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LOAN AND SECURITY AGREEMENT
by and between
INTERGRAPH CORPORATION
and
FOOTHILL CAPITAL CORPORATION
Dated as of December 20, 1996
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TABLE OF CONTENTS
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Page(s)
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1. DEFINITIONS AND CONSTRUCTION. 1
1.1 Definitions 1
1.2 Accounting Terms 24
1.3 Code 25
1.4 Construction 25
1.5 Schedules and Exhibits. 25
2. LOAN AND TERMS OF PAYMENT. 25
2.1 Revolving Advances. 25
2.2 Letters of Credit. 26
2.3 Term Loan 29
2.4 [Intentionally omitted]. 29
2.5 Overadvances 29
2.6 Interest and Letter of Credit Fees: Rates,
Payments, and Calculations. 29
2.7 Collection of Accounts 30
2.8 Crediting Payments; Application of
Collections 31
2.9 Designated Account. 31
2.10 Maintenance of Loan Account; Statements of
Obligations. 32
2.11 Fees. 32
3. CONDITIONS; TERM OF AGREEMENT. 33
3.1 Conditions Precedent to the Initial Advance,
and Letter of Credit, and the Term Loan. 33
3.2 Conditions Precedent to all Advances, all
Letters of Credit, and the Term Loan. 36
3.3 Condition Subsequent. 36
3.4 Term. 39
3.5 Effect of Termination. 39
3.6 Early Termination by Borrower. 39
3.7 Termination Upon Event of Default. 40
4. CREATION OF SECURITY INTEREST. 40
4.1 Grant of Security Interest. 40
4.2 Negotiable Collateral. 41
4.3 Collection of Accounts, General Intangibles,
and Negotiable Collateral. 42
4.4 Delivery of Additional Documentation
Required. 42
4.5 Power of Attorney. 43
4.6 Right to Inspect. 43
5. REPRESENTATIONS AND WARRANTIES. 44
5.1 No Encumbrances. 44
5.2 Eligible Accounts. 44
5.3 Eligible Domestic Inventory. 44
5.4 Equipment. 44
5.5 Location of Inventory and Equipment. 44
5.6 Inventory Records. 44
5.7 Location of Chief Executive Office; FEIN. 45
5.8 Due Organization and Qualification;
Subsidiaries. 45
5.9 Due Authorization; No Conflict. 45
5.10 Litigation. 46
5.11 No Material Adverse Change. 47
5.12 Solvency. 47
5.13 Employee Benefits. 47
5.14 Environmental Condition. 47
5.15 Securities Accounts. 48
6. AFFIRMATIVE COVENANTS. 48
6.1 Accounting System. 48
6.2 Collateral Reporting. 48
6.3 Financial Statements, Reports, Certificates. 49
6.4 Tax Returns. 50
6.5 Guarantor Reports. 51
6.6 Returns. 51
6.7 Title to Equipment. 51
6.8 Maintenance of Equipment. 51
6.9 Taxes. 51
6.10 Insurance. 52
6.11 No Setoffs or Counterclaims. 53
6.12 Location of Inventory and Equipment. 53
6.13 Compliance with Laws. 54
6.14 Employee Benefits. 54
6.15 Leases. 55
7. NEGATIVE COVENANTS. 55
7.1 Indebtedness. 55
7.2 Liens. 56
7.3 Restrictions on Fundamental Changes. 56
7.4 Disposal of Assets. 57
7.5 Change Name. 57
7.6 [intentionally omitted]. 57
7.7 Nature of Business. 57
7.8 Prepayments and Amendments. 57
7.9 Change of Control. 57
7.10 Consignments. 57
7.11 Distributions. 58
7.12 Accounting Methods. 58
7.13 Investments. 58
7.14 Transactions with Affiliates. 58
7.15 Suspension. 58
7.16 [intentionally omitted]. 58
7.17 Use of Proceeds. 58
7.18 Change in Location of Chief Executive Office;
Inventory and Equipment with Bailees. 59
7.19 No Prohibited Transactions Under ERISA 59
7.20 Financial Covenants. 60
7.21 Capital Expenditures. 60
8. EVENTS OF DEFAULT. 60
9. FOOTHILL'S RIGHTS AND REMEDIES. 62
9.1 Rights and Remedies. 62
9.2 Remedies Cumulative. 65
10. TAXES AND EXPENSES. 65
11. WAIVERS; INDEMNIFICATION 66
11.1 Demand; Protest; etc. 66
11.2 Foothill's Liability for Collateral. 66
11.3 Indemnification. 66
12. NOTICES. 66
13. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER. 68
14. DESTRUCTION OF BORROWER'S DOCUMENTS. 68
15. GENERAL PROVISIONS. 69
15.1 Effectiveness. 69
15.2 Successors and Assigns. 69
15.3 Section Headings. 69
15.4 Interpretation. 69
15.5 Severability of Provisions. 69
15.6 Amendments in Writing. 69
15.7 Counterparts; Telefacsimile Execution. 69
15.8 Revival and Reinstatement of Obligations. 70
15.9 Integration. 70
15.10 Confidentiality. 71
SCHEDULES AND EXHIBITS
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Schedule E-1 Eligible Domestic Inventory Locations
Schedule P-1 Permitted Liens
Schedule P-2 Permitted Other Investments
Schedule R-1 Real Property Collateral
Schedule 5.8 Subsidiaries -- Capitalization and Assets
Schedule 5.10 Litigation
Schedule 5.13 ERISA Benefit Plans
Schedule 5.14 Environmental Condition
Schedule 6.12 Location of Inventory and Equipment
Schedule 7.1 Indebtedness
Exhibit A-1 Form of Aircraft Security Agreement
Exhibit C-1 Form of Compliance Certificate
Exhibit C-2 Form of Copyright Security Agreement
Exhibit P-1 Form of Patent Security Agreement
Exhibit P-2 Form of Pledge Agreement
Exhibit T-1 Form of Trademark Security Agreement
Exhibit V-1 Form of VCOC Letter
LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT (this "Agreement"), is
entered into as of December 20, 1996, between FOOTHILL CAPITAL
CORPORATION, a California corporation ("Foothill"), with a
place of business located at ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, and INTERGRAPH
CORPORATION, a Delaware corporation ("Borrower"), with its
chief executive office located at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇.
The parties agree as follows:
1. DEFINITIONS AND CONSTRUCTION.
1.1 Definitions. As used in this Agreement, the
following terms shall have the following definitions:
"Account Debtor" means any Person who is or who
may become obligated under, with respect to, or on account of,
an Account.
"Accounts" means all presently existing and
hereafter arising accounts, contract rights, and all other
forms of obligations owing to Borrower arising out of the
sale, license, or lease of goods or software or the rendition
of services by Borrower, irrespective of whether earned by
performance, and any and all credit insurance, guaranties, or
security therefor.
"Advances" has the meaning set forth in Section 2.1(a).
"Affiliate" means, as applied to any Person,
any other Person who directly or indirectly controls, is
controlled by, is under common control with or is a director
or officer of such Person. For purposes of this definition,
"control" means: (a) solely when "Affiliate" is used in
determining Eligible Accounts, the possession, directly or
indirectly, of the power to vote 5% or more of the securities
having ordinary voting power for the election of directors or
the direct or indirect power to direct the management and
policies of a Person; and (b) in all other cases, the
possession, directly or indirectly, of the power to vote 10%
or more of the securities having ordinary voting power for the
election of directors or the direct or indirect power to
direct the management and policies of a Person.
"Agreement" has the meaning set forth in the preamble hereto.
"Aircraft Security Agreement" means an Aircraft
Security Agreement, in the form of Exhibit A-1 attached
hereto, dated as of even date herewith, between Borrower and Foothill.
"AnaTech Division" means the AnaTech Division of Borrower.
"AnaTech Accounts" means Accounts created by
the AnaTech Division.
"Appraised Assets" means items of Equipment
that are the subject of that certain appraisal, dated December
11, 1996, performed by Acuval Associates, Inc. or any
subsequent appraisal performed by a qualified appraiser
satisfactory to Foothill.
"Asset Disposition" means any sale, license,
lease, exchange, transfer, or other disposition (including any
disposition as part of a sale and lease-back transaction),
directly or indirectly, by Borrower of any of the properties
or assets of Borrower.
"Authorized Person" means any officer or other
employee of Borrower.
"Average Unused Portion of Maximum Revolving
Amount" means, as of any date of determination, (a) the
Maximum Revolving Amount, less (b) the sum of (i) the average
Daily Balance of Advances that were outstanding during the
immediately preceding month, plus (ii) the average Daily
Balance of the Letter of Credit Usage during the immediately
preceding month.
"Availability" means the amount of money that
Borrower is entitled to borrow as Advances under Section 2.1,
such amount being the difference derived when (a) the sum of
the principal amount of Advances then outstanding (including
any amounts that Foothill may have paid for the account of
Borrower pursuant to any of the Loan Documents and that have
not been reimbursed by Borrower) is subtracted from (b) the
lesser of (i) the Maximum Revolving Amount less the Letter of
Credit Usage, or (ii) the Borrowing Base less the Letter of
Credit Usage.
"Bankruptcy Code" means the United States
Bankruptcy Code (11 U.S.C. Section 101 et seq.), as amended, and
any successor statute.
"Benefit Plan" means a "defined benefit plan"
(as defined in Section 3(35) of ERISA) for which Borrower, any
Subsidiary of Borrower, or any ERISA Affiliate has been an
"employer" (as defined in Section 3(5) of ERISA) within the
past six years.
"Bentley Equity Interests" means the equity
interests in Bentley Systems, Inc. owned of record by Borrower
and the rights of Borrower related thereto under that certain
Stockholders' Agreement, dated June 11, 1987, by and among
Bentley Systems, Inc., Borrower, and the "Management
Stockholders" party thereto (as amended).
"Bestinfo" means Bestinfo, Inc., a Delaware corporation.
"Books" means all of Borrower's books and
records including: ledgers; records indicating, summarizing,
or evidencing Borrower's properties or assets (including the
Collateral) or liabilities; all information relating to
Borrower's business operations or financial condition; and all
computer programs, disk or tape files, printouts, runs, or
other computer prepared information.
"Borrower" has the meaning set forth in the
preamble to this Agreement.
"Borrowing Base" has the meaning set forth in
Section 2.1(a). For purposes of this definition, any amount
that is denominated in a currency other than Dollars shall be
valued in Dollars based on the applicable Exchange Rate for
such currency as of the date 1 Business Day prior to the date
of determination.
"Business Day" means any day that is not a
Saturday, Sunday, or other day on which national banks are
authorized or required to close.
"Change of Control" shall be deemed to have
occurred at such time as a "person" or "group" (within the
meaning of Sections 13(d) and 14(d)(2) of the Securities
Exchange Act of 1934) becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Securities Exchange Act of
1934), directly or indirectly, of more than 25% of the total
voting power of all classes of stock then outstanding of
Borrower entitled to vote in the election of directors.
"Chelmsford Property" means the Real Property
(and related improvements thereto) of Borrower located in or
about Chelmsford, Massachusetts.
"Closing Date" means the date of the first to
occur of the making of the initial Advance, the issuance of
the initial Letter of Credit, or the funding of the Term Loan.
"Code" means the California Uniform Commercial Code.
"Collateral" means all right, title, or
interest of Borrower with respect to the following:
(a) the Accounts,
(b) the Books,
(c) the Equipment,
(d) the General Intangibles,
(e) the Inventory,
(f) the Negotiable Collateral,
(g) the Real Property Collateral,
(h) any money, or other assets of Borrower that now or
hereafter come into the possession, custody, or control of Foothill, and
(i) the proceeds and products, whether
tangible or intangible, of any of the foregoing, including
proceeds of insurance covering any or all of the Collateral,
and any and all Accounts, Books, Equipment, General
Intangibles, Inventory, Negotiable Collateral, Real Property,
money, deposit accounts, or other tangible or intangible
property resulting from the sale, exchange, collection, or
other disposition of any of the foregoing, or any portion
thereof or interest therein, and the proceeds thereof.
"Collateral Access Agreement" means a landlord
waiver, mortgagee waiver, bailee letter, or acknowledgement
agreement of any warehouseman, processor, lessor, consignee,
or other Person in possession of, having a Lien upon, or
having rights or interests in the Equipment or Inventory, in
each case, in form and substance reasonably satisfactory to
Foothill.
"Collections" means all cash, checks, notes,
instruments, and other items of payment (including, insurance
proceeds, proceeds of cash sales, rental proceeds, and tax
refunds).
"Compliance Certificate" means a certificate
substantially in the form of Exhibit C-1 and delivered by the
chief financial officer or the chief accounting officer of
Borrower to Foothill.
"Consolidated Current Assets" means, as of any
date of determination, the aggregate amount of all current
assets of Borrower and its Subsidiaries that would, in
accordance with GAAP, be classified on a balance sheet as
current assets.
"Consolidated Current Liabilities" means, as of
any date of determination, the aggregate amount of all current
liabilities of Borrower and its Subsidiaries that would, in
accordance with GAAP, be classified on a balance sheet as
current liabilities. For purposes of this definition, all
Obligations outstanding under this Agreement shall be deemed
to be current liabilities without regard to whether they would
be deemed to be so under GAAP.
"Copyright Security Agreement" means a
Copyright Security Agreement, in the form of Exhibit C-2
attached hereto, dated as of even date herewith, between
Borrower and Foothill.
"Currency Protection Agreement" shall mean any
currency swap, cap, or collar agreement or other similar
insurance-type agreement in connection with hedging against
foreign currency rate fluctuations.
"Daily Balance" means the amount of an
Obligation owed at the end of a given day.
"deems itself insecure" means that the Person
deems itself insecure in accordance with the provisions of
Section 1208 of the Code.
"Default" means an event, condition, or default
that, with the giving of notice, the passage of time, or both,
would be an Event of Default.
"Designated Account" means account number 4068-
0637 of Borrower maintained with Borrower's Designated Account
Bank, or such other deposit account of Borrower (located
within the United States) which has been designated, in
writing and from time to time, by Borrower to Foothill.
"Designated Account Bank" means Citibank, N.A.,
whose office is located at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇, and whose ABA number is ▇▇▇-▇▇▇-▇▇▇.
"Dilution" means, in each case based upon the
experience of the immediately prior 90 days, the result of
dividing the Dollar amount of (a) bad debt write-downs,
discounts, returns, credits, or other dilution with respect to
the Accounts, by (b) Collections with respect to Accounts (in
each case, excluding intercompany Accounts and extraordinary
items) plus the Dollar amount of clause (a).
"Dilution Reserve" means, as of any date of
determination pursuant to the report of Dilution delivered
under Section 6.2, an amount sufficient to reduce Foothill's
advance rate against Eligible Accounts by 1 percentage point
for each percentage point by which Dilution is in excess of
8%.
"Disbursement Letter" means an instructional
letter executed and delivered by Borrower to Foothill
regarding the extensions of credit to be made on the Closing
Date, the form and substance of which shall be reasonably
satisfactory to Foothill.
"Dollars or $" means United States dollars.
"Domestic Accounts" means Accounts with respect
to which the Account Debtor maintains its chief executive
office in the United States or is organized under the laws of
the United States or any State thereof.
"Early Termination Premium" has the meaning set
forth in Section 3.6.
"Eligible Accounts" means Eligible Domestic
Accounts and Eligible Unbilled Accounts.
"Eligible Domestic Accounts" means those
Accounts created by Borrower in the ordinary course of
business, that arise out of Borrower's sale, license, or lease
of goods or software or rendition of services, and that
strictly comply with each and all of the representations and
warranties respecting Accounts made by Borrower to Foothill in
the Loan Documents; provided, however, that standards of
eligibility may be fixed and revised from time to time by
Foothill in Foothill's reasonable credit judgment. Eligible
Domestic Accounts shall not include the following:
(a) Accounts that the Account Debtor has failed to pay
within 60 days of due date (or, in the case of Federal
Accounts, 90 days of due date) or Accounts with selling terms
of more than 60 days;
(b) Accounts owed by an Account Debtor or its Affiliates
where 50% or more of all Accounts owed by that Account Debtor
(or its Affiliates) are deemed ineligible under clause (a)
above;
(c) Accounts with respect to which the Account Debtor is
an employee, Affiliate, or agent of Borrower;
(d) Accounts with respect to which goods are placed on
consignment, guaranteed sale, sale or return, sale on
approval, ▇▇▇▇ and hold, or other terms by reason of which the
payment by the Account Debtor may be conditional;
(e) Accounts that are not payable in Dollars or with
respect to which the Account Debtor: (i) does not maintain its
chief executive office in the United States, or (ii) is not
organized under the laws of the United States or any State
thereof, or (iii) is the government of any foreign country or
sovereign state, or of any state, province, municipality, or
other political subdivision thereof, or of any department,
agency, public corporation, or other instrumentality thereof,
unless (y) the Account is supported by an irrevocable letter
of credit that is satisfactory to Foothill (as to form,
substance, and issuer or domestic confirming bank) and that,
upon the occurrence and during the continuance of an Event of
Default, has been delivered to Foothill and is directly
drawable by Foothill (provided, however, that nothing herein
shall limit Foothill's right to not make an Advance or issue a
Letter of Credit upon the occurrence and during the
continuance of an Event of Default), or (z) the Account is
covered by credit insurance in form and amount, and by an
insurer, satisfactory to Foothill;
(f) Accounts with respect to which the Account Debtor is
a creditor of Borrower, has or has asserted a right of setoff,
has disputed its liability (whether pursuant to a contractual
discrepancy or otherwise), or has made any claim with respect
to the Account; provided, however, that the foregoing only
shall apply to the extent of such right of setoff, disputed
liability, or other claim giving rise to such contra-account.
(g) Accounts with respect to an Account Debtor whose
total obligations owing to Borrower exceed 10% of all Eligible
Accounts, to the extent of the obligations owing by such
Account Debtor in excess of such percentage; provided,
however, that in the case of the United States and its
departments, agencies, and instrumentalities, taken as a
whole, the foregoing percentage shall be fifty percent (50%)
before the excess would be deemed ineligible;
(h) Accounts with respect to which the Account Debtor is
subject to any Insolvency Proceeding, or becomes insolvent, or
goes out of business;
(i) Accounts the collection of which Foothill, in its
reasonable credit judgment, believes to be doubtful by reason
of the Account Debtor's financial condition and with respect
to which Foothill has notified Borrower of such belief;
(j) Accounts (other than Eligible Unbilled Accounts)
with respect to which the goods giving rise to such Account
have not been shipped and billed to the Account Debtor, the
services giving rise to such Account have not been performed
and accepted by the Account Debtor, or the Account otherwise
does not represent a final sale;
(k) Accounts with respect to which the Account Debtor is
located in the states of New Jersey, Minnesota, Indiana, or
West Virginia (or any other state that requires a creditor to
file a Business Activity Report or similar document in order
to bring suit or otherwise enforce its remedies against such
Account Debtor in the courts or through any judicial process
of such state), unless Borrower has qualified to do business
in New Jersey, Minnesota, Indiana, West Virginia, or such
other states, or has filed a Notice of Business Activities
Report with the applicable division of taxation, the
department of revenue, or with such other state offices, as
appropriate, for the then-current year, or is exempt from such
filing requirement;
(l) At such times as Foothill may determine in its sole
discretion, Federal Accounts (exclusive, however, of Accounts
with respect to which Borrower has complied, to the
satisfaction of Foothill and subject to Section 4.4(c) hereof,
with the Assignment of Claims Act, 31 U.S.C. Section 3727);
(m) At such times as Foothill may determine in its sole
discretion, Accounts with respect to which the Account Debtor
is any State of the United States (exclusive, however, of: (i)
Accounts owed by any State that does not have a statutory
counterpart to the Assignment of Claims Act; and (ii) Accounts
owed by any State that has a statutory counterpart to the
Assignment of Claims Act and with respect to which Borrower
has complied, to the satisfaction of Foothill and subject to
Section 4.4(c) hereof, with such statutory counterpart);
(n) Federal Accounts arising under any one underlying
contract or any series of related underlying contracts, the
total amount of which obligations owing Borrower exceeds 10%
of all Eligible Accounts, to the extent of the obligations
owing under such contract or contracts in excess of such
percentage;
(o) Federal Accounts in respect of which the subject
contract for goods and services is designated by the Account
Debtor as "classified" (i.e., the ability of Foothill to
receive information regarding such contract or such Account is
restricted by rules or regulations of the United States or any
department, agency, or instrumentality of the United States in
respect of classified information);
(p) Optronics Accounts or AnaTech Accounts;
(q) Accounts which represent progress payments or other
advance ▇▇▇▇▇▇▇▇ that are due prior to the completion of
performance by Borrower of the subject contract for goods or
services, except to the extent that such progress payments or
other advance ▇▇▇▇▇▇▇▇ are expressly permitted by the terms of
the subject contract (including so-called "maintenance
contracts"); or
(r) Accounts with respect to which a surety or other
bond has been issued in respect of the performance by Borrower
of the subject contract for goods or services.
"Eligible Domestic Inventory" means Eligible
Domestic Finished Goods Inventory and Eligible Domestic Raw
Materials Inventory.
"Eligible Domestic Finished Goods Inventory"
means Inventory consisting of first quality finished goods
held for sale or license in the ordinary course of Borrower's
business, that are located at or in-transit between Borrower's
premises identified on Schedule E-1, and that strictly comply
with each and all of the representations and warranties
respecting Inventory made by Borrower to Foothill in the Loan
Documents; provided, however, that standards of eligibility
may be fixed and revised from time to time by Foothill in
Foothill's reasonable credit judgment. In determining the
amount to be so included, Inventory shall be valued at the
lower of cost or market on a basis consistent with Borrower's
current and historical accounting practices. An item of
Inventory shall not be included in Eligible Domestic Finished
Goods Inventory if:
(a) it is not owned solely by Borrower or
Borrower does not have good, valid, and marketable title thereto;
(b) it is not located at one of the locations
set forth on Schedule E-1;
(c) it is not located on property owned or
leased by Borrower or in a contract warehouse, in each case,
subject to a Collateral Access Agreement executed by the
mortgagee, lessor, the warehouseman, or other third party, as
the case may be, and segregated or otherwise separately
identifiable from goods of others, if any, stored on the
premises;
(d) it is not subject to a valid and perfected
first priority security interest in favor of Foothill;
(e) it consists of goods returned or rejected
by Borrower's customers or goods in transit;
(f) it is Inventory of the Optronics Division
or the AnaTech Division; or
(g) it is obsolete or slow moving, a
restrictive or custom item, raw materials, work-in-process, a
component that is not part of finished goods, or constitutes
spare parts (other than spare parts located at the Huntsville
Property), packaging and shipping materials, supplies used or
consumed in Borrower's business, Inventory subject to a Lien
in favor of any third Person, ▇▇▇▇ and hold goods, defective
goods, "seconds," or Inventory acquired on consignment.
