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EXHIBIT 10.14
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CREDIT AGREEMENT
AMONG
BANK ONE, NA,
A NATIONAL BANKING ASSOCIATION;
M-WAVE, INC.,
A DELAWARE CORPORATION
AND
POLY CIRCUITS, INC.
AN ILLINOIS CORPORATION
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DATED AS OF ______, 2003
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CREDIT AGREEMENT
This CREDIT AGREEMENT, is dated as of _______ (this "AGREEMENT"), is by
and among BANK ONE, NA, a national banking association (the "BANK"), M-WAVE,
INC., a Delaware corporation (the "COMPANY") and POLY CIRCUITS, INC., an
Illinois corporation ("POLY CIRCUITS" and jointly and severally with the
Company, the "BORROWER").
RECITALS
The Bank and the Borrower acknowledge the following:
A. The Borrower entered into a Loan Agreement, dated as of July
1, 2001 (as amended from time to time, the "ISSUER LOAN AGREEMENT") with the
Illinois Development Finance Authority (the "ISSUER"), a public body corporate
and politic, pursuant to which Issuer Loan Agreement the Issuer agreed to lend
to the Borrower $8,100,000.00 to finance the costs of the Project (as defined in
the Issuer Loan Agreement), which loan is evidenced by the ISSUER PROMISSORY
NOTE (as defined in the Issuer Loan Agreement).
B. The Issuer entered into a Trust Indenture, dated as of July 1,
2001 (as amended from time to time, the "INDENTURE"), naming American National
Bank and Trust Company of Chicago, an Illinois banking corporation, as trustee
(together with any successor trustee under the Indenture, the "TRUSTEE"), which
provided for, among other things, the assignment by the Issuer of its rights
under the Issuer Loan Agreement and the Issuer Promissory Note to the Trustee
for the benefit of the holders of the Bonds and of the Bank.
C. Pursuant to the Issuer Loan Agreement and the Indenture, the
Issuer issued its Variable Rate Demand Industrial Development Revenue Bonds
(M-Wave, Inc. Project) Series 2001 in the initial aggregate amount of $8,100,000
(the "BONDS").
D. As security for the payment of the Bonds, the Borrower
arranged for Bank to issue a letter of credit in favor of the Trustee (the
"LETTER OF CREDIT"), in the amount of $8,199,864.00 to secure the following: (i)
payment of the principal of, and up to 45 days' interest at a maximum rate of
10% per annum on the Bonds, and subject to the terms and conditions of the
Reimbursement Agreement dated as of July 1, 2001 between Bank and Borrower (the
"REIMBURSEMENT AGREEMENT").
E. Borrower defaulted under the Reimbursement Agreement due to
its failure to comply with certain financial ratios in the Reimbursement
Agreement.
F. After Borrower defaulted under the Reimbursement Agreement,
the parties entered into Forbearance Agreements dated November 22, 2002 and
January 1, 2003 (collectively, the "FORBEARANCE AGREEMENTS").
G. Borrower defaulted under the Forbearance Agreement dated
January 1, 2003 due to its failure to make certain payments required hereunder.
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H. After Borrower defaulted under the Forbearance Agreement dated
January 1, 2003, Bank notified the Trustee of the default, the Trustee
accelerated the Bonds and the Trustee drew on the Letter of Credit to pay the
Bondholders.
I. As a result of Borrower's defaults and the Trustee's draw on
the Letter of Credit, Borrower is indebted to Bank under the Reimbursement
Agreement in the principal amount of $2,718.532.80.
J. Pursuant to the Indenture, the Bank is entitled to be
subrogated to the rights of the Trustee under the Issuer Loan Agreement and the
Issuer Promissory Note.
K. Borrower has requested, and subject to the terms and
conditions hereof, Bank has agreed that the indebtedness of Borrower to Bank
under the Reimbursement Agreement be evidenced by a Promissory Note in the
principal amount of $2,413,532.80, dated of even date herewith (the "NOTE")
executed by Borrower.
AGREEMENTS
In consideration of the Recitals and issuance of the Letter of Credit,
the Bank and the Borrower agree as follows:
1. DEFINITIONS. As used in this Agreement, the following terms
shall have the following meanings:
1.1 "AFFILIATE" means any person, corporation or other
entity directly or indirectly controlling, controlled by or under common control
with the Borrower.
1.2 "ARTICLES OF INCORPORATION" means the articles of
incorporation of each of the Company and Poly Circuits.
1.3 "ASSIGNMENT OF CONTRACTS AND PERMITS" means the
Assignment of Contracts and Permits between the Borrower and the Bank, dated as
of July 1, 2001 relating to the assignment by the Borrowers of its right, title
and interest under any and all architectural and construction agreements,
permits, reservations, utility agreements, and escrows related to the
construction of the Project.
1.4 "ASSIGNMENT OF SECURITY AND PROMISSORY NOTE" means
the Assignment of Security and Promissory Note of even date herewith, whereby
the Trustee assigns to the Bank the Trustee's interest in the Security (as
defined in the Indenture) and the Issuer Promissory Note.
1.5 "AUTHORIZED REPRESENTATIVE" means, with respect to
the Company, either ▇▇▇▇▇▇ ▇▇▇▇▇ or ▇▇▇▇ ▇▇▇▇▇▇▇, or any other officer, employee
or other person authorized to perform the act in question by the by-laws or a
resolution of the Company filed with the Bank; and, with respect to Poly
Circuits either ▇▇▇▇▇▇ ▇▇▇▇▇ or ▇▇▇▇ ▇▇▇▇▇▇▇, or any officer, employee or other
person authorized to perform the act in question by the by-laws or a resolution
of Poly Circuits filed with the Bank.
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1.6 "BENSENVILLE ENVIRONMENTAL INDEMNITY" means the
Environmental Indemnity Agreement between the Borrower and the Bank of even date
herewith related to the certification that the Bensenville Property complies
with, and will continue to comply with, all Environmental Laws.
1.7 "BENSENVILLE MORTGAGE" means the Real Estate
Mortgage, Security Agreement and Assignment of Rents and Leases dated of even
date herewith, as modified from time to time, from Poly Circuits, which grants
the Bank a first mortgage lien on the Bensenville Property, and secures amounts
due and performance under the Loan Documents, the Bond Documents and the
Restructure Documents.
1.8 "BENSENVILLE PROPERTY" means the real estate located
at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, owned by the Borrower and described
in the Bensenville Mortgage, together with all present and future buildings,
structures and other improvements, fixtures, equipment, appliances and goods
located on the Bensenville property which are owned by the Borrower and are to
become fixtures.
1.9 "BOND DOCUMENTS" means the Indenture, the Bonds, the
Issuer Loan Agreement, the Bond Purchase Agreement, the Arbitrage Regulation
Agreement, the Tax Certificate, the Preliminary Offering Memorandum, the
Offering Memorandum, the Promissory Note, the Reimbursement Agreement and the
Remarketing Agreement.
1.10 "BORROWER'S ARCHITECT" means PLD Associates, ▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
1.11 "BORROWER'S CONTRACTOR" means NEPCO, Inc., with an
address at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
1.12 "CAPITALIZED LEASE" means any lease, the obligations
under which have been, or in accordance with GAAP are required to be, recorded
as a capital lease liability on the balance sheet of the Borrower.
