
(a) Except as otherwise expressly permitted in this
Section 6.4 with respect to Affiliates, no Credit Party shall enter into or be
a party to any transaction with any other Credit Party or any Affiliate thereof
except in the ordinary course of and pursuant to the reasonable requirements of
such Credit Party's business and upon fair and reasonable terms that are no
less favorable to such Credit Party than would be obtained in a comparable
arm's length transaction with a Person not an Affiliate of such Credit Party;
provided, however, that nothing in this Section shall prohibit the consummation
of the Tessco Liquidation in compliance with Section 6.1 or the sale of goods
for value of Borrower to Tessco and Tessco to Borrower. In addition, if any
such transaction or series of related transactions other than as part of the
Tessco Liquidation involves payments in excess of $100,000, the terms of these
transactions must be disclosed in advance to Agent and Lenders. All such
transactions existing as of the date hereof are described on Disclosure
Schedule (6.4).
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(b) No Credit Party shall enter into any lending or
borrowing transaction with any employees of any Credit Party after the Closing
Date, except (i) loans to their respective employees on an arm's-length basis
in the ordinary course of business consistent with past practices for travel
expenses, relocation costs and similar purposes and (ii) stock option financing
up to a maximum of $25,000 to any employee and up to a maximum of $100,000 in
the aggregate at any one time outstanding.
6.5 Capital Structure and Business. No Credit Party
shall:
(a) make any changes in any of its business objectives,
purposes or operations which could in any way adversely affect the repayment of
the Loans or any of the other Obligations or could have or result in a Material
Adverse Effect;
(b) make any change in its capital structure as described
on Disclosure Schedule (3.8), including the issuance of any shares of Stock,
warrants or other securities convertible into Stock or any revision of the
terms of its outstanding Stock, except that (i) Borrower may make a Qualified
Public Offering of its Common Stock so long as (A) the proceeds thereof are
applied in prepayment of the Obligations as required by Section 1.3(b)(ii), and
(B) no Change of Control occurs after giving effect thereto, (ii) Borrower may
issue additional shares of its capital stock, pursuant to an exercise of the
GECC Warrants, (iii) Borrower may issue capital stock and Subordinated Debt to
the extent necessary to satisfy the portion of Net Litigation Liability, if
any, which exceeds $3,000,000 as provided in Section 2.2(b), (iv) Borrower may
increase the number of authorized shares of its Common Stock, (v) Borrower may
issue the Management Options and, upon their exercise, issue shares of its
capital stock in accordance with their terms, (vi) Borrower and Tessco may
effect the Tessco Liquidation and mergers of Subsidiaries in compliance with
Section 6.1, (vii) Borrower may issue additional shares of its capital stock
upon the exercise of Series A Warrants, and payment-in-kind dividends, in
accordance with the terms and conditions of the Series A Preferred Stock
Documents, and (viii) Borrower may issue the "Litigation Warrants" in
accordance with the terms and conditions of the Series A Preferred Stock
Documents;
(c) amend its charter (including any certificate of
designation with respect to preferred stock) or bylaws in a manner which would
adversely affect Agent or Lenders or such Credit Party's duty or ability to
repay the Obligations other than, in the case of Borrower, to increase the
number of authorized shares of its Common Stock; or
(d) engage in any business other than the businesses
currently engaged in by it or businesses reasonably related thereto.
6.6 Guaranteed Indebtedness. No Credit Party shall
create, incur, assume or permit to exist any Guaranteed Indebtedness except (a)
by endorsement of instruments or items of payment for deposit to the general
account of any Credit Party, (b) Guaranteed Indebtedness
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with respect to the Obligations and (c) for Guaranteed Indebtedness incurred
for the benefit of any other Credit Party if the primary obligation is
expressly permitted by this Agreement.
6.7 Liens. No Credit Party shall create, incur, assume
or permit to exist any Lien on or with respect to its Accounts or any of its
other properties or assets (whether now owned or hereafter acquired) except for
(a) Permitted Encumbrances; (b) Liens in existence on the date hereof and
summarized on Disclosure Schedule (6.7); (c) Liens created after the date
hereof by conditional sale or other title retention agreements (including
Capital Leases) or in connection with purchase money Indebtedness with respect
to Equipment and Fixtures acquired by any Credit Party in the ordinary course
of business, involving the incurrence of an aggregate amount of purchase money
Indebtedness and Capital Lease Obligations of not more than $100,000
outstanding at any one time for all such Liens (provided that such Liens attach
only to the assets subject to such purchase money debt and such Indebtedness is
incurred within twenty (20) days following such purchase and does not exceed
100% of the purchase price of the subject assets); and (d) other Liens securing
Indebtedness not exceeding $100,000 in the aggregate at any time outstanding,
so long as such Liens do not attach to any Accounts or Inventory. In addition,
no Credit Party shall become a party to any agreement, note, indenture or
instrument, or take any other action, which would prohibit the creation of a
Lien on any of its properties or other assets in favor of Agent, on behalf of
itself and Lenders, as additional collateral for the Obligations, except
operating leases, Capital Leases or Licenses which prohibit Liens upon the
assets that are subject thereto.
6.8 Sale of Stock and Assets. No Credit Party shall
sell, transfer, convey, assign or otherwise dispose of any of its properties or
other assets, including its capital Stock or the capital Stock of any of its
Subsidiaries (whether in a public or a private offering, except as permitted
under Section 6.5(b)) or otherwise or any of their Accounts, other than (a) the
sale of Inventory in the ordinary course of business, (b) the sale, transfer,
conveyance or other disposition of Equipment, Fixtures or Real Estate that are
obsolete or no longer used or useful in such Credit Party's business and having
a value not exceeding $50,000 in any single transaction or $100,000 in the
aggregate in any Fiscal Year, and (c) the sale, transfer, conveyance or other
disposition of other Equipment and Fixtures having a value not exceeding
$50,000 in any single transaction or $100,000 in the aggregate in any Fiscal
Year; provided, however, if any sale, transfer, conveyance or other disposition
under clause (b) or (c) above involves property having a value in excess of
$25,000 for any single transaction, or if all such sales, transfers,
conveyances and other dispositions under clause (b) or (c) involve property
having an aggregate value in excess of $50,000 for any Fiscal Year, then
Borrower shall make prepayments of the Obligations in accordance with Section
1.3(b)(ii) in amounts equal to all of the proceeds of such sales, transfers,
conveyances or other dispositions. With respect to any disposition of assets
or other properties permitted pursuant to clause (b) and clause (c) above,
Agent agrees on reasonable prior written notice to release its Lien on such
assets or other properties in order to permit the applicable Credit Party to
effect such disposition and shall execute and deliver to Borrower, at
Borrower's expense, appropriate UCC-3 termination statements and other releases
as reasonably requested by Borrower.
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6.9 ERISA. No Credit Party shall, or shall cause or
permit any ERISA Affiliate to, cause or permit to occur an event which could
result in the imposition of a Lien under Section 412 of the IRC or Section 302
or 4068 of ERISA.
6.10 Financial Covenants. Borrower shall not breach or
fail to comply with any of the Financial Covenants (the "Financial Covenants")
set forth in Annex G.
6.11 Hazardous Materials. No Credit Party shall cause or
permit a Release of any Hazardous Material on, at, in, under, above, to, from
or about any of the Real Estate where such Release would (a) violate in any
respect, or form the basis for any Environmental Liabilities of the Credit
Parties under, any Environmental Laws or Environmental Permits or (b) otherwise
adversely impact the value or marketability of any of the Real Estate or any of
the Collateral, other than such violations or impacts which could not
reasonably be expected to have a Material Adverse Effect.
6.12 Sale-Leasebacks. No Credit Party shall engage in any
sale-leaseback, synthetic lease or similar transaction involving any of its
assets.
6.13 Cancellation of Indebtedness. No Credit Party shall
cancel any claim or debt owing to it, except for reasonable consideration
negotiated on an arm's-length basis and (except with respect to the California
Award) in the ordinary course of its business consistent with past practices.
6.14 Restricted Payments. No Credit Party shall make any
Restricted Payment, except (a) intercompany loans and advances between Borrower
and Tessco permitted by Section 6.3 above, (b) dividends and distributions by
Subsidiaries of Borrower paid to Borrower, (c) employee loans permitted under
Section 6.4(b) above, (d) payments of scheduled and accrued dividends (and not
any liquidating dividends or any redemption or repurchase payments) to holders
of Series A Preferred Stock pursuant to the terms and conditions of the Series
A Preferred Stock Documents, (e) cash payments for fractional shares upon the
exercise of GECC Warrants or Series A Warrants and (f) scheduled payments of
interest on Subordinated Debt permitted under Section 6.3, provided that (i) no
Default or Event of Default shall have occurred and be continuing or would
result after giving effect to each payment pursuant to clauses (d) and (f)
above, and (ii) Borrower shall have Net Borrowing Availability of at least
$1,000,000 after giving effect to each payment pursuant to clauses (d) and (f)
above.
6.15 Change of Corporate Name or Location; Change of
Fiscal Year. No Credit Party shall (a) change its corporate name, or (b)
change its chief executive office, principal place of business, corporate
offices or warehouses or locations at which Collateral is held or stored, or
the location of its records concerning the Collateral, in any case without at
least thirty (30) days prior written notice to Agent and after Agent's written
acknowledgment that any reasonable action requested by Agent in connection
therewith, including to continue the perfection of any Liens in favor of Agent,
on behalf of Lenders, in any Collateral, has been
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completed or taken, and provided that any such new location shall be in the
continental United States. Without limiting the foregoing, no Credit Party
shall change its name, identity or corporate structure in any manner which
might make any financing or continuation statement filed in connection herewith
seriously misleading within the meaning of Section 9-402(7) of the Code or any
other then applicable provision of the Code except upon prior written notice to
Agent and Lenders and after Agent's written acknowledgment that any reasonable
action requested by Agent in connection therewith, including to continue the
perfection of any Liens in favor of Agent, on behalf of Lenders, in any
Collateral, has been completed or taken. No Credit Party shall change its
Fiscal Year.
6.16 No Impairment of Intercompany Transfers. No Credit
Party shall directly or indirectly enter into or become bound by any agreement,
instrument, indenture or other obligation (other than this Agreement and the
other Loan Documents) which could directly or indirectly restrict, prohibit or
require the consent of any Person with respect to the payment of dividends or
distributions or the making or repayment of intercompany loans by a Subsidiary
of Borrower to Borrower or between such Subsidiaries.
6.17 No Speculative Transactions. No Credit Party shall
engage in any transaction involving commodity options, futures contracts or
similar transactions, except solely to hedge against fluctuations in the prices
of commodities owned or purchased by it and the values of foreign currencies
receivable or payable by it and interest swaps, caps or collars.
6.18 Changes Relating to Preferred Stock and Subordinated
Debt. No Credit Party shall change or amend the terms of any of the Series A
Preferred Stock Documents, the Series B Preferred Stock Documents or any
Subordinated Debt (or any indenture or agreement in connection therewith).
7. TERM
7.1 Termination. The financing arrangements contemplated
hereby shall be in effect until the Commitment Termination Date, and the Loans
and all other Obligations shall be automatically due and payable in full on
such date.
7.2 Survival of Obligations Upon Termination of Financing
Arrangements. Except as otherwise expressly provided for in the Loan
Documents, no termination or cancellation (regardless of cause or procedure) of
any financing arrangement under this Agreement shall in any way affect or
impair the obligations, duties and liabilities of the Credit Parties or the
rights of Agent and Lenders relating to any unpaid portion of the Loans or any
other Obligations, due or not due, liquidated, contingent or unliquidated or
any transaction or event occurring prior to such termination, or any
transaction or event, the performance of which is required after the Commitment
Termination Date. Except as otherwise expressly provided herein or in any
other Loan Document, all undertakings, agreements, covenants, warranties and
representations of or binding upon the Credit Parties, and all rights of Agent
and each Lender, all
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as contained in the Loan Documents, shall not terminate or expire, but rather
shall survive any such termination or cancellation and shall continue in full
force and effect until the Termination Date; provided however, that in all
events the provisions of Section 11, the payment obligations under Sections
1.13, 1.15 and 1.16, and the indemnities contained in the Loan Documents shall
survive the Termination Date.
8. EVENTS OF DEFAULT; RIGHTS AND REMEDIES
8.1 Events of Default. The occurrence of any one or more
of the following events (regardless of the reason therefor) shall constitute an
"Event of Default" hereunder:
(a) Borrower (i) fails to make any payment of principal
of, or interest on, or Fees owing in respect of, the Loans or any of the other
Obligations when due and payable, or (ii) fails to pay or reimburse Agent or
Lenders for any expense reimbursable hereunder or under any other Loan Document
within ten (10) days following the date such payment is due hereunder or
thereunder.
(b) Any Credit Party shall fail or neglect to perform,
keep or observe any of the provisions of Sections 1.4, 1.8, 5.4 or 6, or any of
the provisions set forth in Annexes C, F or G, respectively.
(c) Borrower shall fail or neglect to perform, keep or
observe any of the provisions of Section 4 or any provisions set forth in Annex
E, and the same shall remain unremedied for three (3) Business Days or more.
(d) Any Credit Party shall fail or neglect to perform,
keep or observe any other provision of this Agreement or of any of the other
Loan Documents (other than any provision embodied in or covered by any other
clause of this Section 8.1) and the same shall remain unremedied for
twenty-five (25) days or more.
(e) A default or breach shall occur under any other
agreement, document or instrument to which any Credit Party is a party which is
not cured within any applicable grace period, and such default or breach (i)
involves the failure to make any payment when due in respect of any
Indebtedness (other than the Obligations) of any Credit Party having an
aggregate outstanding principal balance in excess of $250,000 in the aggregate,
or (ii) causes, or permits any holder of such Indebtedness or a trustee to
cause, such Indebtedness, or any portion thereof in excess of $250,000 in the
aggregate, to become due prior to its stated maturity or prior to its regularly
scheduled dates of payment, regardless of whether such default is waived, or
such right is exercised, by such holder or trustee.
(f) Any information contained in any Borrowing Base
Certificate is untrue or incorrect in any material respect, or any
representation or warranty herein or in any Loan Document or in any written
statement, report, financial statement or certificate (other than a
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Borrowing Base Certificate) made or delivered to Agent or any Lender by any
Credit Party is untrue or incorrect in any material respect as of the date when
made or deemed made.
(g) Assets of any Credit Party with a fair market value
of $25,000 or more shall be seized, levied upon or subjected to a writ or
distress warrant, or come within the possession of any receiver, trustee,
custodian or assignee for the benefit of creditors of any Credit Party and such
condition continues for thirty (30) days or more.
(h) A case or proceeding shall have been commenced
against the Series B Pledgor, either Pegasus Fund or any Credit Party seeking a
decree or order in respect of such Person (i) under Title 11 of the United
States Code, as now constituted or hereafter amended or any other applicable
federal, state or foreign bankruptcy or other similar law, (ii) appointing a
custodian, receiver, liquidator, assignee, trustee or sequestrator (or similar
official) for any such Person or of any substantial part of any such Person's
assets, or (iii) ordering the winding-up or liquidation of the affairs of any
such Person, and such case or proceeding shall remain undismissed or unstayed
for sixty (60) days or more or such court shall enter a decree or order
granting the relief sought in such case or proceeding.1
(i) The Series B Pledgor, either Pegasus Fund or any
Credit Party (i) shall file a petition seeking relief under Title 11 of the
United States Code, as now constituted or hereafter amended, or any other
applicable federal, state or foreign bankruptcy or other similar law, (ii)
shall fail to contest in a timely and appropriate manner or shall consent to
the institution of proceedings thereunder or to the filing of any such petition
or to the appointment of or taking possession by a custodian, receiver,
liquidator, assignee, trustee or sequestrator (or similar official) of any such
Person or of any substantial part of any such Person's assets, (iii) shall make
an assignment for the benefit of creditors, (iv) shall take any corporate
action in furtherance of any of the foregoing; or (v) shall admit in writing
its inability to, or shall be generally unable to, pay its debts as such debts
become due.
(j) A final judgment or judgments for the payment of
money in excess of $250,000 in the aggregate at any time outstanding shall be
rendered against any Credit Party (excluding the Lower Court Judgment or the
Final Judgment, but including any other judgment with respect to the DEI
Litigation) and the same shall not, within thirty (30) days after the entry
thereof, have been discharged or execution thereof stayed or bonded pending
appeal, or shall not have been discharged prior to the expiration of any such
stay.
(k) The Lower Court Judgment, Final Judgment and/or any
other judgment with respect to the DEI Litigation shall have been entered or
determined and the sum of the amount of Borrower's and each Credit Parties'
liability with respect thereto and the aggregate amount of accrued and unpaid
expenses (including, without limitation, legal fees) incurred by the
__________________________________
1Confirm that no default exists at closing with respect to foreign subsidiaries.
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Credit Parties with respect to the DEI Litigation as of the date of such entry
or determination, exceeds $12,000,000 (provided, however, that such sum shall
not include such expenses to the extent that, as of any date of determination
hereof, the Net Borrowing Base Availability minus the Letter of Credit
Obligations and minus such expenses exceeds $500,000); or the Lower Court
Judgment shall have been entered and the conditions described in Section 2.3(I)
shall have not been satisfied by the time specified in Section 2.3(I)(c) or, as
of such time, either the Bond shall not have been approved by the Lower Court
or issued as contemplated by Section 2.3 or the conditions precedent to the
issuance of the Litigation L/C shall not have been otherwise satisfied; or the
Final Judgment shall have been entered or otherwise determined and the
conditions described in Section 2.2 shall have not been satisfied by the time
specified in Section 2.2(c) or, as of such time, the conditions precedent to
the making of Term Loan B shall not have been otherwise satisfied and the
conditions described in Section 2.3(II) shall have not been satisfied by the
time specified in Section 2.3(II)(c) or, as of such time, the conditions
precedent to the making of Term Loan C directly shall not have been otherwise
satisfied; or any Lien (including, without limitation, any judicial or judgment
lien) securing, arising as a result of or otherwise relating to the Lower Court
Judgment, the Final Judgment or any other judgment or claim against any of the
Credit Parties with respect to the DEI Litigation shall have been created,
attached or perfected under applicable law and procedure.
(l) Any material provision of any Loan Document shall for
any reason cease to be valid, binding and enforceable in accordance with its
terms (or the Series B Pledgor, either Pegasus Fund or any Credit Party shall
challenge the enforceability of, or revoke or attempt to revoke, any Loan
Document or shall assert in writing, or engage in any action or inaction based
on any such assertion, that any provision of any of the Loan Documents has
ceased to be or otherwise is not valid, binding and enforceable in accordance
with its terms), or any security interest created under any Loan Document shall
cease to be a valid and perfected first priority security interest or Lien
(except as otherwise permitted herein or therein) in any of the Collateral or
Litigation Collateral purported to be covered thereby.
(m) Any Change of Control shall occur.
(n) Any event shall occur, whether or not insured or
insurable, as a result of which revenue-producing activities cease or are
substantially curtailed at any facility of Borrower or any of its Subsidiaries
generating more than 10% of Borrower's consolidated revenues for the Fiscal
Year preceding such event and such cessation or curtailment continues for more
than thirty (30) days; provided, however, that no Event of Default shall exist
under this clause (m) solely as a result of the physical relocation of Tessco's
Georgetown, Texas location to one or more of Borrower's facility locations in
connection with the Tessco Liquidation.
8.2 Remedies. (a) If any Event of Default shall have
occurred and be continuing, Agent may (and at the written request of the
Requisite Revolving Lenders shall), without notice, suspend this facility with
respect to further Advances and/or the incurrence of further Letter of Credit
Obligations or Litigation L/C Obligations whereupon any further
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Advances and Letter of Credit Obligations or Litigation L/C Obligations shall
be made or extended in Agent's sole discretion (or in the sole discretion of
the Requisite Revolving Lenders, if such suspension occurred at their
direction) so long as such Event of Default is continuing. If any Event of
Default shall have occurred and be continuing, Agent may (and at the written
request of Requisite Lenders shall), without notice except as otherwise
expressly provided herein, increase the rate of interest applicable to the
Loans and the Letter of Credit Fees to the Default Rate.
(b) If any Event of Default shall have occurred and be
continuing, Agent may (and at the written request of the Requisite Lenders
shall), without notice, (i) terminate this facility with respect to further
Advances or the incurrence of further Letter of Credit Obligations or
Litigation L/C Obligations; (ii) declare all or any portion of the Obligations,
including all or any portion of any Loan, to be thereupon due and payable, and
require that the Letter of Credit Obligations and Litigation L/C Obligations be
cash collateralized as provided in Annex B or the Litigation L/C Agreement, all
without presentment, demand, protest or further notice of any kind, all of
which are expressly waived by Borrower and each other Credit Party; and (iii)
exercise any rights and remedies provided to Agent under the Loan Documents
and/or at law or equity, including all remedies provided under the Code;
provided, however, that upon the occurrence of an Event of Default specified in
Sections 8.1, (h) or (i), all of the Obligations, including the aggregate
Revolving Loan, shall become immediately due and payable without declaration,
notice or demand by any Person, and the Commitments shall be thereupon
terminated.
8.3 Waivers by Credit Parties. Except as otherwise
provided for in this Agreement or by applicable law, each Credit Party waives:
(a) presentment, demand and protest and notice of presentment, dishonor, notice
of intent to accelerate, notice of acceleration, protest, default, nonpayment,
maturity, release, compromise, settlement, extension or renewal of any or all
commercial paper, accounts, contract rights, documents, instruments, chattel
paper and guaranties at any time held by Agent on which any Credit Party may in
any way be liable, and hereby ratifies and confirms whatever Agent may do in
this regard, (b) all rights to notice and a hearing prior to Agent's taking
possession or control of, or to Agent's replevy, attachment or levy upon, the
Collateral or any bond or security which might be required by any court prior
to allowing Agent to exercise any of its remedies, and (c) the benefit of all
valuation, appraisal, marshaling and exemption laws.
9. ASSIGNMENT AND PARTICIPATIONS; APPOINTMENT OF AGENT
9.1 Assignment and Participations. (a) The Credit
Parties signatory hereto consent to any Lender's assignment of, and/or sale of
participations in, at any time or times, the Loan Documents, Loans, Letter of
Credit Obligations, Litigation L/C Obligations and any Commitment or of any
portion thereof or interest therein, including any Lender's rights, title,
interests, remedies, powers or duties thereunder, whether evidenced by a
writing or not. Any assignment by a Lender shall (i) require the consent of
Agent (which shall not be unreasonably
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withheld or delayed) and the execution of an assignment agreement (an
"Assignment Agreement") substantially in the form attached hereto as Exhibit
9.1(a) and otherwise in form and substance satisfactory to, and acknowledged
by, Agent; (ii) be conditioned on such assignee Lender representing to the
assigning Lender and Agent that it is purchasing the applicable Loans to be
assigned to it for its own account, for investment purposes and not with a view
to the distribution thereof; (iii) if a partial assignment, be in an amount at
least equal to $5,000,000 and, after giving effect to any such partial
assignment, the assigning Lender shall have retained Commitments in an amount
at least equal to $5,000,000; and (iv) include a payment to Agent by such
assigning Lender of an assignment fee of $3,500. In the case of an assignment
by a Lender under this Section 9.1, the assignee shall have, to the extent of
such assignment, the same rights, benefits and obligations as it would if it
were a Lender hereunder. The assigning Lender shall be relieved of its
obligations hereunder with respect to its Commitments or assigned portion
thereof from and after the date of such assignment. Borrower hereby
acknowledges and agrees that any assignment will give rise to a direct
obligation of Borrower to the assignee and that the assignee shall be
considered to be a "Lender". In all instances, each Lender's liability to make
Loans hereunder shall be several and not joint and shall be limited to such
Lender's Pro Rata Share of the applicable Commitment. In the event Agent or
any Lender assigns or otherwise transfers all or any part of a Note, Agent or
any such Lender shall so notify Borrower and Borrower shall, upon the request
of Agent or such Lender, execute new Notes in exchange for the Notes being
assigned. Notwithstanding the foregoing provisions of this Section 9.1(a), any
Lender may at any time pledge or assign all or any portion of such Lender's
rights under this Agreement and the other Loan Documents to a Federal Reserve
Bank; provided, however, that no such pledge or assignment shall release such
Lender from such Lender's obligations hereunder or under any other Loan
Document.
(b) Any participation by a Lender of all or any part of
its Commitments shall be in an amount at least equal to $5,000,000, and with
the understanding that all amounts payable by Borrower hereunder shall be
determined as if that Lender had not sold such participation, and that the
holder of any such participation shall not be entitled to require such Lender
to take or omit to take any action hereunder except actions directly affecting
(i) any reduction in the principal amount of, or interest rate or Fees payable
with respect to, any Loan in which such holder participates, (ii) any extension
of the scheduled amortization of the principal amount of any Loan in which such
holder participates or the final maturity date thereof, and (iii) any release
of all or substantially all of the Collateral (other than in accordance with
the terms of this Agreement, the Collateral Documents or the other Loan
Documents). Solely for purposes of Sections 1.13, 1.15, 1.16 and 9.8, Borrower
acknowledges and agrees that a participation shall give rise to a direct
obligation of Borrower to the participant and the participant shall be
considered to be a "Lender". Except as set forth in the preceding sentence
neither Borrower nor any Credit Party shall have any obligation or duty to any
participant. Neither Agent nor any Lender (other than the Lender selling a
participation) shall have any duty to any participant and may continue to deal
solely with the Lender selling a participation as if no such sale had occurred.
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(c) Except as expressly provided in this Section 9.1, no
Lender shall, as between Borrower and that Lender, or Agent and that Lender, be
relieved of any of its obligations hereunder as a result of any sale,
assignment, transfer or negotiation of, or granting of participation in, all or
any part of the Loans, the Notes or other Obligations owed to such Lender.
(d) Each Credit Party executing this Agreement shall
assist any Lender permitted to sell assignments or participations under this
Section 9.1 as reasonably required to enable the assigning or selling Lender to
effect any such assignment or participation, including the execution and
delivery of any and all agreements, notes and other documents and instruments
as shall be requested and, if requested by Agent, the preparation of
informational materials for, and the participation of management in meetings
with, potential assignees or participants. Each Credit Party executing this
Agreement shall certify the correctness, completeness and accuracy of all
descriptions of the Credit Parties and their affairs contained in any selling
materials provided by them and all other information provided by them and
included in such materials, except that any Projections delivered by Borrower
shall only be certified by Borrower as having been prepared by Borrower in
compliance with the representations contained in Section 3.4(c).
(e) A Lender may furnish any information concerning
Borrower in the possession of such Lender from time to time to assignees and
participants (including prospective assignees and participants). Each Lender
shall obtain from assignees or participants confidentiality covenants
substantially equivalent to those contained in Section 11.8.
(f) So long as no Event of Default shall have occurred
and be continuing, no Lender shall assign or sell participations in any portion
of its Loans or Commitments to a potential Lender or participant, if, as of the
date of the proposed assignment or sale, the assignee Lender or participant
would be subject to capital adequacy or similar requirements under Section
1.16(a), increased costs under Section 1.16(b), an inability to fund LIBOR
Loans under Section 1.16(c), or withholding taxes in accordance with Section
1.16(d).
9.2 Appointment of Agent. GE Capital is hereby appointed
to act on behalf of all Lenders as Agent under this Agreement and the other
Loan Documents. The provisions of this Section 9.2 are solely for the benefit
of Agent and Lenders and no Credit Party nor any other Person shall have any
rights as a third party beneficiary of any of the provisions hereof. In
performing its functions and duties under this Agreement and the other Loan
Documents, and, notwithstanding the use of the term "Agent", Agent shall act
solely as an independent contractor and contractual representative of Lenders
and does not assume and shall not be deemed to have assumed any obligation
toward or relationship of agency, trust or other fiduciary with or for any
Lender, Credit Party or any other Person. Agent shall have no duties or
responsibilities except for those expressly set forth in this Agreement and the
other Loan Documents. The duties of Agent shall be mechanical and
administrative in nature and Agent shall not have, or be deemed to have, by
reason of this Agreement, any other Loan Document or otherwise a fiduciary
relationship in respect of any Lender. Neither Agent nor any of its Affiliates
nor any of their respective officers, directors, employees, agents, attorneys
or representatives shall be liable to
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any Lender for any action taken or omitted to be taken by it hereunder or under
any other Loan Document, or in connection herewith or therewith, except for
damages solely caused by its or their own gross negligence or willful
misconduct as finally determined by a court of competent jurisdiction.
If Agent shall request instructions from Requisite Lenders,
Requisite Revolving Lenders, Supermajority Revolving Lenders or all affected
Lenders with respect to any act or action (including failure to act) in
connection with this Agreement or any other Loan Document, then Agent shall be
entitled to refrain from such act or taking such action unless and until Agent
shall have received instructions from Requisite Lenders, Requisite Revolving
Lenders, Supermajority Revolving Lenders or all affected Lenders, as the case
may be, and Agent shall not incur liability to any Person by reason of so
refraining. Agent shall be fully justified in failing or refusing to take any
action hereunder or under any other Loan Document (a) if such action would, in
the opinion of Agent, be contrary to law or the terms of this Agreement or any
other Loan Document, (b) if such action would, in the opinion of Agent, expose
Agent to Environmental Liabilities or (c) if Agent shall not first be
indemnified to its satisfaction against any and all liability and expense which
may be incurred by it by reason of taking or continuing to take any such
action. Without limiting the foregoing, no Lender shall have any right of
action whatsoever against Agent as a result of Agent acting or refraining from
acting hereunder or under any other Loan Document in accordance with the
instructions of Requisite Lenders, Requisite Revolving Lenders, Supermajority
Revolving Lenders or all affected Lenders, as applicable.
9.3 Agent's Reliance, Etc. Neither Agent nor any of its
Affiliates nor any of their respective directors, officers, agents or employees
shall be liable for any action taken or omitted to be taken by it or them under
or in connection with this Agreement or the other Loan Documents, except for
damages caused by its or their own gross negligence or willful misconduct as
finally determined by a court of competent jurisdiction. Without limitation of
the generality of the foregoing, Agent: (a) may treat the payee of any Note
as the holder thereof until Agent receives written notice of the assignment or
transfer thereof signed by such payee and in form satisfactory to Agent; (b)
may consult with legal counsel, independent public accountants and other
experts selected by it and shall not be liable for any action taken or omitted
to be taken in good faith by it in accordance with the advice of such counsel,
accountants or experts; (c) makes no warranty or representation to any Lender
and shall not be responsible to any Lender for any statements, warranties or
representations made in or in connection with this Agreement or the other Loan
Documents; (d) shall not have any duty to ascertain or to inquire as to the
performance or observance of any of the terms, covenants or conditions of this
Agreement or the other Loan Documents on the part of any Credit Party or to
inspect the Collateral (including the books and records) of any Credit Party;
(e) shall not be responsible to any Lender for the due execution, legality,
validity, enforceability, genuineness, sufficiency or value of this Agreement
or the other Loan Documents or any other instrument or document furnished
pursuant hereto or thereto or the perfection, priority, enforceability or
unavoidability of any of the Liens securing the Obligations; and (f) shall
incur no liability under or in respect of this Agreement or the other Loan
Documents by acting upon any notice, consent, certificate or other instrument
or writing
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(which may be by telecopy, telegram, cable or telex) believed by it to be
genuine and signed or sent by the proper party or parties.
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9.4 GE Capital and Affiliates. With respect to its
Commitments hereunder, GE Capital 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 Agent; and the term "Lender" or
"Lenders" shall, unless otherwise expressly indicated, include GE Capital in
its individual capacity. GE Capital and its Affiliates may lend money to,
invest in, and generally engage in any kind of business with, any Credit Party,
any of their Affiliates and any Person who may do business with or own
securities of any Credit Party or any such Affiliate, all as if GE Capital were
not Agent and without any duty to account therefor to Lenders. GE Capital and
its Affiliates may accept fees and other consideration from any Credit Party
for services in connection with this Agreement or otherwise without having to
account for the same to Lenders. GE Capital has also received warrants from
Borrower and is an investor in each of the Pegasus Funds. Each Lender
acknowledges the potential conflict of interest between GE Capital as a Lender
holding disproportionate interests in the Loans, GE Capital as a stockholder or
warrant holder of Borrower, GE Capital as an investor in each of the Pegasus
Funds and GE Capital as Agent.