"Eligible Domestic Raw Materials Inventory"
means Inventory that does not qualify as Eligible Domestic
Finished Goods Inventory solely because it constitutes raw
materials consisting of components used as a part of first
quality finished goods held for sale in the ordinary course of
Borrower's business.
"Eligible Unbilled Accounts" means those
Domestic Accounts created by Borrower that would qualify as
Eligible Domestic Accounts except for the fact that they
constitute Unbilled Accounts.
"Equipment" means all of Borrower's present and
hereafter acquired machinery, machine tools, motors,
equipment, furniture, furnishings, fixtures, vehicles
(including motor vehicles and trailers), tools, parts, goods
(other than consumer goods, farm products, or Inventory),
wherever located, including, (a) any interest of Borrower in
any of the foregoing, and (b) all attachments, accessories,
accessions, replacements, substitutions, additions, and
improvements to any of the foregoing.
"ERISA" means the Employee Retirement Income
Security Act of 1974, 29 U.S.C. Section 1000 et seq., amendments
thereto, successor statutes, and regulations or guidance
promulgated thereunder.
"ERISA Affiliate" means (a) any corporation
subject to ERISA whose employees are treated as employed by
the same employer as the employees of Borrower under IRC
Section 414(b), (b) any trade or business subject to ERISA
whose employees are treated as employed by the same employer
as the employees of Borrower under IRC Section 414(c), (c)
solely for purposes of Section 302 of ERISA and Section 412 of
the IRC, any organization subject to ERISA that is a member of
an affiliated service group of which Borrower is a member
under IRC Section 414(m), or (d) solely for purposes of
Section 302 of ERISA and Section 412 of the IRC, any party
subject to ERISA that is a party to an arrangement with
Borrower and whose employees are aggregated with the employees
of Borrower under IRC Section 414(o).
"ERISA Event" means (a) a Reportable Event with
respect to any Benefit Plan or Multiemployer Plan, (b) the
withdrawal of Borrower, any of its Subsidiaries or ERISA
Affiliates from a Benefit Plan during a plan year in which it
was a "substantial employer" (as defined in Section 4001(a)(2)
of ERISA), (c) the providing of notice of intent to terminate
a Benefit Plan in a distress termination (as described in
Section 4041(c) of ERISA), (d) the institution by the PBGC of
proceedings to terminate a Benefit Plan or Multiemployer Plan,
(e) any event or condition (i) that provides a basis under
Section 4042(a)(1), (2), or (3) of ERISA for the termination
of, or the appointment of a trustee to administer, any Benefit
Plan or Multiemployer Plan, or (ii) that may result in
termination of a Multiemployer Plan pursuant to Section 4041A
of ERISA, (f) the partial or complete withdrawal within the
meaning of Sections 4203 and 4205 of ERISA, of Borrower, any
of its Subsidiaries or ERISA Affiliates from a Multiemployer
Plan, or (g) providing any security to any Plan under Section
401(a)(29) of the IRC by Borrower or its Subsidiaries or any
of their ERISA Affiliates.
"Event of Default" has the meaning set forth in Section 8.
"Exchange Rate" means the nominal rate of
exchange available to Foothill in a chosen foreign exchange
market for the purchase of the applicable non-Dollar currency
at 12:00 noon, local time, 1 Business Day prior to any date of
determination, expressed as the number of units of such
currency per Dollar.
"Excluded Foreign Portion" means, with respect
to any Foreign Subsidiary, the portion (if any) of the equity
securities of such Subsidiary owned of record by Borrower with
voting power that is in excess of 65% of the total combined
voting power of issued and outstanding stock of such
Subsidiary entitled to vote.
"Excluded Foreign Subsidiary Securities" means
(a) the Excluded Foreign Portion (if any) of the equity
securities of any Foreign Subsidiary of Borrower identified in
Schedule II of the Pledge Agreement (as the same may be
amended or supplemented from time to time), and (b) subject to
the last paragraph of Section 6.3, 100% of the fully diluted
issued and outstanding equity securities of any other Foreign
Subsidiary of Borrower.
"Existing Lender" means Citicorp USA, Inc., as
the representative of certain banks and other financial
institutions.
"Federal Accounts" means Accounts where the
United States or any department, agency, or instrumentality of
the United States is the Account Debtor.
"FEIN" means Federal Employer Identification Number.
"Foothill" has the meaning set forth in the
preamble to this Agreement.
"Foothill Account" has the meaning set forth in Section 2.7.
"Foothill Expenses" means all: costs or
expenses (including taxes, and insurance premiums) required to
be paid by Borrower under any of the Loan Documents that are
paid or incurred by Foothill; fees or charges paid or incurred
by Foothill in connection with Foothill's transactions with
Borrower, including, fees or charges for photocopying,
notarization, couriers and messengers, telecommunication,
public record searches (including tax lien, litigation, and
UCC (or equivalent) searches and including searches with the
patent and trademark office, the copyright office, or the
department of motor vehicles), filing, recording, publication,
appraisal (including periodic Personal Property Collateral or
Real Property Collateral appraisals), real estate surveys,
real estate title policies and endorsements, and environmental
audits; costs and expenses incurred by Foothill in the
disbursement of funds to Borrower (by wire transfer or
otherwise); charges paid or incurred by Foothill resulting
from the dishonor of checks; costs and expenses paid or
incurred by Foothill to correct any default or enforce any
provision of the Loan Documents, or in gaining possession of,
maintaining, handling, preserving, storing, shipping, selling,
preparing for sale, or advertising to sell the Personal
Property Collateral or the Real Property Collateral, or any
portion thereof, irrespective of whether a sale is
consummated; costs and expenses paid or incurred by Foothill
in examining Borrower's Books; costs and expenses of third
party claims or any other suit paid or incurred by Foothill in
enforcing or defending the Loan Documents or in connection
with the transactions contemplated by the Loan Documents or
Foothill's relationship with Borrower (or any of its
Subsidiaries party to one or more Loan Documents); and
Foothill's reasonable attorneys fees and expenses incurred in
advising, structuring, drafting, reviewing, administering,
amending, terminating, enforcing (including attorneys fees and
expenses incurred in connection with a "workout," a
"restructuring," or an Insolvency Proceeding concerning
Borrower), defending, or concerning the Loan Documents,
irrespective of whether suit is brought.
"Foreign Subsidiary" means any Subsidiary
organized under the laws of a jurisdiction other than the
United States or any State thereof.
"GAAP" means generally accepted accounting
principles as in effect from time to time in the United
States, consistently applied.
"General Intangibles" means all of Borrower's
present and future general intangibles and other personal
property (including contract rights, rights arising under
common law, statutes, or regulations, choses or things in
action, goodwill, patents, trade names, trademarks,
servicemarks, copyrights, blueprints, drawings, purchase
orders, customer lists, monies due or recoverable from pension
funds, route lists, rights to payment and other rights under
any royalty or licensing agreements, infringement claims,
computer programs, information contained on computer disks or
tapes, literature, reports, catalogs, deposit accounts,
insurance premium rebates, tax refunds, and tax refund
claims), other than goods, Accounts, and Negotiable
Collateral.
"Governing Documents" means the certificate or
articles of incorporation, by-laws, or other organizational or
governing documents of any Person.
"Hazardous Materials" means (a) substances that
are defined or listed in, or otherwise classified pursuant to,
any applicable laws or regulations as "hazardous substances,"
"hazardous materials," "hazardous wastes," "toxic substances,"
or any other formulation intended to define, list, or classify
substances by reason of deleterious properties such as
ignitability, corrosivity, reactivity, carcinogenicity,
reproductive toxicity, or "EP toxicity", (b) oil, petroleum,
or petroleum derived substances, natural gas, natural gas
liquids, synthetic gas, drilling fluids, produced waters, and
other wastes associated with the exploration, development, or
production of crude oil, natural gas, or geothermal resources,
(c) any flammable substances or explosives or any radioactive
materials, and (d) asbestos in any form or electrical
equipment that contains any oil or dielectric fluid containing
levels of polychlorinated biphenyls in excess of 50 parts per
million.
"Huntsville Property" means the Real Property
(and related improvements thereto) of Borrower located in or
about Huntsville, Alabama.
"IG Australia" means Intergraph Corporation
Pty., Ltd.. a corporation organized under the laws of Australia.
"IG Australia Existing Lender" means National
Bank of Australia.
"IG Australia Existing Lender Pay-Off Letter"
means a letter, in form and substance reasonably satisfactory
to Foothill, from IG Australia Existing Lender respecting the
amount necessary to repay in full all of the obligations of
Borrower or IG Australia owing to IG Australia Existing Lender
and obtain a termination or release of all of the Liens
existing in favor of IG Australia Existing Lender in and to
the properties or assets of Borrower and its Subsidiaries.
"IG Benelux" means Intergraph Benelux B.V., a
corporation organized under the laws of The Netherlands.
"IG Benelux Existing Lender" means ING Bank, N.V..
"IG Delaware" means Intergraph Delaware, Inc.,
a Delaware corporation.
"Indebtedness" means: (a) all obligations of
Borrower for borrowed money, (b) all obligations of Borrower
evidenced by bonds, debentures, notes, or other similar
instruments and all reimbursement or other obligations of
Borrower in respect of letters of credit, bankers acceptances,
interest rate swaps, or other financial products, (c) all
obligations of Borrower under capital leases, (d) all
obligations or liabilities of others secured by a Lien on any
property or asset of Borrower, irrespective of whether such
obligation or liability is assumed, and (e) any obligation of
Borrower guaranteeing or intended to guarantee (whether
guaranteed, endorsed, co-made, discounted, or sold with
recourse to Borrower) any indebtedness, lease, dividend,
letter of credit, or other obligation of any other Person;
provided, however, that the term "Indebtedness" shall not
include (i) liabilities or obligations arising out of or
relating to guarantees, warranties, or other commitments that
products or systems sold by Borrower or any of its Affiliates
will meet particular performance or operating specifications
("Commercial Performance Guarantees"), or (ii) liabilities
arising out of or relating to agreements or commitments of
Borrower to maintain the financial condition or solvency of
any Affiliate of Borrower that are made, in the ordinary
course of Borrower's business consistent with past practices,
in connection with or in fulfillment of any Commercial
Performance Guarantee.
"Insolvency Proceeding" means any proceeding
commenced by or against any Person under any provision of the
Bankruptcy Code or under any other bankruptcy or insolvency
law, assignments for the benefit of creditors, formal or
informal moratoria, compositions, extensions generally with
creditors, or proceedings seeking reorganization, arrangement,
or other similar relief.
"Interest Rate Agreement" shall mean any
interest rate swap agreement or any other similar insurance-
type agreement in connection with any interest "cap" or
"collar" transaction or any other interest rate hedging
transaction.
"InterCAP" means InterCAP Graphic Systems,
Inc., a Delaware corporation.
"Intercompany Notes" means promissory notes, if
any, evidencing loan obligations between Borrower and any of
its Subsidiaries that constitute loans qualifying under the
definition of "Permitted Subsidiary Loans and Capital
Contributions" or that are permitted under Section 7.1(d).
"Inventory" means all present and future
inventory in which Borrower has any interest, including goods
held for sale, license, or lease or to be furnished under a
contract of service and all of Borrower's present and future
raw materials, work in process, finished goods, and packing
and shipping materials, wherever located.
"Inventory Advance Rate" means 25%; provided,
however, that the Inventory Advance Rate shall at no time
exceed the quotient, expressed as a percentage, equal to 100%
of the Liquidation Value based upon the most recent third
party appraisal of Borrower's Inventory located in the United
States conducted by an appraiser selected by Foothill, divided
by the value of Eligible Domestic Inventory on the date of
such appraisal.
"IRC" means the Internal Revenue Code of 1986,
as amended, and the regulations thereunder.
"L/C" has the meaning set forth in Section 2.2(a).
"L/C Guaranty" has the meaning set forth in Section 2.2(a).
"Letter of Credit" means an L/C or an L/C
Guaranty, as the context requires.
"Letter of Credit Usage" means the sum of (a)
the undrawn amount of Letters of Credit, plus (b) the amount
of unreimbursed drawings under Letters of Credit.
"Lien" means any interest in property securing
an obligation owed to, or a claim by, any Person other than
the owner of the property, whether such interest shall be
based on the common law, statute, or contract, whether such
interest shall be recorded or perfected, and whether such
interest shall be contingent upon the occurrence of some
future event or events or the existence of some future
circumstance or circumstances, including the lien or security
interest arising from a mortgage, deed of trust, encumbrance,
pledge, hypothecation, assignment, deposit arrangement,
security agreement, adverse claim or charge, conditional sale
or trust receipt, or from a lease, consignment, or bailment
for security purposes and also including reservations,
exceptions, encroachments, easements, rights-of-way,
covenants, conditions, restrictions, leases, and other title
exceptions and encumbrances affecting Real Property.
"Liquidation Value" means, in respect of any
item of Inventory or Equipment, the net orderly liquidation
value of such item of Inventory or Equipment as determined by
a qualified appraiser selected by Foothill.
"Loan Account" has the meaning set forth in Section 2.10.
"Loan Documents" means this Agreement, the
Disbursement Letter, the Letters of Credit, the Lockbox
Agreements, the Mortgages, the Aircraft Security Agreement,
the Copyright Security Agreement, the Patent Security
Agreement, the Pledge Agreement, the Trademark Security
Agreement, the VCOC Letter, any note or notes executed by
Borrower and payable to Foothill, and any other agreement
entered into, now or in the future, in connection with this
Agreement.
"Lockbox Account" shall mean a depositary
account established pursuant to one of the Lockbox Agreements.
"Lockbox Agreements" means those certain
Lockbox Operating Procedural Agreements and those certain
Depository Account Agreements, in form and substance
reasonably satisfactory to Foothill, each of which is among
Borrower, Foothill, and one of the Lockbox Banks.
"Lockbox Banks" means Citibank, N.A., First
National Bank of Chicago, and NationsBank of Georgia.
"Lockboxes" has the meaning set forth in Section 2.7.
"M&S" means M&S Computing Investments, Inc., a
Delaware corporation.
"Material Adverse Change" means (a) a material
adverse change in the business, operations, results of
operations, assets, liabilities or condition of Borrower, (b)
the material impairment of Borrower's ability to perform its
obligations under the Loan Documents to which it is a party or
of Foothill to enforce the Obligations or to realize upon the
Collateral, (c) a material adverse effect on the value of the
Collateral or the amount that Foothill would be likely to
receive (after giving consideration to delays in payment and
costs of enforcement) in the liquidation of such Collateral,
or (d) a material impairment of the priority of Foothill's
Liens with respect to the Collateral; provided, however, that
the determination of any Material Adverse Change shall be made
after giving effect to the reserves, if any, created by
Foothill against the Borrowing Base, or the reduction, if any,
made by Foothill of the applicable advance rates based upon
the Borrowing Base, in each case, in respect of the event or
circumstance giving rise to such material adverse change,
material impairment, or material adverse effect.
"Maturity Date" has the meaning set forth in Section 3.4.
"Maximum Amount" means $100,000,000.
"Maximum Revolving Amount" means, as of any
date of determination, the result of (a) the Maximum Amount,
minus (b) the then outstanding principal balance of the Term Loan.
"Meadlock Note" means that certain promissory
note, dated May 1, 1996, made by ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ to the order
of Borrower in the original principal amount of approximately
$4,400,000.
"Mortgage Policies" means mortgagee title
insurance policies (or marked commitments to issue the same)
for the Real Property Collateral issued by a title insurance
company reasonably satisfactory to Foothill in amounts
reasonably satisfactory to Foothill.
"Mortgages" means one or more mortgages, deeds
of trust, or deeds to secure debt, executed by Borrower in
favor of Foothill, the form and substance of which shall be
reasonably satisfactory to Foothill, that encumber the Real
Property Collateral and the related improvements thereto.
"Multiemployer Plan" means a "multiemployer
plan" (as defined in Section 4001(a)(3) of ERISA) to which
Borrower, any of its Subsidiaries, or any ERISA Affiliate has
contributed, or was obligated to contribute, within the past
six years.
"Negotiable Collateral" means all of Borrower's
present and future letters of credit, notes (including the
Meadlock Note), drafts, instruments, investment property,
security entitlements, securities (including the shares of
stock of Subsidiaries of Borrower, but expressly excluding the
Excluded Foreign Subsidiary Securities and the Bentley Equity
Interests), documents, personal property leases (wherein
Borrower is the lessor), chattel paper, and Borrower's Books
relating to any of the foregoing.
"Net Worth" means, as of any date of
determination, Borrower's total stockholder's equity.
"Obligations" means all loans, Advances, debts,
principal, interest (including any interest that, but for the
provisions of the Bankruptcy Code, would have accrued),
contingent reimbursement obligations under any outstanding
Letters of Credit, premiums (including Early Termination
Premiums), liabilities (including all amounts charged to
Borrower's Loan Account pursuant hereto), obligations, fees,
charges, costs, or Foothill Expenses (including any fees or
expenses that, but for the provisions of the Bankruptcy Code,
would have accrued), lease payments, guaranties, covenants,
and duties owing by Borrower to Foothill of any kind and
description (whether pursuant to or evidenced by the Loan
Documents or pursuant to any other agreement between Foothill
and Borrower, and irrespective of whether for the payment of
money), whether direct or indirect, absolute or contingent,
due or to become due, now existing or hereafter arising, and
including any debt, liability, or obligation owing from
Borrower to others that Foothill may have obtained by
assignment or otherwise, and further including all interest
not paid when due and all Foothill Expenses that Borrower is
required to pay or reimburse by the Loan Documents, by law, or
otherwise.
"Obligor" means any of Borrower or any of its Subsidiaries
party to one or more Loan Documents, including M&S and IG Delaware.
"Optronics Division" means the Optronics
Division of Borrower.
"Optronics Accounts" means Accounts created by
the Optronics Division.
"Ordinary Course Dispositions" means Asset
Dispositions of (a) Inventory in the ordinary course of
business, (b) Equipment that is substantially worn, damaged,
or obsolete in the ordinary course of business, (c) Equipment
that is a so-called "internal equipment item" that is replaced
by Borrower in the ordinary course of business and consistent
with past practices with another such item of equal or greater
value, and (d) Equipment that is a so-called "demonstration
item" in the ordinary course of business and consistent with
past practices.
"Overadvance" has the meaning set forth in Section 2.5.
"Participant" means any Person to which
Foothill has sold a participation interest in its rights under
the Loan Documents.
"Patent Security Agreement" means a Patent
Security Agreement, in the form of Exhibit P-1 attached
hereto, dated as of even date herewith, between Borrower and
Foothill.
"Pay-Off Letter" means a letter, in form and
substance reasonably satisfactory to Foothill, from Existing
Lender respecting the amount necessary to repay in full all of
the obligations of Borrower owing to Existing Lender and
obtain a termination or release of all of the Liens existing
in favor of Existing Lender in and to the properties or assets
of Borrower.
"PBGC" means the Pension Benefit Guaranty
Corporation as defined in Title IV of ERISA, or any successor thereto.
"Permitted AnaTech Dispositions" means, subject
to the prior or concurrent satisfaction of the Release
Condition therefor, Asset Dispositions of the assets of the
AnaTech Division, free and clear of Foothill's Lien thereon
(other than Foothill's Lien in the proceeds of such Asset Disposition).
"Permitted Appraised Assets Dispositions"
means, subject to the prior or concurrent satisfaction of the
Release Condition therefor, Asset Dispositions of Appraised
Assets (in the ordinary course of Borrower's business and
consistent with past practices), free and clear of Foothill's
Lien thereon (other than Foothill's Lien in the proceeds of
such Asset Disposition), so long as: (a) Borrower replaces the
Appraised Asset that is the subject of such Asset Disposition
(the "Disposed Appraised Asset") with a newly acquired item of
Equipment of equal or greater comparable value than the
appraised value of the Disposed Appraised Asset set forth in
the most recent appraisal thereof and reports such Asset
Disposition and replacement pursuant to Section 6.2; and (b)
in the case of any single Asset Disposition or series of
integrated Asset Dispositions involving one or more Disposed
Appraised Assets with an aggregate appraised value of $100,000
or more, the chief financial officer of Borrower shall deliver
to Foothill a certificate, in form and substance satisfactory
to Foothill, demonstrating in reasonable detail that the value
of such newly acquired item or items of Equipment are of equal
or greater comparable value than the appraised value of the
relevant Disposed Appraised Asset set forth in the most recent
appraisal thereof.
"Permitted Bentley Disposition" means, subject
to the prior or concurrent satisfaction of the Release
Condition therefor, Asset Dispositions of the Bentley Equity Interests.
"Permitted Bestinfo Disposition" means, subject
to the prior or concurrent satisfaction of the Release
Condition therefor, Asset Dispositions of the capital stock of
Bestinfo, free and clear of Foothill's Lien thereon (other
than Foothill's Lien in the proceeds of such Asset
Disposition).
"Permitted Disposition" means (a) Ordinary
Course Dispositions, (b) Permitted Optronics Dispositions,
Permitted AnaTech Dispositions, the Permitted Bentley
Disposition, and the Permitted Bestinfo Disposition, (c) the
Reston Sale/Leaseback, (d) subject to the prior or concurrent
satisfaction of the applicable Release Condition therefor,
Asset Dispositions of the assets that are the subject of
Permitted Toehold Investments and Permitted Other Investments,
(e) Permitted Appraised Assets Dispositions, and (f) subject
to the prior or concurrent satisfaction of the applicable
Release Condition therefor, other Asset Dispositions (but
excluding Asset Dispositions of Equipment constituting
Appraised Assets) not in the ordinary course of Borrower's
business that do not exceed, on a book value basis, $1,000,000
in the aggregate in any fiscal year and do not exceed, on a
book value basis, $250,000 in any one transaction or series of
related transactions.
"Permitted Investments" means: (a) Permitted
Ordinary Course Investments; (b) Permitted Repayment
Investments; (c) Permitted Toehold Investments; (d) Permitted
Subsidiary Loans and Capital Contributions; and (e) Permitted
Other Investments.