1.13 "CODE" means the Internal Revenue Code of 1986, as
amended.
1.14 "COLLATERAL" means all of the property and interests
in property (i) described in the Issuer Loan Agreement, (ii) described in the
Mortgage, (iii) described in the Security Agreement, and (iv) described in any
of the other Loan Documents, and all other property and interests in property
which shall, from time to time, secure the Obligations.
1.15 "CONTINGENT LIABILITIES" means, as of each date of
determination, all obligations and liabilities of the Borrower which, under
GAAP, would be reflected as a contingent liability in the balance sheet of the
Borrower or in a note thereto.
1.16 "CONTROLLED GROUP" means a group of trades or
businesses (whether or not incorporated) under common control as defined in the
regulations issued pursuant to Section 414(c) of the Code or such other
regulations prescribed by the Pension Benefit Guaranty Corporation pursuant to
Section 4001(b)(1) of ERISA, of which the Borrower is a part.
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1.17 "DEFAULT" means any act, event, condition or omission
which, with the giving of notice or lapse of time, would constitute an Event of
Default if uncured or unremedied.
1.18 "ENVIRONMENTAL LAWS" means all federal, state and
local laws including statutes, regulations, ordinances, codes, rules and other
governmental restrictions and requirements relating to the discharge of air
pollutants, water pollutants or process waste water or otherwise relating to the
environment or hazardous substances now or hereafter in effect including, but
not limited to, the Federal Solid Waste Disposal Act, the Federal Clean Air Act,
the Federal Clean Water Act, the Federal Resource Conservation and Recovery Act
of 1976, the Federal Comprehensive Environmental Response, Compensation and
Liability Act of 1980, regulations of the Environmental Protection Agency,
regulations of the Nuclear Regulatory Agency and regulations of the Illinois
Environmental Protection Agency.
1.19 "ERISA" means, at any date, the Employee Retirement
Income Security Act of 1974, and the regulations thereunder, all as the same
shall be in effect at such date.
1.20 "EVENT OF DEFAULT" means the occurrence of any of the
events described in Section 9.1.
1.21 "FIFTH MORTGAGE MODIFICATION AGREEMENT" means the
Fifth Mortgage Modification Agreement of even date herewith between Borrower and
Bond which modifies and amends the West Chicago Mortgage.
1.22 "FIRST AMENDMENT TO INSTALLMENT NOTE" means the First
Amendment to Installment Note (Secured) of even date herewith executed by
Borrower.
1.23 "FIRST AMENDMENT TO SECURITY AGREEMENT" means the
First Amendment to Security Agreement between the Borrower and the Bank of even
date herewith, which amends the Security Agreement.
1.24 "GAAP" means generally accepted accounting principles
in effect in the United States from time to time, applied consistently from year
to year.
1.25 "GUARANTY" means any agreement, undertaking or
arrangement pursuant to which the Borrower guarantees, endorses or otherwise
becomes or is contingently liable for an obligation of any other person or
entity or any other liability which would be classified as contingent in
accordance with GAAP.
1.26 "INDEBTEDNESS" means all items which, in accordance
with GAAP, would be classified as liabilities on the balance sheet of the
Borrower, including all Capitalized Leases.
1.27 "INSTALLMENT NOTE" means the Installment Note
(Secured) of Borrower dated October 27, 1999 in the original principal amount of
$293,834, as amended by the Amendment to Installment Note.
1.28 "ISSUER LOAN AGREEMENT" means the Issuer Loan
Agreement between the Issuer and the Borrower, dated as of July 1, 2001 relating
to the use of the proceeds of the Bonds.
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1.29 "ISSUER PROMISSORY NOTE" means that certain
Promissory Note in the form of the Promissory Note attached to the Issuer Loan
Agreement between the Borrower and the Issuer.
1.30 "LEASE OBLIGATIONS" means, at any date, the
obligations of the Borrower under leases of real or personal property for a
remaining term of one (1) year or longer (including taxes, insurance,
maintenance and similar expenses which the Borrower is required to pay under any
such lease) whether or not such obligations are reflected as liabilities on the
balance sheet of the Borrower or in a note thereto.
1.31 "LETTER OF CREDIT" means, collectively, the Letter of
Credit issued by the Bank pursuant to the terms of the Reimbursement Agreement.
1.32 "LOAN DOCUMENTS" means the Reimbursement Agreement
and all agreements, instruments and documents executed in connection with or
contemplated by the Reimbursement Agreement, the Pledge and Security Agreement,
the Security Agreement, the Assignment of Contracts and Permits, the
Contractor's Letter, the Architect's Certificate, the West Chicago Environmental
Indemnity Agreement, the West Chicago Mortgage, the Installment Note, including,
without limitation, security agreements, guaranties, mortgages, pledges, powers
of attorney, consents, assignments, contracts, certificates, notices, leases,
financing statements and all other written matter heretofore, now and/or from
time to time hereafter executed by and/or on behalf of Borrower and delivered to
or for the benefit Bank or any affiliated bank, as the same may be amended,
restated or modified from time to time hereafter.
1.33 "MULTIEMPLOYER PLAN" means any pension benefit plan
subject to Title IV of ERISA as defined in Section 4001(a)(3) of ERISA, to which
the Borrower or any member of the Controlled Group is required to contribute on
behalf of its employees.
1.34 "OBLIGATIONS" means all of Borrower's liabilities,
obligations and indebtedness to Bank of any and every kind and nature
(including, without limitation, interest charges, expenses, reasonable
attorneys' fees and other sums chargeable to Borrower by Bank and future
advances made to or for the benefit of Borrower), whether arising under this
Credit Agreement, the Note, the Installment Note (Secured), the Bond Documents,
the Loan Documents and the Restructure Documents, or acquired by Bank from any
other source, whether heretofore, now or hereafter owing, arising, due, or
payable from Borrower to Bank and howsoever evidenced, created, incurred,
acquired or owing, whether primary, secondary, direct, contingent, fixed, or
otherwise, including obligations of performance.
1.35 "OPERATIVE DOCUMENTS" means the Loan Documents, the
Bond Documents and all amendments, modifications, extensions, renewals or
replacements thereof.
1.36 "PERMITTED LIENS" means (a) liens, charges or
encumbrances listed on Schedule 1 attached hereto; (b) liens for taxes,
assessments or governmental charges not delinquent or being contested in good
faith by the Borrower for which adequate reserves are established and maintained
in accordance with GAAP; (c) liens or deposits in connection with worker's
compensation or other insurance or to secure the performance of bids, trade
contracts
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(other than for borrowed money), leases, public or statutory obligations, surety
or appeal bonds or other obligations of like nature incurred in the ordinary
course of business; (d) easements, restrictions, minor title irregularities and
similar matters which have no material adverse effect as a practical matter upon
the ownership or use of its property by the Borrower; and (e) liens under the
Loan Documents, the Bond Documents or the Restructure Documents or to secure any
indebtedness owing to the Bank or any affiliate of the Bank.