9.5 Lender Credit Decision. Each Lender acknowledges
that it has, independently and without reliance upon Agent or any other Lender
and based on the Financial Statements referred to in Section 3.4(a) and such
other documents and information as it has deemed appropriate, made its own
credit and financial analysis of the Credit Parties and its own decision to
enter into this Agreement. Each Lender also acknowledges that it will,
independently and without reliance upon Agent or any other Lender and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
this Agreement. Each Lender acknowledges the potential conflict of interest of
each other Lender as a result of Lenders holding disproportionate interests in
the Loans, and expressly consents to, and waives any claim based upon, such
conflict of interest.
9.6 Indemnification. Lenders agree to indemnify Agent
(to the extent not reimbursed by the Credit Parties and without limiting the
obligations of the Credit Parties hereunder), ratably according to their
respective Pro Rata Shares, from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever which may be imposed
on, incurred by, or asserted against Agent in any way relating to or arising
out of this Agreement or any other Loan Document or any action taken or omitted
by Agent in connection therewith; provided, however, that no Lender shall be
liable for any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements
resulting solely from Agent's gross negligence or wilful misconduct as finally
determined by a court of competent jurisdiction. Without limiting the
foregoing, each Lender agrees to reimburse Agent promptly upon demand for its
ratable share of any out-of-pocket expenses (including counsel fees) incurred
by Agent in connection with the preparation, execution, delivery,
administration, modification, amendment or enforcement (whether through
negotiations, legal proceedings or otherwise) of, or legal advice in respect of
rights or responsibilities under, this Agreement and
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each other Loan Document, to the extent that Agent is not reimbursed for such
expenses by the Credit Parties.
9.7 Successor Agent. Agent may resign at any time by
giving not less than thirty (30) days' prior written notice thereof to Lenders
and Borrower. Upon any such resignation, the Requisite Lenders shall have the
right to appoint a successor Agent. If no successor Agent shall have been so
appointed by the Requisite Lenders and shall have accepted such appointment
within 30 days after the resigning Agent's giving notice of resignation, then
the resigning Agent may, on behalf of Lenders, appoint a successor Agent, which
shall be a Lender, if a Lender is willing to accept such appointment, or
otherwise shall be a commercial bank or financial institution or a subsidiary
of a commercial bank or financial institution if such commercial bank or
financial institution is organized under the laws of the United States of
America or of any State thereof and has a combined capital and surplus of at
least $300,000,000. If no successor Agent has been appointed pursuant to the
foregoing, by the 30th day after the date such notice of resignation was given
by the resigning Agent, such resignation shall become effective and the
Requisite Lenders shall thereafter perform all the duties of Agent hereunder
until such time, if any, as the Requisite Lenders appoint a successor Agent as
provided above. Any successor Agent appointed by Requisite Lenders hereunder
shall be subject to the approval of Borrower, such approval not to be
unreasonably withheld or delayed; provided that such approval shall not be
required if a Default or an Event of Default shall have occurred and be
continuing. Upon the acceptance of any appointment as Agent hereunder by a
successor Agent, such successor Agent shall succeed to and become vested with
all the rights, powers, privileges and duties of the resigning Agent. Upon the
earlier of the acceptance of any appointment as Agent hereunder by a successor
Agent or the effective date of the resigning Agent's resignation, the resigning
Agent shall be discharged from its duties and obligations under this Agreement
and the other Loan Documents, except that any indemnity rights or other rights
in favor of such resigning Agent shall continue. After any resigning Agent's
resignation hereunder, the provisions of this Section 9 shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was Agent
under this Agreement and the other Loan Documents. Agent may be removed at the
written direction of the holders (other than Agent) of two-thirds or more of
the Commitments (excluding Agent's Commitment); provided that in so doing, such
Lenders shall be deemed to have waived and released any and all claims they may
have against Agent.
9.8 Setoff and Sharing of Payments. In addition to any
rights now or hereafter granted under applicable law and not by way of
limitation of any such rights, upon the occurrence and during the continuance
of any Event of Default, each Lender and each holder of any Note is hereby
authorized at any time or from time to time, without notice to any Credit Party
or to any other Person, any such notice being hereby expressly waived, to set
off and to appropriate and to apply any and all balances held by it at any of
its offices for the account of any Credit Party (regardless of whether such
balances are then due to such Credit Party) and any other properties or assets
any time held or owing by that Lender or that holder to or for the credit or
for the account of the Credit Parties against and on account of any of the
Obligations which are not paid when due. Any Lender or holder of any Note
exercising a right to set off or
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otherwise receiving any payment on account of the Obligations in excess of its
Pro Rata Share thereof shall purchase for cash (and the other Lenders or
holders shall sell) such participations in each such other Lender's or holder's
Pro Rata Share of the Obligations as would be necessary to cause such Lender to
share the amount so set off or otherwise received with each other Lender or
holder in accordance with their respective Pro Rata Shares. Each Lender's
obligation under this Section 9.8 shall be in addition to and not limitation of
its obligations to purchase a participation in an amount equal to its Pro Rata
Share of the Swing Line Loans under Section 1.1. Each Credit Party agrees, to
the fullest extent permitted by law, that (a) any Lender or holder may exercise
its right to set off with respect to amounts in excess of its Pro Rata Share of
the Obligations and may sell participations in such amount so set off to other
Lenders and holders and (b) any Lender or holders so purchasing a participation
in the Loans made or other Obligations held by other Lenders or holders may
exercise all rights of set-off, bankers' lien, counterclaim or similar rights
with respect to such participation as fully as if such Lender or holder were a
direct holder of the Loans and the other Obligations in the amount of such
participation. Notwithstanding the foregoing, if all or any portion of the
set-off amount or payment otherwise received is thereafter recovered from the
Lender that has exercised the right of set-off, the purchase of participations
by that Lender shall be rescinded and the purchase price restored without
interest.
9.9 Advances; Payments; Non-Funding Lenders; Information;
Actions in Concert.
(a) Advances; Payments. (i) Revolving Lenders shall
refund or participate in the Swing Line Loan in accordance with clauses (iii)
and (iv) of Section 1.1(e). Agent shall notify Revolving Lenders, promptly
after receipt of a Notice of Revolving Credit Advance and in any event prior to
1:00 p.m. (New York time) on the date such Notice of Revolving Advance is
received, by telecopy, telephone or other similar form of transmission. Each
Revolving Lender shall make the amount of such Lender's Pro Rata Share of each
Revolving Credit Advance available to Agent in same day funds by wire transfer
to Agent's account as set forth in Annex H not later than 3:00 p.m. (New York
time) on the requested funding date, in the case of an Index Rate Loan and not
later than 11:00 a.m. (New York time) on the requested funding date in the case
of a LIBOR Loan. After receipt of such wire transfers (or, in the Agent's sole
discretion, before receipt of such wire transfers), subject to the terms
hereof, Agent shall make the requested Revolving Credit Advance to the
Borrower. All payments by each Revolving Lender shall be made without setoff,
counterclaim or deduction of any kind.
(ii) Agent shall notify Term Lenders promptly after receipt
of a Notice of Term Loan B Advance or promptly upon its receipt of notice of a
payment by the L/C Issuer under the Litigation L/C, and in any event prior to
1:00 p.m. (New York time) on the date a Notice of Term Loan B Advance is
received or, in the case of a notice of payment under the Litigation L/C prior
to 1:00 p.m. on the Business Day next following the date of Agent's receipt of
such notice. Any such notification to Term Lenders shall be by telecopy,
telephone or other similar form of transmission. Each Term Lender shall make
the amount of such Lender's Pro Rata Share of the Term Loan B or payment under
the Litigation L/C available to Agent in same day funds by wire
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transfer to Agent's account as set forth in Annex H not later than 3:00 p.m.
(New York time) on the Term Loan B Funding Date in the case of Term Loan B if
requested as an Index Rate Loan, not later than 11:00 a.m. (New York time) on
the Term Loan B Funding Date in the case of Term Loan B if requested as a LIBOR
Loan or, not later than 3:00 p.m. (New York time) on the Business Day next
following the date of Agent's receipt of notice of such payment in the case of
a payment with respect to the Litigation L/C. In the case of Term Loan B,
after receipt of such wire transfers (or, in Agent's sole discretion, before
receipt of such wire transfers), subject to the terms hereof, Agent shall make
the Term Loan B available to Borrower. All payments by each Term Lender shall
be made without setoff, counterclaim or deduction of any kind.
(iii) On the second (2nd) Business Day of each calendar
week or more frequently as aggregate cumulative payments in excess of
$2,000,000 are received with respect to the Loans (other than the Swing Line
Loan) (each, a "Settlement Date"), Agent will advise each Lender by telephone,
or telecopy of the amount of such Lender's Pro Rata Share of principal,
interest and Fees paid for the benefit of Lenders with respect to each
applicable Loan. Provided that such Lender has made all payments required to
be made by it and has purchased all participations required to be purchased by
it under this Agreement and the other Loan Documents as of such Settlement
Date, Agent will pay to each Lender such Lender's Pro Rata Share of principal,
interest and Fees paid by Borrower since the previous Settlement Date for the
benefit of that Lender on the Loans held by it. Such payments shall be made by
wire transfer to such Lender's account (as specified by such Lender in Annex H
or the applicable Assignment Agreement) not later than 1:00 p.m. (Chicago time)
on the next Business Day following each Settlement Date.
(b) Availability of Lender's Pro Rata Share. Agent may
assume that each Revolving Lender will make its Pro Rata Share of each
Revolving Credit Advance available to Agent on each funding date and that each
Term Lender will make its Pro Rata Share of Term Loan B on the Term Loan B
Funding Date. If such Pro Rata Share is not, in fact, paid to Agent by such
Lender when due, Agent will be entitled to recover such amount on demand from
such Lender without set-off, counterclaim or deduction of any kind. If any
Lender fails to pay the amount of such Pro Rata Share of any Revolving Credit
Advance, or if any Term Lender fails to pay the amount of its Pro Rata Share of
any payment under the Litigation L/C when due, forthwith upon Agent's demand,
Agent shall promptly notify Borrower and Borrower shall immediately repay such
amount to Agent. Nothing in this Section 9.9(b) or elsewhere in this Agreement
or the other Loan Documents shall be deemed to require Agent to advance funds
on behalf of any Lender or to relieve any Lender from its obligation to fulfill
its Commitments hereunder or to prejudice any rights that Borrower may have
against any Lender as a result of any default by such Lender hereunder. To the
extent that Agent advances funds to Borrower on behalf of any Lender and is not
reimbursed therefor on the same Business Day as such Advance is made, Agent
shall be entitled to retain for its account all interest accrued on such
Advance until reimbursed by the applicable Lender.
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(c) Return of Payments. (i) If Agent pays an amount
to a Lender under this Agreement in the belief or expectation that a related
payment has been or will be received by Agent from Borrower and such related
payment is not received by Agent, then Agent will be entitled to recover such
amount from such Lender on demand without set-off, counterclaim or deduction of
any kind.
(ii) If Agent determines at any time that any amount
received by Agent under this Agreement must be returned to Borrower or paid to
any other Person pursuant to any insolvency law or otherwise, then,
notwithstanding any other term or condition of this Agreement or any other Loan
Document, Agent will not be required to distribute any portion thereof to any
Lender. In addition, each Lender will repay to Agent on demand any portion of
such amount that Agent has distributed to such Lender, together with interest
at such rate, if any, as Agent is required to pay to Borrower or such other
Person, without set-off, counterclaim or deduction of any kind.
(d) Non-Funding Lenders. The failure of any Lender (such
Lender, a "Non-Funding Lender") to make any Revolving Credit Advance, to
purchase any participation in any Swing Line Loan to be made or purchased by it
on the date specified therefor, to make its Term Loan B, or to pay its Pro Rata
Share of any payment under the Litigation L/C, shall not relieve any other
Lender (each such other Lender, an "Other Lender") of its obligations to make
such Advance, purchase such participation on such date, make such Term Loan B
or to make such payment with respect to the Litigation L/C payment, but neither
any Other Lender nor Agent shall be responsible for the failure of any Non-
Funding Lender to make an Advance to be made, or to purchase a participation to
be purchased, by such Non-Funding Lender, and no Non-Funding Lender shall have
any obligation to Agent or any Other Lender for the failure by such Non-Funding
Lender. Notwithstanding anything set forth herein to the contrary, a
Non-Funding Lender shall not have any voting or consent rights under or with
respect to any Loan Document or constitute a "Lender", a "Revolving Lender" or
a "Term Lender" (or be included in the calculation of "Requisite Lenders",
"Requisite Revolving Lenders" or "Supermajority Revolving Lenders" hereunder)
for any voting or consent rights under or with respect to any Loan Document.
(e) Dissemination of Information. Agent will use
reasonable efforts to provide Lenders with any notice of Default or Event of
Default received by Agent from, or delivered by Agent to, any Credit Party,
with notice of any Event of Default of which Agent has actually become aware
and with notice of any action taken by Agent following any Event of Default;
provided, however, that Agent shall not be liable to any Lender for any failure
to do so, except to the extent that such failure is attributable solely to
Agent's gross negligence or willful misconduct as finally determined by a court
of competent jurisdiction. Lenders acknowledge that Borrower is required to
provide Financial Statements and Collateral Reports to Lenders in accordance
with Annexes E and F hereto and agree that Agent shall have no duty to provide
the same to Lenders.
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(f) Actions in Concert. Anything in this Agreement to
the contrary notwithstanding, each Lender hereby agrees with each other Lender
that no Lender shall take any action to protect or enforce its rights arising
out of this Agreement or the Notes (including exercising any rights of set-off)
without first obtaining the prior written consent of Agent or Requisite
Lenders, it being the intent of Lenders that any such action to protect or
enforce rights under this Agreement and the Notes shall be taken in concert and
at the direction or with the consent of Agent.
10. SUCCESSORS AND ASSIGNS
10.1 Successors and Assigns. This Agreement and the other
Loan Documents shall be binding on and shall inure to the benefit of each
Credit Party, Agent, Lenders and their respective successors and assigns
(including, in the case of any Credit Party, a debtor-in-possession on behalf
of such Credit Party), except as otherwise provided herein or therein. No
Credit Party may assign, transfer, hypothecate or otherwise convey its rights,
benefits, obligations or duties hereunder or under any of the other Loan
Documents without the prior express written consent of Agent and Requisite
Lenders. Any such purported assignment, transfer, hypothecation or other
conveyance by any Credit Party without the prior express written consent of
Agent and Requisite Lenders shall be void. The terms and provisions of this
Agreement are for the purpose of defining the relative rights and obligations
of each Credit Party, Agent and Lenders with respect to the transactions
contemplated hereby and no Person shall be a third party beneficiary of any of
the terms and provisions of this Agreement or any of the other Loan Documents.
11. MISCELLANEOUS
11.1 Complete Agreement; Modification of Agreement and
Pegasus Litigation Guaranty. (a) The Loan Documents constitute the complete
agreement between the parties with respect to the subject matter thereof and
may not be modified, altered or amended except as set forth in Section 11.2
below. Any letter of interest, commitment letter, and/or fee letter (other
than the GE Capital Fee Letter) and/or confidentiality agreement between any
Credit Party and Agent or any Lender or any of their respective affiliates,
predating this Agreement and relating to a financing of substantially similar
form, purpose or effect shall be superseded by this Agreement.
(b) Without Borrower's prior written consent, Agent shall
not enter into any written amendment to the Litigation Guaranty which expands
or modifies the deliveries required pursuant to Section 3 hereof.
11.2 Amendments and Waivers. (a) Except for actions
expressly permitted to be taken by Agent, no amendment, modification,
termination or waiver of any provision of this Agreement or any of the Notes,
or any consent to any departure by any Credit Party therefrom, shall in any
event be effective unless the same shall be in writing and signed by Agent and
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Borrower, and by Requisite Lenders, Requisite Revolving Lenders, Supermajority
Revolving Lenders or all affected Lenders, as applicable. Except as set forth
in clauses (b) and (c) below, all such amendments, modifications, terminations
or waivers requiring the consent of any Lenders shall require the written
consent of Requisite Lenders.
(b) No amendment, modification, termination or waiver of
or consent with respect to any provision of this Agreement which increases the
percentage advance rates set forth in the definition of the Borrowing Base, or
which makes less restrictive the nondiscretionary criteria for exclusion from
Eligible Accounts and Eligible Inventory set forth in Sections 1.6 and 1.7,
shall be effective unless the same shall be in writing and signed by Agent,
Supermajority Revolving Lenders and Borrower. No amendment, modification,
termination or waiver of or consent with respect to any provision of this
Agreement which waives compliance with the conditions precedent set forth in
Section 2.2 to the making of any Loan or the incurrence of any Letter of Credit
Obligations shall be effective unless the same shall be in writing and signed
by Agent, Requisite Revolving Lenders and Borrower. Notwithstanding anything
contained in this Agreement to the contrary, no waiver or consent with respect
to any Default (if in connection therewith Agent or Requisite Revolving
Lenders, as the case may be, have exercised its or their right to suspend the
making or incurrence of further Advances or Letter of Credit Obligations
pursuant to Section 8.2(a)) or any Event of Default shall be effective for
purposes of the conditions precedent to the making of Loans or the incurrence
of Letter of Credit Obligations set forth in Section 2.2 unless the same shall
be in writing and signed by Agent, Requisite Revolving Lenders and Borrower.
(c) No amendment, modification, termination or waiver
shall, unless in writing and signed by Agent and each Lender directly affected
thereby, do any of the following: (i) increase the principal amount of any
Lender's Commitment (which action shall be deemed to directly affect all
Lenders); (ii) reduce the principal of, rate of interest on or Fees payable
with respect to any Loan or Letter of Credit Obligations of any affected
Lender; (iii) extend any scheduled payment date or final maturity date of the
principal amount of any Loan of any affected Lender; (iv) waive, forgive,
defer, extend or postpone any payment of interest or Fees as to any affected
Lender; (v) release any Guaranty or, except as otherwise permitted herein or in
the other Loan Documents, permit any Credit Party to sell or otherwise dispose
of any Collateral with a value exceeding $5,000,000 in the aggregate (which
action shall be deemed to directly affect all Lenders); (vi) change the
percentage of the Commitments or of the aggregate unpaid principal amount of
the Loans which shall be required for Lenders or any of them to take any action
hereunder; and (vii) amend or waive this Section 11.2 or the definitions of the
terms "Requisite Lenders", "Requisite Revolving Lenders" or "Supermajority
Revolving Lenders" insofar as such definitions affect the substance of this
Section 11.2. Furthermore, no amendment, modification, termination or waiver
affecting the rights or duties of Agent under this Agreement or any other Loan
Document shall be effective unless in writing and signed by Agent, in addition
to Lenders required hereinabove to take such action. Each amendment,
modification, termination or waiver shall be effective only in the specific
instance and for the specific purpose for which it was given. No amendment,
modification, termination or waiver shall be required for
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Agent to take additional Collateral pursuant to any Loan Document. No
amendment, modification, termination or waiver of any provision of any Note
shall be effective without the written concurrence of the holder of that Note.
No notice to or demand on any Credit Party in any case shall entitle such
Credit Party or any other Credit Party to any other or further notice or demand
in similar or other circumstances. Any amendment, modification, termination,
waiver or consent effected in accordance with this Section 11.2 shall be
binding upon each holder of the Notes at the time outstanding and each future
holder of the Notes.
(d) If, in connection with any proposed amendment,
modification, waiver or termination (a "Proposed Change"):
(i) requiring the consent of all affected
Lenders, the consent of Requisite Lenders is obtained, but the
consent of other Lenders whose consent is required is not
obtained (any such Lender whose consent is not obtained as
described this clause (i) and in clauses (ii), (iii) and (iv)
below being referred to as a "Non-Consenting Lender"), or
(ii) requiring the consent of Supermajority
Revolving Lenders, the consent of Requisite Revolving Lenders
is obtained, but the consent of Supermajority Revolving
Lenders is not obtained, or
(iii) requiring the consent of Requisite Revolving
Lenders, the consent of Revolving Lenders holding 51% or more
of the aggregate Revolving Loan Commitments is obtained, but
the consent of Requisite Revolving Lenders is not obtained, or
(iv) requiring the consent of Requisite Lenders,
the consent of Lenders holding 51% or more of the aggregate
Commitments is obtained, but the consent of Requisite Lenders
is not obtained,
then, so long as Agent is not a Non-Consenting Lender, at Borrower's request,
Agent or a Person acceptable to Agent shall have the right with Agent's consent
and in Agent's sole discretion (but shall have no obligation) to purchase from
such Non-Consenting Lenders, and such Non-Consenting Lenders agree that they
shall, upon Agent's request, sell and assign to Agent or such Person, all of
the Commitments of such Non-Consenting Lender for an amount equal to the
principal balance of all Loans held by the Non-Consenting Lender and all
accrued interest and Fees with respect thereto through the date of sale, such
purchase and sale to be consummated pursuant to an executed Assignment
Agreement.
(e) Upon indefeasible payment in full in cash and
performance of all of the Obligations (other than indemnification Obligations
under Section 1.13), termination of the Commitments and a release of all claims
against Agent and Lenders, and so long as no suits, actions proceedings, or
claims are pending or threatened against any Indemnified Person
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asserting any damages, losses or liabilities that are Indemnified Liabilities,
Agent shall deliver to Borrower termination statements, mortgage releases and
other documents necessary or appropriate to evidence the termination of the
Liens securing payment of the Obligations.
11.3 Fees and Expenses. Borrower shall reimburse Agent
for all reasonable out-of-pocket expenses incurred in connection with the
preparation of the Loan Documents (including the reasonable fees and expenses
of all of its special loan counsel, advisors, consultants and auditors retained
in connection with the Loan Documents and the Related Transactions and advice
in connection therewith). Borrower shall reimburse Agent (and, with respect to
clauses (c) and (d) below, all Lenders) for all reasonable fees, costs and
expenses, including the fees, costs and expenses of counsel or other advisors
(including environmental and management consultants and appraisers) for advice,
assistance, or other representation in connection with:
(a) the forwarding to Borrower or any other
Person on behalf of Borrower by Agent of the proceeds of the Loans;
(b) any amendment, modification or waiver of, or
consent with respect to, any of the Loan Documents or Related Transactions
Documents or advice in connection with the administration of the Loans made
pursuant hereto or its rights hereunder or thereunder;
(c) any litigation, contest, dispute, suit,
proceeding or action (whether instituted by Agent, any Lender, Borrower or any
other Person) in any way relating to the Collateral, any of the Loan Documents
or any other agreement to be executed or delivered in connection therewith or
herewith, whether as party, witness, or otherwise, including any litigation,
contest, dispute, suit, case, proceeding or action, and any appeal or review
thereof, in connection with a case commenced by or against Borrower or any
other Person that may be obligated to Agent by virtue of the Loan Documents;
including any such litigation, contest, dispute, suit, proceeding or action
arising in connection with any work-out or restructuring of the Loans during
the pendency of one or more Events of Default; provided that in the case of
reimbursement of counsel for Lenders other than Agent, such reimbursement shall
be limited to one counsel for all such Lenders and, provided, further, that
Borrower shall not be obligated hereunder to reimburse the Agent or the Lenders
to the extent the amount otherwise to be reimbursed hereunder resulted from the
Agent's or such Lenders' gross negligence or willful misconduct.
(d) any attempt to enforce any remedies of Agent
against any or all of the Credit Parties or any other Person that may be
obligated to Agent or any Lender by virtue of any of the Loan Documents;
including any such attempt to enforce any such remedies in the course of any
work-out or restructuring of the Loans during the pendency of one or more
Events of Default; provided that in the case of reimbursement of counsel for
Lenders other than Agent, such reimbursement shall be limited to one counsel
for all such Lenders;
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(e) any work-out or restructuring of the Loans
during the pendency of one or more Events of Default;
(f) efforts to (i) monitor the Loans or any of
the other Obligations, (ii) evaluate, observe or assess any of the Credit
Parties or their respective affairs, and (iii) verify, protect, evaluate,
assess, appraise, collect, sell, liquidate or otherwise dispose of any of the
Collateral;
including all reasonable attorneys' and other professional and service
providers' fees arising from such services, including those in connection with
any appellate proceedings; and all reasonable expenses, costs, charges and
other fees incurred by such counsel and others in any way or respect arising in
connection with or relating to any of the events or actions described in this
Section 11.3 shall be payable by Borrower to Agent, within thirty (30) days of
demand therefor. Without limiting the generality of the foregoing, such
expenses, costs, charges and fees may include: fees, costs and expenses of
accountants, environmental advisors, appraisers, investment bankers, management
and other consultants and paralegals; court costs and expenses; photocopying
and duplication expenses; court reporter fees, costs and expenses; long
distance telephone charges; air express charges; telegram or telecopy charges;
secretarial overtime charges; and expenses for travel, lodging and food paid or
incurred in connection with the performance of such legal or other advisory
services.
11.4 No Waiver. Agent's or any Lender's failure, at any
time or times, to require strict performance by the Credit Parties of any
provision of this Agreement and any of the other Loan Documents shall not
waive, affect or diminish any right of Agent or such Lender thereafter to
demand strict compliance and performance therewith. Any suspension or waiver
of an Event of Default shall not suspend, waive or affect any other Event of
Default whether the same is prior or subsequent thereto and whether the same or
of a different type. Subject to the provisions of Section 11.2, none of the
undertakings, agreements, warranties, covenants and representations of any
Credit Party contained in this Agreement or any of the other Loan Documents and
no Default or Event of Default by any Credit Party shall be deemed to have been
suspended or waived by Agent or any Lender, unless such waiver or suspension is
by an instrument in writing signed by an officer of or other authorized
employee of Agent and the applicable required Lenders, and directed to Borrower
specifying such suspension or waiver.
11.5 Remedies. Agent's and Lenders' rights and remedies
under this Agreement shall be cumulative and nonexclusive of any other rights
and remedies which Agent or any Lender may have under any other agreement,
including the other Loan Documents, by operation of law or otherwise. Recourse
to the Collateral shall not be required.
11.6 Severability. Wherever possible, each provision of
this Agreement and the other Loan Documents shall be interpreted in such a
manner as to be effective and valid under applicable law, but if any provision
of this Agreement shall be prohibited by or invalid under applicable law, such
provision shall be ineffective to the extent of such prohibition or invalidity,
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without invalidating the remainder of such provision or the remaining
provisions of this Agreement.
11.7 Conflict of Terms. Except as otherwise provided in
this Agreement or any of the other Loan Documents by specific reference to the
applicable provisions of this Agreement, if any provision contained in this
Agreement is in conflict with, or inconsistent with, any provision in any of
the other Loan Documents, the provision contained in this Agreement shall
govern and control.
11.8 Confidentiality. Agent and each Lender agree to use
commercially reasonable efforts (equivalent to the efforts Agent or such Lender
applies to maintaining the confidentiality of its own confidential information)
to maintain as confidential all confidential information provided to them by
the Credit Parties and designated as confidential for a period of two (2) years
following receipt thereof, except that Agent and any Lender may disclose such
information (a) to Persons employed or engaged by Agent or such Lender in
evaluating, approving, structuring or administering the Loans and the
Commitments; (b) to any bona fide assignee or participant or potential assignee
or participant that has agreed to comply with the covenant contained in this
Section 11.8 (and any such bona fide assignee or participant or potential
assignee or participant may disclose such information to Persons employed or
engaged by them as described in clause (a) above); (c) as required or requested
by any Governmental Authority or reasonably believed by Agent or such Lender to
be compelled by any court decree, subpoena or legal or administrative order or
process; (d) as, in the opinion of Agent's or such Lender's counsel, required
by law; (e) in connection with the exercise of any right or remedy under the
Loan Documents or in connection with any Litigation to which Agent or such
Lender is a party; or (f) which ceases to be confidential through no fault of
Agent or such Lender; provided, however, that such Lender shall use its best
efforts to give Borrower as much advance notice of the proposed disclosure as
is reasonably possible under the circumstances.
11.9 GOVERNING LAW. EXCEPT AS OTHERWISE EXPRESSLY
PROVIDED IN ANY OF THE LOAN DOCUMENTS, IN ALL RESPECTS, INCLUDING ALL MATTERS
OF CONSTRUCTION, VALIDITY AND PERFORMANCE, THE LOAN DOCUMENTS AND THE
OBLIGATIONS SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF ILLINOIS APPLICABLE TO CONTRACTS MADE AND
PERFORMED IN THAT STATE AND ANY APPLICABLE LAWS OF THE UNITED STATES OF
AMERICA. EACH CREDIT PARTY HEREBY CONSENTS AND AGREES THAT THE STATE OR
FEDERAL COURTS LOCATED IN ▇▇▇▇ COUNTY, CITY OF CHICAGO, ILLINOIS SHALL HAVE
EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN THE
CREDIT PARTIES, AGENT AND LENDERS PERTAINING TO THIS AGREEMENT OR ANY OF THE
OTHER LOAN DOCUMENTS OR TO ANY MATTER ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS, PROVIDED, THAT AGENT, LENDERS AND
THE CREDIT PARTIES ACKNOWLEDGE THAT ANY
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APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE OF
▇▇▇▇ COUNTY, CITY OF CHICAGO, ILLINOIS AND, PROVIDED, FURTHER NOTHING IN THIS
AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE AGENT FROM BRINGING SUIT OR
TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION TO REALIZE ON THE
COLLATERAL OR ANY OTHER SECURITY FOR THE OBLIGATIONS, OR TO ENFORCE A JUDGMENT
OR OTHER COURT ORDER IN FAVOR OF AGENT. EACH CREDIT PARTY EXPRESSLY SUBMITS
AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN
ANY SUCH COURT, AND EACH CREDIT PARTY HEREBY WAIVES ANY OBJECTION WHICH SUCH
CREDIT PARTY MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE
OR FORUM NON CONVENIENS AND HEREBY CONSENTS TO THE GRANTING OF SUCH LEGAL OR
EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH COURT. EACH CREDIT PARTY
HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS
ISSUED IN ANY SUCH ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS,
COMPLAINTS AND OTHER PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL
ADDRESSED TO SUCH CREDIT PARTY AT THE ADDRESS SET FORTH IN ANNEX I OF THIS
AGREEMENT AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE EARLIER
OF SUCH CREDIT PARTY'S ACTUAL RECEIPT THEREOF OR THREE (3) DAYS AFTER DEPOSIT
IN THE U.S. MAILS, PROPER POSTAGE PREPAID.
11.10 Notices. Except as otherwise provided herein,
whenever it is provided herein that any notice, demand, request, consent,
approval, declaration or other communication shall or may be given to or served
upon any of the parties by any other parties, or whenever any of the parties
desires to give or serve upon any other parties any communication with respect
to this Agreement, each such notice, demand, request, consent, approval,
declaration or other communication shall be in writing and shall be deemed to
have been validly served, given or delivered (a) upon the earlier of actual
receipt and three (3) Business Days after deposit in the United States Mail,
registered or certified mail, return receipt requested, with proper postage
prepaid, (b) upon transmission, when sent by telecopy or other similar
facsimile transmission (with such telecopy or facsimile promptly confirmed by
delivery of a copy by personal delivery or United States Mail as otherwise
provided in this Section 11.10), (c) one (1) Business Day after deposit with a
reputable overnight courier with all charges prepaid or (d) when delivered, if
hand-delivered by messenger, all of which shall be addressed to the party to be
notified and sent to the address or facsimile number indicated on Annex I or to
such other address (or facsimile number) as may be substituted by notice given
as herein provided. The giving of any notice required hereunder may be waived
in writing by the party entitled to receive such notice. Failure or delay in
delivering copies of any notice, demand, request, consent, approval,
declaration or other communication to any Person (other than Borrower or Agent)
designated on Annex I to receive copies shall in no way adversely affect the
effectiveness of such notice, demand, request, consent, approval, declaration
or other communication.
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11.11 Section Titles. The Section titles and Table of
Contents contained in this Agreement are and shall be without substantive
meaning or content of any kind whatsoever and are not a part of the agreement
between the parties hereto.
11.12 Counterparts. This Agreement may be executed in any
number of separate counterparts, each of which shall collectively and
separately constitute one agreement.