"Permitted Liens" means (a) Liens held by
Foothill, (b) Liens for unpaid taxes that either (i) are not
yet due and payable or (ii) are the subject of Permitted
Protests, (c) Liens set forth on Schedule P-1, (d) purchase
money Liens in respect of Equipment and the interests of
lessors under operating leases and of lessors under capital
leases to the extent that the acquisition or lease of the
underlying asset is permitted under Section 7.21 and so long
as the Lien only attaches to the asset purchased or acquired
and only secures the purchase price of the asset, (e) Liens
arising by operation of law in favor of warehousemen,
landlords, carriers, mechanics, materialmen, laborers, or
suppliers, incurred in the ordinary course of business of
Borrower and not in connection with the borrowing of money,
and which Liens either (i) are for sums not yet due and
payable, or (ii) are the subject of Permitted Protests, (f)
Liens arising from deposits made in connection with obtaining
worker's compensation or other unemployment insurance, (g)
Liens or deposits to secure performance of bids, tenders, or
leases (to the extent permitted under this Agreement),
incurred in the ordinary course of business of Borrower and
not in connection with the borrowing of money, (h) Liens
arising by reason of security for surety or appeal bonds in
the ordinary course of business of Borrower, (i) Liens of or
resulting from any judgment or award that would not have a
Material Adverse Effect and as to which the time for the
appeal or petition for rehearing of which has not yet expired,
or in respect of which Borrower is in good faith prosecuting
an appeal or proceeding for a review, and in respect of which
a stay of execution pending such appeal or proceeding for
review has been secured, (j) Liens with respect to the Real
Property Collateral that are exceptions to the commitments for
title insurance issued in connection with the Mortgages, as
accepted by Foothill, (k) with respect to any Real Property
that is not part of the Real Property Collateral, easements,
rights of way, zoning and similar covenants and restrictions,
and similar encumbrances that customarily exist on properties
of Persons engaged in similar activities and similarly
situated and that in any event do not materially interfere
with or impair the use or operation of the Collateral by
Borrower or the value of Foothill's Lien thereon or therein,
or materially interfere with the ordinary conduct of the
business of Borrower, (l) software escrow arrangements entered
into in the ordinary course of business consistent with past
practice, and (m) if and to the extent required under the
Payoff Letter, cash collateral pledged to Existing Lender to
secure the outstanding obligations, as of the Closing Date,
under letters of credit issued by Existing Lender or the
financial institutions for which it is acting as
representative in respect of the Indebtedness that is the
subject of the Payoff Letter.
"Permitted Optronics Dispositions" means,
subject to the prior or concurrent satisfaction of the Release
Condition therefor, (a) Asset Dispositions of the assets of
the Optronics Division, free and clear of Foothill's Lien
thereon (other than Foothill's Lien in the proceeds of such
Asset Disposition) to any Person other than a Subsidiary of
Borrower, or (b) the capital contribution by Borrower to
Scansystems of the operating assets of the Optronics Division.
"Permitted Ordinary Course Investment" means
(a) direct obligations of, or obligations the principal of and
interest on which are unconditionally guaranteed by, the
United States of America with a maturity not exceeding one
year, (b) certificates of deposit, time deposits, banker's
acceptances or other instruments of a bank having a combined
capital and surplus of not less than $500,000,000 with a
maturity not exceeding one year, (c) investments in commercial
paper rated at least A-1 or P-1 maturing within one year after
the date of acquisition thereof, (d) money market accounts
maintained at a bank having combined capital and surplus of no
less than $500,000,000 or at another financial institution
reasonably satisfactory to Foothill, (e) loans and advances to
officers and employees of Borrower (exclusive of loans
evidenced by the Meadlock Note) in the ordinary course of
business in an aggregate amount at any one time outstanding
not to exceed $3,000,000, (f) loans evidenced by the Meadlock
Note, (g) investments in negotiable instruments for
collection, (h) advances in connection with purchases of goods
or services in the ordinary course of business, and (i)
deposits required in connection with leases.
"Permitted Other Investments" means the equity
investments of Borrower as of the Closing Date identified on Schedule P-2.
"Permitted Protest" means the right of Borrower
to protest any Lien other than any such Lien that secures the
Obligations, tax (other than payroll taxes or taxes that are
the subject of a United States federal tax lien), or rental
payment, provided that (a) a reserve with respect to such
obligation is established on the books of Borrower in
accordance with GAAP (or, if higher, in an amount that
Foothill in good faith and in its reasonable credit judgment
believes to be appropriate under the circumstances), (b) any
such protest is instituted and diligently prosecuted by
Borrower in good faith, and (c) Foothill is satisfied that,
while any such protest is pending, there will be no impairment
of the enforceability, validity, or priority of any of the
Liens of Foothill in and to the Collateral.
"Permitted Repayment Investment" means (a) the
contribution or loan by Borrower to IG Benelux of
approximately $15,000,000 to enable IG Benelux to repay, in
full, all of its indebtedness owing to the IG Benelux Existing
Lender, or (b) subject to the timely satisfaction of the
condition set forth in Section 3.3(f), the contribution or
loan by Borrower to IG Australia of approximately $24,000,000
to enable IG Australia to repay, in full, all of its
indebtedness owing to the IG Australia Existing Lender.
"Permitted Subsidiary Loans and Capital
Contributions" means loans and capital contributions made
after the Closing Date by Borrower to any Subsidiary of
Borrower; provided, however, that all such loans and capital
contributions made by Borrower shall not exceed, in the
aggregate, (a) $20,000,000 during the 1997 calendar year, (b)
$25,000,000 during the 1998 calendar year, and (c) $30,000,000
during the 1999 calendar year.
"Permitted Toehold Investment" means the
acquisition of an equity interest in a Person other than a
Subsidiary of Borrower (but not to exceed 10% of all of the
issued and outstanding equity interests of such Person on a
fully diluted basis) so long as (a) no Default or Event of
Default shall have occurred and be continuing or would result
from the consummation of the proposed acquisition, (b) the
Person, in whom the equity interest is being acquired, is
engaged in the same business as that of Borrower or any of its
Subsidiaries or in a business reasonably related thereto, (c)
the relevant equity interest being acquired in such Person is
acquired directly by Borrower, (d) to the extent required
under Section 4.2, Borrower shall have executed and delivered
a supplement to the Pledge Agreement and shall have perfected
Foothill's security interest in the acquired equity interest,
and (e) the aggregate amount expended by Borrower in respect
of all such Permitted Toehold Investments does not exceed
$1,000,000 in any fiscal year.
"Person" means and includes natural persons,
corporations, limited liability companies, limited
partnerships, general partnerships, limited liability
partnerships, joint ventures, trusts, land trusts, business
trusts, or other organizations, irrespective of whether they
are legal entities, and governments and agencies and political
subdivisions thereof.
"Personal Property Collateral" means all
Collateral other than the Real Property Collateral.
"Plan" means any employee benefit plan,
program, or arrangement maintained or contributed to by
Borrower or with respect to which it may incur liability.
"Pledge Agreement" means a Pledge Agreement, in
the form of Exhibit P-2 attached hereto, dated as of even date
herewith, among Borrower, IG Delaware, M&S, and Foothill.
"Real Property" means any estates or interests
in real property now owned or hereafter acquired by Borrower.
"Real Property Collateral" means the parcel or
parcels of Real Property and the related improvements thereto
now owned by Borrower and identified on Schedule R-1, and any
Real Property hereafter acquired by Borrower.
"Reference Rate" means the variable rate of
interest, per annum, most recently announced by Norwest Bank
Minnesota, National Association, or any successor thereto, as
its "base rate," irrespective of whether such announced rate
is the best rate available from such financial institution.
"Release Condition" means, in respect of any
Asset Disposition, that (a) no Default or Event of Default has
occurred and is continuing or would result therefrom, and (b)
Borrower is receiving at least fair value (as determined in
accordance with Section 3439 of the California Civil Code, as
amended) for the property or assets that are the subject of
the Asset Disposition.
"Reportable Event" means any of the events
described in Section 4043(c) of ERISA or the regulations
thereunder other than a Reportable Event as to which the
provision of 30 days notice to the PBGC is waived under
applicable regulations.
"Reserve" means, as of any date of
determination, an amount equal the product of (a) $238,000
times (b) the number of months separating such date from the
Closing Date.
"Reston Property" means the Real Property (and
related improvements thereto) of Borrower located in or about
Reston, Virginia.
"Reston Sale/Leaseback" means the sale and
lease-back transaction in respect of the Reston Property.
"Retiree Health Plan" means an "employee
welfare benefit plan" within the meaning of Section 3(1) of
ERISA that provides benefits to individuals after termination
of their employment, other than as required by Section 601 of
ERISA.
"Scansystems" means Scansystems, Inc., a Delaware corporation.
"Securities Account" means a "securities
account" as that term is defined in Section 8-501 of official
text of the Uniform Commercial Code and as defined in
California Senate ▇▇▇▇ 1591 which was approved by the Governor
on September 14, 1996 and will be effective on January 1, 1997.
"Solvent" means, with respect to any Person on
a particular date, that on such date (a) at fair valuations,
all of the properties and assets of such Person are greater
than the sum of the debts, including contingent liabilities,
of such Person, (b) the present fair salable value of the
properties and assets of such Person is not less than the
amount that will be required to pay the probable liability of
such Person on its debts as they become absolute and matured,
(c) such Person is able to realize upon its properties and
assets and pay its debts and other liabilities, contingent
obligations and other commitments as they mature in the normal
course of business, (d) such Person does not intend to, and
does not believe that it will, incur debts beyond such
Person's ability to pay as such debts mature, and (e) such
Person is not engaged in business or a transaction, and is not
about to engage in business or a transaction, for which such
Person's properties and assets would constitute unreasonably
small capital after giving due consideration to the prevailing
practices in the industry in which such Person is engaged. In
computing the amount of contingent liabilities at any time, it
is intended that such liabilities will be computed at the
amount that, in light of all the facts and circumstances
existing at such time, represents the amount that reasonably
can be expected to become an actual or matured liability.
"Subsidiary" of a Person means a corporation,
partnership, limited liability company, or other entity in
which that Person directly or indirectly owns or controls the
shares of stock or other ownership interests having ordinary
voting power to elect a majority of the board of directors (or
appoint other comparable managers) of such corporation,
partnership, limited liability company, or other entity.
Anything to the contrary notwithstanding, Bentley Systems,
Inc. shall not be deemed to be a Subsidiary of Borrower.
"Term Loan" has the meaning set forth in Section 2.3.
"Trademark Security Agreement" means a
Trademark Security Agreement, in the form of Exhibit T-1
attached hereto, dated as of even date herewith, between
Borrower and Foothill.
"Triggering Event" means any of (a) the
occurrence and continuation of an Event of Default, or (b)
Foothill deems itself insecure.
"Unbilled Accounts" means Domestic Accounts
that are fully earned by performance, but have not yet been
billed to the Account Debtor and that, as of any date of
determination, arise from the sale of goods or rendition of
services within the prior 60 days.
"United States" means the United States of
America, or any department, agency, or instrumentality of any
of the foregoing.
"VCOC Letter" means a letter agreement between
Borrower and Foothill's Participants that meets the Venture
Capital Operating Company requirements and that is in
substantially the form of Exhibit V-1.
"VeriBest" means VeriBest, Inc., a Delaware corporation.
"Voidable Transfer" has the meaning set forth in Section 15.8.
1.2 Accounting Terms. All accounting terms not
specifically defined herein shall be construed in accordance
with GAAP. When used herein, the term "financial statements"
shall include the notes and schedules thereto. Whenever the
term "Borrower" is used in respect of a financial covenant or
a related definition, it shall be understood to mean Borrower
on a consolidated basis unless the context clearly requires otherwise.
1.3 Code. Any terms used in this Agreement that are
defined in the Code shall be construed and defined as set
forth in the Code unless otherwise defined herein.
1.4 Construction. Unless the context of this Agreement
clearly requires otherwise, references to the plural include
the singular, references to the singular include the plural,
the term "including" is not limiting, and the term "or" has,
except where otherwise indicated, the inclusive meaning
represented by the phrase "and/or." The words "hereof,"
"herein," "hereby," "hereunder," and similar terms in this
Agreement refer to this Agreement as a whole and not to any
particular provision of this Agreement. An Event of Default
shall "continue" or be "continuing" until such Event of
Default has been waived in writing by Foothill. Section,
subsection, clause, schedule, and exhibit references are to
this Agreement unless otherwise specified. Any reference in
this Agreement or in the Loan Documents to this Agreement or
any of the Loan Documents shall include all alterations,
amendments, changes, extensions, modifications, renewals,
replacements, substitutions, and supplements, thereto and
thereof, as applicable.
1.5 Schedules and Exhibits. All of the schedules and
exhibits attached to this Agreement shall be deemed
incorporated herein by reference.
2. LOAN AND TERMS OF PAYMENT.
2.1 Revolving Advances.
(a) Subject to the terms and conditions of this
Agreement, Foothill agrees to make advances ("Advances") to
Borrower in an amount outstanding not to exceed at any one
time the lesser of (i) the Maximum Revolving Amount less the
Letter of Credit Usage, or (ii) the Borrowing Base less the
Letter of Credit Usage. For purposes of this Agreement,
"Borrowing Base", as of any date of determination, shall mean
the result of:
(x) the lesser of (i) the result of
(A) 80% of Eligible Domestic Accounts, plus (B) the
lowest of (1) 80% of Eligible Unbilled Accounts, (2)
40% of the amount of credit availability created by
this clause (x), and (3) $20,000,000, minus (C) the
amount, if any, of the Dilution Reserve, and (ii) an
amount equal to the Collections with respect to the
Accounts of Borrower for the immediately preceding
60 day period, plus
(y) the lowest of (i) $30,000,000,
(ii) the product of (A) the Inventory Advance Rate
times (B) the value (calculated at the lower of cost
or market) of Eligible Domestic Inventory, and (iii)
30% of the amount of credit availability created by
clause (x) above, minus
(z) the sum of (i) prior to the full
satisfaction of the condition subsequent set forth
in Section 3.3(b), $20,000,000, and (ii) the Reserve.
(b) Anything to the contrary in Section 2.1(a) above
notwithstanding, Foothill may create reserves against or
reduce its advance rates based upon Eligible Domestic
Accounts, Eligible Unbilled Accounts, or Eligible Domestic
Inventory without declaring an Event of Default if it
determines in good faith and in its reasonable credit judgment
that there has occurred a Material Adverse Change.
(c) Foothill shall have the right to have the Inventory
reappraised by a qualified appraiser selected by Foothill from
time to time after the Closing Date for the purpose of
redetermining the Liquidation Value of the Inventory. In the
absence of the occurrence and continuation of an Event of
Default, such appraisals shall occur annually.
(d) Foothill shall have no obligation to make Advances
hereunder to the extent they would cause the outstanding
Obligations (other than under the Term Loan) to exceed the
Maximum Revolving Amount.
(e) Amounts borrowed pursuant to this Section 2.1 may be
repaid and, subject to the terms and conditions of this
Agreement, reborrowed at any time during the term of this Agreement.
2.2 Letters of Credit.
(a) Subject to the terms and conditions of this
Agreement, Foothill agrees to issue letters of credit for the
account of Borrower (each, an "L/C") or to issue guarantees of
payment (each such guaranty, an "L/C Guaranty") with respect
to letters of credit issued by an issuing bank for the account
of Borrower. Foothill shall have no obligation to issue a
Letter of Credit if any of the following would result:
(i) the Letter of Credit Usage
would exceed the Borrowing Base less the amount of
outstanding Advances, or
(ii) the Letter of Credit Usage
would exceed the lower of (y) the Maximum Revolving
Amount less the amount of outstanding Advances, or
(z) $60,000,000, or
(iii) the outstanding Obligations
(other than under the Term Loan) would exceed the
Maximum Revolving Amount.
Borrower and Foothill acknowledge and agree that certain of
the letters of credit that are to be the subject of L/C
Guarantees may be outstanding on the Closing Date. Each
Letter of Credit shall have an expiry date no later than 60
days prior to the date on which this Agreement is scheduled to
terminate under Section 3.4 and all such Letters of Credit
shall be in form and substance acceptable to Foothill in its
sole discretion. If Foothill is obligated to advance funds
under a Letter of Credit, Borrower immediately shall reimburse
such amount to Foothill and, in the absence of such
reimbursement, the amount so advanced immediately and
automatically shall be deemed to be an Advance hereunder and,
thereafter, shall bear interest at the rate then applicable to
Advances under Section 2.6.
(b) Borrower hereby agrees to indemnify, save, defend,
and hold Foothill harmless from any loss, cost, expense, or
liability, including payments made by Foothill, expenses, and
reasonable attorneys fees incurred by Foothill arising out of
or in connection with any Letter of Credit. Borrower agrees
to be bound by the issuing bank's regulations and
interpretations of any Letters of Credit guarantied by
Foothill and opened to or for Borrower's account or by
Foothill's interpretations of any L/C issued by Foothill to or
for Borrower's account, even though this interpretation may be
different from Borrower's own, and Borrower understands and
agrees that Foothill shall not be liable for any error,
negligence, or mistake, whether of omission or commission, in
following Borrower's instructions or those contained in the
Letter of Credit or any modifications, amendments, or
supplements thereto. Borrower understands that the L/C
Guarantees may require Foothill to indemnify the issuing bank
for certain costs or liabilities arising out of claims by
Borrower against such issuing bank. Borrower hereby agrees to
indemnify, save, defend, and hold Foothill harmless with
respect to any loss, cost, expense (including reasonable
attorneys fees), or liability incurred by Foothill under any
L/C Guaranty as a result of Foothill's indemnification of any
such issuing bank.
(c) Borrower hereby authorizes and directs any bank that
issues a letter of credit guaranteed by Foothill to deliver to
Foothill all instruments, documents, and other writings and
property received by the issuing bank pursuant to such letter
of credit, and to accept and rely upon Foothill's instructions
and agreements with respect to all matters arising in
connection with such letter of credit and the related
application. Borrower may or may not be the "applicant" or
"account party" with respect to such letter of credit.
(d) Any and all charges, commissions, fees, and costs
incurred by Foothill relating to the letters of credit
guaranteed by Foothill shall be considered Foothill Expenses
for purposes of this Agreement and immediately shall be
reimbursable by Borrower to Foothill.
(e) Immediately upon the termination of this Agreement,
Borrower agrees to either (i) provide cash collateral to be
held by Foothill in an amount equal to 102% of the maximum
amount of Foothill's obligations under Letters of Credit, or
(ii) cause to be delivered to Foothill releases of all of
Foothill's obligations under outstanding Letters of Credit.
At Foothill's discretion, any proceeds of Collateral received
by Foothill after the occurrence and during the continuation
of an Event of Default may be held as the cash collateral
required by this Section 2.2(e).
(f) If by reason of (i) any change in any applicable law,
treaty, rule, or regulation or any change in the
interpretation or application by any governmental authority of
any such applicable law, treaty, rule, or regulation, or (ii)
compliance by the issuing bank or Foothill with any direction,
request, or requirement (irrespective of whether having the
force of law) of any governmental authority or monetary
authority including, without limitation, Regulation D of the
Board of Governors of the Federal Reserve System as from time
to time in effect (and any successor thereto):
(A) any reserve, deposit, or similar requirement is or
shall be imposed or modified in respect of any Letters of
Credit issued hereunder, or
(B) there shall be imposed on the issuing bank or
Foothill any other condition regarding any letter of credit,
or Letter of Credit, as applicable, issued pursuant hereto;
and the result of the foregoing is to increase, directly or
indirectly, the cost to the issuing bank or Foothill of
issuing, making, guaranteeing, or maintaining any letter of
credit, or Letter of Credit, as applicable, or to reduce the
amount receivable in respect thereof by such issuing bank or
Foothill, then, and in any such case, Foothill may, at any
time within a reasonable period after the additional cost is
incurred or the amount received is reduced, notify Borrower,
and Borrower shall pay on demand such amounts as the issuing
bank or Foothill may specify to be necessary to compensate the
issuing bank or Foothill for such additional cost or reduced
receipt, together with interest on such amount from the date
of such demand until payment in full thereof at the rate set
forth in Section 2.6(a)(i) or (c)(i), as applicable. The
determination by the issuing bank or Foothill, as the case may
be, of any amount due pursuant to this Section 2.2(f), as set
forth in a certificate setting forth the calculation thereof
in reasonable detail, shall, in the absence of manifest or
demonstrable error, be final and conclusive and binding on all
of the parties hereto.
2.3 Term Loan. Foothill has agreed to make a term loan
(the "Term Loan") to Borrower in the original principal amount
of $20,000,000. The outstanding principal balance and all
accrued and unpaid interest under the Term Loan shall not be
due and payable until the earlier to occur of (a) the Maturity
Date, and (b) the date of termination of this Agreement,
whether by its terms, by acceleration, or otherwise. The
unpaid principal balance of the Term Loan may not be prepaid
in whole or in part. All amounts outstanding under the Term
Loan shall constitute Obligations.
2.4 [Intentionally omitted].
2.5 Overadvances. If, at any time or for any reason,
the amount of Obligations owed by Borrower to Foothill
pursuant to Sections 2.1 and 2.2 is greater than either the
Dollar or percentage limitations set forth in Sections 2.1 or
2.2 (an "Overadvance"), Borrower immediately shall pay to
Foothill, in cash, the amount of such excess to be used by
Foothill first, to repay Advances outstanding under Section
2.1 and, thereafter, to be held by Foothill as cash collateral
to secure Borrower's obligation to repay Foothill for all
amounts paid pursuant to Letters of Credit.
2.6 Interest and Letter of Credit Fees: Rates,
Payments, and Calculations.
(a) Interest Rate. Except as provided in clause (b)
below, all Obligations (except for undrawn Letters of Credit)
shall bear interest at a per annum rate of 0.625 percentage
points above the Reference Rate.
(b) Letter of Credit Fee. Borrower shall pay Foothill a
fee (in addition to the charges, commissions, fees, and costs
set forth in Section 2.2(d)) equal to 1.0% per annum times the
aggregate undrawn amount of all outstanding Letters of Credit.
(c) Default Rate. Upon the occurrence and during the
continuation of an Event of Default, all Obligations (except
for undrawn Letters of Credit) shall bear interest at a per
annum rate equal to 3.625 percentage points above the
Reference Rate, and (ii) the Letter of Credit fee provided in
Section 2.6(b) shall be increased to 4.0% per annum times the
amount of the undrawn Letters of Credit that were outstanding
during the immediately preceding month.
(d) Minimum Interest. In no event shall the rate of
interest chargeable hereunder for any day be less than 7.0%
per annum. To the extent that interest accrued hereunder at
the rate set forth herein would be less than the foregoing
minimum daily rate, the interest rate chargeable hereunder for
such day automatically shall be deemed increased to the minimum rate.