1.37 "PLAN" means any pension benefit plan subject to
Title IV of ERISA, including any Multiemployer Plan, maintained by the
Borrower or any member of the Controlled Group or any such Plan to which the
Borrower or any member of the Controlled Group is required to contribute on
behalf of its employees.
1.38 "PLANS AND SPECIFICATIONS" means the plans and
specifications dated January 5, 2001 (Phase 1), January 23, 2001 (Phase 2), and
January 9, 2001 (Phase 3) prepared by Borrower's Architect.
1.39 "PLEDGE AND SECURITY AGREEMENT" means the Pledge and
Security Agreement from Borrower to Bank dated as of July 1, 2001.
1.40 "PRIME RATE" means the rate of interest announced by
the Bank from time to time as its prime rate for interest rate determinations.
The Prime Rate may or may not be the lowest interest rate charged by the Bank.
1.41 "PROJECT" means the Project as defined in the Issuer
Loan Agreement.
1.42 "RESTRUCTURE DOCUMENTS" means this Credit Agreement,
the Note, the First Amendment to Installment Note (Secured), the Bensenville
Mortgage, the Bensenville Environmental Indemnity, the Fifth Mortgage
Modification Agreement, the First Amendment to Security Agreement, the
Assignment of Security and Promissory Note, all other documents, agreements and
instruments now or hereafter executed in connection therewith, and all
amendments, modifications, extensions, renewals and replacements thereof entered
into from time to time.
1.43 "SECURITY AGREEMENT" means the Security Agreement
dated as of July 1, 2001 herewith executed by Borrower in favor or the Bank to
secure the Obligations.
1.44 "WEST CHICAGO ENVIRONMENTAL INDEMNITY AGREEMENT"
means the Environmental Indemnity Agreement between the Borrowers and the Bank
dated November 15, 2000 relating to the certification by the Borrowers that the
West Chicago Property complies with, and will continue to comply with, all
Environmental Laws, and the Reaffirmation of Environmental Indemnity Agreement
dated as of July 1, 2001.
1.45 "WEST CHICAGO MORTGAGE" means the Real Estate
Mortgage, Security Agreement and Assignment of Rents and Leases dated as of
November 15, 2000, as modified from time to time, from the Borrower granting the
Bank a first mortgage lien on the West Chicago Property, and securing amounts
due and performance under the Loan Documents and the Bond Documents.
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1.46 "WEST CHICAGO PROPERTY" means the real estate located
at ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ owned by the Borrower and
described in the West Chicago Mortgage, together with all present and future
buildings, structures and other improvements, fixtures, equipment, appliances
and goods which are owned by the Borrower and are to become fixtures and which
are located on the real estate described in the West Chicago Mortgage.
1.47 ADDITIONAL TERMS. Other capitalized terms herein not
otherwise defined shall have the meanings given to them in the Operative
Documents.
2. CREDIT AND NOTE.
2.1 AMOUNT OF CREDIT. The unpaid amounts due to Bank from
Borrower under the Reimbursement Agreement in the amount of $2,718,532.80 shall
be repaid as provided herein, subject to all of the terms and conditions of this
Credit Agreement.
2.2 NOTE. The amounts due under the Reimbursement
Agreement shall be evidenced by the Note in the principal amount of
$2,413,532.80. The Note shall mature and all amounts unpaid thereunder shall be
due and payable on December 31, 2003.
2.3 INSTALLMENT NOTE. The unpaid principal amount of
$68,026.48 due to Bank from Borrower under the Installment Note shall be paid to
the Bank on December 31, 2003.
2.4 SETOFF. The Bank, and each affiliate of the Bank, is
authorized to charge any account of the Borrower at Bank or at such affiliate
for all amounts payable under Section 2 or Section 3 hereof.
3. INTEREST AND PRINCIPAL PAYMENTS.
3.1 INTEREST. (a) The unpaid principal amount from time
to time outstanding under the Note shall bear interest at the per annum rate (i)
before maturity, whether by acceleration or otherwise, equal to the Prime Rate,
and (ii) after maturity, until paid at a rate equal to two percent (2%) in
addition to the interest rate in effect prior to maturity (the "DEFAULT RATE").
(b) The unpaid principal amount under the
Installment Note shall bear interest as provided in the Installment Note.
3.2 PRINCIPAL REPAYMENTS. Borrower shall make payments on
account of the principal amount due under the Note and the Installment Note
according to the following schedule:
(a) Within five (5) days of the sale of the
Bensenville Property, $650,000.
(b) A final payment of all principal, interest
and other amounts due to the Bank, if any, on December 31, 2003.
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3.3 PREPAYMENTS. Amounts due under the Note and the
Installment Note (Secured) may be prepaid by Borrower at any time without
penalty or premium.
3.4 APPLICATION OF PAYMENTS. Payments received by the
Bank from the Borrower shall be applied first to costs and expenses incurred by
the Bank in connection with the Obligations, then to accrued and unpaid interest
under the Note and the Installment Note (Secured), then to principal under the
Note and the Installment Note (Secured), as the Bank may determine in its
discretion.
3.5 COMPUTATIONS. All computations of interest and fees
under this Agreement shall be for actual days elapsed on a 360 day year.
4. SECURITY.
4.1 SECURITY AGREEMENT. The Obligations are secured
pursuant to the Security Agreement dated as of July 1, 2001 between Borrower and
the Bank, as amended by the First Amendment to Security Agreement and from time
to time thereafter.
4.2 WEST CHICAGO MORTGAGE. The Obligations are further
secured pursuant to the West Chicago Mortgage, as now or hereafter amended from
time to time, including by the Fifth Mortgage Modification Agreement.
4.3 BENSENVILLE MORTGAGE. The Obligations are further
secured pursuant to the Bensenville Mortgage, as amended from time to time
hereafter.
4.4 ASSIGNED SECURITY. The Obligations are further
secured by the Security, as defined in Section 301 of the Indenture, pursuant to
the Assignment of Security and Promissory Note of even date herewith executed by
the Trustee in favor of the Bank.
5. REPRESENTATIONS AND WARRANTIES. In order to induce the Bank to
issue the Letter of Credit, the Borrower represents and warrants:
5.1 ORGANIZATION; AUTHORITY. (a) The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware, is duly authorized and/or qualified to conduct
business, is in good standing in the State of Delaware and every other
jurisdiction in which the nature of its business or the ownership of its
properties requires such qualification and, the Company has the power to own its
properties and carry on its business as currently being conducted; and, (b) Poly
Circuits is a corporation duly organized, validly existing and in good standing
under the laws of the State of Illinois, is duly authorized and/or qualified to
conduct business, is in good standing in the State of Illinois and every other
jurisdiction in which the nature of its business or the ownership of its
properties requires such qualification and, Poly Circuits has the power to own
its properties and carry on its business as currently being conducted.