11.13 WAIVER OF JURY TRIAL. BECAUSE DISPUTES ARISING IN
CONNECTION WITH COMPLEX FINANCIAL TRANSACTIONS ARE MOST QUICKLY AND
ECONOMICALLY RESOLVED BY AN EXPERIENCED AND EXPERT PERSON AND THE PARTIES WISH
APPLICABLE STATE AND FEDERAL LAWS TO APPLY (RATHER THAN ARBITRATION RULES), THE
PARTIES DESIRE THAT THEIR DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH
APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE BEST COMBINATION OF THE BENEFITS OF
THE JUDICIAL SYSTEM AND OF ARBITRATION, THE PARTIES HERETO WAIVE ALL RIGHT TO
TRIAL BY JURY IN ANY ACTION, SUIT, OR PROCEEDING BROUGHT TO RESOLVE ANY
DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE, AMONG AGENT, LENDERS
AND ANY CREDIT PARTY ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL
TO THE RELATIONSHIP ESTABLISHED AMONG THEM IN CONNECTION WITH, THIS AGREEMENT
OR ANY OF THE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS RELATED THERETO.
11.14 Press Releases. Each Credit Party executing this
Agreement agrees that neither it nor its Affiliates will in the future issue
any press releases or other public disclosure using the name of GE Capital or
its affiliates or referring to this Agreement, the other Loan Documents or the
Related Transactions Documents without at least two (2) Business Days' prior
notice to GE Capital and without the prior written consent of GE Capital unless
(and only to the extent that) such Credit Party or Affiliate is required to do
so under law and then, in any event, such Credit Party or Affiliate will
consult with GE Capital before issuing such press release or other public
disclosure. Each Credit Party consents to the publication by Agent or any
Lender of a tombstone or similar advertising material relating to the financing
transactions contemplated by this Agreement.
11.15 Reinstatement. Notwithstanding anything contained
herein to the contrary, this Agreement shall remain in full force and effect
and continue to be effective should any petition be filed by or against
Borrower for liquidation or reorganization, should Borrower become insolvent or
make an assignment for the benefit of any creditor or creditors or should a
receiver or trustee be appointed for all or any significant part of Borrower's
assets, and shall continue to be effective or to be reinstated, as the case may
be, if at any time payment and performance of the Obligations, or any part
thereof, is, pursuant to applicable law, rescinded, avoided or reduced in
amount, or must otherwise be restored or returned by any obligee of the
Obligations, whether as a "voidable preference," "fraudulent transfer,"
"fraudulent conveyance,"
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or otherwise, all as though such payment or performance had not been made.
Notwithstanding anything contained herein to the contrary, in the event that
any payment, or any part thereof, is rescinded, avoided, reduced, restored or
returned, the Obligations shall be reinstated and deemed reduced only by such
amount paid and not so rescinded, avoided, reduced, restored or returned.
11.16 Advice of Counsel. Each of the parties represents to
each other party hereto that it has discussed this Agreement and, specifically,
the provisions of Sections 11.9 and 11.13, with its counsel.
11.17 No Strict Construction. The parties hereto have
participated jointly in the negotiation and drafting of this Agreement. In the
event an ambiguity or question of intent or interpretation arises, this
Agreement shall be construed as if drafted jointly by the parties hereto and no
presumption or burden of proof shall arise favoring or disfavoring any party by
virtue of the authorship of any provisions of this Agreement.
* * * *
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IN WITNESS WHEREOF, this Agreement has been duly executed as
of the date first written above.
CODE-ALARM, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------
Title: President
-------------------------
GENERAL ELECTRIC CAPITAL
CORPORATION, as Agent and Lender
Revolving Loan
Commitment (including
a Swing Line Commitment By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇ ▇▇▇▇
of $1,200,000): --------------------------------
$12,000,000 Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇ ▇▇▇▇
--------------------------
Title: Duly Authorized Signatory
-------------------------
Term Loan A Commitment:
$1,500,000
Term Loan B Commitment:
$3,000,000
Term Loan C Commitment:
$12,000,000
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The following Persons are signatories to this Agreement in
their capacity as Credit Parties and not as borrowers.
TESSCO GROUP, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------
Title: President
-------------------------
▇▇▇▇▇▇▇ SECURITY SYSTEMS, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------
Title: President
-------------------------
INTERCEPT SYSTEMS, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------
Title: President
-------------------------
ANES, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------
Title: President
-------------------------
76
84
EXHIBIT 1.1(a)(i)
TO
CREDIT AGREEMENT
FORM OF NOTICE OF REVOLVING CREDIT ADVANCE
Reference is made to that certain Credit Agreement dated as of
October 24, 1997 by and among Code-Alarm, Inc. (the "Borrower"), the other
Persons signatory thereto as Credit Parties, General Electric Capital
Corporation ("Agent") and the Persons signatory thereto from time to time as
Lenders (including all annexes, exhibits and schedules thereto, and as from
time to time amended, restated, supplemented or otherwise modified, the "Credit
Agreement"). Capitalized terms used herein without definition are so used as
defined in the Credit Agreement.
The undersigned hereby certifies that all of the conditions set forth in
Section 2.4 ("Further Conditions to Each Loan") of the Credit Agreement have
been satisfied as of the date hereof, and will remain satisfied on the date of
the requested Revolving Credit Advance, before and after giving effect thereto
and the application of the proceeds therefrom.
Borrower represents and warrants that the conditions in Section 2.4 have
been satisfied and hereby reaffirms the granting and continuance of Agent's
Liens, on behalf of itself and Lenders, pursuant to the Collateral Documents.
85
Previously Faxed: Yes No (Circle One)
__________________________________________________________________________________________________________________________
Company Name: Date: / / Certificate Number:
__________________________________________________________________________________________________________________________
1. ACCOUNTS RECEIVABLE (Line 5 of previous Notice of Revolving Credit Advance
$__________________
dated_____/_____/_____)
2. Additions to Accounts Receivable since last Notice of Revolving Credit Advance
(A) New sales dated _____/_____/_____ to _____/_____/_____ $_________________
(B) Other additions (Explain: ) $_________________
(C) TOTAL ADDITIONS
$_________________
3. Reductions to Accounts Receivable since last BBC
(A) Cash collections dated _____/_____/_____ to _____/_____/_____ $_________________
(B) Discounts issued since last Notice of Revolving Credit Advance $_________________
(C) Credit memos issued since last Notice of Revolving Credit Advance $_________________
(D) Other reductions/additions since last Notice of Revolving Credit Advance $_________________
(E) TOTAL REDUCTIONS $_________________
4. Other adjustments to Accounts Receivable (Explain:_______________________________________) $_________________
5. NEW ACCOUNTS RECEIVABLE BALANCE (Total of Lines 1, 2C, 3E, and 4) $_________________
6. Total ineligible Accounts Receivable (Line 2 of Borrowing Base Certificate dated ______/_____/_____)
$_________________
7. Eligible Accounts Receivable (Line 5 minus Line 6) $_________________
8. Eligible Accounts Receivable Availability (85% of Line 7) $_________________
9. Eligible Inventory Availability (Line 10 of Borrowing Base Certificate dated _____/_____/_____) $_________________
10. Supplemental Amount $4,000,000
11. Reserves against availability (including Rent Reserve and reserve for NBD indemnities) $_________________
12. Tessco Liquidation Reserve (including the total liabilities and contingent liabilities (to the
extent known and probable) of Tessco, as provided by Borrower on the attached Schedule A hereto,
other than Tessco's intercompany liabilities owing to Borrower and Tessco's obligations to
Agent and Lenders under the Loan Documents), plus an amount equal to two months' rental
obligations with respect to all existing operating leases of Tessco. $_________________
13. Total Borrowing Availability (The lesser of (i) the total of Lines 8, 9 and 10 minus the sum of
Lines 11 and 12, or (ii) the Maximum amount of $12,000,000)
$_________________
14. BEGINNING REVOLVING CREDIT LOAN BALANCE (Line 17 of previous Notice of Revolving
Credit Advance dated _____/_____/_____) $_________________
15. Plus Revolving Credit Advance requested, including any Swing Line Advances $_________________
16. Less TOTAL cash collections against Revolving Credit Loan
since last Notice of Revolving Credit Advance
(A) Date ____________ Amt. $___________ (C) Date ___________ Amt. $__________
(B) Date ____________ Amt. $___________ (C) Date ___________ Amt. $__________
(E) TOTAL CASH REMITTED $_________________
17. New Revolving Credit Loan Balance (Line 14 plus Line 15 minus Line 16E) $_________________
18. Letter of Credit Obligations $_________________
19. NET BORROWING AVAILABILITY (Line 13 minus the total of Line 17 plus Line 18) $_________________
-2-
86
IN WITNESS WHEREOF, Borrower has caused this Notice of Revolving Credit
Advance to be executed and delivered by its duly authorized officer as of the
date first set forth above.
CODE-ALARM, INC.
By: _________________________
Title: ______________________
-3-
87
SCHEDULE A
TESSCO LIQUIDATION RESERVE
Item 12 on the Notice of Revolving Credit Advance
[To be provided by Borrower]
-4-
88
A:\478139.WPD November 5,1997 (2:25pm)
-5-
89
EXHIBIT 1.1(a)(ii)
TO
CREDIT AGREEMENT
FORM OF REVOLVING NOTE
Chicago, Illinois
$12,000,000 October 24, 1997
FOR VALUE RECEIVED, the undersigned, CODE-ALARM, INC., a Michigan
corporation ("Borrower"), HEREBY PROMISES TO PAY to the order of GENERAL
ELECTRIC CAPITAL CORPORATION ("Lender"), at the offices of GENERAL ELECTRIC
CAPITAL CORPORATION, a New York corporation, as Agent for Lenders ("Agent"), at
its address at ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or
at such other place as Agent may designate from time to time in writing, in
lawful money of the United States of America and in immediately available
funds, the amount of TWELVE MILLION DOLLARS AND NO CENTS ($12,000,000) or, if
less, the aggregate unpaid amount of all Revolving Credit Advances made to the
undersigned under the "Credit Agreement" (as hereinafter defined). All
capitalized terms used but not otherwise defined herein have the meanings given
to them in the Credit Agreement or in Annex A thereto.
This Revolving Note is one of the Revolving Notes issued pursuant to that
certain Credit Agreement dated as of October 24, 1997 by and among Borrower,
the other Persons named therein as Credit Parties, Agent, Lender and the other
Persons signatory thereto from time to time as Lenders (including all annexes,
exhibits and schedules thereto, and as from time to time amended, restated,
supplemented or otherwise modified, the "Credit Agreement"), evidences the
Revolving Credit Advances made to Borrower, and is entitled to the benefit and
security of the Credit Agreement, the Security Agreement and all of the Loan
Documents other than Litigation Collateral Documents referred to therein.
Reference is hereby made to the Credit Agreement for a statement of all of the
terms and conditions under which such Revolving Credit Advances are made and
are to be repaid. The date and amount of each Revolving Credit Advance made by
Lenders to Borrower, the rates of interest applicable thereto and each payment
made on account of the principal thereof, shall be recorded by Agent on its
books; provided that the failure of Agent to make any such recordation shall
not affect the obligations of Borrower to make a payment when due of any amount
owing under the Credit Agreement or this Revolving Note in respect of the
Revolving Credit Advances made by Lender to Borrower.
The principal amount of the indebtedness evidenced hereby shall be payable
in the amounts and on the dates specified in the Credit Agreement, the terms of
which are hereby incorporated herein by reference. Interest thereon shall be
paid until such principal amount is paid in full at such interest rates and at
such times, and pursuant to such calculations, as are specified in the Credit
Agreement.
90
If any payment on this Revolving Note becomes due and payable on a day
other than a Business Day, the maturity thereof shall be extended to the next
succeeding Business Day (except as otherwise provided in the Credit Agreement)
and, with respect to payments of principal, interest thereon shall be payable
at the then applicable rate during such extension.
Upon and after the occurrence of any Event of Default, this Revolving Note
may, as provided in the Credit Agreement, and without demand, notice or legal
process of any kind, be declared, and immediately shall become, due and
payable.
Time is of the essence of this Revolving Note. Demand, presentment,
protest and notice of nonpayment and protest are hereby waived by Borrower.
Except as provided in the Credit Agreement, this Revolving Note may not be
assigned by Lender to any Person.
THIS REVOLVING NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF ILLINOIS APPLICABLE TO CONTRACTS MADE AND PERFORMED IN
THAT STATE.
CODE-ALARM, INC.
By:__________________________
Name:___________________
Title:____________________
91
EXHIBIT 1.1(b)
TO
CREDIT AGREEMENT
FORM OF TERM A NOTE
Chicago, Illinois
$1,500,000 October 24, 1997
FOR VALUE RECEIVED, the undersigned, CODE-ALARM, INC., a Michigan
corporation ("Borrower"), HEREBY PROMISES TO PAY to the order of GENERAL
ELECTRIC CAPITAL CORPORATION ("Lender") at the offices of GENERAL ELECTRIC
CAPITAL CORPORATION, a New York corporation, as Agent for Lenders ("Agent"), at
its address at ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or
at such other place as Agent may designate from time to time in writing, in
lawful money of the United States of America and in immediately available
funds, the amount of ONE MILLION FIVE HUNDRED THOUSAND DOLLARS AND NO CENTS
($1,500,000). All capitalized terms used but not otherwise defined herein have
the meanings given to them in the "Credit Agreement" (as hereinafter defined)
or in Annex A thereto.
This Term A Note is one of the Term A Notes issued pursuant to that
certain Credit Agreement dated as of October 24, 1997 by and among Borrower,
the other Persons named therein as Credit Parties, Agent, Lender and the other
Persons signatory thereto from time to time as Lenders (including all annexes,
exhibits and schedules thereto and as from time to time amended, restated,
supplemented or otherwise modified, the "Credit Agreement"), evidences the
Lender's Term Loan A, and is entitled to the benefit and security of the Credit
Agreement, the Security Agreement and all of the Loan Documents other than
Litigation Collateral Documents referred to therein. Reference is hereby made
to the Credit Agreement for a statement of all of the terms and conditions
under which such Term Loan A is made and is to be repaid. The principal
balance of such Term Loan A, the rates of interest applicable thereto and the
date and amount of each payment made on account of the principal thereof, shall
be recorded by Agent on its books; provided that the failure of Agent to make
any such recordation shall not affect the obligations of Borrower to make a
payment when due of any amount owing under the Credit Agreement or this Term A
Note.
Borrower shall pay the principal amount of the Term Loan A evidenced
hereby in twelve (12) equal, consecutive quarterly installments of $125,000
each, on the first day of January, April, July and October of each year,
commencing on January 1, 1998. Interest thereon shall be paid until such
principal amount is paid in full at such interest rates and at such times, and
pursuant to such calculations, as are specified in the Credit Agreement. The
terms of the Credit Agreement are hereby incorporated herein by reference.
If any payment on this Term A Note becomes due and payable on a day
other than a Business Day, the maturity thereof shall be extended to the next
succeeding Business Day
92
(except as otherwise provided in the Credit Agreement) and, with respect to
payments of principal, interest thereon shall be payable at the then applicable
rate during such extension.
Upon and after the occurrence of any Event of Default, this
Term A Note may, as provided in the Credit Agreement, and without demand,
notice or legal process of any kind, be declared, and immediately shall become,
due and payable.
Time is of the essence of this Term A Note. Demand, presentment,
protest and notice of nonpayment and protest are hereby waived by Borrower.
Except as provided in the Credit Agreement, this Term A Note may not be
assigned by Lender to any Person.
THIS TERM A NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF ILLINOIS APPLICABLE TO CONTRACTS MADE AND PERFORMED IN
THAT STATE.
CODE-ALARM, INC.
By:_____________________________
Name:______________________
Title:_____________________
93
EXHIBIT 1.1(c)(i)
TO
CREDIT AGREEMENT
FORM OF TERM B NOTE
Chicago, Illinois
$3,000,000 October 24, 1997
FOR VALUE RECEIVED, the undersigned, CODE-ALARM, INC., a Michigan
corporation ("Borrower"), HEREBY PROMISES TO PAY to the order of GENERAL
ELECTRIC CAPITAL CORPORATION ("Lender") at the offices of GENERAL ELECTRIC
CAPITAL CORPORATION, a New York corporation, as Agent for Lenders ("Agent"), at
its address at ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
or at such other place as Agent may designate from time to time in writing, in
lawful money of the United States of America and in immediately available
funds, the amount of THREE MILLION DOLLARS AND NO CENTS ($3,000,000) or such
lesser amount as may have been advanced as Term Loan B to the undersigned under
the "Credit Agreement" (as hereinafter defined). All capitalized terms used
but not otherwise defined herein have the meanings given to them in the Credit
Agreement or in Annex A thereto.
This Term B Note is one of the Term B Notes issued pursuant to that
certain Credit Agreement dated as of October 24, 1997 by and among Borrower,
the other Persons named therein as Credit Parties, Agent, Lender and the other
Persons signatory thereto from time to time as Lenders (including all annexes,
exhibits and schedules thereto and as from time to time amended, restated,
supplemented or otherwise modified, the "Credit Agreement"), evidences Lender's
Term Loan B, and is entitled to the benefit and security of the Credit
Agreement, the Security Agreement and all of the Loan Documents other than
Litigation Collateral Documents referred to therein. Reference is hereby made
to the Credit Agreement for a statement of all of the terms and conditions
under which such Term Loan B is made and is to be repaid. The principal
balance of such Term Loan B, the rates of interest applicable thereto and the
date and amount of each payment made on account of the principal thereof, shall
be recorded by Agent on its books; provided that the failure of Agent to make
any such recordation shall not affect the obligations of Borrower to make a
payment when due of any amount owing under the Credit Agreement or this Term B
Note.
Borrower shall pay the aggregate amount of the Term Loan B evidenced
hereby in equal, consecutive quarterly installments equal to one- twelfth
(1/12) of the aggregate original principal amount of such Loan on the first day
of January, April, July and October of each year, commencing, subject to the
terms of the Credit Agreement, on the first of such dates occurring after the
Term Loan B Funding Date. Interest thereon shall be paid until such principal
amount is paid in full at such interest rates and at such times, and pursuant
to such calculations, as are
94
specified in the Credit Agreement. The terms of the Credit Agreement are
hereby incorporated herein by reference.
If any payment on this Term B Note becomes due and payable on a day
other than a Business Day, the maturity thereof shall be extended to the
next succeeding Business Day (except as otherwise provided in the Credit
Agreement) and, with respect to payments of principal, interest thereon shall
be payable at the then applicable rate during such extension.
Upon and after the occurrence of any Event of Default, this Term Note
may, as provided in the Credit Agreement, and without demand, notice or
legal process of any kind, be declared, and immediately shall become, due and
payable.
Time is of the essence of this Term B Note. Demand, presentment,
protest and notice of nonpayment and protest are hereby waived by Borrower.
Except as provided in the Credit Agreement, this Term B Note may not be
assigned by Lender to any Person.
THIS TERM B NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF ILLINOIS APPLICABLE TO CONTRACTS MADE AND PERFORMED IN
THAT STATE.
CODE-ALARM, INC.
By:___________________________
Name:____________________
Title:___________________
95
EXHIBIT 1.1(c)(ii)
TO
CREDIT AGREEMENT
FORM OF NOTICE OF TERM LOAN B ADVANCE
Reference is made to that certain Credit Agreement dated as of October
24, 1997 by and among Code-Alarm, Inc. ("Borrower"), the other Persons
signatory thereto as Credit Parties, General Electric Capital Corporation as
agent ("Agent") and the Persons signatory thereto from time to time as Lenders
(including all annexes, exhibits and schedules thereto, and as from time to
time amended, restated, supplemented or otherwise modified, the "Credit
Agreement"). Capitalized terms used herein without definition are so used as
defined in the Credit Agreement.
Borrower hereby gives irrevocable notice, pursuant to Section
1.1(c)(i) of the Credit Agreement, of its request on behalf of the Borrower for
a Term Loan B Advance to be made on [ DATE ] in the aggregate amount of
$[___________] to be made on [____________, ____] as [an Index Rate Loan] [as a
LIBOR Loan having LIBOR Period of [_____] month(s)].
Borrower hereby represents and warrants that all of the conditions
contained in Sections 2.2 and 2.4 of the Credit Agreement have been
satisfied on and as of the date hereof, and will continue to be satisfied on
and as of the date of the Term Loan B Advance(s) requested hereby, before and
after giving effect thereto and to the application of the proceeds therefrom.
Borrower hereby represents and warrants that the conditions set forth
in Section 2.2 pertaining to a request for the Term Loan B Advance and the
further conditions in Section 2.4 have been satisfied and hereby reaffirms its
granting and continuance of Agent's Liens, on behalf of itself and Lenders,
pursuant to the Collateral Documents.
IN WITNESS WHEREOF, Borrower has caused this Notice of Term Loan B
Advance to be executed and delivered by its duly authorized officer as of the
date first set forth above.
96
CODE-ALARM, INC.
By: _________________________________
Title: ______________________________
-2-
97
EXHIBIT 1.1(d)
TO
CREDIT AGREEMENT
FORM OF NOTICE OF TERM LOAN C ADVANCE
Reference is made to that certain Credit Agreement dated as of October
24, 1997 by and among Code-Alarm, Inc. ("Borrower"), the other Persons
signatory thereto as Credit Parties, General Electric Capital Corporation as
agent ("Agent") and the Persons signatory thereto from time to time as Lenders
(including all annexes, exhibits and schedules thereto, and as from time to
time amended, restated, supplemented or otherwise modified, the "Credit
Agreement"). Capitalized terms used herein without definition are so used as
defined in the Credit Agreement.
Borrower hereby gives irrevocable notice, pursuant to Section
1.1(d)(iii) of the Credit Agreement, of its request on behalf of the Borrower
for a Term Loan C Advance to be made on [ DATE ] in the aggregate
amount of $[___________] to be made on [____________, ____] as [an Index Rate
Loan] [as a LIBOR Loan having LIBOR Period of [_____] month(s)].
Borrower hereby represents and warrants that all of the conditions
contained in Sections 2.3(II) and 2.4 of the Credit Agreement have been
satisfied on and as of the date hereof, and will continue to be satisfied on
and as of the date that the Term Loan C Advance(s) is requested hereby, before
and after giving effect thereto and to the application of the proceeds
therefrom.
Borrower hereby represents and warrants that the conditions set forth
in Section 2.3 (II) pertaining to a request for the Term Loan C Advance, and
the further conditions in Section 2.4 have been satisfied and hereby reaffirms
its granting and continuance of Agent's Liens, on behalf of itself and Lenders,
pursuant to the Litigation Collateral Documents.
98
IN WITNESS WHEREOF, Borrower has caused this Notice of Term Loan C
Advance to be executed and delivered by its duly authorized officer as of
the date first set forth above.
CODE-ALARM, INC.
By: _______________________
Title: ____________________
-2-
99
EXHIBIT 1.1(e)
TO
CREDIT AGREEMENT
FORM OF SWING LINE NOTE
Chicago, Illinois
$1,200,000 October 24, 1997
FOR VALUE RECEIVED, the undersigned, CODE-ALARM, INC., a Michigan
corporation ("Borrower"), HEREBY PROMISES TO PAY to the order of GENERAL
ELECTRIC CAPITAL CORPORATION, a New York corporation ("Swing Line Lender") at
the offices of GENERAL ELECTRIC CAPITAL CORPORATION, a New York corporation, as
Agent (in such capacity, the "Agent") at the Agent's address at ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or at such other place as
Agent may designate from time to time in writing, in lawful money of the United
States of America and in immediately available funds, the amount of ONE MILLION
TWO HUNDRED THOUSAND DOLLARS AND NO CENTS ($1,200,000) or, if less, the
aggregate unpaid amount of all Swing Line Advances made to the undersigned
under the "Credit Agreement" (as hereinafter defined). All capitalized terms
used but not otherwise defined herein have the meanings given to them in the
Credit Agreement or in Annex A thereto.
This Swing Line Note is issued pursuant to that certain Credit Agreement
dated as of October 24, 1997 by and among Borrower, the other Persons named
therein as Credit Parties, Agent, Swing Line Lender and the other Persons
signatory thereto from time to time as Lenders (including all annexes, exhibits
and schedules thereto and as from time to time amended, restated, supplemented
or otherwise modified, the "Credit Agreement"), evidences the Swing Line
Lenders' Swing Line Advances made to Borrower, and is entitled to the benefit
and security of the Credit Agreement, the Security Agreement and all of the
Loan Documents other than Litigation Collateral Documents referred to therein.
Reference is hereby made to the Credit Agreement for a statement of all of the
terms and conditions under which such Swing Line Advances are made and are to
be repaid. The date and amount of each Swing Line Advance made by Swing Line
Lender to Borrower, the rate of interest applicable thereto and each payment
made on account of the principal thereof, shall be recorded by Agent on its
books; provided that the failure of Agent to make any such recordation shall
not affect the obligations of Borrower to make a payment when due of any amount
owing under the Credit Agreement or this Swing Line Note in respect of the
Swing Line Advances made by Swing Line Lender to Borrower.
The principal amount of the indebtedness evidenced hereby shall be payable
in the amounts and on the dates specified in the Credit Agreement, the terms of
which are hereby incorporated herein by reference. Interest thereon shall be
paid until such principal amount is
100
paid in full at such interest rates and at such times, and pursuant to such
calculations, as are specified in the Credit Agreement.
If any payment on this Swing Line Note becomes due and payable on a day
other than a Business Day, the maturity thereof shall be extended to the next
succeeding Business Day and, with respect to payments of principal, interest
thereon shall be payable at the then applicable rate during such extension.
Upon and after the occurrence of any Event of Default, this Swing Line
Note may, as provided in the Credit Agreement, and without demand, notice or
legal process of any kind, be declared, and immediately shall become, due and
payable.
Time is of the essence of this Swing Line Note. Demand, presentment,
protest and notice of nonpayment and protest are hereby waived by Borrower.
Except as provided in the Credit Agreement, this Swing Line Note may not
be assigned by Lender to any Person.
THIS SWING LINE NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF ILLINOIS APPLICABLE TO CONTRACTS MADE AND PERFORMED IN
THAT STATE.
CODE-ALARM, INC.
By:___________________________
Name:____________________
Title:___________________
101
EXHIBIT 1.5(E)
TO
CREDIT AGREEMENT
FORM OF NOTICE OF CONVERSION/CONTINUATION
Reference is made to that certain Credit Agreement dated as of
October 24, 1997 by and among Code-Alarm, Inc., a Michigan corporation (in such
capacity, the "Borrower"), the other Persons signatory thereto as Credit
Parties, General Electric Capital Corporation ("Agent") and the Persons
signatory thereto from time to time as Lenders (including all annexes, exhibits
or schedules thereto, and as from time to time amended, restated, supplemented
or otherwise modified, the "Credit Agreement"). Capitalized terms used herein
without definition are so used as defined in the Credit Agreement.
Borrower hereby gives irrevocable notice, pursuant to Section
1.5(e) of the Credit Agreement, of its request to:
(a) on DATE convert $________ of the aggregate
outstanding principal amount of the _______ Loan, bearing interest at
the ________ Rate, into a(n) ________ Loan [and, in the case of a
LIBOR Loan, having a LIBOR Period of _____ month(s)];
[(b) on DATE continue $________of the aggregate
outstanding principal amount of the _______ Loan, bearing interest at
the LIBOR Rate, as a LIBOR Loan having a LIBOR Period of _____
month(s)].
Borrower hereby represents and warrants that all of the
conditions contained in Section 2.4 of the Credit Agreement have been satisfied
on and as of the date hereof, and will continue to be satisfied on and as of
the date of the conversion/continuation requested hereby, before and after
giving effect thereto.
Borrower hereby represents and warrants that the conditions
set forth in Section 2.4 have been satisfied and hereby reaffirms its granting
and continuance of Agent's Liens, on behalf of itself and Lenders, pursuant to
the Collateral Documents.
102
IN WITNESS WHEREOF, Borrower has caused this Notice of
Conversion/Continuation be executed and delivered on its by its duly authorized
officer as of the date first set forth above.
CODE-ALARM, INC.
By:
--------------------------------
Title:
-----------------------------
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103
EXHIBIT 4.1(b)
TO
CREDIT AGREEMENT
FORM OF BORROWING BASE CERTIFICATE
Reference is made to that certain Credit Agreement dated as of October 24,
1997 by and among Code-Alarm, Inc. ("Borrower"), the other Persons signatory
thereto as Credit Parties, General Electric Capital Corporation ("Agent") and
the Persons signatory thereto from time to time as Lenders (including all
annexes, exhibits and schedules thereto, and as from time to time amended,
restated, supplemented or otherwise modified, the "Credit Agreement").
Capitalized terms used herein without definition are so used as defined in the
Credit Agreement.
The undersigned certifies that (a) all of the foregoing information
regarding Eligible Accounts is true and correct on the date hereof and relates
solely to Eligible Accounts within the meaning given such term in the Credit
Agreement, and (b) all of the foregoing information regarding Eligible
Inventory is true and correct on the date hereof and relates solely to Eligible
Inventory within the meaning given such term in the Credit Agreement.
104
Company Name: Code-Alarm, Inc. Date:_________________ B.B.C.#________
1. Period end accounts receivable as of :______________________ $______________
2. Ineligible Accounts as of :________________________
Accounts from sales/services not in ordinary course
(as defined in Section 1.6(a)) $______________
Contingent or judicially unenforceable accounts
(as defined in Section 1.6(b)) $______________
Defense, counterclaim, setoff or dispute applies
(as defined in Section 1.6(c)) $______________
Invalid Account (as defined in Section 1.6(d)) $______________
Invoice not sent to Account Debtor
(as defined in Section 1.6(e)) $______________
Accounts not owned (as defined in Section 1.6(f)) $______________
Intercompany accounts
(as defined in Section 1.6(g)) $______________
United States government Account
(as defined in Section 1.6(h)) $______________
Prepaid Credit Balance over ninety (90) days
(as defined in Section 1.6(i)) $______________
Foreign accounts (as defined in Section 1.6(i)) $______________
Contra accounts (as defined in Section 1.6(j)) $______________
Consignment (as defined in Section 1.6(k)) $______________
Accounts in default (as defined in Section 1.6(l)) $______________
50% Cross aging exclusion
(as defined in Section 1.6(m)) $______________
Accounts exceeding 10% of all Eligible Accounts
(excluding entities named in Section 1.6(n)) $______________
Restricted Accounts (as defined in Section 1.6(o)) $______________
Representations and Warranties untrue
(as defined in Section 1.6(p)) $______________
Evidenced by judgment, Instrument, or Chattel Paper
(as defined in Section 1.6(q)) $______________
Payable in currency other than Dollars
(as defined in Section 1.6(r)) $______________
Payment conditional on delivery
(as defined in Section 1.6(s)) $______________
Warranty (as defined in Section 1.6(t)) $______________
Other (as specified in Section 1.6 or otherwise):
________________________________ $______________
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TOTAL INELIGIBLES $______________
3. Eligible Accounts (Line 1 minus Line 2) $______________
4. Eligible Accounts advance rate 85%
5. Eligible Accounts availability (Line 3 multiplied by Line 4) $______________
_______________________________________________________________________________________
6. Inventory as of :____________________ $______________
7. Ineligible Inventory as of : ___________________
Not owned by Borrower/Tessco
(as defined in Section 1.7(a)) $______________
On premises not owned/operated by Borrower/Tessco
(as defined in Section 1.7(b)) $______________
Locations less than $100,000
(as defined in Section 1.7(b)) $______________
Inventory on Consignment or In Transit
(as defined in Section 1.7(c)) $______________
Negotiable titles (as defined in Section 1.7(d)) $______________
Excess Inventory Reserve
(as defined in Section 1.7(e)) $______________
Work-in-process (as defined in Section 1.7(f)) $______________
Low Value items (as defined in Section 1.7(f)) $______________
Returned goods (as defined in Section 1.7(g)) $______________
Not held for sale in ordinary course of business
(as defined in Section 1.7(h)) $______________
Restricted (as defined in Section 1.7(i)) $______________
Representations and Warranties untrue
(as defined in Section 1.7(j)) $______________
"Freight-in" costs or charges
(as defined in Section 1.7(k)) $______________
Hazardous Materials or licensed sales
(as defined in Section 1.7(l)) $______________
Unacceptably insured
(as defined in Section 1.7(m)) $______________
Components not tracked
(as defined in Section 1.7(n)) $______________
Valuation Reserve (as defined in Section 1.7(o)) $______________
Other (as specified in Section 1.7 or otherwise):
________________________________ $______________
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TOTAL INELIGIBLES $______________
8. Eligible Inventory (Line 6 minus Line 7) $______________
9. Eligible Inventory advance rate 25%
10. Eligible Inventory availability (Line 8 multiplied by Line 9) $______________
_______________________________________________________________________________________________________
11. Supplemental Amount $4,000,000
_______________________________________________________________________________________________________
12. Reserves against availability (including Rent Reserve
and reserve for NBD indemnities) $______________
13. Tessco Liquidation Reserve (including the total liabilities and contingent
liabilities (to the extent known and probable) of Tessco, as provided
by Borrower on the attached Schedule A hereto, other than Tessco's
intercompany liabilities owing to Borrower and Tessco's obligations to
Agent and Lenders under the Loan Documents), plus an amount equal to
two months' rental obligations with respect to all existing operating
leases of Tessco. $______________
_______________________________________________________________________________________________________
14. Borrowing Availability (the lesser of (i) the total of lines 5, 10 and 11
minus the sum of lines 12 and 13,
or (ii) the Maximum Amount of $12,000,000) $______________
15. Revolving Credit Loan Balance $______________
16. Letter of Credit Obligations $______________
17. Net Borrowing Availability (Line 14 minus the total of Lines 15 and 16) $______________
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IN WITNESS WHEREOF, the undersigned has executed and delivered this
Borrowing Base Certificate as of the date first set forth above.
