EXHIBIT 10.7
LOAN AND SECURITY AGREEMENT
DATED AS OF AUGUST 14, 2002
among
LASALLE BUSINESS CREDIT, INC.,
as agent for Standard Federal Bank National Association
as Lender,
and
AM COMMUNICATIONS, INC.
and
ITS DIRECT AND INDIRECT SUBSIDIARIES,
as Borrowers
TABLE OF CONTENTS
Page
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1. DEFINITIONS..............................................................................................1
2. LOANS...................................................................................................13
(a) Revolving Loans................................................................................13
(b) Equipment Loans................................................................................15
(c) Term Loan A....................................................................................15
(d) Term Loan B....................................................................................15
(e) Repayment of Loans.............................................................................15
(f) Mandatory Repayments...........................................................................16
(g) Payment Dates as Business Days.................................................................17
(h) Notes..........................................................................................17
(i) Voluntary Partial Prepayments and Partial Permanent Reductions
to Maximum Revolving Loan Limit................................................................17
3. LETTERS OF CREDIT.......................................................................................17
(a) General Terms..................................................................................17
(b) Requests for Letters of Credit.................................................................18
(c) Obligations Absolute...........................................................................18
(d) Expiration Dates of Letters of Credit..........................................................19
4. INTEREST, FEES AND CHARGES..............................................................................19
(a) Interest Rate..................................................................................19
(b) Other LIBOR Provisions.........................................................................20
(c) Fees And Charges...............................................................................22
(d) Maximum Interest...............................................................................24
5. COLLATERAL..............................................................................................24
(a) Grant of Security Interest to Lender...........................................................24
(b) Other Security.................................................................................24
(c) Possessory Collateral..........................................................................25
(d) Electronic Chattel Paper.......................................................................25
(e) Intentionally Omitted..........................................................................25
(f) Pledge.........................................................................................25
(g) Intentionally Omitted..........................................................................25
(h) Commercial Tort Claims; Letter-of-Credit Rights................................................26
(i) Real Estate Collateral.........................................................................26
(j) Rights Under Leases............................................................................26
(k) Title Insurance Policies.......................................................................26
(l) Lien Documents.................................................................................26
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6. PRESERVATION OF COLLATERAL AND PERFECTION OF
SECURITY INTERESTS THEREIN..............................................................................27
7. POSSESSION OF COLLATERAL AND RELATED MATTERS............................................................27
8. COLLECTIONS.............................................................................................28
9. COLLATERAL, AVAILABILITY AND FINANCIAL REPORTS AND SCHEDULES............................................30
(a) Borrowing Base Certificates and Weekly Reports.................................................30
(b) Monthly Reports................................................................................30
(c) Financial Statements...........................................................................30
(d) Annual Projections.............................................................................31
(e) Public Reporting...............................................................................31
(f) Other Information..............................................................................31
10. TERMINATION.............................................................................................31
11. REPRESENTATIONS AND WARRANTIES..........................................................................32
(a) Financial Statements and Other Information.....................................................32
(b) Locations......................................................................................32
(c) Loans by Borrower..............................................................................33
(d) Accounts and Inventory.........................................................................33
(e) Liens..........................................................................................33
(f) Organization, Authority and No Conflict........................................................33
(g) Litigation.....................................................................................33
(h) Compliance with Laws and Maintenance of Permits................................................33
(i) Affiliate Transactions.........................................................................34
(j) Names and Trade Names..........................................................................34
(k) Equipment......................................................................................34
(l) Enforceability.................................................................................34
(m) Solvency.......................................................................................34
(n) Indebtedness...................................................................................34
(o) Margin Security and Use of Proceeds............................................................34
(p) Capital Structure..............................................................................35
(q) No Defaults....................................................................................35
(r) Employee Matters...............................................................................35
(s) Intellectual Property..........................................................................35
(t) Environmental Matters..........................................................................36
(u) ERISA Matters..................................................................................36
(v) Delivery of Acquisition Documents; Acquisition.................................................37
(w) Disclosure.....................................................................................37
(x) Condominium Declaration........................................................................37
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12. AFFIRMATIVE COVENANTS...................................................................................37
(a) Maintenance of Records.........................................................................38
(b) Notices........................................................................................38
(c) Compliance with Laws and Maintenance of Permits................................................39
(d) Inspection and Audits..........................................................................40
(e) Insurance......................................................................................40
(f) Collateral.....................................................................................42
(g) Use of Proceeds................................................................................42
(h) Taxes..........................................................................................42
(i) Intellectual Property..........................................................................43
(j) Checking Accounts..............................................................................43
(k) Acquisition Documents..........................................................................43
13. NEGATIVE COVENANTS......................................................................................43
(a) Guaranties.....................................................................................43
(b) Indebtedness...................................................................................43
(c) Liens..........................................................................................43
(d) Mergers, Sales, Acquisitions, Subsidiaries and Other Transactions
Outside the Ordinary Course of Business........................................................44
(e) Dividends and Distributions....................................................................44
(f) Investments; Loans.............................................................................44
(g) Fundamental Changes, Line of Business..........................................................45
(h) Equipment......................................................................................45
(i) Use of Proceeds................................................................................45
(j) Affiliate Transactions.........................................................................45
(k) Settling of Accounts...........................................................................45
(l) Amendments to Acquisition Documents............................................................45
(m) Subordinated Debt..............................................................................46
(n) Designated Contracts...........................................................................46
14. FINANCIAL COVENANTS.....................................................................................46
(a) Net Worth......................................................................................46
(b) Fixed Charge Coverage..........................................................................46
(c) Leverage.......................................................................................47
(d) Capital Expenditures...........................................................................47
(e) Consolidated Research & Development Expenditures...............................................47
15. DEFAULT.................................................................................................47
(a) Payment........................................................................................47
(b) Breach of this Agreement and the Other Agreements..............................................48
(c) Breaches of Other Obligations..................................................................48
(d) Breach of Representations and Warranties.......................................................48
(e) Loss of Collateral.............................................................................48
(f) Levy, Seizure or Attachment....................................................................48
(g) Bankruptcy or Appointment of Receiver..........................................................48
(h) Insolvency; Ceasing Business...................................................................49
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(i) Judgment.......................................................................................49
(j) Criminal Proceedings...........................................................................49
(k) Change of Management...........................................................................49
(l) Change of Control..............................................................................49
(m) Material Adverse Change........................................................................49
(n) Acquisition Documents..........................................................................49
(o) Designated Contracts...........................................................................49
16. REMEDIES UPON AN EVENT OF DEFAULT.......................................................................49
17. CONDITIONS PRECEDENT....................................................................................51
(a) Initial Conditions Precedent...................................................................51
(b) Pre-Funding Conditions Precedent...............................................................52
18. SCOPE OF LIABILITY......................................................................................52
19. NOTICE..................................................................................................55
20. CHOICE OF GOVERNING LAW; CONSTRUCTION; FORUM SELECTION..................................................55
21. MODIFICATION AND BENEFIT OF AGREEMENT...................................................................56
22. HEADINGS OF SUBDIVISIONS................................................................................56
23. POWER OF ATTORNEY.......................................................................................56
24. CONFIDENTIALITY.........................................................................................56
25. COUNTERPARTS............................................................................................57
26. ELECTRONIC SUBMISSIONS..................................................................................57
27. WAIVER OF JURY TRIAL; OTHER WAIVERS.....................................................................57
28. BORROWING AGENT.........................................................................................58
29. LASALLE BUSINESS CREDIT, INC., AS AGENT.................................................................58
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EXHIBIT A - COMPLIANCE CERTIFICATE
EXHIBIT B - FORM OF DISBURSEMENT AUTHORIZATION
EXHIBIT C - FORM LICENSOR AGREEMENT
EXHIBIT 17(A) - CLOSING DOCUMENT CHECKLIST
SCHEDULE 1(A) -ORGANIZATIONAL ID NUMBERS; CHIEF EXECUTIVE OFFICE
SCHEDULE 1(B) - EXISTING LIENS
SCHEDULE 3(H) - COMMERCIAL TORT CLAIMS
SCHEDULE 11(B) - BUSINESS AND COLLATERAL LOCATIONS
SCHEDULE 11(C) - EXISTING LOANS AND ADVANCES
SCHEDULE 11(F) - MATERIAL AGREEMENTS
SCHEDULE 11(G) - EXISTING LITIGATION
SCHEDULE 11(I) - AFFILIATE TRANSACTIONS
SCHEDULE 11(J) - NAMES & Trade Names
Schedule 11(n) - Existing Indebtedness
Schedule 11(p) - Capital Structure
Schedule 11(s) - Intellectual Property
Schedule 13(f) - Existing Investments
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LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT (as amended, modified or supplemented
from time to time, this "Agreement") is made this 14th day of August, 2002 by
and between LASALLE BUSINESS CREDIT, INC., a Delaware corporation, as agent for
Standard Federal Bank National Association ("Lender"), with an address at ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, and AM COMMUNICATIONS, INC., a
Delaware corporation ("AM Communications"), AM BROADBAND SERVICES, INC., a
Delaware corporation ("AM Broadband"), SRS COMMUNICATIONS CORPORATION, a
Connecticut corporation ("SRS Communications"), AMC SERVICES, INC., a Delaware
corporation ("AMC Services"), AM NEX-LINK COMMUNICATIONS, INC. (formerly known
as Nex-Link Acquisition Corp.), a Delaware corporation ("AM Nex-Link"), and AM
TRAINING SERVICES, INC., a Delaware corporation ("AM Training"). AM
Communications, AM Broadband, SRS Communications, AMC Services, AM Nex-Link and
AM Training are referred to herein individually each as a "Borrower" and
collectively as "Borrowers" each with an organizational identification or
registration number (if applicable) and chief executive office as listed on
Schedule 1 (a) attached hereto.
WITNESSETH:
WHEREAS, Borrowers may, from time to time, request Loans from Lender,
and the parties wish to provide for the terms and conditions upon which such
Loans or other financial accommodations, if made by Lender, shall be made.
NOW, THEREFORE, in consideration of any Loan (including any Loan by
renewal or extension) hereafter made to Borrowers by Lender, and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged by Borrowers, the parties agree as follows:
1. DEFINITIONS.
"Account", "Account Debtor", "Certificated Security", "Chattel Paper",
"Commercial Tort Claims", "Control", "Deposit Accounts", "Documents",
"Electronic Chattel Paper", "Equipment", "Fixtures", "General Intangibles",
"Goods", "Instruments", "Inventory", "Investment Property", "Letter-of-Credit
Right", "Payment Intangible", "Proceeds", "Securities Entitlement", "Securities
Intermediary", "Supporting Obligations", "Tangible Chattel Paper" and
"Uncertificated Security" shall have the respective meanings assigned to such
terms in the Uniform Commercial Code, as the same may be in effect in the
Commonwealth of Pennsylvania from time to time (the "UCC").
"Acquisition Agreement" shall mean the Agreement and Plan of Merger
including all exhibits and schedules thereto dated as of June 3, 2002 among AM
Nex-Link, AM Broadband, Target and all of the members of the Target.
"Acquisition Documents" shall mean the Acquisition Agreement and all
related agreements, instruments and documents.
"Affiliate" shall mean any Person (i) which directly or indirectly
through one or more intermediaries controls, is controlled by, or is under
common control with, a Borrower, (ii) which beneficially owns or holds five
percent (5%) or more of the voting control or equity interests of a Borrower, or
(iii) five percent (5%) or more of the voting control or equity interests of
which is beneficially owned or held by a Borrower.
"Annual Financial Statements" shall have the meaning specified in
subsection 9(c) hereof.
"Applicable Margin" shall mean, for (a) Revolving Credit Loans, a
percentage equal to (i) with respect to Prime Rate Loans, .50% and (ii) with
respect to LIBOR Rate Loans, 2.75%, (b) the Equipment Loans and Term Loan A, a
percentage equal to (i) with respect to Prime Rate Loans, .75% and (ii) with
respect to LIBOR Rate Loans, 3.00% and (c) Term Loan B, a percentage equal to
2.00%; provided that a one-time reduction of .25% in the interest rate
applicable to Revolving Credit Loans shall be implemented (as to LIBOR Rate
Loans only, to new or converted LIBOR Rate Loans) upon Lender's receipt of the
financial statements for the month ending September 28, 2002 in accordance with
Subsection 9(c) hereof so long as (1) no Event of Default is then outstanding;
(2) Borrowers have a ratio of (i) Consolidated EBITDA to (ii) the sum of (A)
Consolidated Debt Service, plus (B) all Capital Expenditures, of at least 1.25
to 1 for the 6 month period ending September 28, 2002; and (3) Borrowers have an
Undrawn Availability of at least $1,000,000 as of the date of Lender's receipt
of such financial statements and shall have had a Sixty Day Average Undrawn
Availability of at least such amount. If Borrowers do not achieve the benchmarks
set forth in clause (2) or (3) above, Borrowers may obtain this one-time rate
reduction upon Lender's receipt of the December 31, 2002 financial statements if
Borrowers then satisfy the requirements of clauses (1), (2) and (3) above except
that the ratio referenced in clause (2) above shall be measured for the 9 month
period ending December 29, 2002 and if Borrowers have not previously achieved
the benchmarks in clauses (2) or (3) above, Borrowers may obtain this one-time
rate reduction following Lender's receipt of the required monthly financial
statements after the end of any subsequent fiscal quarter if Borrowers then
satisfy the requirements of clauses (1), (2) and (3) above, except that the
ratio referenced in clause (2) above shall be measured for the 12 month period
ending with the date as of which the applicable financial statements are
prepared. If and when the one-time rate reduction described in this paragraph is
implemented, no further rate reduction pursuant hereto shall be available.
"Assignment of Rents" shall have the meaning specified in Subsection
5(i) hereof.
"Audit Fees" shall have the meaning specified in subsection 12(d)
hereto.
"Borrowing Agent" shall mean AM Communications.
"Borrowing Base" shall mean (i) the lesser of (x) the Maximum Revolving
Loan Limit and (y) the Revolving Loan Limit, minus in each case (ii) the
reserves, if any, established by Lender as set forth in Subsection 2(a) below.
"Breakage Costs" shall have the meaning specified in subsection
4(b)(iv) hereof.
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"Business Day" shall mean any day other than a Saturday, a Sunday or
(i) with respect to all matters, determinations, fundings and payments in
connection with LIBOR Rate Loans, any day on which banks in London, England or
Chicago, Illinois are required or permitted to close, and (ii) with respect to
all other matters, any day that banks in Chicago, Illinois are required or
permitted to close.
"Capital Expenditures" shall mean, with respect to any measurement
period, the aggregate of all expenditures (whether paid in cash or accrued as
liabilities and including expenditures for capitalized lease obligations) during
such measurement period that are required by GAAP to be included in or reflected
by the property, plant and equipment or similar fixed asset accounts on a
balance sheet, all calculated on a consolidated basis for the Borrowers in
accordance with GAAP.
"Cash Collateral Account" shall have the meaning specified in
Subsection 8(a).
"Casualty Loss" shall have the meaning specified in Subsection
12(e)(i).
"Change of Control" shall mean the failure of AM Communications to own,
directly or indirectly, 100% of the capital stock of each other Borrower.
"Closing Date" shall mean the date on which all of the initial
conditions precedent set forth in Section 17(a).
"Collateral" shall mean all of the property of each Borrower described
in Section 5 hereof, together with all other real or personal property of any
Obligor now or hereafter pledged to Lender to secure, either directly or
indirectly, repayment of any of the Liabilities.
"Collateral Assignment of Acquisition Documents" shall mean that
certain Collateral Assignment of Acquisition Documents of even date herewith
among Borrowers, 1401077 Ontario, Ltd., 1418294 Ontario, Ltd., ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇▇▇▇, and Lender.
"Compliance Certificate" shall have the meaning specified in Section
9(c) hereof.
"Consolidated EBITDA" shall mean, with respect to any measurement
period, the sum of (i) Consolidated Net Income for such measurement period plus
(ii) interest expense, income tax expense, depreciation and amortization expense
for such fiscal measurement period, all calculated on a consolidated basis for
the Borrowers in accordance with GAAP, minus (iii) any gains, including, without
limitation, extraordinary gains and gains from the sale or other disposition of
assets.
"Consolidated Debt Service" shall mean, with respect to any measurement
period, the sum (without duplication) of all payments (made or scheduled to be
made) of (i) the Interest Expense for such measurement period, (ii) all income
and other taxes for such measurement period, (iii) all principal payments of
long term Indebtedness for such measurement period, (iv) permitted payments of
Subordinated Debt for such measurement period, (v) capital lease payments for
such measurement period, and (vi) Permitted Advances for such measurement
period, all calculated on a consolidated basis for the Borrowers in accordance
with GAAP.
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"Consolidated Funded Debt" shall mean, as at any given date, the sum
(without duplication) of (i) the principal amount outstanding as of such date of
the Loans, (ii) the principal amount outstanding as of such date of any
Subordinated Debt, (iii) the principal amount outstanding as of such date of any
long-term Indebtedness and (iv) the principal amount outstanding on any
promissory notes payable by the Borrowers, all calculated on a consolidated
basis for, and as should be reflected as a liability on a balance sheet of, the
Borrowers in accordance with GAAP.
"Consolidated Net Income" shall mean, with respect to any measurement
period, net income for such measurement period, calculated on a consolidated
basis for the Borrowers in accordance with GAAP.
"Consolidated Research & Development Expenditures" shall mean, with
respect to any measurement period, the aggregate of all expenditures (whether
paid in cash or accrued as liabilities) during such measurement period that are
required by GAAP to be included or reflected as research and development
expenditures on the financial statements of Borrowers.
"Commitment Letter" shall have the mean that certain Commitment Letter
dated as of June 25, 2002 between Lender and AM Communications.
"Designated Contract" shall have the meaning specified in Subsection
13(n) hereof.
"Eligible Account" shall mean, as to any Borrower, an Account owing to
such Borrower which is acceptable to Lender in its sole discretion (based on its
good faith prudent credit evaluation) from time to time. Without limiting
Lender's discretion, Lender shall, in general, consider an Account to be an
Eligible Account if it meets, and so long as it continues to meet, the following
requirements:
(i) it is genuine and in all respects what it purports to be;
(ii) it is owned by such Borrower, such Borrower has the right
to subject it to a security interest in favor of Lender or assign it to Lender
and it is subject to a first priority perfected security interest in favor of
Lender and to no other claim, lien, security interest or encumbrance of any kind
or nature whatsoever;
(iii) it arises from (A) the performance of services by such
Borrower in the ordinary course of such Borrower's business, and such services
have been fully performed and acknowledged and accepted by the Account Debtor
thereunder; or (B) the sale or lease of Goods by such Borrower in the ordinary
course of such Borrower's business, and (x) such Goods have been completed in
accordance with the Account Debtor's specifications (if any) and delivered to
the Account Debtor, (y) such Account Debtor has not refused to accept, returned
or offered to return, any of the Goods which are the subject of such Account,
and (z) such Borrower has possession of, or such Borrower has delivered to
Lender (at Lender's request), shipping and delivery receipts evidencing delivery
of such Goods;
(iv) it is evidenced by an invoice rendered solely in the name
of such Borrower to the Account Debtor thereunder and does not remain unpaid
past the earlier of 60 days after the due date for such invoice or 90 days after
the issuance date for such invoice provided, however, that if more than 25% of
the aggregate dollar amount of invoices owing by a particular Account Debtor
remain unpaid past the earlier of 60 days after the due dates for such invoices
or 90 days after the issuance dates for such invoices, then all Accounts owing
by that Account Debtor shall be deemed ineligible;
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(v) it is a valid, legally enforceable and unconditional
obligation of the Account Debtor thereunder to such Borrower, and is not subject
to defense, setoff, counterclaim, credit, allowance or adjustment by such
Account Debtor, or to any claim by such Account Debtor denying liability
thereunder in whole or in part;
(vi) it does not arise out of a contract or order which fails
in any material respect to comply with the requirements of applicable law;
(vii) the Account Debt or thereunder is not a director,
officer, employee or agent of a Borrower, or a Subsidiary, Parent or Affiliate;
(viii) it is not an Account with respect to which the Account
Debtor is the United States of America or any state or local government, or any
department, agency or instrumentality thereof, unless such Borrower assigns its
right to payment of such Account to Lender pursuant to, and in compliance with,
the Assignment of Claims Act of 1940, as amended, or any comparable state or
local law, as applicable;
(ix) it is not an Account with respect to which the Account
Debtor is located in Minnesota, New Jersey or any other State which requires
such Borrower, as a precondition to commencing or maintaining an action in the
courts of that state, either to (A) receive a certificate of authority to do
business and be in good standing in such state or (B) file a notice of business
activities report or similar report with such state's taxing authority; unless
(x) such Borrower has taken one of the actions described in clauses (A) or (B),
(y) the failure to take one of the actions described in either clause (A) or (B)
may be cured retroactively by such Borrower at its election or (z) such Borrower
has proven, to Lender's satisfaction, that it is exempt from any such
requirements under any such state's laws;
(x) the Account Debtor thereunder is located within the United
States of America or Canada, (provided that, for purposes of calculating the
Borrowing Base, the aggregate amount of all Eligible Accounts of all Borrowers
owing from Account Debtors located in Canada shall not exceed Two Hundred Fifty
Thousand Dollars ($250,000) in the aggregate at any one time), unless such
Account is supported by an irrevocable documentary letter of credit, with such
content, in such amounts in U.S. dollars and with such issuers and confirming
banks as are satisfactory to Lender and, if required by Lender, the original of
such letter of credit has been delivered to Lender and the applicable Borrower
has executed and delivered, and caused to be executed and delivered, all
agreements, instruments and documents required by Lender to perfect Lender's
security interest in the proceeds of such letter of credit;
(xi) it is not an Account with respect to which the Account
Debtor's obligation to pay is subject to any repurchase obligation or return
right, as with sales made on a ▇▇▇▇-and-hold, guaranteed sale, sale on approval,
sale or return or consignment basis;
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(xii) it is not an Account (A) with respect to which any
representation or warranty contained in this Agreement is untrue in any material
respect; or (B) which violates any of the covenants of such Borrower contained
in this Agreement in any material respect;
(xiii) it is not an Account which, when added to a particular
Account Debtor's other indebtedness to all Borrowers, exceeds (A) twenty percent
(20%) of all Accounts of all Borrowers, in the case of Account Debtors other
than Charter Communications, ▇▇▇ Communications and Post Acquisition
Comcast/AT&T, or thirty percent (30%) of all Accounts of all Borrowers, in the
case of Charter Communications, ▇▇▇ Communications and Post Acquisition
Comcast/AT&T, or (B) a credit limit determined by Lender in its sole discretion
(based on its good faith prudent credit evaluation) for that Account Debtor;
provided that Lender reserves the right, exercisable in its sole discretion
(based on its good faith prudent credit evaluation) to modify the concentration
limit on the Accounts of Charter Communications and ▇▇▇ Communications as Lender
deems appropriate;
(xiv) it is not an Account subject to any chargebacks,
defenses, offsets or credits or otherwise classifiable as a "contra" Account;
(xv) the Account Debtor is not insolvent or the subject of any
state or federal bankruptcy or insolvency or receivership proceedings (or any
similar proceedings under the laws of any foreign jurisdiction);
(xvi) such Account is not subject to any credit balance that is
outstanding with respect to such Account past the earlier of 60 days after the
due date for the invoice therefore or 90 days after the date of issuance date of
the invoice therefore (to the extent of any such cumulative credit balance);
(xvii) it is not an Account with respect to which the prospect
of payment or performance by the Account Debtor is or will be impaired, as
determined by Lender in its sole discretion; and
(xviii) with respect to an Account arising from the performance
of services by a Borrower, the Account Debtor is a cable company and the
corresponding invoice has been approved in advance, in accordance with
Borrowers' current business practice, by such Account Debtor.