5.2 AUTHORIZATION AND BINDING EFFECT. The execution and
delivery of this Credit Agreement, the Note, the Bensenville Mortgage, the First
Amendment to Security Agreement, the Fifth Mortgage Modification Agreement and
any other Restructure Documents to which it is a party, and the performance by
the Borrower of its obligations thereunder, are
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within its power, have been duly authorized by proper action on the part of the
Company and Poly Circuits, are not in violation of any existing law, rule or
regulation of any governmental agency or authority, any order or decision of any
court, the Articles of Incorporation and by-laws of the Company or Poly
Circuits, restriction or undertaking to which or by which Borrower is bound, and
do not require the approval or consent which has not been secured in writing of
any governmental body, agency or authority or any other person or entity. The
Restructure Documents to which the Borrower is a party, when executed and
delivered, will constitute, the valid and binding obligations of the Borrower
enforceable in accordance with their terms, except as limited by bankruptcy,
insolvency or similar laws of general application affecting the enforcement of
creditors' rights and except to the extent that general principles of equity
might affect the specific enforcement thereof.
5.3 FINANCIAL STATEMENTS. Each Borrower has furnished to
the Bank the balance sheet of such Borrower as of June 30, 2003, together with
related statements of income, and cash flows for the year ended on that date.
Such financial statements were prepared in accordance with GAAP consistently
applied throughout the periods involved, except as set forth in the attached
notes thereto, are correct and complete and fairly present the financial
condition of such Borrower as of such date and the results of its operations and
cash flow for the period ended on such date. There has been no material adverse
change in the condition or prospects of either Borrower, financial or otherwise,
since the date of the most recent financial statement furnished to the Bank,
that has not been disclosed to the Bank.
5.4 LITIGATION. Except for the matters described on
Schedule 5.4 attached hereto, there is no litigation or administrative
proceeding pending or, to the knowledge of the Borrower, threatened against or
affecting the Borrower, the properties of the Borrower which, if determined
adversely, would have an adverse effect upon the business, financial condition
or properties of the Borrower or the ability of the Borrower to perform its
obligations under the Loan Documents and the Restructure Documents.
5.5 INDEBTEDNESS; NO DEFAULT. The Borrower has no
Indebtedness, Guaranties or Lease Obligations except as permitted under Sections
8.1 and 8.3 hereof. Except as listed on Schedule 5.5 hereto, there exists no
default nor has any act or omission occurred which, with the giving of notice or
the passage of time, would constitute a default under the provisions of any
Operative Document, Restructure Document or any instrument evidencing
Indebtedness or any agreement relating thereto or any other agreement or
instrument to which the Borrower is a party.
5.6 OWNERSHIP OF PROPERTIES; LIENS AND ENCUMBRANCES. The
Borrower has good and marketable title to all property, real and personal,
reflected on the most recent financial statements of the Borrower furnished to
the Bank, and all property purported to have been acquired since the date of
such financial statement, except property sold or otherwise disposed of in the
ordinary course of business subsequent to such date; and all such property is
free of any lien, security interest, mortgage, encumbrance or charge of any
kind, except Permitted Liens, and is free of any agreement not to grant a
security interest, mortgage or lien. All owned and leased buildings and
equipment of the Borrower are in good condition, repair and working order and
conform to all applicable laws, ordinances and regulations.
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5.7 TAX RETURNS FILED. The Borrower has filed when due,
subject to extensions of filing dates permitted under the Code, all federal and
state income and other tax returns which are required to be filed. The Borrower
has paid or made provision for all taxes shown on said returns and on all
assessments received by it to the extent that such taxes have become due except
any such taxes which are being contested in good faith by appropriate
proceedings and for which adequate security has been established with Bank. The
Borrower has no knowledge of any liabilities which may be asserted against it
upon audit of its federal or state tax returns.
5.8 MARGIN STOCK. The Borrower will not use, directly or
indirectly, any part of the proceeds of any Indebtedness to the Bank for the
purpose of purchasing or carrying, or to extend credit to others for the purpose
of purchasing or carrying, any margin stock within the meaning of Regulation U
of the Board of Governors of the Federal Reserve System, or any amendments
thereto. The Borrower is not engaged principally, or as one of its important
activities, in the business of extending credit for the purpose of purchasing or
carrying margin stock.
5.9 INVESTMENT COMPANY. The Borrower is not an
"investment company" or a company controlled by an "investment company" within
the meaning of the Investment Company Act of 1940, as amended.
5.10 ERISA LIABILITIES. The Borrower has (i) no liability
to or with respect to any Plan, the Internal Revenue Service or to the Pension
Benefit Guaranty Corporation in connection with any Plan (except that any
employees of Borrower may participate in a 401(k) Plan maintained by an
Affiliate of Borrower provided that Bank has reviewed and approved such Plan,
which approval shall not be unreasonably withheld), and (ii) received no notice
to the effect that it is not in full compliance with any of the requirements of
ERISA, and the regulations promulgated thereunder and, to the best of its
knowledge, there exists no event described in Section 4043(t)(3) thereof
("REPORTABLE EVENT").
5.11 NO BURDENSOME AGREEMENTS. The Borrower is not a party
to or bound by any agreement, instrument or undertaking, or subject to any other
restriction (i) which materially adversely affects or may in the future so
affect the property, financial condition or business operations of the Borrower,
or (ii) under or pursuant to which the Borrower is or will be required to place
(or under which any other person may place) a lien upon any of its properties
securing Indebtedness either upon demand or upon the happening of a condition,
with or without such demand.
5.12 TRADEMARKS, ETC. The Borrower possesses adequate
trademarks, trade names, copyrights, patents, permits, service marks and
licenses, or rights thereto, for the present and planned future conduct of their
businesses substantially as now conducted, without any known conflict with the
rights of others which might result in an adverse effect on the Borrower.
5.13 DUMP SITES. With respect to the period during which
the Borrower owned or occupied its real estate, and to the best of the
Borrower's knowledge, after due inquiry, with respect to the time before the
Borrower owned or occupied its real estate except as disclosed with respect to
the West Chicago Property in the Environmental Assessments by K-Plus
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Environmental (the "Environmental Assessments"), no person or entity has caused
or permitted materials to be stored, deposited, treated, recycled or disposed of
on, under or at any real estate owned or occupied by the Borrower in a manner
which would require cleanup, removal or some other remedial action under
Environmental Laws.
5.14 TANKS. There are not now, nor have there ever been on
any real estate owned or occupied by the Borrower storage tanks which contained
materials which, if known to be present in soils or groundwater, would require
cleanup, removal or some other remedial action under Environmental Laws except
as disclosed with respect to the West Chicago Property in the Environmental
Assessments.
5.15 OTHER ENVIRONMENTAL CONDITIONS. There are no
conditions existing currently or, to the best of Borrower's knowledge, after due
inquiry, likely to exist during the term of this Agreement which would subject
the Borrower to damages, penalties, injunctive relief or cleanup costs under any
Environmental Laws or which require or are likely to require cleanup, removal,
remedial action or other response pursuant to Environmental Laws by the Borrower
except as disclosed with respect to the West Chicago Property in the
Environmental Assessments.
5.16 CHANGES IN LAWS. To the best of the Borrower's
knowledge, after due inquiry, there are no proposed or pending changes in
Environmental Laws that would adversely affect the Borrower.
5.17 ENVIRONMENTAL JUDGMENTS, DECREES AND ORDERS. The
Borrower is not subject to any judgment, decree, order or citation related to or
arising out of Environmental Laws and has not been named as a potentially
responsible party by a governmental body or agency in a matter arising under any
Environmental Laws.
