1
CREDIT AGREEMENT
made and entered into
as of September 23, 1996
by and among
▇▇▇▇ TECHNOLOGY, INC.,
a Delaware corporation,
EACH OF THE FINANCIAL INSTITUTIONS WHICH IS
A SIGNATORY HERETO OR
WHICH MAY FROM TIME TO TIME
BECOME A PARTY HERETO,
and
THE CHASE MANHATTAN BANK,
a New York banking corporation
as agent for such Financial Institutions
2
Index to Credit Agreement
Page
----
1. Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
-----------
1.1. Certain Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
---------------------
Adjusted LIBOR Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Alternate Base Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Alternate Base Rate Borrowing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Annual Audited Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Applicable Lending Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Applicable Margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Applications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Assessment Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Assignment and Acceptance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Availability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Base CD Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Borrower . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Borrowing Base . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Business Day . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Business Entity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Capital Lease Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Commitment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Commitment Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Commitment Letter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Commitment Percentage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Consequential Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Consolidated . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Contingent Obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Current Sum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Discontinued Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Domestic Lending Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
EBITDA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Eligible Assignee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Eligible Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Environmental Claim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Environmental Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Environmental Permit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
ERISA Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Event of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Index to Credit Agreement
Page 1
3
Excess Interest Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Federal Funds Effective Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Financial Officer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
GAAP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Governmental Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Grantor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Guarantors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Guaranty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Hazardous Substance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Highest Lawful Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Interest Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Interest Option . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Interest Payment Dates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Interest Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Joinder Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Legal Requirement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Lender or Lenders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Letter of Credit Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Letter of Credit Exposure Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Leverage Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
LIBOR Borrowing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
LIBOR Lending Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
LIBOR Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Lien . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Loan Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Lockbox Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Material Adverse Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Maturity Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Net Amount of Eligible Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Officer's Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Organizational Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Past Due Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
PBGC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Permitted Affiliate Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Permitted Dispositions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Permitted Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Permitted Investment Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Index to Credit Agreement
Page 2
4
Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Prime Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Principal Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Proper Form . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Quarterly Unaudited Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Rate Selection Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Rate Selection Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Refinancing Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Regulation D . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Regulatory Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Reportable Event . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Request for Extension of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Required Lenders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Requirements of Environmental Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Responsible Officer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Security Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Security Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Statutory Reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Subordinated Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Tangible Net Worth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
TCB . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Three-Month Secondary CD Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Total Commitment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Unused Commitment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
1.2. Accounting Terms and Determinations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
-----------------------------------
2. Loans; Letters of Credit; Notes; Payments; Prepayments; Interest Rates . . . . . . . . . . . . . . . . . . . . . . 21
----------------------------------------------------------------------
2.1. Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
-----------
2.2. Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
-----
2.3. Commitment and Other Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
-------------------------
2.4. Termination and Reductions of Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
-----------------------------------------
2.5. Mandatory and Voluntary Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
-----------------------------------
2.6. Notes; Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
---------------
2.7. Application of Payments and Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
---------------------------------------
2.8. Interest Rates for Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
------------------------
2.9. Special Provisions Applicable to LIBOR Borrowings. . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
-------------------------------------------------
2.10. Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
-----------------
2.11. Pro-Rata Treatment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
------------------
2.12. Sharing of Payments, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
-------------------------
2.13. Recapture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
---------
Index to Credit Agreement
Page 3
5
3. Collateral. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
----------
3.1. Security Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
------------------
3.2. Filing and Recording . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
--------------------
4. Conditions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
----------
4.1. All Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
---------
4.2. First Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
----------
5. Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
------------------------------
5.1. Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
------------
5.2. Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
--------------------
5.3. Enforceable Obligations; Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
--------------------------------------
5.4. Other Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
----------
5.5. Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
----------
5.6. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
-----
5.7. No Material Misstatements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
-------------------------
5.8. Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
------------
5.9. Representations by Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
-------------------------
5.10. Permits, Licenses, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
----------------------
5.11. ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
-----
5.12. Title to Properties; Possession Under Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
--------------------------------------------
5.13. Assumed Names . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
-------------
5.14. Investment Company Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
----------------------
5.15. Public Utility Holding Company Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
----------------------------------
5.16.Indebtedness Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
-----------------------
5.17. Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
---------------------
5.18. No Change in Credit Criteria or Collection Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
---------------------------------------------------
5.19. Solvency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
--------
5.20. Status of Receivables and Other Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
------------------------------------------
6. Affirmative Covenants. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
---------------------
6.1. Businesses and Properties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
-------------------------
6.2. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
-----
6.3. Financial Statements and Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
------------------------------------
6.4. Inspection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
----------
6.5. Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
------------------
6.6. Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
-----------------
6.7. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
---------
6.8. ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
-----
6.9. Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
---------------
6.10. Guarantor; Joinder Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
----------------------------
6.11. Notice of Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
----------------
6.12. Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
---------------------
6.13. End of Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
------------------
6.14. Pay Obligations and Perform Other Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
-------------------------------------------
6.15. Collection of Receivables; Application of Lockbox Agreement Proceeds . . . . . . . . . . . . . . . . . . 53
--------------------------------------------------------------------
Index to Credit Agreement
Page 4
6
6.16. Additional Receivables Documentation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
------------------------------------
7. Negative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
------------------
7.1. Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
------------
7.2. Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
-----
7.3. Contingent Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
----------------------
7.4. Mergers, Consolidations and Dispositions and Acquisitions of Assets . . . . . . . . . . . . . . . . . . . 57
-------------------------------------------------------------------
7.5. Nature of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
------------------
7.6. Transactions with Related Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
---------------------------------
7.7. Investments; Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
------------------
7.8. ERISA Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
----------------
7.9. Credit Extensions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
-----------------
7.10. Change in Accounting Method . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
---------------------------
7.11. Leverage Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
--------------
7.12. Tangible Net Worth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
------------------
7.13. Sales of Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
--------------------
7.14. Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
----------
7.15. Sale and Lease-Back Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
--------------------------------
7.16. Change of Name or Place of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
-----------------------------------
7.17. Availability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
------------
8. Events of Default and Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
------------------------------
8.1. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
-----------------
8.2. Remedies Cumulative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
-------------------
9. The Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
---------
9.1. Appointment, Powers and Immunities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
----------------------------------
9.2. Reliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
--------
9.3. Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
--------
9.4. Rights as a Lender . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
------------------
9.5. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
---------------
9.6. Non-Reliance on Agent and Other Lenders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
---------------------------------------
9.7. Failure to Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
--------------
9.8. Resignation or Removal of Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
-------------------------------
10. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
-------------
10.1. No Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
---------
10.2. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
-------
10.3. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
-------------
10.4. Survival; Parties Bound . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
-----------------------
10.5. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
------------
10.6. Limitation of Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
----------------------
10.7. Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
--------
10.8. Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
--------
10.9. Expenses, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
--------------
10.10. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
---------------
Index to Credit Agreement
Page 5
7
10.11. Amendments, Waivers, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
-------------------------
10.12. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
----------------------
10.13. Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
----------------
10.14. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
------------
10.15. Disclosures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
-----------
10.16. Capital Adequacy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
----------------
10.17. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
-----
10.18. Waiver of Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
----------------
10.19. Right of Setoff . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
---------------
10.20. Waiver of Right to Jury Trial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
-----------------------------
10.21. Additional Provisions Regarding Collection of Receivables,
----------------------------------------------------------
Control of Inventory and Other Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
-----------------------------------------
10.22. Joint and Several Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
-----------------------------
EXHIBITS
A - Note Form (Section 1.1)
B - Standard Lockbox Agreement (Section 1.1)
C - Amended Lockbox Implementaion and Processing Instructions (Section
1.1)
D - Officer's Certificate (Section 1.1)
E - Request for Extension of Credit (Section 1.1)
F - Rate Selection Notice (Section 2.8[b][1])
G - Secretary's Certificate (Section 4.2[c])
H - Borrowing Base Compliance Certificate Form (Section 6.3[g])
SCHEDULES
1.1 - Commitments
5.5 - Material Litigation
5.12 - Leases of Real Property
5.13 - List of Assumed Names
5.16 - Indebtedness & Capital Leases
5.17 - Environmental Matters
7.2 - Liens
7.6 - List of Existing Transactions with Related Parties
Index to Credit Agreement
Page 6
8
CREDIT AGREEMENT
THIS CREDIT AGREEMENT (together with all amendments, modifications and
supplements hereto and restatements hereof, this "Agreement") is made and
entered into as of September 23, 1996, by and among ▇▇▇▇ TECHNOLOGY, INC.
("Borrower"), a Delaware corporation, EACH OF THE FINANCIAL INSTITUTIONS WHICH
IS A SIGNATORY HERETO OR WHICH MAY FROM TIME TO TIME BECOME A PARTY HERETO
(individually, a "Lender" and collectively, the "Lenders") and THE CHASE
MANHATTAN BANK ("Chase"), a New York banking corporation, as agent for the
Lenders (in such capacity, together with its successors in such capacity, the
"Agent").
W I T N E S S E T H:
THAT, in consideration of the mutual covenants, agreements and
undertakings herein contained, the parties hereto agree as follows:
1. Definitions.
1.1 Certain Defined Terms. Unless a particular
word or phrase is otherwise defined or the context otherwise requires,
capitalized words and phrases used in the Loan Documents have the meanings
provided below.
9
Adjusted LIBOR Rateshall mean, with respect to any LIBOR Borrowing for
any Interest Period, an interest rate per annum (rounded upwards, if necessary,
to the next 1/16 of 1%) equal to the sum of (a) the product of (i) the LIBOR
Rate in effect for such Interest Period and (ii) Statutory Reserves and (b) the
Applicable Margin.
Affiliate of any Person shall mean any other Person which controls or
is controlled by or under common control with such Person and, without limiting
the generality of the foregoing, includes (a) any Person which beneficially
owns or holds five percent (5%) or more of any class of voting securities of
such Person or five percent (5%) of the equity interest in such Person, (b) any
Person of which such Person beneficially owns or holds five percent (5%) or
more of any class of voting securities or in which such Person beneficially
owns or holds five percent (5%) or more of the equity interest in such Person,
and (c) any director, officer or employee of such Person. For purposes of this
definition, "control" (including "controlled by" and "under common control
with") means the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of such Person, whether
through the ownership of securities, partnership or other ownership interests,
by contract or otherwise.
-2-
10
Agent shall have the meaning assigned to such term in the preamble to
this Agreement.
Alternate Base Rateshall mean, for any day, a rate per annum (rounded
upwards to the nearest 1/16 of 1%) equal to the sum of (a) the greater of (i)
the Prime Rate (computed on the basis of the actual number of days elapsed over
a year of 360 days, as the case may be) in effect on such day, (ii) the Federal
Funds Effective Rate (computed on the basis of the actual number of days
elapsed over a 360-day year) in effect for such day plus 1/2 of 1%, and (iii)
the Base CD Rate in effect for such day plus 1% and (b) the Applicable Margin.
For purposes of this Agreement, any change in the Alternate Base Rate due to a
change in the Prime Rate, Federal Funds Effective Rate or the Three-Month
Secondary CD Rate shall be effective on the effective date of such change in
the Prime Rate, Federal Funds Effective Rate or the Three-Month Secondary CD
Rate, respectively. If for any reason the Agent shall have determined (which
determination shall be conclusive and binding, absent manifest error) that it
is unable to ascertain the Federal Funds Effective Rate or Base CD Rate, or
both, for any reason, including the inability or failure of the Agent to obtain
sufficient quotations in accordance with the terms hereof, the Alternate Base
Rate shall be determined without regard to clauses (a)(ii) or (a)(iii), or
both, as appropriate, until the circumstances giving rise to such inability no
longer exist.
-3-
11
Alternate Base Rate Borrowingshall mean, as of any date, that portion
of the principal balance of the Loans bearing interest at the Alternate Base
Rate as of such date.
Annual Audited Financial Statements shall mean the annual financial
statements of a Person, including all notes thereto, which statements shall
include a balance sheet as of the end of such fiscal year and an income
statement, a retained earnings statement and a statement of cash flows for such
fiscal year, all setting forth in comparative form the corresponding figures
from the previous fiscal year, all prepared in conformity with GAAP and
accompanied by a report and opinion of independent certified public accountants
with a "Big 6" accounting firm or other accounting firm of similar national
standing and reputation, which report shall not contain any qualification
except with respect to new accounting principles mandated by the Financial
Accounting Standards Board and shall state that such financial statements, in
the opinion of such accountants, present fairly, in all material respects, the
financial position of such Person as of the date thereof and the results of its
operations and cash flows for the period covered thereby in conformity with
GAAP. The Annual Audited Financial Statements for the Borrower and its
Subsidiaries shall be prepared on a Consolidated basis in accordance with GAAP.
Additionally, when and if the daily collection and application procedure for
Receivables is implemented and is continuing in accordance
-4-
12
with the provisions of Section 6.15(b) hereof, the Annual Audited Financial
Statements for the Borrower and its Subsidiaries shall also be prepared on a
consolidating basis (with such consolidating statements to be prepared in
accordance with GAAP only to the extent normal and customary). All such Annual
Audited Financial Statements shall be accompanied by a certificate of such
accountants that in making the appropriate audit and/or investigation in
connection with such report and opinion, such accountants did not become aware
of any Default or Event of Default, or if in the opinion of such accountant any
such Default or Event of Default exists, a description of the nature and status
thereof.
Applicable Lending Office shall mean, with respect to each Lender,
such Lender's Domestic Lending Office in the case of an Alternate Base Rate
Borrowing and such Lender's LIBOR Lending Office in the case of a LIBOR
Borrowing.
Applicable Margin shall mean with respect to any Loan as follows:
-5-
13
Per Annum Percentage Per Annum Percentage
Leverage Ratio for LIBOR for Alternate
-------------- Borrowings Base Rate Borrowings
---------- --------------------
Less than 1.00x 1.50% 0.00%
1.00x or greater 2.00% 0.00%
Such compliance with the Leverage Ratio will be tested quarterly as of the end
of each fiscal quarter by the Agent, based on the Agent's review of the
Borrower's most recent Quarterly Unaudited Financial Statements or Annual
Audited Financial Statements, as applicable, which are delivered to and
received by the Agent for the immediately preceding four fiscal quarters of the
Borrower in accordance with Sections 6.3(a) and (b) hereof. For purposes
hereof, any adjustment in the respective amounts of the Applicable Margin,
whether upward or downward, shall be effective ten (10) Business Days after the
applicable Annual Audited Financial Statements or Quarterly Unaudited Financial
Statements of the Borrower have been delivered to and received by the Agent in
accordance with the terms of Sections 6.3(a) and (b) hereof.
Applications shall mean all applications and agreements for Letters of
Credit, or similar instruments or agreements,
-6-
14
in Proper Form, now or hereafter executed by any Person in connection with any
Letter of Credit now or hereafter issued or to be issued under the terms hereof
at the request of any Person.
Assessment Rate shall mean the annual assessment rate (net of refunds
and rounded upwards, if necessary, to the next 1/16 of 1%) estimated by the
Agent (in good faith, but in no event in excess of statutory or regulatory
maximums) to be payable by the Agent to the Federal Deposit Insurance
Corporation (or any successor) for insurance by such Corporation (or such
successor) of time deposits made in dollars at the Agent's domestic offices
during the current calendar year.
Assignment and Acceptance shall have the meaning ascribed to such item
in Section 10.12(c) hereof.
Availability shall mean at any time (a) the lesser at such time of (i)
the Total Commitment (as such amount may be reduced in accordance with the
provisions of this Agreement) and (ii) the Borrowing Base, less (b) the sum of
(i) the aggregate amount of each Lender's Current Sum at such time, (ii) the
aggregate amount of accrued interest outstanding under the Loans at such time
and (iii) all other Obligations outstanding hereunder or any other Loan
Documents at such time.
-7-
15
Base CD Rate shall mean the sum of (a) the product of (i) the
Three-Month Secondary CD Rate and (ii) Statutory Reserves and (b) the
Assessment Rate.
Borrower shall have the meaning assigned to such term in the preamble
of this Agreement.
Borrowing Base shall mean, as of any date, the amount of the then most
recent computation of the Borrowing Base, determined by calculating the amount
equal to 80% of the Net Amount of Eligible Receivables at such date.
Notwithstanding anything to the contrary set forth in the immediately preceding
sentence, the Agent reserves the right to adjust downward to a level acceptable
to the Agent in its reasonable discretion the eighty percent (80%) advance rate
set forth above for the Net Amount of Eligible Receivables if the average
dilution percentage for all Receivables of the Borrower and its Subsidiaries in
the aggregate exceeds ten percent (10%) for the three (3) most recent fiscal
months of the Borrower ending on or immediately prior to the applicable date of
determination by the Agent of such dilution percentage. The Borrowing Base
will be computed initially hereunder on a monthly basis (based on all
information reasonably available to the Agent, including without limitation,
the periodic reports and listings delivered to the Agent in accordance with
Section 6.3(f) hereof), and a monthly Borrowing Base Compliance Certificate
from a Responsible
-8-
16
Officer of the Borrower presenting the Borrower's computation of the Borrowing
Base will be periodically delivered to the Agent in accordance with Section
6.3(g) hereof. When and if the daily collection and application procedure for
Receivables is implemented and is continuing in accordance with the provisions
of Section 6.15(b) hereof, the Borrowing Base will be computed on a daily basis
(based on all information reasonably available to the Agent, including without
limitation, the periodic reports and listings delivered to Agent in accordance
with Sections 6.3(f) and 6.15(d) hereof), and a monthly Borrowing Base
Compliance Certificate from a Responsible Officer of the Borrower shall
continue to be periodically delivered to the Agent in accordance with Section
6.3(g) hereof.
Business Day shall mean a day when the principal office in New York
City of the Agent is open for business and Lenders in New York City are
generally open for business.
Business Entity shall mean corporations, partnerships, joint ventures,
joint stock associations, business trusts and other business entities.
Capital Lease Obligations shall mean the obligations of a Person to
pay rent or other amounts under a lease of (or other agreement conveying the
right to use) real and/or personal Property which obligations are required to
be classified and
-9-
17
accounted for as a capital lease on a balance sheet of such Person under GAAP
(including Statement of Financial Accounting Standards No. 13 of the Financial
Accounting Standards Board, as amended) and, for purposes of this Agreement,
the amount of such obligations shall be the capitalized amount thereof,
determined in accordance with GAAP (including such Statement No. 13).
Closing Date shall mean the earlier to occur of (a) the date of the
first Loan under this Agreement or (b) September 23, 1996.
Code shall mean the Internal Revenue Code of 1986, as amended, as now
or hereafter in effect, together with all regulations, rulings and
interpretations thereof or thereunder by the Internal Revenue Service.
Collateral shall mean all collateral and security as described in the
Security Documents.
Commitment shall mean, as to any Lender, the obligation of such Lender
to make Loans and incur liability for the Letter of Credit Exposure Amount in
an aggregate principal amount at any one time outstanding up to, but not
exceeding, the amount set forth as such Lender's Commitment in Schedule 1.1
attached hereto (as the same may be reduced from time to time pursuant to
Section 2.4 hereof).
-10-
18
Commitment Fee, with respect to any Lender, shall have the meaning
assigned to it in Section 2.3(a).
Commitment Letter shall mean that certain Commitment Letter of the
Agent to the Borrower dated August 27, 1996 and accepted by the Borrower as of
August 29, 1996.
Commitment Percentage shall mean, with respect to any Lender, the
ratio, expressed as a percentage, of such Lender's Commitment to the Total
Commitment.
Consequential Loss shall mean, with respect to (a) the Borrower's
payment of principal of a LIBOR Borrowing on a day other than the last day of
the applicable Interest Period, (b) the Borrower's failure to borrow a LIBOR
Borrowing on the date specified by the Borrower for any reason, or (c) any
cessation of the Adjusted LIBOR Rate to apply to the Loans or any part thereof
pursuant to Section 2.9 hereof, in each case whether voluntary or involuntary,
any loss, expense, penalty, premium or liability incurred by any of the Lenders
or the Agent as a result thereof, including without limitation, any interest
paid by any of the Lenders to lenders of funds borrowed by it to make or carry
the Loans and any other costs and expenses sustained or incurred in liquidating
or employing deposits from third parties acquired to effect or maintain the
Loans.
-11-
19
Consolidated shall mean, for any Person, as applied to any financial
or accounting term, such term determined on a consolidated basis in accordance
with GAAP (except as otherwise required herein) for such Person and all
Subsidiaries thereof.
Contingent Obligation shall mean, as to any Person, any obligation of
such Person guaranteeing or intended to guarantee the payment or performance of
any Indebtedness, leases, dividends or other obligations (collectively "primary
obligations") of any other Person (the "primary obligor") in any manner,
whether directly or indirectly, including without limitation, any obligation of
the Person for whom Contingent Obligations is being determined, whether or not
contingent, (a) to purchase any such primary obligation or other property
constituting direct or indirect security therefor, (b) assume or contingently
agree to become or be secondarily liable in respect of any such primary
obligation, (c) to advance or supply funds (i) for the purchase or payment of
any such primary obligation or (ii) to maintain working capital or equity
capital for the primary obligor or otherwise to maintain the net worth or
solvency of the primary obligor, (d) to purchase property, securities or
services primarily for the purpose of assuring the owner of any such primary
obligation of the ability of the primary obligor to make payment of such
primary obligation, or (e) otherwise to assure or hold harmless the owner of
such primary obligation against loss in
-12-
20
respect thereof; provided, however, that the term "Contingent Obligation" shall
not include (x) endorsements of checks or other negotiable instruments in the
ordinary course of business or (y) issuance of indemnities in the ordinary
course of business.
Current Sum shall mean on any day, as to a particular Lender, the sum
of (a) the outstanding principal balance of such Lender's Note on such day plus
(b) the product of (i) such Lender's Commitment Percentage times (ii) the
Letter of Credit Exposure Amount on such day.
Discontinued Operations shall mean, as of any day, operations of the
Borrower or any of its Subsidiaries which have been discontinued, and which, as
of such day, have been fully terminated, disposed of or liquidated.
Domestic Lending Office shall mean, with respect to any Lender, the
office of such Lender specified as its "Domestic Lending Office" opposite its
name on the signature pages hereof, or such other office of such Lender as such
Lender may from time to time specify to the Borrower and the Agent.
EBITDA shall mean with respect to any Person for any period the sum of
(i) Net Income, (ii) Interest Expense, (iii) depreciation and amortization of
assets, and (iv) federal, state and local income taxes, in each case of such
Person for
-13-
21
such period, computed and calculated in accordance with GAAP consistently
applied.
Eligible Assignee shall mean a commercial Lender, a finance company,
insurance company, other financial institution or fund, reasonably acceptable
to the Agent and the Borrower.
Eligible Receivables shall mean, as at any date of determination
thereof, Receivables created by the Borrower or any of its Subsidiaries (but
only to the extent that such Receivables are Collateral hereunder and are
subject to a first priority perfected Lien in favor of the Agent for the
ratable benefit of the Lenders) in the ordinary course of business arising out
of the sale of goods or rendering of services by the Borrower or any such
Subsidiary, which do, and at all times shall continue to, satisfy the standards
of eligibility applicable thereto as established by the Agent in accordance
with the terms hereof. Standards of eligibility for Receivables may be fixed
and revised from time to time by the Agent in the Agent's reasonable, exclusive
judgment; provided, that the Agent shall give the Borrower notice within a
reasonable time after giving effect to any change in such standards of
eligibility. In general, without limiting the foregoing, an Eligible
Receivable must comply with all of the following requirements: (a) all payments
due on the Receivable have been billed and invoiced in a timely fashion and in
the
-14-
22
normal course of business; (b) no payment is outstanding on the Receivable for
more than 90 days after the date of invoice; (c) the payments due on 50% or
more of all Receivables of the applicable account debtor are less than 90 days
past the date of invoice; (d) the total Receivables owing to the Borrower and
its Subsidiaries by the applicable account debtor constitute 10% or less of the
aggregate Receivables owing to the Borrower and its Subsidiaries by all account
debtors, or if the total Receivables of the applicable account debtor (other
than Sun Microsystems, Inc.) exceed 10% of the aggregate of all Receivables
owing to the Borrower and its Subsidiaries by all account debtors, the
Receivables of the applicable account debtor up to such 10% limit shall be
deemed to constitute Eligible Receivables (subject to compliance with all other
applicable standards of eligibility) and the Receivables of the applicable
account debtor (other than Sun Microsystems, Inc.) exceeding such 10% limit
shall be included within Eligible Receivables (subject to compliance with all
other applicable standards of eligibility) only if the Receivables exceeding
such 10% limit are backed or secured by credit insurance reasonably
satisfactory to the Agent in all respects and such credit insurance has been
assigned to the Agent upon terms reasonably acceptable to the Agent in its
discretion; (e) the Receivable is free and clear of all security interests,
liens, charges and encumbrances of any nature whatsoever (except for the Lien
in favor of the Agent); (f) the Receivable arose from a completed, outright and
lawful
-15-
23
sale of goods, to which title has passed to the applicable account debtor on an
absolute sales basis, or from the rendering of services by or on behalf of the
Borrower or any such Subsidiary; (g) the Receivable constitutes an "account"
within the meaning of the Uniform Commercial Code of the state in which the
Borrower's or such Subsidiary's principal offices are located; (h) neither the
Borrower or any such Subsidiary is aware that the Receivable arises out of a
▇▇▇▇ and hold, consignment or progress billing arrangement or is subject to any
setoff, contra, offset, deduction, dispute, chargeback, credit, counterclaim or
other defense arising out of the transactions represented by the Receivable or
independently thereof (such Receivable be excluded only to the extent of such
setoff, contra, offset, etc., subject to compliance with all other standards of
eligibility); (i) the applicable account debtor has finally accepted the goods
or services from the sale out of which the Receivable arose and has not
objected to such account debtor's liability thereon or returned, rejected or
repossessed any of such goods, except for complaints made or goods returned in
the ordinary course of business for which, in the case of goods returned, goods
of equal or greater value have been shipped in return (such Receivable to be
excluded only to the extent of such objection, return, rejection or
repossession, subject to compliance with all other standards of eligibility);
(j) the applicable account debtor is not any Governmental Authority, unless
there has been in compliance reasonably satisfactory to
-16-
24
the Agent in all respects with the Assignment of Claims Act or similar state
statutes; (k) the applicable account debtor is not an Affiliate of the Borrower
or any such Subsidiary (other than Sun Microsystems, Inc.); (l) the account
debtor must be located in the United States, except for Receivables insured or
backed by credit insurance or a letter of credit in form and substance
acceptable to the Agent in all respects; (m) the Receivable complies with all
material Legal Requirements (including without limitation, all usury laws, fair
credit reporting and billing laws, fair debt collection practices and rules,
and regulations relating to truth in lending and other similar matters); (n)
the Receivable is in full force and effect and constitutes a legal, valid and
binding obligation of the applicable account debtor enforceable in accordance
with the terms thereof; (o) the Receivable is denominated in and provides for
payment by the applicable account debtor in U.S. dollars; (p) the Receivable
has not been and is not required to be charged or written off as uncollectible
in accordance with GAAP; (q) if the Receivable is owing by an account debtor
for which the Borrower or the applicable Subsidiary must have filed a "Notice
of Business Activities Report" or similar report in a state or states where
failure to comply with such filing of notice precludes bringing suit against
the applicable account debtor, the Borrower or the applicable Subsidiary must
have filed such requisite activities report or other similar report and
otherwise be in compliance with such Legal Requirement to the extent necessary
-17-
25
to allow the Borrower or the applicable Subsidiary to bring suit against the
applicable account debtor in the applicable state or states; and (r) the Agent
is satisfied in its reasonable discretion with the credit standing of the
applicable account debtor in relation to the amount of credit extended.
Notwithstanding the exclusion or exemption of Sun Microsystems, Inc. from the
10% concentration limit for Receivables owing by any account debtor set forth
in subclause (d) above, the total amount of Receivables owing by Sun
Microsystems, Inc. which are included in the Borrowing Base shall never exceed
$5,000,000 at any time.
Environmental Claim shall mean any third party (including any
Governmental Authority) action, lawsuit, claim or proceeding (including claims
or proceedings at common law) which seeks to impose or alleges any liability
for (i) noise; (ii) preservation, protection, conservation, pollution,
contamination of, or releases or threatened releases of, Hazardous Substances
into the air, surface water, ground water or land or the clean-up, abatement,
removal, remediation or monitoring of such pollution, contamination or
Hazardous Substances; (iii) generation, recycling, reclamation, handling,
treatment, storage, disposal or transportation of Hazardous Substances (as
defined under the Resource Conservation and Recovery Act and its regulations,
as amended from time to time); (iv) exposure to Hazardous Substances; (v) the
safety or health of employees or other Persons in
-18-
26
connection with any of the activities specified in any other subclause of this
definition; or (vi) the manufacture, processing, distribution in commerce,
presence or use of Hazardous Substances. An "Environmental Claim" includes a
common law action, as well as a proceeding to issue, modify or terminate an
Environmental Permit, or to adopt or amend a regulation, to the extent that
such a proceeding attempts to redress violations of the applicable permit,
license, or regulation as alleged by any Governmental Authority.
Environmental Liabilities shall mean all liabilities arising from any
Environmental Claim, Environmental Permit or Requirement of Environmental Law
under any theory of recovery, at law or in equity, and whether based on
negligence, strict liability or otherwise, including: remedial, removal,
response, abatement, restoration (including natural resources), investigative,
or monitoring liabilities, personal injury and damage to property, natural
resources or injuries to persons, and any other related costs, expenses,
losses, damages, penalties, fines, liabilities and obligations, and all costs
and expenses necessary to cause the issuance, reissuance or renewal of any
Environmental Permit including attorney's fees and court costs. Environmental
Liability shall mean any one of them.
Environmental Permit shall mean any permit, license, approval or other
authorization under any applicable law,
-19-
27
regulation and other requirement of the United States or of any state,
municipality or other subdivision thereof relating to pollution or protection
of health or the environment, including laws, regulations or other requirements
relating to emissions, discharges, releases or threatened releases of
pollutants, contaminants, Hazardous Substances or toxic materials or wastes
into ambient air, surface water, ground water or land, or otherwise relating to
the manufacture, processing, distribution, recycling, presence, use, treatment,
storage, disposal, transport, or handling of wastes, pollutants, contaminants
or Hazardous Substances.
ERISA shall mean the Employee Retirement Income Security Act of 1974,
as amended from time to time, and all rules, regulations, rulings and
interpretations adopted by the Internal Revenue Service or the Department of
Labor thereunder.
ERISA Affiliate shall mean any trade or business (whether or not
incorporated) which together with the Borrower or any Subsidiary of the
Borrower would be treated as a single employer under the provisions of Title I
or Title IV of ERISA.
Event of Default shall mean any of the events specified in
Section 8.1 hereof or otherwise specified as a Default in any other Loan
Document, provided there has been satisfied any requirement in connection with
any such event for the giving
-20-
28
of notice or the lapse of time, or both, and Default shall mean any of such
events, whether or not any such requirement for the giving of notice, or the
lapse of time, or both, has been satisfied.
Excess Interest Amount shall have the meaning attributed to such term
in Section 2.13 hereof.
Federal Funds Effective Rate shall mean, for any day, a rate per annum
equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers, as published on the next succeeding Business Day by the Federal
Reserve Bank of New York, or, if such rate is not so published for any day
which is a Business Day, the average of the quotations for the day of such
transactions received by the Agent from three Federal funds brokers of
recognized standing selected by it.
Financial Officer shall mean, with respect to any Person, the chief
financial officer of such Person.
GAAP shall mean, as to a particular Person, those principles and
practices (a) which are recognized as generally accepted accounting principles
by the Financial Accounting Standards Board or any successor organization, (b)
which are applied for all periods after the date hereof in a manner con-
-21-
29
sistent with the manner in which such principles and practices were applied to
the most recent audited financial statements of the relevant Person furnished
to the Agent and the Lenders, and (c) which are consistently applied for all
periods after the date hereof so as to reflect properly the financial
condition, and results of operations and changes in financial position, of such
Person. If any changes in accounting principles from those used in preparation
of the financial statements periodically required to be delivered to the Agent
and the Lenders by the terms of this Agreement are hereafter occasioned by
promulgation of rules, regulations, pronouncements or opinions by or other
required by the Financial Accounting Standards Board or any successor or
organization, and any of such changes results in a change of the method of
calculation of, or affect the results of such calculation of, any financial
covenant or financial standard or term found herein, then the parties hereto
agree to continue to calculate financial covenants, standards and terms
hereunder in accordance with GAAP as in existence on the Closing Date.
Governmental Authority shall mean any foreign governmental authority,
the United States of America, any state of the United States and any political
subdivision of any of the foregoing, and any agency, instrumentality,
department, commission, board, bureau, central bank, authority, court or other
tribunal, in each case whether
-22-
30
executive, legislative, judicial, regulatory or administrative, having
jurisdiction over the Agent, any of the Lenders, the Borrower, any Subsidiary
of the Borrower, or their respective Property.