"Environmental Laws" shall mean all federal, state, district, local and
foreign laws, rules, regulations, ordinances, and consent decrees relating to
health, safety, hazardous substances, pollution and environmental matters, as
now or at any time hereafter in effect, applicable to the business or facilities
owned or operated by a Borrower, including laws relating to emissions,
discharges, releases or threatened releases of pollutants, contamination,
chemicals, or hazardous, toxic or dangerous substances, materials or wastes into
the environment (including, without limitation, ambient air, surface water,
ground water, land surface or subsurface strata) or otherwise relating to the
generation, manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Hazardous Materials.
"Equipment Loan" shall have the meaning specified in Subsection 2(b)
hereof.
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"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended, modified or restated from time to time.
"Event of Default" shall have the meaning specified in Section 15
hereof.
"Excess Cash Flow" shall mean for each Borrowers' Fiscal Year,
Consolidated EBITDA for such period, minus Interest Expense during such period,
minus all income and other taxes during such period, minus principal payments
made with respect to long term debt (including, without limitation, Subordinated
Debt) and capital leases during such period, minus Capital Expenditures by
Borrowers during such period.
Existing IP Lien" shall mean the security interests of Ben Franklin
Technology Center of Southeastern Pennsylvania ("BFTC") in certain intellectual
property of AM Communications (evidenced by that certain Technology Improvement
Fund Funding Agreement, dated March 10, 1998 between AM Communications and
BFTC), which, as of the Closing Date, secures an aggregate principal amount of
approximately $53,000.
"Fiscal Year" shall mean each twelve (12) month accounting period of
the Borrowers, which ends on the Saturday closest to March 31 of each year.
"Form Licensor Agreement" shall have the meaning specified in
Subsection 11(s) hereof.
"GAAP" shall mean generally accepted accounting principals in the
United States as in effect on the Closing Date and applied on a basis consistent
with the Pre-Closing Financials.
"Hazardous Materials" shall mean any hazardous, toxic or dangerous
substance, materials and wastes, including, without limitation, hydrocarbons
(including naturally occurring or man-made petroleum and hydrocarbons),
flammable explosives, asbestos, urea formaldehyde insulation, radioactive
materials, biological substances, polychlorinated biphenyls, pesticides,
herbicides and any other kind and/or type of pollutants or contaminants
(including, without limitation, materials which include hazardous constituents),
sewage, sludge, industrial slag, solvents and/or any other similar substances,
materials, or wastes and including any other substances, materials or wastes
that are or become regulated under any Environmental Law (including, without
limitation any that are or become classified as hazardous or toxic under any
Environmental Law).
"Indebtedness", as applied to a Person, means:
(a) all items (except items of capital stock or of surplus) which in
accordance with GAAP would be included in determining total liabilities as shown
on the liability side of a balance sheet of such Person as at the date as of
which Indebtedness is to be determined;
(b) to the extent not included in the foregoing, all indebtedness,
obligations, and liabilities either (i) incurred in connection with any
capitalized lease obligations or (ii) secured by any mortgage, pledge, lien,
conditional sale or other title retention agreement or other security interest
to which any property or asset owned or held by such Person is subject, whether
or not the indebtedness, obligations or liabilities secured thereby shall have
been assumed by such Person; and
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(c) to the extent not included in the foregoing, all indebtedness and
obligations (i) relating to liabilities of others which such Person has directly
or indirectly guaranteed, endorsed (other that for collection or deposit in the
ordinary course of business), (ii) arising from sales of property with recourse,
(iii) relating to agreements (contingently or otherwise) to purchase or
repurchase or otherwise acquire or in respect of which such Person has agreed to
supply or advance funds (whether by way of loan, stock purchase, capital
contribution or otherwise), (iv) in respect of any letter of credit banker's
acceptance or surety or other bond, and (v) in respect of any bond, indenture or
instrument.
"Indemnified Party" shall have the meaning specified in Section 18
hereof.
"Individual Revolving Loan Limit" shall have the meaning specified in
Subsection 2(a) hereof.
"Initial Conditions Precedent" shall have the meaning specified in
Subsection 17(a).
"Initial Mortgaged Premises" shall mean the real estate and
improvements of AM Communications located in Milford Township, Bucks County,
Pennsylvania.
"Interest Expense" shall mean, with respect to any fiscal measurement
period, the sum of all scheduled payments of interest (including without
limitation the interest component payments with respect to capital leases) and
fees (to the extent carried as interest expense on the financial statements of
the Borrowers in accordance with GAAP) with respect to all Indebtedness for
borrowed money (including without limitation, the interest and fees (as
applicable) under this Agreement), for such fiscal measurement period, all
calculated on a consolidated basis for the Borrowers in accordance with GAAP.
"Interest Period" shall have the meaning specified in Subsection
4(a)(ii) hereof.
"Issuer Reimbursement Payments" shall have the meaning specified in
Subsection 3(a) hereof.
"LaSalle Bank" shall mean LaSalle Bank National Association.
"Letter of Credit" shall mean any standby letter of credit issued on
behalf of a Borrower in accordance with this Agreement.
"Letter of Credit Obligations" shall mean, as of any date of
determination, the sum of (i) the aggregate undrawn face amount of all Letters
of Credit, (ii) the aggregate unreimbursed amount of all drawn Letters of Credit
not already converted to Loans hereunder, (iii) any other amounts advanced by
Lender on behalf of Borrowers to the issuer of any Letters of Credit as provided
for under Section 3 not already converted into Loans hereunder and (iv) any
amounts paid with respect to any Letters of Credit by the issuer thereof which
have not been reimbursed to such issuer.
-8-
"Liabilities" shall mean, as to each Borrower, any and all obligations,
liabilities and indebtedness of all of the Borrowers to Lender or to any parent,
affiliate or subsidiary of Lender of any and every kind and nature (specifically
including the obligation of Borrowers to reimburse Lender for any amounts
advanced and/or paid by Lender on behalf of the Borrowers (including payments
made through the creation of a Revolving Loan) to the issuer of any Letter of
Credit as provided in Section 3 and the obligation of Borrowers to reimburse the
issuer of any Letter of Credit for any amounts paid by such issuer if such
issuer has not otherwise been reimbursed), howsoever created, arising or
evidenced and howsoever owned, held or acquired, whether now or hereafter
existing, whether now due or to become due, whether primary, secondary, direct,
indirect, absolute, contingent or otherwise (including, without limitation,
obligations of performance), whether several, joint or joint and several, and
whether arising or existing under written or oral agreement or by operation of
law.
"LIBOR Rate" shall mean, with respect to any LIBOR Rate Loan for any
Interest Period, a rate per annum equal to (a) the offered rate for deposits in
United States dollars for a period equal to such Interest Period as it appears
on Telerate page 3750 as of 11:00 a.m. (London time) two Business Days prior to
the first day of such Interest Period. "Telerate page 3750" means the display
designated as "Page 3750" on the Telerate Service (or such other page as may
replace page 3750 of that service or such other service as may be nominated by
the British Bankers' Association as the vendor for the purpose of displaying
British Bankers' Association interest settlement rates for United States dollar
deposits) divided by (b) a number equal to 1.0 minus the maximum reserve
percentages (expressed as a decimal fraction) including, without limitation,
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 Lender by the Board of Governors of the Federal Reserve System. The LIBOR
Rate shall be adjusted automatically on and as of the effective date of any
change in such reserve percentage.
"LIBOR Rate Loans" shall mean the Loans bearing interest with reference
to the LIBOR Rate.
"Licensing Agreement" shall have the meaning specified in Subsection
11(s)(i) hereof.
"Licensor Agreement" shall have the meaning specified in Subsection
11(s) hereof.
"Loans" shall mean all loans and advances made by Lender to or on
behalf of Borrowers hereunder, including the Revolving Loans, the Term Loans and
any portion(s) thereof.
"Lock Box Account Control Agreement," "Lock Box" and "Lock Box Account"
shall have the meanings specified in Subsection 8(b) hereof.
"Material Adverse Change" shall mean an event or occurrence that would
reasonably be expected to have a Material Adverse Effect.
-9-
"Material Adverse Effect" shall mean a material adverse effect on the
business, property, assets, prospects, operations or condition, financial or
otherwise, of any of the Borrowers or on the ability of any of the Borrowers to
perform its obligations and undertakings hereunder.
"Maximum Loan Limit" shall mean, at any time, an amount equal to Ten
Million Seven Hundred Thousand Dollars ($10,700,000).
"Maximum Revolving Loan Limit" shall mean, at any time, an amount equal
to Seven Million Five Hundred Thousand Dollars ($7,500,000).
"Monthly Financial Statements" shall have the meaning specified in
subsection 9(c) hereof.
"Mortgages" shall have the meaning specified in Subsection 5(i) hereof.
"NeST" shall have the meaning specified in Subsection 13(n) hereof.
"NeST Consulting Agreement" shall have the meaning specified in
Subsection 13(n) hereof.
"Net Worth" means the shareholders' equity (including retained
earnings), which shall include for purposes hereof (regardless of how and where
shown on the balance sheet of Borrowers) the outstanding preferred stock of AM
Communications (the issuance of which, as of and after the Closing Date, shall
be subject to Subsection 13(d)(v) hereof), all on a consolidated basis and as
determined under GAAP.
"Notes" shall have the meaning specified in Subsection 2(h) hereof.
"Obligor" shall mean each Borrower and any other Person who at any time
becomes liable in whole or in part, for the Liabilities or pledges any real or
personal property to secure any or all of the Liabilities.
"Other Agreements" shall mean all agreements, instruments and
documents, other than this Agreement, including, without limitation, the
Mortgage, Collateral Assignment of Acquisition Documents, guaranties, mortgages,
trust deeds, pledges, powers of attorney, consents, assignments, contracts,
notices, security agreements, leases, financing statements and all other
writings heretofore, now or from time to time hereafter executed by or on behalf
of any Borrower or any other Person and delivered to Lender or to any parent,
affiliate or subsidiary of Lender in connection with the Liabilities or the
transactions contemplated hereby, as each of the same may be amended, modified
or supplemented from time to time.
"Parent" shall mean, as to any Person, any Person now or at any time or
times hereafter owning or controlling (alone or with any other Person) more than
fifty (50%) percent of the issued and outstanding equity of such Person and, if
such Person is a partnership, the general partner of such Person.
"PBGC" shall have the meaning specified in Subsection 12(b)(v) hereof.
-10-
"Permitted Advances" shall mean the following signing bonuses to
certain employees of Borrowers, which may be paid by the applicable Borrower
only during the following periods: (i) in the case of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, up to (A)
$250,000 during the Fiscal Year 2003, and (B) $250,000 during the Fiscal Year
2004; (ii) in the case of ▇▇▇▇▇ ▇▇▇▇▇▇▇, up to (A) $50,000 during the Fiscal
Year 2003, and (B) $50,000 during the Fiscal Year 2004; (iii) in the case of
▇▇▇▇▇▇ ▇▇▇▇▇▇, up to (A) $125,000 during the Fiscal Year 2003, and (B) $125,000
during the Fiscal Year 2004; and (iv) in the case of ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, up to (A)
$125,000 during the Fiscal Year 2003, and (B) $125,000 during the Fiscal Year
2004.
"Permitted Distributions" shall mean any (i) cash dividends or
distributions of net profits from the Subsidiary of any Borrower to such Parent
Borrower (but specifically shall not include any dividend or distribution from
AM Communications to its shareholders), and (ii) non-cash stock dividends or
distributions.
"Permitted Liens" shall mean (i) statutory liens of landlords,
carriers, warehousemen, processors, mechanics, materialmen or suppliers incurred
in the ordinary course of business and securing amounts not yet due or declared
to be due by the claimant thereunder; (ii) liens or security interests in favor
of Lender; (iii) zoning restrictions and easements, licenses, covenants and
other restrictions affecting the use of real property that do not individually
or in the aggregate have a material adverse effect on a Borrower's ability to
use such real property for its intended purpose in connection with such
Borrower's business; (iv) liens in connection with purchase money indebtedness
and capitalized leases otherwise permitted pursuant to this Agreement, provided,
that such liens attach only to the assets the purchase of which was financed by
such purchase money indebtedness or which is the subject of such capitalized
leases and that such Liens only secure such purchase money indebtedness and
capitalized leases; and (v) existing liens specifically set forth on Schedule 1
(b) attached hereto (including, with limitation, the Existing IP Lien, but only
to the extent the Existing IP Lien secures an aggregate principal amount not in
excess of $53,000); or (vi) otherwise specifically permitted by Lender in
writing.
"Person" shall mean any individual, sole proprietorship, partnership,
joint venture, trust, unincorporated organization, association, corporation,
limited liability company, institution, entity, party or foreign or United
States government (whether federal, state, county, city, municipal or
otherwise), including, without limitation, any instrumentality, division,
agency, body or department thereof.
"Plan" shall have the meaning specified in Subsection 12(b)(v) hereof.
"Pledge Agreement" shall have the meaning specified in Subsection 5(f)
hereof.
"Post Acquisition Comcast/AT&T" shall mean (a) the surviving
corporation of a merger between Comcast Corporation and AT&T Corporation
Cable-TV unit or (b) Comcast Corporation after its acquisition of AT&T
Corporation Cable-TV unit. For avoidance of doubt, prior to the effectiveness of
such merger or acquisition, Comcast Corporation and AT&T Corporation's Cable-TV
unit shall be considered separate Account Debtors (subject to the 20%
concentration limit) for purposes of determining concentration under clause
(xiii) of the definition of Eligible Accounts.
-11-
"Pre-Closing Financials" shall mean, collectively, (i) the audited
consolidated and consolidating annual financial statements for the Borrowers for
the Fiscal Year 2002 and (ii) the internally prepared consolidated and
consolidating interim financial statements for the Borrowers as of the end of
each of April, May and June, 2002.
"Pre-Funding Conditions Precedent" shall have the meaning specified in
Subsection 17(b).
"Prepayment Fee" shall have the meaning specified in Subsection
4(c)(iii) hereof.
"Prime Rate" shall mean the publicly announced prime rate of LaSalle
Bank (which is not intended to be the lowest or most favorable rate of LaSalle
Bank in effect at any time) in effect from time to time.
"Prime Rate Loans" shall means the Loans bearing interest with
reference to the Prime Rate.
"Real Property" shall mean, collectively, the Initial Mortgaged
Premises and any real property hereafter acquired by any Borrower.
"Regulatory Change" shall have the meaning specified in Subsection
4(b)(iii) hereof.
"Revolving Loan Limit" shall mean the aggregate of the Individual
Revolving Loan Limits of the Borrowers.
"Revolving Loan" shall have the meaning specified in Subsection 2(a)
hereof.
"Revolving Outstandings" shall mean, at any time, the then-outstanding
aggregate principal balance of all Revolving Loans.
"Sixty Day Average Undrawn Availability" shall mean an amount equal to
the arithmetical average of the amounts of the Undrawn Availability of Borrowers
for each of the preceding 60 days (up to but not including such date of
determination).
"Solvent" shall mean as to any Person, that such Person (i) owns
property whose fair saleable value is greater than the amount required to pay
all of such Person's Indebtedness (including contingent debts), (ii) is able to
pay all of its Indebtedness as such Indebtedness matures and (iii) has capital
sufficient to carry on its business and transactions and all business and
transactions in which it is about to engage.
"Subordinated Debt" shall mean any unsecured indebtedness incurred by
any Borrower that is subordinated to the Liabilities hereunder pursuant to a
written subordination agreement in form and substance acceptable to and executed
by and delivered to Lender.
"Subsidiary" shall mean, as to any Person, any corporation of which
more than fifty percent (50%) of the outstanding capital 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 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 by such Person,
or any partnership, joint venture or limited liability company of which more
than fifty percent (50%) of the outstanding equity interests are at the time,
directly or indirectly, owned by such Person or any partnership of which such
Person is a general partner.
-12-
"Target" shall mean Nex-Link Communications Project Services LLC, a
Florida limited liability company.
"Tax" shall mean, in relation to any LIBOR Rate Loans and the
applicable LIBOR Rate, any tax, levy, impost, duty, deduction, withholding or
charges of whatever nature required to be paid by Lender and/or to be withheld
or deducted from any payment otherwise required hereby to be made by a Borrower
to Lender; provided, that the term "Tax" shall not include any taxes imposed
upon the net income of Lender.
"Term" shall have the meaning specified in Section 10 hereof.
"Term Loan A" shall have the meaning specified in Subsection 2(c)
hereof.
"Term Loan B" shall have the meaning specified in Subsection 2(d)
hereof.
"Term Loans" shall mean, collectively, Term Loan A, Term Loan B and the
Equipment Loans.
"Undrawn Availability" shall mean, as of any date, an amount equal to
the difference between (i) the lesser of (A) the Revolving Loan Limit and (B)
the Maximum Revolving Loan Limit and (ii) the sum of (A) the aggregate principal
balance of all Revolving Loans and the aggregate undrawn face amounts of all
Letters of Credit outstanding as of such date, (B) all trade payables of all of
the Borrowers that are outstanding past the date such trade payables were due
and (C) any and all fees, costs, charges, expenses due and owing by Borrowers to
Lender as of such date, including all fees and charges provided for under
Subsection 4(c).
"United States Dollars" shall mean the lawful currency of the United
States of America.
2. LOANS.
(a) Revolving Loans.
(i) Subject to the terms and conditions of this Agreement and
the Other Agreements, during the Term, Lender shall make revolving loans and
advances in United States Dollars to each Borrower (each such Loan, and any
portion thereof, a "Revolving Loan") in an amount outstanding at any one time up
to eighty-five percent (85%) of the face amount (less maximum discounts, credits
and allowances which may be taken by or granted to Account Debtors in connection
therewith in the ordinary course of such Borrower's business) of the Eligible
Accounts of such Borrower (as to each Borrower, its "Individual Revolving Loan
Limit"); provided, that the aggregate unpaid principal balance of the Revolving
Loans available to Borrowers shall not at any time exceed the Borrowing Base,
minus the aggregate Letter of Credit Obligations; provided further, that the
aggregate unpaid principal balance of Revolving Loans made to any Borrower shall
not at any time exceed the Individual Revolving Loan Limit of such Borrower,
minus the Letter of Credit Obligations attributable to Letters of Credit issued
for the account of such Borrower. Lender may establish such reserves as Lender
elects, in its sole discretion based on its good faith prudent credit
evaluation, to establish from time to time, including, without limitation, (i)
if dilution exceeds five percent (5%) and (ii) with regard to outstanding
performance bonds posted by Borrowers.
-13-
If at any time the Revolving Outstandings exceed any of the limitations
and sublimitations set forth in this Agreement, Borrowers shall immediately, and
without the necessity of demand by Lender, pay to Lender such amount as may be
necessary to eliminate such excess and Lender shall apply such payment to the
Revolving Loans in such order as Lender shall determine in its sole discretion.
Each Borrower hereby authorizes Lender, in its sole discretion, to
charge any account of such Borrower maintained at LaSalle Bank for, or advance
Revolving Loans (without further request of any Borrower) in order to make, any
payments of principal, interest, fees, costs or expenses required to be made
under this Agreement or the Other Agreements. The coming due of any such payment
shall be deemed to be a request by Borrowing Agent in accordance with the
procedures set forth herein for a Revolving Loan as a Prime Rate Loan in the
amount of such payment to be made on the date such payment is due. Such
Revolving Loans in respect of such payments may be made by Lender, in its sole
discretion, regardless of the existence of an Event of Default, whether or not
the aggregate outstanding principal balance of the Revolving Loans, after giving
effect to such Revolving Loans to be made, exceeds any limitations or
sublimitations set forth in this Agreement and whether or not the Pre-Funding
Conditions Precedent (specifically including compliance with the provisions of
Section 8) have been satisfied. Such Revolving Loans shall be a part of the
Liabilities hereunder secured by the Collateral as provided herein.
(ii) A request for a Revolving Loan shall be made or shall be
deemed to be made, each in the following manner: the Borrowing Agent shall give
Lender (x) same day written notice no later than 10:30 A.M. (Chicago time) for
such day, of its request for a Revolving Loan as a Prime Rate Loan, and (y) at
least three (3) Business Days prior written notice no later than 10:30 A.M.