5.18 ENVIRONMENTAL PERMITS AND LICENSES. The Borrower has
all permits, licenses and approvals required under applicable Environmental
Laws.
5.19 ACCURACY OF INFORMATION. All information furnished by
the Borrower to the Bank is true, correct and complete in all material respects
as of the date furnished and does not contain any untrue statement of a material
fact or omit to state a material fact necessary to make such information not
misleading. All of the Borrower's representations and warranties contained in
the Restructure Documents are true and correct on the date hereof and are
incorporated herein by reference.
5.20 OTHER PERMITS AND LICENSES. The Borrower has all
permits, licenses and approvals necessary for the construction and operation of
the Project, or will obtain such permits, licenses and approvals prior to the
disbursement of funds from the Project Fund for construction purposes.
5.21 SOLVENCY. Borrower is solvent as of the date hereof.
5.22 COMPLIANCE WITH LAWS. The use by Borrower of the West
Chicago Property and the Bensenville Property do not violate any presently
existing applicable statute, law, regulation, rule, ordinance or order of any
kind whatsoever (including, but not limited to,
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any presently existing zoning or building laws or ordinances, any environmental
protection laws or regulations, or any rules, regulations or orders of any
governmental agency), or any building permit issued with respect to either
property or any condition, easement, right-of-way, covenant or restriction of
record affecting either property.
5.23 ZONING. Each of the West Chicago Property and
Bensenville Property is duly and validly zoned for the uses thereof proposed by
Borrower. Such zoning is unconditional, in full force and effect and no legal or
administrative proceedings are pending or threatened with respect thereto.
6. CONDITIONS PRECEDENT TO CLOSING.
6.1 RESTRUCTURE DOCUMENTS. The Bank shall not be required
to enter into the Restructure Documents under this Credit Agreement unless on
the date of such issuance all legal matters incident to the Restructure
Documents shall be satisfactory to the Bank and its counsel, and the Borrower
shall have furnished to the Bank on such date all the documents required to be
delivered by the Borrower to the Bank pursuant to this Agreement.
6.2 CONDITIONS PRECEDENT TO CLOSING. On the date of
execution hereof, the Borrower shall have furnished or caused to be furnished to
the Bank the following:
(a) From the Company:
(i) Copies, certified on the date of
execution by the Secretary or Assistant Secretary of the Company, of resolutions
of the Board of Directors of the Company authorizing the execution of the
Restructure Documents to which the Company is a party. The Bank shall be
entitled to rely on such resolutions until informed of any change in writing by
the Company.
(ii) An incumbency certificate, executed
by the Secretary or Assistant Secretary of the Company, that identifies by name
and title and bears the signature of the officers of the Company authorized to
sign any applicable Restructure Documents and to effect the transactions
contemplated thereunder. The Bank shall be entitled to rely on such incumbency
certificates until informed of any change in writing by the Company.
(b) From Poly Circuits:
(i) Copies, certified on the date of
execution by the Secretary or Assistant Secretary of Poly Circuits, of
resolutions of the Board of Directors of Poly Circuits authorizing the execution
of the Restructure Documents to which Poly Circuits is a party. The Bank shall
be entitled to rely on such resolutions until informed of any change in writing
by the Company.
(ii) An incumbency certificate, executed
by the Secretary or Assistant Secretary of Poly Circuits, that identifies by
name and title and bears the signature of the officers of Poly Circuits
authorized to sign any applicable Restructure Documents and to effect the
transactions contemplated thereunder. The Bank shall be entitled to rely on such
incumbency certificates until informed of any change in writing by Poly
Circuits.
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(c) From the Company and Poly Circuits:
(i) Payment to the Bank of $350,000.00.
(ii) An original copy of the following
executed documents:
1. Note
2. Credit Agreement
3. Fifth Mortgage Modification
Agreement
4. Bensenville Mortgage
5. Bensenville Environmental
Indemnity
6. First Amendment to Security
Agreement
7. Assignment of Promissory Note
and Security from the Trustee
8. First Amendment to Installment
Note
9. UCC Financing Statements from
Poly Circuits
(iii) A certificate of insurance
evidencing the Borrower's insurance, as required hereunder and under the West
Chicago Mortgage and the Bensenville Mortgage.
(iv) Payment in full of all fees and
disbursements of the Bank's counsel in connection with the Restructure
Documents.
(v) A title insurance policy issued by
Chicago Title Insurance Company, insuring the Bensenville Mortgage as a first
priority lien on the Bensenville Property and showing no title exceptions other
than Permitted Liens.
(vi) A date down endorsement to the
current title insurance policy from CTIC, insuring the West Chicago Mortgage
through the date hereof as a first priority lien on the West Chicago Property
and showing no title exceptions other than Permitted Liens.
(vii) UCC lien, tax lien and judgment
search results for each Borrower showing no liens other than Permitted Liens.
(viii) Such other documents including,
without limitation, waivers or consents, as the Bank may reasonably request to
complete the transactions contemplated by this Agreement.
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6.3 DISBURSEMENT OF FUNDS. No disbursement of funds will
be made by Bank hereunder as this Credit Agreement and the Note evidence current
obligations of Borrower under the Reimbursement Agreement.
7. AFFIRMATIVE COVENANTS. The Borrower agrees that it will, while
any of the Obligations remain unpaid:
7.1 INTERIM FINANCIAL STATEMENTS; COVENANT COMPLIANCE
WORKSHEETS AND REPORTS. Furnish to the Bank within forty-five (45) days after
the end of each month of each fiscal year of the Borrower a balance sheet of the
Borrower as of the end of each such month and related statements of income and
cash flows for the period from the beginning of the fiscal year to the end of
such month, prepared in the manner set forth in Section 7.1 hereof for the
annual statements, subject to normal year-end adjustments, certified by an
authorized officer of the Borrower and accompanied by the certificate of such
officer to the effect that there exists no Default or Event of Default or, if
any Default or Event of Default exists, specifying the nature thereof, the
period of existence thereof and what action the Borrower proposes to take with
respect thereto.
7.2 ADDITIONAL FINANCIAL INFORMATION. Furnish to the Bank
within ten (10) business days, such other or additional financial information as
reasonably requested by the Bank.
7.3 MANAGEMENT LETTERS. Furnish to the Bank, promptly
upon receipt, copies of all management letters submitted to the Borrower by
independent certified public accountants.
7.4 FINANCIAL RATIOS. The Borrower, on a consolidated
basis, shall maintain the following financial covenant:
(a) Borrower shall not at any time permit its
tangible net worth as determined in accordance with GAAP, to be less than
$3,000,000 (the "Minimum Tangible Net Worth Amount").
7.5 BOOKS AND RECORDS. Keep proper, complete and accurate
books of record and account and permit any representatives of the Bank to visit
and inspect any of the properties and examine and copy any of the books and
records of the Borrower at any reasonable time and as often as may reasonably be
desired.
7.6 INSURANCE. Maintain insurance, with insurance
companies reasonably satisfactory to the Bank, as follows:
(a) Casualty and Public Liability Insurance:
(i) Casualty and extended coverage
insurance ("ALL RISKS" form) insuring the Borrower's real and personal property
(others than land) in an amount equal to the actual cash value thereof;
provided, however, that such amount shall not be less than $5,000,000; and
41
(ii) General public liability and
property damage insurance in amounts of not less than $3,000,000 per occurrence
for bodily injury and $3,000,000 per occurrence for property damage (such
amounts shall be subject to increase and adjustment to at least equal those
amounts generally maintained by similarly situated business in the geographic
area in which Borrower's facilities are located).