Grantor shall mean any Grantor, Assignor, Pledgor or Debtor, as such
terms are defined in any of the Security Documents.
Guarantors shall mean each and every Person executing a Guaranty from
time to time. As of the Closing Date, there are no Guarantors.
Guaranty shall mean each and every guaranty of the Obligations from
time to time executed and delivered to the Agent by any Guarantor, as amended,
supplemented, modified, joined in pursuant to a Joinder Agreement and restated
from time to time.
Hazardous Substance shall mean any hazardous or toxic waste, substance
or product or material defined or regulated from time to time by any applicable
law, rule, regulation or order described in the definition of "Requirements of
Environmental Law," including solid waste (as defined under RCRA or its
regulations, as amended from time to time), petroleum and any fraction thereof,
any radioactive materials and waste.
-23-
31
Highest Lawful Rate shall mean, with respect to the Agent or any
Lender, the maximum nonusurious rate of interest permitted to be charged by, as
applicable, the Agent or such Lender under applicable laws (if any) of the
United States or any state from time to time in effect.
Indebtedness shall mean, as to any Person, without duplication: (a)
all indebtedness (including principal, interest, fees and charges) of such
Person for borrowed money; (b) any other indebtedness which is evidenced by a
bond, debenture or similar instrument; (c) all Capital Lease Obligations of
such Person; (d) all obligations of such Person for the deferred purchase
price of Property or services (except current trade accounts payable arising in
the ordinary course of business); (e) all obligations of such Person in respect
of outstanding letters of credit, acceptances and similar obligations created
for the account of such Person; (f) all indebtedness, liabilities, and
obligations secured by any Lien on any Property owned by such Person even
though such Person has not assumed or has not otherwise become liable for the
payment of any such indebtedness, liabilities or obligations secured by such
Lien; (g) net liabilities of such Person under interest rate cap agreements,
interest rate swap agreements, foreign currency exchange agreements and other
hedging agreements or arrangements (calculated on a basis satisfactory to the
Agent and in accordance with accepted practice); and (h) all other
indebtedness, liabilities and
-24-
32
obligations of such Person which are required to be included or listed in the
liabilities section of such Person's balance sheet according to GAAP; provided,
that such term shall not mean or include any Indebtedness in respect of which
monies sufficient to pay and discharge the same in full (either on the
expressed date of maturity thereof or on such earlier date as such Indebtedness
may be duly called for redemption and payment) shall be deposited with a
depository, agency or trustee acceptable to the Agent in trust for the payment
thereof.
Interest Expense shall mean, with respect to any Person for any
period, the interest expense of such Person during such period determined in
accordance with GAAP, consistently applied, and shall in any event include,
without limitation, (a) the amortization of debt discounts, (b) the
amortization of all fees payable in connection with the incurrence of
Indebtedness to the extent included in interest expense, (c) the portion of any
Capital Lease Obligation allocable to interest expense, (d) all fixed and
calculable dividend payments on preferred stock, and (e) payments of interest
expense in kind.
Interest Option shall have the meaning given to such term in Section
2.8(a) hereof.
-25-
33
Interest Payment Dates shall mean (a) the first Business Day of each
calendar month prior to the Maturity Date, commencing on October 1, 1996, and
(b) the Maturity Date. In addition to the Interest Payment Dates described in
the preceding sentence, an Interest Payment Date for all LIBOR Borrowings shall
be the last day of the Interest Period applicable thereto.
Interest Period shall mean, as to any LIBOR Borrowing, the period
commencing on the date of such LIBOR Borrowing and ending on the numerically
corresponding day (or, if there is no numerically corresponding day, on the
last day) in the calendar month that is one (1), two (2), three (3) or six (6)
months thereafter, as the Borrower may elect in accordance herewith; provided,
however, that (a) if an Interest Period would end on a day that is not a
Business Day, such Interest Period shall be extended to the next succeeding
Business Day unless, with respect to LIBOR Borrowings, such next succeeding
Business Day would fall in the next calendar month, in which case such Interest
Period shall end on the next preceding Business Day, (b) no Interest Period
shall end later than the Maturity Date, and (c) interest shall accrue from and
including the first day of an Interest Period to, but excluding, the last day
of such Interest Period.
Investment shall mean the purchase or other acquisition of any
securities or Indebtedness of, or the making of any
-26-
34
loan, advance, transfer of Property or capital contribution to, any Person.
Joinder Agreement shall mean any agreement, in Proper Form, executed
by a Subsidiary of the Borrower from time to time in accordance with Section
6.10 hereof, pursuant to which such Subsidiary joins in the execution and
delivery of a Guaranty.
Legal Requirement shall mean any law, statute, ordinance, decree,
requirement, order, judgment, rule, regulation (or interpretation of any of the
foregoing) of, and the terms of any license or permit issued by, any
Governmental Authority.
Lender or Lenders shall have the meaning assigned to such terms in the
preamble of this Agreement.
Letters of Credit shall mean all standby letters of credit and
documentary sight letters of credit issued by the Agent for the account of the
Borrower pursuant to the terms set forth in this Agreement.
Letter of Credit Advances shall mean all sums which may from time to
time be paid by any and all of the Lenders pursuant to any and all of the
Letters of Credit, together with all other sums, fees, reimbursements or other
obligations
-27-
35
which may be due to the Agent or any of the Lenders pursuant to any of the
Letters of Credit.
Letter of Credit Exposure Amount shall mean at any time the sum of (i)
the aggregate undrawn amount of all Letters of Credit outstanding at such time
plus (ii) the aggregate amount of all Letter of Credit Advances for which the
Lenders have not been reimbursed and which remain unpaid at such time.
Leverage Ratio shall mean as of any date that the Leverage Ratio is
calculated, the ratio of (a) the aggregate liabilities of the Borrower and its
Subsidiaries, on a Consolidated basis, as shown on the most recent Quarterly
Unaudited Financial Statements or Annual Audited Financial Statements, as
applicable, which are delivered to and received by the Agent on or immediately
prior to the date of determination of the Leverage Ratio to (b) the aggregate
EBITDA of the Borrower and its Subsidiaries, on a Consolidated basis, for the
four (4) most recent consecutive fiscal quarters of the Borrower ending on or
immediately prior to the date of determination of the Leverage Ratio.
LIBOR Borrowing shall mean, as of any date, that portion of the
principal balance of the Loans bearing interest at the Adjusted LIBOR Rate as
of such date.
-28-
36
LIBOR Lending Office shall mean, with respect to any Lender, the
office of such Lender specified as its "LIBOR Lending Office" opposite or below
its name on the signature pages hereof, or (if no such office is specified, its
Domestic Lending Office), or such other office of such Lender as such Lender
may from time to time specify in writing to the Borrower and the Agent.
LIBOR Rate shall mean, with respect to any LIBOR Borrowing for any
Interest Period, an interest rate per annum (rounded upwards, if necessary, to
the next 1/16 of 1%) equal to the rate at which dollar deposits approximately
equal in principal amount to the Agent's portion of such LIBOR Borrowing and
for a maturity equal to the applicable Interest Period are offered in
immediately available funds to the London branch of the Agent by leading
lenders in the London interbank market for Eurodollars at approximately 11:00
a.m., London time, two (2) Business Days prior to the first day of such
Interest Period.
Lien shall mean, with respect to any asset of any Person, (a) any
mortgage, pledge, charge, encumbrance, security interest, collateral assignment
or other lien or restriction of any kind on such asset, whether based on common
law, constitutional provision, statute or contract, (b) the interest of any
vendor or a lessor under any conditional sale agreement, title retention
agreement or capital lease relating
-29-
37
to such asset, (c) in the case of securities, any purchase option, call or
similar right of a third party with respect to such securities, or (d) any
other right of or arrangement with any creditor to have such creditor's claim
satisfied out of such assets, or the proceeds therefrom, prior to the general
creditors of such Person owning such assets.
Loan Documents shall mean this Agreement, the Notes, the Applications,
the Security Documents, the Guaranties, the Joinder Agreements, the Letters of
Credit, all instruments, certificates and agreements now or hereafter executed
or delivered to the Agent and/or the Lenders pursuant to any of the foregoing,
and all amendments, modifications, renewals, extensions, increases and
rearrangements of, and substitutions for, any of the foregoing.
Loans shall mean the Loans made pursuant to Section 2.1 hereof. Loan
shall mean any one of the Loans.
Lockbox Agreement shall collectively mean one or more lockbox
agreements, in Proper Form, to be executed and delivered to the Agent or TCB by
the Borrower and each of its Subsidiaries required by the Agent, together with
all modifications and/or replacements thereof which are approved in writing by
the Agent. As of the Closing Date, the Borrower has previously executed and
delivered to the Agent or TCB a Lockbox Agreement in substantially the form
attached hereto as
-30-
38
Exhibit B, as well as the Amended Lockbox Implementation & Processing
Instructions attached hereto as Exhibit C that relate to and modify said
Lockbox Agreement.
Material Adverse Effect shall mean a material adverse effect on (a)
the business, assets, operations, financial or other condition of the Borrower
and its Subsidiaries, taken as a whole, (b) the ability of the Borrower and the
Guarantors, taken as a whole, to perform or pay the Obligations in accordance
with the terms hereof or of any other Loan Document, or (c) the Agent's Lien on
any material portion of the Collateral or the priority of such Lien.
Maturity Date shall mean the earlier of (a) September 23, 1998, (b)
any date that the Total Commitment is terminated in full by the Borrower
pursuant to Section 2.4 hereof, and (c) any date the Maturity Date is
accelerated by the Agent pursuant to Section 8.1 hereof.
Net Amount of Eligible Receivables shall mean and include at any time,
without duplication, the gross amount of Eligible Receivables at such time less
(a) unpaid sales, excise or similar taxes owed by the Borrower or any of its
Subsidiaries, and (b) returns, discounts, claims, credits and allowances of any
nature at any time issued, owing, granted, outstanding, available or claimed.
In addition to the deductions from Eligible Receivables discussed in the
preceding sentence, the
-31-
39
Agent reserves the right to deduct from the gross amount of Eligible
Receivables a warranty allowance or reserve in an amount reasonably acceptable
to the Agent if the amount of actual warranty claims made against the Borrower
and its Subsidiaries in the aggregate for the three (3) most recent fiscal
months of the Borrower ending on or immediately prior to the applicable date of
calculation exceeds three percent (3%) of the aggregate gross sales of the
Borrower and its Subsidiaries for such period.
Net Income shall mean gross revenues and other proper income credits
for such Person, less all proper expenses and other income charges for such
Person, including taxes on income, all determined in accordance with GAAP;
provided, that there shall not be included in such revenues any extraordinary
or nonrecurring items, as determined in accordance with GAAP.
Notes shall mean the promissory notes, each substantially in the form
of Exhibit A attached hereto, of the Borrower evidencing the Loans, payable to
the order of the respective Lender in the amount of said Lender's Commitment,
and all renewals, extensions, modifications, rearrangements and replacements
thereof and substitutions therefor. Note shall mean any one of such promissory
notes.
Obligations shall mean, without duplication, all obligations,
liabilities and Indebtedness of the Borrower and
-32-
40
the Guarantors with respect to the Security Documents and other Loan Documents,
including without limitation, (a) the principal of and interest on the Loans
and (b) the payment or performance of all other obligations, liabilities and
Indebtedness of the Borrower or the Guarantors to the Agent and the Lenders
hereunder, under the Notes, under the Letters of Credit, under the Applications
or under any one or more of the other Loan Documents, including all fees,
costs, expenses and indemnity obligations hereunder and thereunder.
Officer's Certificate shall mean a certificate substantially in the
form of Exhibit D attached hereto.
Organizational Documents shall mean, with respect to a corporation,
the certificate of incorporation, articles of incorporation and bylaws of such
corporation; with respect to a partnership, the partnership agreement
establishing such partnership; with respect to a joint venture, the joint
venture agreement establishing such joint venture, and with respect to a trust,
the instrument establishing such trust; in each case including any and all
modifications thereof as of the date of the Loan Document referring to such
Organizational Document and any and all future modifications thereof which are
consented to by the Agent.
Parties shall mean all Persons other than the Agent or any Lender
executing any Loan Document.
-33-
41
Past Due Rate shall mean for the Agent and each Lender, on any day,
the lesser of (a) the sum of (i) the Alternate Base Rate, plus (ii) one percent
(1%), and (b) the Highest Lawful Rate, if any, applicable to the Agent or such
Lender on such day.
PBGC shall mean the Pension Benefit Guaranty Corporation.
Permitted Affiliate Transactions shall mean the following:
(a) full-time employment agreements and incentive compensation
programs with employees on commercially reasonable terms;
(b) officer, director or employee loans for work related
expenditures;
(c) advances to directors, officers or employees of the Borrower
and/or its Subsidiaries to provide for the payment of reasonable expenses
incurred by such Persons in the performance of such Persons' responsibilities
to the Borrower;
(d) loans to employees or officers for the purpose of enabling
such employees or officers to acquire Stock in the Borrower under one or more
qualified employee stock option plans, so long as the aggregate amount of such
loans by the
-34-
42
Borrower and all of its Subsidiaries does not exceed in the aggregate $250,000
per fiscal year; and
(e) indemnities provided on behalf of officers, directors or
employees of the Borrower and/or in its Subsidiaries as determined in good
faith by the Borrower's Board of Directors or senior management.
Permitted Dispositions shall mean the following dispositions of
assets:
(a) sales of inventory and other assets in the ordinary course of
business and for fair and adequate consideration;
(b) dispositions of damaged, worn-out or obsolete Property, or
Property which is no longer necessary for the proper conduct of any Person's
business;
(c) the abandonment of any assets or Properties which are no
longer useful for the proper conduct of business and cannot (after good faith
efforts to sell the same) be sold;
(d) the liquidation of Permitted Investment Securities;
(e) transfers of Property from the Borrower to its domestic
Subsidiaries (whether presently existing or hereafter created in accordance
with the other provisions of this
-35-
43
Agreement) or from one Subsidiary of the Borrower to another domestic
Subsidiary of the Borrower, provided, that if the entity to whom such transfer
or disposition is made is not the Borrower or is not yet a Guarantor,
simultaneously with such transfer, such entity executes and delivers to the
Agent a Joinder Agreement, together with all of the requested Security
Documents, as required at such time by the Agent, appropriately completed;
(f) sale/leaseback transactions permitted pursuant to Section
7.15 hereof;
(g) leases to any Person of real Property of the Borrower,
provided that the terms (including lease term and rent) of such leases are
commercially reasonable; and
(h) sales and licenses of intellectual Property of the Borrower
or its Subsidiaries entered into on commercially reasonable terms.
Permitted Investments shall mean:
(a) the endorsement of negotiable instruments for deposit or
collection in the ordinary course of business;
(b) Investments in Permitted Investments Securities;
-36-
44
(c) Investments representing Stock or obligations issued to the
Borrower or its Subsidiaries in settlement of claims against any other Person
by reason of a composition or readjustment of debt or a reorganization of any
debtor of the Borrower and/or its Subsidiaries;
(d) loans to employees or officers of the Borrower and/or its
Subsidiaries for the purpose of enabling such employees or officers to acquire
Stock in the Borrower under one or more qualified employee stock option plans,
so long as the aggregate amount of such loans by the Borrower and all of its
Subsidiaries does not exceed in the aggregate $250,000 per fiscal year;
(e) Investments made as a result of the receipt of non-cash
consideration from a Permitted Disposition;
(f) to the extent that any manufacturing and licensing agreements
constitute Investments, any such arrangements entered into in the ordinary
course of business;
(g) the Stock of ▇▇▇▇ Semiconductors (Israel) Ltd. owned and held
by the Borrower as of the Closing Date;
(h) any Stock owned and held by the Borrower or any of its
Subsidiaries in (1) any wholly-owned, domestic Subsidiary of the Borrower
created by the Borrower for purposes of
-37-
45
receiving one or more transfers of Property from the Borrower or any of its
other Subsidiaries pursuant to the terms of clause (e) of the "Permitted
Dispositions" definition set forth above or (2) any other wholly-owned
Subsidiary of the Borrower created or acquired with the prior written consent
of the Agent after the Closing Date; and
(i) to the extent that any interest held by the Borrower in SPARC
International, Inc., a California mutual benefit corporation, or any payments
made by the Borrower to such entity constitute Investments, any such interest
held or any such payments made in the ordinary course of business.
Permitted Investment Securities shall mean: (1) readily marketable,
direct obligations of the United States of America or any agency or wholly
owned corporation thereof which are backed by the full faith and credit of the
United States, (2) certificates of deposit or other short-term direct
obligations of (i) the Agent, (ii) TCB or (iii) any other financial institution
having capital and surplus in excess of $5,000,000,000, and (3) other
Investments mutually agreed to in writing by the Borrower and the Agent;
provided, that in each case described in clauses (1) and (2), such obligation
shall mature not more than one (1) year from the acquisition thereof.
-38-
46
Person shall mean any individual, corporation, business trust,
unincorporated organization or association, partnership, joint venture,
Governmental Authority or any other form of entity.
Plan shall mean any plan subject to Title IV of ERISA and maintained
for employees of the Borrower or of any member of a "controlled group of
corporations", as such term is defined in the Code, of which the Borrower, any
of its Subsidiaries or any ERISA Affiliate it may acquire from time to time is
a part, or any such plan to which the Borrower, any of its Subsidiaries or any
ERISA Affiliate is required to contribute on behalf of its employees.
Prime Rate shall mean the rate of interest per annum publicly
announced from time to time by Chase, or its successor financial institution,
at its principal office in New York City as its prime rate in effect at such
time. Without notice to the Borrower or any other Person, the Prime Rate shall
change automatically from time to time as and in the amount by which said prime
rate shall fluctuate, with each such change to be effective as of the date of
each change in such prime rate. THE PRIME RATE IS A REFERENCE RATE AND DOES
NOT NECESSARILY REPRESENT THE LOWEST OR BEST RATE ACTUALLY CHARGED BY CHASE OR
SUCH SUCCESSOR FINANCIAL INSTITUTION TO ANY OF ITS CUSTOMERS. CHASE OR SUCH
SUCCESSOR FINANCIAL
-39-
47
INSTITUTION MAY MAKE COMMERCIAL LOANS OR OTHER LOANS AT RATES OF INTEREST AT,
ABOVE AND BELOW THE PRIME RATE.
Principal Office shall mean the principal office in New York City of
the Agent, or at such other place as the Agent may from time to time by notice
to the Borrower designate.
Proper Form shall mean in form and substance reasonably satisfactory
to the Agent.
Property shall mean any interest in any kind of property or asset,
whether real, personal or mixed, tangible or intangible.
Quarterly Unaudited Financial Statements shall mean the financial
statements of a Person, which statements shall include (a) a balance sheet as
of the end of the respective fiscal quarter, (b) an income statement for such
respective fiscal quarter, and for the fiscal year to date, subject to normal
year-end adjustments, all setting forth in comparative form the corresponding
figures for the corresponding period of the preceding fiscal year, and (c) a
statement of cash flows for the fiscal year to date, subject to normal year-end
adjustments, setting forth in comparative form the corresponding figures for
the corresponding period of the preceding fiscal year, all prepared in
accordance with GAAP and certified as true and correct by a Responsible Officer
of
-40-
48
the Borrower. The Quarterly Unaudited Financial Statements for the Borrower
and its Subsidiaries shall be prepared on a Consolidated basis in accordance
with GAAP. Additionally, when and if the daily collection and application
procedure for Receivables is implemented and is continuing in accordance with
the provisions of Section 6.15(b) hereof, the Quarterly Unaudited Financial
Statements for the Borrower and its Subsidiaries shall also be prepared on a
consolidating basis (with such consolidating statements to be prepared in
accordance with GAAP only to the extent normal and customary).
Rate Selection Date shall mean that Business Day which is (a) in the
case of the Alternate Base Rate Borrowings, the date of such borrowing, or (b)
in the case of LIBOR Borrowings, the date three (3) Business Days preceding the
first day of any proposed Interest Period.
Rate Selection Notice shall have the meaning ascribed to such term in
Section 2.8(b)(1) hereof.
Receivables shall mean and include all of the accounts, instruments,
documents, chattel paper and general intangibles of the Borrower or any of its
Subsidiaries, whether secured or unsecured, whether now existing or hereafter
created or arising, and whether or not specifically assigned to the Agent for
the ratable benefit of the Lenders.
-41-
49
Refinancing Indebtedness shall mean any Indebtedness of the Borrower
or its Subsidiaries issued in exchange for, or the net proceeds of which are
used to extend, refinance, renew, replace, defease or refund other Indebtedness
of such Person, provided, that:
(a) the principal amount of such Refinancing Indebtedness does
not exceed the then outstanding principal amount of the Indebtedness so
extended, refinanced, renewed, replace, defeased or refunded (plus the amount
of reasonable expenses and any premium or penalty paid in connection with such
extension, refinancing, renewal, replacement, defeasance or refund in
accordance with the terms of the documents governing the original issuance of
such Indebtedness);
(b) the interest rates, maturities, amortization schedules,
covenants, defaults, remedies, subordination provisions (with respect to any
Subordinated Indebtedness), collateral security provisions (or absence thereof)
and other terms of such Refinancing Indebtedness are in each case the same or
more favorable to the Borrower and/or its Subsidiaries as those in the
Indebtedness so extended, refinanced, renewed, replaced, defeased or refunded;
and
(c) no Default or Event of Default has occurred and is continuing
or would result from the issuance or origination of such Refinancing
Indebtedness.
-42-
50
Regulation D shall mean Regulation D of the Board of Governors of the
Federal Reserve System from time to time in effect and shall include any
successor or other regulation relating to reserve requirements applicable to
member Lenders of the Federal Reserve System.
Regulatory Change shall mean, with respect to any Lender, any change
on or after the date of this Agreement in any Legal Requirement (including
Regulation D) or the adoption or making on or after such date of any
interpretation, directive or request applying to a class of Lenders including
such Lender under any Legal Requirement (whether or not having the force of
law) by any Governmental Authority charged with the interpretation or
administration thereof.
Reportable Event shall mean a Reportable Event as defined in Section
4043(b) of ERISA.
Request for Extension of Credit shall mean a written request for
extension of credit substantially in the form of Exhibit E attached hereto.
Required Lenders shall mean Lenders having 66-2/3% or greater of the
Total Commitment.
Requirements of Environmental Law shall mean all requirements imposed
by any law (including The Resource Conservation
-43-
51
and Recovery Act, The Comprehensive Environmental Response, Compensation, and
Liability Act, the Clean Water Act, the Clean Air Act, and any state analogues
of any of the foregoing), rule, regulation, or order of any Governmental
Authority now or hereafter in effect which relate to (i) noise; (ii) pollution,
protection or clean-up of the air, surface water, ground water or land; (iii)
solid, liquid or gaseous waste or Hazard Substance generation, recycling,
reclamation, release, threatened release, treatment, storage, disposal or
transportation; (iv) exposure of Persons or property to Hazardous Substances;
(v) the safety or health of employees or other Persons; or (vi) the
manufacture, presence, processing, distribution in commerce, use, discharge,
releases, threatened releases, emissions or storage of Hazardous Substances
into the environment. Requirement of Environmental Law shall mean any one of
them.
Responsible Officer shall mean, with respect to any Person, any
president or vice president, or the chief financial officer or controller of
such Person.
Security Agreements shall mean (a) the Security Agreement (Personal
Property) of even effective date herewith, between the Borrower and the Agent,
for the ratable benefit of the Lenders, covering all Receivables, inventory and
all other related tangible and intangible personal Property of the Borrower
more particularly described therein, (b) any and all
-44-
52
other security agreements, pledge agreements, collateral assignments or other
similar documents now or hereafter executed in favor of the Agent, for the
ratable benefit of the Lenders, as security for the payment or performance of
any and or all of the Obligations, and (c) any amendment, modification,
restatement or supplement of all or any of the above-described agreements and
assignments.
Security Documents shall mean the Security Agreements, all related
financing statements and any and all other agreements, mortgages, deeds of
trust, chattel mortgages, security agreements, pledges, guaranties, assignments
of income, assignments of contract rights, assignments or pledges of stock or
partnership interests, standby agreements, subordination agreements,
undertakings and other instruments and financing statements now or hereafter
executed and delivered in connection with, or as security for, the payment and
performance of the Obligations, as any of them may from time to time be
amended, modified, restated or supplemented.
Statutory Reserves shall mean (a) with respect to the Adjusted LIBOR
Rate, a fraction (expressed as a decimal), the numerator of which is the number
one and the denominator of which is the number one minus the aggregate of the
maximum reserve percentage (including without limitation, any marginal,
special, emergency or supplemental reserves) expressed as a decimal,
established by the Board of Governors
-45-
53
of the Federal Reserve System of the United States and any other banking
authority to which any Lender is subject with respect to the Adjusted LIBOR
Rate for Eurocurrency Liabilities (as defined in Regulation D), including
without limitation, those reserve percentages imposed under Regulation D, and
(b) with respect to the Base CD Rate, a fraction (expressed as a decimal), the
numerator of which is the number one and the denominator of which is the number
one minus the aggregate of the maximum reserve percentage (including, without
limitation, any marginal, special, emergency or supplemental reserves)
expressed as a decimal, established by the Board of Governors of the Federal
Reserve System of the United States or any banking authority to which any
Lender is subject with respect to the Base CD Rate for new negotiable
nonpersonal time deposits in U.S. dollars of over $100,000 with maturities
approximately equal to three months. Statutory Reserves shall be adjusted
automatically on and as of the effective date of any change in any applicable
reserve percentage. For purposes hereof, LIBOR Borrowings shall be deemed to
constitute Eurocurrency Liabilities (as defined in Regulation D) and as such,
shall be deemed to be subject to such reserve requirements of Regulation D
without benefit of or credit for proration, exceptions or offsets which may be
available from time to time to any Lender under Regulation D.
-46-
54
Stock shall mean as to a Business Entity, all capital stock or other
indicia of equity rights issued by such Business Entity from time to time.
Subordinated Indebtedness shall mean, with respect to the Borrower or
any Guarantor, Indebtedness subordinated in right of payment to the Borrower's
or such Guarantor's monetary Obligations on terms satisfactory to and approved
in writing by the Agent.
Subsidiary shall mean, as to a particular parent Business Entity, any
Business Entity of which more than fifty percent (50%) of the Stock issued by
such Business Entity is at the time directly or indirectly owned by such parent
Business Entity or by one or more of its Affiliates.
Tangible Net Worthshall mean, as to any Person at any time, without
duplication, (a) the sum of such Person's capital stock, additional paid in
capital, capital in excess of par or stated value of shares of its capital
stock, retained earnings and any other amount which, in accordance with GAAP,
constitutes stockholders' equity, less (b) treasury stock, less (c) the amount
of any write-up subsequent to the effective date of this Agreement in the value
of any asset above the cost or depreciated costs thereof to such Person, less
(d) the book value of all assets which would be treated as intangibles under
GAAP, including without limitation, good
-47-
55
will, trademarks, trade names, patents, copyrights and licenses.
TCB shall mean Texas Commerce Bank National Association, a national
banking association.
Three-Month Secondary CD Rate shall mean, for any day, the secondary
market rate for three-month certificates of deposit reported as being in effect
on such day (or, if such day shall not be a Business Day, the next preceding
Business Day) by the Board of Governors of the Federal Reserve System of the
United States through the public information telephone line of the Federal
Reserve Bank of New York (which rate will, under the current practices of such
Board of Governors, be published in Federal Reserve Statistical Release
H.15(519) during the week following such day), or, if such rate shall not be so
reported on such day or such next preceding Business Day, the average of the
secondary market quotations for three-month certificates of deposit of major
money center banks in New York City received at approximately 10:00 a.m. on
such day (or, if such day shall not be a Business Day, on the next preceding
Business Day) by the Agent from three New York City negotiable certificate of
deposit dealers of recognized standing selected by the Agent.
Total Commitment shall mean, on any day, the aggregate of all of the
Commitments of the Lenders on such day (as the same
-48-
56
may be reduced from time to time pursuant to Section 2.4 hereof).
Unused Commitment shall mean, as to a particular Lender, the daily
difference of such Lender's Commitment on such day less the Current Sum
applicable to such Lender on such day.
1.2 Accounting Terms and Determinations. Except where
specifically otherwise provided:
(a) The symbol "$" and the word "dollars" shall
mean lawful money of the United States of America.
(b) Any accounting term not otherwise defined
shall have the meaning ascribed to it under GAAP.
(c) Unless otherwise expressly provided, any
accounting concept and all financial covenants shall be determined on a
Consolidated basis, and financial measurements shall be computed without
duplication.
(d) Wherever the term "including" or any of its
correlatives appears in the Loan Documents, it shall be read as if it were
written "including (by way of example and without limiting the generality of
the subject or concept referred to)".
-49-
57
(e) Wherever the word "herein" or "hereof" is
used in any Loan Document, it is a reference to that entire Loan Document and
not just to the subdivision of it in which the word is used.
(f) References in any Loan Document to Section
numbers are references to the Sections of such Loan Document.
(g) References in any Loan Document to Exhibits,
Schedules, Annexes and Appendices are to the Exhibits, Schedules, Annexes and
Appendices to such Loan Document, and they shall be deemed incorporated into
such Loan Document by reference.
(h) Any term defined in the Loan Documents which
refers to a particular agreement, instrument or document shall also mean, refer
to and include all modifications, amendments, supplements, restatements,
renewals, extensions and substitutions of the same; provided that nothing in
this subsection shall be construed to authorize any such modification,
amendment, supplement, restatement, renewal, extension or substitution except
as may be permitted by other provisions of the Loan Documents.
(i) All times of day used in the Loan Documents
mean local time in New York City.
-50-
58
(j) Defined terms may be used in the singular or
plural, as the context requires.
2. Loans; Letters of Credit; Notes; Payments; Prepayments; Interest
Rates.
2.1 Commitments. Subject to the terms and conditions hereof,
each Lender, severally and not jointly, agrees to make Loans to the Borrower
from time to time on and after the Closing Date until, but not including, the
Maturity Date, in an aggregate principal amount at any one time outstanding
(including such Lender's Commitment Percentage of the Letter of Credit Exposure
Amount at such time) up to, but not exceeding such Lender's Commitment.
Notwithstanding the foregoing, the aggregate principal amount of the Loans
outstanding at any time shall not exceed (a) the lesser of (i) the Total
Commitment and (ii) the applicable Borrowing Base at such time less (b) the
Letter of Credit Exposure Amount at such time. Subject to the conditions
herein, any such Loan repaid prior to the Maturity Date may be reborrowed as an
additional Loan by the Borrower pursuant to the terms of this Agreement.
2.2 Loans.
(a) Subject to Sections 4.1 and 4.2 hereof, (i)
all Loans shall be advanced and made ratably by the
-51-
59
Lenders in accordance with the Lenders' respective Commitments; and (ii) the
initial Loans shall be made on the Closing Date by the Lenders against delivery
of the Notes.
(b) When requesting a Loan hereunder, the
Borrower shall give the Agent notice of a request for a Loan in accordance with
Section 4.1(a) hereof. Except as otherwise provided in Section 2.2(f) hereof,
the Agent shall promptly advise the Lenders of any notice of a request for a
Loan given pursuant to Section 4.1(a) and of each Lender's portion of a
requested borrowing (based on such Lender's Commitment Percentage).
(c) Except as otherwise provided or specified in
Section 2.2(f) below, each Lender shall make its Loans available on the
proposed dates thereof by causing its Applicable Lending Office to pay the
amount required to the Agent at the Principal Office in immediately available
funds not later than 11:00 a.m., and the Agent shall as soon as practicable,
but in no event later than 5:00 p.m. on such date, credit the amount so
received to a general deposit account designated and maintained by the Borrower
with the Agent at the Principal Office or with TCB at its Austin, Texas branch.
If a requested Loan shall not occur on the Closing Date or any date specified
by the Borrower as set forth in the applicable Request for Extension of Credit,
as the case may be, because all of the conditions for such Loan set forth
-52-
60
herein or in any of the other Loan Documents shall not have been met, the Agent
shall return the amounts so received from the Lenders in respect of such
requested Loan to the applicable Lenders as soon as practicable.
(d) The obligations of the Lenders hereunder are
several and not joint; therefore, notwithstanding anything herein to the
contrary: (i) no Lender shall be required to make Loans at any one time
outstanding in excess of such Lender's Commitment; (ii) if a Lender fails to
make a Loan as and when required hereunder and the Borrower subsequently makes
a repayment on the Loans, such repayment shall be split among the
non-defaulting Lenders in accordance with their respective Commitment
Percentages until each Lender has its Commitment Percentage of all of the
outstanding Loans, after which the balance of such repayment shall be divided
among all of the Lenders in accordance with their respective Commitments; and
(iii) the failure of any Lender to make any Loan shall not in itself relieve
any other Lender of its obligation to lend hereunder (provided, that no Lender
shall be responsible for the failure of any other Lender to make a Loan such
other Lender is obligated to make hereunder).