CODE-ALARM, INC.
By: ______________________
Title: ___________________
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SCHEDULE A
TESSCO LIQUIDATION RESERVE
Item 12 on the Form of Borrowing Base Certificate
[To be provided by Borrower]
109
EXHIBIT 9.1(a)
ASSIGNMENT AGREEMENT
This Assignment Agreement (this "Agreement") is made as of
___________ __, ____ by and between __________________________________
("Assignor Lender") and ________________________ ("Assignee Lender") and
acknowledged and consented to by GENERAL ELECTRIC CAPITAL CORPORATION, as agent
("Agent"). All capitalized terms used in this Agreement and not otherwise
defined herein will have the respective meanings set forth in the Credit
Agreement as hereinafter defined.
RECITALS:
WHEREAS, Code-Alarm, Inc., a Michigan corporation (in such
capacity, the "Borrower"), the Persons signatory thereto as Credit Parties,
Agent, Assignor Lender and other Persons signatory thereto from time to time as
Lenders have entered into that certain Credit Agreement dated as of October 24,
1997 (as amended, restated, supplemented or otherwise modified from time to
time, the "Basic Credit Agreement") pursuant to which Assignor Lender has
agreed to make certain Loans to, and incur certain Letter of Credit Obligations
for, Borrower;
WHEREAS, Borrower, Agent, Assignor Term Lender and the Persons
signatory thereto from time to time as Term Lenders have entered into that
certain Litigation L/C and Term Loan C Agreement dated as of October 24, 1997
(including all annexes, exhibits and schedules thereto, as from time to time
amended, restated, supplemented or otherwise modified, the "L/C Credit
Agreement") pursuant to which Assignor Lender has agreed to incur Litigation
L/C Obligations and certain other Litigation Obligations including the
obligations constituting Term Loan C for Borrower;
WHEREAS, Assignor Lender desires to assign to Assignee Lender
[all/a portion] of its interest in the Loans (as described below), the Letter
of Credit Obligations, L/C Litigation Obligations and the Collateral and to
delegate to Assignee Lender [all/a portion] of its Commitments and other duties
with respect to such Loans, Letter of Credit Obligations, L/C Litigation
Obligations and Collateral;
WHEREAS, Assignee Lender desires to become a Lender under the
Basic Credit Agreement and the L/C Credit Agreement (collectively, the "Credit
Agreement") and to accept such assignment and delegation from Assignor Lender;
and
WHEREAS, Assignee Lender desires to appoint Agent to serve as
agent for Assignee Lender under the Credit Agreement.
110
NOW, THEREFORE, in consideration of the premises and the
agreements, provisions, and covenants herein contained, Assignor Lender and
Assignee Lender agree as follows:
1. ASSIGNMENT, DELEGATION, AND ACCEPTANCE
1.1 Assignment. Assignor Lender hereby transfers and assigns to
Assignee Lender, without recourse and without representations or warranties of
any kind [all/such percentage] of Assignor Lender's right, title, and interest
in [the Revolving Loan ], [the Swing Line Loan], [Term Loan A], [Term Loan B],
[Term Loan ], [the Loans], [Letter of Credit Obligations], [Litigation L/C
Obligations], Loan Documents and Collateral as will result in Assignee Lender
having as of the Effective Date (as hereinafter defined) a Pro Rata Share
thereof, as follows:
Assignee Lender's Loans Principal Amount Pro Rata Share
Revolving Loan $____________ ____%
Swing Line Loan $____________ ____%
Term Loan A $____________ ____%
Term Loan B $____________ ____%
Term Loan C $____________ ____%
Letter of Credit Obligations $____________ ____%
Litigation L/C Obligations $____________ ____%
Capital Expenditure Loan $____________ ____%
1.2 Delegation. Assignor Lender hereby irrevocably assigns and
delegates to Assignee Lender [all/a portion] of its Commitments and its other
duties and obligations as a Lender under the Loan Documents equivalent to
[100%/___%] of Assignor Lender's Revolving Loan Commitment (such percentage
representing a commitment of $ ___________), [100%/___%] of Assignor Lender's
Term Loan Commitment (such percentage representing a commitment of $ ______),
and [100%/____%] of Assignor Lender's Capital Expenditure Loan Commitment (such
percentage representing a commitment of $ ___________)].
1.3 Acceptance by Assignee Lender. By its execution of this
Agreement, Assignee Lender irrevocably purchases, assumes and accepts such
assignment and delegation and agrees to be a Lender with respect to the
delegated interest under the Loan Documents and to be bound by the terms and
conditions thereof. By its execution of this Agreement, Assignor Lender
agrees, to the extent provided herein, to relinquish its rights and be released
from its obligations and duties under the Credit Agreement.
1.4 Effective Date. Such assignment and delegation by Assignor
Lender and acceptance by Assignee Lender will be effective and Assignee Lender
will become a Lender under the Loan Documents as of [the date of this
Agreement] ("Effective Date") and upon
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payment of the Assigned Amount and the Assignment Fee (as each term is defined
below). [Interest and Fees accrued prior to the Effective Date are for the
account of Assignor Lender.]
2. INITIAL PAYMENT AND DELIVERY OF NOTES
2.1 Payment of the Assigned Amount. Assignee Lender will pay to
Assignor Lender, in immediately available funds, not later than 12:00 noon (New
York time) on the Effective Date, an amount equal to its Pro Rata Share of the
then outstanding principal amount of the Loans as set forth above in Section
1.1 (but not contingent Letter of Credit Obligations or Litigation L/C
Obligations) [together with accrued interest, fees and other amounts as set
forth on Schedule 2.1] (the "Assigned Amount").
2.2 Payment of Assignment Fee. [Assignor Lender and/or Assignee
Lender] will pay to Agent, for its own account in immediately available funds,
not later than 12:00 noon (New York time) on the Effective Date, the assignment
fee in the amount of $3,500 (the "Assignment Fee") as required pursuant to
Section 9.1(a) of the Credit Agreement.
2.3 Execution and Delivery of Notes. Following payment of the
Assigned Amount and the Assignment Fee, Assignor Lender will deliver to Agent
the Notes previously delivered to Assignor Lender for redelivery to Borrower
and Agent will obtain from Borrower for delivery to [Assignor Lender and]
Assignee Lender, new executed Notes evidencing Assignee Lender's [and Assignor
Lender's respective] Pro Rata Share[s] in the Loans after giving effect to the
assignment described in Section 1. Each new Note will be issued in the
aggregate maximum principal amount of the [applicable] Commitment [of the
Lender to whom such Note is issued] OR [the Assignee Lender].
3. REPRESENTATIONS, WARRANTIES AND COVENANTS
3.1 Assignee Lender's Representations, Warranties and Covenants.
Assignee Lender hereby represents, warrants, and covenants the following to
Assignor Lender and Agent:
(a) This Agreement is a legal, valid, and binding agreement of
Assignee Lender, enforceable according to its terms;
(b) The execution and performance by Assignee Lender of its duties
and obligations under this Agreement and the Loan Documents will not require
any registration with, notice to, or consent or approval by any Governmental
Authority;
(c) Assignee Lender is familiar with transactions of the kind and
scope reflected in the Loan Documents and in this Agreement;
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(d) Assignee Lender has made its own independent investigation and
appraisal of the financial condition and affairs of each Credit Party, has
conducted its own evaluation of the Loans and Letter of Credit Obligations, the
Loan Documents and each Credit Party's creditworthiness, has made its decision
to become a Lender to Borrower under the Credit Agreement independently and
without reliance upon Assignor Lender or Agent, and will continue to do so;
(e) Assignee Lender is entering into this Agreement in the
ordinary course of its business, and is acquiring its interest in the Loans and
Letter of Credit Obligations for its own account and not with a view to or for
sale in connection with any subsequent distribution; provided, however, that at
all times the distribution of Assignee Lender's property shall, subject to the
terms of the Credit Agreement, be and remain within its control;
(f) No future assignment or participation granted by Assignee
Lender pursuant to Section 9.1 of the Credit Agreement will require Assignor
Lender, Agent, or Borrower to file any registration statement with the
Securities and Exchange Commission or to apply to qualify under the blue sky
laws of any state;
(g) Assignee Lender has no loans to, written or oral agreements
with, or equity or other ownership interest in any Credit Party;
(h) Assignee Lender will not enter into any written or oral
agreement with, or acquire any equity or other ownership interest in, any
Credit Party without the prior written consent of Agent; and
(i) As of the Effective Date, Assignee Lender (i) is entitled to
receive payments of principal and interest in respect of the Obligations
without deduction for or on account of any taxes imposed by the United States
of America or any political subdivision thereof [, (ii) is not subject to
capital adequacy or similar requirements under Section 1.16(a) of the Credit
Agreement, (iii) does not require the payment of any increased costs under
Section 1.16(b) of the Credit Agreement, and (iv) is not unable to fund LIBOR
Loans under Section 1.16(c) of the Credit Agreement, ] and Assignee Lender will
indemnify Agent from and against all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, or expenses that result from
Assignee Lender's failure to fulfill its obligations under the terms of Section
1.15(c) of the Credit Agreement [or from any other inaccuracy in the
foregoing].
3.2 Assignor Lender's Representations, Warranties and Covenants.
Assignor Lender hereby represents, warrants and covenants the following to
Assignee Lender:
(a) Assignor Lender is the legal and beneficial owner of the
Assigned Amount;
(b) This Agreement is a legal, valid and binding agreement of
Assignor Lender, enforceable according to its terms;
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(c) The execution and performance by Assignor Lender of its duties
and obligations under this Agreement and the Loan Documents will not require
any registration with, notice to or consent or approval by any Governmental
Authority;
(d) Assignor Lender has full power and authority, and has taken
all action necessary to execute and deliver this Agreement and to fulfill the
obligations hereunder and to consummate the transactions contemplated hereby;
(e) Assignor Lender is the legal and beneficial owner of the
interests being assigned hereby, free and clear of any adverse claim, lien,
encumbrance, security interest, restriction on transfer, purchase option, call
or similar right of a third party; and
(f) This Assignment by Assignor Lender to Assignee Lender
complies, in all material respects, with the terms of the Loan Documents.
4. LIMITATIONS OF LIABILITY
Neither Assignor Lender (except as provided in Section 3.2)
nor Agent makes any representations or warranties of any kind, nor assumes any
responsibility or liability whatsoever, with regard to (a) the Loan Documents
or any other document or instrument furnished pursuant thereto or the Loans,
Letter of Credit Obligations or other Obligations, (b) the creation, validity,
genuineness, enforceability, sufficiency, value or collectibility of any of
them, (c) the amount, value or existence of the Collateral, (d) the perfection
or priority of any Lien upon the Collateral, or (e) the financial condition of
any Credit Party or other obligor or the performance or observance by any
Credit Party of its obligations under any of the Loan Documents. Neither
Assignor Lender nor Agent has or will have any duty, either initially or on a
continuing basis, to make any investigation, evaluation, appraisal of, or any
responsibility or liability with respect to the accuracy or completeness of,
any information provided to Assignee Lender which has been provided to Assignor
Lender or Agent by any Credit Party. Nothing in this Agreement or in the Loan
Documents shall impose upon the Assignor Lender or Agent any fiduciary
relationship in respect of the Assignee Lender.
5. FAILURE TO ENFORCE
No failure or delay on the part of Agent or Assignor Lender in
the exercise of any power, right, or privilege hereunder or under any Loan
Document will impair such power, right, or privilege or be construed to be a
waiver of any default or acquiescence therein. No single or partial exercise
of any such power, right, or privilege will preclude further exercise thereof
or of any other right, power, or privilege. All rights and remedies existing
under this Agreement are cumulative with, and not exclusive of, any rights or
remedies otherwise available.
6. NOTICES
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Unless otherwise specifically provided herein, any notice or
other communication required or permitted to be given will be in writing and
addressed to the respective party as set forth below its signature hereunder,
or to such other address as the party may designate in writing to the other.
7. AMENDMENTS AND WAIVERS
No amendment, modification, termination, or waiver of any
provision of this Agreement will be effective without the written concurrence
of Assignor Lender, Agent and Assignee Lender.
8. SEVERABILITY
Whenever possible, each provision of this Agreement will be
interpreted in such manner as to be effective and valid under applicable law.
In the event any provision of this Agreement is or is held to be invalid,
illegal, or unenforceable under applicable law, such provision will be
ineffective only to the extent of such invalidity, illegality, or
unenforceability, without invalidating the remainder of such provision or the
remaining provisions of the Agreement. In addition, in the event any provision
of or obligation under this Agreement is or is held to be invalid, illegal, or
unenforceable in any jurisdiction, the validity, legality, and enforceability
of the remaining provisions or obligations in any other jurisdictions will not
in any way be affected or impaired thereby.
9. SECTION TITLES
Section and Subsection titles in this Agreement are included
for convenience of reference only, do not constitute a part of this Agreement
for any other purpose, and have no substantive effect.
10. SUCCESSORS AND ASSIGNS
This Agreement shall be binding upon and inure to the benefit
of the parties hereto and their respective successors and assigns.
11. APPLICABLE LAW
THIS AGREEMENT WILL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF THE STATE OF ILLINOIS APPLICABLE TO CONTRACTS MADE AND
PERFORMED IN THAT STATE.
12. COUNTERPARTS
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This Agreement and any amendments, waivers, consents, or
supplements may be executed in any number of counterparts and by different
parties hereto in separate counterparts, each of which, when so executed and
delivered, will be deemed an original and all of which shall together
constitute one and the same instrument.
[signature page follows]
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IN WITNESS WHEREOF, this Agreement has been duly executed as
of the date first written above.
Assignee Lender Assignor Lender
______________________________ _______________________________
By: __________________________ By:____________________________
Title:________________________ Title:_________________________
Notice Address Notice Address
Account Information: Account Information:
Acknowledged and Consented to:
GENERAL ELECTRIC CAPITAL CORPORATION as Agent
By: ____________________________________
Its Duly Authorized Signatory
117
SCHEDULE 2.1
ASSIGNOR LENDER'S LOANS
Principal Amount
Revolving Loan $
------------
Term Loan A $
------------
Term Loan B $
------------
[Term Loan C $ ]
------------
[Capital Expenditure Loan] $
------------
Subtotal $
============
Accrued Interest $
------------
Unused Line Fee $
------------
Other + or - $
------------
Total $
============
All determined as of the Effective Date
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ANNEX A (RECITALS)
TO
CREDIT AGREEMENT
DEFINITIONS
Capitalized terms used in the Loan Documents shall have
(unless otherwise provided elsewhere in the Loan Documents) the following
respective meanings and all section references in the following definitions
shall refer to Sections of the Agreement:
"Account Debtor" shall mean any Person who may become
obligated to any Credit Party under, with respect to, or on account of, an
Account.
"Accounts" shall mean all "accounts," as such term is defined
in the Code, now owned or hereafter acquired by any Credit Party and, in any
event, including (a) all accounts receivable, other receivables, book debts and
other forms of obligations (other than forms of obligations evidenced by
Chattel Paper, Documents or Instruments) now owned or hereafter received or
acquired by or belonging or owing to any Credit Party, whether arising out of
goods sold or services rendered by it or from any other transaction (including
any such obligations which may be characterized as an account or contract right
under the Code), (b) all of each Credit Party's rights in, to and under all
purchase orders or receipts now owned or hereafter acquired by it for goods or
services, (c) all of each Credit Party's rights to any goods represented by any
of the foregoing (including unpaid sellers' rights of rescission, replevin,
reclamation and stoppage in transit and rights to returned, reclaimed or
repossessed goods), (d) all monies due or to become due to any Credit Party,
under all purchase orders and contracts for the sale of goods or the
performance of services or both by such Credit Party or in connection with any
other transaction (whether or not yet earned by performance on the part of such
Credit Party) now or hereafter in existence, including the right to receive the
proceeds of said purchase orders and contracts, and (e) all collateral security
and guarantees of any kind, now or hereafter in existence, given by any Person
with respect to any of the foregoing.
"Advance" shall mean any Revolving Credit Advance or Swing
Line Advance, as the context may require.
"Affiliate" shall mean, with respect to any Person, (a) each
Person that, directly or indirectly, owns or controls, whether beneficially, or
as a trustee, guardian or other fiduciary, five percent (5%) or more of the
Stock having ordinary voting power in the election of directors of such
Persons, (b) each Person that controls, is controlled by or is under common
control with such Person, (c) each of such Person's officers, directors, joint
venturers and partners and (d) in the case of Borrower, the immediate family
members, spouses and lineal descendants of individuals who are Affiliates of
Borrower. For the purposes of this definition, "control" of a Person shall
mean the possession, directly or indirectly, of the power to direct or cause
the
119
direction of its management or policies, whether through the ownership of
voting securities, by contract or otherwise; provided, however, that the term
"Affiliate" shall specifically exclude Agent and each Lender.
"Agent" shall mean GE Capital or its successor appointed
pursuant to Section 9.7.
"Agreement" shall mean the Credit Agreement by and among
Borrower, the other Credit Parties named therein, GE Capital, as Agent and
Lender and the other Lenders signatory from time to time to the Agreement.
"Appendices" shall have the meaning assigned to it in the
recitals to the Agreement.
"Applicable Revolver Index Margin" shall mean one and one-half
of one percent (1.50%) per annum.
"Applicable Revolver LIBOR Margin" shall mean three and
one-quarter of one percent (3.25%) per annum.
"Applicable Term Loan Index Margin" shall mean (a) in the case
of the Term Loan A, one and three-quarters of one percent (1.75%) per annum and
(b) in the case of the Term Loan B and Term Loan C, two percent (2.00%) per
annum.
"Applicable Term Loan LIBOR Margin" shall mean (a) in the case
of the Term Loan A, three and one-half of one percent (3.50%) per annum and (b)
in the case of the Term Loan B and Term Loan C, three and three-quarters of one
percent (3.75%) per annum.
"Assignment Agreement" shall have the meaning assigned to it
in Section 9.1(a).
"Bond" shall have the meaning assigned to it in Section
2.3(I).
"Borrower Accounts" shall have the meaning assigned to it in
Annex C.
"Borrower" shall have the meaning assigned thereto in the
recitals to the Agreement.
"Borrowing Availability" shall have the meaning assigned to
it in Section 1.1(a)(i).
"Borrowing Base" shall mean, as of any date of determination
by Agent, from time to time, an amount equal to the sum at such time of the
following, minus the Tessco Liquidation Reserve then in effect:
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(a) eighty-five percent (85%) of Borrower's and Tessco's
Eligible Accounts, less any Reserves established by Agent at such
time;
(b) twenty-five percent (25%) of the book value of
Borrower's and Tessco's Eligible Inventory valued on a first-in,
first-out basis (at the lower of cost or market), less any Reserves
established by Agent at such time; and
(c) the Supplemental Amount.
"Borrowing Base Certificate" shall mean a certificate to be
executed and delivered from time to time by Borrower in the form attached to
the Agreement as Exhibit 4.1(b).
"Business Day" shall mean any day that is not a Saturday, a
Sunday or a day on which banks are required or permitted to be closed in the
State of Illinois or New York and in reference to LIBOR Loans shall mean any
such day that is also a LIBOR Business Day.
"California Award" shall mean any judgment, settlement or
other award payable to any Credit Party in connection with the litigation
pending with the United States District Court for the Southern District of
California known as Directed Electronics, Inc. v. Code-Alarm, Inc., case
number 95-0513(CGA), or any appeal thereof.
"Capital Expenditures" shall mean, with respect to any Person,
all expenditures (by the expenditure of cash or the incurrence of Indebtedness)
by such Person during any measuring period for any fixed assets or improvements
or for replacements, substitutions or additions thereto, that have a useful
life of more than one year and that are required to be capitalized under GAAP.
"Capital Lease" shall mean, with respect to any Person, any
lease of any property (whether real, personal or mixed) by such Person as
lessee that, in accordance with GAAP, would be required to be classified and
accounted for as a capital lease on a balance sheet of such Person.
"Capital Lease Obligation" shall mean, with respect to any
Capital Lease of any Person, the amount of the obligation of the lessee
thereunder that, in accordance with GAAP, would appear on a balance sheet of
such lessee in respect of such Capital Lease.
"Cash Management Systems" shall have the meaning assigned to
it in Section 1.8.
"Change of Control" means (a) any person or group of persons
(within the meaning of the Securities Exchange Act of 1934, as amended), other
than either of the Pegasus Funds, shall have acquired beneficial ownership
(within the meaning of Rule 13d-3 promulgated by the Securities and Exchange
Commission under the Securities Exchange Act of 1934, as amended) of 20% or
more (computed on a fully diluted basis) of the issued and outstanding
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shares of capital Stock of Borrower having the right to vote for the election
of directors of Borrower under ordinary circumstances; (b) during any period of
twelve consecutive calendar months, individuals who at the beginning of such
period constituted the board of directors of Borrower (together with any new
directors whose election by the board of directors of Borrower or whose
nomination for election by the stockholders of Borrower was approved by a vote
of at least two-thirds of the directors then still in office who either were
directors at the beginning of such period or whose elections or nomination for
election was previously so approved) cease for any reason other than death or
disability to constitute a majority of the directors then in office, (c)
Borrower shall cease to own and control all of the economic and voting rights
associated with all of the outstanding capital Stock of Tessco (other than as a
result of the Tessco Liquidation, if consummated in compliance with Section
6.1) or any of its other Subsidiaries, (d) ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ shall cease to hold
the office of, or cease to perform the duties substantially to the same degree
as currently being performed of, President and Chief Executive Officer of
Borrower (provided, however, that no such event shall constitute an Event of
Default as a result of ▇▇. ▇▇▇▇▇▇▇'▇ death, disability or termination for cause
if ▇▇. ▇▇▇▇▇▇▇ is thereafter replaced within forty-five (45) days with an
officer acceptable to the Requisite Lenders), or (e) ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, his wife
and trusts with respect to which he or his wife are sole beneficiaries or
trustees shall cease to own, collectively, less than 400,000, 320,000 and
250,000 shares of Common Stock of Borrower on the first, second and third
anniversaries, respectfully, of the date of this Agreement.
"Charges" shall mean all federal, state, county, city,
municipal, local, foreign or other governmental taxes (including taxes owed to
the PBGC at the time due and payable), levies, assessments, charges, liens,
claims or encumbrances upon or relating to, but in any event in favor of or
owed to a Governmental Authority, (a) the Collateral, (b) the Obligations, (c)
the employees, payroll, income or gross receipts of any Credit Party, (d) any
Credit Party's ownership or use of any properties or other assets, or (e) any
other aspect of any Credit Party's business.
"Chattel Paper" shall mean any "chattel paper," as such term
is defined in the Code, now owned or hereafter acquired by any Credit Party,
wherever located.
"Closing Checklist" shall mean the schedule, including all
appendices, exhibits or schedules thereto, listing certain documents and
information to be delivered in connection with the Agreement, the other Loan
Documents and the transactions contemplated thereunder, substantially in the
form attached hereto as Annex D.
"Closing Date" shall mean October 24, 1997.
"Code" shall mean the Uniform Commercial Code as the same may,
from time to time, be enacted and in effect in the State of Illinois; provided,
however, in the event that, by reason of mandatory provisions of law, any or
all of the attachment, perfection or priority of Agent's or any Lender's
security interest in any Collateral is governed by the Uniform Commercial Code
as enacted and in effect in a jurisdiction other than the State of Illinois,
the
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term "Code" shall mean the Uniform Commercial Code as enacted and in effect in
such other jurisdiction solely for purposes of the provisions hereof relating
to such attachment, perfection or priority and for purposes of definitions
related to such provisions.
"Collateral" shall mean the property covered by the Security
Agreements, the Pledge Agreements, the Mortgages and the other Collateral
Documents and Litigation Collateral Documents and any other property, real or
personal, tangible or intangible, now existing or hereafter acquired, that may
at any time be or become subject to a security interest or Lien in favor of
Agent, on behalf of itself and Lenders, to secure the Obligations or Litigation
Obligations or a Credit Party's guaranty obligations with respect to the
Obligations or Litigation Obligations.
"Collateral Documents" shall mean the Security Agreements, the
Pledge Agreements, the Guaranties, the Litigation Guaranty, the Supplemental
Guaranty, the Mortgages, the Patent Security Agreements, the Trademark Security
Agreements, the Copyright Security Agreements and all similar agreements
entered into, guaranteeing payment of, or granting a Lien upon property as
security for payment of, the Obligations or a Credit Party's guaranty
obligations with respect to the Obligations.
"Collateral Reports" shall mean the reports with respect to
the Collateral referred to in Annex F.
"Collection Account" shall mean that certain account of Agent,
account number ▇▇▇-▇▇▇-▇▇ in the name of Agent at Bankers Trust Company in New
York, New York.
"Commitment Termination Date" shall mean the earliest of (a)
October 24, 2000, (b) the date of termination of Lenders' obligations to make
Advances and/or incur Letter of Credit Obligations and/or Litigation L/C
Obligations or permit existing Loans to remain outstanding pursuant to Section
8.2(b), and (c) the date of indefeasible prepayment in full by Borrower of the
Loans and the cancellation and return (or stand-by guarantee) of all Letters of
Credit or the cash collateralization of all Letter of Credit Obligations and
Litigation L/C Obligations pursuant to Annex B, and the permanent reduction of
the Revolving Loan Commitment and the Swing Line Commitment to zero dollars
($0), in accordance with the provisions of Section 1.3(a).
"Commitments" shall mean (a) as to any Lender, the aggregate
of such Lender's Revolving Loan Commitment (including without duplication the
Swing Line Lender's Swing Line Commitment) and Term Loan Commitment as set
forth on the signature page to the Agreement or in the most recent Assignment
Agreement executed by such Lender and (b) as to all Lenders, the aggregate of
all Lenders' Revolving Loan Commitments (including without duplication the
Swing Line Lender's Swing Line Commitment) and Term Loan Commitments, which
aggregate maximum commitment shall be Twenty-Five Million Five Hundred Thousand
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Dollars ($25,500,000.00) on the Closing Date, as such amount may be adjusted,
if at all, from time to time in accordance with the Agreement.
"Compliance Certificate" shall have the meaning assigned to it
in Annex E.
"Concentration Accounts" shall have the meaning assigned to it
in Annex C.
"Contracts" shall mean all "contracts," as such term is
defined in the Code, now owned or hereafter acquired by any Credit Party, in
any event, including all contracts, undertakings, or agreements (other than
rights evidenced by Chattel Paper, Documents or Instruments) in or under which
any Credit Party may now or hereafter have any right, title or interest,
including any agreement relating to the terms of payment or the terms of
performance of any Account.
"Control Letter" means a letter agreement between Agent and
(i) the issuer of uncertificated securities with respect to uncertificated
securities in the name of any Credit Party, (ii) a securities intermediary with
respect to securities, whether certificated or uncertificated, securities
entitlements and other financial assets held in a securities account in the
name of any Credit Party, (iii) a futures commission merchant or clearing house
with respect to commodity accounts and commodity contracts held by any Credit
Party, whereby, among other things, the issuer, securities intermediary or
futures commission merchant disclaims any security interest in the applicable
financial assets, acknowledges the Lien of Agent, on behalf of itself and
Lenders, on such financial assets, and agrees to follow the instructions or
entitlement orders of Agent without further consent by the affected Credit
Party.
"Copyright License" shall mean any and all rights now owned or
hereafter acquired by any Credit Party under any written agreement granting any
right to use any Copyright or Copyright registration.
"Copyright Security Agreements" shall mean, collectively, each
Copyright Security Agreement executed by a Credit Party in favor of Agent, on
behalf of itself and Lenders, with respect to Copyrights, as security for the
obligations or for such Credit Party's guaranty obligations with respect to the
Obligations.
"Copyrights" shall mean all of the following now owned or
hereafter acquired by any Credit Party: (a) all copyrights and general
intangibles of like nature (whether registered or unregistered), now owned or
existing or hereafter adopted or acquired, all registrations and recordings
thereof, and all applications in connection therewith, including all
registrations, recordings and applications in the United States Copyright
Office or in any similar office or agency of the United States, any state or
territory thereof, or any other country or any political subdivision thereof,
and (b) all reissues, extensions or renewals thereof.
"Credit Parties" shall mean Borrower and each of its
Subsidiaries.
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"DEI Litigation" shall mean the litigation currently pending
with the United States District Court for the Eastern District of Michigan
known as Code Alarm, Inc. v. Electromotive Technologies Corporation and
Directed Electronics, Inc., case number 87-CV-74022-DT, and all appeals with
respect thereto.
"Default" shall mean any event which, with the passage of time
or notice or both, would, unless cured or waived, become an Event of Default.
"Default Rate" shall have the meaning assigned to it in
Section 1.5(d).
"Disbursement Accounts" shall have the meaning assigned to it
on Annex C.
"Disclosure Schedules" shall mean the Schedules prepared by
Borrower and denominated as Disclosure Schedules 1.4 through 6.7 in the Index
to the Agreement.
"Documents" shall mean any "documents," as such term is
defined in the Code, now owned or hereafter acquired by any Credit Party,
wherever located.
"Dollars" or "$" shall mean lawful currency of the United
States of America.
"EBITDA" shall mean, with respect to any Person for any fiscal
period, an amount equal to (a) consolidated net income before stock dividends
of such Person for such period, minus (b) the sum of (i) income tax credits,
(ii) interest income, (iii) gain from extraordinary items for such period, (iv)
any aggregate net gain (but not any aggregate net loss) during such period
arising from the sale, exchange or other disposition of capital assets by such
Person (including any fixed assets, whether tangible or intangible, all
inventory sold in conjunction with the disposition of fixed assets and all
securities), and (v) any other non-cash gains which have been added in
determining consolidated net income, in each case to the extent included in the
calculation of consolidated net income of such Person for such period in
accordance with GAAP, but without duplication, plus (c) the sum of (i) any
provision for income taxes, (ii) Interest Expense (other than preferred stock
dividends), (iii) the amount of non-cash charges (including depreciation and
amortization) for such period, (iv) amortized debt discount for such period,
and (v) the amount of any deduction to consolidated net income as the result of
any grant to any members of the management of such Person of any Stock, in each
case to the extent included in the calculation of consolidated net income of
such Person for such period in accordance with GAAP, but without duplication.