(Chicago time) of its request for a Revolving Loan as a LIBOR Rate Loan, in
which notice the Borrowing Agent shall specify the amount of the proposed
borrowing, the proposed borrowing date, and whether such proposed borrowing is
to be a Prime Rate Loan or a LIBOR Rate Loan; provided, however, that no such
request may be made at a time when there exists an Event of Default or an event
which, with the passage of time or giving of notice, or both, will become an
Event of Default. In the event that a Borrower or any one or more of them
maintains a controlled disbursement account at LaSalle Bank, each check
presented for payment against such controlled disbursement account and any other
charge or request for payment against such controlled disbursement account shall
constitute a request by Borrowing Agent for a Revolving Loan as a Prime Rate
Loan. As an accommodation to Borrowers, Lender may in its discretion and without
establishing a course of dealing or conduct, permit telephone requests for
Revolving Loans and electronic transmittal of instructions, authorizations,
agreements or reports to Lender by Borrowing Agent. Unless Borrowing Agent
specifically directs Lender in writing not to accept or act upon telephonic or
electronic communications from Borrowing Agent, Lender shall have no liability
to Borrowers for any loss or damage suffered by any Borrower as a result of
Lender's honoring of any requests, execution of any instructions, authorizations
or agreements or reliance on any reports communicated to it telephonically or
electronically and purporting to have been sent to Lender by Borrowing Agent and
Lender shall have no duty to verify the origin of any such communication or the
authority of the Person sending it.
-14-
Revolving Loans may be borrowed, repaid and reborrowed during the Term.
Each Borrower hereby irrevocably authorizes Lender to disburse the
proceeds of each Revolving Loan requested by Borrowing Agent, or deemed to be
requested by Borrowing Agent, as follows: the proceeds of each Revolving Loan
requested by Borrowing Agent under Section 2(a) shall be disbursed by Lender in
lawful money of the United States of America in immediately available funds, by
wire transfer or Automated Clearing House (ACH) transfer, to such bank account
of the corresponding Borrower at LaSalle Bank as may be agreed upon by Borrowing
Agent and Lender from time to time. Lender shall be unconditionally authorized
to rely upon and act upon a request or direction from Borrowing Agent and all
Borrowers shall be liable for all Revolving Loans made by Lender in response to
a request from Borrowing Agent.
(b) Equipment Loans. Subject to the terms and conditions of this
Agreement and the Other Agreements, from the Closing Date through the second
anniversary of the Closing Date, Lender shall make advances (each such Loan, and
any portion thereof, an "Equipment Loan") to any Borrower as Borrowing Agent may
request from time to time in an amount not to exceed eighty percent (80%) of the
purchase price (exclusive of sales taxes, delivery and installation charges and
other "soft" costs related to such purchase) of new Equipment to be purchased
for the business operations of Borrowers and upon which Lender shall have a
first priority perfected security interest; provided, that (i) the aggregate
amount advanced for all such purchases during the Term shall not exceed Five
Hundred Thousand Dollars ($500,000) (the "Equipment Loan Limit"), (ii) at least
five (5) Business Days prior to any such advance hereunder, such Borrower shall
have furnished to Lender an invoice and acceptance letter for the Equipment
being purchased and shall have executed such documents and taken such other
actions as Lender shall required to assure that Lender has a first priority
perfected security interest in such Equipment, and (iii) each advance hereunder
shall be in an amount not less than One Hundred Thousand Dollars ($100,000). The
proceeds of each Equipment Loan shall be used to purchase the subject Equipment
from the vendor thereof.
(c) Term Loan A. Subject to the terms and conditions of this Agreement
and the Other Agreements, on the date that the conditions to the initial Loans
are satisfied, Lender shall make a term loan to AM Communications in an amount
equal to Two Million Two Hundred Thousand Dollars ($2,200,000) ("Term Loan A").
(d) Term Loan B. Subject to the terms and conditions of this Agreement
and the Other Agreements, on the date that the conditions to the initial Loans
are satisfied, Lender shall make a term loan to Borrowers in an amount equal to
Five Hundred Thousand Dollars ($500,000) ("Term Loan B").
-15-
(e) Repayment of Loans.
(i) Revolving Credit Loans. The principal owing with respect
to the Revolving Loans shall be repaid on the last day of the Term, subject to
earlier acceleration upon the occurrence and during the continuance of an Event
of Default as provided in Section 16 (and the repayment of overadvances as set
forth in subsection 2(a) hereof) or upon termination of this Agreement as
provided in Section 10.
(ii) Equipment Loans. Each Equipment Loan shall be repaid in
consecutive equal monthly installments of principal payable on the first day of
each month, commencing on the first day of the month immediately following the
date of such Equipment Loan, based on a sixty (60) month amortization of such
Equipment Loan; provided, that any remaining outstanding principal balance of
each Equipment Loan shall be repaid on the last day of the Term, subject to
earlier acceleration upon the occurrence and during the continuance of an Event
of Default as provided in Section 16 or upon termination of this Agreement as
provided in Section 10.
(iii) Term Loan A. Term Loan A shall be repaid in thirty-five
(35) consecutive equal monthly installments of Twelve Thousand Two Hundred
Twenty-Two and 22/100 Dollars ($12,222.22) payable on the first day of each
month, commencing on the first day of the month immediately following the
Closing Date; provided, that any remaining outstanding principal balance of Term
Loan A shall be repaid on the last day of the Term, subject to earlier
acceleration upon the occurrence and during the continuance of an Event of
Default as provided in Section 16 or upon termination of this Agreement as
provided in Section 10.
(iv) Term Loan B. Term Loan B shall be repaid in twenty-three
(23) consecutive equal monthly installments of Twenty Thousand Eight Hundred
Thirty-Three and 33/100 Dollars ($20,833.33) payable on the first day of each
month, commencing on the first day of the month immediately following the
Closing Date; provided, that any remaining outstanding principal balance of Term
Loan B shall be repaid on the second anniversary of the Closing Date, subject to
earlier acceleration upon the occurrence and during the continuance of an Event
of Default as provided in Section 16 or upon termination of this Agreement as
provided in Section 10.
(f) Mandatory Repayments.
(i) Sales of Assets. Except as expressly provided in
Subsection 13(d), upon receipt of the proceeds of the sale or other disposition
of any Collateral, or if any Collateral is damaged, destroyed or taken by
condemnation in whole or in part, the proceeds thereof (whether insurance or
otherwise) shall be paid by such Borrower to Lender immediately upon receipt
thereof by such Borrower as a mandatory prepayment of the Term Loans (except for
proceeds of the sale of Inventory in the ordinary course of business which shall
be applied to the Revolving Loans), as determined by Lender in its sole
discretion, such payment to be applied against the remaining installments of
principal in the inverse order of their maturities until the Term Loans are
repaid in full, and then against the other Liabilities, as determined by Lender
in its sole discretion.
(ii) Excess Cash Flow. Ten (10) days after receipt of
Borrowers' Fiscal Year end audited financial statements for each Fiscal Year of
Borrowers commencing with Borrowers' Fiscal Year ended March 29, 2003 Borrowers
shall make a mandatory prepayment of Term Loan B in an amount equal to fifty
percent (50%) of Excess Cash Flow for the Fiscal Year just ended, such
prepayment to be applied against the remaining installments of principal
thereunder in the inverse order of their maturities, such mandatory prepayments
to continue until the date on which Term Loan B shall be repaid in full.
-16-
(g) Payment Dates as Business Days. If any payment due date specified
in Subsection 2(b) (or otherwise in this Agreement) is not a Business Day, then
such payment may be made on the next succeeding Business Day and such extension
of time shall be included in the computation of the amount of interest and fees
due hereunder.
(h) Notes. The Loans may, in Lender's sole discretion, be evidenced by
one or more promissory notes in form and substance satisfactory to Lender
(collectively, the "Notes"). However, if such Loans are not so evidenced, such
Loans may be evidenced solely by entries upon the books and records maintained
by Lender. All obligations of all Borrowers with respect to the Liabilities
shall at all times be joint and several, regardless of which Borrower actually
receives or uses proceeds of the Loans.
(i) Voluntary Partial Prepayments and Partial Permanent Reductions to
Maximum Revolving Loan Limit. Borrowers shall have the right to make partial
prepayments of the Term Loans and reduce the Maximum Revolving Loan Limit at any
time and from time to time on the following terms and conditions: (i) Borrowing
Agent shall give the Lender prior written notice (specifying (A) the amount of
such prepayment, (B) in the case of the Term Loans, the specific Term Loan to
which such prepayment relates and (C) in the case of LIBOR Rate Loans, the
specific LIBOR Rate Loan(s) to which such prepayment relates) prior to 10:30
A.M. (Chicago time) (x) of at least one (1) Business Day of its intent to prepay
Prime Rate Loans and (y) of at least three (3) Business Days of its intent to
prepay LIBOR Rate Loans; (ii) each partial prepayment of a Term Loan shall be in
an aggregate principal amount of at least $100,000 and in integral multiples of
$100,000 in excess thereof, (iii) each reduction of the Maximum Revolving Loan
Limit shall be permanent and in an aggregate principal amount of at least
$250,000 and in integral multiples of $100,000 in excess thereof, provided that
the aggregate amount of all such partial permanent reductions of the Maximum
Revolving Loan Limit may not exceed $3,500,000, and (iv) each prepayment in
respect of any Term Loan shall be applied to the unpaid installments thereof in
the inverse order of maturity; and (v) Borrowers shall pay all fees required
under Subsection 4(c)(iii) and, to the extent applicable, Breakage Costs.
3. LETTERS OF CREDIT.
(a) General Terms.
Subject to the terms and conditions of the Agreement and the Other
Agreements, during the Term, Lender may, in its sole discretion, from time to
time cause to be issued and co-sign for or otherwise guarantee, upon Borrowing
Agent's request for the benefit of any Borrower, standby Letters of Credit
denominated in United States Dollars for the account of any of the Borrowers;
provided, that the aggregate undrawn face amount of all such Letters of Credit
shall at no time exceed the lesser of (i) One Million Dollars ($1,000,000) or
(ii) an amount equal to the Borrowing Base minus the Revolving Outstandings;
provided further, that the aggregate Letter of Credit Obligations attributable
to Letters of Credit issued for the account of such Borrower, plus the aggregate
unpaid principal balance of Revolving Loans made to any Borrower shall not at
any time exceed the Individual Revolving Loan Limit of such Borrower. Payments
made by Lender to any Person on account of any Letter of Credit or any drawing
thereunder (specifically including payments by Lender to the issuer of such
Letter of Credit in reimbursement for any payments made and/or drawings honored
by such issuer with respect to such Letter of Credit ("Issuer Reimbursement
Payments")) shall constitute Revolving Loans made as Prime Rate Loans hereunder
and Borrowers agree that each such payment made by Lender (specifically
including any Issuer Reimbursement Payments) shall constitute a request by
Borrowing Agent on behalf of Borrowers for a Revolving Loan as a Prime Rate Loan
to reimburse such issuer. Such Revolving Loans may be made by Lender regardless
of the existence of any Event of Default and whether or not the aggregate
outstanding principal balance of the Revolving Loans after giving effect to such
Revolving Loans, exceeds any of the limitations or sublimitations set forth in
this Agreement (provided that if an Event of Default does exist or the aggregate
outstanding principal balance of Revolving Loans would exceed such limit(s),
Lender may, in its sole discretion, decline to make such a Revolving Loan). Such
Revolving Loans shall be a part of the Liabilities hereunder secured by the
Collateral as set forth herein.
-17-
(b) Requests for Letters of Credit.
Borrowing Agent shall make requests for Letters of Credit to be issued
for the account of any Borrower in writing at least two (2) Business Days prior
to the date such Letter of Credit is to be issued. Each such request shall
specify the account party, the date such Letter of Credit is to be issued, the
amount thereof, the name and address of the beneficiary thereof and a
description of the transaction to be supported thereby. Any such notice shall be
accompanied by the form of Letter of Credit requested and any application or
reimbursement agreement required by the issuer of such Letter of Credit. If any
term of such application or reimbursement agreement is inconsistent with this
Agreement, then the provisions of this Agreement shall control to the extent of
such inconsistency.
(c) Obligations Absolute.
Borrowers shall be obligated to reimburse the issuer of any Letter of
Credit, or Lender, if Lender has reimbursed such issuer on Borrowers' behalf,
for any payments made in respect of any Letter of Credit or any drawing
thereunder regardless of which Borrower is the applicant or account party, which
obligation shall be unconditional and irrevocable and shall be paid regardless
of: (i) any lack of validity or enforceability of any Letter of Credit, (ii) any
amendment or waiver of or consent or departure from all or any provisions of any
Letter of Credit, this Agreement or any Other Agreement, (iii) the existence of
any claim, set off, defense or other right which any Borrower or any other
Person may have against any beneficiary of any Letter of Credit, Lender or the
issuer of the Letter of Credit, (iv) any draft or 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, (v) any payment under any Letter of Credit against presentation of a
draft or other document that does not comply with the terms of such Letter of
Credit, and (vi) any other act or omission to act or delay of any kind of the
issuer of such Letter of Credit, the Lender or any other Person or any other
event or circumstance that might otherwise constitute a legal or equitable
discharge of Borrowers' obligations hereunder. It is understood and agreed by
each Borrower that the issuer of any Letter of Credit may accept documents that
appear on their face to be in order without further investigation or inquiry,
regardless of any notice or information to the contrary.
-18-
(d) Expiration Dates of Letters of Credit.
The expiration date of each Letter of Credit shall be no later than the
earlier of (i) one (1) year from the date of issuance and (ii) the tenth (10th)
day prior to the end of the Term. Notwithstanding the foregoing, a Letter of
Credit may provide for automatic extensions of its expiration date for one or
more one (1) year periods, so long as the issuer thereof has the right to
terminate the Letter of Credit at the end of each one (1) year period and no
extension period extends past the tenth (10th) day prior to the end of the Term.
4. INTEREST, FEES AND CHARGES.
(a) Interest Rate.
Subject to the terms and conditions set forth below, the Loans shall
bear interest at the per annum rate of interest set forth in subsection (i),
(ii) or (iii) below (except that Term Loan B shall only bear interest at the per
annum rate of interest set forth in subsection (i) or (iii) below):
(i) A per annum rate of interest equal to the Prime Rate in
effect from time to time, plus the Applicable Margin payable in United States
Dollars on the first Business Day of each month in arrears. Said rate of
interest shall increase or decrease by an amount equal to each increase or
decrease in the Prime Rate effective on the effective date of each such change
in the Prime Rate.
(ii) A per annum rate of interest equal to the LIBOR Rate for
the applicable Interest Period, plus the Applicable Margin, such rate to remain
fixed for such applicable Interest Period. "Interest Period" shall mean any
continuous period of one (1) month, two (2) months or three (3) months, as
selected from time to time by the Borrowing Agent with respect to such LIBOR
Rate Loan by irrevocable notice (in writing or by facsimile) given to Lender not
less than three (3) Business Days prior to the first day of each respective
Interest Period and no later than 10:30 A.M. (Chicago Time) on such date;
provided that: (A) each such period occurring after such initial period shall
commence on the day on which the immediately preceding period expires; (B) the
final Interest Period shall be such that its expiration occurs on or before the
end of the Term; and (C) if for any reason the Borrowing Agent shall fail to
timely select a period, then such LIBOR Rate Loan shall continue as, or revert
to, Prime Rate Loans. Interest on LIBOR Rate Loans shall be payable in United
States Dollars on the first Business Day of each month in arrears and also on
the last Business Day of the then applicable Interest Period.
(iii) Upon the occurrence of an Event of Default and during the
existence thereof, the Loans shall bear interest at the rate of two percent
(2.00%) per annum in excess of the interest rate otherwise payable thereon,
which interest shall be payable in United States Dollars on demand.
-19-
(iv) All interest on all Loans shall be calculated on the basis
of a 360 day year for the actual number of days elapsed.
(v) To the extent not already provided for herein, any final
payment of the entire principal balance outstanding with respect to the Loans
shall be accompanied by payment in United States Dollars of all the outstanding
accrued and unpaid interest with respect to the Loans.
(b) Other LIBOR Provisions.
(i) Subject to the provisions of this Agreement, the Borrowing
Agent, shall have the option (A) as of any date, to convert all or any part of
the Prime Rate Loans made to Borrowers to, or request that new Loans be made to
Borrowers as, LIBOR Rate Loans of various Interest Periods, (B) as of the last
day of any Interest Period, to continue all or any portion of the relevant LIBOR
Rate Loans as LIBOR Rate Loans; (C) as of the last day of any Interest Period,
to convert all or any portion of the relevant LIBOR Rate Loans to Prime Rate
Loans; and (D) at any time, to request new Loans as Prime Rate Loans; provided,
that Loans may not be made or continued as or converted to LIBOR Rate Loans, if
the continuation or conversion thereof would violate the provisions of
subsections 4(b)(ii) or 4(b)(iii) of this Agreement or if an Event of Default
exists.
(ii) Lender's determination of the LIBOR Rate as provided above
shall be conclusive, absent manifest error. Furthermore, if Lender determines,
in good faith (which determination shall be conclusive, absent manifest error),
prior to the commencement of any Interest Period that (A) U.S. Dollar deposits
of sufficient amount and maturity for funding the Loans are not available to
Lender in the London Interbank Eurodollar market in the ordinary course of
business, or (B) by reason of circumstances affecting the London Interbank
Eurodollar market, adequate and fair means do not exist for ascertaining the
rate of interest to be applicable to the Loans requested by Borrowers to be
LIBOR Rate Loans or the Loans bearing interest at the rates set forth in
subsection 4(a)(ii) of this Agreement shall not represent the effective pricing
to Lender for U.S. Dollar deposits of a comparable amount for the relevant
period (such as for example, but not limited to, official reserve requirements
required by Regulation D to the extent not given effect in determining the
rate), Lender shall promptly notify Borrowing Agent and (1) all existing LIBOR
Rate Loans shall convert to Prime Rate Loans upon the end of the applicable
Interest Period, and (2) no additional LIBOR Rate Loans shall be made until such
circumstances are cured.
(iii) If, after the date hereof, the introduction of, or any
change in any applicable law, treaty, rule, regulation or guideline or in the
interpretation or administration thereof by any governmental authority or any
central bank or other fiscal, monetary or other authority having jurisdiction
over Lender or its lending offices (a "Regulatory Change"), shall, in the
opinion of counsel to Lender, make it unlawful for Lender to make or maintain
LIBOR Rate Loans, then Lender shall promptly notify the Borrowing Agent and (A)
the LIBOR Rate Loans shall immediately convert to Prime Rate Loans on the last
Business Day of the then existing Interest Period or on such earlier date as
required by law and (B) no additional LIBOR Rate Loans shall be made until such
circumstance is cured.
-20-
(iv) If, for any reason, a LIBOR Rate Loan is paid prior to the
last Business Day of any Interest Period or if a LIBOR Rate Loan is not made
and/or does not occur on a date specified by the Borrowing Agent in its request
(other than as a result of a default by Lender), the Borrowers agree to
indemnify Lender against any loss (including any loss on redeployment of the
deposits or other funds acquired by Lender to fund or maintain such LIBOR Rate
Loan) cost or expense incurred by Lender as a result of such prepayment (such
costs, expenses or loss, "Breakage Costs").
(v) If any Regulatory Change (whether or not having the force
of law) shall (A) impose, modify or deem applicable any assessment, reserve,
special deposit or similar requirement against assets held by, or deposits in or
for the account of or loans by, or any other acquisition of funds or
disbursements by, Lender; (B) subject Lender or the LIBOR Rate Loans to any Tax
or change the basis of taxation of payments to Lender of principal or interest
due from a Borrower to Lender hereunder (other than a change in the taxation of
the overall net income of Lender); or (C) impose on Lender any other condition
regarding the LIBOR Rate Loans or Lender's funding thereof, and Lender shall
determine (which determination shall be conclusive, absent any manifest error)
that the result of the foregoing is to increase the cost to Lender of making or
maintaining the LIBOR Rate Loans or to reduce the amount of principal or
interest received by Lender hereunder, then the applicable Borrowers shall pay
to Lender, on demand, such additional amounts as Lender shall, from time to
time, determine are sufficient to compensate and indemnify Lender from such
increased cost or reduced amount.
(vi) Lender shall receive payments of amounts of principal of
and interest with respect to the LIBOR Rate Loans free and clear of, and without
deduction for, any Taxes. If (A) Lender shall be subject to any Tax in respect
of any LIBOR Rate Loans or any part thereof or, (B) Borrowers shall be required
to withhold or deduct any Tax from any such amount, the LIBOR Rate applicable to
such LIBOR Rate Loans shall be adjusted by Lender to reflect all additional
costs incurred by Lender in connection with the payment by Lender or the
withholding by a Borrower of such Tax and Borrowers shall provide Lender with a
statement detailing the amount of any such Tax actually paid by Borrowers.
Determination by Lender of the amount of such costs shall be conclusive, absent
manifest error. If after any such adjustment any part of any Tax paid by Lender
is subsequently recovered by Lender, Lender shall reimburse Borrowers to the
extent of the amount so recovered. A certificate of an officer of Lender setting
forth the amount of such recovery and the basis therefor shall be conclusive,
absent manifest error.
(vii) Each request for LIBOR Rate Loans shall be in an amount
not less than $1,000,000, and in integral multiples of $100,000.
(viii) Unless otherwise specified by Borrowing Agent, all Loans
shall be Prime Rate Loans.
(ix) No more than five (5) LIBOR Rate Loans may be outstanding
at any one time.
-21-
(c) Fees And Charges.
(i) Commitment Fee: Borrowers shall pay to Lender a commitment
fee in United States Dollars of Fifty-Three Thousand Five Hundred Dollars
($53,500), which fee was fully earned by Lender upon the execution of the
Commitment Letter, and was paid by Borrowers in connection with the execution of
the Commitment Letter.
(ii) Unused Line Fee: Borrowers shall pay to Lender an unused
line fee in United States Dollars of 0.50% of the difference between (x) the
Maximum Revolving Loan Limit and (y) the average daily balance of the
outstanding Revolving Loans plus the average daily amount of outstanding Letter
of Credit Obligations for each month, which fee shall be fully earned by Lender
and payable monthly in arrears on the first Business Day of each month. Said fee
shall be calculated on the basis of a 360 day year for the actual number of days
elapsed.