(e) The Loans made by the Lenders on any date
shall be in integral multiples of $1.00; provided, however, that the LIBOR
Borrowings made on any date shall be in a minimum aggregate principal amount of
$1,000,000, with any
-53-
61
increases over such minimal amount being in integral aggregate multiples of
$100,000.
(f) When and if the daily collection and
application procedures for Receivables are implemented and are continuing in
accordance with the provisions of Section 6.15(b) hereof, the arrangements
between the Agent and the Lenders with respect to making and advancing the
Loans and making payments under Letters of Credit shall be handled on the
following basis: no less than once a week, the Agent will provide each Lender
with a statement showing, for the period of time since the date of the most
recent of such statements previously provided, the aggregate principal amount
of new Loans made to the Borrower, the aggregate amount of new Letter of Credit
Advances which have not been reimbursed, the aggregate face amount of new
Letters of Credit issued for the account of the Borrower, the amount of
remittances and payments actually collected and applied by the Agent to reduce
the outstanding principal balance of the Loans and to reimburse Letter of
Credit Advances during such period and the outstanding principal balances of
the Loans and the aggregate Letter of Credit Exposure Amount outstanding at the
end of such period. If a Lender's pro-rata share (based on such Lender's
Commitment Percentage) of the Loans and the unreimbursed Letter of Credit
Advances made during such period exceeds such Lender's pro-rata share of
remittances and payments applied to reduce the Loans and reimburse Letter of
-54-
62
Credit Advances during such period, the difference will be paid and made
available in same day funds by such Lender to the Agent, and if such Lender's
pro-rata share (based on such Lender's Commitment Percentage) of remittances
and payments applied to reduce the Loans and reimburse Letter of Credit
Advances during such period exceeds such Lender's pro-rata share (based on such
Lender's Commitment Percentage) of the Loans and the unreimbursed Letter of
Credit Advances made during such period, the difference will be paid and made
available in same day funds by the Agent to such Lender.
(g) When and if the daily collection and
application procedures for Receivables are implemented and are continuing in
accordance with the provisions of Section 6.15(b) hereof, the Agent shall
render to the Borrower each month a statement of the Borrower's account of all
transactions of the type described in Section 2.2(f) hereof, which shall be
deemed to be correct and accepted by and be binding upon the Borrower unless
the Agent receives a written statement of the Borrower's exceptions to such
account statement within thirty (30) days after such statement was rendered to
the Borrower.
2.3 Commitment and Other Fees.
(a) In consideration of each Lender's Commitment,
the Borrower agrees to pay to the Agent for the
-55-
63
account of each Lender a commitment fee (each a "Commitment Fee") (computed on
the basis of the actual number of days elapsed in a year composed of 360 days,
subject to the terms of Section 10.6 hereof) in an amount equal to the product
of (A) one-quarter of one percent (.25%) times (B) such Lender's Unused
Commitment. The Commitment Fee shall be due and payable in arrears (i) on the
first Business Day of each December, March, June and September prior to the
Maturity Date, commencing December 1, 1996, and (ii) on the Maturity Date, with
each Commitment Fee to commence to accrue as of the date hereof and to be
effective as to any reduction in the Total Commitment as of the date of any
such decrease, and each Commitment Fee shall cease to accrue (except with
respect to interest at the Past Due Rate on any unpaid portion thereof) on the
Maturity Date. All past due Commitment Fees shall bear interest at the Past
Due Rate and shall be payable upon demand by the Agent.
(b) When and if the daily collection and
application procedures for Receivables are implemented and are continuing in
accordance with the provisions of Section 6.15(b) hereof, the Borrower hereby
agrees to pay to the Agent, for its sole benefit (and not for the benefit of
each of the Lenders), an administration fee in the amount of $25,000 per annum,
payable in advance in quarterly installments of $6,250, commencing on any date
such daily collection procedures are implemented, and thereafter
-56-
64
quarterly on the same Business Day of each subsequent calendar quarter in which
such daily collection procedures are continuing.
2.4 Termination and Reductions of Commitments.
(a) Upon at least five (5) Business Days' prior
irrevocable written notice to the Agent, the Borrower may at any time in whole
permanently terminate, or from time to time in part permanently reduce, the
Total Commitment ratably among the Lenders in accordance with the amounts of
their Commitments; provided, however, that the Total Commitment shall not be
reduced at any time to an amount not less than the aggregate of each Lender's
Current Sum outstanding at such time. Each partial reduction of the Total
Commitment shall be in a minimum of $1,000,000 or an integral multiple of
$100,000 in excess thereof.
(b) Simultaneously with any termination or
reduction, in whole or in part, of the Total Commitment pursuant to Section
2.4(a) above, the Borrower hereby agrees to pay to each Lender, through the
Agent, (i) the Commitment Fee due and owing through and including the date of
such termination or reduction on the amount of the Commitment of such Lender so
terminated or reduced and (ii) a prepayment fee equal to one percent (1%) of
the Commitment of such Lender so terminated or reduced if such termination or
reduction occurs
-57-
65
on or before the first anniversary of the Closing Date. After the first
anniversary date of the Closing Date, the Total Commitment may be terminated or
reduced, in whole or in part, without any prepayment fee, penalty or other
similar charge.
(c) To effect the payment of any and all
Commitment Fees and all other Obligations outstanding and owing hereunder or
under any other Loan Documents, subject to the provisions of Sections 2.1 and
4.1 hereof, the Agent may, but shall not be obligated to, cause the Lenders to
make a Loan if (i) such Loan is to be made prior to the Maturity Date, (ii) the
Availability would be equal to or greater than zero after giving effect to such
Loan, and (iii) no Default or Event of Default shall have occurred which is
then continuing. The inability of the Agent to cause the payment of any such
Commitment Fees or other Obligations in accordance with the preceding sentence
shall not in any way whatsoever affect the Borrower's and Guarantors'
obligation to otherwise pay such amounts in accordance with the applicable
terms hereof or of any other Loan Documents.
2.5 Mandatory and Voluntary Prepayments.
(a) If the Current Sum applicable to a Lender at
any time exceeds such Lender's Commitment, the Agent shall notify the Borrower
of the deficiency (such notice being permitted to be given orally and need not
be in writing) and
-58-
66
the Borrower shall immediately make a prepayment on such Lender's Note or
otherwise reimburse such Lender for Letter of Credit Advances or cause one or
more Letters of Credit to be cancelled and surrendered in an amount sufficient
to reduce such Lender's Current Sum to an amount no greater than such Lender's
Commitment. Any prepayments required by this subparagraph (a) shall be applied
to outstanding Alternate Base Rate Borrowings up to the full amount thereof
before such prepayments are applied to outstanding LIBOR Borrowings (together
with any Consequential Loss resulting from such prepayment).
(b) The Borrower shall make prepayments of the
Loans from time to time so that the Availability equals or exceeds zero at all
times. Specifically, if the Availability at any time is less than zero, the
Agent shall notify the Borrower of the deficiency (such notice being permitted
to be given orally and need not be in writing) and the Borrower shall
immediately make a prepayment on the Notes or otherwise reimburse the Agent for
Letter of Credit Advances or cause one or more Letters of Credit to be
cancelled and surrendered in an amount sufficient to cause the Availability to
be at least equal to zero. Any prepayments required by this subparagraph (b)
shall be applied to outstanding Alternate Base Rate Borrowings up to the full
amount thereof before such prepayments are applied to outstanding LIBOR
Borrowings (together with any Consequential Loss resulting from such
prepayment).
-59-
67
(c) In addition to the mandatory prepayments
required by Sections 2.5(a) and (b) above, the Borrower shall have the right,
at its option and subject to the requirements of Section 2.4, to prepay any of
the Loans in whole at any time or in part from time to time, without premium or
penalty, except as otherwise provided in Section 2.4, this Section 2.5 or
subsections (a), (b) or (c) of Section 2.9 hereof. Each prepayment under this
subsection shall be applied to the prepayment of the aggregate unpaid principal
amount of the Notes. Prepayments under this subparagraph (c) shall be subject
to the following additional conditions:
(1) In giving notice of prepayment as hereinafter
provided, the Borrower shall specify, for the purpose of paragraphs
(2) and (3) immediately following, the manner of application of such
prepayment as between Alternate Base Rate Borrowings and LIBOR
Borrowings; provided, that in no event shall any LIBOR Borrowing be
partially prepaid.
(2) Prepayments applied to any LIBOR Rate
Borrowing may be made on any Business Day, provided, that (i) the
Borrower shall have given the Agent at least five (5) Business Days'
prior irrevocable written or telecopied notice of such prepayment,
specifying the principal amount of the LIBOR Borrowing to be prepaid,
the particular LIBOR Borrowing to which such prepayment
-60-
68
is to be applied and the prepayment date; and (ii) if such prepayment
is made on any day other than the last day of the Interest Period
corresponding to the LIBOR Borrowing to be prepaid, the Borrower shall
pay directly to the Agent for the account of the Lenders, on the last
day of such Interest Period, the Consequential Loss as a result of
such prepayment.
(3) Prepayments applied to any Alternate Base
Rate Borrowing may be made on any Business Day, provided that the
Borrower shall have given the Agent prior irrevocable written notice
or notice by telephone (which is to be promptly confirmed in writing)
of such prepayment on the Business Day of such prepayment, specifying
the principal amount of the Alternate Base Rate Borrowing to be
prepaid.
(d) Notice of any prepayment having been given,
the principal amount specified in such notice, together with (in the case of
any prepayment of a LIBOR Borrowing) interest thereon to the date of
prepayment, shall be due and payable on such prepayment date.
2.6 Notes; Payments.
(a) Subject to the provisions of Section 10.12
hereof relating to replacement and substitution of the Notes,
-61-
69
all Loans made by a Lender to the Borrower shall be evidenced by a single Note
dated as of the Closing Date, delivered and payable to such Lender in a
principal amount equal to such Lender's Commitment as of the Closing Date.
(b) The outstanding principal balance of each and
every Loan, as evidenced by the Notes, shall mature and be fully due and
payable on the Maturity Date.
(c) Subject to Section 10.6 hereof, the Borrower
hereby agrees to pay accrued interest on the unpaid principal balance of the
Loans on the Interest Payment Dates, commencing with the first of such dates to
occur after the date hereof. After the Maturity Date, accrued and unpaid
interest on the Loans shall be payable on demand.
(d) To effect payment of accrued interest owing
on the Loans as of the Interest Payment Dates, subject to the provisions of
Sections 2.1 and 4.1 hereof, the Agent may, but shall not be obligated to,
cause the Lenders to make a Loan to pay in full the amount of accrued interest
owing and payable on the Loans as of the respective Interest Payment Date if
(i) such Loan is to be made prior to the Maturity Date, (ii) the Availability
would be equal to or greater than zero after giving effect to such Loan, and
(iii) no Default or Event of Default shall have occurred which is then
continuing. The inability of the Agent to cause a payment of any accrued
-62-
70
interest owing on the Loans on any Interest Payment Date as of the respective
due date thereof in accordance with the preceding sentence shall not in any way
whatsoever effect the Borrower's obligation to otherwise pay such amounts in
accordance with the applicable terms hereof or any other Loan Documents.
2.7 Application of Payments and Prepayments.
(a) Except as otherwise provided in Sections
2.5(a) and (b) hereof, prepayments on the Notes shall be applied to payment of
the aggregate unpaid principal amounts of the Notes, with the balance of any
such prepayments, if any, being applied to accrued interest. Payments of
accrued interest on each Note in accordance with Section 2.6(c) hereof shall be
applied to the aggregate accrued interest then outstanding under the Notes,
while payment by the Borrower of the aggregate principal amount outstanding
under the Notes on the Maturity Date shall be applied to principal.
(b) Except as otherwise provided or specified in
Section 2.2(f) hereof, each payment or prepayment received by the Agent
hereunder or under any Note for the account of a Lender shall be paid promptly
to such Lender, in immediately available funds. If the Agent fails to send to
any Lender the product of such Lender's Commitment Percentage times the
-63-
71
aggregate amount of any such payment or prepayment received by the Agent for
the account of all the Lenders by the close of business on the date such
payment was deemed received by the Agent in accordance with Section 2.7(d)
below, the Agent shall pay to such Lender interest on such Lender's pro-rata
portion of such payment timely received by the Agent from such date of receipt
by the Agent to the date that such Lender receives its pro-rata portion of such
payment, such interest to accrue at the Federal Funds Effective Rate and to be
payable upon written request from such Lender.
(c) All sums payable by the Borrower to the Agent
hereunder or pursuant to the Notes for its own account or the account of the
Lenders shall be payable in United States dollars in immediately available
funds not later than 12:00 noon on the date such payment or prepayment is due
and shall be made without set-off, counterclaim or deduction of any kind. Any
such payment or prepayment received and accepted by the Agent after 12:00 noon
shall be considered for all purposes (including the payment of interest, to the
extent permitted by law) as having been made on the next succeeding Business
Day. All such payments or prepayments shall be made at the Principal Office.
If any payment or prepayment becomes due and payable on a day which is not a
Business Day, then the date for the payment thereof shall be extended to the
next succeeding Business Day and interest shall be payable thereon at the then
applicable rate per annum during such extension.
-64-
72
2.8 Interest Rates for Loans.
(a) Subject to Section 10.6 hereof, the Notes
shall bear interest on their respective outstanding principal balances at the
Alternate Base Rate; provided, that (1) all past due principal and interest
shall bear interest at the Past Due Rate, which shall be payable on demand, and
(2) subject to the provisions hereof, the Borrower shall have the option of
having all or any portion of the principal balances from time to time
outstanding under the Notes bear interest until their respective maturities at
a rate per annum equal to the Adjusted LIBOR Rate (together with the Alternate
Base Rate, individually herein called an "Interest Option" and collectively
called "Interest Options"). The records of the Agent with respect to Interest
Options, Interest Periods and the amounts of Loans to which they are applicable
shall be binding and conclusive, absent manifest error. Interest on the Loans
shall be calculated at the Alternate Base Rate, except where it is expressly
provided pursuant to this Agreement that the Adjusted LIBOR Rate is to apply.
(b) The Borrower shall have the right to
designate or convert its Interest Options in accordance with the provisions
hereof. Provided no Default or Event of Default has occurred and is continuing
and subject to the provisions of the last sentence of Subsection 2.8(a)
hereinabove and of Section 2.9 hereof, the Borrower may elect
-65-
73
to have the Adjusted LIBOR Rate apply or continue to apply to all or any
portion of the principal balances of the Notes. Each change in Interest
Options shall be a conversion of the rate of interest applicable to the
specified portion of the Loans, but such conversion alone shall not change the
outstanding principal balance of the Notes. The Interest Options shall be
designated or converted in the manner provided below:
(1) The Borrower shall give the Agent notice by
telephone, promptly confirmed by written notice (the "Rate Selection
Notice") substantially in the form of Exhibit F hereto. Each such
telephone and written notice shall specify the amount and type of
borrowings which are the subject of the designation, if any; the
amount and type of borrowings into which such borrowings are to be
converted or for which an Interest Option is designated; the proposed
date for the designation or conversion (which, in the case of
conversion of LIBOR Borrowings, except as provided in Section 2.9
hereof, shall be the last day of the Interest Period applicable
thereto) and the Interest Period or Periods, if any, selected by the
Borrower. Such notice by telephone shall be irrevocable and shall be
given to the Agent no later than the applicable Rate Selection Date.
If (a) a new Loan is to be a LIBOR Borrowing, (b) an existing LIBOR
Borrowing is maturing at the time that a new Loan is being requested
-66-
74
and the Borrower is electing to have such existing portion of the
outstanding principal balance of the Notes going forward bear interest
at the same Interest Option and for the same Interest Period as the
new Loan, or (c) a portion of an Alternate Rate Borrowing is to be
converted so as to bear interest at the same Interest Option and for
the same Interest Period as the new Loan, then the Rate Selection
Notice shall be included in the Request for Extension of Credit
applicable to the new Loan, which shall be given to the Agent no later
than the applicable Rate Selection Date.
(2) No more than five (5) LIBOR Borrowings and
corresponding Interest Periods shall be outstanding at any one time.
Each LIBOR Borrowing shall be in a minimum aggregate principal amount
of at least $1,000,000, with any increases over such minimum amount
being in integral aggregate multiples of $100,000.
(3) Principal included in any borrowing shall not
be included in any other borrowing which exists at the same time.
(4) Each designation or conversion shall occur on
a Business Day.
-67-
75
(5) Except as provided in Section 2.9 hereof, no
LIBOR Borrowing shall be converted on any day other than the last day
of the applicable Interest Period.
(6) The Agent shall promptly advise the Lenders
of any Rate Selection Notice given pursuant to this Section 2.8 and of
each Lender's pro-rata portion of such designation or conversion
hereunder.
(c) All interest and fees (including the
Commitment Fee) will be computed on the basis of a year of 360 days and actual
days elapsed (including the first day but excluding the last day) occurring in
the period for which payable, unless the effect of so computing shall be to
cause the rate of interest to exceed the Highest Lawful Rate.
2.9 Special Provisions Applicable to LIBOR Borrowings.
(a) If, after the date of this Agreement, the
adoption of any applicable Legal Requirement or any change in any applicable
Legal Requirement or in the interpretation or administration thereof by any
Governmental Authority or compliance by the Agent or any Lender with any
request or directive (whether or not having the force of law) of any
Governmental Authority shall at any time make it unlawful or impossible for any
Lender to permit the establishment of or to maintain any LIBOR Borrowing, the
commitment of the Lenders to
-68-
76
establish or maintain the Adjusted LIBOR Rate affected by such adoption or
change shall forthwith be canceled and the Borrower shall forthwith, upon
demand by the Agent to the Borrower, (1) convert the Adjusted LIBOR Rate with
respect to which such demand was made to the Alternate Base Rate; (2) pay all
accrued and unpaid interest to date on the amount so converted; and (3) pay any
amounts required to compensate the Agent and the Lenders for any additional
cost or expense which the Agent or any Lender may incur as a result of such
adoption of or change in such Legal Requirement or in the interpretation or
administration thereof and any Consequential Loss which the Agent or any Lender
may incur as a result of such conversion to the Alternate Base Rate. If, when
the Agent so notifies the Borrower, the Borrower has given a Rate Selection
Notice specifying one or more borrowings of the type with respect to which such
demand was made but the selected Interest Period or Interest Periods has not
yet begun, such Rate Selection Notice shall be deemed to be of no force and
effect, as if never made, and the balance of the Loans specified in such Rate
Selection Notice shall bear interest at the Alternate Base Rate until a
different available Interest Option shall be designated in accordance herewith.
(b) If the adoption of any
applicable Legal Requirement or any change in any applicable Legal Requirement
or in the interpretation or administration thereof by any Governmental
Authority or compliance by the Agent or any
-69-
77
Lender with any request or directive (whether or not having the force of law)
from any Governmental Authority shall at any time as a result of any portion of
the principal balance of the Notes being maintained on the basis of the
Adjusted LIBOR Rate:
(1) subject any Lender (or make it apparent that
any Lender is subject) to any tax (including any United States
interest equalization tax), levy, impost, duty, charge, fee
(collectively, "Taxes"), or any deduction or withholding for any Taxes
on or from the payment due under any LIBOR Borrowing or other amounts
due hereunder, other than income and franchise taxes of the United
States and its political subdivisions; or
(2) change the basis of taxation of payments due
from the Borrower to the Agent or any Lender under any LIBOR Borrowing
(otherwise than by a change in the rate of taxation of the overall net
income of the Agent or any Lender); or
(3) impose, modify, increase or deem applicable
any reserve requirement (excluding that portion of any reserve
requirement included in the calculation of the Statutory Reserves,
special deposit requirement or similar requirement (including state
law requirements and Regulation D)) imposed, modified,
-70-
78
increased or deemed applicable by any Governmental Authority against
assets held by the Agent or any Lender, or against deposits or
accounts in or for the account of the Agent or any Lender, or against
loans made by the Agent or any Lender, or against any other funds,
obligations or other Property owned or held by the Agent or any
Lender; or
(4) impose on the Agent or any Lender any other
condition regarding any LIBOR Borrowing;
and the result of any of the foregoing is to increase the cost to any Lender of
agreeing to make or of making, renewing or maintaining such borrowing on the
basis of the Adjusted LIBOR Rate, or reduce the amount of principal or interest
received by any Lender, then, upon demand by the Agent, the Borrower shall pay
to the Agent, from time to time as specified by the Agent, additional amounts
which shall compensate such Lender for such increased cost or reduced amount.
The Agent will promptly notify the Borrower in writing of any event, upon
becoming actually aware of it, which will entitle any Lender to additional
amounts pursuant to this paragraph. The Agent's determination of the amount of
any such increased cost, increased reserve requirement or reduced amount shall
be conclusive and binding, absent manifest error, provided that the calculation
thereof is set forth in reasonable detail in such notice.
-71-
79
The Borrower shall have the right, if it receives from the Agent any
notice referred to in the preceding paragraph, upon three (3) Business Days'
notice to the Agent, either (i) to repay in full (but not in part) any
borrowing with respect to which such notice was given, together with any
accrued interest thereon, or (ii) to convert the Adjusted LIBOR Rate in effect
with respect to such borrowing to the Alternate Base Rate; provided, that any
such repayment or conversion shall be accompanied by payment of (x) the amount
required to compensate the appropriate Lender or Lenders for the increased cost
or reduced amount referred to in the preceding paragraph; (y) all accrued and
unpaid interest to date on the amount so repaid or converted, and (z) any
Consequential Loss which may be incurred as a result of such repayment or
conversion.
(c) If for any reason with respect to any
Interest Period the Agent shall have determined (which determination shall be
conclusive and binding upon the Borrower) that: (1) the Agent is unable through
its customary general practices to determine a rate at which the Agent is
offered deposits in United States dollars by prime banks in the London
interbank market, in the appropriate amount for the appropriate period, or by
reason of circumstances affecting the London interbank market, generally, the
Agent is not being offered deposits for the applicable Interest Period and in
an amount equal to the amount of the Agent's pro-rata portion of
-72-
80
any LIBOR Borrowing requested by the Borrower, or (2) the Adjusted LIBOR Rate
will not reflect the actual cost to any Lender of making and maintaining any
LIBOR Borrowing hereunder for any proposed Interest Period, then the Agent
shall give the Borrower notice thereof and thereupon, (A) any Rate Selection
Notice previously given by the Borrower designating an Adjusted LIBOR Rate
which has not commenced as of the date of such notice from the Agent shall be
deemed for all purposes hereof to be of no force and effect, as if never given,
and (B) until the Agent shall notify the Borrower that the circumstances giving
rise to such notice from the Agent no longer exist, each Rate Selection Notice
requesting an Adjusted LIBOR Rate shall be deemed a request for an Alternate
Base Rate Borrowing, and each outstanding LIBOR Borrowing then in effect shall
be converted, without any notice to or from the Borrower, upon the termination
of the Interest Period then in effect, to an Alternate Base Rate Borrowing.
(d) THE BORROWER HEREBY AGREES TO INDEMNIFY THE
AGENT AND EACH OF THE LENDERS AGAINST AND HOLD EACH OF THEM HARMLESS FROM ANY
LOSS OR EXPENSE WHICH IT MAY INCUR OR SUSTAIN AS A CONSEQUENCE OF ANY UNTIMELY
PAYMENT (MANDATORY OR OPTIONAL) OR DEFAULT BY THE BORROWER IN THE PAYMENT OF
ANY PRINCIPAL AMOUNT OF OR INTEREST ON EACH NOTE, OR ANY FAILURE BY THE
BORROWER TO CONVERT OR TO BORROW ANY LIBOR BORROWING ON THE DATE SPECIFIED BY
THE BORROWER, IN EACH CASE INCLUDING ANY INTEREST PAYABLE BY ANY LENDER TO THE
LENDERS OF THE FUNDS
-73-
81
OBTAINED BY IT IN ORDER TO MAKE OR MAINTAIN ANY LIBOR BORROWING (OR ANY PORTION
THEREOF), AND, TO THE EXTENT NOT COVERED ABOVE, ANY CONSEQUENTIAL LOSS. THIS
AGREEMENT SHALL SURVIVE THE PAYMENT OF EACH NOTE. A CERTIFICATE AS TO ANY
ADDITIONAL AMOUNTS PAYABLE TO THE AGENT OR ANY LENDER PURSUANT TO THIS
PARAGRAPH SUBMITTED BY THE AGENT OR SUCH LENDER TO THE BORROWER SHALL BE
CONCLUSIVE AND BINDING UPON THE BORROWER, ABSENT MANIFEST ERROR, PROVIDED THE
CALCULATION THEREOF IS SET FORTH IN REASONABLE DETAIL IN SUCH NOTICE.
(e) If the Borrower requests quotes of the
Adjusted LIBOR Rate for different Interest Periods being considered for
election by the Borrower, the Agent will use reasonable efforts to provide such
quotes to the Borrower promptly. However, all such quotes provided shall be
representative only and shall not be binding on the Agent or any Lender, nor
shall they be determinative, directly or indirectly, of any Adjusted LIBOR Rate
or any component of any such rate, nor will the Borrower's failure to receive
or the Agent's failure to provide any requested quote or quotes either (1)
excuse or extend the time for performance of any obligation of the Borrower or
for the exercise of any right, option or election of the Borrower or (2) impose
any duty or liability on the Agent or any Lender. If the Borrower requests a
list of the Business Days in any calendar month, the Agent will use reasonable
efforts to provide such list promptly. However, any such list provided shall
be understood
-74-
82
to identify only those days which the Agent believes in good faith at the time
such list is prepared will be the Business Days for such month. The Agent
shall not have any liability for any failure to provide, delay in providing,
error or mistake in or omission from, any such quote or list.
(f) With respect to any Lender having a LIBOR
Lending Office which differs from its Domestic Lending Office, all Loans
advanced by such Lender's LIBOR Lending Office shall be deemed to have been
made by such Lender and the obligation of the Borrower to repay such Loans
shall nevertheless be to such Lender and shall be deemed held by such Lender,
to the extent of such portions of the Loan, for the account of such Lender's
LIBOR Lending Office.
(g) Notwithstanding any provision of this
Agreement to the contrary, each Lender shall be entitled to fund and maintain
its funding of all or any part of the Loans hereunder in any manner it sees
fit, it being understood, however, that for the purposes of this Agreement, all
determinations hereunder shall be made as if such Lender had actually funded
and maintained its portion of each LIBOR Borrowing during each Interest Period
for the Loans through the purchase of deposits having a maturity corresponding
to such Interest Period and bearing an interest rate equal to the LIBOR Rate
for such Interest Period.
-75-
83
(h) The Borrower's obligation to pay increased
costs and Consequential Loss with regard to each LIBOR Borrowing as specified
in this Section 2.9 hereof shall survive termination of this Agreement.
2.10 Letters of Credit.
(a) Subject to the terms and conditions contained
herein, the Borrower shall have the right to utilize a portion of the Total
Commitment from time to time prior to the Maturity Date to obtain from the
Agent one or more Letters of Credit for the account of the Borrower in such
amounts and in favor of such beneficiaries as the Borrower from time to time
shall request; provided, that in no event shall the Agent have any obligation
to issue any Letter of Credit if (i) the face amount of such Letter of Credit,
plus the Letter of Credit Exposure Amount at such time would exceed $2,000,000,
(ii) the face amount of such Letter of Credit, plus the aggregate of each
Lender's Current Sum at such time, would exceed the lesser of (1) the Total
Commitment or (2) the Availability, (iii) such Letter of Credit would have an
expiry date beyond the earlier to occur of (1) one month prior to the scheduled
Maturity Date, (2) 90 days after the issuance date of such Letter of Credit if
such Letter of Credit is a documentary sight Letter of Credit or (3) 365 days
after the issuance date of such Letter of Credit if such Letter of Credit is a
standby Letter of Credit, (iv) such Letter of
-76-
84
Credit is not in a form and does not contain terms satisfactory to the Agent in
its sole and absolute discretion, (v) the Borrower have not executed and
delivered such Applications and other instruments and agreements relating to
such Letter of Credit as the Agent shall have requested, or (vi) an event has
occurred and is continuing which constitutes a Default or Event of Default.
(b) If requesting the issuance of any Letter of
Credit, the Borrower shall give at least three (3) Business Days' prior written
notice to the Agent, at its Domestic Lending Office, which written notice shall
be the requisite Application for a Letter of Credit on the Agent's customary
form. In accordance with the provisions of Section 2.2(f) hereof, the Agent
shall periodically notify each Lender that a Letter of Credit has been
requested in the amount reflected in such Application and inform such Lender of
the amount of its pro- rata portion of such proposed Letter of Credit (based
upon such Lender's Commitment Percentage).
(c) Simultaneously with the Agent's issuance and
delivery of any Letter of Credit, the Agent shall be deemed, without further
action, to have sold to each other Lender, and such other Lender shall be
deemed, without further action by any party hereto, to have purchased from the
Agent, a participation interest (which participation shall be nonrecourse to
the Agent) equal to such other Lender's
-77-
85
Commitment Percentage at such time in such Letter of Credit and all of the
Letter of Credit Exposure Amount related to such Letter of Credit; provided,
that no such Lender shall be obligated to participate in a particular Letter of
Credit if such Letter of Credit was issued or honored solely as a result of the
Agent's gross negligence or wilful misconduct. Each Lender acknowledges and
agrees that its obligation to acquire participations in each Letter of Credit,
as well as its obligation to make the payments specified in this Section 2.10
and the right of the Agent to receive the same in the manner specified herein,
are absolute and unconditional and shall not be effected by any circumstance
whatsoever, including without limitation, the occurrence and continuance of a
Default or Event of Default hereunder, and that each such payment shall be made
without any offset, abatement, withholding or reduction whatsoever.
(d) The Borrower promises to pay to the order of
the Agent the amount of all Letter of Credit Advances. Each Letter of Credit
Advance shall be considered for all purposes as a demand obligation owing by
the Borrower to the Agent, and each Letter of Credit Advance shall bear
interest from the date thereof at the Past Due Rate, without notice of
presentment, demand, protest or other formalities of any kind (said past due
interest on such Letter of Credit Advance being payable on demand). To effect
repayment of any such Letter of Credit Advance, the Agent may, at its option,
automatically
-78-
86
satisfy such Letter of Credit Advance (subject to the terms and conditions of
Sections 2.1 and 4.1 hereof) by causing the Lenders to make a Loan if (i) such
Letter of Credit Advance is (and such Loan is to be) made prior to the Maturity
Date, (ii) the Availability would be equal to or greater than zero after giving
effect to such Loan and (iii) no Default or Event of Default shall have
occurred which is then continuing. The failure of the Agent to elect to affect
repayment of any such Letter of Credit Advance in accordance with the preceding
sentence shall not in any way whatsoever affect the Borrower's obligation to
pay each Letter of Credit Advance on demand and to pay interest at the Past Due
Rate on the amount of unreimbursed Letter of Credit Advance. Except as
otherwise provided in Section 2.2(f), the Agent will pay to each Lender such
Lender's Commitment Percentage of all amounts received from the Borrower by the
Agent, if any, for application, in whole or in part, against the Letter of
Credit Advances in respect to any Letter of Credit, but only to the extent such
Lender has made its full pro-rata payment of each drawing under the Letter of
Credit to which such Letter of Credit Advance relates. All rights, powers,
benefits and privileges of this Agreement with respect to the Notes, all
security therefor (including the Collateral) and guaranties thereof (including
the Guaranties) and all restrictions, provisions for repayment or acceleration
and all other covenants, warranties, representations and agreements of the
Borrower
-79-
87
contained in this Agreement with respect to the Notes shall apply to such
Letter of Credit Advances.
(e) In consideration of the issuance of each
Letter of Credit pursuant to the provisions of this Section 2.10, the Borrower
agrees to pay (subject to Section 10.6 hereof) to the Agent for the ratable
benefit of the Lenders a letter of credit fee (computed on the basis of the
actual number of days elapsed in a year composed of 360 days) in an amount
equal to the product of (a) the Applicable Margin in effect for LIBOR
Borrowings for the applicable period times (b) the undrawn upon amount of the
applicable Letter of Credit, with each letter of credit fee to commence to
accrue as of the date of issuance of such Letter of Credit and to be effective
as to any reductions in the undrawn amount of such Letter of Credit as of the
date of any such reduction (whether resulting from payments thereunder by the
Agent, by agreement of the beneficiary thereunder or automatically by the terms
of such Letter of Credit), and each letter of credit fee shall cease to accrue
(except with respect to interest at the Past Due Rate on any unpaid portion
thereof) on the date that such Letter of Credit expires, is returned to the
Agent undrafted upon by the beneficiary thereof or is fully paid by the Agent.