For purposes of this definition, and notwithstanding the foregoing, the
following items shall be excluded in determining consolidated net income of a
Person: (1) the income (or deficit) of any other Person accrued prior to the
date it became a Subsidiary of, or was merged or consolidated into, such Person
or any of such Person's Subsidiaries; (2) the income (or deficit) of any other
Person (other than a Subsidiary) in which such Person has an ownership
interest, except to the extent any such income has actually been received by
such Person in the form of cash dividends or distributions; (3) the
undistributed earnings of any Subsidiary of such Person to the extent that the
declaration or payment of
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dividends or similar distributions by such Subsidiary is not at the time
permitted by the terms of any contractual obligation or requirement of law
applicable to such Subsidiary; (4) any restoration to income of any contingency
reserve, except to the extent that provision for such reserve was made out of
income accrued during such period; (5) any write-up of any asset; (6) any net
gain from the collection of the proceeds of life insurance policies; (7) any
net gain arising from the acquisition of any securities, or the extinguishment,
under GAAP, of any Indebtedness, of such Person, (8) in the case of a successor
to such Person by consolidation or merger or as a transferee of its assets, any
earnings of such successor prior to such consolidation, merger or transfer of
assets, (9) any deferred credit representing the excess of equity in any
Subsidiary of such Person at the date of acquisition of such Subsidiary over
the cost to such Person of the investment in such Subsidiary (10) any ordinary
or extraordinary gain realized after the Closing Date as a result of any
judgment entered with respect to the litigation relating to any potential
California Award, and (11) any ordinary or extraordinary loss incurred after
the Closing Date of up to $12,000,000 in respect of the DEI Litigation.
"Eligible Accounts" shall have the meaning assigned to it in
Section 1.6 of the Agreement.
"Eligible Inventory" shall have the meaning assigned to it in
Section 1.7 of the Agreement.
"Environmental Laws" shall mean all applicable federal, state,
local and foreign laws, statutes, ordinances, codes, rules, standards and
regulations, and any applicable judicial or administrative interpretation
thereof, including any applicable judicial or administrative order, consent
decree, order or judgment, imposing liability or standards of conduct for the
regulation and protection of human health, safety, the environment and natural
resources (including ambient air, surface water, groundwater, wetlands, land
surface or subsurface strata). Environmental Laws include the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980 (42 U.S.C.
Section Section 9601 et seq.) ("CERCLA"); the Hazardous Materials
Transportation Authorization Act of 1994 (49 U.S.C. Section Section 5101 et
seq.); the Federal Insecticide, Fungicide, and Rodenticide Act (7 U.S.C.
Section Section 136 et seq.); the Solid Waste Disposal Act (42 U.S.C. Section
Section 6901 et seq.); the Toxic Substance Control Act (15 U.S.C. Section
Section 2601 et seq.); the Clean Air Act (42 U.S.C. Section Section 7401 et
seq.); the Federal Water Pollution Control Act (33 U.S.C. Section Section 1251
et seq.); the Occupational Safety and Health Act (29 U.S.C. Section Section
651 et seq.); and the Safe Drinking Water Act (42 U.S.C. Section Section
300(f) et seq.), and any and all regulations promulgated thereunder, and all
analogous state, local and foreign counterparts or equivalents and any transfer
of ownership notification or approval statutes.
"Environmental Liabilities" shall mean, with respect to any
Person, all liabilities, obligations, responsibilities, response, remedial and
removal costs, investigation and feasibility study costs, capital costs,
operation and maintenance costs, losses, damages, punitive damages, property
damages, natural resource damages, consequential damages, treble damages, costs
and expenses (including all fees, disbursements and expenses of counsel,
experts and consultants),
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fines, penalties, sanctions and interest incurred as a result of or related to
any claim, suit, action, investigation, proceeding or demand by any Person,
whether based in contract, tort, implied or express warranty, strict liability,
criminal or civil statute or common law, arising under or related to any
Environmental Laws, Environmental Permits, or in connection with any Release or
threatened Release or presence of a Hazardous Material whether on, at, about,
in, under, or migrating from or to any real or personal property of that
Person.
"Environmental Permits" shall mean all permits, licenses,
authorizations, certificates, approvals, registrations or other written
documents required by any Governmental Authority under any Environmental Laws.
"Equipment" shall mean all "equipment," as such term is
defined in the Code, now owned or hereafter acquired by any Credit Party,
wherever located and, in any event, including all such Credit Party's machinery
and equipment, including processing equipment, conveyors, machine tools, data
processing and computer equipment with software and peripheral equipment (other
than software constituting part of the Accounts), and all engineering,
processing and manufacturing equipment, office machinery, furniture, materials
handling equipment, tools, attachments, accessories, automotive equipment,
trailers, trucks, forklifts, molds, dies, stamps, motor vehicles, rolling stock
and other equipment of every kind and nature, trade fixtures and fixtures not
forming a part of real property, all whether now owned or hereafter acquired,
and wherever situated, together with all additions and accessions thereto,
replacements therefor, all parts therefor, all substitutes for any of the
foregoing, fuel therefor, and all manuals, drawings, instructions, warranties
and rights with respect thereto, and all products and proceeds thereof and
condemnation awards and insurance proceeds with respect thereto.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974 (or any successor legislation thereto), as amended from time to time,
and any regulations promulgated thereunder.
"ERISA Affiliate" shall mean, with respect to any Credit
Party, any trade or business (whether or not incorporated) which, together with
such Credit Party, are treated as a single employer within the meaning of
Sections 414(b), (c), (m) or (o) of the IRC.
"ERISA Event" shall mean, with respect to any Credit Party or
any ERISA Affiliate, (a) any event described in Section 4043(c) of ERISA with
respect to a Title IV Plan; (b) the withdrawal of any Credit Party or ERISA
Affiliate from a Title IV Plan subject to Section 4063 of ERISA during a plan
year in which it was a substantial employer, as defined in Section 4001(a)(2)
of ERISA; (c) the complete or partial withdrawal of any Credit Party or any
ERISA Affiliate from any Multiemployer Plan; (d) the filing of a notice of
intent to terminate a Title IV Plan or the treatment of a plan amendment as a
termination under Section 4041 of ERISA; (e) the institution of proceedings to
terminate a Title IV Plan or Multiemployer Plan by the PBGC; (f) the failure by
any Credit Party or ERISA Affiliate to make when due required contributions to
a Multiemployer Plan or Title IV Plan unless such failure is cured within 30
days; (g) any other
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event or condition which might reasonably be expected to constitute grounds
under Section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Title IV Plan or Multiemployer Plan or for the
imposition of liability under Section 4069 or 4212(c) of ERISA; (h) the
termination of a Multiemployer Plan under Section 4041A of ERISA or the
reorganization or insolvency of a Multiemployer Plan under Section 4241 of
ERISA; or (i) the loss of a Qualified Plan's qualification or tax exempt
status.
"ESOP" shall mean a Plan which is intended to satisfy the
requirements of Section 4975(e)(7) of the IRC.
"Event of Default" shall have the meaning assigned to it in
Section 8.1.
"Excess Cash Flow" shall mean, without duplication, with
respect to any Fiscal Year of Borrower and its Subsidiaries, consolidated net
income plus (a) depreciation, amortization and other non cash charges and
Interest Expense to the extent deducted in determining consolidated net income,
minus (c) Capital Expenditures during such Fiscal Year (excluding the portion
thereof which is financed other than with the proceeds of Loans hereunder and
excluding any Capital Expenditures in such Fiscal Year to the extent in excess
of the amount permitted to be made in such Fiscal Year pursuant to clause (a)
of Annex G), minus (d) Interest Expense paid or accrued (excluding any original
issue discount, interest paid in kind or amortized debt discount, to the extent
included in determining Interest Expense) and scheduled principal payments paid
or payable in respect of Funded Debt, plus or minus (as the case may be), (e)
extraordinary gains or losses which are cash items not included in the
calculation of net income, minus (f) mandatory prepayments paid in cash
pursuant to Section 1.3 other than mandatory prepayments made pursuant to
Sections 1.3(b)(i), 1.3(b)(iv) or 1.3(d), minus voluntary prepayments paid in
cash pursuant to Section 1.3 to the extent such prepayments are applied to any
Term Loan installments in the inverse order of their maturities, and plus (g)
taxes deducted in determining consolidated net income to the extent not paid
for in cash. Notwithstanding the foregoing, losses with respect to the DEI
Litigation shall not reduce Excess Cash Flow for any period.
"Fair Salable Balance Sheet" shall mean a balance sheet of
Borrower prepared in accordance with Section 3.4(d).
"Federal Funds Rate" shall mean, for any day, a floating rate
equal to the weighted average of the rates on overnight Federal funds
transactions among members of the Federal Reserve System, as determined by
Agent.
"Federal Reserve Board" means the Board of Governors of the
Federal Reserve System, or any successor thereto.
"Fees" shall mean any and all fees payable to Agent or any
Lender pursuant to the Agreement or any of the other Loan Documents.
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"Final Judgment" shall mean (a) an order, judgment, ruling or
other decree (or any revision, modification or amendment thereto) issued and
entered by the Lower Court in or relating to the DEI Litigation or by any other
Federal court or state court as may have jurisdiction over any proceeding in
connection with the DEI Litigation, which order, judgment, ruling or other
decree has not been reversed, vacated, stayed, modified or amended and as to
which (i) no appeal, petition for review, reargument, rehearing,
reconsideration or certiorari has been taken and is pending and the time for
filing of such appeal, petition for review, reargument, rehearing,
reconsideration or certiorari has expired, or (ii) such appeal or petition has
been heard and dismissed, denied or otherwise resolved and the time to further
appeal or petition has expired with no further appeal or petition pending; or
(b) a settlement agreement, stipulation or other agreement entered into which
has the effect of any aforesaid order, judgment, ruling or other decree with
like finality.
"Financial Statements" shall mean the consolidated and
consolidating income statements, statements of cash flows and balance sheets of
Borrower delivered in accordance with Section 3.4 of the Agreement and Annex E
to the Agreement.
"Fiscal Month" shall mean any of the monthly accounting
periods of Borrower.
"Fiscal Quarter" shall mean any of the quarterly accounting
periods of Borrower, ending on March 31, June 30, September 30 and December 31
of each year.
"Fiscal Year" shall mean any of the annual accounting periods
of Borrower ending on December 31 of each year.
"Fixed Charge Coverage Ratio" shall mean, with respect to any
Person for any fiscal period, the ratio of (i) EBITDA, minus Capital
Expenditures, minus current federal tax expenses paid or accrued to (ii)
scheduled payments of principal (excluding mandatory and voluntary prepayments)
with respect to Indebtedness during such period, plus Interest Expense for such
period.
"Fixtures" shall mean any "fixtures" as such term is defined
in the Code, now owned or hereafter acquired by any Credit Party.
"Funded Debt" shall mean, with respect to any Person, all
Indebtedness for borrowed money evidenced by notes, bonds, debentures, or
similar evidences of Indebtedness and which by its terms matures more than one
year from, or is directly or indirectly renewable or extendible at such
Person's option under a revolving credit or similar agreement obligating the
lender or lenders to extend credit over a period of more than one year from the
date of creation thereof, and specifically including Capital Lease Obligations,
current maturities of long-term debt, revolving credit and short-term debt
extendible beyond one year at the option of the debtor, and also including, in
the case of Borrower, the Obligations.
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"Funding Accounts" shall have the meaning assigned in Annex C.
"GAAP" shall mean generally accepted accounting principles in
the United States of America as in effect on the Closing Date, consistently
applied as such term is further defined in Annex G to the Agreement.
"GE Capital Fee Letter" shall mean that certain letter, dated
as of October 24, 1997, between GE Capital and Borrower with respect to certain
Fees to be paid from time to time by Borrower to GE Capital.
"GECC Warrant Documents" shall mean, collectively, the GECC
Warrants, the GECC Warrant Purchase Agreement and that certain Registration
Rights Agreement dated as of October 24, 1997 among Borrower and certain
holders of equity securities issued by Borrower.
"GECC Warrants" shall mean that certain Warrant To Purchase
Common Stock of Code-Alarm, Inc. issued by Borrower on October 24, 1997 to GECC
for the purchase of 131,718 initial shares of Borrower's Common Stock, no par
value, for an initial exercise price of approximately $1.88 per share, and each
warrant issued in substitution thereof pursuant to the terms thereof.
"GECC Warrant Purchase Agreement" shall mean that certain
Warrant Purchase Agreement of even date herewith between Borrower and GECC with
respect to the GECC Warrant.
"General Intangibles" shall mean any "general intangibles," as
such term is defined in the Code, now owned or hereafter acquired by any Credit
Party, and, in any event, including all right, title and interest which such
Credit Party may now or hereafter have in or under any Contract, all customer
lists, Licenses, Copyrights, Trademarks, Patents, and all applications therefor
and reissues, extensions or renewals thereof, rights in Intellectual Property,
interests in partnerships, joint ventures and other business associations,
licenses, permits, copyrights, trade secrets, proprietary or confidential
information, inventions (whether or not patented or patentable), technical
information, procedures, designs, knowledge, know-how, software, data bases,
data, skill, expertise, experience, processes, models, drawings, materials and
records, goodwill (including the goodwill associated with any Trademark or
Trademark License), all rights and claims in or under insurance policies
(including insurance for fire, damage, loss and casualty, whether covering
personal property, real property, tangible rights or intangible rights , all
liability, life, key man and business interruption insurance, and all unearned
premiums), uncertificated securities, choses in action, deposit, checking and
other bank accounts, rights to receive tax refunds and other payments, rights
of indemnification, all books and records, correspondence, credit files,
invoices and other papers, including without limitation all tapes, cards,
computer runs and other papers and documents in the possession or under the
control of such Credit Party or any computer bureau or service company from
time to time acting for such Credit Party.
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"Governmental Authority" shall mean any nation or government,
any state or other political subdivision thereof, and any agency, department or
other entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
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"Guaranteed Indebtedness" shall mean, as to any Person, any
obligation of such Person guaranteeing any indebtedness, lease, dividend, or
other obligation ("primary obligations") of any other Person (the "primary
obligor") in any manner, including any obligation or arrangement of such Person
(a) to purchase or repurchase any such primary obligation, (b) to advance or
supply funds (i) for the purchase or payment of any such primary obligation or
(ii) to maintain working capital or equity capital of the primary obligor or
otherwise to maintain the net worth or solvency or any balance sheet condition
of the primary obligor, (c) to purchase property, securities or services
primarily for the purpose of assuring the owner of any such primary obligation
of the ability of the primary obligor to make payment of such primary
obligation, or (d) to indemnify the owner of such primary obligation against
loss in respect thereof. The amount of any Guaranteed Indebtedness at any time
shall be deemed to be an amount equal to the lesser at such time of (x) the
stated or determinable amount of the primary obligation in respect of which
such Guaranteed Indebtedness is made and (y) the maximum amount for which such
Person may be liable pursuant to the terms of the instrument embodying such
Guaranteed Indebtedness; or, if not stated or determinable, the maximum
reasonably anticipated liability (assuming full performance) in respect
thereof.
"Guaranties" shall mean, collectively, each Guaranty executed
by a Credit Party in favor of Agent and Lenders, in respect of the Obligations.
"Hazardous Material" shall mean any substance, material or
waste which is regulated by or forms the basis of liability under any
Environmental Laws, including any material or substance which is (a) defined as
a "solid waste," "hazardous waste," "hazardous material," "hazardous
substance," "extremely hazardous waste," "restricted hazardous waste,"
"pollutant," "contaminant," "hazardous constituent," "special waste," "toxic
substance" or other similar term or phrase under any Environmental Laws, (b)
petroleum or any fraction or by-product thereof, asbestos, polychlorinated
biphenyls (PCB's), or any radioactive substance (except for radioactive
substances occurring as a result of natural conditions).
"Indebtedness" of any Person shall mean without duplication
(a) all indebtedness of such Person for borrowed money or for the deferred
purchase price of property payment for which is deferred six (6) months or
more, but excluding obligations to trade creditors incurred in the ordinary
course of business other than those that are overdue by more than six (6)
months unless being contested in good faith, (b) all reimbursement and other
obligations with respect to letters of credit, bankers' acceptances and surety
bonds, whether or not matured, (c) all obligations evidenced by notes, bonds,
debentures or similar instruments, (d) all indebtedness 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), (e) all Capital Lease Obligations, (f)
all obligations of such Person under commodity purchase or option agreements or
other commodity price hedging arrangements, in each case whether contingent or
matured, (g) all obligations of such Person under any foreign exchange
contract, currency swap agreement, interest rate swap, cap or collar agreement
or other similar agreement
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or arrangement designed to alter the risks of that Person arising from
fluctuations in currency values or interest rates, in each case whether
contingent or matured, (h) all Indebtedness referred to 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 or other assets
(including accounts and contract rights) owned by such Person, even though such
Person has not assumed or become liable for the payment of such Indebtedness,
and (i) the Obligations.
"Indemnified Liabilities" shall have the meaning assigned to
it in Section 1.13.
"Index Rate" shall mean, for any day, a floating rate equal to
the higher of (i) the rate publicly quoted from time to time by The Wall Street
Journal as the "PRIME RATE" or "base rate on corporate loans posted by at least
75% of the nations 30 largest banks" (or, if The Wall Street Journal ceases
quoting a base rate of the type described, the highest per annum rate of
interest published by the Federal Reserve Board in Federal Reserve statistical
release H.15 (519) entitled "Selected Interest Rates" as the Bank prime loan
rate or its equivalent), and (ii) the Federal Funds Rate plus fifty (50) basis
points per annum. Each change in any interest rate provided for in the
Agreement based upon the Index Rate shall take effect at the time of such
change in the Index Rate.
"Index Rate Loan" shall mean a Loan or portion thereof bearing
interest by reference to the Index Rate.
"Instruments" shall mean any "instrument," as such term is
defined in the Code, now owned or hereafter acquired by any Credit Party,
wherever located, and, in any event, including all certificated securities, all
certificates of deposit, and all notes and other, without limitation, evidences
of indebtedness, other than instruments that constitute, or are a part of a
group of writings that constitute, Chattel Paper.
"Intellectual Property" shall mean any and all Licenses,
Patents, Copyrights, Trademarks, trade secrets and customer lists.
"Intercompany Note" shall have the meaning assigned to it in
Section 6.3.
"Interest Expense" shall mean, with respect to any Person for
any fiscal period, interest expense (whether cash or non-cash) of such Person
determined in accordance with GAAP which is paid or accrued during the relevant
period ended on such date, including, in any event, interest expense with
respect to any Funded Debt of such Person, together with all cash dividends
paid or accrued during such period with respect to any capital stock of such
Person (including, without limitation, with respect to Borrower, its Series A
Preferred Stock).
"Interest Payment Date" means (a) as to any Index Rate Loan,
the first Business Day of each month to occur while such Loan is outstanding,
(b) as to any LIBOR Loan, the last day of the applicable LIBOR Period;
provided that in the case of any LIBOR Period greater than
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three months in duration, interest shall be payable at three-month intervals
and on the last day of such LIBOR Period; and provided further that, in
addition to the foregoing, each of (x) the date upon which all of the
Commitments have been terminated and the Loans have been paid in full and (y)
the Commitment Termination Date shall be deemed to be an "Interest Payment
Date" with respect to any interest which is then accrued under the Agreement.
"Inventory" shall mean any "inventory," as such term is
defined in the Code, now or hereafter owned or acquired by any Credit Party,
wherever located, and in any event including inventory, merchandise, goods and
other personal property which are held by or on behalf of any Credit Party for
sale or lease or are furnished or are to be furnished under a contract of
service, or which constitute raw materials, work in process or materials used
or consumed or to be used or consumed in such Credit Party's business or in the
processing, production, packaging, promotion, delivery or shipping of the same,
including other supplies.
"Investment Property" shall have the meaning ascribed thereto
in Section 9-115 of the Code in those jurisdictions in which such definition
has been adopted and shall include (i) all securities, whether certificated or
uncertificated, including stocks, bonds, interests in limited liability
companies, partnership interests, treasuries, certificates of deposit, and
mutual fund shares; (ii) all securities entitlements of any Credit Party,
including the rights of any Credit Party to any securities account and the
financial assets held by a securities intermediary in such securities account
and any free credit balance or other money owing by any securities intermediary
with respect to that account; (iii) all commodity contracts held by any Credit
Party; and (iv) all commodity accounts held by any Credit Party.
"IRC" shall mean the Internal Revenue Code of 1986, as
amended, and any successor thereto.
"IRS" shall mean the Internal Revenue Service, or any
successor thereto.
"L/C Issuer" shall have the meaning assigned to such term in
Annex B.
"L/C Sublimit" shall have the meaning assigned to such term in
Annex B.
"Lenders" shall mean GE Capital, the other Lenders named on
the signature page of the Agreement, and, if any such Lender shall decide to
assign all or any portion of the Obligations, such term shall include such
assignee.
"Letter of Credit Fee" has the meaning ascribed thereto in
Annex B.
"Letter of Credit Obligations" shall mean all outstanding
obligations incurred by Agent and Lenders at the request of Borrower, whether
direct or indirect, contingent or otherwise, due or not due, in connection with
the issuance of a reimbursement agreement or guaranty by Agent with respect to
any Letter of Credit other than the Litigation L/C. The amount of such
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Letter of Credit Obligations shall equal the maximum amount which may be
payable by Agent or Lenders thereupon or pursuant thereto.
"Letters of Credit" shall mean commercial or standby letters
of credit (including, without limitation, the Litigation L/C), issued for the
account of Borrower by any L/C Issuer, and bankers' acceptances issued by
Borrower, for which Agent and Lenders have incurred Letter of Credit
Obligations or Litigation L/C Obligations.
"Letter of Credit Cash Collateral Account" has the meaning
ascribed in Annex B.
"LIBOR Business Day" shall mean a Business Day on which banks
in the city of London are generally open for interbank or foreign exchange
transactions.
"LIBOR Loan" shall mean a Loan or any portion thereof bearing
interest by reference to the LIBOR Rate.
"LIBOR Period" shall mean, with respect to any LIBOR Loan,
each period commencing on a LIBOR Business Day selected by Borrower pursuant to
the Agreement and ending one, two, three or six months thereafter, as selected
by Borrower's irrevocable notice to Agent as set forth in Section 1.5(e);
provided that the foregoing provision relating to LIBOR Periods is subject to
the following:
(a) if any LIBOR Period would otherwise end on a day that is
not a LIBOR Business Day, such LIBOR Period shall be extended to the
next succeeding LIBOR Business Day unless the result of such extension
would be to carry such LIBOR Period into another calendar month in
which event such LIBOR Period shall end on the immediately preceding
LIBOR Business Day;
(b) any LIBOR Period that would otherwise extend beyond the
Commitment Termination Date shall end two (2) LIBOR Business Days
prior to such date;
(c) any LIBOR Period pertaining to a LIBOR Loan that begins
on the last LIBOR Business Day of a calendar month (or on a day for
which there is no numerically corresponding day in the calendar month
at the end of such LIBOR Period) shall end on the last LIBOR Business
Day of a calendar month;
(d) Borrower shall select LIBOR Periods so as not to require
a payment or prepayment of any LIBOR Loan during a LIBOR Period for
such Loan; and
(e) Borrower shall select LIBOR Periods so that there shall
be no more than five (5) separate LIBOR Loans in existence at any one
time.
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"LIBOR Rate" shall mean for each LIBOR Period, a rate of
interest determined by Agent equal to:
(a) the offered rate for deposits in United States Dollars for
the applicable LIBOR Period which appears on Telerate Page 3750 as of
11:00 a.m., London time, on the second full LIBOR Business Day next
preceding the first day of each LIBOR Period (unless such date is not
a Business Day, in which event the next succeeding Business Day will
be used); divided by
(b) a number equal to 1.0 minus the aggregate (but without
duplication) of the rates (expressed as a decimal fraction) of reserve
requirements in effect on the day which is two (2) LIBOR Business Days
prior to the beginning of such LIBOR Period (including basic,
supplemental, marginal and emergency reserves under any regulations of
the Board of Governors of the Federal Reserve system or other
governmental authority having jurisdiction with respect thereto, as
now and from time to time in effect) for Eurocurrency funding
(currently referred to as "Eurocurrency liabilities" in Regulation D
of such Board which are required to be maintained by a member bank of
the Federal Reserve System (such rate to be adjusted to the nearest
one sixteenth of one percent (1/16th of 1%) or, if there is not a
nearest one sixteenth of one percent (1/16th of 1%), to the next
highest one sixteenth of one percent (1/16th of 1%).
If such interest rates shall cease to be available from
Telerate News Service, the LIBOR Rate shall be determined from such
financial reporting service or other information as shall be mutually
acceptable to Agent and Borrower.
"License" shall mean any Copyright License, Patent License,
Trademark License or other license of rights or interests now held or hereafter
acquired by any Credit Party.
"Lien" shall mean any mortgage or deed of trust, pledge,
hypothecation, collateral assignment, deposit arrangement, lien, charge with
respect to specific property, claim with respect to specific property, security
interest, easement or encumbrance, or preference, priority with respect to
specific property or other security agreement or preferential arrangement of
any kind or nature whatsoever (including any lease or title retention
agreement, any financing lease having substantially the same economic effect as
any of the foregoing, and the filing of, or agreement to give, any financing
statement perfecting a security interest under the Code or comparable law of
any jurisdiction other than a financing statement filed solely with respect to
a lessor's interest in property owned by such lessor).
"Litigation" shall have the meaning assigned to it in Section
3.13.
"Litigation Collateral Documents" shall mean, collectively,
all Collateral Documents pursuant to which any Litigation Obligations are
secured or guaranteed.
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"Litigation Guaranty" shall mean that certain Limited
Litigation Guaranty of even date herewith executed and delivered by the
Pegasus Funds in favor of Agent and Lenders.
"Litigation L/C" shall mean a standby letter of credit issued
for the account of Borrower by the L/C Issuer to secure the Bond and with
respect to which Agent and Lenders have incurred Litigation L/C Obligations.
"Litigation L/C Agreement" shall mean that certain Litigation
L/C and Term Loan C Agreement of even date herewith among Borrower, Agent and
the Term Lenders pursuant to which the Agent and the Term Lender have agreed,
subject to certain terms and conditions, to incur the Litigation L/C
Obligations, advance Term Loan C and incur other Litigation Obligations and
each of the parties thereto have agreed to the terms of repayment thereof.
"Litigation L/C Cash Collateral Account" has the meaning
ascribed thereto in Annex B.
"Litigation L/C Issuance Date" shall mean a Business Day on or
after which the conditions set forth in Sections 2.1, 2.3(I) and 2.4 shall have
been satisfied and on which Borrower has requested the L/C Issuer to issue the
Litigation L/C pursuant to the terms and conditions of Annex B and the
Litigation L/C Agreement.
"Litigation L/C Obligations" shall mean all outstanding
obligations incurred by Agent and Lenders, whether direct or indirect,
contingent or otherwise, due or not due, in connection with the issuance of a
reimbursement agreement, guaranty or similar accommodation by Agent with
respect to the Litigation L/C. The amount of such Litigation L/C Obligations
shall equal the maximum amount which may be payable by Agent or Lenders
thereupon or pursuant thereto.
"Litigation Obligations" shall mean, collectively, the
Litigation L/C Obligations, the outstanding principal balance of, and accrued
interest on, Term Loan C, all Fees and expenses with respect to the Litigation
L/C, and all other Obligations with respect to the Litigation L/C, the
Litigation L/C Obligations or Term Loan C.
"Loan Account" shall have the meaning assigned to it in
Section 1.12.
"Loan Documents" shall mean the Agreement, the Notes, the
Collateral Documents, the GECC Warrant Documents and all other agreements,
instruments, documents and certificates identified in the Closing Checklist
executed and delivered to, or in favor of, Agent and/or Lenders and including
all other pledges, powers of attorney, consents, assignments, contracts,
notices, and all other written matter whether heretofore, now or hereafter
executed by or on behalf of any Credit Party, or any employee of any Credit
Party, and delivered to Agent or any Lender in connection with the Agreement or
the transactions contemplated hereby. Any reference in the Agreement or any
other Loan Document to a Loan Document shall include all
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appendices, exhibits or schedules thereto, and all amendments, restatements,
supplements or other modifications thereto, and shall refer to such Agreement
as the same may be in effect at any and all times such reference becomes
operative.
"Loans" shall mean the Revolving Loan, the Swing Line Loan and
the Term Loan.
"Lower Court" shall mean the United States District Court for
the Eastern District of Michigan.
"Lower Court Judgment" shall mean a judgment or other award
entered against Borrower (and, possibly, other Credit Parties) by the United
States District Court for the Eastern District of Michigan with respect to the
DEI Litigation (excluding any partial judgment or award until such time as a
complete judgment or award has been entered by such court with respect to all
matters at issue in the DEI Litigation).
"Management Options" shall mean, collectively, the stock
options from time to time issued by Borrower pursuant to the Code- Alarm, Inc.
1987 Stock Option Plan dated as of May 29, 1987, as amended by Amendment No. 1
thereto dated as of March 16, 1990, and Amendment No. 2 thereto dated as of
March 27, 1992, and the Code-Alarm, Inc. 1997 Stock Option Plan dated as of
October 24, 1997.
"Margin Stock" shall have the meaning assigned to it in
Section 3.10.
"Material Adverse Effect" shall mean a material adverse effect
on (a) the business, assets, operations, prospects or financial or other
condition of any Credit Party, (b) Borrower's ability to pay any of the Loans
or any of the other Obligations in accordance with the terms of the Agreement,
or any Credit Party's ability to perform its obligations under the terms of any
Loan Document to which it is a party, (c) the Collateral or Agent's Liens, on
behalf of itself and Lenders, on the Collateral or the priority of such Liens,
or (d) Agent's or any Lender's rights and remedies under the Agreement and the
other Loan Documents. Without limiting the foregoing, any event or occurrence
which results or could reasonably be expected to result in costs or liabilities
in excess of $250,000 shall, for purposes of this Agreement and the other Loan
Documents, be deemed to have a Material Adverse Effect. Notwithstanding the
foregoing, the DEI Litigation shall not be deemed to have had, or reasonably be
expected to have, a Material Adverse Effect unless (i) the sum of (A) the
amount of the Lower Court Judgment, the Final Judgment or any other judgment
with respect to the DEI Litigation plus (B) the aggregate amount of accrued and
unpaid expenses (including, without limitation, legal fees) incurred by the
Credit Parties with respect to the DEI Litigation as of the time of the entry
or other determination of such judgment, exceeds $12,000,000 (provided,
however, the amount determined pursuant to clause (B) shall not be included in
such sum to the extent that, as the date of determination hereof, the Net
Borrowing Base Availability minus the Letter of Credit Obligations and minus
such amount, exceeds $500,000), (ii) the Lower Court Judgment is reasonably
expected to be
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entered and the conditions described in Section 2.3(I) shall not have been
satisfied, or could reasonably be expected to be unsatisfied, by the time
specified in Section 2.3(I)(c), or the Bond or the Litigation L/C is otherwise
reasonably expected not to be issued or (iii) the Final Judgment is reasonably
expected to be entered and the conditions described in Section 2.2 shall not
have been satisfied, or could reasonably be expected to be unsatisfied, by the
time specified in Section 2.2(c), or Term Loan B is otherwise reasonably
expected not to be made.
"Maximum Amount" shall mean, at any particular time, an amount
equal to the Revolving Loan Commitment of all Lenders.
"Mortgaged Properties" shall have the meaning assigned to it
in Annex D.
"Mortgages" shall mean, collectively, each mortgage, deed of
trust, leasehold mortgage, leasehold deeds of trust, collateral assignment of
leases or other real estate security document executed by a Credit Party in
favor of Agent, on behalf of itself and Lenders, with respect to the Mortgaged
Properties, as security for the Obligations or for such Credit Party's guaranty
obligations with respect to the Obligations.
"Multiemployer Plan" shall mean a "multiemployer plan" as
defined in Section 4001(a)(3) of ERISA, and to which any Credit Party or ERISA
Affiliate is making, is obligated to make, has made or been obligated to make,
contributions on behalf of participants who are or were employed by any of
them.
"Net Borrowing Availability" shall mean as of any date of
determination, the lesser of (a) the Maximum Amount and (b) the Borrowing Base,
less the sum of the aggregate Revolving Loan and Swing Line Loan then
outstanding.
"Net Litigation Liability" shall have the meaning assigned to
it in Section 2.2.
"Net Worth" shall mean, with respect to any Person as of any
date of determination, and without duplication, the book value of the total
gross assets of such Person, minus (a) reserves applicable thereto, and minus
(b) all of such Person's liabilities on a consolidated basis (including accrued
and deferred income taxes), all as determined in accordance with GAAP,
excluding the effects of losses incurred after the Closing Date of up to
$12,000,000 in respect of the DEI Litigation, and the effects of charge-offs or
writedowns of up to $3,500,000 related to the Tessco Liquidation (all such
charge-offs or writedowns to occur by December 31, 1997).