(iii) Prepayment Fee: In the event that Borrowers prepay all of
the Liabilities hereunder, including all of the principal outstanding under the
Revolving Loans, and elect to terminate this Agreement prior to the last day of
the Term, which Borrowers may elect to do at any time but only upon 90 days
prior written notice to Lender, Borrowers shall pay to Lender a prepayment fee
("Prepayment Fee") in United States Dollars equal to (i) 3.00% of the Maximum
Loan Limit if such prepayment occurs on or prior to the first anniversary of the
Closing Date, (ii) 2.00% of the Maximum Loan Limit if such prepayment occurs
after the first anniversary of the Closing Date and on or prior to the second
anniversary of the Closing Date and (iii) 1.00% of the Maximum Loan Limit if
such prepayment occurs after the second anniversary of the Closing Date but
prior to the last day of the Term; provided, however, that no Prepayment Fee
will be charged in connection with a prepayment of all or any portion of the
Liabilities with proceeds of a Casualty Loss. If Borrowers make any reductions
of the Maximum Revolving Loan Limit or make voluntary partial prepayments of the
Term Loans in accordance with Subsection 2(i), then a pro-rata portion of the
Prepayment Fee determined pursuant to the preceding sentence shall be payable in
connection therewith. Borrowers acknowledge that such fee is intended to
compensate Lender for actual damages and is not established or to be treated as
a penalty.
(iv) Letter of Credit Fees. Borrowers shall remit to Lender a
letter of credit fee in United States Dollars equal to 3.00% per annum on the
aggregate undrawn face amount of each Letter of Credit for each day such Letter
of Credit is to be outstanding, which fee shall be payable monthly in advance on
(x) the date of issuance of each such Letter of Credit (for the time period from
such date of issuance through the last day prior to the first Business Day of
the month following the month in which such issuance occurs) and (y) on the
first Business Day of each month thereafter during any portion of which month
such Letter of Credit is to be outstanding (for the time period from such first
Business Day through the earlier of (i) the last day prior to the first Business
Day of the following month or (ii) the expiration date of such Letter of
Credit). Each monthly installment of such letter of credit fee is fully earned
and nonrefundable upon the coming due thereof. Said fee shall be calculated on
the basis of a 360 day year for the actual number of days elapsed. Borrowers
shall also pay on demand to Lender an amount equal to the normal and customary
administrative charges of the issuer of the Letters of Credit for the issuance,
amendment, negotiation, renewal or extension of any Letter of Credit.
-22-
(v) Audit Fees. Borrowers shall pay to Lender the Audit
Fees provided for in Subsection 12(d). Such Audit Fees shall be fully earned
upon the incurrence thereof and shall be payable on demand.
(vi) Collateral Management Fee. Borrowers shall pay to Lender a
collateral management fee in United States Dollars of One Thousand Dollars
($1,000) per month, which fee shall be fully earned and payable monthly in
advance on the first Business Day of each month.
(vii) Costs and Expenses: Borrowers shall reimburse Lender for
all out of pocket costs and expenses, including, without limitation, legal
expenses and reasonable attorneys' fees, incurred by Lender in connection with
the (i) analysis, due diligence, documentation and, consummation of this
transaction and the Loans and any other transactions between Borrowers and
Lender, including, without limitation, fees and expenses for Uniform Commercial
Code and other public record searches and filings, overnight courier or other
express or messenger delivery, field examination costs, appraisal costs and
environmental audit or review costs; (ii) amendments, waivers or consents with
respect to this Agreement and any Other Agreements; (iii) protection,
preservation, defense or enforcement of any rights of Lender in or to the
Collateral or otherwise under this Agreement or any Other Agreements; (iv)
collection of any Liabilities; and (v) non-overhead administration of this
Agreement (primarily expected, if necessary, to include any of the foregoing
plus periodic consultation or analysis with counsel concerning its rights under
this Agreement and the Other Agreements). Borrowers shall also pay all normal
service charges with respect to all accounts maintained by each Borrower with
Lender and LaSalle Bank and any additional services requested by any Borrower
from Lender and LaSalle Bank. All such costs, expenses and charges shall, if
owed to LaSalle Bank, be reimbursed by Lender and in such event or in the event
such costs and expenses are owed to Lender, constitute Liabilities hereunder,
shall be payable by Borrowers to Lender on demand, and, until paid, shall bear
interest at the highest rate then applicable to Loans hereunder.
(viii) Capital Adequacy Charge. If Lender shall have determined
that the adoption of any law, rule or regulation regarding capital adequacy, or
any change therein or in the interpretation or application thereof, or
compliance by Lender with any request or directive regarding capital adequacy
(whether or not having the force of law) from any central bank or governmental
authority enacted after the date hereof, does or shall have the effect of
reducing the rate of return on such party's capital as a consequence of its
obligations hereunder to a level below that which Lender could have achieved but
for such adoption, change or compliance (taking into consideration Lender's
policies with respect to capital adequacy) by a material amount, then from time
to time, after submission by Lender to Borrowers of a written demand therefor
("Capital Adequacy Demand") together with the certificate described below,
Borrowers shall pay to Lender such additional amount or amounts ("Capital
Adequacy Charge") as will compensate Lender for such reduction, such Capital
Adequacy Demand to be made with reasonable promptness following such
determination. A certificate of Lender claiming entitlement to payment as set
forth above shall be conclusive in the absence of manifest error. Such
certificate shall set forth the nature of the occurrence giving rise to such
reduction, the amount of the Capital Adequacy Charge to be paid to Lender, and
the method by which such amount was determined. In determining such amount,
Lender may use any reasonable averaging and attribution method, applied on a
non-discriminatory basis.
-23-
(d) Maximum Interest. It is the intent of the parties that the rate of
interest and other charges to each Borrower under this Agreement shall be
lawful; therefore, if for any reason the interest or other charges payable under
this Agreement are found by a court of competent jurisdiction, in a final
determination, to exceed the limit which Lender may lawfully charge Borrowers
(or any one of them), then the obligation to pay interest and other charges
shall automatically be reduced to such limit and, if any amount in excess of
such limit shall have been paid, then such amount shall be refunded to
Borrowers.
5. COLLATERAL.
(a) Grant of Security Interest to Lender. As security for the payment
of all Loans now or in the future made by Lender to Borrowers hereunder and for
the payment or other satisfaction of all other Liabilities, each Borrower hereby
assigns to Lender and grants to Lender a continuing, valid and, enforceable
first priority (subject only to the Existing IP Lien) and only (other than
Permitted Liens) lien, charge and security interest in all assets and property
of any kind of such Borrower, including without limitation, all of the following
property: whether tangible or intangible and whether now or hereafter owned,
existing, acquired, created or arising and wherever now or hereafter located:
(a) all Accounts (whether or not Eligible Accounts) and all Goods whose sale,
lease or other disposition by such Borrower has given rise to Accounts and have
been returned to, or repossessed or stopped in transit by, such Borrower; (b)
all Chattel Paper, Instruments, Documents and General Intangibles (including,
without limitation, all patents, patent applications, trademarks, trademark
applications, trade names, trade secrets, goodwill, copyrights, copyright
applications, registrations, licenses, software, franchises, customer lists, tax
refund claims, claims against carriers and shippers, guarantee claims, contracts
rights, payment intangibles, security interests, security deposits and rights to
indemnification); (c) all Inventory; (d) all Goods (other than Inventory),
including, without limitation, Equipment, vehicles (other than any vehicles
subject to any lien or security interest granted to any holder of purchase money
Indebtedness with respect to such vehicle(s)) and Fixtures; (e) all Investment
Property; (f) all Deposit Accounts, bank accounts, deposits and cash; (g) all
Letter-of-Credit Rights; (h) Commercial Tort Claims listed on Exhibit D hereto;
(i) Payment Intangibles; (j) Supporting Obligations; (k) any other property of
such Borrower now or hereafter in the possession, custody or control of Lender
or any agent or any parent, affiliate or subsidiary of Lender or any participant
with Lender in the Loans, for any purpose (whether for safekeeping, deposit,
collection, custody, pledge, transmission or otherwise) and (l) all additions
and accessions to, substitutions for, and replacements, products and Proceeds of
the foregoing property, including, without limitation, proceeds of all insurance
policies insuring the foregoing property, and all of such Borrowers' books and
records relating to any of the foregoing and to such Borrowers' business.
(b) Other Security. Lender, in its sole discretion, without waiving or
releasing any obligation, liability or duty of any Borrower under this Agreement
or the Other Agreements or any Event of Default, may at any time or times
hereafter, but shall not be obligated to, pay, acquire or accept an assignment
of any security interest, lien, encumbrance or claim asserted by any Person in,
upon or against the Collateral. All sums paid by Lender in respect thereof and
all costs, fees and expenses including, without limitation, reasonable attorney
fees, all court costs and all other charges relating thereto incurred by Lender
shall constitute Liabilities, payable by Borrowers to Lender on demand and,
until paid, shall bear interest at the highest rate then applicable to Loans
hereunder.
-24-
(c) Possessory Collateral. Promptly (but in any event within 10 days)
after any Borrower's receipt of any portion of the Collateral evidenced by an
agreement, Instrument or Document, including, without limitation, any Tangible
Chattel Paper and any Investment Property consisting of certificated securities,
such Borrower shall deliver the original thereof to Lender together with an
appropriate endorsement or other specific evidence of assignment thereof to
Lender (in form and substance acceptable to Lender). If an endorsement or
assignment of any such items shall not be made for any reason, Lender is hereby
irrevocably authorized, as such Borrower's attorney and agent-in-fact, to
endorse or assign the same on such Borrower's behalf.
(d) Electronic Chattel Paper. To the extent that a Borrower obtains or
maintains any Electronic Chattel Paper, such Borrower shall create, store and
assign the record or records comprising the Electronic Chattel Paper in such a
manner that (i) a single authoritative copy of the record or records exists
which is unique, identifiable and except as otherwise provided in clauses (iv),
(v) and (vi) below, unalterable, (ii) the authoritative copy identifies Lender
as the assignee of the record or records, (iii) the authoritative copy is
communicated to and maintained by the Lender or its designated custodian, (iv)
copies or revisions that add or change an identified assignee of the
authoritative copy can only be made with the participation of Lender, (v) each
copy of the authoritative copy and any copy of a copy is readily identifiable as
a copy that is not the authoritative copy and (vi) any revision of the
authoritative copy is readily identifiable as an authorized or unauthorized
revision.
(e) Intentionally Omitted.
(f) Pledge. As further security for the payment of all Loans now or in
the future made by Lender to Borrowers hereunder and for the payment or other
satisfaction of all other Liabilities, each Borrower shall pledge to Lender all
of the capital stock or other equity interests of each of such Borrower's
Subsidiaries (including each Subsidiary which is a Borrower) pursuant to a
pledge agreement dated as of the date hereof acceptable to Lender (each a
"Pledge Agreement"). Borrowers shall take all other steps requested by Lender
which Lender shall deem necessary, prudent or desirable in order for Lender to
have Control over any Investment Property pledged under this Subsection, and/or
for Lender otherwise to perfect and protect its pledge in such capital stock and
other equity interests. Immediately upon the creation of a new Subsidiary
(subject to Subsection 13(d) hereof), each Borrower shall pledge the capital
stock or other equity interests of such new Subsidiary as required by this
Subsection and comply with all of the provisions of this Subparagraph with
respect to such capital stock or other equity interests. The term "Collateral"
shall further include all of the Investment Property pledged pursuant to this
Subsection.
(g) Intentionally Omitted.
-25-
(h) Commercial Tort Claims; Letter-of-Credit Rights. Each Borrower
represents and warrants to Lender that such Borrower does not have any pending
Commercial Tort Claims or Letter-of-Credit Rights except as shown on Schedule 3
(h) attached hereto. Borrowers shall be deemed to restate this representation
and warranty at the time of each Loan as if this representation and warranty had
been set forth in full in Section 11 hereof.
(i) Real Estate Collateral. As further security for the payment of all
Loans now or in the future made by Lender to Borrowers hereunder and for the
payment or other satisfaction of all other Liabilities, each Borrower shall
grant to Lenders a continuing first priority lien and mortgage upon, in and to
all of such Borrower's now owned or hereafter acquired Real Property (including,
without limitation, the Initial Mortgaged Premises). Each Borrower hereby agrees
to execute in favor of Lender, either on the Closing Date or at such future time
as any Real Property is acquired (as applicable), a mortgage or deed of trust in
form and substance acceptable to Lender with respect to each such piece of Real
Property (each such mortgage or deed of trust (or debenture), as it may
hereafter be amended, modified restated or replaced from time to time, a
"Mortgage"). Each such Mortgage shall be duly recorded, at the expense of
Borrowers in such recording office(s) as necessary to create a fully valid and
perfected public lien in favor of Lender on the Real Property covered by such
Mortgage. Each Borrower also agrees to deliver or cause to be delivered to
Lender such other documents (in form and substance acceptable to Lender) and
assurances relative to each parcel of Real Property, including without
limitation, assignments of rents and leases, title insurance, flood insurance
certificates and/or policies, endorsements, surveys, certificates, and legal
opinions as Lender and its counsel may request. The definition of "Collateral"
shall include the Real Property.
(j) Rights Under Leases. As additional security for all Liabilities,
each Borrower shall assign to Lender for the benefit of Lender all of such
Borrower's rights as lessor under any and all leases with respect to Real
Property (collectively, the "Assignments of Rents and Leases").
(k) Title Insurance Policies. Borrowers shall provide to Lender, on the
Closing Date, title insurance policies, obtained at the expense of Borrowers,
insuring the mortgage lien of Agent upon the Initial Mortgaged Premises. Such
title insurance policies shall be in amounts and in form and substance and
issued by insurers that are acceptable to Lender in its reasonable discretion.
Further, each Borrower agrees to provide title insurance policies meeting the
above criteria with respect to each and every piece of Real Property acquired by
any Borrower subsequent to the Closing Date no later than the date of
acquisition thereof.
(l) Lien Documents. At closing and thereafter as Lender deems necessary
or desirable, each Borrower shall execute and deliver, or cause to be executed
and delivered, to Lender any agreements, documents and instruments, including
without limitation, the Mortgage with respect to the Initial Mortgaged Property,
required by Lender to evidence, perfect or protect Lender's liens and security
interests in the Collateral. In addition to the foregoing, each Borrower shall
do anything further that may be lawfully required by Lender to effectuate the
intentions and objects of this Agreement, including, but not limited to, the
execution and delivery of additional agreements, documents and instruments.
-26-
6. PRESERVATION OF COLLATERAL AND PERFECTION OF SECURITY INTERESTS
THEREIN.
Each Borrower hereby authorizes Lender to file UCC-1 financing
statements against such Borrower covering the Collateral owned by such Borrower
(and describing such collateral, if Lender shall so choose in its absolute
discretion, as "All Assets" of such Borrower) in such jurisdictions as Lender
shall deem necessary, prudent or desirable to perfect and protect the liens and
security interests granted to Lender hereunder, with or without the signature of
such Borrower. Each Borrower shall, at Lender's request, at any time and from
time to time, authenticate, execute and deliver to Lender such financing
statements, documents and other agreements and instruments (and pay the cost of
filing or recording the same in all public offices deemed necessary, prudent or
desirable by Lender) and do such other acts and things or cause third parties to
do such other acts and things as Lender may deem necessary, prudent or desirable
in its sole discretion in order to establish and maintain a valid, attached and
perfected security interest in the Collateral in favor of Lender (free and clear
of all other liens, claims, encumbrances and rights of third parties whatsoever,
whether voluntarily or involuntarily created, except Permitted Liens) to secure
payment of the Liabilities. Without limiting the generality of the foregoing,
each Borrower agrees (a) to provide a landlord's waiver reasonably satisfactory
to Lender for each leased location where such Borrower maintains books and
records or any Equipment financed with Equipment Loans (provided that, so long
as books and records information pertaining to the business of AM Nex-Link is
available at the Initial Mortgaged Premises, Borrowers shall not be required to
provide a landlord's waiver for AM Nex-Link's Florida location if all such books
and records are moved to the Initial Mortgaged Premises prior to October 1, 2002
and maintained at such location thereafter), and (b) to use best efforts to
provide a landlord's waiver reasonably satisfactory to Lender for each other
leased location of such Borrower. Each Borrower irrevocably hereby makes,
constitutes and appoints Lender (and all Persons designated by Lender for that
purpose) as such Borrower's true and lawful attorney and agent-in-fact to
execute and file such financing statements, documents and other agreements and
instruments and do such other acts and things as may be necessary to preserve
and perfect Lender's security interest in the Collateral. Each Borrower further
agrees that a carbon, photographic, photostatic or other reproduction of this
Agreement or of a financing statement shall be sufficient as a financing
statement. Each Borrower further ratifies and confirms the prior filing by
Lender of any and all financing statements (and any appropriate amendments or
continuations thereof) which identify such Borrower as debtor, Lender as secured
party and any or all Collateral as collateral. Notwithstanding anything to the
contrary contained herein, no Borrower shall be required to comply with any
certificate of title statute in order to perfect Lender's security interest in
vehicles unless an Event of Default exists and Lender requests that Borrower so
comply with the applicable certificate of title statutes.
7. POSSESSION OF COLLATERAL AND RELATED MATTERS.
So long as no Event of Default exists, each Borrower shall have the
right, except as otherwise provided in this Agreement, in the ordinary course of
such Borrower's business consistent with past practices, to (a) sell, lease or
furnish under contracts of service any of such Borrower's Inventory normally
held by such Borrower for any such purpose; and (b) use and consume any raw
materials, work in process or other materials normally held by such Borrower for
such purpose; provided, however, that a sale in the ordinary course of business
shall not include any transfer or sale in satisfaction, partial or complete, of
a debt owed by such Borrower.
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8. COLLECTIONS.
(a) Each Borrower shall direct all of its Account Debtors to make all
payments on the Accounts of such Borrowers directly to certain post office boxes
(each a "Lock Box") designated by, and under the exclusive control of, Lender,
at LaSalle Bank. A Lock Box shall be established for each Borrower In connection
with each such Lock Box, Borrowers shall establish one or more deposit accounts
(each a "Lock Box Account") in Lender's name with LaSalle Bank, into which all
payments received in the respective Lock Box shall be deposited. Each Borrower
will, immediately upon receipt thereof, deposit into the applicable Lock Box
Accounts all payments received by such Borrower on its Accounts and any and all
other cash proceeds of any Collateral in the identical form in which such
payments were received, whether by cash or check, and each such Borrower shall
direct any Account Debtor wishing to send a wire transfer as payment to send any
funds to the applicable Lock Box Account. If any such Borrower or any Affiliate
or Subsidiary of such Borrower or any shareholder, officer, director, employee
or agent of such Borrower or any Affiliate or Subsidiary thereof, or any other
Person acting for or in concert with such Borrower shall receive any monies,
checks, notes, drafts or other payments relating to or as Proceeds of Accounts
or other Collateral, such Borrower and each such Person shall receive all such
items in trust for, and as the sole and exclusive property of, Lender and,
immediately upon receipt thereof, shall remit the same (or cause the same to be
remitted) in kind to the applicable Lock Box Account. The applicable Borrower
shall execute a tri-party account control agreement with respect to each
applicable Lock Box Account (each such agreement, as it may hereafter be
amended, modified, restated or replaced from time to time, a "Lock Box Account
Control Agreement") among Lender, the applicable Borrower and LaSalle Bank. Each
such Lock Box Control Agreement shall provide that the amounts on deposit in
such Lock Box Account are the sole and exclusive property of Lender, that
LaSalle Bank will follow the instructions of Lender with respect to disposition
of funds in the Lock Box and Lock Box Account without further consent from the
applicable Borrower, that LaSalle Bank has no right to setoff against the Lock
Box Account or against any other account maintained by LaSalle Bank into which
the contents of the Lock Box Account are transferred, and that LaSalle Bank
shall wire, or otherwise transfer (in a manner satisfactory to Lender) in
immediately available funds all funds deposited in the Lock Box Account on a
daily basis as such funds are collected to a cash collateral account maintained
with LaSalle Bank, which account shall be maintained in the name of Lender and
shall be under the sole dominion and control of Lender ("Cash Collateral
Account").
(b) Each Borrower agrees that all payments and other funds received by
Lender from such Lock Box Accounts or otherwise, whether in respect of the
Accounts or as Proceeds of other Collateral or otherwise, will be, if received
directly by a Borrower, promptly remitted to Lender and applied on account of
the applicable Liabilities in accordance with the terms of this Agreement;
provided, that so long as no Event of Default has occurred, payments received by
Lender shall not be applied to the unmatured portion of the LIBOR Rate Loans,
but shall be held in a cash collateral account maintained by Lender, until the
earlier of (i) the last Business Day of the Interest Period applicable to such
LIBOR Rate Loan and (ii) the occurrence of an Event of Default; provided
further, that so long as no Event of Default has occurred and is continuing, the
immediately available funds in such Cash Collateral Account may be disbursed, at
Borrowers discretion, to the applicable Borrowers so long as after giving effect
to such disbursement, the aggregate outstanding balance of all Revolving Loans
does not exceed any limitations set forth in Subsection 2(a) hereof. Borrowers
agree to pay all fees, costs and expenses in connection with opening and
maintaining the Lock Boxes and Lock Box Accounts. All of such fees, costs and
expenses if not paid by Borrowers, may be paid by Lender and in such event all
amounts paid by Lender shall constitute Liabilities hereunder, shall be payable
to Lender by Borrowers upon demand, and, until paid, shall bear interest at the
highest rate then applicable to Loans hereunder. All checks, drafts, instruments
and other items of payment or Proceeds of Collateral shall be endorsed by the
applicable Borrower to Lender, and, if that endorsement of any such item shall
not be made for any reason, Lender is hereby irrevocably authorized to endorse
the same on such Borrower's behalf. For the purpose of this Section 8, each
Borrower irrevocably hereby makes, constitutes and appoints Lender (and all
Persons designated by Lender for that purpose) as such Borrower's true and
lawful attorney and agent-in-fact (i) to endorse such Borrower's name upon said
items of payment and/or Proceeds of Collateral and upon any Chattel Paper,
Document, Instrument, invoice or similar document or agreement relating to any
Account of such Borrower or Goods pertaining thereto; (ii) to take control in
any manner of any item of payment or Proceeds thereof, (iii) to have access to
any lock box into which any of such Borrower's mail is deposited, and open and
process all mail addressed to such Borrower and deposited therein and (iv)
following the occurrence and during the continuance of an Event of Default, to
have access to any other postal box into which any of such Borrower's mail is
deposited, and open and process all mail addressed to such Borrower and
deposited therein.