Said letter of credit fees shall be payable in arrears to the Agent at its
Principal Office in immediately available funds (i) on the first Business Day
of each calendar month that such Letter of Credit remains open, and (ii) on the
-80-
88
date that such Letter of Credit expires, is returned to the Agent undrafted
upon by the beneficiary thereof or is fully paid by the Agent. All past due
letter of credit fees shall bear interest at the Past Due Rate and shall be
payable upon demand by the Agent. The Agent will pay to each Lender, as soon
as practicable after receiving any payment of letter of credit fees described
in the preceding sentence, an amount equal to the product of (A) such Lender's
Commitment Percentage times (B) the amount of such fees received. If the Agent
fails to send to any Lender such Lender's pro-rata portion of any payment of
such letter of credit fees timely received by the Agent by the close of
business on the Business Day such payment was received by the Agent, the Agent
shall pay to such Lender interest on such Lender's pro-rata portion of such
letter of credit fees timely received by the Agent from such date of receipt by
the Agent to the date that such Lender receives its pro-rata portion of such
payment, such interest to accrue at the Federal Funds Effective Rate and to be
payable upon written request from such Lender. The Borrower also hereby agrees
to pay to the Agent for its sole benefit any and all other issuance, amendment,
negotiation, and other normal and customary fees which are charged by the Agent
in connection with the issuance or negotiation of any of Letter of Credit and
the presentation or payment of any draw under any such Letter of Credit, with
all of such amounts being due and payable to the Agent upon demand.
-81-
89
(f) The obligations of the Borrower under this
Agreement in respect of the Letters of Credit and all Letter of Credit Advances
are absolute, unconditional and irrevocable, and shall be paid strictly in
accordance with the terms of this Agreement, under all circumstances
whatsoever, including the following circumstances:
(1) any lack of validity or enforceability of
this Agreement, any Letter of Credit or any Loan Document;
(2) any amendment or waiver of default under or
any consent to departure from the terms of this Agreement or any
Letter of Credit without the express prior written consent of the
Agent;
(3) the existence of any claim, set-off, defense
or other right which any beneficiary or any transferee of any Letter
of Credit (or any entities for whom any such beneficiary or any such
transferee may be acting), or any Person (other than the Agent or the
Lenders) may have, whether in connection with this Agreement, the
Letters of Credit, the transactions contemplated hereby or any
unrelated transaction;
(4) any statement, draft, certificate, or any
other document presented under any Letter of Credit
-82-
90
proving to be forged, fraudulent, invalid or insufficient in any
respect or any statement therein being untrue or inaccurate in any
respect whatsoever; provided that the Agent will examine each document
presented under each Letter of Credit to ascertain that such document
appears on its face to comply with the terms thereof; and
(5) any other circumstance or happening
whatsoever, whether or not similar to any of the foregoing.
In the event that any restriction or limitation is imposed upon or
determined or held to be applicable to the Agent, any Lender or the
Borrower by, under or pursuant to any Legal Requirement now or
hereafter in effect or by reason of any interpretation thereof by any
Governmental Authority, which in the respective sole judgment of the
Agent or any Lender would prevent any Lender from legally incurring
liability under a Letter of Credit issued or proposed to be issued
hereunder, then the Agent shall give prompt written notice thereof to
the Borrower, whereupon the Agent shall have no obligation to issue
any additional Letters of Credit then or at any time thereafter. In
addition, if as a result of any Regulatory Change which imposes,
modifies or deems applicable (x) any tax, reserve, special deposit or
similar requirement against any Letters of Credit issued
-83-
91
or participated to by any Lender; (y) any fee, expense or assessment
against the Letters of Credit issued by the Agent or any Lender for
deposit insurance, or (z) any other charge, expense or condition which
increases the actual cost to the Agent or any Lender of issuing or
maintaining such Letters of Credit, or reduces any amount receivable
by the Agent or any Lender hereunder in respect of any Letter of
Credit or any participation therein (which increase in cost, or
reduction in amount receivable, shall be the result of the Agent's or
such Lender's reasonable allocation of the aggregate of such increases
or reductions resulting from such event), then the Borrower (subject
to Section 10.6 hereof) shall pay to the Agent or such Lender, upon
demand and from time to time, amounts sufficient to compensate such
Person for each such increase from the effective date of such increase
to the date of demand therefor. Each such demand shall be accompanied
by a certificate setting forth in reasonable detail the calculation of
the amount then being demanded in accordance with the preceding
sentence and each such certificate shall be conclusive absent manifest
error.
(g) THE BORROWER HEREBY INDEMNIFIES AND HOLDS
HARMLESS EACH LENDER AND THE AGENT FROM AND AGAINST ANY AND ALL CLAIMS AND
DAMAGES, LOSSES, LIABILITIES, COSTS OR EXPENSES WHICH SUCH LENDER OR THE AGENT
MAY INCUR (OR WHICH MAY BE
-84-
92
CLAIMED AGAINST SUCH LENDER OR THE AGENT BY ANY PERSON WHATSOEVER) IN
CONNECTION WITH THE EXECUTION AND DELIVERY OR TRANSFER OF OR PAYMENT OR FAILURE
TO PAY UNDER ANY LETTER OF CREDIT, INCLUDING ANY CLAIMS, DAMAGES, LOSSES,
LIABILITIES, COSTS OR EXPENSES WHICH THE AGENT OR SUCH LENDER, AS THE CASE MAY
BE, MAY INCUR (WHETHER INCURRED AS A RESULT OF ITS OWN NEGLIGENCE OR OTHERWISE)
BY REASON OF OR IN CONNECTION WITH THE FAILURE OF ANY OTHER LENDER (WHETHER AS
A RESULT OF ITS OWN NEGLIGENCE OR OTHERWISE) TO FULFILL OR COMPLY WITH ITS
OBLIGATIONS TO THE AGENT OR SUCH LENDER, AS THE CASE MAY BE, HEREUNDER (BUT
NOTHING HEREIN CONTAINED SHALL AFFECT ANY RIGHTS THE BORROWER MAY HAVE AGAINST
SUCH DEFAULTING LENDER); PROVIDED, THAT THE BORROWER SHALL NOT BE REQUIRED TO
INDEMNIFY ANY LENDER OR THE AGENT FOR ANY CLAIMS, DAMAGES, LOSSES, LIABILITIES,
COSTS OR EXPENSES TO THE EXTENT, BUT ONLY TO THE EXTENT, CAUSED BY (I) THE
WILLFUL MISCONDUCT OR GROSS NEGLIGENCE OF THE PARTY SEEKING INDEMNIFICATION OR
(II) SUCH LENDER'S OR THE AGENT'S (AS THE CASE MAY BE) FAILURE TO PAY UNDER ANY
LETTER OF CREDIT AFTER THE PRESENTATION TO IT OF A REQUEST REQUIRED TO BE PAID
UNDER APPLICABLE LAW. NOTHING IN THIS SECTION 2.10(G) IS INTENDED TO LIMIT THE
OBLIGATIONS OF THE BORROWER UNDER ANY OTHER PROVISION OF THIS AGREEMENT.
(h) The Agent shall review, on behalf of the
Lenders, each draft and any accompanying documents
-85-
93
presented under a Letter of Credit. Promptly after it shall have ascertained
that any draft and any accompanying documents presented under such Letter of
Credit appear on their face to be in substantial conformity with the terms and
conditions of such Letter of Credit, the Agent shall make the appropriate
payment to the beneficiary of such Letter of Credit. Subject to the provisions
of Section 2.2(f) hereof, the Agent shall give telephonic or facsimile notice
to the Lenders of the receipt and amount of any draft presented under any
Letter of Credit and the date on which payment thereon will be made, and each
of the Lender's shall, by 11:00 a.m. on the date such payment is to be made
under such Letter of Credit, pay in immediately available funds, an amount
equal to the product of (A) such Lender's Commitment Percentage times (B) the
amount of such payment to be made by the Agent to the beneficiary under such
Letter of Credit. Any Lender failing to timely deliver its requisite portion
of any such payment shall deliver the same to the Agent as soon as possible
thereafter, together with interest on such amount for each day from the due
date for such payment to the date of payment by such Lender to the Agent of
such amount at a rate of interest per annum equal to the Federal Funds
Effective Rate for such period. Each Lender hereby absolutely and
unconditionally assumes, as primary obligor and not as a surety, and agrees to
pay and discharge, and to indemnify and hold the Agent harmless from liability
and respect of, such Lender's pro-rata share (based on such Lender's Commitment
Percentage) of any amounts owing by such Lender to the Agent in accordance with
the immediately preceding sentence. Nothing herein shall be
-86-
94
deemed to require any Lender to pay to the Agent any amount as reimbursement
for any payment made by the Agent to acquire (discount) for its own account
prior to maturity thereof any acceptance created under a Letter of Credit.
2.11 Pro-Rata Treatment.
(a) Except to the extent otherwise provided
herein (including without limitation, as specified in Sections 2.2(f) and
2.11(c) hereof): (a) each borrowing from the Lenders under Section 2.1 hereof
shall be made, each payment of Commitment Fees shall be made and applied for
the account of the Lenders, and each termination or reduction of the
Commitments of the Lenders under Section 2.4 hereof shall be applied, pro rata,
according to each Lender's Commitment Percentage; (b) each payment or
prepayment by the Borrower of principal of or interest on Loans shall be made
to the Agent for the account of the Lenders pro rata in accordance with the
respective unpaid principal amounts of such Loans held by the Lenders; and (c)
the Lenders (other than the Agent) shall purchase from the Agent participations
in the Letters of Credit, to the extent of their respective Commitment
Percentages upon issuance by the Agent of each Letter of Credit as otherwise
provided for herein.
(b) Except as otherwise provided or specified in
Section 2.2(f), unless the Agent shall have been notified
-87-
95
in writing by any Lender prior to the date of a proposed Loan that such Lender
will not make the amount that would constitute such Lender's Commitment
Percentage of such Loan on such date available to the Agent at the Principal
Office, the Agent may assume that such Lender has made such amount available to
the Agent on such date, and the Agent may, in reliance upon such assumption and
subject to the terms and conditions of this Agreement, make such amount
available to the Borrower by depositing the same, in immediately available
funds, in a general deposit account designated and maintained by the Borrower
with the Agent at the Principal Office. If a requested Loan shall not occur on
any date specified by the Borrower as set forth in the applicable Request for
Extension of Credit because all of the conditions for such Loan set forth
herein or in any of the other Loan Documents shall have not been met, the Agent
shall return the amounts so received from the Lenders in respect of such
requested Loan to the applicable Lenders as soon as practicable.
(c) Notwithstanding any provision to the contrary
contained in this Section 2.11 or in any other provision hereof, each Lender
shall only receive interest upon and a portion of the Commitment Fee paid
hereunder based upon the amount of funds actually advanced by such Lender to
the Borrower from time to time.
-88-
96
2.12 Sharing of Payments, Etc. The Borrower
agrees that, in addition to (and without limitation of) any right of set-off,
bankers' lien or counterclaim a Lender may otherwise have, each Lender shall be
entitled, at its option, to offset balances held by it for the account of any
of the Borrower at any of its offices against any principal of or interest on
any of such Lender's Loans to the Borrower hereunder, such Lender's Commitment
Percentage of the Letter of Credit Exposure Amount or any other obligation of
the Borrower hereunder which is not paid (regardless of whether such balances
are then due to the Borrower), in which case it shall promptly notify the
Borrower and the Agent thereof, provided that such Lender's failure to give
such notice shall not affect the validity thereof. If a Lender shall obtain
payment of any principal of or interest on any Loan made by it under this
Agreement, any Letter of Credit Exposure Amount or other obligation then due to
such Lender hereunder, through the exercise of any right of set-off (including,
without limitation, any right of set-off or lien granted under Section 10.19
hereof), banker's lien, counterclaim or similar right, or otherwise, it shall
promptly purchase from the other Lenders participations in the Loans made by,
the Letter of Credit Exposure Amount of, or the other obligations of the
Borrower hereunder of, the other Lenders in such amounts, and make such other
adjustments from time to time as shall be equitable to the end that all the
Lenders shall share the benefit of such payment (net of any expenses which may
be
-89-
97
incurred by such Lender in obtaining or preserving such benefit) pro-rata in
accordance with their respective Commitment Percentages. To such end all the
Lenders shall make appropriate adjustments among themselves (by the resale of
participations sold or otherwise) if such payment is rescinded or must
otherwise be restored. The Borrower agrees, to the fullest extent it may
effectively do so under applicable law, that any Lender so purchasing a
participation in the Loans made by, Letter of Credit Exposure Amount of, or
other obligations hereunder of, the other Lenders may exercise all rights of
set-off, bankers' lien, counterclaim or similar rights with respect to such
participation as fully as if such Lender were a direct holder of said Loans,
Letter of Credit Exposure Amount or other obligations in the amount of such
participation. Nothing contained herein shall require any Lender to exercise
any such right or shall affect the right of any Lender to exercise, and retain
the benefits of exercising, any such right with respect to any other
indebtedness or obligation of the Borrower.
2.13 Recapture. If on any Interest Payment Date the Agent
does not receive for the account of one or more Lenders payment in full of
interest computed at the Alternate Base Rate and/or the Adjusted LIBOR Rate, as
applicable (computed without regard to any limitation by the Highest Lawful
Rate) because the sum of the Alternate Base Rate and/or the Adjusted LIBOR
Rate, as applicable (so computed) exceeds or has
-90-
98
exceeded the Highest Lawful Rate applicable to such Lenders, the Borrower shall
pay to the Agent for the account of such Lenders, in addition to interest
otherwise required, on each Interest Payment Date thereafter, the Excess
Interest Amount (calculated as of each such subsequent Interest Payment Date);
provided that in no event shall the Borrower be required to pay, for any
computation period, interest at a rate exceeding the Highest Lawful Rate
applicable to such Lenders during such period. As used herein, the term
"Excess Interest Amount" shall mean, on any day, the amount by which (a) the
amount of all interest which would have accrued prior to such day on the
outstanding principal of the Notes of the applicable Lender (had the Alternate
Base Rate and/or the Adjusted LIBOR Rate, as applicable, at all times been in
effect without limitation by the Highest Lawful Rate applicable to such Lender)
exceeds (b) the aggregate amount of interest actually paid to the Agent for the
account of such Lender on its Notes on or prior to such day.
3. Collateral.
3.1 Security Documents. The Loans and all other Obligations
shall be secured by the Collateral described in the Security Documents and are
entitled to the benefits thereof. The Borrower shall duly execute and deliver
the Security Documents, all consents of third parties necessary to permit the
effective granting of the Liens created thereby,
-91-
99
financing statements pursuant to the Uniform Commercial Code and other
documents, all in Proper Form, as may be reasonably required by the Agent to
grant to the Agent, for the ratable benefit of the Lenders, a valid, perfected
and enforceable first priority Lien on and security interest in the Collateral
(subject only to the Liens permitted under Section 7.2 hereof).
3.2 Filing and Recording. The Borrower shall, at its sole cost
and expense, cause all financing statements and other Security Documents
pursuant to this Agreement to be duly recorded and/or filed or otherwise
perfected in all places necessary, in the opinion of the Agent, and take such
other actions as the Agent may reasonably request, in order to perfect and
protect the Liens of the Agent, for the ratable benefit of the Lenders, in the
Collateral. The Borrower, to the extent permitted by law, hereby authorizes
the Agent to file any financing statement in respect of any Lien created
pursuant to the Security Documents which may at any time be required or which,
in the opinion of the Agent, may at any time be desirable, although the same
may have been executed only by the Agent or, at the option of the Agent, to
sign such financing statement on behalf of the Borrower and file the same, and
the Borrower hereby irrevocably designates the Agent, its agents,
representatives and designees as its agent and attorney-in-fact for this
purpose. In the event that any re-recording or refiling thereof (or the filing
of any
-92-
100
statements of continuation or assignment of any financing statement) is
reasonably required to protect and preserve such Lien, the Borrower shall, at
the Borrower's cost and expense, cause the same to be recorded and/or refiled
at the time and in the manner reasonably requested by the Agent.
4. Conditions.
4.1 All Loans. The obligation of each Lender to make any Loan
and the obligation of the Agent to issue any Letter of Credit is subject to the
accuracy of all representations and warranties of the Borrower on the date of
such Loan or issuance of such Letter of Credit, to the performance by the
Borrower of its obligations under the Loan Documents and to the satisfaction of
the following further conditions:
(a) the Agent shall have received the following,
all of which shall be duly executed and in Proper Form: (1) in the case of a
Loan, other than a Loan for the purposes described in Sections 2.6(d) and
2.10(d),
(i) by no later than 12:00 noon on the applicable
Rate Selection Date, telephonic notice from
the Borrower of the proposed date and amount
of such Loan, and
-93-
101
(ii) no later than 1:00 p.m. on the applicable
Rate Selection Date, a Request for Extension
of Credit, signed by a Responsible Officer of
the Borrower,
or, in the case of issuance of a Letter of Credit, a completed Application (as
may be required by the Agent) signed by a Responsible Officer of the Borrower
by 12:00 noon three (3) Business Days prior to the proposed date of issuance of
such Letter of Credit and payment of the first letter of credit fee as and by
the time required in Section 2.10 of this Agreement, along with, in each case,
such financial information as the Agent may reasonably require to substantiate
compliance with all financial covenants contained herein by the Borrower; and
(2) such other Applications, certificates and other documents as the Agent may
reasonably require;
(b) Availability must be in excess of or equal to
zero, after giving effect to the requested Loan(s) or Letter(s) of Credit;
(c) all representations and warranties of the
Borrower and any other Person set forth in this Agreement and in any other Loan
Document shall be true and correct in all material respects with the same
effect as though made on and as of such date, except for (1) those
representations and warranties which relate only to the Closing Date or (2)
such
-94-
102
changes in the representations and warranties otherwise permitted by the terms
of this Agreement;
(d) the Borrower (and each Guarantor, if
applicable) shall be in compliance with all the terms and provisions contained
in this Agreement or in any other Loan Document which are to be observed or
performed by the Borrower (or such Guarantor, if applicable);
(e) prior to the making of such Loan or the
issuance of such Letter of Credit, there shall have occurred no Material
Adverse Effect in the assets, liabilities, financial condition, business or
affairs of the Borrower or any of its Subsidiaries since the date hereof;
(f) no Default or Event of Default shall have
occurred and be continuing;
(g) if requested by the Agent, it shall have
received a certificate executed by the Financial Officer or other Responsible
Officer of the Borrower as to the compliance with subparagraphs (b) through (f)
above;
(h) the making of such Loan or the issuance of
such Letter of Credit, shall not be prohibited by, or subject the Agent or any
Lender to, any penalty or onerous condition under any Legal Requirement; and
-95-
103
(i) the Borrower shall have paid all legal fees
and expenses of the type described in Section 10.9 hereof through the date of
such Loan or the issuance of such Letter of Credit.
4.2 First Loan. In addition to the matters described in Section
4.1 hereof, the obligation of any Lender to make the initial Loan or the
obligation of the Agent to issue the first Letter of Credit is subject to the
receipt by the Agent of each of the following, in Proper Form:
(a) the Notes, executed by the Borrower;
(b) the Security Documents, executed by the
Borrower;
(c) a certificate executed by the Secretary or
Assistant Secretary of the Borrower dated as of the date thereof, substantially
in the form attached hereto as Exhibit G;
(d) certified copies of the Organizational
Documents of the Borrower;
(e) a certificate from the Secretary of State or
other appropriate public official of the State of Delaware
-96-
104
as to the continued existence of the Borrower in the State of Delaware;
(f) a certificate from the Office of the
Comptroller or other appropriate public official of the State of Delaware as to
the good standing of the Borrower in the State of Delaware;
(g) certificates from the appropriate public
officials of those jurisdictions, including without limitation, the State of
Texas, where the nature of the Borrower's business makes it necessary or
desirable to be qualified to do business as a foreign corporation, as to the
existence, good standing and qualification as a foreign corporation (as may be
appropriate) of the Borrower in such jurisdictions;
(h) the most recent schedule and aging of
Receivables of the Borrower (dated within thirty (30) days of the Closing
Date), as well as a current Borrowing Base Compliance Certificate executed by a
Responsible Officer of the Borrower in the form attached hereto as Exhibit H;
(i) a copy of the field examination, including a
takeover field examination, of the Borrower's books and records and the results
of such field examination;
-97-
105
(j) evidence that the Borrower has $4,000,000 or
more of Availability, after giving effect to the Loans occurring and the
Letters of Credit issued on the Closing Date, together with sufficient evidence
and written projections to confirm to the Agent's reasonable satisfaction that
the projected Availability for the next twelve (12) months after the Closing
Date will be no less than $4,000,000;
(k) a legal opinion from counsel for the Borrower
(said counsel to be reasonably acceptable to Agent), dated as of the Closing
Date, addressed to the Agent and acceptable in all respects to the Agent in its
sole and absolute discretion;
(l) certificates of insurance satisfactory to the
Agent in all respects evidencing the existence of all insurance required to be
maintained by the Borrower pursuant to the terms of this Agreement and the
Security Documents;
(m) the Borrower and the Agent (or TCB) shall
have entered into the Lockbox Agreements;
(n) copies of all major customer and supplier
contracts with respect to the Borrower which the Agent shall have requested;
-98-
106
(o) copies of all employment agreements,
management fee agreements and tax sharing agreements which the Agent shall have
requested;
(p) copies of all lease agreements entered into
by Borrower which the Agent shall have requested;
(q) evidence that the Borrower has attempted, on
a best efforts basis, to receive waivers or subordinations of any and all
landlord liens (whether statutory or contractual) held by any owner of each
real Property leased by the Borrower;
(r) copies of all loan agreements, notes and
other documentation evidencing any Indebtedness of the Borrower which the Agent
shall have requested;
(s) evidence satisfactory to the Agent that there
has been no material adverse change in the business, assets, operations, or
financial condition of the Borrower since January 1, 1996;
(t) an executed disbursement authorization letter
from the Borrower to the Agent with respect to the disbursement of the proceeds
of the Loans and the issuance of the Letters of Credit, if any, to be made or
issued on the Closing Date;
-99-
107
(u) all other Loan Documents and any other
instruments or documents consistent with the terms of this Agreement and
relating to the transactions contemplated hereby as the Agent may reasonably
request, executed by the Borrower or any other Person required by the Agent,
including without limitation, the Lockbox Agreements;
and subject to the further conditions that, at the time of the initial Loan,
(1) the ownership, corporate structure, solvency and capitalization of the
Borrower shall be reasonably satisfactory to the Lenders in all respects; (2)
the Agent and the Lender shall have had the opportunity, if they elect, to
examine the books of account and other records and files of the Borrower and to
make copies hereof, and to conduct a preclosing audit which shall include,
without limitation, verification of Eligible Receivables, verification of
satisfactory status of customer and supplier accounts, payment of payroll taxes
and accounts payable and formulation of an opening Borrowing Base as of the
Closing Date (with the results of such examination and audits to have been
satisfactory to the Agent and the Lenders in all respects); (3) all such
actions as the Agent shall reasonably require to perfect the Liens created
pursuant to the Security Documents shall have been taken, including without
limitation, the delivery to the Agent of all Property with respect to which
possession is necessary for the purpose of perfecting such Liens, and with
respect to Collateral covered by the Security
-100-
108
Agreements, the filing of appropriately completed and duly executed Uniform
Commercial Code financing statements; (4) the Agent shall also have received
evidence reasonably satisfactory to it that the Liens created by the Security
Documents constitute first priority Liens (except for any Liens expressly
provided for in Section 7.2 below), including without limitation, satisfactory
title commitments, Uniform Commercial Code search reports and executed releases
of liens or termination statements with respect to any existing prior Liens to
be released; (5) the Borrower shall have paid all fees owed to the Agent and
the Lenders by the Borrower under the Commitment Letter or this Agreement,
including without limitation, legal fees and expenses described in Section 10.9
or otherwise; and (6) all other legal matters incident to the transactions
herein contemplated shall be reasonably satisfactory to counsel for the Agent
and respective counsel for each of the Lenders.
5. Representations and Warranties.
To induce the Agent and the Lenders to enter into this Agreement, the
Borrower represents and warrants to the Agent and the Lenders, as of the date
hereof and as of the date any Loan is made hereunder or any Letter of Credit is
issued hereunder, as follows:
-101-
109
5.1 Organization. The Borrower is duly organized, validly
existing and in good standing under the laws of the state of its incorporation;
has all power and authority to own its Property and assets and to conduct its
business as presently conducted; and is duly qualified to do business and in
good standing in each and every state in the United States of America where its
business requires such qualification, except where failure to so qualify would
not be reasonably likely to have a Material Adverse Effect.
5.2 Financial Statements.
(a) The financial statements of the Borrower
delivered to the Agent and the Lenders in connection with this Agreement,
including without limitation, the financial statements of the Borrower dated as
of January 1, 1996 and April 3, 1996, fairly present, in accordance with GAAP,
the financial condition and the results of operations of the Borrower as of the
dates and for the periods indicated. No Material Adverse Effect has occurred
since the dates of such financial statements.
(b) The Borrower has heretofore furnished to the
Agent, for each month from the projected Closing Date through the Maturity
Date, projected income statements, balance sheets and cash flows of the
Borrower, together with one or more schedules demonstrating prospective
compliance
-102-
110
with all financial covenants contained in this Agreement, such projections
disclosing all assumptions made by the Borrower in formulating such
projections. The projections are based upon estimates and assumptions, all of
which are reasonable in light of the conditions which existed as of the time
the projections were made, have been prepared on the basis of the assumptions
stated therein and reflect as of the Closing Date a reasonable estimate of the
Borrower as to the results of operations and other information projected
therein.
5.3 Enforceable Obligations; Authorization. The Loan Documents
are legal, valid and binding obligations of the Borrower, enforceable in
accordance with their respective terms, except as may be limited by bankruptcy,
insolvency and other similar laws affecting creditors rights generally and by
general equitable principles. The execution, delivery and performance of the
Loan Documents have all been duly authorized by all necessary corporate, and if
necessary shareholder, action; are within the power and authority of the
Borrower; do not and will not contravene or violate any Legal Requirement or
the Organizational Documents of the Borrower; do not and will not result in the
breach of, or constitute a default under, any agreement or instrument by which
the Borrower or any of its Property may be bound or affected; and do not and
will not result in the creation of any Lien upon any Property of the Borrower
except as expressly contemplated therein. All necessary approvals of any
Governmental
-103-
111
Authority and all other requisite permits, registrations and consents for the
performance have been obtained for the delivery and performance of the Loan
Documents.
5.4 Other Debt. The Borrower is not in default in the payment of
any other Indebtedness or under any agreement, mortgage, deed of trust,
security agreement or lease to which it is a party, the result of which has, or
is reasonably likely to have, a Material Adverse Effect.
5.5 Litigation. Except as set forth on Schedule 5.5 attached
hereto, there is no litigation or administrative proceeding pending or, to the
knowledge of the Borrower, threatened against, nor any outstanding judgment,
order or decree affecting, the Borrower or any Subsidiary of the Borrower
before or by any Governmental Authority or arbitral body which individually or
in the aggregate have, or are reasonably likely to have, a Material Adverse
Effect. Neither the Borrower, nor any Subsidiary thereof, is in default with
respect to any judgment, writ, rule, regulation, order or decree of any
Governmental Authority.
5.6 Taxes. Except as otherwise permitted pursuant to the terms
of Section 6.2 hereof, the Borrower has filed all federal, state, local or
foreign tax returns required to have been filed and paid all taxes shown
thereon to be due, except those for which extensions have been obtained if
adequate
-104-
112
reserves with respect thereto are maintained in accordance with GAAP. Except
for the ongoing Internal Revenue Service audit of the Borrower for the period
from July 1, 1993 through December 31, 1993, no federal income tax returns of
the Borrower have been audited by the Internal Revenue Service, and the
Borrower has not, as of the Closing Date, requested or been granted any
extension of time to file any Federal, state, local or foreign tax return.
Except for the existing tax sharing agreement dated January 4, 1995, by and
between the Borrower, ▇▇▇▇ Computer Corporation (formerly known as RTAC Corp.)
and any other Subsidiaries of the Borrower which may hereafter become a party
to such tax sharing agreement, the Borrower is not a party to, and does not
have any obligation under, any tax sharing arrangement.
5.7 No Material Misstatements. No information, report, financial
statement, exhibit or schedule prepared or furnished by or on behalf of the
Borrower to the Agent or any Lender in connection with this Agreement or any
other Loan Documents knowingly contains any material misstatement of fact or
knowingly omits to state any material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
5.8 Subsidiaries. As of the date hereof, the Borrower has no
Subsidiaries or any other material minority ownership interests in any other
Person, other than the Borrower's
-105-
113
ownership of ninety-nine percent (99%) of the issued and outstanding Stock of
▇▇▇▇ Semiconductors (Israel) Ltd., an Israeli company limited by shares.
5.9 Representations by Others. All representations and
warranties made by or on behalf of the Borrower in any Loan Document shall
constitute representations and warranties of the Borrower hereunder.
5.10 Permits, Licenses, Etc. The Borrower possesses all material
permits, licenses, patents, patent rights, trademarks, trademark rights, trade
names, trade name rights and copyrights which are required to conduct its
business.
5.11 ERISA. No Reportable Event has occurred with respect to any
Plan. Each Plan complies in all material respects with all applicable
provisions of ERISA, and the Borrower or each ERISA Affiliate have filed all
reports required by ERISA and the Code to be filed with respect to each Plan.
The Borrower does not have any knowledge of any event which could reasonably be
expected to result in a liability of the Borrower or any ERISA Affiliate to the
PBGC other than for applicable premiums. No accumulated funding deficiency (as
defined in Section 302 of ERISA and Section 412 of the Code), whether or not
waived, exists with respect to any Plan. No event has occurred and no
condition exists that could reasonably be expected to constitute grounds for a
Plan
-106-
114
to be terminated under circumstances which would cause the Lien provided under
Section 4068 of ERISA to attach to any Property of the Borrower or any ERISA
Affiliate. No event has occurred and no condition exists that could reasonably
be expected to cause the Lien provided under Section 302 of ERISA or Section
412 of the Code to attach to any Property of the Borrower or any ERISA
Affiliate.
5.12 Title to Properties; Possession Under Leases.
(a) The Borrower has good and marketable title
to, or a valid leasehold interest in, all of its Property and assets shown on
the most recent balance sheets of the Borrower referred to in Section 5.2
hereof and all assets and Property acquired since the date of such balance
sheets, except for such Property disposed of in accordance with the terms
hereof or no longer used or useful in the conduct of its business or as has
been disposed of in the ordinary course of business, and except for minor
defects in title that do not interfere with the ability of the Borrower or any
of its Subsidiaries to conduct its business as now conducted. All such assets
and Property are free and clear of all Liens other than those permitted by
Section 7.2 hereof.
(b) The Borrower has complied in all material
respects with all obligations under all leases to which it is a party and under
which it is in occupancy, except where non-
-107-
115
compliance does not effect the Borrower's use or occupancy thereof, and all
such leases are in full force and effect, and the Borrower enjoys peaceful and
undisturbed possession under all such leases. Schedule 5.12 attached hereto
sets forth each of such leases of real Property in existence as of the Closing
Date, and the Borrower has provided the Agent with complete and correct copies
of all of such leases of real Property in effect as of the Closing Date where
Collateral is located.
5.13 Assumed Names. The Borrower is not currently conducting its
business under any assumed name or names, except as set forth on Schedule 5.13
attached hereto or as disclosed in writing to the Agent within a reasonable
time before the Borrower commences to conduct business under the applicable
assumed name or names.
5.14 Investment Company Act. The Borrower is not an investment
company within the meaning of the Investment Company Act of 1940, as amended,
or, directly or indirectly, controlled by or acting on behalf of any Person
which is an investment company, within the meaning of said Act.
5.15 Public Utility Holding Company Act. The Borrower is not a
"public utility company," or an "affiliate" or a "subsidiary company" of a
"public utility company," or a "holding company," or a "subsidiary company" of
a "registered
-108-
116
holding company," or an "affiliate" of a "registered holding company" or of a
"subsidiary company" of a "registered holding company," as such terms are
defined in the Public Utility Holding Company Act of 1935, as amended
("PUHCA"). To the best of the Borrower's knowledge, the Borrower is not an
"affiliate" or a "subsidiary company" of an unregistered, non-exempt "holding
company" as such terms are defined in PUHCA.