"Notes" shall mean the Revolving Notes, the Swing Line Notes
and the Term Notes, collectively.
"Notice of Conversion/Continuation" shall have the meaning
assigned to it in Section 1.5(e).
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"Notice of Revolving Credit Advance" shall have the meaning
assigned to it in Section 1.1(a).
"Notice of Term Loan B Advance" shall have the meaning
assigned to it in Section 1.1(c)(i).
"Notice of Term Loan C Advance" shall have the meaning
assigned to it in Section 1.1(d)(iii).
"Obligations" shall mean all loans, advances, debts,
liabilities and obligations for the performance of covenants, tasks or duties
or for payment of monetary amounts (whether or not such performance is then
required or contingent, or such amounts are liquidated or determinable) owing
by any Credit Party to Agent or any Lender, and all covenants and duties
regarding such amounts, of any kind or nature, present or future, whether or
not evidenced by any note, agreement or other instrument, arising under the
Agreement or any of the other Loan Documents. This term includes all
principal, interest (including all interest which accrues after the
commencement of any case or proceeding in bankruptcy after the insolvency of,
or for the reorganization of any Credit Party, whether or not allowed in such
proceeding), Fees, Charges, Letter of Credit Obligations, Litigation L/C
Obligations, expenses, attorneys' fees and any other sum chargeable to any
Credit Party under the Agreement or any of the other Loan Documents.
"OEM Accreditations" shall mean, collectively, the
accreditations and similar awards granted or afforded to Borrower or any other
Credit Party by one or more customers party to an OEM Contract with respect to
any products or services sold or provided by Borrower or any other Credit
Parties to such customers pursuant to such OEM Contracts, including, without
limitation, the accreditations described on Disclosure Schedule (3.22).
"OEM Contracts" shall mean, collectively, the agreements to
which one or more Credit Parties is party, together with their related purchase
orders, renewals, exhibits and schedules, of the type described in Section
3.22, including, without limitation, those listed on Disclosure Schedule
(3.22), in any case pursuant to which revenues have been generated (or are
reasonably expected to be generated) by the Credit Parties in excess of
$1,000,000 per annum.
"Overadvance" shall have the meaning assigned to it in Section
1.1(a)(iii).
"Patent License" shall mean rights under any written agreement
now owned or hereafter acquired by any Credit Party granting any right with
respect to any invention on which a Patent is in existence.
"Patent Security Agreements" shall mean, collectively, each
Patent Security Agreement executed by a Credit Party in favor of Agent, on
behalf of itself and Lenders, with respect to Patents and Patent Licenses, as
security for the Obligations or for such Credit Party's guaranty obligation
with respect to the Obligations.
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"Patents" shall mean all of the following in which any Credit
Party now holds or hereafter acquires any interest: (a) all letters patent of
the United States or any other country, all registrations and recordings
thereof, and all applications for letters patent of the United States or any
other country, including registrations, recordings and applications in the
United States Patent and Trademark Office or in any similar office or agency of
the United States, any State or Territory thereof, or any other country, and
(b) all reissues, continuations, continuations-in-part or extensions thereof.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or
any successor thereto.
"Pegasus Funds" shall mean, collectively, Pegasus Partners,
L.P., a Delaware limited partnership, and Pegasus Related Partners, L.P., a
Delaware limited partnership.
"Permitted Encumbrances" shall mean the following
encumbrances: (a) Liens for taxes or assessments or other governmental Charges
not yet due and payable; (b) pledges or deposits of money securing obligations
under workmen's compensation, unemployment insurance, social security or public
liability laws or similar legislation; (c) pledges or deposits of money made in
the ordinary course of business securing bids, tenders, contracts (other than
contracts for the payment of money) or leases to which any Credit Party is a
party as lessee; (d) deposits of money securing statutory obligations of any
Credit Party; (e) inchoate and unperfected workers', mechanics' or similar
liens arising in the ordinary course of business, so long as such Liens attach
only to Equipment, Fixtures and/or Real Estate; (f) carriers', warehousemen's,
suppliers' or other similar possessory liens arising in the ordinary course of
business and securing liabilities in an outstanding aggregate amount not in
excess of $25,000 at any time, so long as such Liens attach only to Inventory;
(g) deposits securing, or in lieu of, surety, appeal or customs bonds in
proceedings to which any Credit Party is a party; (h) any attachment or
judgment lien not constituting an Event of Default under Section 8.1(j); (i)
zoning restrictions, easements, licenses, or other restrictions on the use of
any Real Estate or other minor irregularities in title (including leasehold
title) thereto, so long as the same do not materially impair the use, value, or
marketability of such Real Estate; (j) presently existing or hereinafter
created Liens in favor of Agent, on behalf of Lenders; and (k) Liens expressly
permitted under clauses (b) and (c) of Section 6.7 of the Agreement.
"Person" shall mean any individual, sole proprietorship,
partnership, joint venture, trust, unincorporated organization, association,
corporation, limited liability company, institution, public benefit
corporation, other entity or government (whether federal, state, county, city,
municipal, local, foreign, or otherwise, including any instrumentality,
division, agency, body or department thereof).
"Plan" shall mean, at any time, an employee benefit plan, as
defined in Section 3(3) of ERISA, which any Credit Party maintains, contributes
to or has an obligation to contribute to on behalf of participants who are or
were employed by any Credit Party.
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"Pledge Agreements" shall mean, collectively, each Pledge
Agreement, executed by a Credit Party in favor of Agent, on behalf of itself
and Lenders, with respect to Stock or investment property, as security for the
Obligations or for such Credit Party's guaranty obligations with respect to the
Obligations.
"Prior Lender" shall mean NBD Bank.
"Prior Lender Obligations" shall mean all loans, letter of
credit obligations, fees, expense reimbursement obligations, indemnification
obligations, and other obligations of payment or performance, whether
liquidated or contingent, and whether or not due and payable, owing by any of
the Credit Parties to the Prior Lender or any participant or assignee of the
Prior Lender, other than unsecured obligations to such parties with respect to
unknown reimbursement or indemnification obligations and ongoing fees, expenses
and other obligations arising from the continuation of portions of the Cash
Management System with the Prior Lender.
"Proceeds" shall mean "proceeds," as such term is defined in
the Code and, in any event, shall include (a) any and all proceeds of any
insurance, indemnity, warranty or guaranty payable to any Credit Party from
time to time with respect to any of the Collateral, (b) any and all payments
(in any form whatsoever) made or due and payable to any Credit Party from time
to time in connection with any requisition, confiscation, condemnation, seizure
or forfeiture of all or any part of the Collateral by any Governmental
Authority (or any Person acting under color of governmental authority), (c) any
claim of any Credit Party against third parties (i) for past, present or future
infringement of any Patent or Patent License, or (ii) for past, present or
future infringement or dilution of any Copyright, Copyright License, Trademark
or Trademark License, or for injury to the goodwill associated with any
Trademark or Trademark License, (d) any recoveries by any Credit Party against
third parties with respect to any litigation or dispute concerning any of the
Collateral, and (e) any and all other amounts from time to time paid or payable
under or in connection with any of the Collateral, upon disposition or
otherwise.
"Pro Forma" means the unaudited consolidated and consolidating
balance sheet of Borrower and its Subsidiaries delivered pursuant to Section
3.4 after giving pro forma effect to the Related Transactions.
"Projections" means Borrower's forecasted consolidated: (a)
balance sheets; (b) profit and loss statements; (c) cash flow statements; and
(d) capitalization statements, in each case prepared in a manner consistent
with the historical Financial Statements of the Borrower, together with
appropriate supporting details and a statement of underlying assumptions.
"Pro Rata Share" shall mean with respect to all matters
relating to any Lender (a) with respect to the Revolving Loan or the Swing Line
Loan, the percentage obtained by dividing (i) the Revolving Loan Commitment,
including the Swing Line Commitment of that Lender by (ii) the aggregate
Revolving Loan Commitments, including the Swing Line Commitment of all Lenders,
and (b) with respect to the Term Loans, the percentage obtained by dividing (i)
the
▇-▇▇
▇▇▇
▇▇▇▇ Loan Commitments of that Lender by (ii) the aggregate Term Loan
Commitments of all Lenders, as any such percentages may be adjusted by
assignments permitted pursuant to Section 9.1.
"Qualified Plan" shall mean a Plan which is intended to be
tax-qualified under Section 401(a) of the IRC.
"Qualified Public Offering" shall mean a firm underwritten
public offering of common stock registered under the Securities Act of 1933, as
amended, by a nationally recognized investment banking firm, and after giving
effect to which the issuer shall be or remain qualified for listing on the
NASDAQ National Market, the American Stock Exchange or the New York Stock
Exchange.
"Real Estate" shall have the meaning assigned to it in Section
3.6.
"Refinancing" shall mean the repayment in full by Borrower of
the Prior Lender Obligations on the Closing Date and the replacement,
termination or securing of any letter of credit obligations constituting Prior
Lender Obligations pursuant to Section 2.1(b) on the Closing Date.
"Refunded Swing Line Loan" shall have the meaning assigned to
it in Section 1.1(e)(iii).
"Related Transactions" means the initial borrowing under the
Revolving Loan and borrowing of the Term Loan A on the Closing Date, the
issuance of the GECC Warrants, the Refinancing, the issuance of the Series A
Preferred Stock and the "Attached Warrants" and "Shortfall Warrants" (as
defined in the Series A Preferred Stock Documents), the issuance of the Series
B Preferred Stock, the payment of all fees, costs and expenses associated with
all of the foregoing, and the execution and delivery of all of the Related
Transactions Documents.
"Related Transactions Documents" shall mean the Loan
Documents, the Series A Preferred Stock Documents, the Series B Preferred Stock
Documents, and the agreements and documents evidencing and governing the terms
of the Refinancing.
"Release" shall mean any release, spill, emission, leaking,
pumping, pouring, emitting, emptying, escape, injection, deposit, disposal,
discharge, dispersal, dumping, leaching or migration of Hazardous Material in
the indoor or outdoor environment, including the movement of Hazardous Material
through or in the air, soil, surface water, ground water or property.
"Requisite Lenders" shall mean (a) Lenders having more than
sixty-six and two-thirds percent (66 2/3%) of the Commitments of all Lenders,
or (b) if the Commitments have been terminated, more than sixty-six and
two-thirds percent (66 2/3%) of the aggregate
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outstanding amount of all Loans (with the Swing Line Loan being attributed to
the Lender making such loan), Letter of Credit Obligations and Litigation L/C
Obligations.
"Requisite Revolving Lenders" shall mean (a) Lenders having
more than sixty-six and two-thirds percent (66 2/3%) of the Revolving Loan
Commitments of all Lenders, or (b) if the Revolving Loan Commitments have been
terminated, more than sixty-six and two-thirds percent (66 2/3%) of the
aggregate outstanding amount of the Revolving Loan (with the Swing Line Loan
being attributed to the Lender making such Loan) and Letter of Credit
Obligations.
"Reserves" shall mean, with respect to the Borrowing Base (a)
reserves established by Agent from time to time against Borrower's and/or
Tessco's Eligible Inventory pursuant to Section 5.9, (b) reserves established
pursuant to Section 5.4(c), and (c) such other reserves against Borrower's
and/or Tessco's Eligible Accounts or Eligible Inventory of Borrower or Tessco
which Agent may, in its reasonable credit judgment, establish from time to
time. Without limiting the generality of the foregoing, reasonable Reserves
established to ensure the payment of accrued Interest Expenses or Indebtedness,
Reserves for product warranty liabilities and expenses, and Reserves for
physical Inventory test counts, shall be deemed to be a reasonable exercise of
Agent's credit judgment.
"Restricted Payment" shall mean (a) the declaration or payment
of any dividend or the incurrence of any liability to make any other payment or
distribution of cash or other property or assets in respect of a Person's Stock
(other than common stock dividends and, in the case of the Series A Preferred
Stock, non-cash, payment-in-kind dividends), (b) any payment on account of the
purchase, redemption, defeasance, sinking fund or other retirement of a
Person's Stock or any other payment or distribution made in respect thereof,
either directly or indirectly, (c) any payment or prepayment of principal of,
premium, if any, or interest, fees or other charges on or with respect to, and
any redemption, purchase, put, call, retirement, defeasance, sinking fund or
similar payment and any claim for rescission with respect to, any Subordinated
Debt; (d) any payment made to redeem, purchase, repurchase, put, call or
retire, or to obtain the surrender of, any outstanding warrants, options or
other rights to acquire Stock of such Person now or hereafter outstanding; (e)
any payment of a claim for the rescission of the purchase or sale of, or for
material damages arising from the purchase or sale of, any shares of such
Person's Stock or of a claim for reimbursement, indemnification or contribution
arising out of or related to any such claim for damages or rescission; (f) any
payment, loan, contribution, or other transfer of funds or other property to
any stockholder of such Person; and (g) any payment of management fees (or
other fees of a similar nature) by such Person to any stockholder of such
Person or their Affiliates.
"Retiree Welfare Plan" shall mean, at any time, a Plan that is
a "welfare plan" as defined in Section 3(2) of ERISA, that provides for
continuing coverage or benefits for any participant or any beneficiary of a
participant after such participant's termination of employment, other than
continuation coverage provided pursuant to Section 4980B of the IRC and at the
sole expense of the participant or the beneficiary of the participant.
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"Revolving Credit Advance" shall have the meaning assigned to
it in Section 1.1(a)(i).
"Revolving Lenders" shall mean, as of any date of
determination, Lenders having a Revolving Loan Commitment.
"Revolving Loan" shall mean as the context may require, at any
time, the sum of (i) the aggregate amount of outstanding Revolving Credit
Advances plus (ii) the aggregate Letter of Credit Obligations.
"Revolving Loan Commitment" shall mean (a) as to any Lender,
the aggregate commitment of such Lender to make Revolving Credit Advances
(including without duplication Swing Line Advances) and/or incur Letter of
Credit Obligations as set forth in the signature page to the Agreement or in
the most recent Assignment Agreement executed by such Lender and (b) as to all
Lenders, the aggregate commitment of all Lenders to make Revolving Credit
Advances (including without duplication Swing Line Advances) and/or incur
Letter of Credit Obligations, which aggregate commitment shall be Twelve
Million Dollars ($12,000,000.00) on the Closing Date, as such amount may be
adjusted, if at all, from time to time in accordance with the Agreement.
"Revolving Note" shall have the meaning assigned to it in
Section 1.1(a)(ii).
"Security Agreements" shall mean, collectively, each Security
Agreement executed by a Credit Party in favor of Agent, on behalf of itself and
Lenders, as security for the Obligations or for such Credit Party's guaranty
obligations with respect to the Obligations.
"Series A Preferred Stock" shall mean Borrower's Series A
Preferred Stock, $0.01 par value, and Series A-2 Preferred Stock, $0.01 par
value.
"Series A Preferred Stock Documents" shall mean, collectively,
(a) that certain Unit Purchase Agreement dated as of October 24, 1997 among
Borrower and the Pegasus Funds, (b) that certain Certificate of Designation,
Number, Powers, Preferences and Relative, Participating, Optional and Other
Rights of Series A Preferred Stock of Code-Alarm, Inc. adopted by Borrower's
board of directors as of October 24, 1997, (c) that certain Registration Rights
Agreement dated as of October 24, 1997 among Borrower and certain holders of
equity securities issued by Borrower and (d) the Series A Warrants.
"Series A Warrants" shall mean, collectively, the "Attached
Warrants", "Shortfall Warrants" and "Litigation Warrants", as each of such
terms is defined in the Series A Preferred Stock Documents.
"Series B Pledgor" shall mean ▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇.
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"Series B Preferred Stock" shall mean Borrower's Series B
Preferred Stock, no par value.
"Series B Preferred Stock Documents" shall mean (a) that
certain Subscription Agreement for Code-Alarm Inc. Series B Preferred Stock of
even date herewith between the Series B Pledgor and Borrower and (b) that
certain Certificate of Designation, Number, Powers, Preference and Relative,
Participating, Optional, and Other Rights of Series B Preferred Stock of
Code-Alarm, Inc.
"Solvent" shall mean, with respect to any Person on a
particular date, that on such date (a) the fair value of the property of such
Person on a going concern basis is greater than the total amount of
liabilities, including contingent liabilities, of such Person; (b) the present
fair salable value of the assets of such Person is not less than the amount
that will be required to pay the probably liability of such Person on its debts
as they become absolute and matured; (c) such Person does not intend to, and
does not believe that it will, incur debts or liabilities beyond such Person's
ability to pay such debts and liabilities as they mature; and (d) such Person
is not engaged in a business or transaction, and is not about to engage in a
business or transaction, for which such Person's property would constitute an
unreasonably small capital. The amount of contingent liabilities (such as
litigation, guarantees and pension plan liabilities) at any time shall be
computed as the amount which, in light of all the facts and circumstances
existing at the time, represents the amount which can reasonably be expected to
become an actual or matured liability.
"Stock" shall mean all shares, options, warrants, general or
limited partnership interests or other equivalents (regardless of how
designated) of or in a corporation, partnership or equivalent entity whether
voting or nonvoting, including common stock, preferred stock or any other
"equity security" (as such term is defined in Rule 3a11-1 of the General Rules
and Regulations promulgated by the Securities and Exchange Commission under the
Securities Exchange Act of 1934, as amended).
"Subordinated Debt" shall mean any Indebtedness of any Credit
Party subordinated to the Obligations in a manner and form satisfactory to
Agent and Lenders in their sole discretion, as to right and time of payment and
as to any other rights and remedies thereunder, including, without limitation,
any Subordinated Debt issued by Borrower for the purposes described in Section
2.2(b).
"Subsidiary" shall mean, with respect to any Person, (a) any
corporation of which an aggregate of more than fifty percent (50%) of the
outstanding Stock having ordinary voting power to elect a majority of the board
of directors of such corporation (irrespective of whether, at the time, Stock
of any other class or classes of such corporation shall have or might have
voting power by reason of the happening of any contingency) is at the time,
directly or indirectly, owned legally or beneficially by such Person and/or one
or more Subsidiaries of such Person, or with respect to which any such Person
has the right to vote or designate the vote of fifty percent
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(50%) or more of such Stock whether by proxy, agreement, operation of law or
otherwise, and (b) any partnership or limited liability company in which such
Person and/or one or more Subsidiaries of such Person shall have an interest
(whether in the form of voting or participation in profits or capital
contribution) of more than fifty percent (50%) or of which any such Person is a
general partner or may exercise the powers of a general partner.
"Supermajority Revolving Lenders" shall mean (a) Lenders
having eighty percent (80%) or more of the Revolving Loan Commitments of all
Lenders, or (b) if the Revolving Loan Commitments have been terminated, eighty
percent (80%) or more of the aggregate outstanding amount of the Revolving Loan
(with the Swing Line Loan being attributed to the Lender making such Loan) and
Letter of Credit Obligations.
"Supplemental Amount" shall mean $4,000,000, provided that the
Supplemental Guaranty is valid, binding and enforceable, and otherwise the
"Supplemental Amount" shall equal zero..
"Supplemental Guaranty" shall mean that certain Limited
Supplemental Guaranty of even date herewith executed and delivered by the
Pegasus Funds.
"Swing Line Advance" has the meaning assigned to it in Section
1.1(e)(i).
"Swing Line Availability" has the meaning assigned to it in
Section 1.1(e)(i).
"Swing Line Commitment" shall mean, as to the Swing Line
Lender, the commitment of the Swing Line Lender to make Swing Line Loans as set
forth on the signature page to the Agreement, which commitment constitutes a
subfacility of the Revolving Loan Commitment of the Swing Line Lender.
"Swing Line Lender" shall mean GE Capital.
"Swing Line Loan" shall mean, as the context may require, at
any time, the aggregate amount of outstanding Swing Line Advances.
"Swing Line Note" has the meaning assigned to it in Section
1.1(e)(ii).
"Taxes" shall mean taxes, levies, imposts, deductions, Charges
or withholdings, and all liabilities with respect thereto, excluding taxes
imposed on or measured by the net income of Agent or a Lender by the
jurisdictions under the laws of which Agent and Lenders are organized or in
which they otherwise conduct operations, or any political subdivision thereof.
"Term A Note" shall have the meaning assigned to it in Section
1.1(b)(i).
"Term B Note" shall have the meaning assigned to it in Section
1.1(c)(i).
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"Term C Note" shall have the meaning assigned to it in Section
1.1(d).
"Term Lenders" shall mean those Lenders having Term Loan
Commitments.
"Term Loan A" shall have the meaning assigned to it in Section
1.1(b)(i).
"Term Loan A Commitment" shall mean (a) as to any Lender, the
commitment of such Lender to make its Pro Rata Share of the Term Loan A as set
forth on the signature page to the Agreement or in the most recent Assignment
Agreement executed by such Lender, and (b) as to all such Lenders, the
aggregate commitment of all Lenders to make the Term Loan A, which aggregate
commitment shall be One Million Five Hundred Thousand Dollars ($1,500,000) on
the Closing Date.
"Term Loan B" shall have the meaning assigned to it in Section
1.1(c)(i).
"Term Loan B Commitment" shall mean (a) as to any Lender, the
commitment of such Lender to make its Pro Rata Share of the Term Loan B as set
forth in the signature page to the Agreement or in the most recent Assignment
Agreement executed by such Lender, and (b) as to all such Lenders, the
aggregate commitment of all Lenders to make the Term Loan B, which aggregate
commitment shall be Three Million Dollars ($3,000,000.00) on the Closing Date.
"Term Loan B Funding Date" shall mean a Business Day on or
after which the conditions set forth in Sections 2.1, 2.2 and 2.4 shall have
been satisfied and on which the Term Lenders have been requested to fund the
Term Loan B pursuant to Section 1.1(c)(i).
"Term Loan C" shall have the meaning assigned to it in Section
1.1(d).
"Term Loan C Commitment" shall mean (a) as to any Lender, the
commitment of such Lender to make its Pro Rata Share of the Term Loan C as set
forth in the signature pages to the Agreement or in the most recent Assignment
Agreement executed by such Lender and (b) as to all such Lenders, the aggregate
commitment of all Lenders to make the Term Loan C, which aggregate commitment
shall be Twelve Million Dollars ($12,000,000) on the Closing Date.
"Term Loan C Funding Date" shall mean a Business Day on or
after which the conditions set forth in Sections 2.1, 2.3(II) and 2.4 shall
have been satisfied and on which the Term Lenders have been requested to fund
the Term Loan C pursuant to Section 1.1(c) of the Litigation L/C Agreement.
"Term Loan Commitment" shall mean, collectively, the Term Loan
A Commitment, the Term Loan B Commitment and the Term Loan C Commitment.
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"Term Loan(s)" shall mean the Term Loan A, the Term Loan B,
the Term Loan C, any portion or component of the Term Loan A, Term Loan B or
Term Loan C, or the Term Loan A, the Term Loan B and the Term Loan C,
collectively, in each case as the context requires.
"Term Note" shall mean, collectively, the Term A Note, the
Term B Note and the Term C Note, or any one of such instruments.
"Termination Date" shall mean the date on which the Loans have
been indefeasibly repaid in full and all other Obligations under the Agreement
and the other Loan Documents have been completely discharged and Letter of
Credit Obligations and Litigation L/C Obligations have been cash
collateralized, cancelled or backed by stand-by letters of credit in accordance
with Annex B, and Borrower shall have no further right to borrow any monies or
obtain additional financial accommodations under the Agreement or the
Litigation L/C Agreement.
"Tessco" means Tessco Group, Inc., a Michigan corporation.
"Tessco Liquidation" shall mean the merger of Tessco with and
into Borrower, or the liquidation or dissolution of Tessco such that the assets
and liabilities of Tessco immediately prior to such liquidation or dissolution
are assigned to and assumed by Borrower upon the consummation of such
liquidation or dissolution.
"Tessco Liquidation Reserve" shall mean, as of any date of
determination, the total liabilities and contingent liabilities (to the extent
known and probable) of Tessco, other than Tessco's intercompany liabilities
owing to Borrower and Tessco's obligations to Agent and Lenders under the Loan
Documents, plus an amount equal to two months' rental obligations with respect
to all existing operating leases of Tessco.
"Title IV Plan" shall mean an employee pension benefit plan,
as defined in Section 3 (2) of ERISA (other than a Multiemployer Plan), which
is covered by Title IV of ERISA, and which any Credit Party or ERISA Affiliate
maintains, contributes to or has an obligation to contribute to on behalf of
participants who are or were employed by any of them.
"Trademark License" shall mean rights under any written
agreement now owned or hereafter acquired by any Credit Party granting any
right to use any Trademark.
"Trademark Security Agreements" shall mean, collectively, each
Trademark Security Agreement executed by a Credit Party in favor of Agent, on
behalf of Lenders, with respect to Trademarks and Trademark Licenses, as
security for the Obligations or for such Credit Party's guaranty obligations
with respect to the Obligations.
"Trademarks" shall mean all of the following now owned or
hereafter acquired by any Credit Party: (a) all trademarks, trade names,
corporate names, business names, trade styles,
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service marks, logos, other source or business identifiers, prints and labels
on which any of the foregoing have appeared or appear, designs and general
intangibles of like nature (whether registered or unregistered), now owned or
existing or hereafter adopted or acquired, all registrations and recordings
thereof, and all applications in connection therewith, including registrations,
recordings and applications in the United States Patent and Trademark Office or
in any similar office or agency of the United States, any state or territory
thereof, or any other country or any political subdivision thereof; (b) all
reissues, extensions or renewals thereof; and (c) all goodwill associated with
or symbolized by any of the foregoing.
"Unfunded Pension Liability" shall mean, at any time, the
aggregate amount, if any, of the sum of (a) the amount by which the present
value of all accrued benefits under each Title IV Plan exceeds the fair market
value of all assets of such Title IV Plan allocable to such benefits in
accordance with Title IV of ERISA, all determined as of the most recent
valuation date for each such Title IV Plan using the actuarial assumptions for
funding purposes in effect under such Title IV Plan, and (b) for a period of
five (5) years following a transaction which might reasonably be expected to be
covered by Section 4069 of ERISA, the liabilities (whether or not accrued) that
could be avoided by any Credit Party or any ERISA Affiliate as a result of such
transaction.
All other undefined terms contained in any of the Loan
Documents shall, unless the context indicates otherwise, have the meanings
provided for by the Code as in effect in the State of Illinois to the extent
the same are used or defined therein. Unless otherwise specified, references
in the Agreement or any of the Appendices to a Section, subsection or clause
refer to such Section, subsection or clause as contained in the Agreement. The
words "herein," "hereof" and "hereunder" and other words of similar import
refer to the Agreement as a whole, including all Annexes, Exhibits and
Schedules, as the same may from time to time be amended, restated, modified or
supplemented, and not to any particular section, subsection or clause contained
in the Agreement or any such Annex, Exhibit or Schedule.
Wherever from the context it appears appropriate, each term
stated in either the singular or plural shall include the singular and the
plural, and pronouns stated in the masculine, feminine or neuter gender shall
include the masculine, feminine and neuter genders. The words "including",
"includes" and "include" shall be deemed to be followed by the words "without
limitation"; references to Persons include their respective successors and
assigns (to the extent and only to the extent permitted by the Loan Documents)
or, in the case of governmental Persons, Persons succeeding to the relevant
functions of such Persons; and all references to statutes and related
regulations shall include any amendments of the same and any successor statutes
and regulations. Whenever any provision in any Loan Document refers to the
knowledge (or an analogous phrase) of any Credit Party, such words are intended
to signify that the chief financial officer or chief executive officer of such
Credit Party has actual knowledge or awareness of a particular fact or
circumstance or that either such officer, if it had exercised reasonable
diligence, would have known or been aware of such fact or circumstance.
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* * * *
▇-▇▇
▇▇▇
▇▇▇▇▇ B (SECTION 1.2)
TO
CREDIT AGREEMENT
LETTERS OF CREDIT
(a) Issuance. Subject to the terms and conditions of the
Agreement and the Litigation L/C Agreement, Agent and Revolving Lenders agree
to incur (or in the case of the Litigation L/C, the Term Lenders agree to
incur), from time to time prior to the Commitment Termination Date, upon the
request of Borrower, Letter of Credit Obligations and Litigation L/C
Obligations by causing Letters of Credit to be issued (by a bank or other
legally authorized Person selected by or acceptable to Agent in its sole
discretion (each, an "L/C Issuer")) for Borrower's account and guaranteed by
Agent; provided, however, that if the L/C Issuer is a Revolving Lender, then
such Letters of Credit (other than the Litigation L/C) shall not be guaranteed
by Agent but rather each Revolving Lender shall, subject to the terms and
conditions hereinafter set forth, purchase (or be deemed to have purchased)
risk participations in all such Letters of Credit issued with the written
consent of Agent, as more fully described in paragraph (b)(ii) below; and,
provided, further, that if the L/C Issuer is a Term Lender, then the Litigation
L/C shall not be guaranteed by Agent but rather each Term Lender shall, subject
to the terms and conditions hereinafter set forth, purchase (or be deemed to
have purchased) risk participations in the Litigation L/C, as more fully
described in paragraph (b)(ii) below. The aggregate amount of all such Letter
of Credit Obligations shall not at any time exceed the least of (i) One Million
Dollars ($1,000,000.00) (the "L/C Sublimit"), and (ii) the Maximum Amount less
the aggregate outstanding principal balance of the Revolving Credit Advances
and the Swing Line Loan, and (iii) the Borrowing Base less the aggregate
outstanding principal balance of the Revolving Credit Advances and the Swing
Line Loan. The aggregate amount of all Litigation L/C Obligations shall not at
any time exceed the least of (i) $12,000,000, (ii) the amount necessary to
obtain and secure the Bond and (iii) the aggregate maximum amount of Litigation
L/C Obligations which are guaranteed pursuant to the terms and conditions of
the Litigation Guaranty. No such Letter of Credit shall have an expiry date
which is more than one year following the date of issuance thereof, and neither
Agent nor any Lenders shall be under any obligation to incur Letter of Credit
Obligations in respect of, or purchase risk participations in, any Letter of
Credit having an expiry date which is later than the Commitment Termination
Date.
(b) Advances Automatic; Participations. (i) In the event
that Agent or any Revolving Lender shall make any payment on or pursuant to any
Letter of Credit Obligation, such payment shall then be deemed automatically to
constitute a Revolving Credit Advance to the applicable Borrower under Section
1.1(a) of the Agreement regardless of whether a Default or Event of Default
shall have occurred and be continuing and notwithstanding Borrower's failure to
satisfy the conditions precedent set forth in Section 2, and each Revolving
Lender shall be obligated to pay its Pro Rata Share thereof in accordance with
the Agreement. The failure of any Revolving Lender to make available to Agent
for Agent's own account its Pro Rata Share of any such Revolving Credit Advance
or payment by Agent under or in respect of a Letter of
152
Credit (other than the Litigation L/C) shall not relieve any other Revolving
Lender of its obligation hereunder to make available to Agent its Pro Rata
Share thereof, but no Revolving Lender shall be responsible for the failure of
any other Revolving Lender to make available such other Revolving Lender's Pro
Rata Share of any such payment.
(ii) In the event that Agent or any Term Lender shall make
payments on or pursuant to the Litigation L/C Obligations, such payments shall
then be deemed automatically to constitute all or part of the Term Loan C to
Borrower pursuant to Section 1.1(d)(ii) of the Agreement and pursuant to the
Litigation L/C Agreement regardless of whether a Default or Event of Default
shall have occurred and be continuing and notwithstanding Borrower's failure to
satisfy any of the conditions precedent set forth in Section 2.4, and each Term
Lender shall be obligated to pay its Pro Rata Share thereof to the Agent in
accordance with the Agreement. The failure of any Term Lender to make
available to Agent for Agent's own account its Pro Rata Share of any such
payment by Agent under or in respect of the Litigation L/C shall not relieve
any other Term Lender of its obligation hereunder to make available to Agent
its Pro Rata Share thereof, but no Term Lender shall be responsible for the
failure of any other Term Lender to make available such other Term Lender's Pro
Rata Share of any such payment.