(e) Payments. Interest and Letter of Credit fees
payable hereunder shall be due and payable, in arrears, on the
first day of each month during the term hereof. Borrower
hereby authorizes Foothill, at its option, without prior
notice to Borrower, to charge such interest and Letter of
Credit fees, all Foothill Expenses (as and when incurred), the
charges, commissions, fees, and costs provided for in Section
2.2(d) (as and when accrued or incurred), the fees and charges
provided for in Section 2.11 (as and when accrued or
incurred), and all installments or other payments due under
the Term Loan or any Loan Document to Borrower's Loan Account,
which amounts thereafter shall accrue interest at the rate
then applicable to Advances hereunder. Any interest not paid
when due shall be compounded and shall thereafter accrue
interest at the rate then applicable to Advances hereunder.
(f) Computation. The Reference Rate as of the date of
this Agreement is 8.25% per annum. In the event the Reference
Rate is changed from time to time hereafter, the applicable
rate of interest hereunder automatically and immediately shall
be increased or decreased by an amount equal to such change in
the Reference Rate. All interest and fees chargeable under
the Loan Documents shall be computed on the basis of a 360 day
year for the actual number of days elapsed.
(g) Intent to Limit Charges to Maximum Lawful Rate. In no
event shall the interest rate or rates payable under this
Agreement, plus any other amounts paid in connection herewith,
exceed the highest rate permissible under any law that a court
of competent jurisdiction shall, in a final determination,
deem applicable. Borrower and Foothill, in executing and
delivering this Agreement, intend legally to agree upon the
rate or rates of interest and manner of payment stated within
it; provided, however, that, anything contained herein to the
contrary notwithstanding, if said rate or rates of interest or
manner of payment exceeds the maximum allowable under
applicable law, then, ipso facto as of the date of this
Agreement, Borrower is and shall be liable only for the
payment of such maximum as allowed by law, and payment
received from Borrower in excess of such legal maximum,
whenever received, shall be applied to reduce the principal
balance of the Obligations to the extent of such excess.
2.7 Collection of Accounts. Borrower shall at all times
maintain lockboxes (the "Lockboxes") and, immediately after
the Closing Date, shall instruct all Account Debtors with
respect to the Accounts, General Intangibles, and Negotiable
Collateral of Borrower to remit all Collections in respect
thereof to such Lockboxes. Borrower, Foothill, and the
Lockbox Banks shall enter into the Lockbox Agreements, which
among other things shall provide for the opening of a Lockbox
Account for the deposit of Collections at a Lockbox Bank.
Borrower agrees that all Collections and other amounts
received by Borrower from any Account Debtor or any other
source immediately upon receipt shall be deposited into a
Lockbox Account. No Lockbox Agreement or arrangement
contemplated thereby shall be modified by Borrower without the
prior written consent of Foothill. Upon the terms and subject
to the conditions set forth in the Lockbox Agreements, all
amounts received in each Lockbox Account shall be wired each
Business Day into an account (the "Foothill Account")
maintained by Foothill at a depositary selected by Foothill.
2.8 Crediting Payments; Application of Collections. The
receipt of any Collections by Foothill (whether from transfers
to Foothill by the Lockbox Banks pursuant to the Lockbox
Agreements or otherwise) immediately shall be applied
provisionally to reduce the Obligations outstanding under
Section 2.1, but shall not be considered a payment on account
unless such Collection item is a wire transfer of immediately
available federal funds and is made to the Foothill Account or
unless and until such Collection item is honored when
presented for payment. From and after the Closing Date,
Foothill shall be entitled to charge Borrower for 1 Business
Days of `clearance' or `float' at the rate set forth in
Section 2.6(a)(i) or Section 2.6(c)(i), as applicable, on all
Collections that are received by Foothill (regardless of
whether forwarded by the Lockbox Banks to Foothill, whether
provisionally applied to reduce the Obligations under Section
2.1, or otherwise). This across-the-board 1 Business Day
clearance or float charge on all Collections is acknowledged
by the parties to constitute an integral aspect of the pricing
of Foothill's financing of Borrower, and shall apply
irrespective of the characterization of whether receipts are
owned by Borrower or Foothill, and whether or not there are
any outstanding Advances, the effect of such clearance or
float charge being the equivalent of charging 1 Business Days
of interest on such Collections. Should any Collection item
not be honored when presented for payment, then Borrower shall
be deemed not to have made such payment, and interest shall be
recalculated accordingly. Anything to the contrary contained
herein notwithstanding, any Collection item shall be deemed
received by Foothill only if it is received into the Foothill
Account on a Business Day on or before 11:00 a.m. California
time. If any Collection item is received into the Foothill
Account on a non-Business Day or after 11:00 a.m. California
time on a Business Day, it shall be deemed to have been
received by Foothill as of the opening of business on the
immediately following Business Day.
2.9 Designated Account. Foothill is authorized to make
the Advances, the Letters of Credit, and the Term Loan under
this Agreement based upon telephonic or other instructions
received from anyone purporting to be an Authorized Person, or
without instructions if pursuant to Section 2.6(e). Borrower
agrees to establish and maintain the Designated Account with
the Designated Account Bank for the purpose of receiving the
proceeds of the Advances requested by Borrower and made by
Foothill hereunder. Unless otherwise agreed by Foothill and
Borrower, any Advance requested by Borrower and made by
Foothill hereunder shall be made to the Designated Account.
2.10 Maintenance of Loan Account; Statements of
Obligations. Foothill shall maintain an account on its books
in the name of Borrower (the "Loan Account") on which Borrower
will be charged with all Advances and the Term Loan made by
Foothill to Borrower or for Borrower's account, including,
accrued interest, Foothill Expenses, and any other payment
Obligations of Borrower. In accordance with Section 2.8, the
Loan Account will be credited with all payments received by
Foothill from Borrower or for Borrower's account, including
all amounts received in the Foothill Account from any Lockbox
Bank. Foothill shall render statements regarding the Loan
Account to Borrower, including principal, interest, fees, and
including an itemization of all charges and expenses
constituting Foothill Expenses owing, and such statements
shall be conclusively presumed to be correct and accurate and
constitute an account stated between Borrower and Foothill
unless, within 30 days after receipt thereof by Borrower,
Borrower shall deliver to Foothill written objection thereto
describing the error or errors contained in any such
statements.
2.11 Fees. Borrower shall pay to Foothill the following fees:
(a) Closing Fee. On the Closing Date, a closing fee of
$500,000;
(b) Unused Line Fee. On the first day of each month
after the Closing Date during the term of this Agreement, an
unused line fee in an amount equal to 0.25% per annum times
the Average Unused Portion of the Maximum Revolving Amount;
(c) Annual Facility Fee. On the Closing Date and each
anniversary of the Closing Date, an annual facility fee in an
amount equal to 0.15% of the Maximum Amount;
(d) Financial Examination, Documentation, and Appraisal
Fees. Foothill's customary fee of $650 per day per examiner,
plus out-of-pocket expenses for each financial analysis and
examination (i.e., audits) of Borrower performed by personnel
employed by Foothill; Foothill's customary appraisal fee of
$1,500 per day per appraiser, plus out-of-pocket expenses for
each appraisal of the Collateral performed by personnel
employed by Foothill; and, the actual charges paid or incurred
by Foothill if it elects to employ the services of one or more
third Persons to perform such financial analyses and
examinations (i.e., audits) of Borrower or to appraise the
Collateral; and
(e) Agency Fee. On the first day of each month after
the Closing Date during the term of this Agreement, an agency
fee in an amount equal to $12,500.
3. CONDITIONS; TERM OF AGREEMENT.
3.1 Conditions Precedent to the Initial Advance, and
Letter of Credit, and the Term Loan. The obligation of
Foothill to make the initial Advance, to issue the initial
Letter of Credit, or to make the Term Loan is subject to the
fulfillment, to the satisfaction of Foothill and its counsel,
of each of the following conditions on or before the Closing
Date:
(a) the Closing Date shall occur on or before January 17, 1997;
(b) Foothill shall have received confirmation of the
filing of its financing statements and fixture filings;
(c) Foothill shall have received each of the following
documents, duly executed, and each such document shall be in full force
and effect:
(1) if and to the extent available on or
before the Closing Date, the Lockbox Agreements;
(2) the Disbursement Letter;
(3) the Pay-Off Letter, together with UCC
termination statements and other documentation evidencing
the termination by Existing Lender of its Liens in and to
the properties and assets of Borrower and its Subsidiaries
and the termination of any lockbox or other dominion
account arrangements in favor of Existing Lender;
(4) either (y) the IG Australia Existing
Lender Pay-Off Letter, together with termination statements
and other documentation evidencing the termination by IG
Australia Existing Lender of its Liens in and to the
properties and assets of Borrower and its Subsidiaries, or
(z) satisfactory evidence of the consent of IG Australia
Existing Lender to the refinancing by Borrower of its
Indebtedness owed to Existing Lender pursuant hereto and
the transactions contemplated hereby;
(5) the Mortgage on the Huntsville Property,
and such Mortgage shall have been recorded in the office of
the county recorder for Madison County, Alabama; and, if
and to the extent available on or before the Closing Date,
a Mortgage Policy in respect of the Huntsville Property
assuring Foothill that the Mortgage on the Huntsville
Property is a valid and enforceable first priority mortgage
Lien on the Huntsville Property free and clear of all
defects and encumbrances except Permitted Liens, and such
Mortgage Policy shall otherwise be in form and substance
reasonably satisfactory to Foothill;
(6) the Aircraft Security Agreement;
(7) the Copyright Security Agreement;
(8) the Patent Security Agreement;
(9) the Trademark Security Agreement;
(10) the Pledge Agreement; and
(11) the VCOC Letter;
(d) if and to the extent available on or before the
Closing Date, Foothill shall have received the original
certificates representing or evidencing all of the Pledged
Shares (as defined in the Pledge Agreement), together with
stock powers or equivalent assignments with respect thereto
duly endorsed in blank;
(e) Foothill shall have received originals of the
Meadlock Note and the Intercompany Notes, together with
endorsements with respect thereto duly endorsed in blank;
(f) Foothill shall have received a certificate from the
Secretary of each Obligor attesting to the resolutions of such
Obligor's Board of Directors authorizing its execution,
delivery, and performance of the Loan Documents to which it is
a party and authorizing specific officers of such Obligor to
execute the same;
(g) Foothill shall have received copies of each
Obligor's Governing Documents, as amended, modified, or
supplemented to the Closing Date, certified by the Secretary
of such Obligor;
(h) Foothill shall have received a certificate of status
with respect to each Obligor, dated within 10 days of the
Closing Date, such certificate to be issued by the appropriate
officer of the jurisdiction of organization of such Obligor,
which certificate shall indicate that such Obligor is in good
standing in such jurisdiction;
(i) Foothill shall have received certificates of status
with respect to Borrower, each dated within 15 days of the
Closing Date, such certificates to be issued by the
appropriate officer of the jurisdictions in which its failure
to be duly qualified or licensed would constitute a Material
Adverse Change, which certificates shall indicate that
Borrower is in good standing in such jurisdictions;
(j) Foothill shall have received a certificate of
insurance, together with the endorsements thereto, as are
required by Section 6.10, the form and substance of which
shall be reasonably satisfactory to Foothill and its counsel;
(k) Foothill shall have received an opinion of the
Obligors' counsel in form and substance reasonably
satisfactory to Foothill in its sole discretion;
(l) after giving effect to the payment of fees due to
Foothill on or before the Closing Date and the payment of the
"Payoff Amount" (under and as defined in the Payoff Letter) to
the Existing Lender, the sum of Borrower's Availability plus
Borrower's unrestricted cash and cash equivalents shall not be
less than Twenty Million Dollars ($20,000,000);
(m) Foothill shall have received appraisals of the Real
Property Collateral and appraisals of the Equipment, in each
case satisfactory to Foothill;
(n) Foothill shall have completed "field surveys" and
location inspections of the Inventory, and the results of each
of them shall be satisfactory to Foothill;
(o) Foothill shall have completed reference checks
regarding key employees and executive officers of Borrower,
the results of which shall be satisfactory to Lender;
(p) Foothill shall have received satisfactory evidence
(which evidence may be in the form of a Certificate of the
chief accounting officer or the chief financial officer of
Borrower) that all tax returns required to be filed by
Borrower have been timely filed and all taxes upon Borrower or
its properties, assets, income, and franchises (including real
property taxes and payroll taxes) have been paid prior to
delinquency, except such taxes that are the subject of a
Permitted Protest; and
(q) all other documents and legal matters in connection
with the transactions contemplated by this Agreement shall
have been delivered, executed, or recorded and shall be in
form and substance reasonably satisfactory to Foothill and its
counsel.
3.2 Conditions Precedent to all Advances, all Letters of
Credit, and the Term Loan. The following shall be conditions
precedent to all Advances, all Letters of Credit, and the Term Loan hereunder:
(a) the representations and warranties contained in this
Agreement and the other Loan Documents shall be true and
correct in all respects on and as of the date of such
extension of credit, as though made on and as of such date
(except to the extent that such representations and warranties
relate solely to an earlier date);
(b) no Default or Event of Default shall have occurred
and be continuing on the date of such extension of credit, nor
shall either result from the making thereof; and
(c) no injunction, writ, restraining order, or other
order of any nature prohibiting, directly or indirectly, the
extending of such credit shall have been issued and remain in
force by any governmental authority against Borrower,
Foothill, or any of their Affiliates.
3.3 Condition Subsequent. As a condition subsequent to
initial closing hereunder, Borrower shall perform or cause to
be performed the following (the failure by Borrower to so
perform or cause to be performed constituting an Event of Default):
(a) within 30 days of the Closing Date, deliver to
Foothill the certified copies of the policies of insurance,
together with the endorsements thereto, as are required by
Section 6.10, the form and substance of which shall be
reasonably satisfactory to Foothill and its counsel.
(b) on or as soon as possible after the Closing Date
(and, in any event, within 30 days of the Closing Date):
(i) to the extent not available on or
before the Closing Date under Section 3.1, Foothill shall have
received a Mortgage Policy in respect of the Huntsville
Property assuring Foothill that the Mortgage on the Huntsville
Property is a valid and enforceable first priority mortgage
Lien on the Huntsville Property free and clear of all defects
and encumbrances except Permitted Liens, and such Mortgage
Policy shall otherwise be in form and substance reasonably
satisfactory to Foothill; and
(ii) Foothill shall have received a phase-
I environmental report and a real estate survey shall have
been completed with respect to the Huntsville Property and
copies thereof delivered to Foothill; the environmental
consultants and surveyors retained for such reports or
surveys, the scope of the reports or surveys, and the results
thereof shall be acceptable to Foothill in its sole
discretion; and
(iii) to the extent not available on or
before the Closing Date under Section 3.1, Foothill shall have
received the Lockbox Agreements, duly executed, and each such
document shall be in full force and effect.
(c) upon the request of Foothill (if ever) after the
Closing Date, within 60 days after the date of such request:
(i) the Mortgage on the Chelmsford
Property shall have been duly executed and delivered by
Borrower, and the same shall be in full force and effect, and
such Mortgage shall have been recorded in the office of the
county recorder for Middlesex County, Massachusetts;
(ii) Foothill shall have received
supplemental opinions of Borrower's counsel, in form and
substance satisfactory to Foothill in its sole discretion, in
respect of the Mortgage on the Chelmsford Property;
(iii) Foothill shall have received a
preliminary title report in respect of the Chelmsford Property
in form and substance reasonably satisfactory to Foothill; and
(iv) Foothill shall have received a phase-
I environmental report and a real estate survey shall have
been completed with respect to the Chelmsford Property and
copies thereof delivered to Foothill; the environmental
consultants and surveyors retained for such reports or
surveys, the scope of the reports or surveys, and the results
thereof shall be acceptable to Foothill in its sole
discretion.
(d) upon the request of Foothill (if ever) after the
Closing Date, within 30 days after the date of such request:
(i) a Mortgage on any Real Property
acquired by Borrower after the Closing Date shall have been
duly executed and delivered by Borrower, and the same shall be
in full force and effect, and such Mortgage shall have been
recorded in the office of the county recorder for the county
in which such Real Property is located;
(ii) Foothill shall have received
supplemental opinions of Borrower's counsel, in form and
substance satisfactory to Foothill in its sole discretion, in
respect of the Mortgage on such Real Property;
(iii) Foothill shall have received a
preliminary title report in respect of such Real Property in
form and substance reasonably satisfactory to Foothill; and
(iv) Foothill shall have received a phase-
I environmental report and a real estate survey shall have
been completed with respect to the such Real Property and
copies thereof delivered to Foothill; the environmental
consultants and surveyors retained for such reports or
surveys, the scope of the reports or surveys, and the results
thereof shall be acceptable to Foothill in its sole
discretion.
(e) in the event the Reston Sale/Leaseback is not
consummated within 180 days of the Closing Date:
(i) the Mortgage on the Reston Property
shall have been duly executed and delivered by Borrower, and
the same shall be in full force and effect, and such Mortgage
shall have been recorded in the office of the county recorder
for Fairfax County, Virginia;
(ii) Foothill shall have received
supplemental opinions of Borrower's counsel, in form and
substance satisfactory to Foothill in its sole discretion, in
respect of the Mortgage on the Reston Property;
(iii) Foothill shall have received a
preliminary title report in respect of the Reston Property in
form and substance reasonably satisfactory to Foothill; and
(iv) Foothill shall have received a phase-
I environmental report and a real estate survey shall have
been completed with respect to the Reston Property and copies
thereof delivered to Foothill; the environmental consultants
and surveyors retained for such reports or surveys, the scope
of the reports or surveys, and the results thereof shall be
acceptable to Foothill in its sole discretion.
(f) within 60 days of either (i) the date that Borrower
makes the Permitted Repayment Investment in respect of the
indebtedness of IG Australia owing to the IG Australia
Existing Lender or (ii) one or more Letters of Credit are
issued to IG Australia Existing Lender in support of the
indebtedness of IG Australia owing to IG Australia Existing
Lender and IG Australia Existing Lender releases its Lien on
the capital stock of IG Australia (in either case, the "IG
Australia Payoff Date"), execute and deliver an appropriate
supplement to the Pledge Agreement and deliver to Foothill
possession of the original stock certificates, respecting 65%
of the issued and outstanding shares of stock of IG Australia,
together with stock powers with respect thereto endorsed in
blank; provided, however, that to the extent, if any, that
such shares are required to be pledged to the holder of any
project financing indebtedness of IG Australia incurred after
the IG Australia Payoff Date as security for such
indebtedness, then, upon Borrower's written request therefor
and with Foothill's prior written consent thereto (not to be
unreasonably withheld), Foothill agrees to release its Lien on
such shares; provided further, that if such holder will permit
such subordination, then, notwithstanding the foregoing
proviso, Foothill's Lien on such shares will not be released
and will become a subordinate Lien pursuant to documentation
in form and substance reasonably satisfactory to Foothill and
such holder.
(g) within 90 days of the Closing Date, Foothill shall
have completed appraisals of the Equipment and the results of
such appraisals shall be satisfactory to Foothill.
(h) to the extent not available on or before the Closing
Date under Section 3.1, Foothill shall have received, within
30 days of the Closing Date, the original certificates
representing or evidencing all of the Pledged Shares (as
defined in the Pledge Agreement), together with stock powers
or equivalent assignments with respect thereto duly endorsed in blank;
(i) from and after the Closing Date up until the date
that is 90 days after the Closing Date, Borrower shall use its
continued best efforts to obtain Collateral Access Agreements
from lessors, warehousemen, bailees, and other third persons
as Foothill may require.
3.4 Term. This Agreement shall become effective upon
the execution and delivery hereof by Borrower and Foothill and
shall continue in full force and effect for a term ending on
January 7, 2000 (the "Maturity Date"). The foregoing
notwithstanding, Foothill shall have the right to terminate
its obligations under this Agreement immediately and without
notice upon the occurrence and during the continuation of an
Event of Default.
3.5 Effect of Termination. On the date of termination
of this Agreement, all Obligations (including contingent
reimbursement obligations of Borrower with respect to any
outstanding Letters of Credit) immediately shall become due
and payable without notice or demand. No termination of this
Agreement, however, shall relieve or discharge Borrower of
Borrower's duties, Obligations, or covenants hereunder, and
Foothill's continuing security interests in the Collateral
shall remain in effect until all Obligations have been fully
and finally discharged and Foothill's obligation to provide
additional credit hereunder is terminated.
3.6 Early Termination by Borrower. Borrower has the
option, at any time prior to the Maturity Date and upon 60
days prior written notice to Foothill, to terminate this
Agreement by paying to Foothill, in cash, the Obligations
(including an amount equal to 102% of the undrawn amount of
the Letters of Credit), in full, together with a premium (the
"Early Termination Premium") equal to (a) during the first 18
months after the Closing Date, the product of (i) 0.10% times
(ii) the Maximum Amount times (iii) the number of months
(including partial months) remaining until the Maturity Date,
(b) during the next 6 months, $1,000,000, and (c) thereafter, $500,000.
3.7 Termination Upon Event of Default. If Foothill
terminates this Agreement upon the occurrence of an Event of
Default that intentionally is caused by Borrower for the
purpose, in Foothill's reasonable judgment, of avoiding
payment of the Early Termination Premium provided in Section
3.7, then, in view of the impracticability and extreme
difficulty of ascertaining actual damages and by mutual
agreement of the parties as to a reasonable calculation of
Foothill's lost profits as a result thereof, Borrower shall
pay to Foothill upon the effective date of such termination, a
premium in an amount equal to the Early Termination Premium.
The Early Termination Premium shall be presumed to be the
amount of damages sustained by Foothill as the result of the
early termination and Borrower agrees that it is reasonable
under the circumstances currently existing. The Early
Termination Premium provided for in this Section 3.7 shall be
deemed included in the Obligations.
4. CREATION OF SECURITY INTEREST.
4.1 Grant of Security Interest. (a) Borrower hereby
grants to Foothill a continuing security interest in all
currently existing and hereafter acquired or arising Personal
Property Collateral in order to secure prompt repayment of any
and all Obligations and in order to secure prompt performance
by Borrower of each of its covenants and duties under the Loan
Documents. Foothill's security interests in the Personal
Property Collateral shall attach to all Personal Property
Collateral without further act on the part of Foothill or
Borrower. Anything contained in this Agreement or any other
Loan Document to the contrary notwithstanding, except for
Permitted Dispositions, Borrower has no authority, express or
implied, to dispose of any item or portion of the Personal
Property Collateral or the Real Property Collateral.
Concurrent with the consummation of any Permitted Disposition,
Foothill agrees to release its Liens on the subject property
or asset (but not the proceeds from the Asset Disposition).