5.16 Indebtedness Agreements. Schedule 5.16 attached hereto is a
complete and correct list of (i) all credit agreements for borrowed money,
indentures and capitalized leases and all Property subject to any Lien securing
such Indebtedness or lease obligation, (ii) each letter of credit and guaranty,
(iii) all other material instruments in effect as of the date hereof providing
for, evidencing, securing or otherwise relating to any Indebtedness for
borrowed money of the Borrower (other than the Indebtedness hereunder), and
(iv) all obligations of the Borrower to issuers of appeal bonds issued for
account of the Borrower. The Borrower shall, upon request by the Agent,
deliver to the Agent and the Lenders a complete and correct copy of all such
credit agreements, indentures, capitalized leases, letters of credit,
guarantees and other instruments or leases described in Schedule 5.16 or
arising after the date hereof, including any modifications or supplements
thereto, as in effect on the date hereof.
-109-
117
5.17 Environmental Matters. Except as is described on Schedule
5.17 attached hereto, no activity of the Borrower requires any Environmental
Permit which has not been obtained and which is not now in full force and
effect, except to the extent failure to have any such Environmental Permit
could not reasonably be expected to have a Material Adverse Effect. The
Borrower is in compliance with all limitations, restrictions, conditions,
standards, prohibitions, requirements, obligations, schedules and timetables
contained in any applicable Requirement of Environmental Law or Environmental
Permit, except where failure to be in such compliance could not reasonably be
expected to have a Material Adverse Effect. The Borrower (and, to the
knowledge of the Borrower, each of the prior owners or operators and
predecessors in interest with respect to any of its Property) (i) has obtained
and maintained in effect all Environmental Permits, the failure to obtain which
could reasonably be expected to have a Material Adverse Effect, (ii) along with
its Property has been and is in compliance with all applicable Requirements of
Environmental Law and Environmental Permits where such failure to comply
therewith could reasonably be expected to have a Material Adverse Effect, (iii)
along with its Property is not subject to any (A) Environmental Claims or (B)
Environmental Liabilities, in either case direct or contingent, and whether
known or unknown, arising from or based upon any act, omission, event,
condition or circumstance occurring or existing on or prior to the date hereof
which could reasonably
-110-
118
be expected to have a Material Adverse Effect, and (iv) has not received
individually or collectively any notice of any violation or alleged violation
of any Requirements of Environmental Law or Environmental Permit or any
Environmental Claim in connection with its Property which could reasonably be
expected to have a Material Adverse Effect. The present and future liability
(including any Environmental Liability and any other damage to Persons or
Property), if any, of the Borrower and with respect to the Property of the
Borrower which is reasonably expected to arise in connection with Requirements
of Environmental Law, Environmental Permits and other environmental matters
will not have a Material Adverse Effect.
5.18 No Change in Credit Criteria or Collection Policies. There
has been no material adverse change in credit criteria or collection policies
concerning Receivables of the Borrower since January 1, 1996.
5.19 Solvency.
(a) The fair salable value of the assets of the Borrower
is not less than the amount that will be required to be paid on or in respect
of the probable liability on the existing debts and other liabilities
(including contingent liabilities) of the Borrower, as they become absolute and
mature.
-111-
119
(b) The assets of the Borrower do not constitute
unreasonably small capital for the Borrower to carry out its business as now
conducted and as proposed to be conducted including the capital needs of the
Borrower, taking into account the particular capital requirements of the
business conducted by the Borrower and projected capital requirements and
capital availability thereof.
(c) The Borrower does not intend to incur debts beyond its
ability to pay such debts as they mature (taking into account the timing and
amounts of cash to be received by the Borrower, and of amounts to be payable on
or in respect of debt of the Borrower). The cash flow of the Borrower, after
taking into account all anticipated uses of the cash of the Borrower, should at
all times be sufficient to pay all such amounts on or in respect of debt of the
Borrower when such amounts are required to be paid.
(d) The Borrower does not believe that final judgments
against it in actions for money damages presently pending, if any, will be
rendered at a time when, or in an amount such that, it will be unable to
satisfy any such judgments promptly in accordance with their terms (taking into
account the maximum reasonable amount of such judgments in any such actions and
the earliest reasonable time at which such judgments might be rendered). The
cash flow of the Borrower, after taking into account all other anticipated uses
of the
-112-
120
cash of the Borrower (including the payments on or in respect of debt referred
to in subparagraph (c) of this Section 5.19), should at all times be sufficient
to pay all such judgments promptly in accordance with their terms.
5.20 Status of Receivables and Other Collateral. The Borrower
represents and warrants that (a) it is and shall be the sole owner, free and
clear of all Liens except in favor of the Agent or otherwise permitted under
Section 7.2 hereunder, of and fully authorized to sell, transfer, pledge and/or
grant a security interest in each and every item of all Collateral owned by it;
(b) each Eligible Receivable is and shall be a good and valid account
representing an undisputed bona fide indebtedness incurred or an amount
indisputably owed by the account debtor therein named, for a fixed sum as set
forth in the invoice relating thereto with respect to an absolute sale and
delivery upon the specified terms of goods sold by the Borrower, or work, labor
and/or services theretofore rendered by the Borrower; (c) no Eligible
Receivable is or shall be subject to any defense, offset, counterclaim,
discount or allowance (as of the time of its creation) except as may be stated
in the invoice relating thereto or discounts and allowances as may be customary
in the Borrower's business; (d) none of the transactions underlying or giving
rise to any Eligible Receivable shall violate any applicable state or federal
laws or regulations, and all documents relating to any Receivable shall be
legally sufficient under such laws or
-113-
121
regulations and shall be legally enforceable in accordance with their terms,
subject, as to enforceability, to the effect of any applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creators'
rights generally; (e) to the best of the Borrower's knowledge, each account
debtor, guarantor or endorser with respect to any Eligible Receivable is
solvent and able to pay all Receivables on which it is obligated in full when
due; (f) all documents and agreements relating to Eligible Receivables shall be
true and correct and in all respects what they purport to be; (g) to the best
of the Borrower's knowledge, all signatures and endorsements that appear on all
documents and agreements relating to Eligible Receivables shall be genuine and
all signatories and endorsers with respect thereto shall have full capacity to
contract; (h) it shall maintain books and records pertaining to the Collateral
owned by it in detail, form and scope as the Agent shall reasonably require;
(i) the Borrower will immediately notify the Agent if any Receivables arise out
of contracts with the United States or any department, agency or
instrumentality thereof, and will, upon request from the Agent, execute any
instruments and take any steps required by the Agent in order that all monies
due or to become due under any such contract shall be assigned to the Agent and
notice thereof given under the Federal Assignment of Claims Act; (j) it will,
immediately upon learning thereof, report to the Agent any material loss or
destruction of, or substantial damage to, any of the Collateral, and any other
matters
-114-
122
adversely affecting the value, enforceability or collectability of any of the
Collateral; (k) if any amount payable under or in connection with any
Receivable is evidenced by a promissory note or other instrument, as such terms
are defined in the Uniform Commercial Code, such promissory note or instrument
shall be immediately pledged, endorsed, assigned and delivered to the Agent as
additional collateral; (l) it shall not redate any invoice or sale or make
sales on extended dating beyond that customary in the industry; and (m) it
shall not be entitled to pledge the Lenders' credit on any purchases or for any
purpose whatsoever.
6. Affirmative Covenants.
The Borrower covenants and agrees with the Agent and the Lenders that
prior to the termination of this Agreement, it will do, cause each of its
Subsidiaries, if any, to do, and if necessary cause to be done, each and all of
the following:
6.1 Businesses and Properties. At all times: (a) do or cause to
be done all things necessary to obtain, preserve, renew and keep in full force
and effect the rights, licenses, permits, franchises, patents, copyrights,
trademarks and trade names material to the conduct of its businesses; (b)
maintain and operate such businesses in the same general manner in which they
are presently conducted and operated; (c) comply with all Legal Requirements
applicable to the operation of
-115-
123
such businesses whether now in effect or hereafter enacted (including without
limitation, all Legal Requirements relating to public and employee health and
safety and all Environmental Laws) and with any and all other Legal
Requirements, the lack of compliance with which would have a Material Adverse
Effect; and (d) maintain, preserve and protect all Property material to the
conduct of such businesses and keep such Property in good repair, working order
and condition, and from time to time make, or cause to be made, all needful and
proper repairs, renewals, additions, improvements and replacements thereto
necessary in order that the business carried on in connection therewith may be
properly conducted at all times.
6.2 Taxes. Pay and discharge promptly when due all taxes,
assessments and governmental charges or levies imposed upon it or upon its
income or profits or in respect of its Property before the same shall become
delinquent or in default, as well as all lawful claims for labor, materials and
supplies or otherwise, which, if unpaid, and in excess of $250,000 with respect
to claims for labor, material and supplies or in excess of $500,000 with
respect to claims for taxes, assessments and governmental charges or levies,
might give rise to Liens upon such properties or any part thereof (except as
otherwise permitted by Section 7.2 hereof), unless being diligently contested
in good faith by appropriate proceedings and as to which adequate reserves in
an amount not less than the aggregate amount secured by such Liens have been
-116-
124
established in accordance with GAAP; provided, however, that such contested
amounts giving rise to such Liens shall be immediately paid upon commencement
of any procedure or proceeding to foreclose any of such Liens unless the same
shall be validly stayed by a court of competent jurisdiction or a surety bond,
which is satisfactory in all respects to the Agent, is delivered to the Agent
for the ratable benefit of the Lenders in an amount no less than such contested
amounts.
6.3 Financial Statements and Information. Furnish to the Agent
and each Lender three (3) copies of each of the following: (a) as soon as
available and in any event within ninety (90) days after the end of each fiscal
year of the Borrower, Annual Audited Financial Statements of the Borrower and
its Subsidiaries; (b) as soon as available and in any event within forty-five
(45) days after the end of each fiscal quarter of the Borrower, Quarterly
Unaudited Financial Statements of the Borrower and its Subsidiaries; (c)
promptly after the same become publicly available, copies of such financial
information, registration statements, annual, periodic and other reports, and
such proxy statements and other information, if any, as shall be filed by the
Borrower with the Securities and Exchange Commission pursuant to the
requirements of the Securities Act of 1993 or the Securities Exchange Act of
1934 or submitted to any shareholders of the Borrower or any Subsidiary
thereof, including without limitation, all 10-Q and 10-K Reports; (d)
concurrently with
-117-
125
the financial statements provided for in Subsections 6.3(a) and 6.3(b) hereof,
(1) an Officer's Certificate, signed by a Responsible Officer of the Borrower,
and (2) a written certificate in Proper Form, identifying each Subsidiary which
is otherwise required by the provisions of Section 6.10 hereof to become a
Guarantor at the request of the Agent, but which has not yet done so as of the
date of such certificate, and providing an explanation of the reasons why each
such Subsidiary is not a Guarantor, signed by a Responsible Officer of the
Borrower; (e) as soon as available and in any event within five (5) days after
the date of issuance thereof (if any such management letter is ever issued), a
management letter prepared by the independent public accountants who reported
on the financial statements provided for in Subsection 6.3(a) above, with
respect to the internal audit and financial controls of the Borrower and its
Subsidiaries; (f) as soon as available and in any event within fifteen (15)
days after the end of each month, account receivable agings and
reconciliations, accounts payable agings and reconciliations, monthly sales
report, monthly inventory summary, and all other schedules, computations and
other information, in reasonable detail, as may be required or requested by the
Agent, all certified by a Responsible Officer of the Borrower; (g) as soon as
available and in any event within fifteen (15) days after the end of each
month, a Borrowing Base Compliance Certificate, signed by a Responsible Officer
of the Borrower in the form attached hereto as
-118-
126
Exhibit H; (h) as soon as available and in any event within thirty (30) days
subsequent to the commencement of each fiscal year of the Borrower,
management-prepared Consolidated financial projections of the Borrower and its
Subsidiaries for the immediately following two (2) fiscal years (setting forth
such projections on both an annual basis and on a monthly basis for the
upcoming fiscal year and on an annual basis only for the fiscal year
thereafter), such projections to be in such format and detail as reasonably
requested by the Agent; and (i) such other information relating to the
financial condition, operations and business affairs of the Borrower or any of
its Subsidiaries as from time to time may be reasonably requested by the Agent.
6.4 Inspection. Upon reasonable notice (which may be telephonic
notice), at all reasonable times and as often as the Agent may request, permit
any authorized representative designated by the Agent, together with any
authorized representatives of any Lender desiring to accompany the Agent, to
visit and inspect the Properties and financial records of the Borrower and its
Subsidiaries and to make extracts from such financial records at the Agent's
expense, and permit any authorized representative designated by the Agent
(together with any accompanying representatives of any Lender) to discuss the
affairs, finances and condition of the Borrower and its Subsidiaries with the
appropriate Financial Officer and such other officers as the Borrower shall
deem appropriate
-119-
127
and the Borrower's independent public accountants, as applicable. The Agent
agrees that it shall schedule any meeting with any such independent public
accountant through the Borrower, and a Responsible Officer of the Borrower
shall have the right to be present at any such meeting. At the Borrower's
expense, the Agent shall have the right to examine, as often as it may request
(but initially scheduled for three (3) times in each fiscal year of the
Borrower prior to a Default or Event of Default) the existence and condition of
the Receivables, books and records of the Borrower and its Subsidiaries and to
review their compliance with the terms and conditions of this Agreement and the
other Loan Documents, subject to governmental confidentiality requirements.
The Agent shall also have the right to verify with any and all customers of the
Borrower and any of its Subsidiaries the existence and condition of the
Receivables, as often as the Agent may require, without prior notice to or
consent of the Borrower or any of its Subsidiaries.
6.5 Further Assurances. Promptly execute and deliver any and all
other and further instruments which may be requested by the Agent to (a) cure
any defect, error or omission in the execution and delivery of any Loan
Document and (b) grant, preserve, protect and perfect the first priority Liens
created by the Security Documents in the Collateral.
-120-
128
6.6 Books and Records. Maintain financial records and books in
accordance with accepted financial practice in the Borrower's industry and
GAAP.
6.7 Insurance.
(a) Keep its insurable Properties adequately insured at
all times by financially sound and reputable insurers.
(b) Maintain such other insurance, to such extent and
against such risks, including fire and other risks insured against by extended
coverage, employee liability and business interruption, as is customary with
companies similarly situated and in the same or similar businesses, provided,
however, that such insurance shall insure the Property of the Borrower against
all risk of physical damage, including without limitation, loss by fire,
explosion, theft, fraud and such other casualties as may be reasonably
satisfactory to the Agent, but in no event at any time in an amount less than
the replacement value of the Collateral.
(c) Maintain in full force and effect worker's
compensation coverage and public liability insurance against claims for
personal injury or death or property damage occurring upon, in, about or in
connection with its operations and with the use of any Properties owned,
occupied or
-121-
129
controlled by the Borrower or any of its Subsidiaries, in such amounts as is
customary with companies similarly situated and in the same or similar
businesses.
(d) Maintain such other insurance as may be required by
law or as may be reasonably requested by the Agent for purposes of assuring
compliance with this Section 6.7. All insurance covering tangible personal
Property subject to a Lien in favor of the Agent for the benefit of the Lenders
granted pursuant to the Security Documents shall provide that, in the case of
each separate loss, the full amount of insurance proceeds shall be payable to
the Agent and shall further provide for at least 30 days' prior written notice
to the Agent of the cancellation or substantial modification thereof.
6.8 ERISA. At all times: (a) make contributions to each Plan in
a timely manner and in an amount sufficient to comply with the minimum funding
standards requirements of ERISA; (b) immediately upon acquiring knowledge of
(i) any Reportable Event in connection with any Plan for which no
administrative or statutory exemption exists or (ii) any "prohibited
transaction", as such term is defined in Section 4975 of the Code, in
connection with any Plan, that could result in the imposition of material
damages or a material excise tax on the Borrower or any Subsidiary thereof,
furnish the Agent a statement executed by a Responsible Officer of the
-122-
130
Borrower or such Subsidiary setting forth the details thereof and the action
which the Borrower or any such Subsidiary proposes to take with respect thereto
and, when known, any action taken by the Internal Revenue Service with respect
thereto; (c) notify the Agent promptly upon receipt by the Borrower or any
Subsidiary thereof of any notice of the institution of any proceedings or other
actions which may result in the termination of any Plan by the PBGC and furnish
the Agent with copies of such notice; (d) pay when due, or within any
applicable grace period allowed by the PBGC, all required premium payments to
the PBGC; (e) furnish the Agent with copies of the annual report for each Plan
filed with the Internal Revenue Service not later than ten (10) days after the
Agent requests such report; (f) furnish the Agent with copies of any request
for waiver of the funding standards or extension of the amortization periods
required by Sections 303 and 304 of ERISA or Section 412 of the Code promptly
after the request is submitted to the Secretary of the Treasury, the Department
of Labor or the Internal Revenue Service, as the case may be; and (g) pay when
due all installment contributions required under Section 302 of ERISA or
Section 412 of the Code or within 10 days of a failure to make any such
required contributions when due furnish the Agent with written notice of such
failure.
6.9 Use of Proceeds. Subject to the terms and conditions
contained herein, use the proceeds of the Loans for
-123-
131
(a) financing ongoing working capital needs of the Borrower and its
Subsidiaries not otherwise prohibited herein and/or (b) payment of the
Obligations, as provided in this Agreement; provided, that no proceeds of any
Loan shall be used (a) for the purpose of purchasing or carrying directly or
indirectly any margin stock as defined in Regulation U ("Reg U") of the Board
of Governors of the Federal Reserve System, (b) for the purpose of reducing or
retiring any Indebtedness which was originally incurred to purchase or carry
any such margin stock, (c) for any other purpose which would cause such Loan to
be a "purpose credit" within the meaning of Reg U and (d) for any purpose which
would constitute a violation of Reg U or of Regulations G, T or X of the Board
of Governors of the Federal Reserve System or any successor regulation of any
thereof or of any other rule, statute or regulation governing margin stock from
time to time.
6.10 Guarantors; Joinder Agreements. Promptly inform the Agent of
the creation or acquisition of any Subsidiary of the Borrower after the Closing
Date and, if required by the Agent, promptly cause any such Subsidiary created
after the Closing Date (except as provided for below) to become a Guarantor by
execution and delivery to the Agent for the benefit of the Lenders of a
Guaranty or a Joinder Agreement (if a Joinder Agreement is requested by the
Agent in lieu of a Guaranty) and execute and deliver to the Agent for the
benefit of the Lenders any applicable Security Documents required by
-124-
132
the Agent, together with such related certificates, legal opinions and
documents as the Agent may reasonably require; provided, however, that any
foreign Subsidiary shall not be required to become a Guarantor hereunder if the
Agent receives, for the ratable benefit of the Lender, a first priority pledge,
as additional Collateral for the Obligations, of no less than sixty-five
percent (65%) of all issued and outstanding indicia of equity rights (including
capital stock) in such foreign Subsidiary contemporaneously with the
acquisition or creation by the Borrower or other Subsidiary of such foreign
Subsidiary. Notwithstanding any provision to the contrary contained herein,
▇▇▇▇ Semiconductors (Israel) Ltd. shall not be required to become a Guarantor,
nor shall any portion of the Stock of ▇▇▇▇ Semiconductors (Israel) Ltd. be
required to be pledged as additional Collateral hereunder.
6.11 Notice of Events. Notify the Agent immediately upon
acquiring knowledge of the occurrence of, or if the Borrower or any of its
Subsidiaries causes or intends to cause, as the case may be: (a) the
institution of any lawsuit, administrative proceeding or investigation
affecting the Borrower or any of its Subsidiaries, including without
limitation, any audit by the Internal Revenue Service, which is reasonably
likely to have a Material Adverse Effect; (b) any development or change in the
business or affairs of the Borrower or any of its Subsidiaries which is
reasonably likely to have a Material Adverse Effect; (c) any Event of Default
or
-125-
133
any Default, together with a detailed statement by a Responsible Officer on
behalf of the Borrower of the steps being taken to cure the effect of such
Event of Default or Default; (d) the occurrence of a default or event of
default by the Borrower or any of its Subsidiaries under any agreement or
series of related agreements to which it is a party, which default or event of
default is reasonably likely to have a Material Adverse Effect; (e) any
violation by, or investigation of, the Borrower or any of its Subsidiaries in
connection with any actual or alleged violation of any Legal Requirement
imposed by the Environmental Protection Agency, the Occupational Safety Hazard
Administration or any other Governmental Authority which is reasonably likely
to have a Material Adverse Effect; and (f) any material change in the accuracy
of the representations and warranties of the Borrower or any of any of its
Subsidiaries in this Agreement or any other Loan Document.
6.12 Environmental Matters. Without limiting the generality of
Section 6.1(c) hereof, (a) comply in all material respects with all
limitations, restrictions, conditions, standards, prohibitions, requirements,
obligations, schedules and timetables contained in any applicable Requirement
of Environmental Law or Environmental Permit; (b) obtain and maintain in effect
all Environmental Permits, the failure to obtain which could reasonably be
expected to have a Material Adverse Effect; and (c) keep its Property free of
any
-126-
134
Environmental Claims or Environmental Liabilities which could reasonably be
expected to have a Material Adverse Effect.
6.13 End of Fiscal Year. Cause each of its fiscal years to end on
the Monday closest to March 31 of the applicable calendar year.
6.14 Pay Obligations and Perform Other Covenants. Make full and
timely payment of the Obligations, whether now existing or hereafter arising,
duly comply with all of the terms and covenants contained in this Agreement and
in each of the other Loan Documents at all times and places and in the manner
set forth therein, and except for the filing of continuation statements and the
making of other filings by the Agent as secured party or assignee, at all times
take all actions necessary to maintain the Liens and security interests
provided for under or pursuant to this Agreement and the Security Documents as
valid perfected first priority Liens on the Collateral intended to be covered
thereby (subject only to other Liens expressly permitted by Section 7.2 hereof)
and supply all information to the Agent necessary for such maintenance.
6.15 Collection of Receivables; Application of Lockbox Agreement
Proceeds.
(a) At the Borrower's own cost and expense, arrange for
remittances on all Receivables to be made directly
-127-
135
to lockbox(es) designated by the Agent under the terms of the Lockbox
Agreements or in such other manner as the Agent may direct. Prior to the
implementation of the procedures discussed in Section 6.15(b) below, the
proceeds of all Receivables collected through such lockbox(es) shall not be
required to be remitted to the Agent for application to the Loans and for other
disbursements approved by the Agent as set forth in Section 6.15(b) below, but
instead shall be available for unrestricted use by the Borrower by deposit of
such proceeds into one or more operating accounts maintained by the Borrower
with the Agent or TCB.
(b) If at any time, either (i) a Default or Event of
Default shall occur and be continuing or (ii) Availability shall be less than
$4,000,000 for more than one (1) Business Day after the Agent has notified the
Borrower (whether orally or in writing) that Availability has fallen below
$4,000,000 for any reason, all remittances on all Receivables processed through
the lockbox(es) in accordance with Section 6.15(a) above shall at all times
thereafter be promptly deposited in one or more accounts designated by the
Agent, subject to withdrawal by the Agent only, as hereinafter provided. In
connection therewith, the Agent and TCB are irrevocably authorized, in
accordance with the terms of the implementation and processing instructions for
the applicable Lockbox Agreement(s), to cause all such remittances on all
Receivables to be promptly deposited in such account or
-128-
136
accounts designated by the Agent. All remittances and payments that are
deposited in accordance with the foregoing will be immediately applied by the
Agent to reduce the outstanding balance of the Loans, subject to the continued
accrual of interest on the Loan balances to which such remittances and payments
are applied for one (1) Business Day (or two Business Days in the case of
remittances and payments received after 12:00 noon) and in any event subject to
final collection in cash of the item deposited.
(c) As long as the procedures implemented under Section
6.15(b) above are in effect and are continuing, the Borrower shall cause all
payments, if any, received by the Borrower or any of its Subsidiaries on
account of Receivables which are not forwarded directly to the above-described
lockbox(es) (whether in the form of cash, checks, notes, drafts, bills of
exchanges, money orders or otherwise) to be promptly deposited in precisely the
form received (but with any endorsements of the Borrower or the applicable
Subsidiary necessary for deposit or collection) in the account or accounts
designated by the Agent in accordance with the provisions of Section 6.15(b)
above.
(d) In addition to the financial reporting requirements
set forth in Section 6.3 hereof, as long as the daily collection procedure
implemented by the provisions of Section 6.15(b) above is in effect, the
Borrower shall furnish
-129-
137
to the Agent on each Business Day a copy of a Receivables report setting forth
the sales, collections and credits for the Borrower and its Subsidiaries for
the preceding Business Day prior to the date of such Receivables report.
(e) If and when the daily collection procedures discussed
in Section 6.15(b) above are implemented in accordance with the provisions
thereof, such daily collection procedures shall thereafter continue to be in
effect until the end of the fiscal quarter of the Borrower during which all
existing Defaults and Events of Default, if applicable, shall have been cured
to the satisfaction of the Agent and Availability shall have increased to an
amount equal to or greater than $4,000,000, if applicable.
6.16 Additional Receivables Documentation. In addition to the
Receivables information delivered pursuant to the other provisions of this
Agreement, furnish such further schedules and/or information as the Agent may
reasonably require relating to the Receivables (including without limitation,
sales invoices if the same are required by the Agent), and the Borrower shall
notify the Agent of any non-compliance in respect of the representations and
warranties contained in Section 5.21 hereof. The items to be provided under
this Section 6.16 are to be in Proper Form and are to be executed and delivered
to the Agent from time to time solely for its convenience in maintaining
records of the Collateral. The
-130-
138
Borrower's failure to give any of such items to the Agent shall not affect,
terminate, modify or otherwise limit the Agent's Lien or security interest in
the Collateral.
7. Negative Covenants.
The Borrower covenants and agrees with the Agent and the Lenders that
prior to the termination of this Agreement, the Borrower will not, and will not
suffer or permit any of its Subsidiaries, if any, to, do any of the following:
7.1 Indebtedness. Except as otherwise permitted hereby, create,
incur, suffer or permit to exist, or assume or guarantee, directly or
indirectly, or become or remain liable with respect to any Indebtedness,
whether direct, indirect, absolute, contingent or otherwise, except the
following:
(a) Indebtedness to the Lenders and the Agent pursuant
hereto;
(b) Indebtedness secured by Liens permitted by Section 7.2
hereof;
(c) Purchase money Indebtedness incurred to finance the
Borrower's purchase of (1) that certain real Property facility known as "The
Pinnacle Building" in Austin, Texas, not to exceed $6,000,000, so long as such
purchase
-131-
139
money Indebtedness is on terms and conditions satisfactory to the Agent in all
respects (including a satisfactory review by the Agent of the projected
carrying costs associated with the Borrower's ownership of such real Property
facility) and (2) equipment used for the Borrower's or any of its Subsidiaries'
research, development and other operations, not to exceed $1,000,000 in the
aggregate at any time during the period of time from the Closing Date through
the Maturity Date;
(d) Subordinated Indebtedness;
(e) other liabilities existing on the date of this
Agreement and set forth on Schedule 5.16 attached hereto;
(f) current accounts payable and unsecured current
liabilities, not the result of borrowings, to vendors, suppliers and persons
providing services, for expenditures on ordinary trade terms for goods and
services normally required by the Borrower or any of its Subsidiaries in the
ordinary course of its business;
(g) the Indebtedness of any Guarantor to the Borrower or
to any other Guarantor, or the Indebtedness of the Borrower to any Guarantor;
-132-
140
(h) current and deferred taxes and other assessments and
governmental charges (to the extent permitted by any of the other provisions of
this Agreement); and
(i) Refinancing Indebtedness.
THE BORROWER, THE AGENT, THE LENDERS AND EACH GUARANTOR (BY ITS
EXECUTION OF A GUARANTY OR A JOINDER AGREEMENT) AGREE THAT, NOTWITHSTANDING
ANYTHING CONTAINED IN SECTIONS 7.1(G) OR IN ANY OTHER PROVISION CONTAINED IN
THIS AGREEMENT WHICH MAY APPEAR TO BE TO THE CONTRARY, ANY AND ALL INDEBTEDNESS
PERMITTED BY SECTIONS 7.1(G) HEREOF (TOGETHER WITH ANY AND ALL LIENS FROM TIME
TO TIME SECURING THE SAME AS PERMITTED BY SECTION 7.2(I) HEREOF) IS HEREBY MADE
AND AT ALL TIMES HEREAFTER SHALL BE INFERIOR AND SUBORDINATE IN ALL RESPECTS TO
THE INDEBTEDNESS FROM TIME TO TIME OWING TO THE AGENT OR ANY LENDER PURSUANT
HERETO AND TO ANY LIEN AGAINST ANY COLLATERAL FROM TIME TO TIME NOW OR
HEREAFTER SECURING ANY OF SUCH INDEBTEDNESS PURSUANT TO THE TERMS HEREOF AND
THE SECURITY DOCUMENTS. THE BORROWER AGREES TO EXECUTE AND DELIVER ON ITS OWN
BEHALF, AND TO CAUSE TO BE EXECUTED AND DELIVERED BY AND ON BEHALF OF THE
GUARANTORS, ANY AND ALL SUBORDINATION AGREEMENTS, IN FORM AND CONTENT
REASONABLY ACCEPTABLE TO THE AGENT, WHICH THE AGENT MAY HEREAFTER REQUIRE TO
FURTHER EVIDENCE THE SUBORDINATION OF THE INDEBTEDNESS PERMITTED BY SECTIONS
7.1(G) ABOVE AND THE LIENS PERMITTED BY SECTION 7.2(I).
-133-
141
7.2 Liens. Except as otherwise permitted hereby, create or
suffer to exist any Lien upon any of its Property (including without
limitation, real property assets) now owned or hereafter acquired, or acquire
any Property upon any conditional sale or other title retention device or
arrangement or any purchase money security agreement; provided, however, that
the Borrower and its Subsidiaries (or any of them) may create or suffer to
exist:
(a) Liens in effect on the date hereof and which are
described on Schedule 7.2 attached hereto, provided, that the Property covered
thereby does not increase in quantity and such Liens may not be renewed and
extended except as permitted by Section 7.2(m) below;
(b) Liens in favor of the Agent for the ratable benefit of
the Lenders;
(c) Liens incurred and pledges and deposits made in the
ordinary course of business in connection with workers' compensation,
unemployment insurance, old-age pensions, social security and other similar
laws (not including any lien described in Section 412(m) of the Code);
(d) Liens imposed by law, such as carriers',
warehousemen's, mechanics', materialmen's and vendors' liens and other similar
liens, incurred in good faith in the
-134-
142
ordinary course of business and securing obligations which are not overdue for
a period of more than 15 days or which are being contested in good faith by
appropriate proceedings as to which the Borrower or any of its Subsidiaries, as
the case may be, shall, to the extent required by GAAP, consistently applied,
have set aside on its books adequate reserves;
(e) Liens securing the payment of taxes, assessments and
governmental charges or levies, that are not delinquent or are being diligently
contested in good faith by appropriate proceedings and as to which adequate
reserves have been established in accordance with GAAP; provided, however, that
in no event shall the aggregate amount of taxes, assessments and governmental
charges or levies which are being contested at any time exceed $500,000 and
that in no event shall the aggregate amount of such reserves be less than the
aggregate amount secured by such Liens;
(f) Zoning restrictions, easements, licenses,
reservations, provisions, covenants, conditions, waivers, restrictions on the
use of property or minor irregularities of title (and with respect to leasehold
interests, mortgages, obligations, liens and other encumbrances incurred,
created, assumed or permitted to exist and arising by, through or under a
landlord or owner of the leased property, with or without consent of the
lessee) which do not in the aggregate materially detract from the value of such
property or assets
-135-
143
or materially impair the use thereof in the operation of its business;
(g) Liens securing the performance of utility services,
bids, tenders, leases, contracts (other than for the repayment of borrowed
money), statutory obligations, surety, customs and appeal bonds and other
obligations of like nature, incurred as an incident to and in the ordinary
course of business;
(h) Purchase money Liens securing the Indebtedness
permitted by Section 7.1(c) above, provided, that as a result of the creation
of any such Lien, (i) no Default or Event of Default shall have occurred, (ii)
the principal amount of such Lien does not exceed 100% of the purchase price of
the asset acquired with such permitted Indebtedness plus accrued interest on
such Indebtedness plus protective advances made by the holder of such permitted
Indebtedness, and (iii) such Lien shall not apply to any other Property other
than the asset acquired with such purchase money Indebtedness;
(i) Liens in favor of the Borrower or any Guarantor
securing any Indebtedness permitted pursuant to Sections 7.1(g) hereof;
(j) Any attachment or judgment Lien, unless the judgment
it secures shall not, within thirty (30) days
-136-
144
after the entry thereof, have been discharged or execution thereof stayed
pending appeal, or shall not have been discharged within thirty (30) days after
the expiration of any such stay;
(k) Liens arising by operation of law under Article 2 of
the Code in favor of unpaid sellers or prepaying buyers of goods relating to
amounts that are not past due in accordance with their respective terms of
sale;
(l) Statutory or contractual Liens of landlords;
(m) Liens securing any Refinancing Indebtedness or other
renewals, replacement, reinstatements or refinancings (but not increases) of
any obligation secured by any of the Liens described in this definition;
(n) Liens on Property of a Person existing at the time
such Person is acquired by, merged into or consolidated with the Borrower or
any of its Subsidiaries in accordance with the terms hereof, provided that such
Liens were in existence prior to the contemplation of such acquisition, merger
or consolidation and do not extend to any assets other than those of the Person
so merged into, consolidated with or acquired by the Borrower or such
Subsidiary; and
-137-
145
(o) To the extent the contractual relationships described
in clauses (g) and (h) of the definition of "Permitted Dispositions" constitute
Liens, any such Liens.