(b) Other Insurance:
(i) Such worker's compensation
insurance and similar insurance as may be required by law;
(ii) Business interruption insurance in
such amounts as may be reasonably required by the Bank; and
(iii) Such other insurance as is required
to be maintained by Borrower as set forth in the Loan Documents or as Bank in
its discretion may reasonably deem appropriate.
Photocopies of all policies and original certificates shall be delivered to the
Bank. Such policies shall contain standard mortgagee and lender's loss payable
clauses in favor of the Bank and its successors and assigns and an endorsement
that all losses payable thereunder shall be payable to the Bank or its
successors or assigns. The Borrower shall obtain a written obligation on the
part of each insurance carrier for the insurance coverage identified in
paragraph (a) above to notify the Bank in writing at least thirty (30) days
prior to any cancellation or material alteration of its policy and, if requested
by the Bank, to furnish it evidence of the payment of the premiums for the
policy. The Borrower shall obtain a written obligation on the part of each
insurance carrier for the insurance coverage identified in paragraph (b) above
to alteration of its policy, but in any event, as soon as the Borrower receives
notice of such cancellation or material modification, and, if requested by the
Bank, to furnish it evidence of the payment of the premiums for the policy.
7.7 CONDITION OF PROPERTY. Keep its properties (whether
owned or leased) in good condition, repair and working order.
7.8 PAYMENT OF TAXES. Pay and discharge all lawful taxes,
assessments and governmental charges upon it or against its properties prior to
the date on which penalties are attached thereto, unless and to the extent only
that the same shall be contested in good faith and by appropriate proceedings by
the Borrower and security satisfactory to Bank is deposited with Bank.
7.9 COMPLIANCE WITH LAW. Do all things necessary to (i)
maintain both the Company's and Poly Circuits' existence in good standing in
their state of organization and in any other state where the ownership of
property or the conduct of business make qualification necessary, (ii) preserve
and keep in full force and effect its rights and franchises necessary to
continue its business and (iii) comply with all applicable laws, rules,
regulations, ordinances, writs, judgments, injunctions, decrees and awards to
which it may be subject including but not limited to all applicable
Environmental laws, now or hereafter in effect except those being contested in
good faith and involving no possibility of criminal liability.
42
7.10 COMPLIANCE WITH OTHER OPERATIVE DOCUMENTS. Timely
comply with all of its obligations under the other Operative Documents, as
applicable, except as modified by the Restructure Documents.
7.11 NOTICE OF DEFAULT OR CLAIMED DEFAULT. Furnish to the
Bank (i) immediately after Borrower obtains knowledge of any Default or Event of
Default, a written notice specifying the nature and period of existence thereof
and what action the Borrower is taking or proposes to take with respect thereto;
(ii) immediately after becoming aware that the holder of any other Indebtedness
issued or assumed by the Borrower, or the lessor under any lease as to which the
Borrower is the lessee, has given notice or has taken any action with respect to
a claimed default thereunder, or under any agreement under which any such
Indebtedness was issued or secured, a written notice specifying the notice given
or action taken, the nature of the claimed default and what action the Borrower
is taking or proposes to take with respect thereto; (iii) immediately after
receipt, copies of any correspondence, notice, pleading, citation, indictment,
complaint, order, decree or other document regarding any financial contribution
alleged to be payable by the Borrower or regarding a cleanup, removal, remedial
action or other response by or on the part of the Borrower under any
Environmental Law or which seeks damages or civil, criminal or punitive
penalties from the Borrower for an alleged violation of any Environmental Law;
and (iv) written notice of any condition or event which would make any warranty
contained in Section 5 inaccurate in any material respect, immediately after the
Borrower becomes aware of such condition or event.
7.12 ACCOUNTS. Maintain with the Bank all bank accounts
and accounts for the deposit of Borrower's funds including without limitation
all of the Borrower's primary depository and disbursement accounts, and all of
the Borrower's operating and payroll accounts.
7.13 INSPECTION. Permit the Bank and its agents, at any
time or times during Borrower's usual business hours, without prior notice, to
examine and make copies of all of Borrower's books and records, visit and
inspect the Borrower's properties and discuss Borrower's affairs with any of its
officers or directors.
8. NEGATIVE COVENANTS. The Borrower covenants that, without the
prior written consent of the Bank, the Borrower will not, while any of the
Obligations remain unpaid:
8.1 LIMITATIONS ON INDEBTEDNESS. Create, assume or permit
to exist any Indebtedness, except (i) Indebtedness owed to the Bank; (ii) trade
credit incurred to acquire goods, services and supplies in the ordinary course
of Borrower's business; and (iii) wages or other compensation due to employees
and agents for services actually performed.
8.2 LIMITATIONS ON GUARANTIES. Create, incur, assume or
permit to exist any Guaranties.
8.3 LIMITATIONS ON LIENS AND ENCUMBRANCES. Create, assume
or permit to exist any mortgage, security interest, lien or charge of any kind,
including any restriction against mortgages, security interests, liens or
charges, upon any of its property or assets, whether now owned or hereafter
acquired, except Permitted Liens. Borrower may contest any liens or
43
charges, provided that such contest is in good faith, prior to judgment of
foreclosure and Borrower has adequate reserves set side on its books to pay any
contested lien or charge.
8.4 LIMITATIONS ON MERGERS, ETC. Merge or consolidate
with, or enter into any other agreement to merge or consolidate with any
corporation or entity or to sell, lease, transfer or otherwise dispose of, in a
single transaction or a series of transactions, all or a substantial part of its
assets.
8.5 LIMITATIONS ON ACQUISITIONS, ADVANCES AND
INVESTMENTS. Create any subsidiary, acquire any other business or partnership or
joint venture interest or make any loans, advances or extensions of credit to,
or any investments in, any person or entity except (i) the purchase of United
States government bonds and obligations; (ii) extensions of credit to customers
or advances to suppliers or employees in the usual course of business of the
Borrower; (iii) the purchase of bank certificates of deposit and commercial
paper having a maturity not exceeding one year; (iv) deposits in deposit
accounts at Bank; and (v) investments in bank repurchase agreements.
8.6 LINES OF BUSINESS. Engage in any business other than
those in which it is now engaged and any business directly related thereto.
8.7 SALES OF RECEIVABLES. Discount or sell with recourse,
or sell for less than the face amount thereof, any of its accounts receivable.
8.8 SALE AND LEASEBACK. Sell or transfer any fixed assets
and then or thereafter rent or lease as lessee any such assets, except in the
ordinary course of its business.
8.9 DISPOSITION OF ASSETS. Sell, convey, lease, abandon
or transfer any of Borrower's assets other than (i) sales, transfers and other
dispositions in the ordinary course of Borrower's business consistent with its
past practice, and (ii) sales, transfers and other dispositions of obsolete
assets and assets no longer used or useful in the conduct of Borrower's
business.