(iii) If it shall be illegal or unlawful for Borrower to
incur Revolving Credit Advances as contemplated by paragraph (b)(i) above
because of an Event of Default described in Section 8.1(h) or (i) or otherwise
or if it shall be illegal or unlawful for any Revolving Lender to be deemed to
have assumed a ratable share of the reimbursement obligations owed to an L/C
Issuer, or if the L/C Issuer is a Revolving Lender, then (i) immediately and
without further action whatsoever, each Revolving Lender shall be deemed to
have irrevocably and unconditionally purchased from Agent (or such L/C Issuer,
as the case may be) an undivided interest and participation equal to such
Revolving Lender's Pro Rata Share (based on the Revolving Loan Commitments) of
the Letter of Credit Obligations in respect of all Letters of Credit then
outstanding and (ii) thereafter, immediately upon issuance of any Letter of
Credit, each Revolving Lender shall be deemed to have irrevocably and
unconditionally purchased from Agent (or such L/C Issuer, as the case may be)
an undivided interest and participation in such Revolving Lender's Pro Rata
Share (based on the Revolving Loan Commitments) of the Letter of Credit
Obligations with respect to such Letter of Credit on the date of such issuance.
Each Revolving Lender shall fund its participation in all payments or
disbursements made under the Letters of Credit in the same manner as provided
in the Agreement with respect to Revolving Credit Advances.
(iv) If it shall be illegal or unlawful for Borrower to incur
the Term Loan C as contemplated by paragraph (b)(ii) above because of an Event
of Default described in Section 8.1(h) or (i) or otherwise or if it shall be
illegal or unlawful for any Term Lender to be deemed to have assumed a ratable
share of the reimbursement obligations owed to an L/C Issuer, or if the L/C
Issuer is a Term Lender, then immediately and without further action
whatsoever, each Term Lender shall be deemed to have irrevocably and
unconditionally purchased from Agent (or such L/C Issuer, as the case may be)
an undivided interest and participation equal to such Term
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Lender's Pro Rata Share (based on the Term Loan C Commitments) of the
Litigation L/C Obligations. Each Term Lender shall fund its participation in
all payments or disbursements made under the Litigation L/C as provided in the
Agreement.
(c) Cash Collateral. If Borrower is required to provide
cash collateral for any Letter of Credit Obligations or Litigation L/C
Obligations pursuant to the Agreement prior to the Commitment Termination Date,
Borrower will pay to Agent for the benefit of the applicable Lenders cash or
cash equivalents acceptable to Agent ("Cash Equivalents") in an amount equal to
105% of the maximum amount then available to be drawn under each applicable
Letter of Credit outstanding for the benefit of Borrower. Any and all such
funds or Cash Equivalents securing or otherwise relating to any Letter of
Credit Obligations shall be held by Agent in a cash collateral account (the
"Letter of Credit Cash Collateral Account") maintained at a bank or financial
institution acceptable to Agent. Any and all such funds or Cash Equivalents
securing or otherwise relating to the Litigation L/C Obligations shall be held
by Agent in a cash collateral account (the "Litigation L/C Cash Collateral
Account") maintained at a bank or financial institution acceptable to Agent.
The Letter of Credit Cash Collateral Account and the Litigation L/C Cash
Collateral Account shall collectively be referred to as the "Cash Collateral
Accounts." The Cash Collateral Accounts shall be in the name of Borrower and
shall be pledged to, and subject to the control of, Agent, for the benefit of
Agent and Lenders, in a manner satisfactory to Agent. Borrower hereby pledges
and grants to Agent, on behalf of Lenders, a security interest in all such
funds and Cash Equivalents held in the Cash Collateral Accounts from time to
time and all proceeds thereof, as security for the payment of all amounts due
in respect of the Letter of Credit Obligations, Litigation L/C Obligations and
other Obligations, whether or not then due. The Agreement, including this
Annex B, shall constitute a security agreement under applicable law. The
funds, Cash Equivalents and proceeds of, in or relating to the Litigation L/C
Cash Collateral Account shall at all times be segregated from, and shall not at
any time be commingled or deposited with, the funds, Cash Equivalents and
proceeds of, in or relating to the Letter of Credit Cash Collateral Account,
and the Borrower hereby agrees and acknowledges to take all necessary and
appropriate actions to effect such segregation and to prevent any such
commingling.
If any Letter of Credit Obligations or Litigation L/C
Obligations, whether or not then due and payable, shall for any reason be
outstanding on the Commitment Termination Date, Borrower shall either (i)
provide cash collateral therefor in the manner described above, or (ii) cause
all such Letters of Credit and guaranties thereof to be canceled and returned,
or (iii) deliver a stand-by letter (or letters) of credit in guaranty of such
Letter of Credit Obligations and Litigation L/C Obligations, which stand-by
letter (or letters) of credit shall be of like tenor and duration as, and in an
amount equal to 105% of the aggregate maximum amount then available to be drawn
under, the Letters of Credit to which such outstanding Letter of Credit
Obligations or Litigation L/C Obligations relate and shall be issued by a
Person, and shall be subject to such terms and conditions, as are be
satisfactory to Agent in its sole discretion.
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From time to time after funds are deposited in the Cash
Collateral Accounts by Borrower, whether before or after the Commitment
Termination Date, Agent may apply such funds or Cash Equivalents then held in
the Cash Collateral Accounts to the payment of any amounts, in such order as
Agent may elect, as shall be or shall become due and payable by Borrower to
Lenders with respect to such Letter of Credit Obligations and Litigation L/C
Obligations of Borrower and, upon the satisfaction in full of all Letter of
Credit Obligations and Litigation L/C Obligations, to any other Obligations
then due and payable.
Neither Borrower nor any Person claiming on behalf of or
through Borrower shall have any right to withdraw any of the funds or Cash
Equivalents held in the Cash Collateral Accounts, except that upon the
termination of all Letter of Credit Obligations and Litigation L/C Obligations
and the payment of all amounts payable by Borrower to Lenders in respect
thereof, any funds remaining in the Cash Collateral Accounts shall be applied
to other Obligations when due and owing and upon payment in full of such
Obligations, any remaining amount shall be paid to Borrower or as otherwise
required by law.
(d) Fees and Expenses. Borrower agrees to pay to Agent
for the benefit of Revolving Lenders and Term Lenders, as applicable, as
compensation to such Lenders for Letter of Credit Obligations and Litigation
L/C Obligations incurred hereunder, (x) all costs and expenses incurred by
Agent or any Lender on account of such Letter of Credit Obligations and
Litigation L/C Obligations, and (y) for each month during which any Letter of
Credit Obligation or Litigation L/C Obligations shall remain outstanding, a fee
(the "Letter of Credit Fee") in an amount equal to (i) in the case of Letters
of Credit other than the Litigation L/C, two percent (2.00%) per annum
multiplied by the maximum amount available from time to time to be drawn under
the applicable Letter of Credit and (ii) in the case of the Litigation L/C,
three percent (3.00%) per annum multiplied by the maximum amount available from
time to time to be drawn under the Litigation L/C. Such fee shall be paid to
Agent for the benefit of the applicable Lenders in arrears, on the first day of
each month. In addition, Borrower shall pay to any L/C Issuer, on demand, such
fees (including all per annum fees), charges and expenses of such L/C Issuer in
respect of the issuance, negotiation, acceptance, amendment, transfer and
payment of such Letter of Credit or otherwise payable pursuant to the
application and related documentation under which such Letter of Credit is
issued.
(e) Request for Incurrence of Letter of Credit
Obligations or Litigation L/C Obligations. Borrower shall give Agent at least
two (2) Business Days prior written notice requesting the incurrence of any
Letter of Credit Obligation or Litigation L/C Obligations, specifying the date
such Letter of Credit Obligation or Litigation L/C Obligations is to be
incurred, identifying the beneficiary to which such Letter of Credit Obligation
or Litigation L/C Obligations relates and describing the nature of the
transactions proposed to be supported thereby. The notice shall be accompanied
by the form of the Letter of Credit (which shall be acceptable to the L/C
Issuer) to be guarantied and shall include (i) a representation and warranty by
Borrower that all of the conditions set forth in Sections 2.1, 2.3(II) and 2.4
of the Credit Agreement have been satisfied and (ii) a reaffirmation by
Borrower of the granting and
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continuance of Agent's Liens, on behalf of itself and Lenders, pursuant to the
Litigation Collateral Documents. Notwithstanding anything contained herein to
the contrary, Letter of Credit applications by Borrower and approvals by Agent
may be made and transmitted pursuant to electronic codes and security measures
mutually agreed upon and established by and among Borrower, Agent and the L/C
Issuer.
(f) Obligation Absolute. The obligation of Borrower to
reimburse Agent, Revolving Lenders and Term Lenders, as applicable, for
payments made with respect to any Letter of Credit Obligation or Litigation L/C
Obligation shall be absolute, unconditional and irrevocable, without necessity
of presentment, demand, protest or other formalities, and the obligations of
each such Lender to make payments to Agent with respect to Letters of Credit
shall be unconditional and irrevocable. Such obligations of Borrower and
Lenders shall be paid strictly in accordance with the terms hereof under all
circumstances including the following circumstances:
(i) any lack of validity or enforceability of any Letter
of Credit, the Litigation Guaranty, the Agreement or the other Loan
Documents or any other agreement;
(ii) the existence of any claim, set-off, defense or other
right which Borrower or any of their respective Affiliates or any
Lender may at any time have against a beneficiary or any transferee of
any Letter of Credit (or any Persons or entities for whom any such
transferee may be acting), Agent, any Lender, or any other Person,
whether in connection with the Agreement, the Letter of Credit, the
transactions contemplated herein or therein or any unrelated
transaction (including any underlying transaction between Borrower or
any of their respective Affiliates and the beneficiary for which the
Letter of Credit was procured);
(iii) any draft, demand, certificate or any other document
presented under any Letter of Credit proving to be forged, fraudulent,
invalid or insufficient in any respect or any statement therein being
untrue or inaccurate in any respect;
(iv) payment by Agent (except as otherwise expressly
provided in paragraph (g)(ii)(C) below) or any L/C Issuer under any
Letter of Credit or guaranty thereof against presentation of a demand,
draft or certificate or other document which does not strictly comply
with the terms of such Letter of Credit or such guaranty;
(v) any other circumstance or happening whatsoever,
which is similar to any of the foregoing; or
(vi) the fact that a Default or an Event of Default shall
have occurred and be continuing.
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(g) Indemnification; Nature of Lenders' Duties.
(i) In addition to amounts payable as elsewhere provided in the Agreement,
Borrower hereby agrees to pay and to protect, indemnify, and save harmless
Agent and each Lender from and against any and all claims, demands,
liabilities, damages, losses, costs, charges and expenses (including attorneys'
fees and allocated costs of internal counsel) which Agent or any Lender may
incur or be subject to as a consequence, direct or indirect, of (A) the
issuance of any Letter of Credit or guaranty thereof, or (B) the failure of
Agent or any Lender seeking indemnification or of any L/C Issuer to honor a
demand for payment under any Letter of Credit or guaranty thereof as a result
of any act or omission, whether rightful or wrongful, of any present or future
de jure or de facto government or Governmental Authority, in each case other
than to the extent as a result of the gross negligence or willful misconduct of
Agent or such Lender (as finally determined by a court of competent
jurisdiction).
(ii) As between Agent and any Lender and Borrower, Borrower
assumes all risks of the acts and omissions of, or misuse of any Letter of
Credit by beneficiaries of any Letter of Credit. In furtherance and not in
limitation of the foregoing, to the fullest extent permitted by law neither
Agent nor any Lender shall be responsible: (A) for the form, validity,
sufficiency, accuracy, genuineness or legal effect of any document issued by
any party in connection with the application for and issuance of any Letter of
Credit, even if it should in fact prove to be in any or all respects invalid,
insufficient, inaccurate, fraudulent or forged; (B) for the validity or
sufficiency of any instrument transferring or assigning or purporting to
transfer or assign any Letter of Credit or the rights or benefits thereunder or
proceeds thereof, in whole or in part, which may prove to be invalid or
ineffective for any reason; (C) for failure of the beneficiary of any Letter of
Credit to comply fully with conditions required in order to demand payment
under such Letter of Credit; provided that, in the case of any payment by Agent
under any Letter of Credit or guaranty thereof, Agent shall be liable to the
extent such payment was made as a result of its gross negligence or willful
misconduct (as finally determined by a court of competent jurisdiction) in
determining that the demand for payment under such Letter of Credit or guaranty
thereof complies on its face with any applicable requirements for a demand for
payment under such Letter of Credit or guaranty thereof; (D) for errors,
omissions, interruptions or delays in transmission or delivery of any messages,
by mail, cable, telegraph, telex or otherwise, whether or not they be in
cipher; (E) for errors in interpretation of technical terms; (F) for any loss
or delay in the transmission or otherwise of any document required in order to
make a payment under any Letter of Credit or guaranty thereof or of the
proceeds thereof; (G) for the credit of the proceeds of any drawing under any
Letter of Credit or guaranty thereof; and (H) for any consequences arising from
causes beyond the control of Agent or any Lender. None of the above shall
affect, impair, or prevent the vesting of any of Agent's or any Lender's rights
or powers hereunder or under the Agreement.
(iii) Nothing contained herein shall be deemed to limit or to
expand any waivers, covenants or indemnities made by Borrower in favor of any
L/C Issuer in any letter of credit application, reimbursement agreement or
similar document, instrument or agreement between Borrower and such L/C Issuer.
B-6
157
* * * *
B-7
158
ANNEX C (SECTION 1.8)
TO
CREDIT AGREEMENT
CASH MANAGEMENT SYSTEMS
Borrower shall, and shall cause its Subsidiaries to, establish and
maintain the Cash Management Systems described below:
(a) On or before the Closing Date and until the
Termination Date, Borrower shall (i) establish lock boxes ("Lock Boxes") at one
or more of the banks set forth on Disclosure Schedule (3.19), and shall request
in writing and otherwise take such reasonable steps to ensure that all Account
Debtors forward payment directly to such Lock Boxes, and (ii) deposit and cause
its Subsidiaries to deposit or cause to be deposited promptly, and in any event
no later than the third Business Day after the date of receipt thereof (unless
the aggregate face amount of such items exceeds $25,000, in which case such
items shall be deposited no later than the first Business Day after receipt
thereof), all cash, checks, drafts or other similar items of payment relating
to or constituting payments made in respect of any and all Collateral (whether
or not otherwise delivered to a Lock Box) into bank accounts in Borrower's name
or any such Subsidiary's name (collectively, the "Borrower Accounts") at banks
set forth on Disclosure Schedule (3.19) (each, a "Relationship Bank"). On or
before the Closing Date, Borrower shall have established a concentration
account in its name (each a "Concentration Account" and, collectively, the
"Concentration Accounts") at the bank or banks which shall be designated as the
Concentration Account bank for Borrower on Disclosure Schedule (3.19) (each a
"Concentration Account Bank" and collectively, the "Concentration Account
Banks"), which banks shall be satisfactory to Agent.
(b) On or before the Closing Date (or such later date as
Agent shall consent to in writing), each Concentration Account Bank, each bank
where a Funding Account or other Disbursement Account is located and all other
Relationship Banks, shall have entered into tri- party blocked account
agreements with Agent, for the benefit of itself and Lenders, and the
applicable Borrower and Subsidiaries thereof, as applicable, in form and
substance acceptable to Agent, which shall become operative on or prior to the
Closing Date. Each such blocked account agreement shall provide, among other
things, that (i) all items of payment deposited in such account and proceeds
thereof deposited in the applicable Concentration Account are held by such bank
as agent or bailee-in-possession for Agent, on behalf of Lenders, (ii) the bank
executing such agreement has no rights of setoff or recoupment or any other
claim against such account, as the case may be, other than for payment of its
service fees and other charges directly related to the administration of such
account and for returned checks or other items of payment, and (iii) from and
after the Closing Date (A) with respect to banks at which a Borrower Account is
located, such bank agrees to forward immediately all available amounts in each
Borrower Account to Borrower's Concentration Account Bank and to commence the
process of daily
159
sweeps from such Borrower Account into the applicable Concentration Account and
(B) with respect to each Concentration Account Bank, such bank agrees to
immediately forward all available amounts received in the applicable
Concentration Account to the Collection Account through daily sweeps from such
Concentration Account into the Collection Account. Borrower shall not, nor
shall it cause or permit any Subsidiary thereof to, accumulate or maintain cash
in any disbursement or payroll accounts as of any date of determination in
excess of checks outstanding against such accounts as of that date and amounts
necessary to meet minimum balance requirements.
(c) So long as no Default or Event of Default has
occurred and is continuing, Borrower may amend Disclosure Schedule (3.19) to
add or replace a Relationship Bank, Lock Box or Borrower Account or to replace
any Concentration Account or any Funding Account or other Disbursement Account;
provided, however, that (i) Agent shall have consented in writing in advance to
the opening of such account or Lock Box with the relevant bank and (ii) prior
to the time of the opening of such account or Lock Box, the applicable Borrower
and/or the Subsidiaries thereof, as applicable, and such bank shall have
executed and delivered to Agent a tri-party blocked account agreement, in form
and substance satisfactory to Agent (except in the case of other Disbursement
Accounts which are zero balance accounts). Borrower shall close any of their
accounts (and establish replacement accounts in accordance with the foregoing
sentence) promptly and in any event within thirty (30) days of notice from
Agent that the creditworthiness of any bank holding an account is no longer
acceptable in Agent's reasonable judgment, or as promptly as practicable and in
any event within sixty (60) days of notice from Agent that the operating
performance, funds transfer and/or availability procedures or performance with
respect to accounts or lockboxes of the bank holding such accounts or Agent's
liability under any tri-party blocked account agreement with such bank is no
longer acceptable in Agent's reasonable judgment.
(d) The Lock Boxes, Borrower Accounts, the "Funding
Accounts" (as defined below), the Concentration Accounts, and to the extent not
"zero balance accounts", each other disbursement account, payroll account or
similar account now or hereafter used for payments by the Borrower or any of
its Subsidiaries (collectively, "Disbursement Accounts"), shall be cash
collateral accounts, with all cash, checks and other similar items of payment
in such accounts securing payment of the Loans and all other Obligations, and
in which Borrower and each Subsidiary thereof shall have granted a Lien to
Agent, on behalf of itself and Lenders, pursuant to the Security Agreement.
(e) All amounts deposited in the Collection Account shall
be deemed received by Agent in accordance with Section 1.10 of the Agreement
and shall be applied (and allocated) by Agent in accordance with Section 1.11
of the Agreement. In no event shall any amount be so applied unless and until
such amount shall have been credited in immediately available funds to the
Collection Account.
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160
(f) Borrower may maintain, in its name, an account (each
a "_"Funding Account" and collectively, the "Funding Accounts") at a bank
acceptable to Agent into which Agent shall, from time to time, deposit proceeds
of Revolving Credit Advances and Swing Line Advances made to Borrower pursuant
to Section 1.1 for use by Borrower solely in accordance with the provisions of
Section 1.4.
(g) Borrower shall and shall cause its Affiliates,
officers, employees, agents, directors or other Persons acting for or in
concert with Borrower (each a "Related Person") to (i) hold in trust for Agent,
for the benefit of itself and Lenders, all checks, cash and other items of
payment received by Borrower or any such Related Person, and (ii) within three
(3) Business Days after receipt by Borrower or any such Related Person (unless
the aggregate face amount of such items exceeds $25,000, in which case such
items shall be deposited within one (1) Business Day after such receipt), of
any checks, cash or other items or payment, deposit the same into a Borrower
Account. Borrower and each Related Person thereof acknowledges and agrees that
all cash, checks or items of payment constituting proceeds of Collateral are
the property of Agent and Lenders. All proceeds of the sale or other
disposition of any Collateral, shall be deposited directly into the applicable
Borrower Accounts.
* * * *
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ANNEX D (SECTION 2.1(a))
TO
CREDIT AGREEMENT
LIST OF CLOSING DOCUMENTS
In addition to, and not in limitation of, the conditions described in Section
2.1 of the Agreement, pursuant to Section 2.1(a), the items described on the
attached List of Closing Documents must be received by Agent in form and
substance satisfactory to Agent on or prior to the Closing Date (each
capitalized term used but not otherwise defined herein shall have the meaning
ascribed thereto in Annex A to the Agreement), unless otherwise indicated
therein as permitted to be delivered on a later date.
* * * *
162
ANNEX D
Execution Copy
GENERAL ELECTRIC CAPITAL CORPORATION
AS AGENT
$25,500,000
CREDIT FACILITY
TO
CODE-ALARM, INC.
AS OF
OCTOBER 24, 1997
LIST OF CLOSING DOCUMENTS
A. LOAN DOCUMENTS
1. Credit Agreement dated as of October 24, 1997 (the "Credit
Agreement") among Code-Alarm, Inc., a Michigan corporation ("Code-Alarm", in
such capacity, the "Borrower"), General Electric Capital Corporation, a New
York corporation ("GECC"), in its capacity as a "Lender", and the other
financial institutions which may from time to time become parties to the Credit
Agreement (GECC, in such capacity, and such other financial institutions being
sometimes hereinafter referred to collectively as the "Lenders" and
individually as a "Lender"), and General Electric Capital Corporation, a New
York corporation, in its separate capacity as agent for the Lenders (the
"Agent"). Capitalized terms used herein and not otherwise defined herein shall
have the meanings set forth in the Credit Agreement.
Exhibits and Schedules
Exhibit 1.1(a)(i) - Form of Notice of Revolving Credit Advance
Exhibit 1.1(a)(ii) - Form of Revolving Note
Exhibit 1.1(b) - Form of Term A Note
Exhibit 1.1(c)(i) - Form of Term B Note
Exhibit 1.1(c)(ii) - Form of Notice of Term Loan B Advance
Exhibit 1.1(d)(iii) - Form of Notice of Term Loan C Advance
Exhibit 1.1(e) - Form of Swing Line Note
Exhibit 1.5(e) - Form of Notice of Conversion/Continuation
Exhibit 4.1(b) - Form of Borrowing Base Certificate
Exhibit 9.1(a) - Form of Assignment Agreement
Schedule 1.1 - Responsible Individual
Schedule 1.4 - Sources and Uses; Funds Flow Memorandum
Schedule 3.2 - Executive Offices; FEIN
Schedule 3.4(A) - Financial Statements
163
Schedule 3.4(B) - Pro Forma
Schedule 3.4(C) - Projections
Schedule 3.4(D) - Fair Salable Balance Sheet
Schedule 3.6 - Real Estate and Leases
Schedule 3.7 - Labor Matters
Schedule 3.8 - Ventures, Subsidiaries and Affiliates; Outstanding Stock
Schedule 3.11 - Tax Matters
Schedule 3.12 - ERISA Plans
Schedule 3.13 - Litigation
Schedule 3.15 - Intellectual Property
Schedule 3.17 - Hazardous Materials
Schedule 3.18 - Insurance
Schedule 3.19 - Deposit and Disbursement Accounts
Schedule 3.20 - Government Contracts
Schedule 3.21 - Customer and Trade Relations
Schedule 3.22 - Material Agreements
Schedule 5.1 - Trade Names
Schedule 6.2 - Investments
Schedule 6.3 - Indebtedness
Schedule 6.4(a) - Transactions with Affiliates
Schedule 6.7 - Existing Liens
Annex A (Recitals) - Definitions
Annex B (Section 1.2) - Letters of Credit
Annex C (Section 1.8) - Cash Management System
Annex D (Section 2.1(a)) - List of Closing Documents
Annex E (Section 4.1(a)) - Financial Statements and Projections -- Reporting
Annex F (Section 4.1(b)) - Collateral Reports
Annex G (Section 6.10) - Financial Covenants
Annex H (Section 9.9(a)) - Lenders' Wire Transfer Information
Annex I (Section 11.10) - Notice Addresses
2. Revolving Notes in an aggregate amount of up to $12,000,000
payable by Borrower to the Lenders in the amounts listed on Schedule I.
3. Swing Line Notes in an aggregate amount of $1,200,000 payable
by Borrower to GECC in its capacity as Swing Line Lender.
4. Term A Notes in an aggregate amount of $1,500,000 payable by
Borrower to the Lenders in the amounts listed on Schedule I.
5. Term B Notes in an aggregate amount of up to $3,000,000
payable by Borrower to the Lenders in the amounts listed on Schedule I.
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164
6. Term C Notes in an aggregate amount of up to $12,000,000
payable by Borrower to the Lenders in the amounts listed on Schedule I.
B. GUARANTY AND COLLATERAL DOCUMENTS
7. Security Agreements executed by each of the Borrower and
Tessco Group, Inc., a Michigan corporation ("Tessco") in favor of the Agent and
the Lenders pursuant to which Borrower and Tessco respectively grants a
security interest in substantially all of its personal property as security for
the Obligations.
8. Guaranty and Security Agreements executed by each of the
following Credit Parties in favor of the Agent and the Lenders pursuant
to which each such Credit Party unconditionally guarantees all of the
Obligations:
▇. ▇▇▇▇, Inc., a Michigan corporation ("Anes");
▇. ▇▇▇▇▇▇▇ Security Systems, Inc., a Michigan corporation
("▇▇▇▇▇▇▇"); and
c. Intercept Systems, Inc., a Michigan corporation
("Intercept").
9. Guaranty executed by Tessco in favor of the Agent and the
Lenders pursuant to which Tessco unconditionally guarantees all of the
Obligations.
10. Pledge Agreement executed by Borrower in favor of the Agent
and the Lenders pursuant to which Borrower grants a security interest in all of
the issued and outstanding capital stock of Tessco, Anes, ▇▇▇▇▇▇▇ and
Intercept, as security for the Obligations, together with stock certificates
and stock powers executed in blank.
11. Pledge Agreement executed by ▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ (the
"Series B Pledgor") in favor of the Agent and the Lenders pursuant to which
the Series B Pledgor grants a security interest in all of the issued and
outstanding Series B Preferred Stock of Borrower as security for the
Obligations, together with stock certificates and stock powers executed in
blank.
12. Patent Security Agreement executed by Borrower in favor of
the Agent and the Lenders pursuant to which Borrower grants a security
interest in substantially all of its patents, patent applications and related
licenses as security for the Obligations.
13. Trademark Security Agreements executed by each of the
following Credit Parties in favor of the Agent and the Lenders pursuant to
which each such Credit Party grants a security interest in substantially
all of its trademarks, service marks and related applications and licenses as
security for the Obligations and, in the case of such Credit Parties (other
than Borrower), as security for their respective obligations under their
Guaranties:
a. Borrower;
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165
▇. ▇▇▇▇; and
▇. ▇▇▇▇▇▇▇.
14. Copyright Security Agreements executed by Borrower in favor
of the Agent and the Lenders pursuant to which Borrower grants a security
interest in substantially all of its copyrights and related applications and
licenses as security for the Obligations.
15. Contribution and Indemnification Agreement among the Credit
Parties with respect to their obligations and grants of collateral in favor of
the Agent and the Lenders pursuant to the Loan Documents.
16. Loss Payable Endorsements and certificates of insurance
relating to the Credit Parties' property and casualty insurance policies naming
the Agent as loss payee, and certificates of insurance relating to the Credit
Parties' liability insurance policies naming the Agent and the Lenders as
additional insureds.
17. Lockbox and Blocked Account Agreements and Pledged Account
Agreements for Borrower with each lockbox and concentration account bank and
other banks at which each such Borrower maintains a depository account,
together with evidence that the Cash Management Systems complying with Annex C
have been established.
18. Landlord Agreements executed by each lessor of the premises
of each Credit Party at the respective locations listed on Schedule II.
19. Collateral assignment of key-man life insurance policies
aggregating $3,000,000 on the life of ▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, together with
certificates of insurance with respect to such policies and copies of such
policies.
20. Master Intercompany Demand Note between the Borrower and
Tessco.
C. LITIGATION L/C AGREEMENTS
21. Litigation L/C and Term Loan C Agreement (the "Litigation
Agreement") dated as of October 24, 1997 among Borrower, Agent and the other
financial institutions which may from time to time become parties to the
Litigation Agreement as Term Lenders.
Exhibit A - Form of Term C Note
22. Security Agreements executed by each of the Borrower and
Tessco Group, Inc., a Michigan corporation ("Tessco") in favor of the Agent and
the Term Lenders pursuant to which Borrower and Tessco respectively grants a
security interest in substantially all of its personal property as
security for the Litigation Obligations.
▇-▇
▇▇▇
▇▇. ▇▇▇▇▇▇▇▇ and Security Agreements executed by each of the
following Credit Parties in favor of the Agent and the Term Lenders pursuant to
which each such Credit Party unconditionally guarantees all of the Litigation
Obligations:
▇. ▇▇▇▇, Inc., a Michigan corporation ("Anes");
▇. ▇▇▇▇▇▇▇ Security Systems, Inc., a Michigan
corporation ("▇▇▇▇▇▇▇"); and
c. Intercept Systems, Inc., a Michigan corporation
("Intercept").
24. Guaranty executed by Tessco in favor of the Agent and the
Term Lenders pursuant to which Tessco unconditionally guarantees all
of the Litigation Obligations.
25. Pledge Agreement executed by Borrower in favor of the Agent
and the Term Lenders pursuant to which Borrower grants a security interest
in all of the issued and outstanding capital stock of Tessco, Anes, ▇▇▇▇▇▇▇
and Intercept, as security for the Litigation Obligations, together with stock
certificates and stock powers executed in blank.
26. Pledge Agreement executed by ▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ (the
"Series B Pledgor") in favor of the Agent and the Term Lenders pursuant to
which the Series B Pledgor grants a security interest in all of the issued and
outstanding Series B Preferred Stock of Borrower as security for the
Litigation Obligations, together with stock certificates and stock powers
executed in blank.
27. Patent Security Agreement executed by Borrower in favor of
the Agent and the Term Lenders pursuant to which Borrower grants a security
interest in substantially all of its patents, patent applications and related
licenses as security for the Litigation Obligations.
28. Trademark Security Agreements executed by each of the
following Credit Parties in favor of the Agent and the Term Lenders
pursuant to which each such Credit Party grants a security interest in
substantially all of its trademarks, service marks and related applications and
licenses as security for the Litigation Obligations and, in the case of such
Credit Parties (other than Borrower), as security for their respective
obligations under their Guaranties:
a. Borrower;
▇. ▇▇▇▇; and
▇. ▇▇▇▇▇▇▇.
29. Copyright Security Agreements executed by Borrower in favor
of the Agent and the Term Lenders pursuant to which Borrower grants a security
interest in substantially all of its copyrights and related applications and
licenses as security for the Litigation Obligations.
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D. PEGASUS SUPPORT DOCUMENTS
30. Limited Supplemental Guaranty ("Supplemental Guaranty")
executed and delivered by Pegasus Partners, L.P., a Delaware limited
partnership ("Pegasus Partners"), and Pegasus Related Partners, L.P., a
Delaware limited partnership ("Pegasus Related Partners"), in favor of the
Agent and the Lenders pursuant to which Pegasus Partners and Pegasus Related
Partners jointly and severally guaranty up to $4,000,000 of the Borrowers
Obligations.
31. Limited Litigation Guaranty ("Litigation Guaranty") executed
and delivered by Pegasus Partners and Pegasus Related Partners in favor of the
Agent and the Lenders pursuant to which Pegasus Partners and Pegasus Related
Partners jointly and severally guaranty up to $12,000,000 of the Litigation L/C
Obligations.
E. UCC FINANCING STATEMENTS AND SEARCHES
32. Intellectual property title searches.
33. Pre-Filing UCC Lien Search Reports (including fixture
filings) relating to the Credit Parties and certain of their predecessors and
former names, in the offices and against the names set forth on Schedule III.
34. Tax Lien and Judgment Search Reports relating to the Credit
Parties and certain of their predecessors and former names, in the offices
and against the names set forth on Schedule III.
35. Acknowledgment copies of UCC-1 Financing Statements filed
against the Credit Parties in the offices set forth on Schedule IV.
36. Acknowledgment copies of Fixture Financing Statements filed
against the Credit Parties in the offices set forth on Schedule IV.
37. Post-Filing Search Reports of filings against the Credit
Parties in the offices set forth on Schedule IV.
F. OTHER LOAN DOCUMENTS
38. Initial Borrowing Base Certificate delivered to the Agent by
Borrower.
39. Disbursement Direction Letter delivered to the Agent by
Borrower, setting forth the disbursement instructions for Loans to be
made on the Closing Date.
▇-▇
▇▇▇
▇▇. Appointment by each Credit Party of CT Corporation as their
agent for service of process in Illinois.