Provided, however, that notwithstanding anything contained above in this
Section 7.2 to the contrary, if any of the permitted Liens are of the type that
are being contested in good faith by appropriate proceedings as to the Borrower
or any of its Subsidiaries, the Indebtedness giving rise to such contested
Lien(s) must be immediately paid upon commencement of any foreclosure process
or proceeding with respect to such Lien(s) unless the same shall be effectively
stayed or a surety bond with respect thereto (which is satisfactory in all
respects to the Agent), is posted.
7.3 Contingent Liabilities. Except as otherwise permitted
hereby, create, incur, suffer or permit to exist, directly or indirectly, any
Contingent Obligations, except for Contingent Obligations incurred for the
benefit of any Subsidiary of the Borrower, if the primary obligation of such
Subsidiary is otherwise permitted by any other provisions of this Agreement.
7.4 Mergers, Consolidations and Dispositions and Acquisitions of
Assets. Except as otherwise permitted hereby,
-138-
146
in any single transaction or series of related transactions, directly or
indirectly:
(a) Wind up its affairs, terminate, liquidate or dissolve;
(b) Except as permitted by Section 7.4(e) and in
connection with Permitted Investments, be a party to any merger or
consolidation;
(c) Except in connection with Permitted Dispositions,
sell, convey, lease, transfer or otherwise dispose of all or any portion of the
assets of the Borrower and/or its Subsidiaries, or agree to take any such
action;
(d) Sell, assign, pledge, transfer or otherwise dispose
of, or in any way part with control of, any Stock of any of its Subsidiaries or
any Indebtedness or obligations of any character of any of its Subsidiaries, or
permit any such Subsidiary to do so with respect to any Stock of any other
Subsidiary or any Indebtedness or obligations of any character of the Borrower
or any of its Subsidiaries, or permit any of its Subsidiaries to issue any
additional Stock other than to the Borrower; or
(e) Without the prior written consent of the Agent (with
the Agent's response to any such consent requested
-139-
147
by the Borrower to not be unreasonably delayed), purchase or otherwise acquire,
directly or indirectly, in a single transaction or a series of related
transactions, all or a substantial portion of the assets of any Person or any
shares of Stock of, or similar interest in, any Person; provided, however that:
(1) any Subsidiary of the Borrower may merge or
consolidate with the Borrower or any other domestic Subsidiary of the Borrower,
provided that if one or more of the entities so merging or consolidation was a
Guarantor, if the surviving entity is not the Borrower or is not yet a
Guarantor, such surviving entity shall simultaneously with such merger, execute
and deliver to the Agent a Joinder Agreement, together with all requested
Security Documents, as required at such time by the Agent, appropriately
completed; and
(2) any transfer of assets otherwise permitted by
clause (e) of the definition of "Permitted Dispositions" may occur.
7.5 Nature of Business. Materially change the nature of its
business or enter into any business which is substantially different from the
business in which it is engaged as of the Closing Date.
-140-
148
7.6 Transactions with Related Parties.
(a) Except for (i) Permitted Affiliate Transactions, (ii)
transactions, contracts or agreements existing on the date of this Agreement
and which are set forth on Schedule 7.6 attached hereto, (iii) transactions,
contracts or agreements otherwise permitted hereby, and (iv) any renewals and
extensions of such existing transactions, contracts or agreements, so long as
such renewals and extensions are upon terms and conditions substantially
identical to the terms and conditions set forth in the existing transactions,
contracts and agreements (or otherwise no less favorable to the Borrower and
the Guarantors, as applicable): (1) enter into any other transaction, contract
or agreement of any kind with any Affiliate, officer or director of the
Borrower or any of its Subsidiaries, unless such transaction, contract or
agreement is made upon terms and conditions not less favorable to such Person
than those which could have been obtained from wholly independent and unrelated
sources; and (2) the Borrower will not permit the compensation paid by the
Borrower or any of its Subsidiaries to any officer, stockholder, director,
partner or proprietor of the Borrower or any of its Subsidiaries to be
excessive, based on the reasonable determination of the Borrower's compensation
committee, taking into consideration the financial circumstances of the
Borrower or the applicable Subsidiary and the position and qualifications of
such Person.
-141-
149
(b) Permit any officer or director of the Borrower or any
of its Subsidiaries to acquire or otherwise usurp any corporate opportunity
rightfully belonging to the Borrower or such Subsidiary in any manner which
would constitute a breach of such officer's or director's duty of loyalty to
the Borrower or such Subsidiary.
7.7 Investments; Loans. Except as otherwise permitted hereby,
make, directly or indirectly, any loan or advance to or have any Investment in
any Person, or make any commitment to make such loan, advance or Investment,
except:
(a) Stock of any Subsidiary created or acquired after the
Closing Date in accordance with the other provisions of this Agreement or with
the prior written consent of the Agent;
(b) Permitted Investments;
(c) Loans otherwise permitted by the provisions of Section
7.1(g) above;
(d) Loans to Marco International of Austin, Texas, so long
as (1) the aggregate amount of such Loans by the Borrower does not exceed
$500,000 in the aggregate and (2) such Loans by the Borrower are fully secured
by a perfected
-142-
150
Lien against substantially all of the assets of Marco International of Austin,
Texas; and
(e) Loans to or other Investments in ▇▇▇▇ Semiconductors
(Israel) Ltd. (in addition to the Borrower's existing ownership of Stock in
such entity as of the Closing Date), so long as the aggregate amount of such
loans and other Investments by the Borrower and all of its Subsidiaries does
not exceed in the aggregate $4,000,000 per fiscal year.
7.8 ERISA Compliance.
(a) At any time engage in any "prohibited transaction" as
defined in ERISA; or permit any Plan to be terminated in a manner which could
result in the imposition of a Lien on any Property of the Borrower or any of
its Subsidiaries pursuant to ERISA.
(b) Engage in any transaction in connection with which the
Borrower or any Subsidiary thereof could be subject to either a material civil
penalty assessed pursuant to the provisions of Section 502 of ERISA or a
material tax imposed under the provisions of Section 4975 of the Code.
(c) Terminate any Plan in a "distress termination" under
Section 4041 of ERISA, or take any other
-143-
151
action which could result in a material liability of the Borrower or any
Subsidiary thereof to the PBGC.
(d) Fail to make payment when due of all amounts which,
under the provisions of any Plan, the Borrower or any Subsidiary thereof is
required to pay as contributions thereto, or, with respect to any Plan, permit
to exist any material "accumulated funding deficiency" (within the meaning of
Section 302 of ERISA and Section 412 of the Code), whether or not waived, with
respect thereto.
(e) Adopt an amendment to any Plan requiring the provision
of security under Section 307 of ERISA or Section 401(a)(29) of the Code.
7.9 Credit Extensions. Extend credit other than (a) normal and
prudent extensions of credit to customers for goods and services in the
ordinary course of business and (b) loans otherwise permitted by the provisions
of Sections 7.1(g) or Section 7.7 above.
7.10 Change in Accounting Method. Make or permit any change in
accounting method or financial reporting practices except as may be required by
GAAP, as in effect from time to time.
-144-
152
7.11 Leverage Ratio. Permit the Leverage Ratio of the Borrower
and its Subsidiaries, on a Consolidated basis, to be greater than 3.00 to 1.00
as of the end of any fiscal quarter or fiscal year.
7.12 Tangible Net Worth. Permit the Tangible Net Worth of the
Borrower and its Subsidiaries, on a Consolidated basis, to be less than
$60,000,000 as of the end of any fiscal quarter or fiscal year.
7.13 Sales of Receivables. Sell, assign, discount, transfer or
otherwise dispose of any Receivables, promissory notes, drafts or trade
acceptances or other rights to receive payment held by it, with or without
recourse.
7.14 Net Income. Permit Net Income of the Borrower and its
Subsidiaries, on a Consolidated basis (commencing with the fiscal quarter
ending on the Monday closest to September 30, 1996), to be (a) less than or
equal to zero for any two (2) consecutive fiscal quarters or (b) a net loss
equal to or in excess of $2,000,000 for any fiscal quarter.
7.15 Sale and Lease-Back Transactions. Enter into any
arrangement, directly or indirectly, with any Person whereby the Borrower or
any of its Subsidiaries shall sell or transfer any Property, real or personal,
which is used or useful in its business, whether now owned or hereafter
acquired, and
-145-
153
thereafter rent or lease such Property or other Property which the Borrower or
such Subsidiary intends to use for substantially the same purpose or purposes
as the Property being sold or transferred.
7.16 Change of Name or Place of Business. Permit the Borrower or
any of its Subsidiaries to change its address, name, location of its chief
executive office or principal place of business or the place it keeps its books
and records, unless the Borrower has (a) notified the Agent of such change in
writing at least thirty (30) days before the effective date of such change, (b)
taken such action, reasonably satisfactory to the Agent and the Lenders, to
have caused the Liens against all Collateral in favor of the Agent for the
ratable benefit of the Lenders to be at all times fully perfected and in full
force and effect and (c) delivered such certificates of Governmental
Authorities as the Agent may reasonably require substantiating such name
change.
7.17 Availability. Allow Availability to be less than zero at any
time.
8. Events of Default and Remedies.
8.1 Events of Default. If any of the following events shall
occur and be continuing, then the Agent may (and, if directed by the Required
Lenders, shall), by written notice
-146-
154
(or facsimile notice promptly confirmed in writing) to the Borrower, take any
or all of the following actions at the same or different times: (1) accelerate
the Maturity Date and declare the Notes, all Letter of Credit Advances, the
Commitment Fees and all other Obligations then outstanding to be, and thereupon
the Notes, said Letter of Credit Advances, the Commitment Fees and all other
Obligations shall forthwith become, immediately due and payable, without
further notice of any kind, notice of acceleration or of intention to
accelerate, presentment and demand or protest, or other notice of any kind all
of which are hereby expressly WAIVED by the Borrower; (2) terminate all or any
portion of the Commitments and any obligation to issue any additional Letters
of Credit; (3) demand that the Borrower and the Guarantors provide the Agent,
for the ratable benefit of the Lenders, and the Borrower and the Guarantors
jointly and severally agree upon such demand to, provide cash collateral in an
amount equal to the aggregate Letter of Credit Exposure Amount then
outstanding, on terms and pursuant to documents in agreement and satisfactory
in all respects to the Agent; and (4) exercise any and all other rights
pursuant to the Loan Documents:
(a) The Borrower shall fail to pay or prepay any principal
of or interest on any Note, any Application, the Commitment Fees or any other
Obligation hereunder as and when due and payable, whether at the due date
thereof (by
-147-
155
acceleration, lapse of time or otherwise) or at any date fixed for prepayment
thereof in accordance with the other provisions of this Agreement; or
(b) The Borrower or any of its Subsidiaries (i) shall fail
to pay at maturity, or within any applicable period of grace, any Indebtedness,
or the equivalent thereof (excluding Indebtedness outstanding hereunder and
accounts payable created in the ordinary course of business), in excess of
$100,000 in principal amount unless such payment is being contested in good
faith (by appropriate proceedings) and adequate reserves have been provided
therefor, or (ii) shall default in any other manner with respect to any
Indebtedness, or the equivalent thereof (excluding Indebtedness outstanding
hereunder), in excess of $100,000 in principal amount if the effect of any such
default or event of default shall be to accelerate or to permit the holder of
any such Indebtedness or equivalent obligation, at its option, to accelerate
the maturity of such Indebtedness or equivalent obligations prior to the stated
maturity thereof, (iii) shall fail to observe or perform any term, covenant or
agreement contained in any agreement or obligation, other than any Loan
Document, by which it or any of its Subsidiaries is bound (the failure of which
would or could have a Material Adverse Effect), or (iv) is in default under or
in violation of any Legal Requirement, which failure would or could have a
Material Adverse Effect; or
-148-
156
(c) Any representation or warranty made or deemed made in
connection with any Loan Document shall prove to have been incorrect, false or
misleading in any material respect when made or deemed to have been made; or
(d) Default shall occur in the punctual and complete
performance or observance of any covenant, condition or agreement to be
observed or performed on the part of the Borrower or any of its Subsidiaries
pursuant to the terms of any provision of this Agreement or any other Loan
Document; or
(e) Final judgment or judgments (or any decree or decrees
for the payment of any fine or any penalty) for the payment of an uninsured
money award in excess of $250,000 in the aggregate shall be rendered against
the Borrower or any of its Subsidiaries and the same shall remain undischarged
for a period of thirty (30) days during which execution shall not be
effectively stayed or bonded; or
(f) The Borrower or any of its Subsidiaries shall claim,
or any court shall find or rule, that the Agent, for the ratable benefit of the
Lenders, does not have a valid Lien on any portion of the Collateral which may
now or hereafter have been provided to secure the Obligations hereunder; or
-149-
157
(g) Any order shall be entered in any proceeding against
the Borrower or any of its Subsidiaries decreeing the dissolution, liquidation
or split-up thereof, and such order shall remain in effect for sixty (60) days;
or
(h) The Borrower or any of its Subsidiaries shall have
concealed, removed, or permitted to be concealed or removed, any part of its
Property, with intent to hinder, delay or defraud its creditors or any of them,
or made or suffered a transfer of any of its Property which may be fraudulent
under any bankruptcy, fraudulent conveyance or similar law; or shall have made
any transfer of its Property to or for the benefit of a creditor at a time when
other creditors similarly situated have not been paid; or
(i) A change shall occur in the financial condition,
business affairs or otherwise of the Borrower or any of its Subsidiaries, or in
the value of the Collateral given as security for the Obligations hereunder,
which would or does have a Material Adverse Effect; or
(j) Any of the following shall occur: (1) a Reportable
Event shall have occurred with respect to a Plan; (2) the filing by the
Borrower, any ERISA Affiliate, or an administrator of any Plan of a notice of
intent to terminate such Plan in a "distressed termination" under the
provisions of Section 4041 of ERISA; (3) the receipt of notice by
-150-
158
the Borrower, any ERISA Affiliate or an administrator of a Plan that the PBGC
has instituted proceedings to terminate (or appoint a trustee to administer)
such a Plan; (4) any other event or condition exists which might, in the
opinion of the Agent, constitute grounds under the provisions of Section 4042
of ERISA for the termination of or the appointment of a trustee to administer
any Plan by the PBGC; (5) a Plan shall fail to maintain a minimum funding
standard required by Section 412 of the Code for any plan year or a waiver of
standard is sought or granted under the provisions of Section 412(d) of the
Code; (6) the Borrower or any ERISA Affiliate has incurred, or is likely to
incur, a liability under the provisions of Section 4062, 4063, 4064 or 4201 of
ERISA; (7) the Borrower or any ERISA Affiliate fails to pay the full amount of
an installment required under Section 412(m) of the Code; or (8) the occurrence
of any other event or condition with respect to any Plan which would constitute
an event of default or default under any other agreement entered into by the
Borrower or any ERISA Affiliate; or
(k) One or more notices of Liens arising from unpaid
federal, state or local taxes exceeding $500,000 in the aggregate shall be
filed against any of the Properties or assets of the Borrower or any of its
Subsidiaries, provided, however, that a reserve against the Borrowing Base will
be established in an amount equal to the amount of any and all federal, state
or local taxes less than such $500,000
-151-
159
aggregate threshold which are claimed to be owing under any such notices of
Liens; or
(l) This Agreement, any Note, any of the Security
Documents or any other Loan Documents shall for any reason cease to be, or
shall be asserted by the Borrower or the Guarantor, not to be, a legal, valid
and binding obligation of the Borrower or such Guarantors, as applicable,
enforceable in accordance with its terms, or the Lien purported to be created
by any of the Security Documents shall for any reason cease to be, or be
asserted by the Borrower or any Guarantor, as applicable not to be, a valid,
first priority perfected Lien against any Collateral (except to the extent
otherwise permitted under this Agreement or any of the Security Documents); or
(m) The Borrower or any of its Subsidiaries which is a
party to any of the Lockbox Agreements fails to perform and observe, and/or
cause to be performed and observed, all covenants, provisions and conditions to
be performed, discharged and observed by the Borrower or any such Subsidiary
under the terms of the Lockbox Agreements.
In addition, if any of the following events shall occur, then the Notes, the
Letter of Credit Advances, the Commitment Fees and all other Obligations then
outstanding and payable hereunder shall automatically, without demand,
presentment,
-152-
160
protest, notice of intent to accelerate, notice of acceleration or other notice
to any Person of any kind, all of which are hereby expressly WAIVED by the
Borrower, become immediately due and payable and all Commitments and further
obligation to issue any additional Letters of Credit shall be immediately and
automatically terminated:
(n) The Borrower or any of its Subsidiaries shall make a
general assignment for the benefit of creditors or shall petition or apply to
any tribunal for the appointment of a trustee, custodian, receiver or
liquidator of all or any substantial part of its business, estate or assets or
shall commence any proceeding under any bankruptcy, reorganization,
arrangement, insolvency, readjustment of debt, dissolution or liquidation law
of any jurisdiction, whether now or hereafter in effect; or
(o) Any such petition or application shall be filed or any
such proceeding shall be commenced against the Borrower or any of its
Subsidiaries and the Borrower or such Subsidiary by any act or omission shall
indicate approval thereof, consent thereto or acquiescence therein, or an order
shall be entered appointing a trustee, custodian, receiver or liquidator of all
or any substantial part of the assets of the Borrower or any of its
Subsidiaries or granting relief to the Borrower or any of its Subsidiaries or
approving the petition
-153-
161
in any such proceeding, and such order shall remain in effect for more than
sixty (60) days; or
(p) The Borrower or any of its Subsidiaries shall admit in
writing its inability to pay its debts as they become due or fail generally to
pay its debts as they become due or suffer any writ of attachment or execution
or any similar process to be issued or levied against it or any substantial
part of its Property which is not released, stayed, bonded or vacated within
thirty (30) days after its issue or levy.
8.2 Remedies Cumulative. No remedy, right or power conferred
upon the Agent or any Lender is intended to be exclusive of any other remedy,
right or power given hereunder or now or hereafter existing at law, in equity,
or otherwise, and all such remedies, rights and powers shall be cumulative.
9. The Agent.
9.1 Appointment, Powers and Immunities. Each Lender hereby
irrevocably appoints and authorizes the Agent to act as its agent hereunder and
under the Letters of Credit and the other Loan Documents with such powers as
are specifically delegated to the Agent by the terms hereof and thereof,
together with such other powers as are reasonably incidental thereto. Each
Lender hereby irrevocably appoints and
-154-
162
authorizes the Agent to act as its agent under the Letters of Credit which the
Agent has issued with such powers as are specifically delegated to the Agent by
the terms hereof and thereof, together with such other powers as are reasonably
incidental thereto. The Agent (which such term as used in this Section 9,
shall, in each case, include reference to its Affiliates and its own and its
Affiliates' officers, directors, employees and agents) (a) shall not have
duties or responsibilities except those expressly set forth in this Agreement,
the Letters of Credit and the other Loan Documents, and shall not by reason of
this Agreement or any other Loan Document be a trustee for any Lender; (b)
shall not be responsible to any Lender for any recitals, statements,
representations or warranties contained in this Agreement, the Letters of
Credit or any other Loan Document, or in any certificate or other document
referred to or provided for in, or received by any of them under, this
Agreement, the Letters of Credit or any other Loan Document, or for the value,
validity, effectiveness, genuineness, enforceability or sufficiency of this
Agreement, the Letters of Credit or any other Loan Document or any other
certificate or document referred to or provided for herein or therein or any
property covered thereby or for any failure by any Party or any other Person
(other than the Agent) to perform any of its obligations hereunder or
thereunder; (c) shall not be required to initiate or conduct any litigation or
collection proceedings hereunder or under the Letters of Credit or any other
Loan
-155-
163
Document except to the extent requested by the Required Lenders, and (d) shall
not be responsible for any action taken or omitted to be taken by it hereunder
or under the Letters of Credit or any other Loan Document or any other document
or instrument referred to or provided for herein or therein or in connection
herewith or therewith, INCLUDING PURSUANT TO ITS OWN NEGLIGENCE, except for its
own gross negligence or willful misconduct. The Agent may employ agents and
attorneys-in-fact and shall not be responsible for the negligence or misconduct
of any such agents or attorneys-in-fact selected by them with reasonable care.
Without in any way limiting any of the foregoing, each Lender acknowledges that
the Agent shall not have any greater responsibility in the operation of the
Letters of Credit than is specified in the Uniform Customs and Practice for
Documentary Credits (1993 Revision, International Chamber of Commerce
Publication No. 500 or any successor publication). In any foreclosure
proceeding concerning any collateral for the Notes, each holder of a Note if
bidding for its own account or for its own account and the accounts of other
Lenders is prohibited from including in the amount of its bid an amount to be
applied as a credit against its Note or the Notes of the other Lenders, instead
such holder must bid in cash only. However, in any such foreclosure
proceeding, the Agent may (but shall not be obligated to) submit a bid for all
Lenders (including itself) in the form of a credit against the Notes of all of
the Lenders, and the Agent or its designee may (but shall not be obligated to),
-156-
164
with the consent of the Required Lenders, accept title to such collateral for
and on behalf of all Lenders.
9.2 Reliance. The Agent shall be entitled to rely upon any
certification, notice or other communication (including any thereof by
telephone, telex, telegram or cable) believed by it to be genuine and correct
and to have been signed or sent by or on behalf of the proper Person or
Persons, and upon advice and statements of legal counsel (which may be counsel
for the Borrower), independent accountants and other experts selected by the
Agent. As to any matters not expressly provided for by this Agreement, the
Letters of Credit or any other Loan Document, the Agent shall in all cases be
fully protected in acting, or in refraining from acting, hereunder and
thereunder in accordance with instructions of the Required Lenders, and any
action taken or failure to act pursuant thereto shall be binding on all of the
Lenders.
9.3 Defaults. The Agent shall not be deemed to have knowledge of
the occurrence of a Default or Event of Default (other than the non-payment of
principal of or interest on Loans, non-payment of reimbursements of Letters of
Credit Advances, or non-payment of Commitment Fees or Letter of Credit fees
payable hereunder or under any other Loan Documents) unless it has received
notice from a Lender or the Borrower specifying such Default or Event of
Default and stating that such notice is a "Notice of Default." In the
-157-
165
event that the Agent receives such a notice of the occurrence of a Default or
Event of Default, the Agent shall give prompt notice thereof to the Lenders
(and shall give each Lender prompt notice of each such non-payment). The Agent
shall (subject to Section 9.7 hereof) take such action with respect to such
Default or Event of Default as shall be directed by the Required Lenders and
within its rights under the Loan Documents and at law or in equity, provided
that, unless and until the Agent shall have received such directions, the Agent
may (but shall not be obligated to) take such action, or refrain from taking
such action, permitted hereby with respect to such Default or Event of Default
as it shall deem advisable in the best interests of the Lenders and within its
rights under the Loan Documents, at law or in equity.
9.4 Rights as a Lender. With respect to its Commitment, the
Loans and any Letter of Credit Exposure Amount, the Agent in its capacity as a
Lender hereunder shall have the same rights and powers hereunder as any other
Lender and may exercise the same as though it were not acting as the Agent, and
the term "Lender" or "Lenders" shall, unless the context otherwise indicates,
includes the Agent in its individual capacity. The Agent may (without having
to account therefor to any Lender) accept deposits from, lend money to and
generally engage in any kind of banking, trust, letter of credit, agency or
other business with the Borrower (and any of its Affiliates) as if it were not
acting as the Agent, and the
-158-
166
Agent may accept fees and other consideration from the Borrower (in addition to
the fees heretofore agreed to between the Borrower and the Agent) for services
in connection with this Agreement or otherwise without having to account for
the same to the Lenders.
9.5 Indemnification. THE LENDERS AGREE TO INDEMNIFY THE AGENT
(TO THE EXTENT NOT REIMBURSED UNDER SECTION 2.10(G), SECTION 10.9 OR SECTION
10.10 HEREOF, BUT WITHOUT LIMITING THE OBLIGATIONS OF THE BORROWER UNDER SAID
SECTIONS 2.10(G), 10.9 AND 10.10), RATABLY IN ACCORDANCE WITH THEIR RESPECTIVE
COMMITMENTS, FOR ANY AND ALL LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES,
PENALTIES, ACTIONS, JUDGMENTS, SUITS, COSTS, EXPENSES OR DISBURSEMENTS OF ANY
KIND AND NATURE WHATSOEVER (INCLUDING THE CONSEQUENCES OF THE NEGLIGENCE OF
SUCH INDEMNIFIED PERSON, BUT EXCLUDING THE GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT OF SUCH INDEMNIFIED PERSON) WHICH MAY BE IMPOSED ON, INCURRED BY OR
ASSERTED AGAINST THE AGENT IN ANY WAY RELATING TO OR ARISING OUT OF THIS
AGREEMENT, THE LETTERS OF CREDIT OR ANY OTHER LOAN DOCUMENT OR ANY OTHER
DOCUMENTS CONTEMPLATED BY OR REFERRED TO HEREIN OR THEREIN OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY (INCLUDING THE COSTS AND EXPENSES WHICH THE
BORROWER IS OBLIGATED TO PAY UNDER SECTIONS 2.10(G), 10.9 AND 10.10 HEREOF BUT
EXCLUDING, UNLESS A DEFAULT OR EVENT OF DEFAULT HAS OCCURRED AND IS CONTINUING,
NORMAL ADMINISTRATIVE COSTS AND EXPENSES INCIDENT TO THE PERFORMANCE OF ITS
AGENCY DUTIES HEREUNDER) OR THE ENFORCEMENT OF ANY OF THE TERMS
-159-
167
HEREOF OR THEREOF OR OF ANY SUCH OTHER DOCUMENTS, INCLUDING THE NEGLIGENCE OF
SUCH INDEMNIFIED PERSON, BUT EXCLUDING THE GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT OF SUCH INDEMNIFIED PERSON. THE OBLIGATIONS OF THE LENDERS UNDER
THIS SECTION 9.5 SHALL SURVIVE THE TERMINATION OF THIS AGREEMENT AND THE
REPAYMENT OF THE INDEBTEDNESS ARISING IN CONNECTION WITH THIS AGREEMENT.
9.6 Non-Reliance on Agent and Other Lenders. Each Lender agrees
that it has received current financial information with respect to the Borrower
and the other Parties and that it has, independently and without reliance on
the Agent or any other Lender and based on such documents and information as it
has deemed appropriate, made its own credit analysis of the Borrower and the
other Parties and decision to enter into this Agreement and that it will,
independently and without reliance upon the Agent or any other Lender, and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own analysis and decisions in taking or not taking
action under this Agreement or any of the other Loan Documents. The Agent
shall not be required to keep itself informed as to the performance or
observance by any Party of this Agreement, the Letters of Credit or any of the
other Loan Documents or any other document referred to or provided for herein
or therein or to inspect the properties or books of the Borrower or any Party.
Except for notices, reports and other documents and information expressly
required
-160-
168
to be furnished to the Lenders by the Agent, under the Letters of Credit or the
other Loan Documents, the Agent shall not have any duty or responsibility to
provide any Lender with any credit or other information concerning the affairs,
financial condition or business of the Borrower or any other Party (or any of
their Affiliates) which may come into the possession of the Agent.
9.7 Failure to Act. Except for action expressly required of the
Agent hereunder, under the Letters of Credit and under the other Loan
Documents, the Agent shall in all cases be fully justified in failing or
refusing to act hereunder and thereunder unless it shall receive further
assurances to its satisfaction by the Lenders of their indemnification
obligations under Section 9.5 hereof against any and all liability and expense
which may be incurred by it by reason of taking or continuing to take any such
action.
9.8 Resignation or Removal of Agent. Subject to the appointment
and acceptance of a successor Agent as provided below, the Agent may resign at
any time by giving notice thereof to the Lenders and the Borrower, and the
Agent may be removed at any time with or without cause by the Required Lenders.
Upon any such resignation or removal, the Required Lenders shall have the right
to appoint a successor Agent reasonably acceptable to the Borrower, provided
deposits with such successor Agent shall be insured by the Federal Deposit
-161-
169
Insurance Corporation or its successor. If no successor Agent shall have been
so appointed by the Required Lenders and shall have accepted such appointment
within 30 days after the retiring Agent's giving of notice of resignation or
the Required Lenders' removal of the retiring Agent, then the retiring Agent
may, on behalf of the Lenders, appoint a successor Agent reasonably acceptable
to the Borrower. Any successor Agent shall be a Lender which has an office in
the United States with a combined capital and surplus of at least $500,000,000.
Upon the acceptance of any appointment as Agent hereunder by a successor Agent,
such successor Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Agent, and the retiring
Agent shall be discharged from its duties and obligations hereunder. Such
successor Agent shall promptly specify by notice to the Borrower and the
Lenders its office for the purpose of any notices and payments hereunder.
After any retiring Agent's resignation or removal hereunder as Agent, the
provisions of this Section 9 shall continue in effect for its benefit in
respect of any actions taken or omitted to be taken by it while it was acting
as the Agent.
10. Miscellaneous.
10.1 No Waiver. No waiver of any Default or Event of Default
shall be deemed to be a waiver of any other Default or Event of Default. No
failure to exercise and no delay on the
-162-
170
part of the Agent or any Lender in exercising any right or power under any Loan
Document or at law or in equity shall operate as a waiver thereof, nor shall
any single or partial exercise of any such right or power, or the abandonment
or discontinuance of steps to enforce any such right or power, preclude any
further or other exercise thereof or the exercise of any other right or power.
No course of dealing between the Borrower and the Agent or any Lender shall
operate as a waiver of any right or power of the Agent or any Lender. Subject
to the provisions of Section 10.11 hereof, no amendment, modification or waiver
of any provision of this Agreement or any other Loan Document, nor any consent
to any departure therefrom, shall be effective unless the same is in writing
and signed by the Person against whom it is sought to be enforced, and then it
shall be effective only in the specific instance and for the purpose for which
given. No notice to or demand on the Borrower or any other Person shall
entitle the Borrower or any other Person to any other or further notice or
demand in similar or other circumstances.
10.2 Notices. All notices under the Loan Documents shall be in
writing and either (i) delivered against receipt therefor, (ii) mailed by
registered or certified mail, return receipt requested, or (iii) sent by telex,
telecopy (promptly confirmed by mail, except for any notice pursuant to Section
4.1(a)(ii) hereof which need not be confirmed by mail) or telegram, in each
case to the intended recipient at the
-163-
171
"Address for Notices" specified below its name on the signature pages hereof;
or, as to any Lender who is a signatory hereto, at such other address as shall
be designated by such Lender in a notice to the Borrower and the Agent given in
accordance with this Section 10.2 or to such other address as a party may
designate. The Borrower may change its address for purposes hereof by
providing written notice of such address change to the Lenders and the Agent in
accordance with the provisions of this Section 10.2, with any such change in
address only being effective ten (10) Business Days after such change of
address has been deemed given in accordance with the provisions hereof.
Notices shall be deemed to have been given (whether actually received or not)
when delivered (or, if mailed, on the next Business Day); however, the notices
required or permitted by Sections 2.2(b) and 4.1(a) hereof shall be effective
only when actually received by the Agent.
10.3 Governing Law. UNLESS OTHERWISE SPECIFIED THEREIN, EACH LOAN
DOCUMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK (OTHER THAN THE CONFLICTS OF LAWS PRINCIPLES THEREOF) AND THE
UNITED STATES OF AMERICA.
10.4 Survival; Parties Bound. All representations, warranties,
covenants and agreements made by or on behalf of the Borrower in connection
herewith shall survive the execution and delivery of the Loan Documents, shall
not be
-164-
172
affected by any investigation made by any Person, and shall bind the Borrower
and its successors, trustees, receivers and assigns and inure to the benefit of
the successors and assigns of the Agent and the Lenders, provided that the
undertaking of the Lenders hereunder to make Loans to the Borrower and to issue
Letters of Credit for the account of the Borrower shall not inure to the
benefit of any successor or assign of the Borrower. The term of this Agreement
shall be until the final maturity of each Note and the payment of all amounts
due under the Loan Documents.
10.5 Counterparts. This Agreement may be executed in several
identical counterparts, and by the parties hereto on separate counterparts, and
each counterpart, when so executed and delivered, shall constitute an original
instrument, and all such separate counterparts shall constitute but one and the
same instrument.