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(c) Lender may, at any time and from time to time after the occurrence
and during the continuance of an Event of Default, whether before or after
notification to any Account Debtor and whether before or after the maturity of
any of the Liabilities, (i) enforce collection of any of each Borrower's
Accounts or other amounts owed to a Borrower by suit or otherwise; (ii) exercise
all of such Borrower's rights and remedies with respect to proceedings brought
to collect any Accounts or other amounts owed to such Borrower; (iii) surrender,
release or exchange all or any part of any Accounts or other amounts owed to
such Borrower, or compromise or extend or renew for any period (whether or not
longer than the original period) any indebtedness thereunder; (iv) sell or
assign any Account of such Borrower or other amount owed to such Borrower upon
such terms, for such amount and at such time or times as Lender deems advisable;
(v) prepare, file and sign such Borrower's name on any proof of claim in
bankruptcy or other similar document against any Account Debtor or other Person
obligated to such Borrower; and (vi) do all other acts and things which are
necessary, in Lender's sole discretion, to fulfill such Borrower's obligations
under this Agreement and to allow Lender to collect the Accounts or other
amounts owed to such Borrower. In addition to any other provision hereof, Lender
may at any time, after the occurrence and during the continuance of an Event of
Default, at Borrowers' expense, notify any parties obligated on any of the
Accounts to make payment directly to Lender of any amounts due or to become due
thereunder.
(d) Subject to the provisions of Subsection 8(a), for purposes of
calculating interest and fees due under this Agreement, Lender shall, within one
(1) Business Day after receipt into any Lock Box or deposit into any Lock Box
Account of checks and cash or other immediately available funds from collections
of items of payment and Proceeds of any Collateral, apply the whole or any part
of such collections or Proceeds against the applicable Liabilities in such order
as Lender shall determine in its sole discretion. Borrowers shall pay a monthly
collection fee equal to the same one day's interest on all payments and deposits
made into the Lock Box Accounts during such month, such fee to be payable in
arrears on the first day of each month. Subject to the provisions of Subsection
8(a), for purposes of determining the amount of Loans available for borrowing
purposes, such checks and cash or other immediately available funds from
collections of items of payment and Proceeds of any Collateral shall be applied
in whole or in part against the Liabilities, in such order as Lender shall
determine in its sole discretion, on the day of receipt, subject to actual
collection.
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(e) On a monthly basis, Lender shall deliver to Borrowing Agent an
account statement showing all Loans, charges and payments, which shall be deemed
final, binding and conclusive upon Borrowers unless Borrowing Agent notifies
Lender in writing, specifying any error therein, within thirty (30) days of the
date such account statement is sent to Borrowing Agent and any such notice shall
only constitute an objection to the items specifically identified.
9. COLLATERAL, AVAILABILITY AND FINANCIAL REPORTS AND SCHEDULES.
(a) Borrowing Base Certificates and Weekly Reports. Borrowers shall
deliver to Lender an executed loan report and borrowing base certificate in
Lender's then current form once every seven (7) days (or more frequently, if so
required by Lender in its sole discretion), which shall be calculated as of the
last Business Day of the prior week (or as of such other day, if more frequent
submissions are required by Lender) and be accompanied by copies of the existing
corresponding sales journal, cash receipts journal and credit memo journal of
each Borrower for the relevant period. Such report shall separately reflect the
activity of each such Borrower with respect to Accounts for the immediately
preceding week, and shall be in a form and with such specificity as is
satisfactory to Lender and shall contain such additional information concerning
Accounts as may be requested by Lender including, without limitation, but only
if specifically requested by Lender, copies of all invoices prepared in
connection with such Accounts.
(b) Monthly Reports. Borrowers shall deliver to Lender, in addition to
any other reports, as soon as practicable and in any event: within fifteen (15)
days after the end of each month, (i) a detailed trial balance and
reconciliation of each Borrower's Accounts aged per invoice date, in form and
substance reasonably satisfactory to Lender including, without limitation, the
names and addresses of all Account Debtors of each Borrower, (ii) a summary and
detail of accounts payable of each Borrower (such Accounts and accounts payable
divided into 30 day time intervals), including a listing of any held checks and
(iii) a summary and detail of all outstanding performance bonds posted by each
Borrower.
(c) Financial Statements. Borrowers shall deliver to Lender the
following financial information, all of which shall be prepared in accordance
with generally accepted accounting principles consistently applied, and shall be
accompanied by a compliance certificate ("Compliance Certificate") in the form
of Exhibit A hereto, which Compliance Certificate shall include a calculation of
all financial covenants contained in this Agreement: (i) no later than thirty
(30) days after each calendar month, copies of internally prepared financial
statements for the Borrowers on a consolidated and consolidating basis, in
accordance with GAAP, including, without limitation, balance sheets and
statements of income, retained earnings and cash flow of certified, subject to
normal year-end adjustments, by the Chief Financial Officer of Borrowing Agent;
and (ii) no later than ninety (90) days after the end of each Fiscal Year
audited, accountant-prepared annual financial statements for the Borrowers on a
consolidated and consolidating basis in accordance with GAAP, with an
unqualified opinion (on the consolidated statements) by independent certified
public accountants selected by Borrower and reasonably satisfactory to Lender,
which financial statements shall be accompanied by (a) a report of such
independent certified public accountants stating that they have reviewed Section
14 of this Agreement and that in making the examinations necessary to rendering
their unqualified opinion, such examination did not disclose the existence of
any Event of Default resulting from the Borrowers' failure to comply with any
subsection contained in Section 14 (or if such examination did disclose the
existence of such an Event of Default, then stating that such Event of Default
exists together with a description thereof), and (b) copies of any management
letters sent to Borrower by such accountants (each such set of annual audited
financial statements together with the accountants' letters and the Compliance
Certificate related thereto, the "Annual Financial Statements".)
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(d) Annual Projections. As soon as practicable and in any event within
sixty (60) days prior to the first day of each Fiscal Year, Borrowers shall
deliver to Lender projected balance sheets, statements of income and cash flow
for the Borrowers for each of the twelve (12) months in such coming Fiscal Year,
which projections shall reflect the projected monthly financial results of
Borrowers on a consolidated basis and the projected quarterly financial results
of Borrowers on a consolidating basis, and shall include the assumptions used
therein together with appropriate supporting details as reasonably requested by
Lender.
(e) Public Reporting. Promptly upon the filing thereof, Borrowers shall
deliver to Lender copies of all registration statements and annual, quarterly,
monthly or other regular reports which any Borrower files with the Securities
and Exchange Commission, as well as promptly providing to Lender copies of any
reports and proxy statements delivered to its shareholders.
(f) Other Information. Promptly following request therefor by Lender,
such other business or financial data, reports, appraisals and projections
regarding Borrowers or any one or more of them as Lender may reasonably request.
10. TERMINATION.
THIS AGREEMENT SHALL BE IN EFFECT FROM THE CLOSING DATE UNTIL THE DATE
OF THE THIRD ANNIVERSARY OF THE CLOSING DATE (THE "TERM") UNLESS (A) THE DUE
DATE OF THE LIABILITIES IS ACCELERATED PURSUANT TO SECTION 16 HEREOF; OR (B)
BORROWERS ELECT TO TERMINATE THIS AGREEMENT AT ANY TIME BY GIVING LENDER AT
LEAST NINETY BUSINESS DAYS NOTICE OF SUCH ELECTION AND BY PAYING ALL OF THE
LIABILITIES IN FULL (INCLUDING ANY APPLICABLE BREAKAGE COST OR PREPAYMENT FEE)
AND BY EITHER (X) PROVIDING CASH COLLATERAL IN AN AMOUNT EQUAL TO 105% OF THE
UNDRAWN FACE AMOUNT OF ALL OUTSTANDING LETTERS OF CREDIT OR (Y) OBTAINING THE
AGREEMENT OF ALL BENEFICIARIES ON EACH OF THE OUTSTANDING LETTERS OF CREDIT TO
THE TERMINATION THEREOF AND ALSO DELIVERING ALL ORIGINAL COPIES OF EACH SUCH
LETTER OF CREDIT TO LENDER. If one or more of the events specified in clauses
(A) or (B) occurs, then (i) Lender shall not make any additional Loans on or
after the date identified as the date on which the Liabilities are to be repaid;
and (ii) this Agreement shall terminate on the date thereafter that the
Liabilities are paid in full. At such time as Borrowers have repaid all of the
Liabilities and this Agreement has terminated, Borrowers shall deliver to Lender
a release, in form and substance satisfactory to Lender, of all obligations and
liabilities of Lender and its officers, directors, employees, agents, parents,
subsidiaries and affiliates to Borrowers, and if Borrowers are obtaining new
financing from another lender, Borrowers shall either (x) deliver such lender's
indemnification of Lender, in form and substance satisfactory to Lender, for
checks which Lender has credited to any Borrower's accounts, but which
subsequently are dishonored for any reason or for automatic clearinghouse or
wire transfers not yet posted to such Borrower's account or (y) provide cash
collateral to Lender in an amount equal to 105% of the aggregate amount of all
checks which Lender has credited to any Borrower's accounts which Lender
reasonably believes have not yet cleared pursuant to the terms and provisions of
a cash collateral account agreement satisfactory to Lender.
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11. REPRESENTATIONS AND WARRANTIES.
Each Borrower hereby represents and warrants to Lender, which
representations and warranties (whether appearing in this Section 11 or
elsewhere) shall, be true at the time of Borrowers' execution hereof and the
closing of the transactions described herein or related hereto (it being
expressly understood that all representations are being made after consummation
of the transactions contemplated by the Acquisition Documents and as to the
business, property and condition of Target, having merged into AM Nex-Link, as
well as to all other Borrowers), shall remain true until the repayment in full
and satisfaction of all the Liabilities and termination of this Agreement, and
shall be remade by each Borrower at the time each Loan is made pursuant to this
Agreement, with respect to itself and each of its Subsidiaries as follows
(provided that any representation or warranty made as of a specific date shall
be true, shall remain true and shall be remade as of such date):
(a) Financial Statements and Other Information. The Pre-Closing
Financials and other information delivered or to be delivered by Borrowers to
Lender at or prior to the Closing Date accurately reflect the financial
condition of the Borrowers, and there has been no material adverse change in the
financial condition, the operations or any other status of any Borrower since
March 30, 2002. All written information now or heretofore furnished by each
Borrower to Lender is true and correct as of the date with respect to which such
information was furnished.
(b) Locations. The office where each Borrower keeps its books, records
and accounts (or copies thereof) concerning the Collateral, each Borrower's
chief executive office and all of each Borrower's other places of business,
locations of Collateral and post office boxes and locations of bank accounts are
as set forth in Schedule 11(b) and at other locations within the continental
United States of which Lender has been advised by a Borrower in accordance with
Subsection 12(b)(i). The Collateral, including, without limitation, the
Equipment (except any part thereof which a Borrower shall have advised Lender in
writing consists of Collateral normally used in more than one state) is kept,
or, in the case of vehicles, based, only at the addresses set forth on Schedule
11(b), and at other locations within the continental United States of which
Lender has been advised by a Borrower in writing in accordance with Subsection
12(b)(i) hereof.
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(c) Loans by Borrower. No Borrower (nor any of its Subsidiaries) has
made any loans or advances to any Affiliate or other Person except for those
loans or advances outstanding on the date hereof as shown on Schedule 11(c)
attached hereto.
(d) Accounts and Inventory. Each Account which Borrowers shall,
expressly or by implication, request Lender to classify as an Eligible Account
shall, as of the time when such request is made, conform in all respects to the
requirements of such classification as set forth in the definition of "Eligible
Account" as set forth herein and as otherwise established by Lender from time to
time.
(e) Liens. Each Borrower is the lawful owner of all Collateral now
purportedly owned or hereafter purportedly acquired by such Borrower, free from
all liens, claims, security interests and encumbrances whatsoever, whether
voluntarily or involuntarily created and whether or not perfected, other than
the Permitted Liens (which in no event shall attach to any Accounts of any
Borrower).
(f) Organization, Authority and No Conflict. Each Borrower is a
corporation duly organized, validly existing and in good standing in its
jurisdiction of organization and has an organizational identification number and
chief executive office as indicated on Schedule 1(a) hereto. Each Borrower is
duly qualified and in good standing in all states where the nature and extent of
the business transacted by it or the ownership of its assets makes such
qualification necessary except where failure to be so qualified could not
reasonably be expected to result in a Material Adverse Effect. Each Borrower has
the right and power and is duly authorized and empowered to enter into, execute
and deliver this Agreement and the Other Agreements and perform its obligations
hereunder and thereunder. Each Borrower's execution, delivery and performance of
this Agreement and the Other Agreements does not conflict with the provisions of
the organizational documents of such Borrower, any statute, regulation,
ordinance or rule of law, or any agreement, contract or other document which may
now or hereafter be binding on such Borrower, and each Borrower's execution,
delivery and performance of this Agreement and the Other Agreements shall not
result in the imposition of any lien or other encumbrance upon any of such
Borrower's property under any existing indenture, mortgage, deed of trust, loan
or credit agreement or other agreement or instrument by which such Borrower or
any of its property may be bound or affected. Except as set forth on Schedule
11(f) hereto, no Borrower is party to any material agreement, contract or other
document which is not listed in the exhibit section to AM Communications' Form
10-KSB for the Fiscal Year ended March 30, 2002 filed with the SEC.
(g) Litigation. Except as shown on Schedule 11(g) attached hereto,
there are no actions or proceedings which are pending or threatened in writing
against any Borrower (or any of its Subsidiaries) and each Borrower shall,
promptly upon becoming aware of any such pending or threatened action or
proceeding, give written notice thereof to Lender.
(h) Compliance with Laws and Maintenance of Permits. Each Borrower has
obtained all governmental consents, franchises, certificates, licenses,
authorizations, approvals and permits, the lack of which would be reasonably
likely to have a Material Adverse Effect. Each Borrower (and each of its
Subsidiaries) is in compliance in all material respects with all applicable
federal, state, local and foreign statutes, orders, regulations, rules and
ordinances (including, without limitation, Environmental Laws and statutes,
orders, regulations, rules and ordinances relating to taxes, employer and
employee contributions and similar items, securities, ERISA or employee health
and safety) the failure to comply with which would be reasonably likely to have
a Material Adverse Effect.
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(i) Affiliate Transactions. Except as set forth on Schedule 11(i)
attached hereto, no Borrower (nor any of its Subsidiaries) is conducting,
permitting or suffering to be conducted, transaction with any Affiliate other
than transactions with Affiliates for the purchase or sale of Inventory or
services in the ordinary course of business consistent with past practices
pursuant to terms that are no less favorable to such Borrower (or its
Subsidiary) than the terms upon which such transfers or transactions would have
been made had they been made to or with a Person that is not an Affiliate.
(j) Names and Trade Names. Each Borrower's corporate name has always
been as set forth on the first page of this Agreement and no Borrower uses any
trade names, assumed names, fictitious names or division names in the operation
of its business, except in each case as set forth on Schedule 11(j) hereto.
(k) Equipment. Each Borrower has good and indefeasible and merchantable
title to and ownership of all Equipment. No Equipment is a Fixture to real
estate or an accession to other personal property unless such personal property
is subject to a first priority lien in favor of Lender.
(l) Enforceability. This Agreement and the Other Agreements to which
each Borrower is a party are the legal, valid and binding obligations of such
Borrower and are enforceable against such Borrower in accordance with their
respective terms, subject to bankruptcy, insolvency, reorganization or similar
laws affecting enforcement of creditors' rights generally, and general equitable
principles.
(m) Solvency. After giving effect to the transactions contemplated
hereby and the Acquisition Documents, Borrowers (taken as a whole) are Solvent.
After giving effect to the Loans to be made and Letters of Credit to be issued
hereunder, Borrowers (taken as a whole) are, and will at all times be, Solvent.
(n) Indebtedness. Except as set forth on Schedule 11(n) attached
hereto, no Borrower is obligated (directly or indirectly) for any Indebtedness
other than the Loans.
(o) Margin Security and Use of Proceeds. No Borrower owns any margin
securities, and none of the proceeds of the Loans hereunder shall be used for
the purpose of purchasing or carrying any margin securities or for the purpose
of reducing or retiring any indebtedness which was originally incurred to
purchase any margin securities or for any other purpose not permitted by
Regulation U of the Board of Governors of the Federal Reserve System as in
effect from time to time.
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(p) Capital Structure. Schedule 11(p) attached hereto sets forth as to
each Borrower (and each of its Subsidiaries) the number of issued and
outstanding shares of each class of capital stock or the total membership
interest (as applicable) of each such Borrower (or Subsidiary) (and also sets
forth, with respect to each such Subsidiary which is not also a Borrower, the
address of the chief executive office and the organizational identification
number of such Subsidiary.) Schedule 11(p) hereto also sets forth in graphic
format a true and complete corporate organizational structure chart for the
Borrowers and their Subsidiaries.
(q) No Defaults. Each material contract (including, without limitation,
the Designated Contracts and the Acquisition Documents), lease and commitment to
which any Borrower is a party or by which it is bound is valid, binding and
enforceable upon such Borrower and each of the other parties thereto in
accordance with their respective terms. No Borrower is in default under any
material contract (including, without limitation, the Designated Contracts and
the Acquisition Documents), lease or commitment to which it is a party or by
which it is bound, nor does any Borrower know of any dispute regarding any
contract, lease or commitment which would be reasonably likely to have a
Material Adverse Effect.
(r) Employee Matters. There are no controversies pending or threatened
in writing between any Borrower and any of its employees, agents or independent
contractors other than employee grievances arising in the ordinary course of
business which would not, in the aggregate, have a Material Adverse Effect, and
each Borrower (and each of its Subsidiaries) is in compliance with all federal
and state laws respecting employment and employment terms, conditions and
practices except for such non-compliance which would not be reasonably likely to
have a Material Adverse Effect.
(s) Intellectual Property. Each Borrower possesses adequate licenses,
patents, patent applications, copyrights, service marks, trademarks, trademark
applications, tradestyles and trade names to continue to conduct its business as
heretofore conducted by it. Schedule 11(s) hereto lists (i) each copyright (and
each application therefore), (ii) each trademark or service ▇▇▇▇ (and each
application therefore) and (iii) each patent (and each application therefore)
owned and/or filled by any Borrower, listing in each case the registration or
application number and date of each such item of intellectual property and the
owner thereof. Schedule 11(s) also lists each agreement between or among one or
more Borrowers and one or more third parties (other than shrinkwrap license
agreements and other license agreements which govern the use of readily
available "off the shelf" software) pursuant to which one or more of the
Borrowers is the licensee of the right to use of any copyright(s), trademark(s)
or service ▇▇▇▇(s) or patent(s) (each such agreement, as it may hereafter be
amended, modified, restated or replaced from time to time, a "Licensing
Agreement"), listing in each case an itemized description of the intellectual
property subject to such Licensing Agreement, including, if known, the
information required with respect to the intellectual property owned by the
Borrowers. None of the copyrights or patents owned by any Borrower is subject to
a source or object code escrow arrangement, or will be subject to a source or
object code escrow arrangement unless such Borrower, contemporaneously with the
establishment of such escrow arrangement, causes the escrow holder to execute
and deliver to Lender an "access and use" agreement reasonably satisfactory to
Lender. Attached hereto as Exhibit C is AM Communications' standard form of
licensing agreement pursuant to which AM Communications is the licensor of the
right to use certain software to third parties (the "Form Licensor Agreement").
All of AM Communications' existing licensing arrangements (other than (i)
implicit, undocumented licensing arrangements in connection with the sale of
certain products and (ii) licensing arrangements pursuant to documented
"protocols" with original equipment manufacturers, in each case which do not
impose on AM Communications warranty, indemnification or other similar
obligations which are more burdensome than the provisions contained in the Form
Licensor Agreement) with respect to such software are documented on forms that
are substantially identical to the Form Licensor Agreement and, in connection
with any future licensing of such software by AM Communications, and of other
copyright(s), trademark(s) or service ▇▇▇▇(s) or patent(s) by any Borrower, to
any third party, AM Communications and the other Borrowers will document such
arrangements (other than licensing arrangements substantially similar to the
referenced (i) implicit licensing arrangements or (ii) "protocol" licensing
arrangements) using one or more forms which are substantially identical to the
Form Licensor Agreement (each such agreement, as it may hereafter be amended,
modified, restated or replaced from time to time, a "Licensor Agreement").
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(t) Environmental Matters. No Borrower (nor any of its Subsidiaries)
has generated, used, stored, treated, transported, manufactured, handled,
produced or disposed of any Hazardous Materials, on or off its premises (whether
or not such premises all of which were owned or leased by it) in any manner
which at any time violates any Environmental Law or any license, permit,
certificate, approval or similar authorization thereunder and the operations of
each Borrower (or Subsidiary) complies in all material respects with all
Environmental Laws and all licenses, permits, certificates, approvals and
similar authorizations thereunder. There has been no investigation, proceeding,
complaint, order, directive, claim, citation or notice by any governmental
authority or any other Person, nor is any pending or to the best of each
Borrower's knowledge threatened with respect to any non-compliance with or
violation of the requirements of any Environmental Law by any such Borrower (or
Subsidiary) or the release, spill or discharge, threatened or actual, of any
Hazardous Materials or the generation, use, storage, treatment, transportation,
manufacture, handling, production or disposal of any Hazardous Materials or any
other environmental, health or safety matter, which affects a Borrower (or
Subsidiary) or its business, operations or assets or any properties at which a
Borrower (or Subsidiary) has transported, stored or disposed of any Hazardous
Materials. No Borrower has any material liability (contingent or otherwise) in
connection with a release, spill or discharge, threatened or actual, of any
Hazardous Materials or the generation, use, storage, treatment, transportation,
manufacture, handling, production or disposal of any Hazardous Materials.