(b) Anything in this Agreement and the other
Loan Documents to the contrary notwithstanding, the foregoing
grant of a security interest shall not extend to, and the term
"Personal Property Collateral" shall not include, any General
Intangible, Federal Account, or Permitted Other Investment
that is now or hereafter held by Borrower as licensee, lessee,
or otherwise, solely in the event and to the extent that: (i)
as the proximate result of the foregoing grant of a security
interest, Borrower's rights in or with respect to such General
Intangible, Federal Account, or Permitted Other Investment
would be forfeited or would become void, voidable, terminable,
or revocable, or if Borrower would be deemed to have breached,
violated, or defaulted the underlying license, lease, or other
agreement that governs such General Intangible, Federal
Account, or Permitted Other Investment, in each case, pursuant
to the restrictions in the underlying lease, license, or other
agreement that governs such General Intangible, Federal
Account, or Permitted Other Investment; (ii) any such
restriction shall be effective and enforceable under
applicable law, including Section 9318(4) of the Code; and
(iii) any such forfeiture, voidness, voidability,
terminability, revocability, breach, violation, or default
cannot be remedied by Borrower using its best efforts (but
without any obligation to make any material expenditures of
money or to commence legal proceedings); provided, however,
that the foregoing grant of security interest shall extend to,
and the term "Personal Property Collateral" shall include, (y)
any and all proceeds of such General Intangible, Federal
Account, or Permitted Other Investment to the extent that the
assignment or encumbering of such proceeds is not so
restricted, and (z) upon any such licensor, lessor, or other
applicable party's consent with respect to any such otherwise
excluded General Intangible, Federal Account, or Permitted
Other Investment being obtained, thereafter such General
Intangible, Federal Account, or Permitted Other Investment as
well as any proceeds thereof that might theretofore have been
excluded from such grant of a security interest and the term
"Personal Property Collateral."
(c) Anything in this Agreement or the other
Loan Documents to the contrary notwithstanding and subject to
Section 4.1(b), (i) the security interest granted in the
Permitted Other Investments under Section 4.1(a) shall not
attach unless and until a Triggering Event has occurred, at
which time such security interest immediately and
automatically shall attach without notice or demand or further
act on the part of Foothill or Borrower, and (ii) Foothill
agrees that Borrower need not deliver any Negotiable
Collateral in respect of the Permitted Other Investments under
Section 4.2 unless and until a Triggering Event has occurred.
(d) Anything in this Agreement and the other
Loan Documents to the contrary notwithstanding, the foregoing
grant of a security interest shall not extend to, and the term
"Personal Property Collateral" shall not include, any Excluded
Foreign Subsidiary Securities or the assets or properties of
any Foreign Subsidiary.
4.2 Negotiable Collateral. In the event that any
Collateral, including proceeds, is evidenced by or consists of
Negotiable Collateral, Borrower, immediately upon the request
of Foothill, shall endorse and deliver (or cause to be
endorsed and delivered) physical possession of such Negotiable
Collateral to Foothill. The foregoing notwithstanding,
Borrower need not deliver any Negotiable Collateral in respect
of any Permitted Toehold Investment with a value less than or
equal to $500,000 unless and until there is a Triggering Event.
4.3 Collection of Accounts, General Intangibles, and
Negotiable Collateral. During a Triggering Event, Foothill or
Foothill's designee may (a) notify customers or Account
Debtors of Borrower that the Accounts, General Intangibles, or
Negotiable Collateral have been assigned to Foothill or that
Foothill has a security interest therein, and (b) collect the
Accounts, General Intangibles, and Negotiable Collateral
directly and charge the collection costs and expenses to the
Loan Account. Borrower agrees that it will hold in trust for
Foothill, as Foothill's trustee, any Collections that it
receives and immediately will deliver said Collections to
Foothill in their original form as received by it.
4.4 Delivery of Additional Documentation Required. (a)
At any time upon the request of Foothill, Borrower shall (and
shall cause its Subsidiaries to) execute and deliver to
Foothill all financing statements, continuation financing
statements, fixture filings, security agreements, pledges,
assignments, endorsements of certificates of title,
applications for title, affidavits, reports, notices,
schedules of accounts, letters of authority, and all other
documents (including documents required for compliance with
the Assignment of Claims Act, 31 U.S.C. Section 3727 or any State's
statutory counterpart thereto) that Foothill reasonably may
request, in form reasonably satisfactory to Foothill, to
perfect and continue perfected Foothill's security interests
in the Collateral and the other properties and assets of
Borrower and its Subsidiaries, and in order to fully
consummate all of the transactions contemplated hereby and
under the other Loan Documents.
(b) In respect of each of the Securities
Accounts of Borrower, if any, Foothill, Borrower, and each
applicable financial intermediary or depositary shall enter
into a control agreement that, among other things, provides
that, from and after the giving of notice by Foothill to such
financial intermediary or depositary, it shall take
instructions solely from Foothill with respect to the
applicable Securities Account and related securities
entitlements or deposit account, as applicable. Foothill
agrees that it will not give such notice unless a Triggering
Event has occurred. Borrower agrees that it will not transfer
assets out of such Securities Accounts or deposit accounts
other than in the ordinary course of business and, if to
another financial intermediary or depositary, unless Borrower,
Foothill, and the substitute financial intermediary or
depositary have entered into a control agreement of the type
described above. No arrangement contemplated hereby shall be
modified by Borrower without the prior written consent of
Foothill. Upon the occurrence of a Triggering Event, Foothill
may elect to notify the financial intermediary to liquidate
the securities entitlements in such Securities Account and may
elect to notify the financial intermediary or depositary to
remit the proceeds in the Securities Account or deposit
account to the Foothill Account.
(c) Anything in this Agreement to the contrary
notwithstanding, Foothill agrees that: (i) so long as no
Triggering Event has occurred and is continuing, (y) Borrower
need not execute and deliver to Foothill documents required
for compliance with the Assignment of Claims Act, 31 U.S.C.
Section 3727 or any State's statutory counterpart thereto in respect
of any one underlying contract or series of related underlying
contracts giving rise to less than $1,000,000 of Accounts of
Borrower, and (z) Foothill agrees not to file notices or
copies of assignments under the Assignment of Claims Act or
any State's statutory counterpart thereto; and (ii) after the
occurrence and during the continuance of a Triggering Event,
(y) Borrower shall execute and deliver to Foothill all
documents that Foothill may request, in form satisfactory to
Foothill, required for compliance with the Assignment of
Claims Act or any State's statutory counterpart thereto,
irrespective of the amount of Accounts arising out of any
underlying contract, and (z) Foothill may file any notices or
copies of assignments under the Assignment of Claims Act or
any State's statutory counterpart thereto.
4.5 Power of Attorney. Borrower hereby irrevocably
makes, constitutes, and appoints Foothill (and any of
Foothill's officers, employees, or agents designated by
Foothill) as Borrower's true and lawful attorney, with power
to (a) if Borrower refuses to, or fails timely to execute and
deliver any of the documents described in Section 4.4, sign
the name of that Borrower on any of the documents described in
Section 4.4, (b) if there is a Triggering Event, sign that
Borrower's name on any invoice or ▇▇▇▇ of lading relating to
any Account, drafts against Account Debtors, schedules and
assignments of Accounts, verifications of Accounts, and
notices to Account Debtors, (c) send requests for verification
of Accounts, (d) endorse Borrower's name on any Collection
item that may come into Foothill's possession, (e) at any time
that an Event of Default has occurred and is continuing or
Foothill deems itself insecure, notify the post office
authorities to change the address for delivery of Borrower's
mail to an address designated by Foothill, to receive and open
all mail addressed to Borrower, and to retain all mail
relating to the Collateral and forward all other mail to
Borrower, (f) if there is a Triggering Event, make, settle,
and adjust all claims under Borrower's policies of insurance
and make all determinations and decisions with respect to such
policies of insurance, and (g) if there is a Triggering Event,
settle and adjust disputes and claims respecting the Accounts
directly with Account Debtors, for amounts and upon terms that
Foothill determines to be reasonable, and Foothill may cause
to be executed and delivered any documents and releases that
Foothill determines to be necessary. The appointment of
Foothill as Borrower's attorney, and each and every one of
Foothill's rights and powers, being coupled with an interest,
is irrevocable until all of the Obligations have been fully
and finally repaid and performed and Foothill's obligation to
extend credit hereunder is terminated.
4.6 Right to Inspect. Foothill (through any of its
officers, employees, or agents) shall have the right, from
time to time hereafter to inspect Borrower's Books and to
check, test, and appraise the Collateral in order to verify
Borrower's financial condition or the amount, quality, value,
condition of, or any other matter relating to, the Collateral.
5. REPRESENTATIONS AND WARRANTIES.
In order to induce Foothill to enter into this
Agreement, Borrower makes the following representations and
warranties which shall be true, correct, and complete in all
respects as of the Closing Date, and at and as of the date of
the making of each Advance or Letter of Credit made
thereafter, as though made on and as of the date of such
Advance or Letter of Credit (except to the extent that such
representations and warranties relate solely to an earlier
date) and such representations and warranties shall survive
the execution and delivery of this Agreement:
5.1 No Encumbrances. Borrower has good and indefeasible
title to the Collateral, free and clear of Liens except for Permitted Liens.
5.2 Eligible Accounts. The Eligible Accounts are bona
fide existing obligations created by the sale and delivery of
Inventory or the rendition of services to Account Debtors in
the ordinary course of Borrower's business, unconditionally
owed to Borrower without defenses, disputes, offsets,
counterclaims, or rights of return or cancellation. The
property giving rise to such Eligible Accounts has been
delivered to the Account Debtor, or to the Account Debtor's
agent for immediate shipment to and unconditional acceptance
by the Account Debtor (except for returns, in the ordinary
course of business, of products that fail to conform with
standard specifications). Borrower has not received notice of
actual or imminent bankruptcy, insolvency, or material
impairment of the financial condition of any Account Debtor
regarding any Eligible Account.
5.3 Eligible Domestic Inventory. All Eligible Domestic
Inventory is of good and merchantable quality, free from defects.
5.4 Equipment. All of the Equipment is used or held for
use in Borrower's business and is fit for such purposes.
5.5 Location of Inventory and Equipment. The Inventory
and Equipment are not stored with a bailee, warehouseman, or
similar party (without Foothill's prior written consent) and
are located only at the locations identified on Schedule 6.12
or otherwise permitted by Section 6.12.
5.6 Inventory Records. Borrower keeps correct and
accurate records itemizing and describing the kind, type,
quality, and quantity of the Inventory, and Borrower's cost therefor.
5.7 Location of Chief Executive Office; FEIN. The chief
executive office of Borrower is located at the address
indicated in the preamble to this Agreement. Borrower's FEIN is ▇▇-▇▇▇▇▇▇▇.
5.8 Due Organization and Qualification; Subsidiaries.
(a) Each Borrower is duly organized and existing and in
good standing under the laws of the jurisdiction of its
incorporation and qualified and licensed to do business in,
and in good standing in, any state where the failure to be so
licensed or qualified reasonably could be expected to have a
Material Adverse Change.
(b) Set forth on Schedule 5.8, is a complete and
accurate list of Borrower's direct and indirect Subsidiaries,
showing: (i) the jurisdiction of their organization; (ii) the
number of shares or units of each class of common and
preferred stock or other equity securities authorized for each
of such Subsidiaries; and (iii) the number and the percentage
of the outstanding shares or units of each such class owned
directly or indirectly by Borrower. All of the outstanding
capital stock or other equity securities of each such
Subsidiary has been validly issued and is fully paid and non-assessable.
(c) Except as set forth on Schedule 5.8, no capital
stock or other equity securities (or any securities,
instruments, warrants, options, purchase rights, conversion or
exchange rights, calls, commitments or claims of any character
convertible into or exercisable for capital stock or other
equity securities) of any direct or indirect Subsidiary of
Borrower is subject to the issuance of any security,
instrument, warrant, option, purchase right, conversion or
exchange right, call, commitment or claim of any right, title,
or interest therein or thereto.
(d) Set forth on Schedule 5.8 are, with respect to each
Subsidiary of Borrower that is not a Foreign Subsidiary: (i) a
description of the direct and indirect stockholders (or
holders of equivalent equity interests) of each such
Subsidiary; (ii) the total assets of each such Subsidiary;
(iii) the amount of the net value of Borrower's direct or
indirect investment in such Subsidiary; and (iv) a true,
correct, and complete statement regarding whether each such
Subsidiary's assets are comprised principally of (x) foreign
assets, (y) securities of other Subsidiaries of Borrower, or
(z) other operating assets.
5.9 Due Authorization; No Conflict.
(a) The execution, delivery, and performance by Borrower
of this Agreement and the Loan Documents to which it is a
party have been duly authorized by all necessary corporate action.
(b) The execution, delivery, and performance by Borrower
of this Agreement and the Loan Documents to which it is a
party do not and will not (i) violate any provision of
federal, state, or local law or regulation (including
Regulations G, T, U, and X of the Federal Reserve Board)
applicable to Borrower, the Governing Documents of Borrower,
or any order, judgment, or decree of any court or other
Governmental Authority binding on Borrower, (ii) conflict
with, result in a breach of, or constitute (with due notice or
lapse of time or both) a default under any material
contractual obligation or material lease of Borrower,
(iii) result in or require the creation or imposition of any
Lien of any nature whatsoever upon any properties or assets of
Borrower, other than Permitted Liens, or (iv) require any
approval of stockholders or any approval or consent of any
Person under any material contractual obligation of Borrower.
(c) Other than the filing of appropriate financing
statements, fixture filings, and mortgages, the execution,
delivery, and performance by Borrower of this Agreement and
the Loan Documents to which Borrower is a party do not and
will not require any registration with, consent, or approval
of, or (except for Borrower's filings with the Securities
Exchange Commission in the ordinary course of Borrower's
business) notice to, or other action with or by, any federal,
state, foreign, or other Governmental Authority or other Person.
(d) This Agreement and the Loan Documents to which
Borrower is a party, and all other documents contemplated
hereby and thereby, when executed and delivered by Borrower
will be the legally valid and binding obligations of Borrower,
enforceable against Borrower in accordance with their
respective terms, except as enforcement may be limited by
equitable principles or by bankruptcy, insolvency, reorganiza
tion, moratorium, or similar laws relating to or limiting
creditors' rights generally.
(e) The Liens granted by Borrower to Foothill in and to
its properties and assets pursuant to this Agreement and the
other Loan Documents are validly created, perfected, and first
priority Liens, subject only to Permitted Liens.
5.10 Litigation. There are no actions or proceedings
pending by or against Borrower before any court or
administrative agency and Borrower does not have knowledge or
belief of any pending, threatened, or imminent litigation,
governmental investigations, or claims, complaints, actions,
or prosecutions involving Borrower or any guarantor of the
Obligations, except for: (a) ongoing collection matters in
which Borrower is the plaintiff; (b) matters disclosed on
Schedule 5.10; and (c) matters arising after the date hereof
that, if decided adversely to Borrower, would not have a
Material Adverse Change.
5.11 No Material Adverse Change. All financial
statements relating to Borrower or any guarantor of the
Obligations that have been delivered by Borrower to Foothill
have been prepared in accordance with GAAP (except, in the
case of unaudited financial statements, for the lack of
footnotes and being subject to year-end audit adjustments) and
fairly present Borrower's (or such guarantor's, as applicable)
financial condition as of the date thereof and Borrower's
results of operations for the period then ended. There has
not been a Material Adverse Change with respect to Borrower
(or such guarantor, as applicable) since the date of the
latest financial statements submitted to Foothill.
5.12 Solvency. Borrower is Solvent. No transfer of
property is being made by Borrower and no obligation is being
incurred by Borrower in connection with the transactions
contemplated by this Agreement or the other Loan Documents
with the intent to hinder, delay, or defraud either present or
future creditors of Borrower.
5.13 Employee Benefits. None of Borrower, any of its
Subsidiaries, or any of their ERISA Affiliates maintains or
contributes to any Benefit Plan, other than those listed on
Schedule 5.13. Borrower, each of its Subsidiaries and each
ERISA Affiliate have satisfied the minimum funding standards
of ERISA and the IRC with respect to each Benefit Plan to
which it is obligated to contribute. No ERISA Event has
occurred nor has any other event occurred that may result in
an ERISA Event that reasonably could be expected to result in
a Material Adverse Change. None of Borrower or its
Subsidiaries, or any ERISA Affiliate, is subject to any direct
or indirect liability with respect to any Plan under any
applicable law, treaty, rule, regulation, or agreement. None
of Borrower or its Subsidiaries or any ERISA Affiliate is
required to provide security to any Plan under Section
401(a)(29) of the IRC.
5.14 Environmental Condition. None of Borrower's
properties or assets has ever been used by Borrower or, to the
best of Borrower's knowledge, by previous owners or operators
in the disposal of, or to produce, store, handle, treat,
release, or transport, any Hazardous Materials, except in
compliance with all applicable laws and regulations in respect
thereof. None of Borrower's properties or assets has ever
been designated or identified in any manner pursuant to any
environmental protection statute as a Hazardous Materials
disposal site, or a candidate for closure pursuant to any
environmental protection statute. No Lien arising under any
environmental protection statute has attached to any revenues
or to any real or personal property owned or operated by
Borrower. Except as set forth on Schedule 5.14, Borrower has
not received a summons, citation, notice, or directive from
the Environmental Protection Agency or any other federal or
state governmental agency concerning any action or omission by
Borrower resulting in the releasing or disposing of Hazardous
Materials into the environment.
5.15 Securities Accounts. Borrower does not have or
maintain any Securities Accounts.
6. AFFIRMATIVE COVENANTS.
Borrower covenants and agrees that, so long as any
credit hereunder shall be available and until full and final
payment of the Obligations, and unless Foothill shall
otherwise consent in writing, Borrower shall do all of the following:
6.1 Accounting System. Maintain one or more systems of
accounting that enable Borrower to produce financial
statements in accordance with GAAP, and maintain records
pertaining to the Collateral that contain information as from
time to time may be requested by Foothill. Borrower also
shall keep a modern inventory reporting system that shows all
additions, sales, claims, returns, and allowances with respect
to the Inventory.
6.2 Collateral Reporting. Provide Foothill with the
following documents at the following times in form
satisfactory to Foothill: (a) on a monthly basis and, in any
event, by no later than the 15th day of each month during the
term of this Agreement (or, in the event that Borrower's then
Availability is less than $10,000,000, on such more frequent
basis as Foothill may require), a monthly accounts receivable
roll-forward report and a detailed calculation of the
Borrowing Base as of such date; (b) on a monthly basis and, in
any event, by no later than the 15th day of each month during
the term of this Agreement, a detailed aging, by total, of the
Accounts, together with a reconciliation to the detailed
calculation of the Borrowing Base previously provided to
Foothill; (c) on a monthly basis and, in any event, by no
later than the 15th day of each month during the term of this
Agreement, a listing of Borrower's accounts payable, by
vendor; (d) on a monthly basis and, in any event, by no later
than the 15th day of each month during the term of this
Agreement (or, in the event that Borrower's then Availability
is less than $10,000,000, on such more frequent basis as
Foothill may require), Inventory reports specifying Borrower's
cost and the wholesale market value of its Inventory by
category, including a monthly Inventory roll-forward report;
(e) upon Foothill's reasonable request, copies of invoices in
connection with the Accounts, credit memos, and remittance
advices and reports in connection with the Accounts and for
Inventory and Equipment acquired by Borrower, purchase orders
and invoices; (f) in the event that Borrower's then
Availability is less than $10,000,000, then upon Foothill's
reasonable request, a sales journal, collection journal, and
credit register since the last such schedule and copies of
deposit slips, shipping and delivery documents in connection
with the Accounts and for Inventory and Equipment acquired by
Borrower; (g) on a quarterly basis, a detailed list of
Borrower's customers; (h) on a monthly basis, a calculation of
the Dilution for the prior month; (i) on a quarterly basis, a
detailed report specifying each Permitted Toehold Investment,
including the book value and market value thereof; (j) on a
monthly basis, a detailed report specifying each Permitted
Appraised Assets Disposition and Equipment replacement in
respect thereof consummated since the last such report; (k) on
a quarterly basis, a detailed report specifying the aggregate
amount of Permitted Subsidiary Loans and Capital Contributions
made by Borrower to date during the then current calendar year
and the aggregate amount of Indebtedness then outstanding and
permitted under Section 7.1(b), and (l) such other reports as
to the Collateral or the financial condition of Borrower as
Foothill may request from time to time. Original sales
invoices evidencing daily sales shall be mailed by Borrower to
each Account Debtor and, at Foothill's direction if there is a
Triggering Event, the invoices shall indicate on their face
that the Account has been assigned to Foothill and that all
payments are to be made directly to Foothill.
6.3 Financial Statements, Reports, Certificates.
Deliver to Foothill: (a) as soon as available, but in any
event within 30 days after the end of each month during each
of Borrower's fiscal years, a company prepared balance sheet,
income statement, and statement of cash flow covering
Borrower's operations during such period; and (b) as soon as
available, but in any event within 90 days after the end of
each of Borrower's fiscal years, financial statements of
Borrower for each such fiscal year, audited by independent
certified public accountants reasonably acceptable to Foothill
and certified, without any qualifications, by such accountants
to have been prepared in accordance with GAAP, together with a
certificate of such accountants addressed to Foothill stating
that such accountants do not have knowledge of the existence
of any Default or Event of Default. Such audited financial
statements shall include a balance sheet, profit and loss
statement, and statement of cash flow and, if prepared, such
accountants' letter to management. If Borrower is a parent
company of one or more Subsidiaries, or Affiliates, or is a
Subsidiary or Affiliate of another company, then, in addition
to the financial statements referred to above, Borrower agrees
to deliver such other information relative to such related
entity as Foothill reasonably may request and, solely to the
extent available, such financing statements on a consolidating
basis so as to present Borrower and each such related entity
separately.
Together with the above, Borrower also shall
deliver to Foothill Borrower's Form 10-Q Quarterly Reports,
Form 10-K Annual Reports, and Form 8-K Current Reports, and
any other filings made by Borrower with the Securities and
Exchange Commission, if any, within 1 Business Day of the date
that the same are filed, or any other information that is
provided by Borrower to its shareholders, and any other report
reasonably requested by Foothill relating to the financial
condition of Borrower.