G. RELEASE DOCUMENTS
41. Estoppel Letter executed by NBD Bank ("NBD") in connection
with the repayment in full of amounts outstanding under the credit facilities
or other evidences of debt and security held by NBD with respect to the Credit
Parties.
42. UCC Termination Statements and the other release documents
executed and delivered by NBD and described on Schedule V
H. ORGANIZATION AND AUTHORIZATION DOCUMENTS
43. Certificate executed by the Secretary or Assistant Secretary
of each Credit Party certifying (i) the resolutions adopted by the Board of
Directors of such Credit Party authorizing or ratifying the execution, delivery
and performance of the Credit Agreement and/or the other Loan Documents
(including, without limitation, GECC Warrant Documents), Series A Preferred
Stock Documents, and Series B Preferred Stock Documents to which such Credit
Party is a party, (ii) the names, signatures, and incumbency of the officers of
such Credit Party authorized to execute such documents on behalf of such Credit
Party and (iii) the Articles or Certificates of Incorporation and Bylaws of
such Credit Party as in effect on the date of such certification.
44. Articles and Certificates of Incorporation of each Credit
Party certified by the Secretaries of State of its jurisdiction of organization.
45. Good Standing Certificates for each Credit Party from the
offices designated on Schedule VII
46. Limited Partnership Agreements and Certificates of
Organization of Pegasus Partners, Pegasus Related Partners, and Pegasus
Investors, L.P. ("Pegasus Investors") certified by the Secretary of State of
Delaware.
47. Articles and Certificate of Incorporation of Pegasus
Investors GP, Inc. ("Pegasus GP") certified by the Secretary of State of
Delaware.
48. Good Standing Certificates for Pegasus Partners, Pegasus
Related Partners, Pegasus Investors and Pegasus GP from the Secretary of
State of Delaware.
I. OPINIONS AND CERTIFICATES
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169
49. Opinions of counsel to the Credit Parties and the Series B
Pledgor addressed to the Agent and the Lenders, in form, scope and substance
acceptable to Agent.
50. Opinions of counsel to Pegasus Partners and Pegasus Related
Partners, in form, scope and substance acceptable to Agent.
51. Financial Condition Certificates executed and delivered by
the Chief Financial Officer or Treasurer of the Borrower, together with
Pro Forma, Fair Salable Balance Sheet and Projections of the Borrower and its
subsidiaries, prepared after giving effect to the consummation of each of the
Related Transactions pursuant to the Related Transactions Documents.
52. Officer's Certificate executed and delivered by the Chief
Financial Officer of Borrower stating that (i) since December 31, 1996, (a) no
event or condition has occurred or is existing which could reasonably be
expected to have a Material Adverse Effect; (b) there has been no material
adverse change in the industry in which Borrower operates; (c) no Litigation
has been commenced which could reasonably be expected to have, or which has
had, a Material Adverse Effect or could challenge any of the transactions
contemplated by the Agreement and the other Loan Documents; (d) there have been
no Restricted Payments made by any Credit Party; and (e) there has been no
material increase in liabilities, liquidated or contingent, and no material
decrease in assets of Borrower or any of its Subsidiaries, (ii) each of the
Related Transactions have been consummated in accordance with the terms and
conditions of the Related Transaction Documents, and (iii) Code-Alarm has
received $7,000,000 in cash proceeds from the issuance of the Series A
Preferred Stock.
J. EQUITY DOCUMENTS
53. Unit Purchase Agreement ("Unit Purchase Agreement") among
Code-Alarm and Pegasus Partners and Pegasus Related Partners.
54. Certificate of Designation Number, Powers, Preferences and
Relative Participating, Optional and Other Rights of Series A Preferred Stock
of Code-Alarm, Inc., adopted by Borrower's Board of Directors.
55. Registration Rights Agreements among Borrower, Pegasus
Partners, Pegasus Related Partners and GECC.
56. "Attached Warrants", "Shortfall Warrants" and "Litigation
Warrants" (as such terms are defined in the Unit Purchase Agreement
executed by Pegasus Partners, Pegasus Related Partners and GECC).
57. Subscription Agreement among Borrower and the Series B
Pledgor.
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170
58. Certificate of Designation, Preference and Rights of Series
B Preferred Stock of Borrower adopted by Borrower's Board of Directors.
59. Warrant Purchase Agreement executed by GECC and Borrower.
60. Warrant To Purchase Common Stock of Code-Alarm, Inc.
executed by Borrower in favor of GECC.
K. MISCELLANEOUS
61. GECC Fee Letter.
* * * *
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171
SCHEDULE I
LOAN ALLOCATIONS
Revolving Notes
General Electric Capital Corporation $12,000,000
Term A Notes
General Electric Capital Corporation $1,500,000
Term B Notes
General Electric Capital Corporation $3,000,000
Term C Notes
General Electric Capital Corporation $12,000,000
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172
SCHEDULE II
LANDLORD AGREEMENT LOCATIONS
Lessor's Name
Property Address and Address
1. 950 ▇. ▇▇▇▇▇▇▇▇ Diversified Real Estate Fund Limited
Madison Heights, Michigan Partnership
[to be obtained post-closing] ▇▇▇▇▇▇▇ Properties of Michigan
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇/▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
2. ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Trustee I Corporation
Madison Heights, Michigan ▇▇▇▇▇▇▇ Properties of Michigan
[to be obtained post-closing] ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇/▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
3. ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ Properties (International), Inc.
Huntington Beach, California ▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
4. ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇.
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇.▇. ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
D-11
173
SCHEDULE III
PRE-FILING UCC LIEN SEARCH REPORTS
1. DEBTOR NAME: CODE-ALARM, INC.
JURISDICTIONS: (1) California
(a) Secretary of State
(b) Orange County
(2) Michigan
(a) Secretary of State
(b) Oakland County
(3) Texas
(a) Secretary of State
(b) ▇▇▇▇▇▇▇▇▇▇ County
2. DEBTOR NAME: TESSCO GROUP, INC.
JURISDICTIONS: (1) California
(a) Secretary of State
(b) Orange County
(2) Michigan
(a) Secretary of State
(b) Oakland County
(3) Texas
(a) Secretary of State
(b) ▇▇▇▇▇▇▇▇▇▇ County
3. DEBTOR NAME: ANES, INC.
JURISDICTIONS: (1) Michigan
(a) Secretary of State
(b) Oakland County
4. DEBTOR NAME: ANES SECURITY, INC.
JURISDICTIONS: (1) Michigan
(a) Secretary of State
(b) Oakland County
5. DEBTOR NAME: ▇▇▇▇▇▇▇ SECURITY SYSTEMS, INC.
JURISDICTIONS: (1) Michigan
(a) Secretary of State
(b) Oakland County
6. DEBTOR NAME: INTERCEPT SYSTEM, INC.
JURISDICTIONS: (1) Michigan
(a) Secretary of State
(b) Oakland County
▇-▇▇
▇▇▇
▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇
TAX LIEN AND JUDGMENT SEARCH REPORTS
1. DEBTOR NAME: CODE-ALARM, INC.
JURISDICTIONS: (1) California
(a) US District Court - Central District
(b) Orange County
(2) Michigan
(a) US District Court - Eastern District
(b) Oakland County
(3) Texas
(a) US District Court - Western District
(b) ▇▇▇▇▇▇▇▇▇▇ County
2. DEBTOR NAME: TESSCO GROUP, INC.
JURISDICTIONS: (1) California
(a) US District Court - Central District
(b) Orange County
(2) Michigan
(a) US District Court - Eastern District
(b) Oakland County
(3) Texas
(a) US District Court - Western District
(b) ▇▇▇▇▇▇▇▇▇▇ County
3. DEBTOR NAME: ANES, INC.
JURISDICTIONS: (1) Michigan
(a) US District Court - Eastern District
(b) Oakland County
4. DEBTOR NAME: ANES SECURITY, INC.
JURISDICTIONS: (1) Michigan
(a) US District Court - Eastern District
(b) Oakland County
5. DEBTOR NAME: ▇▇▇▇▇▇▇ SECURITY SYSTEMS, INC.
JURISDICITONS: (1) Michigan
(a) US District Court - Eastern District
(b) Oakland County
6. DEBTOR NAME: INTERCEPT SYSTEM, INC.
JURISDICITONS: (1) Michigan
(a) US District Court - Eastern District
(b) Oakland County
▇-▇▇
▇▇▇
▇-▇▇
176
SCHEDULE IV
UCC-1 FINANCING STATEMENTS AND FIXTURE FILINGS
(AND POST-FILING SEARCH LOCATIONS)
1. UCC-1 Financing Statements:
Debtor: CODE-ALARM, INC.
Locations: (1) Secretary of State of California
(2) Secretary of State of Michigan
(3) Secretary of State of Texas
Debtor: TESSCO GROUP, INC.
Locations: (1) Secretary of State of California
(2) Secretary of State of Michigan
(3) Secretary of State of Texas
Debtor: ANES, INC.
Locations: (1) Secretary of State of Michigan
Debtor: ▇▇▇▇▇▇▇ SECURITY SYSTEMS, INC.
Locations: (1) Secretary of State of Michigan
Debtor: INTERCEPT SYSTEM, INC.
Locations: (1) Secretary of State of Michigan
Debtor: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Locations: (1) Secretary of State of Michigan
2. UCC Fixture Financing Statements:
Debtor: CODE-ALARM, INC.
Locations: (1) Oakland County, Michigan
(2) ▇▇▇▇▇▇▇▇▇▇ County, Texas
Debtor: TESSCO GROUP, INC.
Locations: (1) Oakland County, Michigan
(2) ▇▇▇▇▇▇▇▇▇▇ County, Texas
D-15
177
SCHEDULE V
RELEASE AND TERMINATION DOCUMENTS
UCCS
CALIFORNIA
(1) Debtor: Code-Alarm, Inc.
Secured Party: NBD Bank
Jurisdiction: Secretary of State
File No.: ▇▇▇▇▇▇▇▇▇▇
File Date: 5/26/95
(2) Debtor: Code-Alarm, Inc.
Secured Party: NBD Bank
Jurisdiction: Orange County
File No.: ▇▇-▇▇▇▇▇▇▇
File Date: 8/9/95
MICHIGAN
(1) Debtor: (1) Code-Alarm, Inc.
(2) Tessco Group, Inc.
Secured Party: NBD Bank
Jurisdiction: Secretary of State
File No.: 56238B
File Date: 5/25/95
(2) Debtor: Code-Alarm, Inc.
Secured Party: NBD Bank
Jurisdiciton: Macomb County
File No.: 134979
15545/372
File Date: 7/26/95
(3) Debtor: (1) ▇▇▇▇▇▇▇ Security Systems, Inc.
(2) Intercept Systems, Inc.
Secured Party: NBD Bank
Jurisdiction: Secretary of State
File No.: 56236B
File Date: 5/25/95
D-16
178
(4) Debtor: ▇▇▇▇▇▇▇ Security Systems, Inc.
Secured Party: NBD Bank
Jurisdiction: Macomb County
File No.: 134980
15545/375
File Date: 7/26/95
(5) Debtor: (1) Anes, Inc., d/b/a Anes Security, Inc.
(2) Anes Security, Inc., a d/b/a of Anes, Inc.
Secured Party: NBD Bank
Jurisdiction: Secretary of State
File No.: 56237B
File Date: 5/25/95
(6) Debtor: Anes, Inc., d/b/a Anes Security, Inc.
Secured Party: NBD Bank
Jurisdiction: Macomb County
File No.: 134976
15545/363
File Date: 7/26/95
(7) Debtor: Anes Security, Inc. a d/b/a of Anes, Inc.
Secured Party: NBD Bank
Jurisdiction: Macomb County
File No.: 134977
15545/366
File Date: 7/26/95
TEXAS
(1) Debtor: (1) Tessco Group, Inc.
(2) Code-Alarm, Inc.
Secured Party: NBD Bank
Jurisdiction: Secretary of State
File No.: 105891
File Date: 5/26/95
(2) Debtor: (1) Code-Alarm, Inc.
(2) Tessco Group, Inc.
Secured Party: NBD Bank
Jurisdiction: ▇▇▇▇▇▇▇▇▇▇ County
File No.: vol: 2730
pg: 0328
File Date: 5/30/95
D-17
179
TRADEMARKS
(1) Trademark: ELITE
Debtor: Code-Alarm, Inc.
Secured Party: NBD Bank, N.A.
Registration Number: 1,709,313
Registration Date: 8/18/92
(2) Trademark: ▇▇▇▇▇▇▇
Debtor: ▇▇▇▇▇▇▇ Security Systems, Inc.
Secured Party: NBD Bank, N.A.
Registration Number: 1,161,795
Registration Date: 7/21/81
(3) Trademark: PROTECTION RACKET
Debtor: ▇▇▇▇▇▇▇ Security Systems, Inc.
Secured Party: NBD Bank, N.A.
Registration Number: 1,256,806
Registration Date: 10/25/82
(4) Trademark: "INSURANCE MAN"
Debtor: ▇▇▇▇▇▇▇ Security Systems, Inc.
Secured Party: NBD Bank, N.A.
Registration Number: 1,183,685
Registration Date: 12/29/81
(5) Trademark: ▇▇▇▇▇▇▇-▇▇▇
Debtor: ▇▇▇▇▇▇▇ Security Systems, Inc.
Secured Party: NBD Bank, N.A.
Registration Number: 1,113,544
Registration Date: 2/20/79
(6) Trademark: TOTAL PROTECTION
Debtor: ▇▇▇▇▇▇▇ Security Systems, Inc.
Secured Party: NBD Bank, N.A.
Registration Number: 1,195,137
Registration Date: 5/11/82
(7) Trademark: ▇▇▇▇▇▇▇
Debtor: ▇▇▇▇▇▇▇ Security Systems, Inc.
Secured Party: NBD Bank, N.A.
Registration Number: 1,183,684
Registration Date: 12/29/81
D-18
180
(8) Trademark: THE BIG STICK
Debtor: Anes, Inc.
Secured Party: NBD Bank, N.A.
Registration Number: 1,720,117
Registration Date: 9/29/92
(9) Trademark: EWS
Debtor: Anes, Inc.
Secured Party: NBD Bank, N.A.
Registration Number: 1,758,074
Registration Date: 3/16/93
PATENTS
(1) Patent: AUTOMOBILE BURGLAR ALARM
Debtor: Code-Alarm, Inc.
Secured Party: NBD Bank, N.A.
Patent Number: 4,740,775
Issue Date: 4/26/88
(2) Patent: SECURITY SYSTEM
Debtor: Code-Alarm, Inc.
Secured Party: NBD Bank, N.A.
Patent Number: 5,543,778
Issue Date: 8/6/96
(3) Patent: VEHICLE ANTITHEFT SYSTEM
Debtor: Code-Alarm, Inc.
Secured Party: NBD Bank, N.A.
Patent Number: 4,107,543
Issue Date: 8/15/78
OTHER
Release and Reassignment of Life Insurance Policy
D-19
181
SCHEDULE VI
GOOD STANDING JURISDICTIONS
CREDIT PARTY: CODE-ALARM, INC.
JURISDICTIONS: (1) Secretary of State of Michigan
(2) Secretary of State of California
CREDIT PARTY: TESSCO GROUP, INC.
JURISDICTIONS: (1) Secretary of State of Michigan
(2) Secretary of State of Texas
CREDIT PARTY: ANES, INC.
JURISDICTIONS: (1) Secretary of State of Michigan
CREDIT PARTY: ▇▇▇▇▇▇▇ SECURITY SYSTEMS, INC.
JURISDICTIONS: (1) Secretary of State of Michigan
CREDIT PARTY: INTERCEPT SYSTEMS, INC.
JURISDICTIONS: (1) Secretary of State of Michigan
182
ANNEX E (SECTION 4.1(A))
TO
CREDIT AGREEMENT
FINANCIAL STATEMENTS AND PROJECTIONS -- REPORTING
Borrower shall deliver or cause to be delivered to Agent or to
Agent and Lenders, as indicated, the following:
(a) Monthly Financials. To Agent and Lenders, within
thirty (30) days after the end of each Fiscal Month, financial information
regarding Borrower and its Subsidiaries, certified by the Chief Financial
Officer of Borrower, consisting of consolidated and consolidating (i) unaudited
balance sheets as of the close of such Fiscal Month and the related statements
of income and cash flow for that portion of the Fiscal Year ending as of the
close of such Fiscal Month; (ii) unaudited statements of income and cash flows
for such Fiscal Month, setting forth in comparative form the figures for the
corresponding period in the prior year and the figures contained in the
Projections for such Fiscal Year, all prepared in accordance with GAAP (subject
to normal year-end adjustments); and (iii) a schedule of the outstanding
balance of all intercompany Indebtedness among Borrower and each of its
Subsidiaries as of the last day of that Fiscal Month. Such financial
information shall be accompanied by (A) a statement in reasonable detail (each,
a "Compliance Certificate") showing the calculations used in determining
compliance with each financial covenant set forth on Annex G which is tested on
a monthly basis, and (B) the certification of the chief financial officer of
Borrower that (i) such financial information presents fairly in accordance with
GAAP (subject to normal year-end adjustments) the financial position and
results of operations of Borrower and its Subsidiaries, on a consolidated and
consolidating basis, in each case as at the end of such month and for the
period then ended and (ii) any other information presented is true, correct and
complete in all material respects and that there was no Default or Event of
Default in existence as of such time or, if a Default or Event of Default shall
have occurred and be continuing, describing the nature thereof and all efforts
undertaken to cure such Default or Event of Default;
(b) Quarterly Financials. To Agent and Lenders, within
forty-five (45) days after the end of each Fiscal Quarter, consolidated and
consolidating financial information regarding Borrower and its Subsidiaries,
certified by the chief financial officer of Borrower, including (i) unaudited
balance sheets as of the close of such Fiscal Quarter and the related
statements of income and cash flow for that portion of the Fiscal Year ending
as of the close of such Fiscal Quarter and (ii) unaudited statements of income
and cash flows for such Fiscal Quarter, in each case setting forth in
comparative form the figures for the corresponding period in the prior year and
the figures contained in the Projections for such Fiscal Year, all prepared in
accordance with GAAP (subject to normal year-end adjustments). Such financial
information shall be accompanied by (A) a Compliance Certificate in respect of
each of the financial covenants set forth on Annex G which is tested on a
quarterly basis and (B) the certification of
183
the chief financial officer of Borrower that (i) such financial information
presents fairly in accordance with GAAP (subject to normal year-end
adjustments) the financial position, results of operations and statements of
cash flows of Borrower and its Subsidiaries, on both a consolidated and
consolidating basis, as at the end of such Fiscal Quarter and for the period
then ended, (ii) any other information presented is true, correct and complete
in all material respects and that there was no Default or Event of Default in
existence as of such time or, if a Default or Event of Default shall have
occurred and be continuing, describing the nature thereof and all efforts
undertaken to cure such Default or Event of Default. In addition, Borrower
shall deliver to Agent and Lenders, within forty-five (45) days after the end
of its first Fiscal Quarter ending in 1998 and each Fiscal Quarter thereafter,
a management discussion and analysis which includes a comparison to budget for
that Fiscal Quarter and a comparison of performance for that Fiscal Quarter to
the corresponding period in the prior year;
(c) Operating Plan. To Agent and Lenders, as soon as
available, but not later than thirty (30) days after the end of each Fiscal
Year, an annual operating plan for Borrower, approved by the Board of Directors
of Borrower, for the following year, which will include a statement of all of
the material assumptions on which such plan is based, will include monthly
balance sheets and a monthly budget for the following year and will integrate
sales, gross profits, operating expenses, operating profit, cash flow
projections and Borrowing Availability projections all prepared on the same
basis and in similar detail as that on which operating results are reported
(and in the case of cash flow projections, representing management's good faith
estimates of future financial performance based on historical performance), and
including plans for personnel, Capital Expenditures and facilities;
(d) Annual Audited Financials. To Agent and
Lenders, within ninety (90) days after the end of each Fiscal Year, audited
Financial Statements for Borrower and its Subsidiaries on a consolidated and
consolidating basis, consisting of balance sheets and statements of income and
retained earnings and cash flows, setting forth in comparative form in each
case the figures for the previous Fiscal Year and the figures contained in the
Projections for such Fiscal Year, which Financial Statements shall be prepared
in accordance with GAAP, certified without qualification, (as to the
consolidated financial statements) by an independent certified public
accounting firm of national standing or otherwise acceptable to Agent. Such
Financial Statements shall be accompanied by (i) a statement prepared in
reasonable detail showing the calculations used in determining compliance with
each of the financial covenants set forth on Annex G, (ii) the annual letters
to such accountants in connection with their audit examination detailing
contingent liabilities and material litigation matters, and (iii) the
certification of the chief executive officer or chief financial officer of
Borrower that all such Financial Statements present fairly in accordance with
GAAP the financial position, results of operations and statements of cash flows
of Borrower and its Subsidiaries on a consolidated and consolidating basis, as
at the end of such year and for the period then ended, and that there was no
Default or Event of Default in existence as of such time or, if a Default or
Event of Default shall have occurred and be continuing, describing the nature
thereof and all efforts undertaken to cure such Default or Event of Default;
E-2
184
(e) Management Letters. To Agent and Lenders, within
five (5) Business Days after receipt thereof by any Credit Party, copies of all
management letters, exception reports or similar letters or reports received by
such Credit Party from its independent certified public accountants;
(f) Default Notices. To Agent and Lenders, as soon as
practicable, and in any event within five (5) Business Days after the chief
executive officer or chief financial officer of Borrower has actual knowledge
of the existence of any Default, Event of Default, or other event which has had
a Material Adverse Effect, telephonic or telecopied notice specifying the
nature of such Default or Event of Default or other event, including the
anticipated effect thereof, which notice, if given telephonically, shall be
promptly confirmed in writing on the next Business Day;
(g) SEC Filings and Press Releases. To Agent and
Lenders, promptly upon their becoming available, copies of: (i) all Financial
Statements, reports, notices and proxy statements made publicly available by
any Credit Party to its security holders; (ii) all regular and periodic reports
and all registration statements and prospectuses, if any, filed by any Credit
Party with any securities exchange or with the Securities and Exchange
Commission or any governmental or private regulatory authority; and (iii) all
press releases and other statements made available by any Credit Party to the
public concerning material adverse changes or developments in the business of
any such Person;
(h) Subordinated Debt and Equity Notices. To Agent, as
soon as practicable, copies of all material written notices given or received
by any Credit Party with respect to any Subordinated Debt or Stock of such
Person, and, within three (3) Business Days after any Credit Party obtains
knowledge of any matured or unmatured event of default with respect to any
Subordinated Debt, notice of such event of default;
(i) Supplemental Schedules. To Agent, supplemental
disclosures, if any, required by Section 5.6 of the Agreement;
(j) Litigation. To Agent in writing, (i) promptly upon
learning thereof, notice of any Litigation commenced or threatened against any
Credit Party that (A) seeks damages in excess of $100,000, (B) seeks injunctive
relief, (C) is asserted or instituted against any Plan, its fiduciaries or its
assets or against any Credit Party or ERISA Affiliate in connection with any
Plan, (D) alleges criminal misconduct by any Credit Party, or (E) alleges the
violation of any law regarding, or seeks remedies in connection with, any
Environmental Liabilities of the Credit Parties, (ii) promptly upon hearing
thereof, notice of any material development in any such Litigation referred to
in clause (i) hereof or described in the Disclosure Schedules (including,
without limitation, the DEI Litigation) and (iii) monthly (prior to the Term
Loan B Funding Date or the date on which the Litigation L/C is issued,
whichever is later), together with the delivery of the monthly financial
statements referred to in clause (a) above, a description of the status of the
DEI Litigation and a schedule disclosing the amount that would be determined
pursuant to
E-3
185
Sections 2.2(a)(iv) or 2.3(a)(iii) of the Credit Agreement as if the Term Loan
B Funding Date occurred on the date such schedule was prepared.
(k) Insurance Notices. To Agent, disclosure of losses or
casualties required by Section 5.4 of the Agreement;
(l) Leases; Warehouses. To Agent, copies of (i) any and
all default notices received under or with respect to any leased location or
public warehouse where Collateral is located, and (ii) such other notices or
documents as Agent may request in its reasonable discretion;
(m) OEM Contracts. To Agent and Lenders, copies of all
notices received indicating or asserting that (i) any Credit Party is in
material default or breach of any OEM Contract, (ii) any OEM Contract is or
will be terminated or expired and will not replaced, or (iii) any OEM
Accreditation will expire or be withdrawn or terminated; and
(n) Other Documents. To Agent and Lenders, such other
financial and other information respecting any Credit Party's business or
financial condition as Agent or any Lender shall, from time to time, request.
* * * *
▇-▇
▇▇▇
▇▇▇▇▇ F (SECTION 4.1(B))
TO
CREDIT AGREEMENT
COLLATERAL REPORTS
Borrower shall deliver or cause to be delivered the following:
(a) To Agent, upon its request, and in no event less
frequently than monthly (together with a copy of all or any part of such
delivery requested by any Lender in writing after the Closing Date), each of
the following, in each case providing information as of the Friday of the then
immediately preceding month:
(i) a Borrowing Base Certificate, in each case
accompanied by such supporting detail and documentation as shall be
requested by Agent in its reasonable discretion;
(ii) a summary of Inventory by location and type with a
supporting perpetual Inventory report, in each case accompanied by
such supporting detail and documentation as shall be requested by
Agent in its reasonable discretion;
(iii) a trial balance showing Accounts outstanding aged
from invoice due date as follows: 1 to 30 days, 31 to 60 days, 61 to
90 days and 91 days or more, accompanied by such supporting detail and
documentation as shall be requested by Agent in its reasonable
discretion; and
(iv) a calculation of the Tessco Liquidation Reserve.
(b) To Agent, on a monthly basis or at such more frequent
intervals as Agent may request from time to time (together with a copy of all
or any part of such delivery requested by any Lender in writing after the
Closing Date), collateral reports, including all additions and reductions (cash
and non-cash) with respect to Accounts, in each case accompanied by such
supporting detail and documentation as shall be requested by Agent in its
reasonable discretion;
(c) To Agent, at the time of delivery of each of the
monthly Financial Statements delivered pursuant to Annex E, a reconciliation of
the Accounts trial balance and month-end Inventory reports of Borrower to
Borrower's general ledger and monthly Financial Statements delivered pursuant
to such Annex E, in each case accompanied by such supporting detail and
documentation as shall be requested by Agent in its reasonable discretion;
(d) To Agent, at the time of delivery of each of the
quarterly and annual Financial Statements delivered pursuant to Annex E, (i) a
listing of government contracts of
187
Borrower and Tessco subject to the Federal Assignment of Claims Act of 1940;
and (ii) a list of any applications for the registration of any Patent,
Trademark or Copyright with the United States Patent and Trademark Office, the
United States Copyright Office or any similar office or agency which any Credit
Party thereof has filed in the prior Fiscal Quarter;
(e) Borrower, at its own expense, shall deliver to Agent
the results of each physical verification, if any, which Borrower or any of its
Subsidiaries may in their discretion have made, or caused any other Person to
have made on their behalf, of all or any portion of their Inventory (and, if a
Default or an Event of Default shall have occurred and be continuing, Borrower
shall, upon the request of Agent, conduct, and deliver the results of, such
physical verifications as Agent may require);
(f) Borrower, at its own expense, shall deliver to Agent
such appraisals of its assets as Agent may request at any time after the
occurrence and during the continuance of a Default or an Event of Default, such
appraisals to be conducted by an appraiser, and in form and substance,
satisfactory to Agent; and
(g) Such other reports, statements and reconciliations
with respect to the Borrowing Base or Collateral of any or all Credit Parties
as Agent shall from time to time request in its reasonable discretion.
* * * *
F-2
188
ANNEX G (SECTION 6.10)
TO
CREDIT AGREEMENT
FINANCIAL COVENANTS
Borrower shall not breach or fail to comply with any of the
following financial covenants, each of which shall be calculated in accordance
with GAAP consistently applied:
(a) Maximum Capital Expenditures. Borrower and its Subsidiaries
on a consolidated basis shall not make Capital Expenditures during any of its
Fiscal Years of more than (i) the amount set forth below opposite such Fiscal
Year plus (ii) in the case of Fiscal Year 1998 and each Fiscal Year thereafter,
25% of the unused portion of the maximum amount of Capital Expenditures
permitted hereunder for the then immediately preceding Fiscal Year (but without
giving effect to an additional amounts permitted during such preceding Fiscal
Year because of this clause (ii)):
Fiscal Year Maximum Amount
----------- --------------
1997 $1,000,000
1998 $1,300,000
1999 and each Fiscal
Year thereafter $1,000,000.
(b) Minimum Fixed Charge Coverage Ratio. Borrower and its
Subsidiaries shall have on a consolidated basis at the end of any Fiscal
Quarter ending on or after December 31, 1997, a Fixed Charge Coverage Ratio for
the 12-month period then ended, taken as a single accounting period (or with
respect to the Fiscal Quarters ending on or before June 30, 1998, the period
commencing on October 1, 1997 and ending on the last day of such Fiscal
Quarter, taken as a single accounting period) of not less 1.5 to 1.0; provided,
however, that, if Term Loan C shall be outstanding during any such Fiscal
Quarter, such ratio shall not be less than, for any such Fiscal Quarter, the
ratio set forth below and corresponding to the outstanding principal balance of
Term Loan C as of the last day of such Fiscal Quarter:
Term Loan C Balance Minimum Ratio
------------------- -------------
$0 to $3,000,000 1.15 to 1.0
Greater than $3,000,000
and less than or equal to
$6,000,000 1.10 to 1.0
189
Greater than $6,000,000
and less than or equal to
$9,000,000 1.05 to 1.0
Greater than $9,000,000 1.00 to 1.0.
(c) Cumulative Minimum EBITDA. Borrowers and its Subsidiaries on
a consolidated basis shall have, for the period commencing October 1, 1997 and
ending as of the end of each Fiscal Month set forth below, EBITDA for such
period then ended (taken as a single accounting period) of not less than the
following:
Month Ending Amount
------------ ------
October, 1997 $ 175,000
November, 1997 $ 375,000
December, 1997 $ 850,000
January, 1998 $1,200,000
February, 1998 $1,500,000
March, 1998 $1,900,000
April, 1998 $2,250,000
May, 1998 $2,600,000
June, 1998 $3,000,000.
(d) Minimum Quarterly EBITDA. Borrower and its Subsidiaries on a
consolidated basis shall have, for the Fiscal Quarter ending September 30, 1998
and for each Fiscal Quarter ending thereafter, EBITDA for such Fiscal Quarter
of not less than $1,500,000.
(e) Minimum Net Worth. Borrower and its Subsidiaries on a
consolidated basis shall have Net Worth at all times of not less than the
"Minimum Net Worth" (as defined below). "Minimum Net Worth" shall mean
$6,500,000 as of the Closing Date and shall increase (on a cumulative basis),
as of the end of the Fiscal Quarter ending December 31, 1997 and each
subsequent Fiscal Quarter, by 80% of an amount equal to (i) Borrower's and its
Subsidiaries' consolidated net income, determined in accordance with GAAP for
such Fiscal Quarter minus (ii) all dividends paid or accrued with respect to
the Series A Preferred Stock for such Fiscal Quarter (and without duplication
of such amounts that were accrued in prior periods and paid in the current
period).
Unless otherwise specifically provided herein, any accounting
term used in the Agreement shall have the meaning customarily given such term
in accordance with GAAP, and all financial computations hereunder shall be
computed in accordance with GAAP consistently
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190
applied as in effect on the Closing Date (and without giving effect to any
changes in GAAP except to the extent agreed to in writing by Borrowers and the
Requisite Lenders). That certain items or computations are explicitly modified
by the phrase "in accordance with GAAP" shall in no way be construed to limit
the foregoing.
* * * *
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191
ANNEX H (SECTION 9.9(A))
TO
CREDIT AGREEMENT
WIRE TRANSFER INFORMATION
Attached.
192
ANNEX I (SECTION 11.10)
TO
CREDIT AGREEMENT
NOTICE ADDRESSES
(A) If to Agent or GE Capital, at
General Electric Capital Corporation
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Account Manager
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to:
Sidley & Austin
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: H. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
and:
General Electric Capital Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Corporate Counsel
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
(B) If to Borrower, at
Code-Alarm, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
193
with copies to:
Pepper, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
* * * *
I-2