10.6 Limitation of Interest. The Borrower and the Lenders intend
to strictly comply with all applicable laws, including applicable usury laws,
if any. Accordingly, the provisions of this Section 10.6 shall govern and
control over every other provision of this Agreement or any other Loan Document
which conflicts or is inconsistent with this Section, even if such provision
declares that it controls. As used in this Section, the term "interest"
includes the aggregate of all charges, fees, benefits or other compensation
which
-165-
173
constitute interest under applicable law, provided that, to the maximum extent
permitted by applicable law, (a) any non-principal payment shall be
characterized as an expense or as compensation for something other than the
use, forbearance or detention of money and not as interest, and (b) all
interest at any time contracted for, reserved, charged or received shall be
amortized, prorated, allocated and spread, in equal parts during the full term
of the Loans and the Commitments. In no event shall the Borrower or any other
Person be obligated to pay, or the Agent or any Lender have any right or
privilege to reserve, receive or retain, (Y) any interest in excess of the
maximum amount of nonusurious interest permitted under the laws of the United
States or of any state, if any, which are applicable to the Agent or such
Lender, respectively, or (Z) total interest in excess of the amount which the
Agent or such Lender could lawfully have contracted for, reserved, received,
retained or charged had the interest been calculated for the full term of the
Loans at the Highest Lawful Rate, if any, applicable to the Agent or such
Lender. On each day, if any, that the sum of the Alternate Base Rate or the
Adjusted LIBOR Rate, as applicable, and the Applicable Margin, or any other
applicable rate called for under any other Loan Document exceeds the Highest
Lawful Rate, if any, applicable to any Lender, the rate at which interest shall
accrue for the applicable type of borrowing owing to such Lender shall
automatically be fixed by operation of this sentence at the Highest Lawful Rate
applicable to such Lender
-166-
174
for that day, and shall remain fixed at the Highest Lawful Rate applicable to
such Lender for each day thereafter until the total amount of interest accrued
and owing to such Lender equals the total amount of interest which would have
accrued on such borrowing owing to such Lender if there were no such ceiling
rate as is imposed by this sentence. Thereafter, interest shall accrue at the
Alternate Base Rate plus the Applicable Margin, the Adjusted LIBOR Rate plus
the Applicable Margin or such other applicable rate, respectively, unless and
until the sum of the Alternate Base Rate and the Applicable Margin, the sum of
the Adjusted LIBOR Rate and the Applicable Margin or such other applicable rate
(whichever is applicable to the situation) again exceeds the Highest Lawful
Rate applicable to such Lender when the provisions of the immediately preceding
sentence shall again automatically operate to limit the interest accrual rate.
The daily interest rates to be used in calculating interest at the Highest
Lawful Rate for any Lender shall be determined by dividing the applicable
Highest Lawful Rate, if any, for such Lender per annum by the number of days in
the calendar year for which such calculation is being made. None of the terms
and provisions contained in this Agreement or in any other Loan Document which
directly or indirectly relate to interest shall ever be construed without
reference to this Section 10.6, or be construed to create a contract to pay any
Lender for the use, forbearance or detention of money at an interest rate in
excess of the Highest Lawful Rate applicable
-167-
175
to such Lender. If the term of any Loans or the Notes is shortened by reason
of acceleration of maturity as a result of any Default or Event of Default or
by any other cause, or by reason of any required or permitted prepayment, and
if for that (or any other) reason the Agent or any Lender at any time is owed
or receives (and/or has received) interest in excess of interest calculated at
the Highest Lawful Rate applicable to the Agent or such Lender, then and in any
such event all of any such excess interest owed to or received by the Agent or
such Lender shall be canceled automatically as of the date of such
acceleration, prepayment or other event which produces the excess, and, if such
excess interest has been paid to the Agent or such Lender, it shall be credited
pro tanto against the then-outstanding principal balance of the Borrower's
obligations to the Agent or such Lender, effective as of the date or dates when
the event occurs which causes it to be excess interest, until such excess is
exhausted or all of such principal has been fully paid and satisfied, whichever
occurs first, and any remaining balance of such excess shall be promptly
refunded to its payor.
10.7 Survival. The obligations of the Borrower under Sections
2.3, 2.4(b), 2.9, 2.10(g), 10.9, 10.10 and 10.17 hereof shall survive the
repayment of the Loans, the termination of the Commitments and the cancellation
or expiration of the Letters of Credit.
-168-
176
10.8 Captions. The headings and captions appearing in the Loan
Documents have been included solely for convenience and shall not be considered
in construing the Loan Documents.
10.9 Expenses, Etc. Whether or not any Loan is ever made or any
Letter of Credit ever issued, the Borrower agrees to pay or reimburse on demand
each of the Lenders and the Agent for paying: (a) the documented fees and
expenses of Liddell, Sapp, Zivley, Hill & ▇▇▇▇▇▇, L.L.P., counsel to the Agent
or any other legal counsel engaged by the Agent, in connection with (i) the
preparation, execution and delivery of this Agreement (including the exhibits
and schedules hereto) and the Loan Documents and the making of the Loans and
the issuance of Letters of Credit hereunder and (ii) any modification,
supplement or waiver of any of the terms of this Agreement, the Letters of
Credit or any other Loan Document; (b) all reasonable and documented costs and
expenses (including reasonable and documented attorneys' fees) of the Lenders
and the Agent in connection with the enforcement of this Agreement, the Letters
of Credit or any other Loan Document; (c) all transfer, stamp, documentary or
other similar taxes, assessments or charges levied by any governmental or
revenue authority in respect of this Agreement, any Letter of Credit or any
other Loan Document or any other document referred to herein or therein; (d)
all costs, expenses, taxes, assessments and other charges incurred in
connection with any filing, registration, recording or
-169-
177
perfection of any security interest contemplated by this Agreement, any other
Loan Document or any document referred to herein or therein, and the cost of
title insurance; and (e) reasonable and documented expenses of due diligence
incurred prior to or as of the Closing Date.
10.10 Indemnification. THE BORROWER AGREES TO INDEMNIFY THE AGENT,
THE LENDERS AND EACH AFFILIATE THEREOF AND THEIR RESPECTIVE DIRECTORS,
OFFICERS, EMPLOYEES, COUNSEL AND AGENTS FROM, AND HOLD EACH OF THEM HARMLESS
AGAINST, ANY AND ALL LOSSES, LIABILITIES (INCLUDING ENVIRONMENTAL LIABILITIES),
CLAIMS (INCLUDING ENVIRONMENTAL CLAIMS) OR DAMAGES TO WHICH ANY OF THEM MAY
BECOME SUBJECT, INSOFAR AS SUCH LOSSES, LIABILITIES, CLAIMS OR DAMAGES ARISE
OUT OF OR RESULT FROM ANY (A) ACTUAL OR PROPOSED USE BY THE BORROWER OF THE
PROCEEDS OF ANY EXTENSION OF CREDIT (WHETHER A LOAN OR A LETTER OF CREDIT) BY
ANY LENDER HEREUNDER, (B) BREACH BY THE BORROWER OF THIS AGREEMENT OR ANY
OTHER LOAN DOCUMENT, (C) VIOLATION BY THE BORROWER OR ANY OF ITS SUBSIDIARIES
OF ANY LAW, RULE, REGULATION OR ORDER INCLUDING ANY REQUIREMENTS OF
ENVIRONMENTAL LAW, (D) LIENS OR SECURITY INTERESTS GRANTED ON ANY PROPERTY
PURSUANT TO OR UNDER THE LOAN DOCUMENTS, TO THE EXTENT RESULTING FROM ANY
HAZARDOUS SUBSTANCE LOCATED IN, ON OR UNDER ANY SUCH PROPERTY, (E) OWNERSHIP BY
THE LENDERS OR THE AGENT OF ANY PROPERTY FOLLOWING FORECLOSURE UNDER THE LOAN
DOCUMENTS, TO THE EXTENT SUCH LOSSES, LIABILITIES, CLAIMS OR DAMAGES ARISE OUT
OF OR RESULT FROM ANY HAZARDOUS SUBSTANCE,
-170-
178
LOCATED IN, ON OR UNDER SUCH PROPERTY PRIOR TO OR AT THE TIME OF SUCH
FORECLOSURE, INCLUDING LOSSES, LIABILITIES, CLAIMS OR DAMAGES WHICH ARE IMPOSED
UPON PERSONS UNDER LAWS RELATING TO OR REGULATING HAZARDOUS SUBSTANCES, SOLELY
BY VIRTUE OF OWNERSHIP, (F) ANY LENDER OR THE AGENT BEING DEEMED AN OPERATOR OF
ANY SUCH PROPERTY BY A COURT OR OTHER REGULATORY OR ADMINISTRATIVE AGENCY OR
TRIBUNAL OR OTHER THIRD PARTY, TO THE EXTENT SUCH LOSSES, LIABILITIES, CLAIMS
OR DAMAGES ARISE OUT OF OR RESULT FROM ANY HAZARDOUS SUBSTANCE, PETROLEUM,
PETROLEUM PRODUCT OR PETROLEUM WASTE LOCATED IN ON OR UNDER SUCH PROPERTY AT OR
PRIOR TO THE TIME OF ANY FORECLOSURE THEREON UNDER THE LOAN DOCUMENT, OR (G)
INVESTIGATION, LITIGATION OR OTHER PROCEEDING (INCLUDING ANY THREATENED
INVESTIGATION OR PROCEEDING) RELATING TO ANY OF THE FOREGOING, AND THE BORROWER
AGREES TO REIMBURSE THE AGENT AND EACH LENDER, AND EACH AFFILIATE THEREOF AND
THEIR RESPECTIVE DIRECTORS, OFFICERS, EMPLOYEES, COUNSEL AND AGENTS, UPON
DEMAND FOR ANY EXPENSES (INCLUDING LEGAL FEES) INCURRED IN CONNECTION WITH ANY
SUCH INVESTIGATION OR PROCEEDING, AND WHETHER ANY SUCH LOSS, LIABILITY, CLAIM
OR DAMAGE RESULTS FROM THE NEGLIGENCE OF ANY SUCH INDEMNIFIED PERSON; BUT
EXCLUDING ANY SUCH LOSSES, LIABILITIES, CLAIMS, DAMAGES OR EXPENSES INCURRED BY
A PERSON OR ANY AFFILIATE THEREOF OR THEIR RESPECTIVE DIRECTORS, OFFICERS,
EMPLOYEES, COUNSEL OR AGENTS BY REASON OF (I) THE GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT OF SUCH PERSON, AFFILIATE, DIRECTOR, OFFICER, EMPLOYEE OR AGENT OR
(II) OWNERSHIP OR OPERATION OF ANY PROPERTY BY THE LENDERS
-171-
179
OR THE AGENT FOLLOWING FORECLOSURE UNDER THE LOAN DOCUMENTS IF SUCH LOSSES,
LIABILITIES, ETC. ARE ATTRIBUTABLE SOLELY TO THE POST-FORECLOSURE ACTIONS OF
THE LENDER OR THE AGENT. PROMPTLY AFTER RECEIPT BY AN INDEMNIFIED PERSON OF
NOTICE OF ANY CLAIM OR THE COMMENCEMENT OF ANY ACTION, SUCH INDEMNIFIED PERSON
SHALL, IF ANY CLAIM IN RESPECT THEREOF IS TO BE MADE AGAINST THE BORROWER UNDER
THIS SECTION 10.10, NOTIFY THE BORROWER IN WRITING OF THE CLAIM OR THE
COMMENCEMENT OF THAT ACTION. THE BORROWER SHALL NOT BE LIABLE FOR ANY
SETTLEMENT OF ANY SUCH CLAIM OR ACTION INVOLVING THE PAYMENT OF MONETARY
DAMAGES EFFECTED WITHOUT ITS WRITTEN CONSENT NOT TO BE UNREASONABLY WITHHELD.
IF ANY SUCH CLAIM OR ACTION SHALL BE BROUGHT AGAINST AN INDEMNIFIED PERSON, IT
SHALL NOTIFY THE BORROWER THEREOF, AND THE BORROWER SHALL BE ENTITLED TO
PARTICIPATE IN THE JOINT DEFENSE THEREOF.
10.11 Amendments, Waivers, Etc. No amendment, modification or
waiver of any provision of this Agreement, the Notes or any other Loan
Document, nor any consent to any departure by the Borrower therefrom, shall in
any event be effective unless the same shall be agreed or consented to by the
Required Lenders and the Borrower, and each such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given; provided, that no amendment, waiver or consent shall, unless consented
to in writing by each Lender, do any of the following: (a) increase any
Commitment of any of the Lenders or subject the Agent or
-172-
180
any of the Lenders to any additional obligations; (b) reduce the principal of,
or interest on, any Loan, any Letter of Credit Exposure Amount or any fee
hereunder; (c) waive or postpone any scheduled date fixed for any payment of
principal of, or interest on, any Loan, any Letter of Credit Exposure Amount or
any fee or other sum to be paid hereunder; (d) change the percentage of any of
the Commitments or of the aggregate unpaid principal amount of any of the
Loans, any Letter of Credit Exposure Amount, or the number of Lenders which
shall be required for the Lenders or any of them to take any action under this
Agreement; (e) increase the Borrowing Base advance rate for Net Amount of
Eligible Receivables; (f) change any provision contained in Sections 2.2(d),
2.11, 10.9 or 10.10 hereof or this Section 10.11 or Section 10.16 hereof; (g)
release the Borrower from liability for any of the Obligations; (h) release any
Guarantor from any Guaranty; (i) other than as expressly permitted by this
Agreement, release any Collateral for any of the Obligations having a value in
excess of $500,000, as reasonably determined by the Agent; or (j) change the
definition of "Required Lenders" contained herein. Anything in this Section
10.11 to the contrary, no amendment, waiver or consent shall be made with
respect to Section 9 without the written consent of the Agent.
10.12 Successors and Assigns.
-173-
181
(a) This Agreement shall be binding upon and inure to the
benefit of the Borrower, the Agent and the Lenders and their respective
successors and permitted assigns. The Borrower may not assign or transfer any
of its rights or obligations hereunder without the prior written consent of all
of the Lenders.
(b) Each Lender may sell participations to any Person in
all or part of any Loan, or all or part of its Notes, the Letter of Credit
Exposure Amount or Commitments, to another bank or other entity, in which
event, without limiting the foregoing, the provisions of Sections 10.10 and
10.16 shall inure to the benefit of each purchaser of a participation and the
pro-rata treatment of payments, as described in Section 2.11, shall be
determined as if such Lender had not sold such participation. In the event any
Lender shall sell any participation, (i) the Borrower, the Agent and the other
Lenders shall continue to deal solely and directly with such selling Lender in
connection with such selling Lender's rights and obligations under the Loan
Documents (including the Note(s) held by such selling Lender), (ii) such Lender
shall retain the sole right and responsibility to enforce the obligations of
the Borrower relating to the Loans and Letter of Credit Exposure Amount,
including the right to approve any amendment, modification or waiver of any
provision of this Agreement other than (and then only if expressly permitted by
the applicable participation agreement) amendments,
-174-
182
modifications or waivers with respect to (A) any fees payable hereunder to the
Lender and (B) the amount of principal or the rate of interest payable on, or
the dates fixed for the scheduled repayment of principal of, the Loans and
other sums to be paid to the Lenders hereunder, and (iii) the Borrower agrees,
to the fullest extent it may effectively do so under applicable law, that any
participant of a Lender may exercise all rights of set-off, bankers' lien,
counterclaim or similar rights with respect to such participation as fully as
if such participant were a direct holder of Loans if such Lender has previously
given notice of such participation to the Borrower.
(c) Each Lender may assign to one or more Lenders or
Eligible Assignees all or a portion of its interests, rights and obligations
under this Agreement (including all or a portion of its Commitment and the same
portion of the related Loans at the time owing to it, the related Note or Notes
held by it and its Letter of Credit Exposure Amount) (a "Ratable Assignment");
provided, however, that, (i) the Agent and the Borrower must give their
respective prior written consent, which consent will not be unreasonably
withheld, conditioned or delayed, (ii) the aggregate amount of the applicable
Commitment, Loans and Letter of Credit Exposure Amount (without duplication) of
the assigning Lender subject to each such assignment (determined as of the date
the Assignment and Acceptance (as defined below) with respect to such
assignment is delivered to the
-175-
183
Agent) shall in no event be less than $5,000,000.00 (except for certain
exceptions approved by the Borrower and the Agent) and shall be in an amount
that is an integral multiple of $1,000,000.00 (unless all of the assigning
Lender's applicable Commitment, Loans and Letter of Credit Exposure Amount is
being assigned); (iii) the aggregate amount of the applicable Commitment and/or
Loans of the assigning Lender immediately after each partial assignment must be
at least $5,000,000.00 (except for certain exceptions approved by the Borrower
and the Agent) and shall be in an amount which is an integral multiple of
$1,000,000.00; and (iv) the parties to each such assignment shall execute and
deliver to the Agent, for its acceptance and recording in its records, an
Assignment and Acceptance in a form required by the Agent (each an "Assignment
and Acceptance") with blanks appropriately completed, together with any Note or
Notes subject to such assignment and a processing and recordation fee of $2,500
(for which the Borrower shall have no liability). Upon such execution,
delivery, acceptance and recording, from and after the effective date specified
in each Assignment and Acceptance, which effective date shall be at least five
(5) Business Days after the execution thereof, unless a shorter period of time
may be agreed to by the Agent in its sole and absolute discretion, (A) the
assignee thereunder shall be a party hereto and, to the extent provided in such
Assignment and Acceptance, have the rights and obligations of a Lender
hereunder and (B) the Lender thereunder shall, to the extent
-176-
184
provided in such assignment, be released from its obligations under this
Agreement (and, in the case of an Assignment and Acceptance covering all or the
remaining portion of an assigning Lender's rights and obligations under this
Agreement, such Lender shall cease to be a party hereto).
(d) By executing and delivering an Assignment and
Acceptance, the Lender assignor thereunder and the assignee thereunder confirm
to and agree with each other and the other parties hereto as follows: (i)
other than the representation and warranty that it is the legal and beneficial
owner of the interest being assigned thereby free and clear of any adverse
claim, such Lender assignor makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with any Loan Document or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of any Loan
Document or any other instrument or document furnished pursuant thereto; (ii)
such assignor Lender makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Borrower or any
of its Subsidiaries or the performance or observance by the Borrower of any of
its obligations hereunder; (iii) such assignee confirms that it has received a
copy of this Agreement and the other Loan Documents, together with copies of
the financial statements of the Borrower previously delivered in accordance
herewith and such other
-177-
185
documents and information as it has deemed appropriate to make its own credit
analysis and decision to enter into such Assignment and Acceptance; (iv) such
assignee confirms that it will keep confidential all information with respect
to the Borrower furnished to it by the Borrower, such assignor Lender or the
Agent (other than information generally available to the public or otherwise
available to the Agent on a non-confidential basis or otherwise permitted
pursuant to the terms of this Agreement); (v) such assignee will, independently
and without reliance upon the Agent, such assignor Lender or any other Lender
and based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking action
under the Loan Documents; (vi) such assignee appoints and authorizes the Agent
to take such action as agent on its behalf and to exercise such powers under
the Loan Documents as are delegated to the Agent by the terms hereof, together
with such powers as are reasonably incidental thereto; and (vii) such assignee
agrees that it will perform in accordance with their terms all obligations that
by the terms of the Loan Documents are required to be performed by it as a
Lender.
(e) The Agent shall maintain at its office a copy of each
Assignment and Acceptance delivered to it and a record of the names and
addresses of the Lenders and the Commitments of, and principal amount of the
Loans owing to,
-178-
186
and the Letter of Credit Exposure Amount of, each Lender from time to time.
The entries in the register shall be conclusive, in the absence of manifest
error, and the Borrower, the Agent and the Lenders may treat each person the
name of which is recorded therein as a Lender hereunder for all purposes of the
Loan Documents. Such records shall be available for inspection by the Borrower
or any Lender at any reasonable time and from time to time upon reasonable
prior notice.
(f) Upon its receipt of an Assignment and Acceptance
executed by an assigning Lender and the assignee thereunder together with the
Note(s) subject to such assignment, the written consent to such assignment and
the fee payable in respect thereto, the Agent shall, if such Assignment and
Acceptance has been completed with blanks appropriately filled, (i) accept such
Assignment and Acceptance, (ii) record the information contained therein in the
Register and (iii) give prompt notice thereof to the Borrower and the Lenders.
Contemporaneously with the receipt by the Borrower of such Assignment and
Acceptance, the Borrower, at its own expense, shall execute and deliver to the
Agent in exchange for the surrendered Note(s), a new Note or Notes payable to
the order of such assignee in an amount equal to the applicable Commitment,
Loans and Letter of Credit Exposure Amount (without duplication) assumed by it
pursuant to such Assignment and Acceptance and, if the assigning Lender
-179-
187
has retained Commitments, Loans and/or Letters of Credit hereunder, a new Note
or Notes to the order of the assigning Lender in an amount equal to the
applicable Commitment, Loans and/or Letters of Credit retained by it hereunder.
Such new Notes shall be in an aggregate principal amount equal to the aggregate
principal amount of such surrendered Note(s), shall be dated the effective date
of such Assignment and Acceptance and shall otherwise be in substantially the
form of the surrendered Note(s). Thereafter, such surrendered Note shall be
marked canceled and returned to the Borrower.
(g) Any Lender may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this Section
10.12, disclose to the assignee or participant or proposed assignee or
participant, any information relating to the Borrower furnished to such Lender
by or on behalf of the Borrower; provided, however, that as a condition to any
such disclosure of information relating to the Borrower, such Lender shall
require such proposed assignee or participant to agree in writing to keep
confidential all information with respect to the Borrower furnished to it by
such Lender in connection with any proposed assignment or participation (other
than information generally available to the public or otherwise available to
the Agent or such Lender on a non-confidential basis).
-180-
188
(h) Each Lender agrees that, in connection with any
assignment or participation or proposed assignment or participation pursuant to
this Section 10.12, the Borrower will not be responsible for the accuracy and
completeness of any written materials furnished by such Lender to any actual or
prospective assignee or participant, other than copies of (i) documents
furnished to such Lender pursuant to Sections 5.2(a) and (b) hereof, and (ii)
any other documents which are prepared by the Borrower for use in such
connection and which contain a statement to such effect.
(i) Notwithstanding anything herein to the contrary, each
Lender may pledge and assign all or any portion of its rights and interests
under the Loan Documents to any Federal Reserve Bank.
10.13 Entire Agreement. This Agreement and the other Loan
Documents embody the entire agreement and understanding among the Borrower, the
Agent and the Lenders relating to the subject matter hereof and supersedes all
prior proposals, agreements and understandings relating to the subject matter
hereof. Any conflict between the provisions of this Agreement and the
provisions of any other Loan Documents shall be governed by the provisions of
this Agreement. The Borrower certifies that it is relying on no
representation, warranty, covenant or agreement except for those set forth in
this Agreement and the other Loan Documents of even date herewith.
-181-
189
10.14 Severability. If any provision of any Loan Documents shall
be invalid, illegal or unenforceable in any respect under any applicable law,
the validity, legality and enforceability of the remaining provisions shall not
be affected or impaired thereby.
10.15 Disclosures. Every reference in the Loan Documents to
disclosures of the Borrower to the Agent and the Lenders in writing, to the
extent that such references refer to disclosures at or prior to the execution
of this Agreement, shall be deemed strictly to refer only to written
disclosures delivered to the Agent and the Lenders in an orderly manner prior
to or concurrently with the execution hereof.
10.16 Capital Adequacy.
(a) If after the date of this Agreement, any Lender shall
have determined that the adoption or effectiveness (regardless of whether
previously announced) of any applicable Legal Requirement or treaty regarding
capital adequacy, or any change therein, or any change in the interpretation or
administration thereof by any Governmental Authority or comparable agency
charged with the interpretation or administration thereof, or compliance by any
Lender with any request or directive regarding capital adequacy (whether or not
having the force of law) of any such Governmental Authority, has or would have
the effect of increasing the cost
-182-
190
of, or reducing the rate of return on the capital of such Lender (or any
holding company of which such Lender is a part) as a consequence of its
obligations hereunder or under any Letter of Credit or its Note to a level
below that which such Lender or holding company could have achieved but for
such adoption, change or compliance by an amount deemed by such Lender to be
material, then from time to time, upon demand by such Lender (with a copy to
the Agent), the Borrower (subject to Section 10.6 hereof) agrees to pay to such
Lender such additional amount or amounts as will compensate such Lender or
holding company for such reduction.
(b) The certificate of any Lender setting forth such
amount or amounts as shall be necessary to compensate such Lender or its
holding company as specified in Subsection 10.16(a) above (and setting forth
the calculation thereof in reasonable detail) shall be delivered as soon as
practicable to the Borrower and shall be conclusive and binding, absent
manifest error. The Borrower shall pay such Lender the amount shown as due on
any such certificate within five days after such Lender delivers such
certificate. In preparing such certificate, such Lender may employ such
assumptions and allocations of costs and expenses as it shall in good ▇▇▇▇▇
▇▇▇▇ reasonable and may use any reasonable averaging and attribution method.
10.17 Taxes.
-183-
191
(a) As used in this Section 10.17, the following terms
shall have the following meanings:
(i) "Indemnifiable Tax" means any Tax, but
excluding, in any case, any Tax that (a) would not be imposed in
respect of a payment to a holder of any of the Notes under this
Agreement, under the Notes held by such holder or under any of the
other Loan Documents except for a present or former connection between
the jurisdiction of the Governmental Authority imposing such Tax and
such holder (or a shareholder or other Person with an interest in such
holder), including a connection arising from such holder's (or
shareholder of such holder or such other Person) being or having been
a citizen or resident of such jurisdiction, or being or having been
organized, present or engaged in a trade or business in such
jurisdiction, or having or having had a permanent establishment or
fixed place of business in such jurisdiction, but excluding a
connection arising solely from such holder having executed, delivered,
performed its obligations or received a payment under, or enforced,
this Agreement, the Notes held by such holder or any other Loan
Documents, or (b) is imposed under United States federal income tax
law or any state income tax law.
-184-
192
(ii) "Tax" means any present or future tax, levy,
impost, duty, charge, assessment or fee of any nature (including
interest thereon and penalties and additions thereto) that is imposed
by any Governmental Authority in respect of a payment to a holder of
any of the Notes under this Agreement, under the Notes or under any of
the other Loan Documents.
(b) If the Borrower is required by any applicable Legal
Requirement to make any deduction or withholding for or on account of any Tax
from any payment to be made by it under this Agreement, under the Notes or
under any other Loan Documents, then the Borrower shall (i) promptly notify the
holder of Notes hereunder that is entitled to such payment of such requirement
to so deduct or withhold such Tax, (ii) pay to the relevant authorities the
full amount required to be so deducted or withheld, (iii) promptly forward to
such holder an official receipt (or certified copies thereof), or other
documentation reasonably acceptable to such holder, evidencing such payment to
such Governmental Authorities and (iv) if such Tax is an Indemnifiable Tax,
pay, to the extent permitted by law, to such holder, in addition to whatever
net amount of such payment is paid to such holder, such additional amount as is
necessary to ensure that the total amount actually received by such holder
(free and clear of Indemnifiable Tax) will equal the full amount of the payment
such holder would have received had no such deduction or
-185-
193
withholding been required. If the Borrower pays any additional amount to a
holder pursuant to the preceding sentence and such holder shall receive a
refund of an Indemnifiable Tax with respect to which, in the good faith opinion
of such holder, such payment was made, such holder shall pay to the Borrower
the amount of such refund promptly upon receipt thereof.
(c) In the event that any Governmental Authority notifies
the Borrower that it has improperly failed to withhold or deduct any Tax from a
payment received by any holder of Notes under this Agreement, under the Notes
held by such holder or under any other Loan Documents, the Borrower agrees to
timely and fully pay such Tax to such Governmental Authority and such holder
shall, upon receipt of written notice of such payment, immediately pay to the
Borrower, an amount necessary in order that the amount of such payment to the
Borrower after payment of all Taxes with respect to such payment, shall equal
the amount that the Borrower paid to such Governmental Authority pursuant to
this clause (c).
(d) Each holder of a Note shall, upon request by the
Borrower, take requested measures to mitigate the amount of Indemnifiable Tax
required to be deducted or withheld from any payment made by the Borrower under
this Agreement, under the Notes or under any other Loan Documents if such
measures can, in the sole and absolute opinion of such
-186-
194
holder, be taken without such holder suffering any economic, legal, regulatory
or other disadvantage (provided, however, that no such holder shall be required
to designate a funding office that is not located in the United States of
America).
(e) Notwithstanding the foregoing, in no event shall the
amount payable under this Section 10.17 (to the extent, if any, constituting
interest under applicable laws) together with all amounts constituting interest
under applicable laws and payable in connection with this Agreement or the
Notes, exceed the Highest Lawful Rate or the maximum amount of interest
permitted to be charged by applicable laws.
10.18 Waiver of Claims. THE BORROWER HEREBY WAIVES AND RELEASES
THE AGENT AND ALL LENDERS FROM ANY AND ALL CLAIMS OR CAUSES OF ACTION WHICH THE
BORROWER MAY OWN, HOLD OR CLAIM IN RESPECT OF ANY OF THEM AS OF THE DATE
HEREOF.
10.19 Right of Setoff. Upon the occurrence and during the
continuation of any Event of Default, the Lenders each are hereby authorized at
any time and from time to time, without notice to the Borrower or any of the
Guarantors (any such notice being expressly waived by the Borrower and by the
Guarantors by their execution of a Guaranty or a Joinder Agreement), to setoff
and apply any and all deposits (general or special, time or demand, provisional
or final, whether or not such setoff results in any loss of interest or other
-187-
195
penalty, and including without limitation all certificates of deposit) at any
time held, and any other funds or property at any time held, and other
Indebtedness at any time owing by such Lender to or for the credit or the
account of the Borrower or any such Guarantor against any and all of the
Indebtedness arising in connection with this Agreement irrespective of whether
or not such Lender will have made any demand under this Agreement, the Notes or
any other Loan Document. The Borrower and each of the Guarantors (by their
execution of a Guaranty or a Joinder Agreement) also hereby grants to each of
the Lenders a security interest in and hereby transfers, assigns, sets over,
and conveys to each of the Lenders, as security for payment of all Loans and
Letter of Credit Exposure Amount, all such deposits, funds or property of the
Borrower or any such Guarantor or Indebtedness of any Lender to the Borrower or
any such Guarantor. Should the right of any Lender to realize funds in any
manner set forth hereinabove be challenged and any application of such funds be
reversed, whether by court order or otherwise, the Lenders shall make
restitution or refund to the Borrower or such Guarantor, as applicable, pro
rata in accordance with their respective Commitment Percentages. Each Lender
agrees to promptly notify the Borrower and the Agent after any such setoff and
application, provided that the failure to give such notice will not affect the
validity of such setoff and application. The rights of the Agent and the
Lenders under this Section are in addition to other rights and remedies
-188-
196
(including without limitation other rights of setoff) which the Agent or the
Lenders may have. This Section is subject to the terms and provisions of
Section 2.11 hereof.
10.20 Waiver of Right to Jury Trial. EXCEPT AS PROHIBITED BY
APPLICABLE LAW, EACH PARTY HERETO HEREBY WAIVES ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT
OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT, THE NOTES, ANY OF THE OTHER
LOAN DOCUMENTS OR ANY TRANSACTIONS EVIDENCED THEREBY.
10.21 Additional Provisions Regarding Collection of Receivables;
Control of Inventory and other Collateral.
(a) So long as the procedures discussed in Section 6.15(b)
hereof have been implemented and are continuing, the Borrower hereby
constitutes the Agent or the Agent's designee as the Borrower's
attorney-in-fact with power to endorse the Borrower's name upon any notes,
acceptances, checks, drafts, money orders or other evidence of payment of any
Receivables or any other Collateral that may come into its possession; to sign
or endorse the Borrower's name on any invoice, ▇▇▇▇ of lading or other title or
ownership documents relating to any Receivables or inventory, drafts against
any customers of the Borrower, assignments and verifications of Receivables and
notices to customers of the Borrower; to send verifications of Receivables; to
notify the U.S. Postal
-189-
197
Service authorities to change the address for delivery of mail addressed to the
Borrower to such address as the Agent may designate at any time after the
occurrence of any Event of Default which is continuing; and to do all other
acts and things necessary to carry out this Agreement. All acts of said
attorney or designee are hereby ratified and approved by the Borrower, and said
attorneys or designee shall not be liable for any acts of omission or
commission, for any error of judgement or for any mistake of fact or law,
provided that the Agent or its designee shall not be relieved of liability to
the extent it is determined by a final judicial decision that its act, error or
mistake constituted gross negligence or willful misconduct. The power of
attorney granted under this subparagraph is coupled with an interest and is
irrevocable until all of the Obligations are paid in full and this Agreement
and the Total Commitment is terminated.