Each month, together with the financial
statements provided pursuant to Section 6.3(a), Borrower shall
deliver to Foothill a certificate signed by its chief
financial officer to the effect that: (i) all financial
statements delivered or caused to be delivered to Foothill
hereunder have been prepared in accordance with GAAP (except,
in the case of unaudited financial statements, for the lack of
footnotes and being subject to year-end audit adjustments) and
fairly present the financial condition of Borrower, (ii) the
representations and warranties of Borrower contained in this
Agreement and the other Loan Documents are true and correct in
all material respects on and as of the date of such
certificate, as though made on and as of such date (except to
the extent that such representations and warranties relate
solely to an earlier date), (iii) for each month that also is
the date on which a financial covenant in Section 7.20 is to
be tested, a Compliance Certificate demonstrating in
reasonable detail compliance at the end of such period with
the applicable financial covenants contained in Section 7.20,
and (iv) on the date of delivery of such certificate to
Foothill there does not exist any condition or event that
constitutes a Default or Event of Default (or, in the case of
clauses (i), (ii), or (iii), to the extent of any non-
compliance, describing such non-compliance as to which he or
she may have knowledge and what action Borrower has taken, is
taking, or proposes to take with respect thereto).
Borrower shall have issued written instructions
to its independent certified public accountants authorizing
them to communicate with Foothill and to release to Foothill
whatever financial information concerning Borrower that
Foothill may request. Borrower hereby irrevocably authorizes
and directs all auditors, accountants, or other third parties
to deliver to Foothill, at Borrower's expense, copies of
Borrower's financial statements, papers related thereto, and
other accounting records of any nature in their possession,
and to disclose to Foothill any information they may have
regarding Borrower's business affairs and financial
conditions.
Each year, together with the financial
statements provided pursuant to Section 6.3(b), Borrower shall
deliver to Foothill a certificate signed by its chief
financial officer specifying, as to each Foreign Subsidiary of
Borrower, the amounts of assets and liabilities and
stockholder's equity of such Foreign Subsidiary as of the end
of the year then ended. Borrower hereby agrees that, in
respect of any Foreign Subsidiary whose capitalization has
materially improved (in Foothill's reasonable determination)
and upon Foothill's reasonable request therefor, Borrower
shall execute and deliver to Foothill a supplement to the
Pledge Agreement pursuant to which Borrower shall pledge to
Foothill all of Borrower's right, title, and interest in and
to such Foreign Subsidiary's equity securities (other than the
Excluded Foreign Portion) and deliver to Foothill all
Negotiable Collateral, if any, in respect of same, unless and
to the extent that doing so would, in any material respect,
violate applicable law or cause a breach or default under any
material contract, agreement, or arrangement binding on such Subsidiary.
6.4 Tax Returns. Deliver to Foothill copies of each of
Borrower's future federal income tax returns, and any
amendments thereto, within 30 days of the filing thereof with
the Internal Revenue Service.
6.5 Guarantor Reports. Cause any guarantor of any of
the Obligations to deliver its annual financial statements at
the time when Borrower provides its audited financial
statements to Foothill and copies of all federal income tax
returns as soon as the same are available and in any event no
later than 30 days after the same are required to be filed by law.
6.6 Returns. Cause returns and allowances, if any, as
between Borrower and its Account Debtors to be on the same
basis and in accordance with the usual customary practices of
Borrower, as they exist at the time of the execution and
delivery of this Agreement. If, at a time when no Event of
Default has occurred and is continuing, any Account Debtor
returns any Inventory to Borrower, Borrower promptly shall
determine the reason for such return and, if Borrower accepts
such return, issue a credit memorandum (with, upon reasonable
request, a copy to be sent to Foothill) in the appropriate
amount to such Account Debtor. If, at a time when an Event of
Default has occurred and is continuing, any Account Debtor
returns any Inventory to Borrower, Borrower promptly shall
determine the reason for such return and, if Foothill consents
(which consent shall not be unreasonably withheld), issue a
credit memorandum (with a copy to be sent to Foothill) in the
appropriate amount to such Account Debtor.
6.7 Title to Equipment. Upon Foothill's request after
the occurrence of an Event of Default, Borrower immediately
shall deliver to Foothill, properly endorsed, any and all
evidences of ownership of, certificates of title, or
applications for title to any items of Equipment; provided,
however, that the foregoing shall not be deemed to prevent
Permitted Dispositions to the extent otherwise permitted hereunder.
6.8 Maintenance of Equipment. Maintain the Equipment in
good operating condition and repair (ordinary wear and tear
excepted), and make all necessary replacements thereto so that
the value and operating efficiency thereof shall at all times
be maintained and preserved. Other than those items of
Equipment that constitute fixtures on the Closing Date,
Borrower shall not permit any item of Equipment to become a
fixture to real estate or an accession to other property, and
such Equipment shall at all times remain personal property.
6.9 Taxes. Cause all assessments and taxes, whether
real, personal, or otherwise, due or payable by, or imposed,
levied, or assessed against Borrower or any of its property to
be paid in full, before delinquency or before the expiration
of any extension period, except to the extent that the
validity of such assessment or tax shall be the subject of a
Permitted Protest. Borrower shall make due and timely payment
or deposit of all such federal, state, and local taxes,
assessments, or contributions required of it by law, and will
execute and deliver to Foothill, on demand, appropriate
certificates attesting to the payment thereof or deposit with
respect thereto. Borrower will make timely payment or deposit
of all tax payments and withholding taxes required of it by
applicable laws, including those laws concerning F.I.C.A.,
F.U.T.A., state disability, and local, state, and federal
income taxes, and will, upon request, furnish Foothill with
proof satisfactory to Foothill indicating that Borrower has
made such payments or deposits.
6.10 Insurance.
(a) At its expense, keep the Personal Property
Collateral insured against loss or damage by fire, theft,
explosion, sprinklers, and all other hazards and risks, and in
such amounts, as are ordinarily insured against by other
owners in similar businesses. Borrower also shall maintain
business interruption, public liability, product liability,
and property damage insurance relating to Borrower's ownership
and use of the Personal Property Collateral, as well as
insurance against larceny, embezzlement, and criminal
misappropriation.
(b) At its expense, obtain and maintain (i) insurance of
the type necessary to insure the Improvements and Chattels (as
such terms are defined in the Mortgages), for the full
replacement cost thereof, against any loss by fire, lightning,
windstorm, hail, explosion, aircraft, smoke damage, vehicle
damage, earthquakes, elevator collision, and other risks from
time to time included under "extended coverage" policies, in
such amounts as Foothill may require, but in any event in
amounts sufficient to prevent Borrower from becoming a
co-insurer under such policies, (ii) combined single limit
bodily injury and property damages insurance against any loss,
liability, or damages on, about, or relating to each parcel of
Real Property Collateral, in an amount satisfactory to
Foothill; (iii) business rental insurance covering annual
receipts for a 12 month period for each parcel of Real
Property Collateral; and (iv) insurance for such other risks
as Foothill may require. Replacement costs, at Foothill's
option, may be redetermined by an insurance appraiser,
satisfactory to Foothill, not more frequently than once every
12 months at Borrower's cost.
(c) All such policies of insurance shall be in such
form, with such companies, and in such amounts as may be
reasonably satisfactory to Foothill. All hazard insurance and
such other insurance as Foothill shall specify, shall contain
a Form 438BFU mortgagee endorsement, or an equivalent
endorsement satisfactory to Foothill, showing Foothill as sole
loss payee thereof, and shall contain a waiver of warranties.
Every policy of insurance referred to in this Section 6.10
shall contain an agreement by the insurer that it will not
cancel such policy except after 30 days prior written notice
to Foothill and that any loss payable thereunder shall be
payable notwithstanding any act or negligence of Borrower or
Foothill which might, absent such agreement, result in a
forfeiture of all or a part of such insurance payment and
notwithstanding (i) occupancy or use of the Real Property
Collateral for purposes more hazardous than permitted by the
terms of such policy, (ii) any foreclosure or other action or
proceeding taken by Foothill pursuant to the Mortgages upon
the happening of an Event of Default, or (iii) any change in
title or ownership of the Real Property Collateral. Borrower
shall deliver to Foothill certified copies of such policies of
insurance and evidence of the payment of all premiums therefor.
(d) Original policies or certificates thereof
satisfactory to Foothill evidencing such insurance shall be
delivered to Foothill at least 10 days prior to the expiration
of the existing or preceding policies. Borrower shall give
Foothill prompt notice of any loss covered by such insurance,
and, upon the occurrence and during the continuance of an
Event of Default, Foothill shall have the right to adjust any
loss. Foothill shall have the exclusive right to adjust all
losses payable under any such insurance policies without any
liability to Borrower whatsoever in respect of such
adjustments. Any monies received as payment for any loss
under any insurance policy including the insurance policies
mentioned above, shall be paid over to Foothill to be applied
at the option of Foothill either to the prepayment of the
Obligations without premium, in such order or manner as
Foothill may elect, or shall be disbursed to Borrower under
stage payment terms satisfactory to Foothill for application
to the cost of repairs, replacements, or restorations. All
repairs, replacements, or restorations shall be effected with
reasonable promptness and shall be of a value at least equal
to the value of the items or property destroyed prior to such
damage or destruction. Upon the occurrence of an Event of
Default, Foothill shall have the right to apply all prepaid
premiums to the payment of the Obligations in such order or
form as Foothill shall determine.
(e) Borrower shall not take out separate insurance
concurrent in form or contributing in the event of loss with
that required to be maintained under this Section 6.10, unless
Foothill is included thereon as named insured with the loss
payable to Foothill under a standard California 438BFU
(NS) Mortgagee endorsement, or its local equivalent. Borrower
immediately shall notify Foothill whenever such separate
insurance is taken out, specifying the insurer thereunder and
full particulars as to the policies evidencing the same, and
originals of such policies immediately shall be provided to Foothill.
6.11 No Setoffs or Counterclaims. Make payments
hereunder and under the other Loan Documents by or on behalf
of Borrower without setoff or counterclaim and free and clear
of, and without deduction or withholding for or on account of,
any federal, state, or local taxes.
6.12 Location of Inventory and Equipment. Keep the
Inventory and Equipment only at the locations identified on
Schedule 6.12; provided, however, that Borrower may amend
Schedule 6.12 so long as such amendment occurs by written
notice to Foothill not less than 30 days prior to the date on
which the Inventory or Equipment is moved to such new
location, so long as such new location is within the
continental United States, and so long as, at the time of such
written notification, Borrower provides any financing
statements or fixture filings necessary to perfect and
continue perfected Foothill's security interests in such
assets and also provides to Foothill a Collateral Access Agreement.
6.13 Compliance with Laws. Comply with the requirements
of all applicable laws, rules, regulations, and orders of any
governmental authority, including the Fair Labor Standards Act
and the Americans With Disabilities Act, other than laws,
rules, regulations, and orders the non-compliance with which,
individually or in the aggregate, would not have and could not
reasonably be expected to have a Material Adverse Change.
6.14 Employee Benefits.
(a) Promptly, and in any event within 10 Business Days
after Borrower or any of its Subsidiaries knows or has reason
to know that an ERISA Event has occurred that reasonably could
be expected to result in a Material Adverse Change, a written
statement of the chief financial officer of Borrower
describing such ERISA Event and any action that is being
taking with respect thereto by Borrower, any such Subsidiary
or ERISA Affiliate, and any action taken or threatened by the
IRS, Department of Labor, or PBGC. Borrower or such
Subsidiary, as applicable, shall be deemed to know all facts
known by the administrator of any Benefit Plan of which it is
the plan sponsor, (ii) promptly, and in any event within 3
Business Days after the filing thereof with the IRS, a copy of
each funding waiver request filed with respect to any Benefit
Plan and all communications received by Borrower, any of its
Subsidiaries or, to the knowledge of Borrower, any ERISA
Affiliate with respect to such request, and (iii) promptly,
and in any event within 3 Business Days after receipt by
Borrower, any of its Subsidiaries or, to the knowledge of
Borrower, any ERISA Affiliate, of the PBGC's intention to
terminate a Benefit Plan or to have a trustee appointed to
administer a Benefit Plan, copies of each such notice.
(b) Cause to be delivered to Foothill, upon Foothill's
request, each of the following: (i) a copy of each Plan (or,
where any such plan is not in writing, complete description
thereof) (and if applicable, related trust agreements or other
funding instruments) and all amendments thereto, all written
interpretations thereof and written descriptions thereof that
have been distributed to employees or former employees of
Borrower or its Subsidiaries; (ii) the most recent
determination letter issued by the IRS with respect to each
Benefit Plan; (iii) for the three most recent plan years,
annual reports on Form 5500 Series required to be filed with
any governmental agency for each Benefit Plan; (iv) all
actuarial reports prepared for the last three plan years for
each Benefit Plan; (v) a listing of all Multiemployer Plans,
with the aggregate amount of the most recent annual
contributions required to be made by Borrower or any ERISA
Affiliate to each such plan and copies of the collective
bargaining agreements requiring such contributions; (vi) any
information that has been provided to Borrower or any ERISA
Affiliate regarding withdrawal liability under any
Multiemployer Plan; and (vii) the aggregate amount of the most
recent annual payments made to former employees of Borrower or
its Subsidiaries under any Retiree Health Plan.
6.15 Leases. Pay when due all rents and other amounts
payable under any leases to which Borrower is a party or by
which Borrower's properties and assets are bound, unless such
payments are the subject of a Permitted Protest. To the
extent that Borrower fails timely to make payment of such
rents and other amounts payable when due under its leases,
Foothill shall be entitled, in its discretion, to reserve an
amount equal to such unpaid amounts against the Borrowing
Base.
7. NEGATIVE COVENANTS.
Borrower covenants and agrees that, so long as any
credit hereunder shall be available and until full and final
payment of the Obligations, Borrower will not to do any of the
following without Foothill's prior written consent:
7.1 Indebtedness. Create, incur, assume, permit,
guarantee, or otherwise become or remain, directly or
indirectly, liable with respect to any Indebtedness, except:
(a) Indebtedness evidenced by this Agreement, together
with Indebtedness to issuers of letters of credit that are the
subject of L/C Guarantees;
(b) (i) unsecured guarantees of indebtedness of
Borrower's Subsidiaries; and (ii) unsecured back-to-back
letters of credit or letter of credit guarantees to issuers of
underlying letters of credit, the account parties of which are
Borrower's Foreign Subsidiaries, that are not the subject of
L/C Guarantees; provided, however, that the aggregate amount
of such Indebtedness at any one time outstanding permitted
under this Section 7.1(b) shall not exceed $50,000,000;
(c) Indebtedness set forth on Schedule 7.1;
(d) unsecured Indebtedness of Borrower owing to one or
more of its Subsidiaries; provided, however, that upon the
request of Foothill, Borrower shall cause each of its
Subsidiaries that is a holder of such Indebtedness to execute
and deliver to Foothill a subordination agreement, in form and
substance satisfactory to Foothill, in respect of such Indebtedness;
(e) unsecured Indebtedness evidenced by Interest Rate
Agreements and Currency Protection Agreements entered into by
Borrower in the ordinary course of its business consistent
with past practices and entered into in connection with the
operational needs of Borrower's business and not for
speculative purposes;
(f) Indebtedness secured by Permitted Liens; and
(g) refinancings, renewals, or extensions of
Indebtedness permitted under clauses (c), (e), and (f) of this
Section 7.1 (and continuance or renewal of any Permitted Liens
associated therewith) so long as: (i) the terms and conditions
of such refinancings, renewals, or extensions do not
materially impair the prospects of repayment of the
Obligations by Borrower, (ii) the net cash proceeds of such
refinancings, renewals, or extensions do not result in an
increase in the aggregate principal amount of the Indebtedness
so refinanced, renewed, or extended, (iii) such refinancings,
renewals, refundings, or extensions do not result in a
shortening of the average weighted maturity of the
Indebtedness so refinanced, renewed, or extended, and (iv) to
the extent that Indebtedness that is refinanced was
subordinated in right of payment to the Obligations, then the
subordination terms and conditions of the refinancing
Indebtedness must be at least as favorable to Foothill as
those applicable to the refinanced Indebtedness.
7.2 Liens. Create, incur, assume, or permit to exist,
directly or indirectly, any Lien on or with respect to any of
its property or assets, of any kind, whether now owned or
hereafter acquired, or any income or profits therefrom, except
for Permitted Liens (including Liens that are replacements of
Permitted Liens to the extent that the original Indebtedness
is refinanced under Section 7.1(g) and so long as the
replacement Liens only encumber those assets or property that
secured the original Indebtedness). Without limiting the
generality of the foregoing, Borrower agrees not to create,
incur, assume, or permit to exist, directly or indirectly, any
Lien on or with respect to the equity securities of any
Subsidiary of Borrower and the equity securities evidencing
any Permitted Toehold Investment (except for Liens thereon in
favor of Foothill and Liens expressly permitted hereunder on
the equity securities of IG Australia).
7.3 Restrictions on Fundamental Changes. (a) Enter into
any merger, consolidation, reorganization, or
recapitalization, or reclassify its capital stock; (b)
liquidate, wind up, or dissolve itself (or suffer any
liquidation or dissolution); or (c) except for Permitted
Dispositions, convey, sell, assign, lease, transfer, or
otherwise dispose of, in one transaction or a series of
transactions, all or any substantial part of its property or assets.
7.4 Disposal of Assets. Except for Permitted
Dispositions, make any Asset Disposition.
7.5 Change Name. Change Borrower's name, FEIN,
corporate structure (within the meaning of Section 9402(7) of
the Code), or identity, or add any new fictitious name.
7.6 [intentionally omitted].
7.7 Nature of Business. Make any change in the
principal nature of Borrower's business.
7.8 Prepayments and Amendments.
(a) Except in connection with a refinancing permitted by
Section 7.1(g), prepay, redeem, defease, purchase, or
otherwise acquire any Indebtedness owing to any third Person,
other than the Obligations in accordance with this Agreement, and
(b) Directly or indirectly, amend, modify, alter,
increase, or change any of the terms or conditions of any
agreement, instrument, document, indenture, or other writing
evidencing or concerning Indebtedness permitted under Sections
7.1(b), (c), (d), (e), or (f), except for any amendment,
modification, waiver, or consent the effect of which would be
to: (i) extend the maturity of all or part of the remaining
scheduled payments of principal outstanding thereunder;
(ii) make any covenant or default contained therein less
stringent; (iii) decrease the interest rate or interest rate
margin or the default interest rate or interest rate margin,
or both; (iv) amends or modify any other terms thereof so long
as the amendments or modifications referenced in this
clause (iv) are not in the aggregate materially more
expensive, burdensome, or otherwise adverse to Borrower or Foothill.
7.9 Change of Control. Cause, permit, or suffer,
directly or indirectly, any Change of Control.
7.10 Consignments. Consign any Inventory or sell any
Inventory on ▇▇▇▇ and hold, sale or return, sale on approval,
or other conditional terms of sale; provided, however, that
the foregoing shall not prevent Borrower from consigning
Inventory with a value not to exceed $500,000 at any one time
outstanding, in the ordinary course of Borrower's business,
consistent with past practices, so long as at the time of any
such consignment, Borrower shall take such steps as may be
necessary to ensure that such consigned Inventory is not
subject to the claims of the consignees' creditors or that
Borrower has priority over any perfected security interests in
the inventory of such consignee.
7.11 Distributions. Make any distribution or declare or
pay any dividends (in cash or other property, other than
capital stock) on, or purchase, acquire, redeem, or retire any
of Borrower's capital stock, of any class, whether now or
hereafter outstanding.
7.12 Accounting Methods. Modify or change significantly
its method of accounting or enter into, modify, or terminate
any agreement currently existing, or at any time hereafter
entered into with any third party accounting firm or service
bureau for the preparation or storage of Borrower's accounting
records without said accounting firm or service bureau
agreeing to provide Foothill information regarding the
Collateral or Borrower's financial condition. Borrower waives
the right to assert a confidential relationship, if any, it
may have with any accounting firm or service bureau in
connection with any information requested by Foothill pursuant
to or in accordance with this Agreement, and agrees that
Foothill may contact directly any such accounting firm or
service bureau in order to obtain such information.
7.13 Investments. Except for Permitted Investments and
Permitted Dispositions, directly or indirectly make, acquire,
or incur any liabilities (including contingent obligations)
for or in connection with (a) the acquisition of the
securities (whether debt or equity) of, or other interests in,
a Person, (b) loans, advances, capital contributions, or
transfers of property to a Person, or (c) the acquisition of
all or substantially all of the properties or assets of a Person.
7.14 Transactions with Affiliates. Except for Permitted
Investments, directly or indirectly enter into or permit to
exist any material transaction with any Affiliate of Borrower
except for transactions that are in the ordinary course of
Borrower's business, upon fair and reasonable terms, that are
fully disclosed to Foothill, and that are no less favorable to
Borrower than would be obtained in a comparable arm's length
transaction with a non-Affiliate.
7.15 Suspension. Suspend or go out of a substantial
portion of its business.
7.16 [intentionally omitted].
7.17 Use of Proceeds. Use the proceeds of the Advances
and the Term Loan made hereunder for any purpose other than
(a) on the Closing Date, (i) to repay in full the outstanding
principal, accrued interest, and accrued fees and expenses
owing to Existing Lender, and (ii) to pay transactional costs
and expenses incurred in connection with this Agreement, and
(b) thereafter, consistent with the terms and conditions
hereof, for its lawful and permitted corporate purposes.
7.18 Change in Location of Chief Executive Office;
Inventory and Equipment with Bailees. Relocate its chief
executive office to a new location without providing 30 days
prior written notification thereof to Foothill and so long as,
at the time of such written notification, Borrower provides
any financing statements or fixture filings necessary to
perfect and continue perfected Foothill's security interests
and also provides to Foothill a Collateral Access Agreement
with respect to such new location. The Inventory and
Equipment shall not at any time now or hereafter be stored
with a bailee, warehouseman, or similar party without
Foothill's prior written consent.