8.10 TRANSACTIONS WITH AFFILIATES. Enter into or be a
party to any transaction with any Affiliate except or in the ordinary course of
business and upon fair and reasonable terms which are no less favorable that a
comparable arm's length transaction with an entity which is not an Affiliate.
8.11 LEASES. Enter into any lease of any of the West
Chicago Property or the Bensenville Property or any portion thereof, except such
leases as are approved by the Bank, or otherwise permit any third party to use
or occupy the West Chicago Property.
8.12 ERISA. Become a party to or bound by or with respect
to any Plan, except that any employees of Borrower may participate in a 401(k)
Plan maintained by an Affiliate of Borrower provided that Bank has reviewed and
approved such Plan, which approval shall not be unreasonably withheld. Any such
Plan and the administration thereof will at all times comply with ERISA and all
other applicable laws and regulations.
44
8.13 LOANS, ADVANCES, ETC. Make, or permit to remain
outstanding, loans or advances to or become or remain a guarantor or surety or
pledge its credit or assets or become liable in any manner on undertakings of
others.
8.14 DIVIDENDS. Make, pay, declare or authorize any
dividend, distribution or other payment to the shareholders of Borrower.
8.15 CHANGE IN MANAGEMENT. Permit any change in the
position or responsibilities of ▇▇▇▇▇▇ ▇▇▇▇▇.
8.16 NATURE OF BUSINESS. Borrower will not, without the
prior written consent of Bank, engage in any business other than the business in
which Borrower is engaged on the date hereof or businesses reasonably related
thereto.
9. EVENTS OF DEFAULT AND REMEDIES UPON AN EVENT OF DEFAULT.
9.1 EVENTS OF DEFAULT. The occurrence of any one or more
of the following shall constitute an Event of Default:
(a) Failure to Pay or Perform Obligations. The
Borrower shall fail to pay or perform any of the Obligations when due or
required and such failure shall continue for two (2) days after written notice
thereof to Borrower; or
(b) Falsity of Representations and Warranties.
Any representation or warranty made in any Restructure Document is false or
inaccurate in any material respect on the date as of which made or as of which
the same is to be effective; or
(c) Breach of Covenants. The Borrower shall fail
to comply with any term, covenant or agreement contained herein or in any of the
Loan Documents, Bond Documents or Restructure Documents; or
(d) Default Under Other Agreements. The Borrower
shall fail to pay when due any Indebtedness issued or assumed by Borrower or
shall fail to comply with the terms of any agreement under which any such
Indebtedness was created, and such default continues beyond the period of grace,
if any, therein provided; or
(e) Entry of Final Judgments. A final judgment
is entered against the Borrower which, together with all unsatisfied final
judgments entered against the Borrower, exceeds the sum of $10,000, and such
judgment shall remain unsatisfied or unstayed for a period of thirty (30) days
after the entry thereof; or
(f) Insolvency, Failure to Pay Debts or
Appointment of Receiver Etc. The Borrower becomes insolvent or the subject of
state insolvency proceedings, fails generally to pay its debts as they become
due or makes an assignment for the benefit of creditors; or a receiver, trustee,
custodian or other similar official is appointed for, or takes possession of any
substantial part of the property of, the Borrower; or
45
(g) Subject of United States Bankruptcy
Proceedings. The taking of action by the Borrower to authorize it to become the
subject of proceedings under the United States Bankruptcy Code; or the execution
by the Borrower of a petition to become a debtor under the United States
Bankruptcy Code; or the filing of an involuntary petition against the Borrower
under the United States Bankruptcy Code which remains undismissed for a period
of sixty (60) days; or the entry of an order for relief under the United States
Bankruptcy Code against the Borrower; or
(h) Validity of Agreement. Any material
provision of this Agreement or any of the other Loan Documents, Bond Documents
or Restructure Documents shall at any time for any reason cease to be valid and
binding on the Borrower, or shall be declared to be null and void, or the
validity or enforceability thereof against the Borrower shall be contested by
the Borrower or any governmental agency or authority, or the Borrower shall deny
that it has any or further liability or obligation under this Agreement; or
(i) Control. Control of Borrower shall become
vested in any person or entity or combination thereof other than ▇▇▇▇▇▇ ▇▇▇▇▇.
"CONTROL" as used in this paragraph shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of the Borrower, whether through the ownership of interests in the
Borrower, by contract or otherwise; or
(j) Reportable Event. The occurrence of any
"REPORTABLE EVENT," as defined in the Employee Retirement Income Security Act of
1974 and any amendments thereto, which is determined to constitute grounds for
termination by the Pension Benefit Guaranty Corporation of any employee pension
benefit plan maintained by or on behalf of the Borrower for the benefit of any
of its employees or for the appointment by the United States District Court of a
trustee to administer such plan and such reportable event is not corrected and
such determination is not revoked within 30 days after notice thereof has been
given to the plan administrator or Borrower; or the institution of proceedings
by the Pension Benefit Guaranty Corporation to terminate any such employee
benefit pension plan or to appoint a trustee to administer such plan; or the
appointment of a trustee by the United States District Court to administer any
such employee benefit pension plan.
(k) Material Adverse Change. The occurrence of
any material adverse change in the condition or prospects of either Borrower,
financial or otherwise, from and after the date hereof.
9.2 REMEDIES UPON AN EVENT OF DEFAULT. If any Event of
Default shall have occurred and be continuing, then unless the Bank otherwise
elects in writing, amounts unpaid under the Note and any other Obligations of
Borrower shall become immediately due and payable without any notice,
opportunity to cure or other action of any kind by the Bank, and the Bank shall
be entitled to exercise all rights and remedies as are available to the Bank
under this Agreement, any of the Operative Documents, any of the Restructure
Documents or applicable law. Such remedies shall be cumulative and may be
exercised by the Bank consecutively or simultaneously, as the Bank may deem
appropriate.
46
10. SETOFF. As security for the payment of the Obligations, the
Borrower grants to the Bank a security interest in and lien on any credit
balance now or hereafter owed the Borrower by the Bank or by any affiliate of
the Bank. In addition, the Borrower agrees that the Bank or any such affiliate
may, at any time after the occurrence of an Event of Default, without prior
notice or demand, set off against any such credit balance or other money all or
any part of the unpaid balance of the Obligations.
11. INDEMNIFICATION. The Borrower agrees to defend, indemnify and
hold harmless the Bank, its directors, officers, employees and agents from and
against any and all claims, damages, losses, liability, costs or expenses
(including reasonable attorneys' fees) incurred in connection with any and all
claims and proceedings (whether brought by a private party or governmental
agency) as a result of, or arising out of or related to:
(a) bodily injury, property damage, abatement or
remediation, environmental damage or impairment or any other injury or damage
resulting from or relating to any hazardous or toxic substance or contaminated
material (as determined under Environmental Laws) located on or migrating into,
from or through property previously, now or hereafter owned or occupied by the
Borrower, which the Bank may incur due to the exercise of any of its rights
under the Restructure Documents or the Operative Documents; or
(b) the performance of and exercise of the
Bank's rights under any of the Restructure Documents or Operative Documents or
any other action taken by the Bank in good faith in connection with the
transactions contemplated by the Loan Documents.