(u) ERISA Matters. Each Borrower (and each of its Subsidiaries) has
paid and discharged all obligations and liabilities arising under ERISA of a
character which, if unpaid or unperformed, might result in the imposition of a
lien against any of its properties or assets.
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(v) Delivery of Acquisition Documents; Acquisition.
(i) Lender has received complete copies of the Acquisition
Documents (including all exhibits, schedules and disclosure letters referred to
therein or delivered pursuant thereto, if any) and all amendments thereto,
waivers relating thereto and other side letters or agreements affecting the
terms thereof. None of such documents and agreements has been amended or
supplemented, nor have any of the provisions thereof been waived, except
pursuant to a written agreement or instrument which has heretofore been
delivered to Lender.
(ii) No default has occurred under any of the Acquisition
Documents.
(iii) The transactions contemplated by the Acquisition Documents
have been consummated in accordance with the terms thereof and all applicable
laws;
(iv) At the time of consummation of the transactions
contemplated by the Acquisition Documents, all third party approvals and other
consents (other than certain third party approvals and consents which the
failure to obtain could not, individually or in the aggregate, reasonably be
expected to have a material adverse effect on the transaction contemplated by
the Acquisition Documents or on the business, operations, property, assets,
liabilities, condition (financial or otherwise) or proceeds of any Borrower) and
approvals of, and filings and registrations with, and all other actions in
respect of, all government agencies, authorities and instrumentalities required
in order to make or consummate the transactions contemplated by the Acquisition
Documents have been obtained, given, filed or taken and are in full force and
effect. All applicable waiting periods with respect thereto have or, prior to
the time when required, will have expired without, in all such cases, any action
being taken by competent authority which restrains, prevents, or imposes
material adverse conditions upon the transactions contemplated by the
Acquisition Documents. Additionally, there does not exist any judgment, order or
injunction prohibiting the transactions contemplated by the Acquisition
Documents or the performance by any party to the Acquisition Documents.
(w) Disclosure. No representation or warranty made by any Borrower in
this Agreement, the Other Agreements, the Acquisition Documents or in any
financial statement, report, certificate or any other document furnished in
connection herewith or therewith contains any untrue statement of a material
fact or omits to state any material fact necessary to make the statements herein
or therein not misleading. There is no fact known to any Borrower or which
reasonably should be known to any Borrower which Borrowers have not disclosed to
Lender in writing with respect to the transactions contemplated by the
Acquisition Documents, or this Agreement which could reasonably be expected to
have a Material Adverse Effect on any Borrower.
(x) Condominium Declaration. Borrowers have taken, or have caused to be
taken, all actions necessary for the Mortgage to constitute a "Permitted
Mortgage" as defined in the Declaration (as defined in the Mortgage). Neither
the Association nor the Executive Board (in each case, as defined in the
Declaration) has any right, claim or interest in or to any insurance or proceeds
of insurance of any Borrower.
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12. AFFIRMATIVE COVENANTS.
Until payment and satisfaction in full of all Liabilities and
termination of this Agreement, unless Borrowers obtain Lender's prior written
consent waiving or modifying any of Borrowers' covenants hereunder in any
specific instance, each Borrower covenants and agrees with respect to itself and
each of its Subsidiaries, as follows:
(a) Maintenance of Records. Each Borrower shall at all times keep
accurate and complete books, records and accounts with respect to all of such
Borrower's business activities, in accordance with sound accounting practices
and generally accepted accounting principles consistently applied, and shall
keep such books, records and accounts, and any copies thereof, only at the
addresses indicated for such purpose on Schedule 11(b).
(b) Notices. Borrowers shall:
(i) Locations. Promptly (but in no event less than ten (10)
days prior to the occurrence thereof) notify Lender of the proposed opening of
any new place of business or new location of Collateral (other than vehicles and
Equipment in transit to a location of a Borrower or customer location in the
ordinary course of any Borrower's business), the closing of any existing place
of business or location of Collateral, any change of in the location of any
Borrower's books, records and accounts (or copies thereof), the opening or
closing of any post office box, or the opening or closing of any bank account.
(ii) Eligible Accounts. Promptly upon becoming aware thereof,
notify Lender if any Account identified by Borrowers to Lender as an Eligible
Account becomes ineligible for any reason.
(iii) Litigation and Proceedings. Promptly upon becoming aware
thereof, notify Lender (A) of any actions or proceedings which are pending or
threatened against any Borrower (or any of its Subsidiaries) (1) in which the
amount of damages or other recovery sought exceeds or could reasonably be
expected to exceed $100,000 in the aggregate (together with all other pending or
threatened actions or proceedings) or (2) which might have a Material Adverse
Effect, and of any Commercial Tort Claims of such Borrower which may arise,
which notice, in the case of clause (A) would be deemed a modification of
Schedule 11(g) hereto to add such litigation and in the case of clause (B) would
be deemed a modification of Schedule 3(h) to add such Commercial Tort Claim.
(iv) Names and Trade Names. Notify Lender within ten (10) days
of the change of the name of any Borrower (or any of its Subsidiaries) or the
use of any trade name, assumed name, fictitious name or division name not
previously disclosed to Lender in writing.
(v) ERISA Matters. Promptly notify Lender of (x) the
occurrence of any "reportable event" (as defined in ERISA) which might result in
the termination by the Pension Benefit Guaranty Corporation (the "PBGC") of any
employee benefit plan ("Plan") covering any officers or employees of any
Borrower (or any of its Subsidiaries), any benefits of which are, or are
required to be, guaranteed by the PBGC, (y) receipt of any notice from the PBGC
of its intention to seek termination of any Plan or appointment of a trustee
therefor or (z) its intention to terminate or withdraw from any Plan.
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(vi) Environmental Matters. Immediately notify Lender upon
becoming aware of any investigation, proceeding, complaint, order, directive,
claim, citation or notice with respect to any non-compliance with or violation
of the requirements of any Environmental Law by any Borrower (or any of its
Subsidiaries) or the generation, use, storage, treatment, transportation,
manufacture handling, production or disposal of any Hazardous Materials or any
other environmental, health or safety matter which affects such Borrower (or
Subsidiary) or its business operations or assets or any properties at which such
Borrower (or Subsidiary) has transported, stored or disposed of any Hazardous
Materials.
(vii) Intellectual Property Matters. Promptly (but in no more
than fifteen (15) days after the registration, filing or acquisition thereof or
entry therein to) notify Lender of the registration (whether or not Lender
previously had notice of the filing of an application for registration thereof)
or acquisition by any Borrower of any patent, trademark or copyright, the filing
of any application for the registration of any patent, trademark or copyright by
any Borrower or the entry by any Borrower into any Licensing Agreement, which
notice shall constitute Borrowers' authorization to amend Schedule 11(s) hereto.
Borrowers shall also immediately notify Lender of the occurrence of any event of
default under any Licensing Agreement that would permit the applicable licensor
to terminate such Licensing Agreement or any termination or attempted
termination of or giving of a notice of termination or intent to terminate with
respect to any Licensing Agreement by the applicable licensor if the termination
of such Licensing Agreement would reasonably be expected to have a Material
Adverse Effect.
(viii) Default; Material Adverse Change. Promptly advise Lender
of the occurrence of any Material Adverse Change or the occurrence of any Event
of Default hereunder or of the occurrence of any event which, if uncured, will
become an Event of Default after notice or lapse of time (or both).
(ix) Acquisition Documents. Promptly (a) advise Lender of the
occurrence of any default or event which with the giving of notice, passage of
time or both, would constitute a default under the Acquisition Documents, (b)
advise Lender of any claim for indemnification made against any Borrower under
the Acquisition Documents, and (b) provide Lender with a copy of any written
notices delivered pursuant to the Acquisition Documents.
(x) Designated Contracts. Promptly advise Lender of the
occurrence of any default or event which with the giving of notice, passage of
time or both, would constitute a default under any of the Designated Contracts.
(xi) Licensor Agreements. Promptly advise Lender of any claim
for breach of warranty or indemnification asserted by any third party in excess
of $25,000 (in the aggregate with respect to all such claims asserted by such
third party) under a Licensor Agreement or a "protocol" licensing arrangement
(as described in Subsection 11(s).
All of the foregoing notices shall be provided by Borrowers to Lender
in writing.
(c) Compliance with Laws and Maintenance of Permits. Each Borrower (and
each of its Subsidiaries) shall maintain all governmental consents, franchises,
certificates, licenses, authorizations, approvals and permits, the lack of which
would be reasonably expected to have a Material Adverse Effect and each Borrower
(and each of its Subsidiaries) shall remain in compliance with all applicable
federal, state, local and foreign statutes, orders, regulations, rules and
ordinances (including, without limitation, Environmental Laws and statutes,
orders, regulations, rules and ordinances relating to taxes, employer and
employee contributions and similar items, securities, ERISA or employee health
and safety), the failure with which to comply would reasonably be expected to
have a Material Adverse Effect. Following any reasonable determination by Lender
that there is non-compliance, or any condition which requires any action by or
on behalf of a Borrower (or any of its Subsidiaries) in order to avoid
non-compliance, with any Environmental Law, Lender may, at Borrowers expense,
cause an independent environmental engineer acceptable to Lender to conduct such
tests of the relevant site(s) as are appropriate and prepare and deliver a
report setting forth the results of such tests, a proposed plan for remediation
and an estimate of the costs thereof.
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(d) Inspection and Audits. Each Borrower shall permit Lender, or any
Persons designated by it, to call at such Borrower's places of business at any
reasonable times, and, without hindrance or delay, to examine or inspect the
Collateral and to examine, inspect, audit, check and make extracts from the
books, records, journals, orders, receipts and any correspondence and other data
relating to the business of such Borrower (including books, records, etc. of or
with respect to its Subsidiaries), the Collateral or any transactions between
the parties hereto, and shall have the right to make such verification
concerning such Borrower's business as Lender may consider reasonable under the
circumstances. Each Borrower shall furnish to Lender such information relevant
to Lender's rights under this Agreement as Lender shall at any time and from
time to time request. Lender, through its officers, employees or agents shall
have the right, at any time and from time to time, in the name of Lender, such
Borrower or otherwise, to verify the validity, amount or any other matter
relating to any of such Borrower's Accounts, by mail, telephone, telegraph or
otherwise. Each Borrower authorizes Lender to discuss the affairs, finances and
business of such Borrower (and its Subsidiaries) with any officers, employees or
directors of such Borrower or with its Parent or any Affiliate or the officers,
employees or directors of its Parent or any Affiliate, and to discuss the
financial condition of such Borrower (and it Subsidiaries) with such Borrower's
independent public accountants. Any such discussions with the accountants shall
be without liability to Lender or to Borrowers' independent public accountants.
Borrowers shall pay to Lender fees in connection with any field audit or
inspection of any one or more Borrowers, their business and/or Collateral
("Audit Fees") equal to $700 per day for each person acting as an auditor on
behalf of Lender plus all out-of-pocket costs and expenses incurred by Lender
and each auditor (including without limitation, air fare, meals and lodging) in
the conduct of such an audit, and all of such Audit Fees shall constitute
Liabilities hereunder, shall be payable on demand and, until paid, shall bear
interest at the highest rate then applicable to Loans hereunder.
(e) Insurance. Borrowers shall:
(i) Keep the Collateral properly housed and insured for the
full insurable value thereof against loss or damage by fire, theft, explosion,
sprinklers, collision (in the case of motor vehicles) and such other risks as
are customarily insured against by Persons engaged in businesses similar to that
of Borrowers, with such companies, in such amounts, with such deductibles, and
under policies in such form and substance as shall be reasonably satisfactory to
Lender. Original (or certified) copies of such policies of insurance have been
delivered to Lender as of the Closing Date, together with evidence of payment of
all premiums therefor, and shall contain an endorsement, in form and substance
acceptable to Lender, showing Lender as lenders' loss payee and/or mortgagee
payee (as applicable) under such insurance policies. Such endorsement, or an
independent instrument furnished to Lender, shall provide that the insurance
company shall give Lender at least thirty (30) days written notice before any
such policy of insurance is altered or canceled and that no act, whether willful
or negligent, or default of any Borrower or any other Person shall affect the
right of Lender to recover under such policy of insurance in case of loss or
damage. In addition, Borrowers shall cause to be executed and delivered to
Lender an assignment of proceeds of their business interruption insurance
policies. Borrowers hereby direct all insurers under all policies of insurance
to pay all proceeds payable thereunder directly to Lender. Upon receipt of any
such insurance proceeds, Lender may, in its sole discretion, either (x) apply
such insurance proceeds to the repayment of the Liabilities in such order as
Lender may in its sole discretion determine or (y) with respect to any insurance
proceeds paid as a result of the loss of damage to or destruction of theft of or
condemnation or confiscation of any tangible Collateral (a "Casualty Loss"),
release such insurance proceeds to Borrowers to be used in the repair or
replacement of the Collateral that was the subject of the Casualty Loss (and
Borrowers covenant that they shall use any such insurance proceeds released to
them solely for such purposes); provided, however, that (i) Lender will not
apply such insurance proceeds to the repayment of the Liabilities to the extent
that such proceeds do not exceed $200,000 (excluding proceeds relating solely to
a Casualty Loss of Borrowers' vehicles) in the aggregate (on a cumulative basis
during any Fiscal Year) so long as no Event of Default exists and such proceeds
are applied within 30 days after the receipt thereof to the repair, rebuilding
or replacement of the property (subject to no Liens other than Permitted Liens)
which was the subject of the Casualty Loss and (ii) so long as no Event of
Default exists, Lender will not apply insurance proceeds relating solely to a
Casualty Loss of Borrowers' vehicles to the Liabilities and will make such
insurance proceeds, to the extent received by Lender, available to Borrowers.
Such Borrower irrevocably makes, constitutes and appoints Lender (and all
officers, employees or agents designated by Lender) as such Borrower's true and
lawful attorney (and agent-in-fact) for the purpose of making, settling and
adjusting claims under such policies of insurance, endorsing the name of such
Borrower on any check, draft, instrument or other item of payment for the
proceeds of such policies of insurance and making all determinations and
decisions with respect to such policies of insurance.
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(ii) Maintain, at their expense, such public liability and
third party property damage insurance as is customary for Persons engaged in
businesses similar to that of such Borrowers with such companies and in such
amounts, with such deductibles and under policies in such form as shall be
satisfactory to Lender and original (or certified copies) of such policies have
been delivered to Lender as of the Closing Date, together with evidence of
payment of all premiums therefor; each such policy shall contain an endorsement
showing Lender as additional insured thereunder and providing that the insurance
company shall give Lender at least thirty (30) days written notice before any
such policy shall be altered or canceled.
If Borrowers at any time or times hereafter shall fail to obtain or
maintain any of the policies of insurance required above or to pay any premium
relating thereto, then Lender, without waiving or releasing any obligation or
default by Borrowers hereunder, may (but shall be under no obligation to) obtain
and maintain such policies of insurance and pay such premiums and take such
other actions with respect thereto as Lender deems advisable. Such insurance, if
obtained by Lender, may, but need not, protect such any Borrower's interests or
pay any claim made by or against any Borrower's with respect to the Collateral.
Such insurance may be more expensive than the cost of insurance Borrowers may be
able to obtain on their own and may be cancelled only upon such Borrowers
providing evidence that they has obtained the insurance as required above. All
sums disbursed by Lender in connection with any such actions, including, without
limitation, court costs, expenses, other charges relating thereto and reasonable
attorneys' fees, shall constitute Loans hereunder, shall be payable on demand by
Borrowers to Lender and, until paid, shall bear interest at the highest rate
then applicable to Loans hereunder. Borrowers shall not make or permit to be
made changes to the terms and conditions (including the amounts) of its
insurance policies from those delivered to Lender prior to the Closing Date
without the prior written consent of Lender.
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(f) Collateral. Borrowers shall keep the Collateral in good condition,
repair and order, ordinary wear and tear excepted, and shall make all reasonably
necessary repairs to the Equipment necessary to operate Borrowers' business and
replacements thereof so that the operating efficiency and the value thereof
shall at all times be preserved and maintained. Each Borrower shall permit
Lender to examine any of the Collateral at any time and wherever the Collateral
may be located and, each Borrower shall, immediately upon request therefor by
Lender, deliver to Lender any and all evidence of ownership of any of the
Equipment including, without limitation, certificates of title and applications
of title. Each Borrower shall, at the request of Lender, indicate on its records
concerning the Collateral a notation, in form satisfactory to Lender, of the
security interest of Lender hereunder.
(g) Use of Proceeds. All monies and other property obtained by any
Borrower from Lender pursuant to this Agreement shall be used solely (i) to
repay existing Indebtedness to Comerica Bank, (ii) to provide working capital to
the Borrowers, (iii) to finance the acquisition of Target in accordance with the
terms of the Acquisition Documents; and (iv) unless the purpose for which such
use is intended is otherwise prohibited or limited by this Agreement, for
general corporate purposes of a Borrower.
(h) Taxes. Borrowers shall file all required tax returns for and pay
all of the taxes owing by any Borrower (and any of its Subsidiaries) when due,
including, without limitation, taxes imposed by foreign, federal, state or
municipal agencies, and shall cause any liens for taxes to be promptly released;
provided, that Borrowers shall have the right to contest the payment of such
taxes in good faith by appropriate proceedings so long as (i) the amount so
contested is shown on the financial statements of the Borrowers; (ii) the
contesting of any such payment does not give rise to a lien for taxes; (iii) if
Lender in the exercise of its reasonable discretion shall require, Borrowers
keep on deposit with Lender (such deposit to be held without interest) an amount
of money which, in the sole judgment of Lender, is sufficient to pay such taxes
and any interest or penalties that may accrue thereon (provided that Lender
agrees not to exercise such rights with respect to the New York state tax
dispute disclosed on Schedule 11(g) unless such dispute results in a lien, claim
or other encumbrance with respect to the Collateral); and (iv) if Borrowers fail
to prosecute such contest with reasonable diligence, Lender may apply the money
so deposited in payment of such taxes. If Borrowers fail to pay any such taxes
and in the absence of any such contest by Borrowers, Lender may (but shall be
under no obligation to) advance and pay any sums required to pay any such taxes
and/or to secure the release of any lien therefor, and any sums so advanced by
Lender shall constitute Loans hereunder, shall be payable by Borrowers to Lender
on demand, and, until paid, shall bear interest at the highest rate then
applicable to Loans hereunder.
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(i) Intellectual Property. Each Borrower shall maintain adequate
licenses, patents, patent applications, copyrights, service marks, trademarks,
trademark applications, tradestyles and trade names to continue its business as
heretofore conducted by it or as hereafter conducted by it.
(j) Checking Accounts. Each Borrower shall maintain all of its general
checking accounts and other Deposit Accounts with LaSalle Bank. Normal charges
shall be assessed thereon.
(k) Acquisition Documents. Each Borrower shall enforce all of its
material rights under the Acquisition Documents including, but not limited to,
all indemnification rights and pursue all remedies available to it with
diligence and in good faith in connection with the enforcement of any such
rights.
13. NEGATIVE COVENANTS.
Until payment and satisfaction in full of all Liabilities and
termination of this Agreement, unless Borrowers obtain Lender's prior written
consent waiving or modifying any of Borrowers' covenants hereunder in any
specific instance, each Borrower agrees, for itself and its Subsidiaries, as
follows:
(a) Guaranties. No Borrower shall assume, guarantee or endorse, or
otherwise become liable in connection with, the obligations of any Person,
except (i) by endorsement of instruments for deposit or collection or similar
transactions in the ordinary course of business, and (ii) those existing
unsecured guarantees and performance bonds shown on Schedule 11(n) hereto and
(iii) AM Communications and AM Broadband may issue unsecured guarantees and post
unsecured performance bonds for the Indebtedness of any Subsidiary.
(b) Indebtedness. No Borrower shall create, incur, assume or become
obligated (directly or indirectly), for any loans or other indebtedness for
borrowed money other than the Loans, except that Borrowers may (i) maintain the
present indebtedness listed on Schedule 11(n) hereto (the maximum permitted
amount to be permanently reduced by repayments thereof that are permitted to be
made under the terms hereof); (ii) incur unsecured indebtedness to trade
creditors in the ordinary course of business on standard terms; (iii) subject to
the requirements of Subsection 14(d), incur Indebtedness to purchase vehicles
used in any Borrower's business; and (iv) Subordinated Debt incurred after the
Closing Date in the aggregate amount not to exceed $500,000 (on a cumulative
basis from the Closing Date); and (v) incur Indebtedness permitted under
Subsection 13(f).
(c) Liens. No Borrower shall grant or permit to exist (voluntarily or
involuntarily) any lien, claim, security interest or other encumbrance
whatsoever on any of its assets, other than Permitted Liens (which in no event
shall attach to any Account of any Borrower).
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(d) Mergers, Sales, Acquisitions, Subsidiaries and Other Transactions
Outside the Ordinary Course of Business. No Borrower (nor any of its
Subsidiaries) shall (i) enter into any merger, consolidation, division,
liquidation or dissolution (or any agreement to do any of the foregoing), except
that any Borrower (other than AM Communications) may merge into another
Borrower; (ii) change the jurisdiction of such Borrower's organization or enter
into any transaction which has the effect of changing Borrower's jurisdiction of
organization; (iii) sell, lease or otherwise dispose of any of its assets (or
any agreement to do any of the foregoing) other than (A) sales of Inventory in
the ordinary course of business, (B) so long as no Event of Default exists,
dispositions of Equipment (other than vehicles) which, in the aggregate (on a
cumulative basis from the Closing Date), do not have a fair market value or book
value, whichever is less, of $100,000 or less, the proceeds of which shall be
used to repay the Liabilities in accordance with Subsection 2(f)(i) unless
Borrowers replace such original Equipment with replacement Equipment of like
kind, function and value within 30 days of the sale of such original Equipment,
which replacement Equipment shall be free and clear of Liens other than
Permitted Liens; (iv) purchase any of the stock or other equity interests or all
or a material portion of the assets of any Person or division of such Person,
and (C) so long as no Event of Default exists, dispositions of vehicles; or (v)
enter into any other transaction outside the ordinary course of such Borrower's
business, including, without limitation, any purchase, redemption or retirement
of any shares of any class of its stock or any other equity interest, and any
issuance or sale of any shares of, or warrants or other rights to receive or
purchase any shares of, any class of its stock or any other equity interest,
except that AM Communications may issue (w) stock options to its employees,
directors and consultants in connection with any stock option plan of AM
Communications in effect from time to time, (x) shares of its stock in
connection with the exercise of (i) stock options issued under any such stock
option plan, and (ii) warrants existing on the Closing Date, (y) warrants to
NeST in accordance with Section 3.3 of NeST Consulting Agreement in lieu of
making cash payments due thereunder and (z) common stock in connection with the
conversion of preferred stock to common stock. No Borrower shall form any
Subsidiaries or enter into any joint ventures or partnerships with any other
Person.