7.19 No Prohibited Transactions Under ERISA. Directly or indirectly:
(a) engage, or permit any Subsidiary of Borrower to
engage, in any prohibited transaction which is reasonably
likely to result in a civil penalty or excise tax described in
Sections 406 of ERISA or 4975 of the IRC for which a statutory
or class exemption is not available or a private exemption has
not been previously obtained from the Department of Labor;
(b) permit to exist with respect to any Benefit Plan any
accumulated funding deficiency (as defined in Sections 302 of
ERISA and 412 of the IRC), whether or not waived;
(c) fail, or permit any Subsidiary of Borrower to fail,
to pay timely required contributions or annual installments
due with respect to any waived funding deficiency to any Benefit Plan;
(d) terminate, or permit any Subsidiary of Borrower to
terminate, any Benefit Plan where such event would result in
any liability of Borrower, any of its Subsidiaries or any
ERISA Affiliate under Title IV of ERISA;
(e) fail, or permit any Subsidiary of Borrower to fail,
to make any required contribution or payment to any Multiemployer Plan;
(f) fail, or permit any Subsidiary of Borrower to fail,
to pay any required installment or any other payment required
under Section 412 of the IRC on or before the due date for
such installment or other payment;
(g) amend, or permit any Subsidiary of Borrower to
amend, a Plan resulting in an increase in current liability
for the plan year such that either of Borrower, any Subsidiary
of Borrower or any ERISA Affiliate is required to provide
security to such Plan under Section 401(a)(29) of the IRC; or
7.(yyyy) withdraw, or permit any Subsidiary of Borrower to
withdraw, from any Multiemployer Plan where such withdrawal is
reasonably likely to result in any liability of any such
entity under Title IV of ERISA;
which, individually or in the aggregate, results in or
reasonably would be expected to result in a claim against or
liability of Borrower, any of its Subsidiaries or any ERISA
Affiliate in excess of $1,500,000.
7.20 Financial Covenants. Fail to maintain:
(a) Current Ratio. A ratio of Consolidated Current
Assets divided by Consolidated Current Liabilities of at least
1.0: 1.0, measured on a fiscal quarter-end basis; and
(b) Net Worth. Net Worth of at least $325,000,000,
measured on a fiscal quarter-end basis.
7.21 Capital Expenditures. Make capital expenditures in
any fiscal year in excess of $80,000,000.
8. EVENTS OF DEFAULT.
Any one or more of the following events shall
constitute an event of default (each, an "Event of Default")
under this Agreement:
8.1 If Borrower fails to pay when due and payable or
when declared due and payable, any portion of the Obligations
(whether of principal, interest (including any interest which,
but for the provisions of the Bankruptcy Code, would have
accrued on such amounts), fees and charges due Foothill,
reimbursement of Foothill Expenses, or other amounts
constituting Obligations);
8.2 (a) If Borrower fails or neglects to perform, keep,
or observe, in any material respect, any term, provision,
condition, covenant, or agreement contained in Sections 6.2
(Collateral Reports) or 6.3 (Financial Statements) of this
Agreement and such failure continues for a period of five (5)
days from the date Foothill sends Borrower telephonic or
written notice of such failure or neglect; (b) If Borrower
fails or neglects to perform, keep, or observe, in any
material respect, any term, provision, condition, covenant, or
agreement contained in Sections 6.4 (Tax Returns), 6.5
(Guarantor Reports), 6.7 (Title to Equipment), 6.12 (Location
of Inventory and Equipment), 6.13 (Compliance with Laws), 6.14
(Employee Benefits), or 6.15 (Leases) of this Agreement and
such failure continues for a period of fifteen (15) days from
the date of such failure or neglect; (c) If Borrower fails or
neglects to perform, keep, or observe, in any material
respect, any term, provision, condition, covenant, or
agreement contained in Sections 6.1 (Accounting System), 6.6
(Returns), or 6.8 (Maintenance of Equipment) of this Agreement
and such failure continues for a period of fifteen (15) days
from the date Foothill sends Borrower telephonic or written
notice of such failure or neglect; or (d) If Borrower fails or
neglects to perform, keep, or observe, in any material
respect, any other term, provision, condition, covenant, or
agreement contained in this Agreement, in any of the Loan
Documents, or in any other present or future agreement between
Borrower and Foothill (other than any such term, provision,
condition, covenant, or agreement that is the subject of
another provision of this Section 8);
8.3 If there is a Material Adverse Change;
8.4 If any material portion of Borrower's properties or
assets is attached, seized, subjected to a writ or distress
warrant, or is levied upon, or comes into the possession of
any third Person;
8.5 If an Insolvency Proceeding is commenced by Borrower;
8.6 If an Insolvency Proceeding is commenced against
Borrower and any of the following events occur: (a) such
Borrower consents to the institution of the Insolvency
Proceeding against it; (b) the petition commencing the
Insolvency Proceeding is not timely controverted; (c) the
petition commencing the Insolvency Proceeding is not dismissed
within 45 calendar days of the date of the filing thereof;
provided, however, that, during the pendency of such period,
Foothill shall be relieved of its obligation to extend credit
hereunder; (d) an interim trustee is appointed to take
possession of all or a substantial portion of the properties
or assets of, or to operate all or any substantial portion of
the business of, Borrower; or (e) an order for relief shall
have been issued or entered therein;
8.7 If Borrower is enjoined, restrained, or in any way
prevented by court order from continuing to conduct all or any
material part of its business affairs;
8.8 (a) If a notice of Lien, levy, or assessment for
more than $1,500,000 is filed of record with respect to any of
Borrower's properties or assets by the United States, or if
any taxes or debts owing for an amount in excess of $1,500,000
at any time hereafter to the United States becomes a lien,
whether ▇▇▇▇▇▇ or otherwise, upon any of Borrower's properties
or assets; provided, however, that Foothill shall be entitled
to create a reserve against the Borrowing Base in an amount
sufficient to discharge such lien, levy, or assessment and any
and all penalties or interest payable in connection therewith; or
(b) If a notice of Lien, levy, or assessment
for more than $1,500,000 is filed of record with respect to
any of Borrower's properties or assets by any state, county,
municipal, or other non-federal governmental agency, or if any
taxes or debts owing for an amount in excess of $1,500,000 at
any time hereafter to any one or more of such entities becomes
a lien, whether ▇▇▇▇▇▇ or otherwise, upon any of Borrower's or
any of its Subsidiaries' properties or assets and, in any such
case, such taxes or debts are not the subject of a Permitted
Protest, and the lien, levy, or assessment is not released,
discharged, or bonded against before the earlier of 30 days of
the date it first arises or 5 days of the date when such
property or asset is subject to being forfeited; provided,
however, that Foothill shall be entitled to create a reserve
against the Borrowing Base in an amount sufficient to
discharge such lien, levy, or assessment and any and all
penalties or interest payable in connection therewith.
8.9 If a judgment or other claim for an amount in excess
of $1,500,000 becomes a Lien or encumbrance upon any material
portion of Borrower's properties or assets;
8.10 If there is a default in any material agreement to
which Borrower is a party with one or more third Persons and
such default (a) occurs at the final maturity of the
obligations thereunder, or (b) results in a right by such
third Person(s), irrespective of whether exercised, to
accelerate the maturity of Borrower's obligations thereunder
or to terminate the subject agreement;
8.11 If Borrower makes any payment on account of
Indebtedness that has been contractually subordinated in right
of payment to the payment of the Obligations, except to the
extent such payment is permitted by the terms of the
subordination provisions applicable to such Indebtedness;
8.12 If any material misstatement or misrepresentation
exists now or hereafter in any warranty, representation,
statement, or report made to Foothill by Borrower or any
officer, employee, agent, or director of Borrower, or if any
such warranty or representation is withdrawn; or
8.13 If the obligation of M&S or IG Delaware under the
Pledge Agreement is limited or terminated by operation of law
or by such Person thereunder, or any such Person becomes the
subject of an Insolvency Proceeding.
9. FOOTHILL'S RIGHTS AND REMEDIES.
9.1 Rights and Remedies. Upon the occurrence, and
during the continuation, of an Event of Default Foothill may,
at its election, without notice of its election and without
demand, do any one or more of the following, all of which are
authorized by Borrower:
(a) Declare all Obligations, whether evidenced by this
Agreement, by any of the other Loan Documents, or otherwise,
immediately due and payable;
(b) Cease advancing money or extending credit to or for
the benefit of Borrower under this Agreement, under any of the
Loan Documents, or under any other agreement between Borrower and Foothill;
(c) Terminate this Agreement and any of the other Loan
Documents as to any future liability or obligation of
Foothill, but without affecting Foothill's rights and security
interests in the Personal Property Collateral or the Real
Property Collateral and without affecting the Obligations;
(d) Settle or adjust disputes and claims directly with
Account Debtors for amounts and upon terms which Foothill
considers advisable, and in such cases, Foothill will credit
Borrower's Loan Account with only the net amounts received by
Foothill in payment of such disputed Accounts after deducting
all Foothill Expenses incurred or expended in connection therewith;
(e) Cause Borrower to hold all returned Inventory in
trust for Foothill, segregate all returned Inventory from all
other property of Borrower or in Borrower's possession and
conspicuously label said returned Inventory as the property of Foothill;
(f) Without notice to or demand upon Borrower, make such
payments and do such acts as Foothill considers necessary or
reasonable to protect its security interests in the
Collateral. Borrower agrees to assemble the Personal Property
Collateral if Foothill so requires, and to make the Personal
Property Collateral available to Foothill as Foothill may
designate. Borrower authorizes Foothill to enter the premises
where the Personal Property Collateral is located, to take and
maintain possession of the Personal Property Collateral, or
any part of it, and to pay, purchase, contest, or compromise
any encumbrance, charge, or Lien that in Foothill's
determination appears to conflict with its security interests
and to pay all expenses incurred in connection therewith.
With respect to any of Borrower's owned or leased premises,
Borrower hereby grants Foothill a license to enter into
possession of such premises and to occupy the same, without
charge, for up to 120 days in order to exercise any of
Foothill's rights or remedies provided herein, at law, in
equity, or otherwise;
(g) Without notice to Borrower (such notice being
expressly waived by Borrower), and without constituting a
retention of any collateral in satisfaction of an obligation
(within the meaning of Section 9505 of the Code), set off and
apply to the Obligations any and all (i) balances and deposits
of Borrower held by Foothill (including any amounts received
in the Lockbox Accounts), or (ii) indebtedness at any time
owing to or for the credit or the account of Borrower held by Foothill;
(h) Hold, as cash collateral, any and all balances and
deposits of Borrower held by Foothill, and any amounts
received in the Lockbox Accounts, to secure the full and final
repayment of all of the Obligations;
(i) Ship, reclaim, recover, store, finish, maintain,
repair, prepare for sale, advertise for sale, and sell (in the
manner provided for herein) the Personal Property Collateral.
Borrower hereby grants to Foothill a license or other right to
use, without charge, Borrower's labels, patents, copyrights,
rights of use of any name, trade secrets, trade names,
trademarks, service marks, and advertising matter, or any
property of a similar nature, as it pertains to the Personal
Property Collateral, in completing production of, advertising
for sale, and selling any Personal Property Collateral and
Borrower's rights under all licenses and all franchise
agreements shall inure to Foothill's benefit;
(j) Sell the Personal Property Collateral at either a
public or private sale, or both, by way of one or more
contracts or transactions, for cash or on terms, in such
manner and at such places (including any of Borrower's
premises) as Foothill determines is commercially reasonable.
It is not necessary that the Personal Property Collateral be
present at any such sale;
(k) Foothill shall give notice of the disposition of the
Personal Property Collateral as follows:
(1) Foothill shall give the applicable Borrower and each
holder of a security interest in the Personal Property
Collateral who has filed with Foothill a written request for
notice, a notice in writing of the time and place of public
sale, or, if the sale is a private sale or some other
disposition other than a public sale is to be made of the
Personal Property Collateral, then the time on or after which
the private sale or other disposition is to be made;
(2) The notice shall be personally delivered or mailed,
postage prepaid, to such Borrower as provided in Section 12,
at least 5 days before the date fixed for the sale, or at
least 5 days before the date on or after which the private
sale or other disposition is to be made; no notice needs to be
given prior to the disposition of any portion of the Personal
Property Collateral that is perishable or threatens to decline
speedily in value or that is of a type customarily sold on a
recognized market. Notice to Persons other than such Borrower
claiming an interest in the Personal Property Collateral shall
be sent to such addresses as they have furnished to Foothill;
(3) If the sale is to be a public sale, Foothill also
shall give notice of the time and place by publishing a notice
one time at least 5 days before the date of the sale in a
newspaper of general circulation in the county in which the
sale is to be held;
(l) Foothill may credit bid and purchase at any public
sale; and
(m) Any deficiency that exists after disposition of the
Personal Property Collateral as provided above will be paid
immediately by Borrower. Any excess will be returned, without
interest and subject to the rights of third Persons, by
Foothill to Borrower.
9.2 Remedies Cumulative. Foothill's rights and remedies
under this Agreement, the Loan Documents, and all other
agreements shall be cumulative. Foothill shall have all other
rights and remedies not inconsistent herewith as provided
under the Code, by law, or in equity. No exercise by Foothill
of one right or remedy shall be deemed an election, and no
waiver by Foothill of any Event of Default shall be deemed a
continuing waiver. No delay by Foothill shall constitute a
waiver, election, or acquiescence by it.
10. TAXES AND EXPENSES.
If Borrower fails to pay any monies (whether taxes,
assessments, insurance premiums, or, in the case of leased
properties or assets, rents or other amounts payable under
such leases) due to third Persons, or fails to make any
deposits or furnish any required proof of payment or deposit,
all as required under the terms of this Agreement, then, to
the extent that Foothill determines that such failure by such
Borrower could result in a Material Adverse Change, in its
discretion and without prior notice to Borrower, Foothill may
do any or all of the following: (a) make payment of the same
or any part thereof; (b) set up such reserves in Borrower's
Loan Account as Foothill deems necessary to protect Foothill
from the exposure created by such failure; or (c) obtain and
maintain insurance policies of the type described in Section
6.10, and take any action with respect to such policies as
Foothill deems prudent. Any such amounts paid by Foothill
shall constitute Foothill Expenses. Any such payments made by
Foothill shall not constitute an agreement by Foothill to make
similar payments in the future or a waiver by Foothill of any
Event of Default under this Agreement. Foothill need not
inquire as to, or contest the validity of, any such expense,
tax, or Lien and the receipt of the usual official notice for
the payment thereof shall be conclusive evidence that the same
was validly due and owing.
11. WAIVERS; INDEMNIFICATION.
11.1 Demand; Protest; etc. Borrower waives demand,
protest, notice of protest, notice of default or dishonor,
notice of payment and nonpayment, nonpayment at maturity,
release, compromise, settlement, extension, or renewal of
accounts, documents, instruments, chattel paper, and
guarantees at any time held by Foothill on which Borrower may
in any way be liable.
11.2 Foothill's Liability for Collateral. So long as
Foothill complies with its obligations, if any, under Section
9207 of the Code, Foothill shall not in any way or manner be
liable or responsible for: (a) the safekeeping of the
Collateral; (b) any loss or damage thereto occurring or
arising in any manner or fashion from any cause; (c) any
diminution in the value thereof; or (d) any act or default of
any carrier, warehouseman, bailee, forwarding agency, or other
Person. All risk of loss, damage, or destruction of the
Collateral shall be borne by Borrower.
11.3 Indemnification. Borrower shall pay, indemnify,
defend, and hold Foothill, each Participant, and each of their
respective officers, directors, employees, counsel, agents,
and attorneys-in-fact (each, an "Indemnified Person") harmless
(to the fullest extent permitted by law) from and against any
and all claims, demands, suits, actions, investigations,
proceedings, and damages, and all reasonable attorneys fees
and disbursements and other costs and expenses actually
incurred in connection therewith (as and when they are
incurred and irrespective of whether suit is brought), at any
time asserted against, imposed upon, or incurred by any of
them in connection with or as a result of or related to the
execution, delivery, enforcement, performance, and
administration of this Agreement and any other Loan Documents
or the transactions contemplated herein, and with respect to
any investigation, litigation, or proceeding related to this
Agreement, any other Loan Document, or the use of the proceeds
of the credit provided hereunder (irrespective of whether any
Indemnified Person is a party thereto), or any act, omission,
event or circumstance in any manner related thereto (all the
foregoing, collectively, the "Indemnified Liabilities").
Borrower shall have no obligation to any Indemnified Person
under this Section 11.3 with respect to any Indemnified
Liability that a court of competent jurisdiction finally
determines to have resulted from the gross negligence or
willful misconduct of such Indemnified Person. This provision
shall survive the termination of this Agreement and the
repayment of the Obligations.
12. NOTICES.
Unless otherwise provided in this Agreement, all
notices or demands by any party relating to this Agreement or
any other Loan Document shall be in writing and (except for
financial statements and other informational documents which
may be sent by first-class mail, postage prepaid) shall be
personally delivered or sent by registered or certified mail
(postage prepaid, return receipt requested), overnight
courier, or telefacsimile to Borrower or to Foothill, as the
case may be, at its address set forth below:
If to Borrower: INTERGRAPH CORPORATION
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Fax No. ▇▇▇.▇▇▇.▇▇▇▇
with copies to: ▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Fax No. ▇▇▇.▇▇▇.▇▇▇▇
If to Foothill: FOOTHILL CAPITAL CORPORATION
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: Business Finance Division Manager
Fax No. ▇▇▇.▇▇▇.▇▇▇▇
with copies to: ▇▇▇▇▇▇▇, PHLEGER & ▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇▇ Hilson, Esq.
Fax No. ▇▇▇.▇▇▇.▇▇▇▇
The parties hereto may change the address at which
they are to receive notices hereunder, by notice in writing in
the foregoing manner given to the other. All notices or
demands sent in accordance with this Section 12, other than
notices by Foothill in connection with Sections 9504 or 9505
of the Code, shall be deemed received on the earlier of the
date of actual receipt or 3 days after the deposit thereof in
the mail. Borrower acknowledges and agrees that notices sent
by Foothill in connection with Sections 9504 or 9505 of the
Code shall be deemed sent when deposited in the mail or
personally delivered, or, where permitted by law, transmitted
telefacsimile or other similar method set forth above.
13. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.
THE VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS (UNLESS EXPRESSLY PROVIDED TO THE CONTRARY IN AN
ANOTHER LOAN DOCUMENT), THE CONSTRUCTION, INTERPRETATION, AND
ENFORCEMENT HEREOF AND THEREOF, AND THE RIGHTS OF THE PARTIES
HERETO AND THERETO WITH RESPECT TO ALL MATTERS ARISING
HEREUNDER OR THEREUNDER OR RELATED HERETO OR THERETO SHALL BE
DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF CALIFORNIA. THE PARTIES AGREE
THAT ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION WITH
THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE TRIED AND
LITIGATED ONLY IN THE STATE AND FEDERAL COURTS LOCATED IN THE
COUNTY OF LOS ANGELES, STATE OF CALIFORNIA OR, AT THE SOLE
OPTION OF FOOTHILL, IN ANY OTHER COURT IN WHICH FOOTHILL SHALL
INITIATE LEGAL OR EQUITABLE PROCEEDINGS AND WHICH HAS SUBJECT
MATTER JURISDICTION OVER THE MATTER IN CONTROVERSY. EACH OF
BORROWER AND FOOTHILL WAIVES, TO THE EXTENT PERMITTED UNDER
APPLICABLE LAW, ANY RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE
OF FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT
ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION 13.
BORROWER AND FOOTHILL HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO
A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE
TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING CONTRACT CLAIMS,
TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW
OR STATUTORY CLAIMS. EACH OF BORROWER AND FOOTHILL REPRESENTS
THAT IT HAS REVIEWED THIS WAIVER AND EACH KNOWINGLY AND
VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING
CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION,
A COPY OF THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO
A TRIAL BY THE COURT.
14. DESTRUCTION OF BORROWER'S DOCUMENTS.
All documents, schedules, invoices, agings, or other
papers delivered to Foothill may be destroyed or otherwise
disposed of by Foothill 4 months after they are delivered to
or received by Foothill, unless the applicable Borrower
requests, in writing, the return of said documents, schedules,
or other papers and makes arrangements, at Borrower's expense,
for their return.
15. GENERAL PROVISIONS.
15.1 Effectiveness. This Agreement shall be binding and
deemed effective when executed by Borrower and Foothill.
15.2 Successors and Assigns. This Agreement shall bind
and inure to the benefit of the respective successors and
assigns of each of the parties; provided, however, that
Borrower may not assign this Agreement or any rights or duties
hereunder without Foothill's prior written consent and any
prohibited assignment shall be absolutely void. No consent to
an assignment by Foothill shall release Borrower from its
Obligations. Foothill may assign this Agreement and its
rights and duties hereunder and no consent or approval by
Borrower is required in connection with any such assignment.
Foothill reserves the right to sell, assign, transfer,
negotiate, or grant participations in all or any part of, or
any interest in Foothill's rights and benefits hereunder. In
connection with any such assignment or participation, Foothill
may disclose all documents and information which Foothill now
or hereafter may have relating to Borrower or Borrower's
business, but such documents and information shall be subject
to the confidentiality provisions of Section 15.10. To the
extent that Foothill assigns its rights and obligations
hereunder to a third Person, Foothill thereafter shall be
released from such assigned obligations to the relevant
Borrower and such assignment shall effect a novation between
the relevant Borrower and such third Person.
15.3 Section Headings. Headings and numbers have been
set forth herein for convenience only. Unless the contrary is
compelled by the context, everything contained in each section
applies equally to this entire Agreement.
15.4 Interpretation. Neither this Agreement nor any
uncertainty or ambiguity herein shall be construed or resolved
against Foothill or Borrower, whether under any rule of
construction or otherwise. On the contrary, this Agreement
has been reviewed by all parties and shall be construed and
interpreted according to the ordinary meaning of the words
used so as to fairly accomplish the purposes and intentions of
all parties hereto.
15.5 Severability of Provisions. Each provision of this
Agreement shall be severable from every other provision of
this Agreement for the purpose of determining the legal
enforceability of any specific provision.
15.6 Amendments in Writing. This Agreement can only be
amended by a writing signed by both Foothill and Borrower.
15.7 Counterparts; Telefacsimile Execution. This
Agreement may be executed in any number of counterparts and by
different parties on separate counterparts, each of which,
when executed and delivered, shall be deemed to be an
original, and all of which, when taken together, shall
constitute but one and the same Agreement. Delivery of an
executed counterpart of this Agreement by telefacsimile shall
be equally as effective as delivery of an original executed
counterpart of this Agreement. Any party delivering an
executed counterpart of this Agreement by telefacsimile also
shall deliver an original executed counterpart of this
Agreement but the failure to deliver an original executed
counterpart shall not affect the validity, enforceability, and
binding effect of this Agreement.
15.8 Revival and Reinstatement of Obligations. If the
incurrence or payment of the Obligations by Borrower or any
guarantor of the Obligations or the transfer by either or both
of such parties to Foothill of any property of either or both
of such parties should for any reason subsequently be declared
to be void or voidable under any state or federal law relating
to creditors' rights, including provisions of the Bankruptcy
Code relating to fraudulent conveyances, preferences, and
other voidable or recoverable payments of money or transfers
of property (collectively, a "Voidable Transfer"), and if
Foothill is required to repay or restore, in whole or in part,
any such Voidable Transfer, or elects to do so upon the
reasonable advice of its counsel, then, as to any such
Voidable Transfer, or the amount thereof that Foothill is
required or elects to repay or restore, and as to all
reasonable costs, expenses, and attorneys fees of Foothill
related thereto, the liability of Borrower or such guarantor
automatically shall be revived, reinstated, and restored and
shall exist as though such Voidable Transfer had never been made.