(b) The Agent, without notice to or consent of the
Borrower, at any time after the occurrence and during the continuation of an
Event of Default, (i) may ▇▇▇ upon or otherwise collect, extend the time of
payment of, or compromise or settle for cash, credit or otherwise upon any
terms, any of the Receivables or any instruments or insurance applicable
thereto and/or release any account debtor thereon; (ii) is authorized and
empowered to accept or direct shipments of inventory and accept the return of
the goods represented by any of the Receivables; and (iii) shall have the right
to
-190-
198
receive, endorse, assign and/or deliver in its name or the name of the Borrower
any and all checks, drafts and other instruments for the payment of money
relating to the Receivables, and the Borrower hereby waives notice of
presentment, protest and non-payment of any instrument so endorsed.
(c) Nothing herein contained shall be construed to
constitute the Borrower as agent of the Agent for any purpose whatsoever, and
the Agent shall not be responsible or liable for any shortage, discrepancy,
damage, loss or destruction of any part of the Collateral wherever the same may
be located and regardless of the cause thereof (except to the extent it is
determined by a final judicial decision that the Agent's or a Lender's act or
omission constituted gross negligence of willful conduct). The Agent and the
Lenders shall not, under any circumstances or in any event whatsoever, have any
liability for any error or omission or delay of any kind occurring in the
settlement, collection or payment of any of the Receivables or any instrument
received in payment thereof or for any damage resulting therefrom (except to
the extent it is determined by a final judicial decision that the Agent's or
such Lender's error, omission or delay constituted gross negligence or willful
misconduct). The Agent and the Lenders do not, by anything herein or in any
assignment or otherwise, assume any of the Borrower's obligations under any
contract or agreement assigned to the Agent or the Lender, and
-191-
199
the Agent and the Lenders shall not be responsible in any way for the
performance by the Borrower of any of the terms and conditions thereof.
(d) Upon the occurrence and during the continuation of any
Event of Default: (i) if any of the Receivables includes a charge for any tax
payable to any governmental tax authority, the Agent is hereby authorized (but
in no event obligated) in its discretion to pay the amount thereof to the
proper taxing authority for the account of the Borrower and to charge the
Borrower's account therefor; and (ii) the Borrower shall notify the Agent if
any Receivables include any tax due to any such taxing authority and, in the
absence of such notice, the Agent shall have the right to retain the full
proceeds of such Receivables and shall not be liable for any taxes that may be
due from the Borrower by reason of the sale and delivery creating such
Receivables.
(e) Upon the occurrence and continuation of any Event of
Default, the Agent may at any time and from time to time employ and maintain in
the premises of the Borrower a custodian selected by the Agent who shall have
full authority to do all acts necessary to protect the Agent's and Lenders'
interests and to report to the Agent thereon. The Borrower hereby agrees to
cooperate with any such custodian and to do so whatever the Agent may
reasonably request to preserve the
-192-
200
Collateral. All costs and expenses incurred by the Agent by reason of the
employment of the custodian shall be charged to the Borrower's account and
added to the Obligations.
Joint and Several Obligations. Notwithstanding anything to the contrary
contained herein or in any other Loan Documents, the Borrower and the
Guarantors are jointly and severally responsible for their respective
agreements, covenants, representations, warranties and obligations contained
and set forth in this Agreement or in any other Loan Document to which they are
a party.
-193-
201
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date set forth above.
▇▇▇▇ TECHNOLOGY, INC.,
a Delaware corporation
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Address for Notices:
-------------------
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Chief Financial Officer
-194-
▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ BANK,
a New York banking corporation, as a
Lender and as Agent
By:
--------------------------------
Name:
--------------------------------
Title:
--------------------------------
Addresses for Notices:
---------------------
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Credit Deputy
Domestic Lending Office:
-----------------------
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
-195-
203
TEXAS COMMERCE BANK NATIONAL
ASSOCIATION, a national banking
association, as a Lender
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Address for Notices:
-------------------
700 Lavaca
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇-Day
Domestic Lending Office:
-----------------------
700 Lavaca
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
-196-
▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
$7,500,000.00 September 23, 1996
FOR VALUE RECEIVED, ▇▇▇▇ TECHNOLOGY, INC., a Delaware corporation
(herein called "Borrower"), promises to pay to the order of ________________
______________ (herein called "Payee"), a _______ banking __________________, at
the banking house of THE CHASE MANHATTAN BANK, a New York banking corporation
acting in its capacity as Agent under the Credit Agreement (together with its
successors in such capacity being herein called "Agent"), located at ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, or at such other place as Agent may hereafter
designate in writing, in immediately available funds and in lawful money of the
United States of America, the principal sum of ___________ Dollars ($________),
(or the unpaid balance of all principal advanced against this note, if that
amount is less), together with interest on the unpaid principal balance of this
note from time to time outstanding until maturity at the rate or rates provided
for in the Credit Agreement and interest on all past due amounts, both principal
and accrued interest, at the Past Due Rate; provided, that for the full term of
this note, the interest rate produced by the aggregate of all sums paid or
agreed to be paid to the holder of this note for the use, forbearance or
detention of the debt evidenced hereby shall not exceed the Highest Lawful Rate,
if any, applicable to Payee.
If, for any reason whatever, the interest paid or received on this note
during its full term produces a rate which exceeds the Highest Lawful Rate, if
any, applicable to Payee, the holder of this note shall refund to the payor or,
at the holder's option, credit against the principal of this note such portion
of said interest as shall be necessary to cause the interest paid on this note
to produce a rate equal to the Highest Lawful rate, if any, applicable to payee.
All sums paid or agreed to be paid to the holder of this note for the use,
forbearance or detention of the indebtedness evidenced hereby shall, to the
extent permitted by applicable law, be amortized, prorated, allocated and spread
in equal parts throughout the full term of this note, so that the interest rate
is uniform throughout the full term of this note.
This note has been issued pursuant to the terms of a Credit Agreement
(which, as it may have been or may be amended, restated, modified or
supplemented from time to time, is herein called the "Credit Agreement") of even
date herewith, by and among Borrower, Agent, Payee and certain other signatory
financial institutions named therein or which may be a party thereto from time
to time, to which reference is made for all purposes. This note is a Note under
the terms of the Credit Agreement, and advances against this note by Payee or
other holder hereof, payments and prepayments hereunder and acceleration hereof
shall be governed by the Credit Agreement. Capitalized words and phrases used
herein and not defined herein and which are defined in the credit Agreement
shall have the same meanings herein as are ascribed to them in the Credit
Agreement.
The unpaid principal balance of this note at any time shall be the total
of all principal lent or advanced against this note less the sum of all
principal payments and permitted prepayments made on this note by or for the
account of Borrower. All loans and advances and all payments
EXHIBIT A
Page 1 of 2 Pages
205
and permitted prepayments made hereon may be endorsed by the holder of this note
on the schedule which is attached hereto (and hereby made a part hereof for all
purposes) or otherwise recorded in the holder's records; provided, that any
failure to make notation of (a) any advance shall not cancel, limit or otherwise
affect Borrower's obligations or any holder's rights with respect to that
advance, or (b) any payment or permitted prepayment of principal shall not
cancel, limit or otherwise affect Borrower's entitlement to credit for that
payment as of the date received by the holder.
Borrower and any and all co-makers, endorsers, guarantors and sureties
severally waive notice (including, but not limited to, notice of intent to
accelerate and notice of acceleration, notice of protest and notice of
dishonor), demand, presentment for payment, protest, diligence in collecting and
the filing of suit for the purpose of fixing liability and consent that the time
of payment hereof may be extended and re-extended from time to time without
notice to any of them. Each such person agrees that his, her or its liability on
or with respect to this note shall not be affected by any release of or change
in any guaranty or security at any time existing or by any failure to perfect or
maintain perfection of any lien against or security interest in any such
security or the partial or complete unenforceability of any guaranty or other
surety obligation, in each case in whole or in part, with or without notice and
before or after maturity.
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS
OF THE STATE OF NEW YORK (OTHER THAN THE CONFLICTS OF LAWS PRINCIPLES THEREOF)
AND THE UNITED STATES OF AMERICA FROM TIME TO TIME IN EFFECT.
▇▇▇▇ TECHNOLOGY, INC.
a Delaware corporation
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
EXHIBIT A
Page 2 of 2 Pages
206
================================================================================
SCHEDULE B
TEXAS COMMERCE BANK
National Association
Austin Office
================================================================================
Lockbox Remittance Processing
Pricing Agreement
WHOLESALE/MANUAL
X Basic Service (includes one photocopy) $ .29/item
-------
X Monthly Maintenance $ 65.00/box
-------
Optional Services:
Additional photocopy $ .09/item
-------
Item sort .02/item
-------
Circle/underline/record amount paid .06/item
-------
Additional deposit slip mailed 8.00/month
-------
Additional deposit account 10.00/month
Reporting Services:
Terminal input lockbox deposit summary $ 30.00/month
------- + Timesharing
Deposit amount phone call 50.00/month
-------
Item listing phone call
------- (Average 10 items per day maximum) .15/item
Daily data transmission 50.00/month
-------
Daily diskette 25.00/month
------- Diskette not returned 1.50/each
Daily faxed report 150.00/month
-------
Lockbox pricing may be changed by the Bank upon 90 days' written notice to the
Customer.
All other regular fees for commercial accounts apply in accordance with the
Bank's then in effect fee schedule.
The foregoing pricing schedule is hereby accepted this 19th day of January,
1994.
TEXAS COMMERCE BANK, N.A. COMPANY: ▇▇▇▇ TECHNOLOGY, INC.
Austin Office
BY: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ BY: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
------------------- -----------------------
TITLE: Vice President TITLE: Chairman & President
---------------- --------------------
207
DEPOSIT INFORMATION REPORTING
================================================================================
*( ) TexCommunication Lockbox Module (deposit totals)
*( ) TexCommunication Audio Response Module (deposit totals)
*( ) Personal Computer Data Entry Report (attach report format)
( ) Phone # Contact
-------------------------- ---------------------------
( ) Terminal Input
Deadline: Contact/Vendor Name:
------------------------ --------------
* Represents standard reporting options
================================================================================
REMITTANCE DISPOSITION
================================================================================
(X) First Class Mail
( ) Overnight Express Courier Type: Co. Acct. #
------------- -------
( ) Courier Pickup Pickup Time: Deposits: ( ) a.m. ( ) p.m.
------------
Name of Courier Service:
-----------------------------------------------
Address: Credit & Collections Contents:
▇▇▇▇ Technology, Inc. (X) Check Copies
▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇ (X) Deposit Advice/Listing
Suite 500 (X) Invoices
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (X) Correspondence
(X) Envelopes
(X) Other
-----------------
Address: Contents:
--------------------- ( ) Check Copies
( ) Deposit Advice/Listing
--------------------- ( ) Invoices
( ) Correspondence
--------------------- ( ) Envelopes
( ) Other
--------------------- -----------------
================================================================================
208
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
(the "Bank")
AMENDED LOCKBOX IMPLEMENTATION & PROCESSING INSTRUCTIONS
CUSTOMER INFORMATION
================================================================================
CUSTOMER NAME PHONE
▇▇▇▇ Technology, Inc. (▇▇▇) ▇▇▇-▇▇▇▇
--------------------------------------------------------------------------------
STREET ADDRESS CITY STATE ZIP
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇
--------------------------------------------------------------------------------
PRIMARY CONTACT DURING BUSINESS HOURS PHONE
( )
--------------------------------------------------------------------------------
START DATE
================================================================================
================================================================================
WHOLESALE [XX] RETAIL [ ]
LOCKBOX #: 0465 ESTIMATED MONTHLY VOLUME (QTY):
------------- ----------
DEPOSITORY ACCOUNT NO: 09920337481
---------------------------------------------------------
================================================================================
================================================================================
STANDARD OPERATING PROCEDURES:
[ ] DISCARD ENVELOPES [ ] PROCESS NON-MICR ITEMS (DRAFTS)
[ ] MULTIPLE CHECKS COPIED TO A PAGE THROUGH DOMESTIC COLLECTIONS
[ ] ACCEPT 7 OR LESS ACCEPTABLE PAYEES [ ] IF LEGAL/COURTESY AMOUNTS
[ ] PROCESS FOREIGN ITEMS THROUGH DIFFER; PROCESSED FOR INVOICE
INTERNATIONAL COLLECTIONS AMOUNT
[ ] ACCEPT POST OR STALE DATED
ITEMS, RESTRICTIVE NOTATIONS
(I.E. PAID IN FULL), AND
UNSIGNED OR MISSING DATE ITEMS
EXCEPTION PROCESSING INSTRUCTIONS - DIFFERENT FROM ABOVE
---------------------------------------- -----------------------------------
---------------------------------------- -----------------------------------
================================================================================
================================================================================
PERSONS AUTHORIZED TO MAKE CHANGES OR AMENDMENTS TO INSTRUCTIONS in accordance
with the Credit Agreement
▇▇▇▇ ▇▇▇▇▇▇▇, as officer of ▇▇▇▇▇ ▇▇▇▇▇▇-Day, as officer of
Texas Commerce Bank Texas Commerce Bank
▇▇▇▇ ▇▇▇▇▇▇▇▇, as officer of Credit Deputy of either Texas Commerce
Chase Manhattan Bank Bank or Chase Manhattan Bank
================================================================================
================================================================================
REMITTANCE DISPOSITION: [ ] ADDRESS OTHER THAN ABOVE
[XX] FIRST CLASS MAIL
--------------------------------
[ ] CUST COURIER/TIME
--------------- --------------------------------
[ ] OVERNIGHT EXPRESS COURIER
------- --------------------------------
AIRBILL ACCT #
--------------- --------------------------------
================================================================================
================================================================================
INFORMATION REPORTING: INCLUDE DATA TRANSMISSION SPECIFICATIONS
[ ] MICROLINK/USER # AND TEST DOCUMENTS, IF APPROPRIATE.
-----------
[ ] CHEMLINK/USER #
-----------
[ ] OTHER
-----------
================================================================================
EXHIBIT C
209
Lockbox
Implementation Form
Page 2
Any and all checks, evidences of payments or accompanying documents delivered
by U.S. mail or otherwise to:
▇▇▇▇ Technology, Inc.
Dept. RB #0465
▇.▇. ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
================================================================================
ACCEPTABLE PAYEES:
----------------------------------------
-------------------------------------- ----------------------------------------
-------------------------------------- ----------------------------------------
-------------------------------------- ----------------------------------------
ACCOUNT # TO CHARGE FOR RETURN ITEMS:
------------------------------------------
================================================================================
CUSTOMER AUTHORIZES THE BANK TO IMPLEMENT LOCKBOX SERVICES FOR IT IN ACCORDANCE
WITH THE INSTRUCTIONS IN THIS FORM AND AGREES TO THE PROVISIONS OF THE TREASURY
MANAGEMENT SERVICE AGREEMENT, AS AMENDED FROM TIME TO TIME.
CUSTOMER: ▇▇▇▇ Technology, Inc.
---------------------------------------------------------------------
BY:
--------------------------------------------------------------
NAME:
--------------------------------------------------------------
TITLE: DATE:
--------------------------------------------------------------
RELATIONSHIP OFFICER: ▇▇▇▇▇ ▇▇▇▇▇▇-Day PHONE #: (▇▇▇) ▇▇▇-▇▇▇▇
------------------------ ------------------
SIGNATURE: COST CENTER: 2347
----------------------------------- ------------------
210
OFFICER'S CERTIFICATE
Date: _________
[Name and address of Lender
or Agent, as the case may be]
-----------------------------
-----------------------------
Attention:
-------------------
Re: Financial Statements Required under Credit Agreement (as the
same may have been amended, modified and restated from time to
time, the "Credit Agreement") dated as of September 23, 1996, by
and among ▇▇▇▇ Technology, Inc., the financial institutions or
party thereto from time to time and The Chase Manhattan Bank, as
Agent
Gentlemen:
Capitalized words and phrases used herein and not defined herein and
defined in the Credit Agreement are used herein with the same meanings as are
assigned to them in the Credit Agreement.
The undersigned hereby certifies, warrants and represents to the
addressee named above that to the best knowledge of the undersigned:
(1) He or she is the duly appointed and acting Financial Officer
of Borrower;
(2) The attached financial statements dated as of _________________
were prepared in conformity with GAAP consistently applied,
subject only to normal and customary adjustments, and present
fairly the financial position of Borrower and its Subsidiaries,
on a Consolidated [and consolidating basis], as of the date
thereof and the results of its operations for the period covered
thereby.
(3) The following constitute true, correct and complete financial
calculations for the Borrower and its Subsidiaries on a
Consolidated basis, as of the end of the period covered by the
attached financial statements:
(a) LEVERAGE RATIO:
(i) Total Indebtedness: $
---------
(ii) EBITDA: $
---------
EXHIBIT D
Page 1
211
(iii) Actual Leverage Ratio
[ratio of (i) to (ii)]: ____ to 1.00
(iv) Required Leverage Ratio: 3.00 to 1.00
(b) TANGIBLE NET WORTH:
(i) Aggregate of capital
stock, additional
paid in capital, capital
in excess of par or
stated value, retained
earnings and other
stockholder equity
amounts: $_______
(ii) Treasury Stock: $_______
(iii) Amount of Write-Ups
after Closing Date in
Value of Assets above
Cost or Depreciated
Value: $_______
(iv) Book Value of all
Intangible Assets: $_______
(v) Actual Tangible Net
Worth [Line (i) less
Lines (ii) through
(iv)]: $___________
$60,000,000
(c) NET INCOME:
(i) Gross Revenues and
other income credits: $_______
(ii) Expenses and other
income charges: $_______
(iii) Actual Net Income
[Line (i) less Line (ii)]: $___________
(iv) Required Net Income: $___________
(4) The undersigned hereby certifies to his or her best knowledge as
follows:
EXHIBIT D
Page 2
212
(a) each representation or warranty of Borrower contained in
the Credit Agreement is true and correct in all material
respects on and as of the date hereof with the same
effect as though such representations and warranties had
been made on and of this date, except for (i) those
representations and warranties which relate only to the
Closing Date or (ii) such changes in the representations
and warranties otherwise permitted by the terms of the
Credit Agreement;
(b) no Event of Default or Default under the Credit
Agreement has occurred and is still continuing (except
for any Event of Default or Default which may have been
expressly waived in writing by the Lenders); and (c)
Borrower is in default in the due performance of any
covenant on its part in the Credit Agreement.
----------------------------------------
Name:
----------------------------------
EXHIBIT D
Page 3
213
[Borrower Letterhead]
REQUEST FOR EXTENSION OF CREDIT
Date:________________
The Chase Manhattan Bank
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Re: Loan under Credit Agreement dated as of September 23, 1996, by
and among ▇▇▇▇ Technology, Inc., the financial institutions a
party thereto from time to time, and The Chase Manhattan Bank,
as Agent (as the same may have been amended, modified and/or
restated from time to time, the "Credit Agreement")
Gentlemen:
Capitalized words and phrases used herein, but not defined herein, shall
have the same meanings as are ascribed to them in the Credit Agreement.
Borrower requests that a Loan be made under the Credit Agreement in the
amount of $_________ and that such Loan be made on __________, 19__, which is a
Business Day (unless this request for a Loan is received by Agent after 1:00
p.m., New York City time, in which case, then on the next to occur Business Day
hereafter.
The Loan is to be an (CHECK ONE) [ ] Alternate Base Rate Borrowing
[ ] LIBOR Borrowing. If the Loan is to be a LIBOR Borrowing, the Interest
Period is to be (CHECK ONE) [ ] one [ ] two [ ] three [ ] six months.
[The Company further requests that simultaneously with the making of the
Loan described above, the current [Alternate Base Rate Borrowing] [LIBOR
Borrowing] which matures on the same day that said Loan is to be made (i) be
converted to a LIBOR Borrowing with the same Interest Period selected for such
Loan and (ii) have its unpaid principal balance be combined with the new Loan so
that the aggregate thereof is treated as a single LIBOR Borrowing for the
Interest Period designated for the new Loan above and for all other purposes in
the Credit Agreement.]
Borrower hereby represents and warrants as follows:
EXHIBIT E
Page 1
214
(i) each representation or warranty of Borrower contained in the
Credit Agreement is true in all material respects on and as of
the date hereof with the same effect as though such
representations and warranties had been made on and of this
date, except for (1) those representations and warranties which
relate only to the Closing Date or (2) such changes in the
representations and warranties otherwise permitted by the terms
of the Credit Agreement;
(ii) no Event of Default or Default under the Credit Agreement has
occurred and is still continuing (except for any Event of
Default or Default which may have been expressly waived in
writing by the Lenders;
(iii) Borrower is not in default in the due performance of any
covenant on its part in the Credit Agreement;
(iv) so far as is known to or is ascertainable by the officers of
Borrower, the business and operations of Borrower and all of its
Subsidiaries as conducted at all times relevant to the
transactions contemplated by the Credit Agreement to and
including the close of business on the date hereof have been and
are in compliance with all applicable Legal requirements
materially affecting the business and operations of Borrower and
its Subsidiaries on a Consolidated basis.
The undersigned Responsible Officer executing this Request for Extension
of Credit on behalf of Borrower is the duly elected, qualified and acting
________________.
▇▇▇▇ TECHNOLOGY, INC.,
a Delaware corporation
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
EXHIBIT E
Page 2
215
RATE SELECTION NOTICE
▇▇▇▇ Technology, Inc., the financial institutions which are signatories
thereto from time to time (collectively, the "Lenders") and The Chase Manhattan
Bank, a New York banking corporation, as Agent for and on behalf of Lenders,
executed and delivered that certain Credit Agreement (as amended, supplemented
and restated, the "Credit Agreement") dated as of September 23, 1996. Any term
used herein and not otherwise defined herein shall have the meaning herein
ascribed to it in the Credit Agreement.
In accordance with the Credit Agreement, Borrower hereby notifies Agent
of the exercise of an Interest Option.
E. Current borrowing
1. Interest Option now in effect: _______________
2. Amount: $_______________
3. Expiration of current Interest
Period, if applicable: _________, 199_
F. Proposed borrowing
1. Amount: $_______________
2. Date Interest Option is to
be effective: _________, 199_
3. Interest Option to be applicable
(check one):
[ ] Alternate Base Rate
[ ] LIBOR RATE
4. Interest Period (check one if applicable):
[ ] 1 month [ ] 3 months
[ ] 2 months [ ] 6 months
EXHIBIT F
Page 1
216
Borrower represents and warrants that the Interest Option and the
Interest Period (if applicable) selected above comply with all provisions of the
Credit Agreement and that there exists no Event of Default or Default under the
Credit Agreement.
▇▇▇▇ TECHNOLOGY, INC.,
a Delaware corporation
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
EXHIBIT F
Page 2
217
CERTIFICATE OF SECRETARY
OF
▇▇▇▇ TECHNOLOGY, INC.
---------------------
a Delaware corporation
The undersigned, being the duly elected, qualified and acting Secretary
and Chief Financial Officer of ▇▇▇▇ Technology, Inc., a Delaware corporation
(the "CORPORATION"), pursuant to Section 4.2 of that certain Credit Agreement
of even date herewith among the Corporation, each of the financial
institutions signatory thereto, and The Chase Manhattan Bank, as Agent (the
"CREDIT AGREEMENT"; capitalized terms used but not otherwise defined herein
shall have the meanings ascribed to such terms in the Credit Agreement), hereby
certifies on behalf of the Corporation that:
1. Attached hereto as Exhibit A is a true, correct and complete
copy of resolutions duly adopted at a meeting of the Board of Directors of the
Corporation held on August 12, 1996 authorizing the borrowing under the Credit
Agreement and the execution, delivery and performance of the Credit Agreement
and the other Loan Documents to which the Corporation is a party. Such
resolutions constitute the only resolutions of the Board of Directors of the
Corporation with respect to the matters referenced therein, and such
resolutions have not been modified, amended or rescinded and remain in full
force and effect as of the date hereof.
2. Attached hereto as Exhibit B is a true, correct and complete
copy of the currently effective Restated Certificate of Incorporation of the
Corporation, as certified by the Delaware Secretary of State. There have been
no amendments to the Restated Certificate of Incorporation filed with the
Delaware Secretary of State since the date of the attached certification, and
no amendments have been authorized or approved by the Board of Directors or the
stockholders of the Corporation as of the date hereof.
3. Attached hereto as Exhibit C is a true, correct and complete
copy of the currently effective Bylaws of the Corporation, as amended. The
Bylaws have not been further modified, amended or rescinded and remain in full
force and effect as of the date hereof.
4. Attached hereto as Exhibit D is a true, correct and complete
copy of (i) a certificate issued by the Delaware Secretary of State with
respect to the due incorporation, good standing and legal existence of the
Corporation and (ii) certificates issued by the Texas Secretary of the State
and the Texas Comptroller of Public Accounts with respect to the Corporation's
authorization to transact business as a foreign corporation and its good
standing in such state.
218
5. The following person is the duly elected and incumbent
Secretary and Chief Officer of the Corporation and is authorized to execute, in
the name of and on behalf of the Corporation, each of the Credit Agreement and
the other Loan Documents, and set forth opposite his name is his genuine
signature:
Name Signature
---- ---------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ____________________________________
IN TESTIMONY WHEREOF, the undersigned has executed this Certificate on
September , 1996.
____________________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Secretary and Chief Financial Officer
The undersigned, being the duly elected, qualified and acting Chief
Accounting Officer and Corporate Controller of the Corporation, do hereby
certify that ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ is the duly elected, qualified and acting
Secretary and Chief Financial Officer of the Corporation and that the signature
of ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ set forth above is his true and genuine signature.
IN TESTIMONY WHEREOF, the undersigned has executed this Certificate on
September , 1996.
____________________________________
▇▇▇▇▇▇ ▇▇▇▇▇▇
Chief Accounting Officer and
Corporate Controller
-2-
219
BORROWING BASE CERTIFICATE
The undersigned hereby certifies that (s)he is a Responsible Officer of
▇▇▇▇ Technology, Inc., a Delaware corporation ("Borrower"), and that as such
(s)he is authorized to execute this Borrowing Base Certificate on behalf of
Borrower pursuant to the Credit Agreement (as it may be amended, supplemented or
restated from time to time, the "Agreement") dated as of September 23, 1996, by
and among Borrower, The Chase Manhattan Bank, as Agent, and Lenders therein
named. The undersigned further certifies, represents and warrants that to his or
her best knowledge (each capitalized term used herein having the same meaning
given to it in the Agreement unless otherwise specified herein):
(a) The Borrowing Base as the date hereof is calculated as follows:
(i) Net Amount of Eligible Receivables
as of the date hereof $__________
(ii) Actual Borrowing Base
[80% times Line (a)(i)] $__________
(b) Calculations of Eligible Receivables and Net Amount of Eligible
Receivables are set forth on Schedule 1 attached hereto and such
calculations are true and correct in all respects and conform to
the definitions of "Eligible Receivables" and "Net Amount of
Eligible Receivables" set forth in the Agreement.
(c) The representations and warranties made in each Loan Document
are true and correct in all material respects on and as of the
time of delivery hereof, with the same force and effect as if
made on and as of the time of delivery hereof, except for (i)
those representations and warranties which relate only to the
Closing Date or (ii) such changes in the representations and
warranties otherwise permitted by the terms of the Credit
Agreement.
(d) No Default or Event of Default has occurred and is continuing.
Dated _________________, 199_.
----------------------------------------
[SIGNATURE OF RESPONSIBLE OFFICER]
EXHIBIT H
Page 1
220
SCHEDULE 1.1
to
Credit Agreement
Dated as of September 23, 1996
COMMITMENTS
1. The Chase Manhattan Bank - $7,500,000
2. Texas Commerce Bank National Association - $7,500,000
1
221
SCHEDULE 5.5
to
Credit Agreement
Dated as of September 23, 1996
MATERIAL LITIGATION
NONE
2
222
SCHEDULE 5.12
to
Credit Agreement
Dated as of September 23, 1996
LEASES OF REAL PROPERTY
1. Lease, dated May 20, 1991 by and between Texas Commerce Bank - Austin
("TCB") and ▇▇▇▇ Technology, Incorporated, with TCB's interest as
Landlord assigned to Oak Hill Office Partners, Ltd., as amended, with
respect to ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇.
2. Lease, dated May 19, 1995, as amended, by and between Security Capital
Industrial Trust and ▇▇▇▇ Technology, Inc., with respect to Southpark
Corporate Center, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇.
3. Lease, dated February 1, 1996 by and between NationsBank, Texas, N.A.,
and ▇▇▇▇ Technology, Inc., with respect to NationsBank, ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇.
4. Sublease, dated February 1, 1996 by and between UHC Management Company,
Inc., and ▇▇▇▇ Technology, Inc., with respect to Southpark ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇.
5. Office lease with respect to 80 Avenue ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇-▇▇▇▇, ▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇.
6. Office lease with respect to 6 Galgalie ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇
7. Apartment lease with respect to ▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇. ▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
3
223
SCHEDULE 5.13
to
Credit Agreement
Dated as of September 23, 1996
LIST OF ASSUMED NAMES
1. ▇▇▇▇
2. RMCC
3. RIL
4
224
SCHEDULE 5.16
to
Credit Agreement
Dated as of September 23, 1996
INDEBTEDNESS AND CAPITAL LEASES
1. The agreements evidencing the Indebtedness secured by the Liens set forth
on Schedule 7.2 and the Property encumbered thereby.
5
225
SCHEDULE 5.17
to
Credit Agreement
Dated as of September 23, 1996
ENVIRONMENTAL MATTERS
NONE
6
226
SCHEDULE 7.2
to
Credit Agreement
Dated as of September 23, 1996
LIENS
1. Liens set forth on the Uniform Commercial Code Search Report with
Certification Date August 27, 1996, as Item Nos. 1-18 (inclusive),
a copy of which is attached hereto and incorporated herein by this
reference.
7
227
SCHEDULE 7.6
to
Credit Agreement
Dated as of September 23, 1996
LIST OF EXISTING TRANSACTIONS WITH RELATED PARTIES
1. Stock Option and Restricted Stock Purchase Plan 2.0, dated as of
December 9, 1993, amended and restated on September 12, 1995, and
agreements entered into in connection therewith including, without
limitation, the following:
(a) Incentive Stock Option Agreements for options granted under
Stock Option and Restricted Stock Purchase Plan 2.0 prior to
August, 1995, to employees hired before June 28, 1993;
(b) Incentive Stock Option Agreements for options granted under
Stock Option and Restricted Stock Purchase Plan 2.0 prior to
September, 1995, to employees hired on or after June 28, 1993;
(c) Incentive Stock Option Agreements for options granted under
Stock Option and Restricted Stock Purchase Plan 2.0 prior to
September, 1995, to employees hired on or after January 1, 1995;
(d) Incentive Stock Option Agreements with employees of the
Borrower for options granted during and after September 1995;
and
(e) Nonqualified Stock Option Agreements with employees of the
Borrower for options granted during and after September, 1995.
2. 1995 Qualified Employee Stock Purchase Plan, dated September 12, 1995,
as amended and restated on August 12, 1996, and agreements entered into
in connection therewith.
3. Employment Agreement of ▇▇▇▇▇ ▇▇▇▇ dated January 30, 1995 effective as
of June 28, 1995.
4. Employment Agreement of ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ dated January 30, 1995 effective
as of June 28, 1995.
5. Employment Agreement of ▇▇▇▇▇▇ ▇▇▇▇▇ dated January 9, 1995 effective as
of June 28, 1995.
8
228
6. Employment Agreement of ▇▇▇▇ ▇▇▇▇▇▇ dated January 22, 1995 effective as
of June 28, 1995.
7. Software License Agreement, dated April 7, 1995, between the Borrower,
as Licensee, and Fujitsu Limited, as Licensor.
8. Shareholders Agreement among the Borrower, ▇▇▇▇▇ ▇. ▇▇▇▇, Fujitsu
Limited and Sun Microsystems, Inc., dated November 10, 1995.
9. Indemnity Agreement, dated November 6, 1995, between the Borrower and
Fujitsu Limited re: Initial Public Offering of the Borrower's Common
Stock.
10. Indemnity Agreements, between the Borrower and certain Directors and
Officers relating to their service as such Directors and/or Officers.
11. Founders Agreement dated June 28, 1996, between the Borrower and Yoav
Talgam relating to ▇▇▇▇ (Semiconductors) Israel Ltd.
12. Tax Sharing Agreement as of January 4, 1995, among the Borrower and
its Subsidiaries
13. Contractor Design Agreement, dated July 15, 1995 between the Borrower,
Fujitsu Limited and PUYALLUP Integrated Circuit Company, Inc.
9