(e) Dividends and Distributions. No Borrower shall declare or pay any
dividend or other distribution (whether in cash or in kind) on any class of its
stock (if such Borrower is a corporation) or on account of any equity interest
in such Borrower (if such Borrower is a partnership, limited liability company
or other type of entity) other than Permitted Distributions made in accordance
with all applicable laws.
(f) Investments; Loans.
(i) No Borrower shall purchase or otherwise acquire, or
contract to purchase or otherwise acquire, or invest in the obligations or stock
(or other equivalent equity interests) of any Person, except for the existing
investments listed on Schedule 13(f) hereto.
(ii) No Borrower shall lend or otherwise advance funds to any
Person (including, without limitation, another Borrower), except (A) Borrowers
may make advances made to employees, officers and directors for travel and other
expenses arising in the ordinary course of business of Borrowers; (B) Borrowers
may make the Permitted Advances; (C) Borrowers may maintain the existing
intercompany and employee loans listed on Schedule 11(c) hereto (the maximum
permitted amount to be permanently reduced by repayments thereof), except that
Borrowers may not (x) make advances under the Hassan Stock Option Loan Agreement
(as defined on Schedule 11(c) hereto) or (y) as of and after the Closing Date,
make new advances (other than Permitted Advances) under any other agreement or
instrument described on Schedule 11(c); (D) AM Nex-Link may make intercompany
loans to AM Broadband in order to enable AM Broadband to fulfill its payment
obligations under the Acquisition Agreement (which such loans shall be used by
AM Broadband solely for such purpose); and (E) AM Communications and AM
Broadband may make intercompany loans to their respective Subsidiaries.
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(g) Fundamental Changes, Line of Business. No Borrower (nor any of its
Subsidiaries) shall (i) amend its organizational documents in a manner which may
be prejudicial to the rights and claims of Lender hereunder or is reasonably
likely to result in a Material Adverse Effect or which could result in an Event
of Default or event which, with the giving of notice, passage of time or both,
would result in an Event of Default, (ii) change its Fiscal Year end or (iii)
enter into a new line of business materially different from such Borrower's or
Subsidiary's current business.
(h) Equipment. No Borrower shall (i) permit any Equipment to become a
Fixture to real property, or (ii) permit any Equipment to become an accession to
any other personal property unless such personal property is subject to a first
priority lien in favor of Lender.
(i) Use of Proceeds. Neither any Borrower nor any Affiliate shall use
any portion of the proceeds of the Loans, either directly or indirectly, for the
purpose of (i) purchasing any securities underwritten or privately placed by ABN
AMRO Securities (USA) Inc. ("AASI"), an affiliate of Lender, (ii) purchasing
from AASI any securities in which AASI makes a market, or (iii) refinancing or
making payments of principal, interest or dividends on any securities issued by
such Borrower or any Affiliate, and underwritten, privately placed or dealt in
by AASI.
(j) Affiliate Transactions. Except (i) as set forth on Schedule 11(i)
hereto, (ii) as permitted pursuant to Subsection 11(c) hereof (but subject to
Subsection 13(f) hereof) and (iii) Permitted Advances, no Borrower (nor any of
its Subsidiaries) shall conduct, permit or suffer to be conducted, transactions
with Affiliates for the purchase or sale of Inventory or services in the
ordinary course of business pursuant to terms that are less favorable to such
Borrower (or Subsidiary) than the terms upon which such transfers or
transactions would have been made had they been made to or with a Person that is
not an Affiliate.
(k) Settling of Accounts. No Borrower shall settle or adjust any
Account identified by Borrowers as an Eligible Account (other than insubstantial
credits issued in the ordinary course of business if no Event of Default exists)
or with respect to which the Account Debtor is an Affiliate without the consent
of Lender.
(l) Amendments to Acquisition Documents. No Borrower shall make or
consent to any amendment or modification to, or waive any material provision of,
any of the Acquisition Documents.
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(m) Subordinated Debt. No Borrower shall amend or otherwise modify any
of the agreements, instruments or documents evidencing the Subordinated Debt or
prepay any of the Subordinated Debt.
(n) Designated Contracts. No Borrower shall enter into any amendment,
waiver or modification of either (i) the Consulting Services Agreement, dated as
of October 8, 1998 (the "NeST Consulting Agreement"), between AM Communications
and Network Systems and Technologies (P) Ltd. ("NeST") or (ii) the Manufacturing
Services Agreement, dated January 2, 2000, between AM Communications and
NESTRONIX, Inc. (together with the NeST Consulting Agreement, the "Designated
Contracts"), without the prior written consent of Lender. No Borrower may prepay
any amounts owing under any of the Designated Contracts.
14. FINANCIAL COVENANTS.
-------------------
Borrowers shall maintain and keep in full force and effect each of the
financial covenants set forth below:
(a) Net Worth. Borrowers shall maintain at all times a minimum Net
Worth in an amount not less than the amounts set forth below opposite the
corresponding measurement periods:
------------------------------------------------------------ ---------------------------------------------------------
Measurement Period: Minimum Net Worth:
------------------------------------------------------------ ---------------------------------------------------------
Closing Date through September 28, 2002 $6,700,000
------------------------------------------------------------ ---------------------------------------------------------
September 29, 2002 through December 28, 2002 $7,500,000
------------------------------------------------------------ ---------------------------------------------------------
December 29, 2002 through March 28, 2003 $8,700,000
------------------------------------------------------------ ---------------------------------------------------------
March 29, 2003 $8,790,000
------------------------------------------------------------ ---------------------------------------------------------
March 30, 2003 through April 1, 2004 (a) $8,790,000, plus (b) 80% of actual Consolidated Net
Income of Borrowers for the Fiscal Year ended March 29,
2003.
------------------------------------------------------------ ---------------------------------------------------------
April 2, 2004 through March 26, 2005 (a) Minimum Net Worth required for March 30, 2003
through April 1, 2004, plus (b) 80% of actual
Consolidated Net Income of Borrowers for Fiscal Year
ended April 1, 2004.
------------------------------------------------------------ ---------------------------------------------------------
March 27, 2005, and at all times thereafter (a) Minimum Net Worth required for April 2, 2004
through March 26, 2005, plus (b) 80% of actual
Consolidated Net Income of Borrowers for Fiscal Year
ended March 26, 2005.
------------------------------------------------------------ ---------------------------------------------------------
(b) Fixed Charge Coverage. Borrowers shall not permit the ratio of (i)
Consolidated EBITDA to (ii) the sum of (A) Consolidated Debt Service, plus (B)
all Capital Expenditures, to be less than the ratios set forth below opposite
the corresponding measurement periods:
------------------------------------------------------------ ---------------------------------------------------------
Measurement Period: Ratio:
------------------------------------------------------------ ---------------------------------------------------------
3 month period ending September 28, 2002 0.75:1.00
------------------------------------------------------------ ---------------------------------------------------------
9 month period ending December 28, 2002 1.00:1.00
------------------------------------------------------------ ---------------------------------------------------------
12 month period ending March 29, 2003 1.05:1.00
------------------------------------------------------------ ---------------------------------------------------------
12 month period ending June 28, 2003 1.25:1.00
------------------------------------------------------------ ---------------------------------------------------------
12 month period ending on the last day of each fiscal 1.25:1.00
quarter thereafter
------------------------------------------------------------ ---------------------------------------------------------
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(c) Leverage. Borrowers shall not permit the ratio of Consolidated
Funded Debt to Consolidated EBITDA to exceed the ratios set forth below opposite
the corresponding measurement periods:
------------------------------------------------------------ ---------------------------------------------------------
Measurement Period: Ratio:
------------------------------------------------------------ ---------------------------------------------------------
9 month period ending December 28, 2002 (Consolidated 3.50:1.00
EBITDA on an annualized basis)
------------------------------------------------------------ ---------------------------------------------------------
12 month period ending March 29, 2003 3.50:1.00
------------------------------------------------------------ ---------------------------------------------------------
12 month period ending on the last day of each fiscal 3.00:1.00
quarter thereafter
------------------------------------------------------------ ---------------------------------------------------------
(d) Capital Expenditures. Borrowers shall not make any Capital
Expenditures if, after giving effect to the making of such Capital Expenditures,
the aggregate cost of all such fixed assets purchased or otherwise acquired
would exceed the amounts set forth below opposite the corresponding periods:
------------------------------------------------------------ ---------------------------------------------------------
Measurement Period: Maximum Capital Expenditures:
------------------------------------------------------------ ---------------------------------------------------------
12 month period ending March 29, 2003 $615,000 (excluding Capital Expenditures not to exceed
$2,631,000 which were made prior to the Closing Date
and were directly related to the purchase of the
Initial Mortgaged Premises)
------------------------------------------------------------ ---------------------------------------------------------
12 month period ending April 1, 2004 $575,000
------------------------------------------------------------ ---------------------------------------------------------
12 month period ending March 26, 2005 $725,000
------------------------------------------------------------ ---------------------------------------------------------
(e) Consolidated Research & Development Expenditures. Borrowers shall
not make any Consolidated Research & Development Expenditures if, after giving
effect to the making of such Consolidated Research & Development Expenditures,
the aggregate cost of all such research and development expenditures would
exceed the amounts set forth below opposite the corresponding periods:
------------------------------------------------------------ ---------------------------------------------------------
Measurement Period: Maximum Research & Development Expenditures:
------------------------------------------------------------ ---------------------------------------------------------
12 month period ending March 29, 2003 $4,500,000
------------------------------------------------------------ ---------------------------------------------------------
12 month period ending April 1, 2004 $5,000,000
------------------------------------------------------------ ---------------------------------------------------------
12 month period ending March 26, 2005 $5,500,000
------------------------------------------------------------ ---------------------------------------------------------
15. DEFAULT.
The occurrence of any one or more of the following events shall
constitute an "Event of Default" hereunder:
(a) Payment. The failure of any Borrower to pay when due, (whether on a
scheduled due date, at stated maturity, by acceleration or otherwise on demand)
any of the Liabilities, including without limitation any payments of principal
or interest on any of the Loans.
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(b) Breach of this Agreement and the Other Agreements. The failure of
any Borrower to perform, keep or observe any of the covenants, conditions,
promises, agreements or obligations of such Borrower contained in (i)
Subsections 12(a) or (h) and such failure continues unremedied for a period of
30 days after the earlier of (a) any Borrower obtaining knowledge thereof and
(b) delivery of written notice thereof to Borrowing Agent by Lender, or (ii) any
other term or provision of this Agreement or any of the Other Agreements, or the
failure of any other Person (other than Lender) to perform, keep or observe any
covenant, promise, agreement or obligation of such Person under any of the Other
Agreements.
(c) Breaches of Other Obligations. The failure of any Borrower to
perform, keep or observe any of the covenants, conditions, promises, agreements
or obligations of such Borrower under any other agreement with any Person (other
than the agreements set forth in Subsections 15(n) or (o)) which is not cured
within any applicable grace period, if such failure (i) relates to a monetary
obligation of such Borrower thereunder aggregating (together with all
outstanding failures under this Subsection 15(c)(i)) in excess of $100,000
(excluding deferral or delay of payment by such Borrower of trade payables in
the ordinary course of business consistent with past practices), or (ii) in the
case of any non-monetary obligation of such Borrower thereunder, is reasonably
likely to result in a Material Adverse Effect.
(d) Breach of Representations and Warranties. The making or furnishing
by any Borrower to Lender of any representation, warranty, certificate,
schedule, report or other communication within or in connection with this
Agreement or the Other Agreements or in connection with any other agreement
between such Borrower and Lender, which is untrue or misleading in any material
respect when made.
(e) Loss of Collateral. The occurrence of any uninsured damage to,
loss, theft, destruction, condemnation or confiscation of any Collateral having
a fair market value aggregating (together with all outstanding damages, losses,
thefts, destructions, condemnations and confiscations under this Subsection
15(e)) in excess of $100,000.
(f) Levy, Seizure or Attachment. The making or issuance of any levy,
seizure or attachment upon any of the tangible Collateral or any garnishment,
forfeiture, seizure or confiscation of any Account or Accounts or Deposit
Account or Deposit Accounts.
(g) Bankruptcy or Appointment of Receiver. Any Borrower or any
Subsidiary or Affiliate of any Borrower shall (i) apply for, consent to or
suffer the appointment of or the taking of possession by, a receiver, custodian,
trustee, liquidator, or similar fiduciary of itself or any party of the
Collateral, (ii) make a general assignment for the benefit of creditors, or
composition or arrangement with its creditors generally, (iii) commence a
voluntary case under any state or federal bankruptcy law or equivalent foreign
bankruptcy or insolvency laws (as now or hereafter in effect), (iv) be
adjudicated a bankrupt or insolvent, or have a receiver, trustee or custodian
appointed over it, which such appointment is not dismissed within 30 days
(provided that, during the pendency of any such 30 day period, Lender shall have
no obligation to make any Revolving Loans or to make or continue any LIBOR Rate
Loans and may seek relief from any stay), (v) file a petition seeking to take
advantage of any other law providing for the relief of debtors, (vi) acquiesce
to, or fail to have dismissed within 60 days, any petition filed against it in
any involuntary case under such bankruptcy laws or equivalent foreign bankruptcy
or insolvency laws (provided that, during the pendency of any such 60 day
period, Lender shall have no obligation hereunder to make any Revolving Loans or
to make or continue any LIBOR Rate Loans and may seek relief from any stay) or
(viii) to take any action to effect any of the foregoing.
-48-
(h) Insolvency; Ceasing Business. Any Borrower shall admit in writing
its inability to be generally unable or be alleged by its creditors to be
generally unable to pay its debts as and where due, or Borrowers taken as a
whole, shall cease the operation of any substantial position of their business.
(i) Judgment. The entry of any judgment or judgments (not paid or fully
covered by a reputable and Solvent insurance company), aggregating (together
with all outstanding judgments against Borrowers) in excess of $100,000 against
any Borrower which is not satisfied, dismissed or discharged within thirty (30)
days after such entry.
(j) Criminal Proceedings. The institution in any court of a criminal
proceeding against any Borrower, or the indictment of any Borrower for any
crime.
(k) Change of Management. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ shall cease to be the
Chairman of the Board of Directors of AM Communications or shall cease to hold a
position in AM Communications' senior management or otherwise cease to be
actively involved in the business of AM Communications.
(l) Change of Control. The occurrence of any Change of Control.
(m) Material Adverse Change. The occurrence of any Material Adverse
Change.
(n) Acquisition Documents. The occurrence of any monetary default by
any Borrower under, or the occurrence of any material breach in the performance
or observance of any term, covenant, condition or agreement contained in, the
Acquisition Agreement or any of the other Acquisition Documents, and such
monetary default or material breach shall continue beyond any applicable grace
period.
(o) Designated Contracts. Termination of, or the issuance of a
termination notice under, any Designated Contract by any party thereto, or the
occurrence of any breach under any Designated Contract, if such breach (i)
relates to any monetary obligation of any Borrower thereunder and such breach
has not been cured within 30 days after the occurrence of such breach (provided
that the non-Borrower party thereunder does not sooner issue a termination
notice), (ii) relates to any other obligation of any Borrower thereunder or
(iii) relates to any obligation (monetary or otherwise) of the non-Borrower
party thereunder which is related to the fulfillment of any Borrower's
obligations to any Account Debtor and such breach has not been cured by the
non-Borrower party within 30 days of such failure.
16. REMEDIES UPON AN EVENT OF DEFAULT.
(a) Upon the occurrence of an Event of Default described in subsections
15(g) or (h) hereof, all of the Liabilities shall immediately and automatically
become due and payable, and this Agreement shall terminate, and Lender shall
have no further obligation to make Loans, without notice of any kind or the
necessity of any affirmative action on the part of Lender. Upon the occurrence
of any other Event of Default, all Liabilities may, at the option of Lender, and
without demand, notice or legal process of any kind, be declared, and
immediately shall become, due and payable. After the occurrence and during the
continuance of any Event of Default, (i) Lender shall have no obligation to make
any further Loans or to make or continue any LIBOR Rate Loans, and any Loans or
LIBOR Rate Loans made or continued during such time shall be made at the sole
and absolute discretion of the Lender, without establishing a cause of conduct
or obligating Lender to make or continue any additional such Loans or LIBOR Rate
Loans during such time as an Event of Default shall continue to exist, and (ii)
at the option of Lender, all outstanding LIBOR Rate Loans may be converted to
Prime Rate Loans.
-49-
(b) Upon the occurrence of an Event of Default, Lender may exercise
from time to time any rights and remedies available to it under the Uniform
Commercial Code and any other applicable law in addition to, and not in lieu of,
any rights and remedies expressly granted in this Agreement or in any of the
Other Agreements and all of Lender's rights and remedies shall be cumulative and
non-exclusive to the extent permitted by law. In particular, but not by way of
limitation of the foregoing, Lender may, without notice, demand or legal process
of any kind, take possession of any or all of the Collateral (in addition to
Collateral of which it already has possession), wherever it may be found, and
for that purpose may pursue the same wherever it may be found, and may enter
onto any of Borrowers' premises where any of the Collateral may be, and search
for, take possession of, remove, keep and store any of the Collateral until the
same shall be sold or otherwise disposed of, and Lender shall have the right to
store the same at any of Borrowers' premises without cost to Lender. At Lender's
request, each Borrower shall, at Borrowers' expense, assemble the Collateral and
make it available to Lender at one or more places to be designated by Lender and
reasonably convenient to Lender and Borrower. Each Borrower recognizes that if
any Borrower fails to perform, observe or discharge any of its Liabilities under
this Agreement or the Other Agreements, no remedy at law will provide adequate
relief to Lender, and agrees that Lender shall be entitled to temporary and
permanent injunctive relief in any such case without the necessity of proving
actual damages. Any notification of intended disposition of any of the
Collateral required by law will be deemed to be a reasonable authenticated
notification of disposition if given at least ten (10) days prior to such
disposition and such notice shall (i) describe Lender and the applicable
Borrower, (ii) describe the Collateral that is the subject of the intended
disposition, (iii) state the method of the intended disposition, (iv) state that
Borrowers are entitled to an accounting of the Liabilities and state the charge,
if any, for an accounting and (v) state the time and place of any public
disposition or the time after which any private sale is to be made. Lender may
disclaim any warranties that might arise in connection with the sale, lease or
other disposition of the Collateral and has no obligation to provide any
warranties at such time. Any Proceeds of any disposition by Lender of any of the
Collateral may be applied by Lender to the payment of expenses in connection
with the Collateral, including, without limitation, legal expenses and
reasonable attorneys' fees, and any balance of such Proceeds may be applied by
Lender toward the payment of such of the Liabilities, and in such order of
application, as Lender may from time to time elect.
(c) In connection with its rights and remedies, Lender is hereby
granted a license or other right to use and/or sublicense, upon and after the
occurrence and during the continuance of an Event of Default, without charge,
each Borrower's labels, patents, copyrights, rights of use of any name, trade
secrets, tradenames, trademarks and advertising matter, or any property of a
similar nature, as it pertains to the Collateral, in advertising for sale and
selling any Collateral and each Borrower's rights under all license agreements
shall inure to Lender's benefit.
-50-
17. CONDITIONS PRECEDENT.
(a) Initial Conditions Precedent. The Closing Date shall be deemed to
have occurred upon the satisfaction of the following conditions precedent (the
"Initial Conditions Precedent"):
(i) Lender shall have received each of the agreements,
opinions, reports, approvals, consents, certificates and other documents set
forth on the closing document list attached hereto as Exhibit 17(a) (the
"Closing Documents"), each of which documents shall be satisfactory in both form
and substance to Lender and Lender's counsel, which such Closing Documents shall
include, without limitation:
(A) the Pre-Closing Financials (which in the case of the
Fiscal Year 2002 financial statements shall not be materially different from the
draft internally prepared statements delivered to Lender prior to the Closing
Date), which shall be delivered to Lender three (3) Business Days prior to the
Closing Date;
(B) the Acquisition Documents and the Designated
Contracts; and
(C) legal opinions from counsel for Borrowers opining as
to such matters that may be required by Lender and its counsel, including
certain matters as to the validity and enforceability of Lender's security
interest, including, to the best of such counsel's knowledge, the absence of
third-party claims with respect to the rights of Borrowers and Lender in the
Accounts of Borrowers
(ii) Lender shall have completed all field examinations and
audits with respect to the Borrowers and the Collateral that Lender, in its sole
discretion, may require.
(iii) Since March 30, 2002, no Material Adverse Change shall
have occurred and no action or proceeding shall be pending, or to the knowledge
of Borrowers, threatened against the Borrowers or the assets of any of them that
might have a Material Adverse Effect with respect to any Borrower.
(iv) Lender shall have received payment in full of all fees and
expenses payable to it by Borrowers or any other Person in connection herewith,
on or before disbursement of the initial Loans hereunder.
(v) The assets of Borrowers shall be free of all liens and
encumbrances, other than Permitted Liens, and Borrowers shall have obtained any
lien release documents or instruments required by Lender with respect to any
such lien on the assets of any Borrower other than a Permitted Lien.
(vi) Lender shall have received reports regarding the accounts
payable and accounts receivable of Borrowers for June 29, 2002 and reports
regarding information on the sales and collections of Borrowers through the date
hereof, along with such other collateral and financial information as Lender
shall request, all of which shall be satisfactory to Lender.