15.9 Integration. This Agreement, together with the
other Loan Documents, reflects the entire understanding of the
parties with respect to the transactions contemplated hereby
and shall not be contradicted or qualified by any other
agreement, oral or written, before the date hereof.
15.10 Confidentiality. Foothill agrees to treat all
material, non-public information regarding Borrower and its
Subsidiaries and their operations, assets, and existing and
contemplated business plans in a confidential manner; it being
understood and agreed by Borrower that in any event Foothill
may make disclosures (a) to counsel for and other advisors,
accountants, and auditors to Foothill, (b) reasonably required
by any bona fide potential or actual assignee, transferee, or
participant in connection with any contemplated or actual
assignment or transfer by Foothill of an interest herein or
any participation interest in Foothill's rights hereunder, (c)
of information that has become public by disclosures made by
Persons other than Foothill, or (d) as required or requested
by any court, governmental or administrative agency, pursuant
to any subpoena or other legal process, or by any law,
statute, regulation, or court order; provided, however, that,
unless prohibited by applicable law, statute, regulation, or
court order, Foothill shall notify Borrower of any request by
any court, governmental or administrative agency, or pursuant
to any subpoena or other legal process for disclosure of any
such non-public material information concurrent with, or where
practicable, prior to the disclosure thereof.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed in Los Angeles, California.
INTERGRAPH CORPORATION,
a Delaware corporation
By___________________________
Title:_______________________
FOOTHILL CAPITAL CORPORATION,
a California corporation
By___________________________
Title:_______________________
Schedule ▇-▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ FOOTHILL NAME AMOUNT
NAME AND ZIP LIEN OF OF PRIOR
CODE POSITION PRIOR LIEN
LIENOR
Huntsville One Huntsville Madison Alabama First n/a n/a
Campus Madison
Industrial
Park
AMENDMENT NUMBER ONE TO
LOAN AND SECURITY AGREEMENT
This AMENDMENT NUMBER ONE TO LOAN AND SECURITY
AGREEMENT (this "Amendment") is entered into as of January 14,
1997, by and between Foothill Capital Corporation, a California
corporation ("Foothill"), on the one hand, and Intergraph
Corporation, a Delaware corporation ("Borrower"), with reference
to the following facts:
A. Foothill and Borrower heretofore have entered into that
certain Loan and Security Agreement, dated as of December 20,
1996 (as heretofore amended, supplemented, or otherwise modified,
the "Agreement");
B. Borrower has requested Foothill to amend the Agreement
to, among other things, permit a subfacility for indemnities in
respect of Borrower's Permitted F/X Contracts, as set forth in
this Amendment;
C. Foothill is willing to so amend the Agreement in
accordance with the terms and conditions hereof; and
D. All capitalized terms used herein and not defined
herein shall have the meanings ascribed to them in the Agreement,
as amended hereby.
NOW, THEREFORE, in consideration of the above recitals
and the mutual premises contained herein, Foothill and Borrower
hereby agree as follows:
1. Amendments to the Agreement.
a. Section 1.1 of the Agreement hereby is amended by
adding the following new defined terms in alphabetical order:
"First Amendment" means that certain Amendment
Number One to Loan and Security Agreement, dated as of
January 14, 1997, between Foothill and Borrower.
"F/X Bank" means Norwest Bank Minnesota, National
Association, or any successor thereto.
"F/X Bank Parameters Letter" means that certain
letter agreement, dated as of January 14, 1997, between F/X
Bank and Borrower, a copy of which is attached hereto as
Exhibit F-1, regarding the parameters under which F/X Bank
provides foreign exchange currency services to Borrower.
"F/X Line" has the meaning set forth in Section 2.4.
"F/X Reserve" means, as of any date of
determination, a reserve equal to the maximum amount of
obligations of Foothill to indemnify F/X Bank against losses
or expenses incurred by F/X Bank in connection with
Permitted F/X Contracts. As of January 14, 1997, the amount
of the F/X Reserve is $3,500,000.
"Permitted F/X Contracts" means foreign currency
exchange contracts between F/X Bank and Borrower that: (a)
are in respect of marked-to-market risk on foreign exchange
future trades or options; (b) are entered into by Borrower
in the ordinary course of its business; (c) are entered into
in connection with the operational needs of Borrower's
business and not for speculative purposes; (d) do not have a
maturity date that is after the date five (5) Business Days
prior to the Maturity Date; and (e) are provided by F/X Bank
pursuant to the F/X Bank Parameters Letter.
"Permitted Spot Trades" means foreign currency
exchange transactions between F/X Bank and Borrower that:
(a) are in respect of foreign exchange spot value trades;
(b) are entered into by Borrower in the ordinary course of
its business; and (c) are entered into in connection with
the operational needs of Borrower's business and not for
speculative purposes; and (d) are conducted pursuant to the
F/X Bank Parameters Letter.
b. The following definitions contained in Section 1.1 of
the Amendment are amended and restated in their entirety to read as follows:
"Availability" means the amount of money that
Borrower is entitled to borrow as Advances under Section
2.1, such amount being the difference derived when (a) the
sum of the principal amount of Advances then outstanding
(including any amounts that Foothill may have paid for the
account of Borrower pursuant to any of the Loan Documents
and that have not been reimbursed by Borrower) is subtracted
from (b) the lesser of (i) the Maximum Revolving Amount less
the sum of (y) the Letter of Credit Usage and (z) the F/X
Reserve, or (ii) the Borrowing Base less the sum of (y) the
Letter of Credit Usage and (z) the F/X Reserve.
c. The first sentence of Section 2.1(a) of the Agreement
hereby is amended and restated in its entirety to read as follows:
Subject to the terms and conditions of this Agreement,
Foothill agrees to make advances ("Advances") to Borrower in
an amount outstanding not to exceed at any one time the
lesser of (i) the Maximum Revolving Amount less the sum of
the Letter of Credit Usage and the F/X Reserve, or (ii) the
Borrowing Base less the sum of the Letter of Credit Usage
and the F/X Reserve.
d. The second sentence of Section 2.2(a) of the Agreement
hereby is amended and restated in its entirety to read as follows:
Foothill shall have no obligation to issue a Letter of
Credit if any of the following would result:
(i) the Letter of Credit
Usage would exceed the Borrowing Base less the sum
of the amount of outstanding Advances and the F/X
Reserve, or
(ii) the Letter of Credit
Usage would exceed the lower of (y) the Maximum
Revolving Amount less the sum of the amount of
outstanding Advances and the F/X Reserve, or (z)
$60,000,000, or
(iii) the outstanding
Obligations (other than under the Term Loan) would
exceed the Maximum Revolving Amount.
e. Section 2.4 of the Agreement hereby is amended and
restated in its entirety to read as follows:
2.4 Subfacility for Borrower's Permitted F/X
Contracts (the "F/X Line").
(a) If requested to do so by Borrower,
Foothill may, in its sole discretion, enter into agreements
with F/X Bank pursuant to which Foothill would indemnify F/X
Bank against losses or expenses incurred by F/X Bank in
connection with Permitted F/X Contracts, notwithstanding any
objections by Borrower as to the amount of such losses or
expenses. If Foothill is obligated to advance funds under
an F/X Line indemnity, Borrower immediately shall reimburse
such amount to Foothill and, in the absence of such
reimbursement, the amount so advanced immediately and
automatically shall be deemed to be an Advance hereunder
and, thereafter, shall bear interest at the rate then
applicable to Advances under Section 2.6. If, upon the
maturity date of any Permitted F/X Contract, Borrower does
not have Availability in an amount sufficient to pay the
full amount of Borrower's obligations to F/X Bank under such
contract, Foothill may, in its sole discretion, instruct F/X
Bank to liquidate such Permitted F/X Contract, at Borrower's
sole expense, and to apply any amounts thereunder that would
have been payable to Borrower against the amounts owed to
F/X Bank by Borrower. Any amounts paid by Foothill to F/X
Bank and any other costs or expenses incurred by Foothill in
connection with any such Permitted F/X Contracts shall
constitute Advances, shall be secured by all of the
Collateral, and thereafter shall be payable by Borrower to
Foothill together with interest as provided for herein.
(b) Borrower hereby agrees to indemnify,
save, defend, and hold Foothill harmless from any loss,
cost, expense, or liability, including payments made by
Foothill, expenses, and reasonable attorneys fees incurred
by Foothill arising out of or in connection with any F/X
Line indemnity.
(c) Any and all charges, commissions, fees,
and costs incurred by Foothill relating to Permitted F/X
Contracts that are the subject of an F/X Line indemnity by
Foothill shall be considered Foothill Expenses for purposes
of this Agreement and immediately shall be reimbursable by
Borrower to Foothill.
(d) Immediately upon the termination of this
Agreement, Borrower agrees to either (i) provide cash
collateral to be held by Foothill in an amount equal to 105%
of the maximum amount of Foothill's obligations under the
F/X Line indemnities, or (ii) cause to be delivered to
Foothill releases of all of Foothill's obligations under
outstanding F/X Line indemnities. At Foothill's discretion,
any proceeds of Collateral received by Foothill after the
occurrence and during the continuation of an Event of
Default may be held as the cash collateral required by this
Section 2.4(d).
(e) The amount of the F/X Reserve may be
reduced from time to time by Foothill upon the receipt and
written acceptance by Foothill of an F/X Reserve Reduction
Certificate, in the form of that attached hereto as
Exhibit F-2, duly executed by both Borrower and F/X Bank,
not less than 2 Business Days prior to the requested
effective date of such reduction.
(f) So long as no Triggering Event has
occurred and is continuing or would result therefrom, the
amount of the F/X Reserve may be increased from time to time
by Foothill in its sole discretion upon the receipt and
written acceptance by Foothill of an F/X Reserve Increase
Certificate, in the form of that attached hereto as Exhibit
F-3, duly executed by both Borrower and F/X Bank, not less
than 2 Business Days prior to the requested effective date
of such increase.
(g) Anything in the Loan Documents to the
contrary notwithstanding, Permitted Spot Trades shall be
deemed to qualify as Permitted F/X Contracts eligible for
coverage under an F/X Line indemnity solely until such time,
if ever, as Foothill is obligated to advance funds under an
F/X Line indemnity to cover obligations owing but unpaid by
Borrower to F/X Bank in respect of Permitted Spot Trades
and, thereafter, Permitted Spot Trades shall no longer be
deemed to qualify as Permitted F/X Contracts eligible for
coverage under an F/X Line indemnity and F/X Line
indemnities shall no longer be permitted to be issued in
respect of Permitted Spot Trades.
f. The first sentence of Section 3.5 of the Agreement
hereby is amended and restated in its entirety to read as follows:
On the date of termination of this Agreement, all
Obligations (including contingent reimbursement obligations
of Borrower with respect to any outstanding Letters of
Credit or any outstanding F/X Line indemnities) immediately
shall become due and payable without notice or demand.
g. The preamble to Section 5 of the Agreement hereby is
amended and restated in its entirety to read as follows:
In order to induce Foothill to enter into this Agreement,
Borrower makes the following representations and warranties
which shall be true, correct, and complete in all respects
as of the Closing Date, and at and as of the date of the
making of each Advance or Letter of Credit or F/X Line
indemnity made thereafter, as though made on and as of the
date of such Advance or Letter of Credit or F/X Line
indemnity (except to the extent that such representations
and warranties relate solely to an earlier date) and such
representations and warranties shall survive the execution
and delivery of this Agreement:
h. Section 7.1(a) of the Agreement hereby is amended and
restated in its entirety to read as follows:
(a) Indebtedness evidenced by this
Agreement, together with Indebtedness to issuers of letters
of credit that are the subject of L/C Guarantees and
Indebtedness to F/X Bank under Permitted F/X Contracts;
i. The subsection of Section 7.19 of the Agreement that
reads "withdraw, or permit any Subsidiary of Borrower to
withdraw, from any Multiemployer Plan where such withdrawal is
reasonably likely to result in any liability of any such entity
under Title IV of ERISA;" and that is numbered in Section 7.19 of
the Agreement as `subsection 7.(yyyy)' hereby is re-numbered as
`subsection (h)'.
j. A new subsection (n) hereby is added to Section 9.1 of
the Agreement in proper numerical order as follows:
(n) Foothill may, at its option, require
Borrower to deposit with Foothill funds in an amount equal
to the F/X Line Reserve (if any), and, if Borrower fails to
make such deposit promptly, Foothill may advance such amount
as an Advance (whether or not an Overadvance is created
thereby). Any such deposit or the proceeds of such Advance
shall be held by Lender as a reserve to fund indemnity
obligations owing to F/X Bank under the F/X Line. At such
time (if ever) as all such indemnity obligations have been
paid or terminated, any amounts remaining in such reserve
shall be applied against any outstanding Obligations or, if
all Obligations have been indefeasibly paid in full,
returned to Borrower.
2. Representations and Warranties. Borrower hereby
represents and warrants to Foothill that: (a) the execution,
delivery, and performance of this Amendment and of the Agreement,
as amended by this Amendment, are within its corporate powers,
have been duly authorized by all necessary corporate action, and
are not in contravention of any law, rule, or regulation, or any
order, judgment, decree, writ, injunction, or award of any
arbitrator, court, or governmental authority, or of the terms of
its charter or bylaws, or of any contract or undertaking to which
it is a party or by which any of its properties may be bound or
affected; (b) this Amendment and the Agreement, as amended by
this Amendment, constitute Borrower's legal, valid, and binding
obligation, enforceable against Borrower in accordance with its
terms; and (c) attached hereto as Exhibit F-1 is a true, correct,
and complete copy of the F/X Bank Parameters Letter.
3. Conditions Precedent to Amendment. The satisfaction of
each of the following on or before, unless otherwise specified
below, the First Amendment Closing Date shall constitute
conditions precedent to the effectiveness of this Amendment:
a. Foothill shall have received the reaffirmation and
consent of each of the Obligors (other than Borrower) attached
hereto as Exhibit A, duly executed and delivered by the
respective authorized officials thereof;
b. Foothill shall have received a certificate from the
Secretary of Borrower attesting to the incumbency and signatures
of authorized officers of Borrower and to the resolutions of
Borrower's Board of Directors authorizing its execution and
delivery of this Amendment and the performance of this Amendment
and the Agreement as amended by this Amendment, and authorizing
specific officers of Borrower to execute and deliver the same;
c. Foothill shall have received all required consents of
Foothill's participants in the Obligations to Foothill's
execution, delivery, and performance of this Amendment;
d. The representations and warranties in this Amendment,
the Agreement as amended by this Amendment, and the other Loan
Documents shall be true and correct in all respects on and as of
the date hereof, as though made on such date (except to the
extent that such representations and warranties relate solely to
an earlier date);
e. No Event of Default or event which with the giving of
notice or passage of time would constitute an Event of Default
shall have occurred and be continuing on the date hereof, nor
shall result from the consummation of the transactions contemplated herein;
f. No injunction, writ, restraining order, or other order
of any nature prohibiting, directly or indirectly, the
consummation of the transactions contemplated herein shall have
been issued and remain in force by any governmental authority
against Borrower, Foothill, or any of their Affiliates;
g. The Collateral shall not have declined materially in
value from the values set forth in the most recent appraisals or
field examinations previously done by Foothill; and
h. All other documents and legal matters in connection
with the transactions contemplated by this Amendment shall have
been delivered or executed or recorded and shall be in form and
substance satisfactory to Foothill and its counsel.
4. Effect on Agreement. The Agreement, as amended hereby,
shall be and remain in full force and effect in accordance with
its respective terms and hereby is ratified and confirmed in all
respects. The execution, delivery, and performance of this
Amendment shall not operate as a waiver of or, except as
expressly set forth herein, as an amendment, of any right, power,
or remedy of Foothill under the Agreement, as in effect prior to
the date hereof.
5. Further Assurances. Borrower shall execute and deliver
all agreements, documents, and instruments, in form and substance
satisfactory to Foothill, and take all actions as Foothill may
reasonably request from time to time, to perfect and maintain the
perfection and priority of Foothill's security interests in the
Collateral and the Real Property, and to fully consummate the
transactions contemplated under this Amendment and the Agreement,
as amended by this Amendment.
6. Miscellaneous.
a. Upon the effectiveness of this Amendment, each
reference in the Agreement to "this Agreement", "hereunder",
"herein", "hereof" or words of like import referring to the
Agreement shall mean and refer to the Agreement as amended by this Amendment.
b. Upon the effectiveness of this Amendment, each
reference in the Loan Documents to the "Loan Agreement",
"thereunder", "therein", "thereof" or words of like import
referring to the Agreement shall mean and refer to the Agreement
as amended by this Amendment.
c. Upon the effectiveness of this Amendment, each
reference in the Agreement and the other Loan Documents to
Exhibit F-1, Exhibit F-2, or Exhibit F-3 of the Agreement shall
mean and refer to Exhibit F-1, Exhibit F-2, or Exhibit F-3
attached hereto, respectively.
d. This Amendment may be executed in any number of
counterparts, all of which taken together shall constitute one
and the same instrument and any of the parties hereto may execute
this Amendment by signing any such counterpart.
[remainder of page intentionally left blank]
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed as of the date first written above.
FOOTHILL CAPITAL CORPORATION,
a California corporation
By____________________________
Title:________________________
INTERGRAPH CORPORATION, a Delaware corporation
By____________________________
Title:________________________
EXHIBIT A
----------
Reaffirmation and Consent
All capitalized terms used herein but not
otherwise defined herein shall have the meanings ascribed to them
in that certain Amendment Number One to Loan and Security
Agreement, dated as of January 14, 1997 (the "Amendment"). Each
of the undersigned hereby (a) represents and warrants to Foothill
that the execution, delivery, and performance of this
Reaffirmation and Consent are within its corporate powers, have
been duly authorized by all necessary corporate action, and are
not in contravention of any law, rule, or regulation, or any
order, judgment, decree, writ, injunction, or award of any
arbitrator, court, or governmental authority, or of the terms of
its charter or bylaws, or of any contract or undertaking to which
it is a party or by which any of its properties may be bound or
affected; (b) consents to the amendment of the Agreement by the
Amendment; (c) acknowledges and reaffirms its obligations owing
to Foothill under the Pledge Agreement and any other Loan
Documents to which it is party; and (d) agrees that each of the
Pledge Agreement and any other Loan Documents to which it is a
party is and shall remain in full force and effect. Although
each of the undersigned has been informed of the matters set
forth herein and has acknowledged and agreed to same, it
understands that Foothill has no obligation to inform it of such
matters in the future or to seek its acknowledgement or agreement
to future amendments, and nothing herein shall create such a duty.
M&S COMPUTING INVESTMENTS, INC., a
Delaware corporation
By ___________________________
Title:________________________
INTERGRAPH DELAWARE, INC., a Delaware
corporation
By ___________________________
Title:________________________
Exhibit F-1
-----------
[TO BE ATTACHED]
Exhibit F-2
-----------
F/X RESERVE REDUCTION CERTIFICATE
Today's date:____________________
(1) FROM INTERGRAPH TO: NORWEST BANK MINNESOTA
ATTENTION: ▇▇▇▇ ▇▇▇▇▇▇▇▇/▇▇▇ ▇▇▇▇▇▇▇
FACSIMILE: (▇▇▇) ▇▇▇-▇▇▇▇
(2) FROM NORWEST TO: FOOTHILL CAPITAL CORPORATION
ATTENTION: ▇▇▇▇▇ ▇▇▇▇
FACSIMILE: (▇▇▇) ▇▇▇-▇▇▇▇
(3) FROM FOOTHILL TO INTERGRAPH AND NORWEST:
Reference hereby is made to that certain Loan and Security
Agreement, dated as of December 20, 1996 (as amended,
supplemented, and modified, the "Loan Agreement"), between
Foothill Capital Corporation ("Foothill") and Intergraph
Corporation ("Borrower"). Capitalized terms used herein and not
otherwise defined herein shall have the meanings ascribed to them
in the Loan Agreement.
Pursuant to Section 2.4 of the Agreement, Borrower hereby
requests a reduction in the F/X Reserve from the current amount
of $____________ to the new amount of $_____________, such
reduction to become effective on _____________,______.
INTERGRAPH CORPORATION FACSIMILE: (▇▇▇) ▇▇▇-▇▇▇▇
ATTENTION: ▇▇▇▇▇ ▇▇▇▇▇▇
By:_______________________
Its:______________________
NORWEST BANK MINNESOTA, N.A.
By:_______________________
Its:______________________
FOOTHILL CAPITAL CORPORATION
By:_______________________
Its:______________________
Exhibit F-3
-----------
F/X RESERVE INCREASE CERTIFICATE
Today's date:____________________
(1) FROM INTERGRAPH TO: FOOTHILL CAPITAL CORPORATION
ATTENTION: ▇▇▇▇▇ ▇▇▇▇
FACSIMILE: (▇▇▇) ▇▇▇-▇▇▇▇
(2) FROM FOOTHILL TO: NORWEST BANK MINNESOTA
ATTENTION: ▇▇▇▇ ▇▇▇▇▇▇▇▇/▇▇▇ ▇▇▇▇▇▇▇
FACSIMILE: (▇▇▇) ▇▇▇-▇▇▇▇
(3) FROM NORWEST TO INTERGRAPH AND FOOTHILL:
Reference hereby is made to that certain Loan and Security
Agreement, dated as of December 20, 1996 (as amended, restated,
supplemented, and modified from time to time, the "Loan
Agreement"), between Foothill Capital Corporation ("Foothill")
and Intergraph Corporation ("Borrower"). Capitalized terms used
herein and not otherwise defined herein shall have the meanings
ascribed to them in the Loan Agreement.
Pursuant to Section 2.4 of the Agreement, Borrower hereby
requests an increase in the F/X Reserve from the current amount
of $____________ to the new amount of $_____________, such
increase to become effective on _____________,______.
INTERGRAPH CORPORATION FACSIMILE: (▇▇▇) ▇▇▇-▇▇▇▇
ATTENTION: ▇▇▇▇▇ ▇▇▇▇▇▇
By:_______________________
Its:______________________
FOOTHILL CAPITAL CORPORATION
By:_______________________
Its:______________________
NORWEST BANK MINNESOTA, N.A.
By:_______________________
Its:______________________