-51-
(vii) Lender shall have determined that as of the Closing Date,
immediately after giving effect to (A) the making of the initial Loans, if any,
requested to be made on the date hereof, (B) the issuance of the initial
Letter(s) of Credit, if any, requested to be made on such date, (C) the payment
of all fees due to Lender, (including the unpaid portion of the commitment fee
provided for in subsection 4(c)(i) hereof) upon such date and (D) the payment or
reimbursement by Borrowers of Lender for all closing costs and expenses incurred
in connection with the transactions contemplated hereby, Borrowers shall have
Undrawn Availability of at least $750,000.
(viii) The Borrowers shall have executed and delivered to Lender
all such other documents, instruments and agreements which Lender determines are
reasonably necessary to consummate the transactions contemplated hereby.
(ix) The transactions contemplated by the Acquisition Documents
shall have been consummated in accordance with the terms thereof and all
applicable laws.
(b) Pre-Funding Conditions Precedent. The obligation of Lender to fund
any Revolving Loan and/or issue or cause to be issued any Letter of Credit is
subject to the satisfaction or waiver of the following conditions precedent
"Pre-Funding Conditions Precedent" on or before the date such Revolving Loan is
requested to be made and/or such Letter of Credit is requested to be issued:
(i) With respect to the initial request for a Revolving Loan
or Letter of Credit, the Initial Conditions Precedent shall have been satisfied;
(ii) Borrowers shall have complied with all of the provisions
of Section 8; and
(iii) No Event of Default (or event which, with the passage of
time or giving of notice or both, will become an Event of Default) is
outstanding.
18. SCOPE OF LIABILITY.
(a) Each Borrower hereby acknowledges and agrees that, notwithstanding
the appointment by such Borrower of AM Communications as Borrowing Agent
hereunder and the granting of certain powers by such Borrower to AM
Communications in connection therewith, it shall be unconditionally liable for
the repayment of all of the Liabilities of all of the Borrowers under this
Agreement, including without limitation all Loans made to Borrowers and all
Letter of Credit Obligations, regardless of the fact that the Loans and Letter
of Credit Obligations may have been made in reliance of the Collateral of the
other Borrowers. The ultimate scope of liability of all Borrowers shall be such
that Lender may proceed against any one or more Borrowers in any order and on
any basis provided for hereunder or under any other Agreement (including any
guaranty and suretyship agreement) to collect the liabilities. Without limiting
the foregoing, Borrowers agree that they shall be liable for the making of any
and all payments of interest, fees and expenses hereunder.
-52-
(b) Notwithstanding any provisions of this Agreement to the contrary,
it is intended that the joint and several nature of the Liabilities of Borrowers
and the liens and security interests granted by Borrowers to secure the
Liabilities, not constitute a "Fraudulent Conveyance" (as defined below).
Consequently, Lender and Borrower agree that if the Liabilities of a Borrower,
or any liens or security interests granted by such Borrower securing the
Liabilities of such Borrower would, but for the application of this sentence,
constitute a Fraudulent Conveyance, the Liabilities of such Borrower and the
liens and security interests securing such Liabilities shall be valid and
enforceable only to the maximum extent that would not cause such Liabilities or
such lien or security interest to constitute a Fraudulent Conveyance, and the
Liabilities of such Borrower under this Agreement shall automatically be deemed
to have been amended accordingly. For purposes hereof, "Fraudulent Conveyance"
means a fraudulent conveyance under Section 548 of Chapter 11 of Title II of the
United States Code (11 U.S.C. ss. 101, et seq.), as amended (the "Bankruptcy
Code") or a fraudulent conveyance or fraudulent transfer under the applicable
provisions of any fraudulent conveyance or fraudulent transfer law or similar
law of any state, nation or other governmental unit, as in effect from time to
time.
(c) Each Borrower assumes responsibility for keeping itself informed of
the financial condition of each other Borrower, and any and all endorsers and/or
guarantors of any instrument or document evidencing all or any part of such
other Borrower's Liabilities and of all other circumstances bearing upon the
risk of nonpayment by such other Borrowers of their Liabilities and each
Borrower agrees that Lender shall not have any duty to advise such Borrower of
information known to Lender regarding such condition or any such circumstances
or to undertake any investigation not a part of its regular business routine. If
Lender, in its sole discretion, undertakes at any time or from time to time to
provide any such information to a Borrower, Lender shall not be under any
obligation to update any such information or to provide any such information to
such Borrower on any subsequent occasion.
(d) If (i) the time for payment of, or other terms relating to any
Borrower's Liabilities, are renewed, extended, accelerated or changed or the
terms of any promissory note or other agreement, document or instrument now or
hereafter executed by any Borrower and delivered to Lender are modified or
changed; (ii) Lender accepts partial payments on any Borrower's Liabilities;
(iii) Lender takes and hold security or collateral for the payment of any
Borrower's Liabilities hereunder or for the payment of any guaranties of any
Borrower's Liabilities or other liabilities of any Borrower or exchanges,
enforces, waives or releases any such security or collateral; or (iv) Lender
settles, releases, compromises, collects or otherwise liquidates any Borrower's
Liabilities and any security or collateral therefor in any manner, such
action(s) may take place without notice to or approval of any other Borrower and
without affecting or impairing the obligations of the other Borrowers. Lender
shall have the exclusive right to determine the time and manner of application
of any payments, credits, security or collateral, whether received from a
Borrower or any other source, and such determination shall be binding on
Borrowers. All such payments and credits may be applied, reversed and reapplied,
in whole or in part, to any of any Borrower's Liabilities as Lender shall
determine in its sole discretion without affecting the validity or
enforceability of the Liabilities of the other Borrowers.
(e) Each Borrower hereby agrees that, except as hereinafter provided,
its obligations hereunder shall be unconditional, irrespective of (i) the
absence of any attempt to collect any Borrower's Liabilities from any Borrower
or any guarantor or other action to enforce the same; (ii) the waiver or consent
by Lender with respect to any provision of any instrument evidencing the
Liabilities of any Borrower, or any part thereof, or any other agreement
heretofore, now or hereafter executed by any Borrower and delivered to Lender;
(iii) failure by Lender to take any steps to perfect and maintain its security
interest in, or to preserve its rights to, any security or collateral for the
Liabilities of any Borrower; (iv) the institution of any proceeding under the
Bankruptcy Code, or any similar proceeding, by or against any Borrower or
Lender's election in any such proceeding of the application of Section
1111(b)(2) of the Bankruptcy Code; (v) any borrowing or grant of a security
interest by any Borrower as debtor-in-possession, under Section 364 of the
Bankruptcy Code; (vi) the disallowance, under Section 502 of the Bankruptcy
Code, of all or any portion of Lender's claim(s) for repayment of any of the
Liabilities of any Borrower; or (vii) any other circumstance which might
otherwise constitute a legal or equitable discharge or defense of a guarantor.
-53-
(f) No payment made by or for the account of any Borrower including,
without limitations, (i) a payment made by such Borrower on behalf of another
Borrower's Liabilities or (ii) a payment made by any other person under any
guaranty, shall entitle such Borrower, by subrogation or otherwise, to any
payment from such other Borrower or from or out of such other Borrower's
property and such Borrower shall not exercise any right or remedy against such
other Borrower or any property of such other Borrower by reason of any
performance of such Borrower of its joint and several obligations hereunder.
(g) Each Borrower agrees to defend (with counsel satisfactory to
Lender), protect, indemnify and hold harmless Lender, each affiliate or
subsidiary of Lender, and each of their respective officers, directors,
employees, attorneys and agents (each an "Indemnified Party") from and against
any and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, claims, costs, expenses and disbursements of any kind or
nature (including, without limitation, the disbursements and the reasonable fees
of counsel for each Indemnified Party in connection with any investigative,
administrative or judicial proceeding, whether or not the Indemnified Party
shall be designated a party thereto), which may be imposed on, incurred by, or
asserted against, any Indemnified Party (whether direct, indirect or
consequential and whether based on any foreign, federal, state or local laws or
regulations, including, without limitation, securities laws and regulations,
Environmental Laws and commercial laws and regulations, under common law or in
equity, or based on contract or otherwise) in any manner relating to or arising
out of this Agreement or any Other Agreement, or any act, event or transaction
related or attendant thereto, the making or issuance and the management of the
Loans or any Letters of Credit or the use or intended use of the proceeds of the
Loans or any Letters of Credit; provided, however, that no Borrower shall have
any obligation hereunder to any Indemnified Party with respect to matters caused
by or resulting from the willful misconduct or gross negligence of such
Indemnified Party as determined by a final non-appealable judgment of a court of
competent jurisdiction. To the extent that the undertaking to indemnify set
forth in the preceding sentence may be unenforceable because it is violative of
any law or public policy, each Borrower shall satisfy such undertaking to the
maximum extent permitted by applicable law. Any liability, obligation, loss,
damage, penalty, cost or expense covered by this indemnity shall be paid to each
Indemnified Party on demand, and, failing prompt payment, shall, together with
interest thereon at the highest rate then applicable to Loans hereunder from the
date incurred by each Indemnified Party until paid by Borrowers, be added to the
Liabilities of Borrowers and be secured by the Collateral. The provisions of
this Section 18 shall survive the satisfaction and payment of the other
Liabilities and the termination of this Agreement.
-54-
19. NOTICE.
All written notices and other written communications with respect to
this Agreement shall be sent by overnight mail, by facsimile or delivered in
person, and in the case of Lender shall be sent to it at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attn: ▇▇▇▇▇▇▇ ▇▇▇▇, facsimile number: (267)
386-8844, and in the case of Borrowers shall be sent to them in care of the
Borrowing Agent at its chief executive office set forth on Schedule 1 (a)hereto
or as otherwise directed by Borrowers in writing. All notices shall be deemed
received upon actual receipt thereof or refusal of delivery.
20. CHOICE OF GOVERNING LAW; CONSTRUCTION; FORUM SELECTION.
This Agreement and the Other Agreements are submitted by Borrowers to
Lender for Lender's acceptance or rejection at Lender's principal place of
business as an offer by Borrowers to borrow monies from Lender now and from time
to time hereafter, and shall not be binding upon Lender or become effective
until accepted by Lender, in writing, at said place of business. If so accepted
by Lender, this Agreement and the Other Agreements shall be deemed to have been
made at said place of business. THIS AGREEMENT AND THE OTHER AGREEMENTS SHALL BE
GOVERNED AND CONTROLLED BY THE INTERNAL LAWS OF THE COMMONWEALTH OF PENNSYLVANIA
AS TO INTERPRETATION, ENFORCEMENT, VALIDITY, CONSTRUCTION, EFFECT, AND IN ALL
OTHER RESPECTS, INCLUDING, WITHOUT LIMITATION, THE LEGALITY OF THE INTEREST RATE
AND OTHER CHARGES, BUT EXCLUDING PERFECTION OF THE SECURITY INTERESTS IN
COLLATERAL LOCATED OUTSIDE OF THE COMMONWEALTH OF PENNSYLVANIA, WHICH SHALL BE
GOVERNED AND CONTROLLED BY THE LAWS OF THE RELEVANT JURISDICTION IN WHICH SUCH
COLLATERAL IS LOCATED. If any provision of this Agreement shall be held to be
prohibited by or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or remaining provisions of this
Agreement.
To induce Lender to accept this Agreement, each Borrower irrevocably
agrees that, subject to Lender's sole and absolute election, ALL ACTIONS OR
PROCEEDINGS IN ANY WAY, MANNER OR RESPECT, ARISING OUT OF OR FROM OR RELATED TO
THIS AGREEMENT, THE OTHER AGREEMENTS OR THE COLLATERAL SHALL BE LITIGATED IN
COURTS HAVING SITES WITHIN THE CITY OF PHILADELPHIA, COMMONWEALTH OF
PENNSYLVANIA. EACH BORROWER HEREBY CONSENTS AND SUBMITS TO THE JURISDICTION OF
ANY LOCAL, STATE OR FEDERAL COURTS LOCATED WITHIN SAID CITY AND STATE. Each
Borrower hereby waives personal service of any and all process upon it and
consents that all such service of process may be made (i) by intentionally
recognized overnight courier or hand delivery directed to Borrowing Agent at its
notice address as provided for in Section 20 and service so made shall be deemed
completed (x) in the case of service made by overnight courier, one (1) Business
Day after the same shall have been delivered to such overnight courier and (y)
in the case of hand delivery to Agent, on the date so delivered, or (ii) in the
alternative, at Lender's sole option, by service upon Borrowing Agent, which
each Borrower irrevocably appoints so such Borrower's agent for the purpose of
accepting service in the Commonwealth of Pennsylvania. EACH BORROWER HEREBY
WAIVES ANY RIGHT IT MAY HAVE TO TRANSFER OR CHANGE THE VENUE OF ANY LITIGATION
BROUGHT AGAINST SUCH BORROWER BY AGENT IN ACCORDANCE WITH THIS SECTION.
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21. MODIFICATION AND BENEFIT OF AGREEMENT.
This Agreement and the Other Agreements may not be modified, altered or
amended except by an agreement in writing signed by each Borrower or such other
person who is a party to such Other Agreement and Lender. No Borrower may sell,
assign or transfer this Agreement, or the Other Agreements or any portion
thereof, including, without limitation, such Borrower's rights, titles,
interest, remedies, powers or duties hereunder and thereunder. Each Borrower
hereby consents to Lender's sale, assignment, transfer or other disposition, at
any time and from time to time hereafter, of this Agreement, or the Other
Agreements, or of any portion thereof, or participations therein, including,
without limitation, Lender's rights, titles, interest, remedies, powers and/or
duties and agrees that it shall execute and deliver such documents as Lender may
request in connection with any such sale, assignment, transfer or other
disposition.
22. HEADINGS OF SUBDIVISIONS.
The headings of subdivisions in this Agreement are for convenience of
reference only, and shall not govern the interpretation of any of the provisions
of this Agreement.
23. POWER OF ATTORNEY.
Each Borrower acknowledges and agrees that its appointment of Lender as
its attorney and agent-in-fact for the purposes specified in this Agreement is
an appointment coupled with an interest and shall be irrevocable until all of
the Liabilities are satisfied and paid in full and this Agreement is terminated.
24. CONFIDENTIALITY.
Each Borrower and Lender hereby agree and acknowledge that any and all
information relating to such Borrower which is (i) furnished by such Borrower to
Lender (or to any affiliate of Lender); and (ii) non-public, confidential or
proprietary in nature, shall be kept confidential by Lender or such affiliate in
accordance with applicable law; provided, however, that such information and
other credit information relating to such Borrower may be distributed by Lender
or such affiliate to Lender's or such affiliate's directors, officers,
employees, attorneys, affiliates, assignees, participants, auditors, agents and
regulators, and upon the order of a court or other governmental agency having
jurisdiction over Lender or such affiliate, to any other party. Each Borrower
and Lender further agrees that this provision shall survive the termination of
this Agreement. Notwithstanding the foregoing, each Borrower hereby consents to
Lender publishing a tombstone or similar advertising material relating to the
financing transaction contemplated by this Agreement so long as such tombstone
or other advertising material does not contain any non-public, confidential or
proprietary information concerning Borrowers.
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25. COUNTERPARTS.
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, shall be
deemed an original, but all of which counterparts together shall constitute but
one agreement.
26. ELECTRONIC SUBMISSIONS.
Upon not less than thirty (30) days' prior written notice (the
"Approved Electronic Form Notice"), Lender may permit or require that any of the
documents, certificates, forms, deliveries or other communications, authorized,
required or contemplated by this Agreement or the Other Agreements, be submitted
to Lender in "Approved Electronic Form" (as hereafter defined), subject to any
reasonable terms, conditions and requirements in the applicable Approved
Electronic Forms Notice. For purposes hereof "Electronic Form" means e-mail,
e-mail attachments, data submitted on web-based forms or any other communication
method that delivers machine readable data or information to Lender, and
"Approved Electronic Form" means an Electronic Form that has been approved in
writing by Lender (which approval has not been revoked or modified by Lender)
and sent to Borrowers in an Approved Electronic Form Notice. Except as otherwise
specifically provided in the applicable Approved Electronic Form Notice, any
submissions made in an applicable Approved Electronic Form shall have the same
force and effect that the same submissions would have had if they had been
submitted in any other applicable form authorized, required or contemplated by
this Agreement or the Other Agreements.
27. WAIVER OF JURY TRIAL; OTHER WAIVERS.
(a) EACH BORROWER AND LENDER EACH HEREBY WAIVES ALL RIGHTS TO TRIAL BY
JURY IN ANY ACTION OR PROCEEDING WHICH PERTAINS DIRECTLY OR INDIRECTLY TO THIS
AGREEMENT, THE NOTES, ANY OF THE OTHER AGREEMENTS, THE LIABILITIES, THE
COLLATERAL, ANY ALLEGED TORTUOUS CONDUCT BY A BORROWER OR LENDER OR WHICH, IN
ANY WAY, DIRECTLY OR INDIRECTLY, ARISES OUT OF OR RELATES TO THE RELATIONSHIP
BETWEEN A BORROWER AND LENDER. IN NO EVENT SHALL LENDER BE LIABLE FOR LOST
PROFITS OR OTHER SPECIAL OR CONSEQUENTIAL DAMAGES.
(b) Each Borrower hereby waives demand, presentment, protest and notice
of nonpayment, and further waives the benefit of all valuation, appraisal and
exemption laws.
(c) Each Borrower hereby waives the benefit of any law that would
otherwise restrict or limit Lender or any affiliate of Lender in the exercise of
its right, which is hereby acknowledged and agreed to, to set-off against the
Liabilities, without notice at any time hereafter, any indebtedness, matured or
unmatured, owing by Lender or such affiliate of Lender to such Borrower,
including, without limitation any deposit account at Lender or such affiliate.
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(d) EACH BORROWER HEREBY WAIVES ALL RIGHTS TO NOTICE AND HEARING OF ANY
KIND PRIOR TO THE EXERCISE BY LENDER OF ITS RIGHTS TO REPOSSESS THE COLLATERAL
OF SUCH BORROWER WITHOUT JUDICIAL PROCESS OR TO REPLEVY, ATTACH OR LEVY UPON
SUCH COLLATERAL.
(e) Lender's failure, at any time or times hereafter, to require strict
performance by a Borrower of any provision of this Agreement or any of the Other
Agreements shall not waive, affect or diminish any right of Lender thereafter to
demand strict compliance and performance therewith. Any suspension or waiver by
Lender of an Event of Default under this Agreement or any default under any of
the Other Agreements shall not suspend, waive or affect any other Event of
Default under this Agreement or any other default under any of the Other
Agreements, whether the same is prior or subsequent thereto and whether of the
same or of a different kind or character. No delay on the part of Lender in the
exercise of any right or remedy under this Agreement or any Other Agreement
shall preclude other or further exercise thereof or the exercise of any right or
remedy. None of the undertakings, agreements, warranties, covenants and
representations of Borrowers contained in this Agreement or any of the Other
Agreements and no Event of Default under this Agreement or default under any of
the Other Agreements shall be deemed to have been suspended or waived by Lender
unless such suspension or waiver is in writing, signed by a duly authorized
officer of Lender and directed to Borrowers specifying such suspension or
waiver.
28. BORROWING AGENT.
Each Borrower hereby irrevocably designates and appoints Borrowing
Agent, in such capacity, to be its attorney and agent-in-fact with respect to
all matters under and pertaining to this Agreement, including without
limitation, in connection with the loan and interest rate request and
designation procedures set forth in this Agreement, and in connection with all
procedures regarding the giving of notice to Borrowers, or any one or more of
them set forth in this Agreement, and to borrow, request Revolving Loans, sign
and endorse notes, and execute and deliver all instruments, documents, writings
and further assurances now or hereafter required hereunder, on behalf of each
such Borrower in connection with this Agreement or any Other Document, whether
in respect of the requesting of Revolving Loans and/or Letters of Credit, in
respect of the designation of Loans as Prime Rate Loans or LIBOR Rate Loans or
the designation of Interest Periods for LIBOR Rate Loans or otherwise, and
hereby authorizes Lender to pay over or credit all proceeds of any Loans
hereunder in accordance with the requests and instructions of Borrowing Agent
(including without limitation, instructions to pay such proceeds to Borrowing
Agent or an account maintained and/or controlled by Borrowing Agent).
The Lender may rely on all communications and instructions of any kind
received from Borrowing Agent as though identical communications or instructions
had been received from each and every Borrower.
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29. LASALLE BUSINESS CREDIT, INC., AS AGENT.
Standard Federal Bank National Association ("Standard Federal") has
appointed LaSalle Business Credit, Inc. ("LBCI"), and at all during the term
hereof, LBCI shall act, as the agent of Standard Federal to act on its behalf
under the credit facilities described herein and the Other Agreements pursuant
to the terms of an Agency Services Agreement between Standard Federal and LBCI.
Accordingly, all rights and options of Standard Federal as Lender under this
Agreement and the Other Agreements may be exercised by, and the Agreement, the
Other Agreements and all related agreements, documents and writings shall be
executed on behalf of Standard Federal by, LBCI and all obligations and
responsibilities of Standard Federal shall be carried out by LBCI.
[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK]
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first written above.
LENDER: LASALLE BUSINESS CREDIT, INC., as agent
for Standard Federal Bank National Association
By:
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Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇.
Title: Assistant Vice President
BORROWER: AM COMMUNICATIONS, INC.
By:
----------------------------------
Name: H. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, III
Title: Corporate Controller
AM BROADBAND SERVICES, INC.
By:
----------------------------------
Name: H. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, III
Title: Corporate Controller
SRS COMMUNICATIONS CORPORATION
By:
----------------------------------
Name: H. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, III
Title: Corporate Controller
AMC SERVICES, INC.
By:
----------------------------------
Name: H. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, III
Title: Corporate Controller
AM NEX-LINK COMMUNICATIONS, INC.
By:
----------------------------------
Name: H. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, III
Title: Corporate Controller
AM TRAINING SERVICES, INC.
By:
----------------------------------
Name: H. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, III
Title: Corporate Controller