The Bank will promptly give the Borrower written notice of the
assertion of any claim which it believes is subject to the indemnities set forth
in this Section and will, upon the request of the Borrower, promptly furnish to
the Borrower all material in its possession relating to such claim or the
defense thereof.
By written notice to the Bank that it intends to defend the claim,
Borrower may assume the defense of the claim, with counsel satisfactory to the
Bank and, after notice from the Borrower to the Bank of its election to assume
the defense, the Borrower will not be liable to the Bank for any legal or other
expenses except as provided below and except for the reasonable costs of
investigation subsequently incurred by the Bank in connection with the defense.
The Bank will have the right to employ its own counsel in any such action, but
the fees and expenses of such counsel will be at the expense of the Bank unless
(1) the employment of counsel by the Bank has been authorized in writing by the
Borrower, (2) the Bank has reasonably concluded that there may be legal defenses
available to it that are different from or in addition to those available to the
Borrower (in which case the Borrower will not have the right to assume or direct
the defense of such action on behalf of the Bank) or (3) the Borrower has not in
fact employed counsel satisfactory to the Bank to assume the defense of such
claim within a reasonable time after receiving notice of the assertion of the
claim, in each of which cases the reasonable fees and expenses of counsel will
be incurred at the expense of the Borrower and the Borrower must promptly
reimburse all such fees and expenses as they are incurred.
47
This indemnity will survive foreclosure of any security interest or
mortgage or conveyance in lieu of foreclosure and the payment of the Obligations
and the discharge and release of any Restructure Documents or Operative
Documents.
12. INSURANCE PROCEEDS AND CONDEMNATION AWARDS FUND. In the event
that (i) an insured casualty loss to any of the Property shall occur or (ii) a
partial taking or condemnation of any of the West Chicago Property or the
Bensenville Property shall occur, then the Borrower shall deposit or cause to be
deposited with the Bank all insurance proceeds and condemnation awards which the
Borrower shall be entitled to receive in connection with such loss, taking, or
condemnation, and which are not to be used to restore or to rebuild such
Property in accordance with the provisions of the Loan Documents and the
Restructure Documents. All moneys deposited hereunder shall be applied by the
Bank to repay the Obligations.
13. WAIVER AND RELEASE OF CLAIMS. Borrower represents to the Bank
that it has no defenses, setoffs, claims or counterclaims of any kind or nature
whatsoever against the Bank, including without limitation, defenses, setoffs,
claims or counterclaims in connection with the Bonds, the Indenture, the Letter
of Credit, the Reimbursement Agreement, any of the Operative Documents, any of
the Restructure Documents, the ISDA Master Agreement between Borrower and Bank
dated July 13, 2001 and all Schedules thereto (the "Swap Agreement"), the
Forbearance Agreements or any action taken or not taken by the Bank with respect
to the Borrower, any such documents, or any accounts of the Borrower with the
Bank. Without limiting the generality of the foregoing, and in consideration of
Bank's agreements hereunder, Borrower hereby releases and forever discharges the
Bank, its affiliates and each of their officers, agents, employees, attorneys,
insurers, successors and assigns (collectively the "Released Parties"), from and
against any and all liabilities, rights, claims, losses, expenses or causes of
action whatsoever, known or unknown, including without limitation all
liabilities, rights, claims, losses, expenses or causes of action, arising out
of any action or inaction by any of the Released Parties to the date hereof with
respect to the Bonds, the Indenture, the Letter of Credit, the Reimbursement
Agreement, any of the Operative Documents, this Agreement, the Swap Agreement,
the Forbearance Agreements, no matter in any way related thereto or arising in
conjunction therewith. The Borrower also waives, releases and forever discharges
the Released Parties and each of them from and against any and all known or
unknown rights to setoff, defenses, claims, counterclaims, causes of action, and
any other bar to the enforcement of this Agreement, the Bonds, the Indenture,
the Letter of Credit, the Reimbursement Agreement, any of the Operative
Documents, any of the Restructure Documents, the Swap Agreement, or the
Forbearance Agreements.
14. DISCLAIMER OF RELIANCE. Borrower expressly disclaims any
reliance on any oral representation made by the Released Parties or any of them
in respect to the subject matter of this Agreement. Borrower acknowledges and
agrees that the Bank is specifically relying upon the representations,
warranties, releases and agreements contained herein.
15. WAIVER BY BANK. Bank's failure, at any time or times, to
require strict performance by Borrower of any provision of this Credit Agreement
or of any Operative Document or Restructure Document shall not constitute a
waiver, or affect or diminish any right of Bank thereafter to demand strict
compliance and performance therewith. Any suspension or waiver by Bank of an
Event of Default under this Agreement or any Operative Document or
48
Restructure Document shall not suspend, waive or affect any other Event of
Default under this Credit Agreement or the Operative Documents or Restructure
Documents, whether the same is prior or subsequent thereto and whether of the
same or of a different type. None of the undertakings, agreements, warranties,
covenants and representations of Borrower contained in this Credit Agreement or
the Operative Document or Restructure Document and no Event of Default under
this Credit Agreement or the Operative Documents or Restructure Documents shall
be deemed to have been suspended or waived by Bank, unless such suspension or
waiver is by an instrument in writing signed by an officer of Bank and directed
to Borrower specifying such suspension or waiver.
16. BINDING EFFECT. This Agreement inures to the benefit of and is
binding upon the Bank, and its successors and assigns, and the Borrower, and its
successors and assigns, provided that none of the rights of the Borrower
hereunder may be assigned without the prior written consent of the Bank.
17. GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the internal laws (without regard to the conflicts
of laws rules) of the State of Illinois.
18. EXPENSES. The Borrower agrees, whether or not the transaction
hereby contemplated shall be consummated, to pay on demand (a) all out-of-pocket
expenses incurred by the Bank in connection with the negotiation, execution,
preparation, filing, recording, administration, amendment or enforcement of any
Operative Document or Restructure Document including the reasonable fees and
expenses of the Bank's counsel and (b) all out-of-pocket expenses, including the
reasonable fees and expenses of the Bank's counsel, incurred by the Bank in
connection with any litigation, proceeding or dispute in any way related to the
Bank's relationship with the Borrower, whether arising hereunder or otherwise.
The obligations of the Borrower under this Section will survive payment of the
Obligations.
19. NOTICES. Except as otherwise provided in this Agreement, any
notice required shall be in writing and shall be deemed to have been validly
served, given or delivered upon delivery by messenger or overnight courier
service; the day of transmission by telecopy or facsimile; or two (2) business
days after deposit in the United States certified or registered mails, with
proper postage prepaid, addressed to the party to be notified as follows:
(a) If to Bank, at:
Bank One, NA
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇
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with a copy to:
Wildman, Harrold, ▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇
(b) If to Borrower, at:
M-Wave, Inc.
Poly Circuits, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇
or to such other address as each party may designate for itself by like notice.
20. JURISDICTION; SERVICE OF PROCESS; WAIVER OF JURY TRIAL. THIS
CREDIT AGREEMENT HAS BEEN DELIVERED AT CHICAGO, ILLINOIS, AND SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS (WITHOUT REGARD TO THE
CONFLICTS OF LAWS PROVISIONS) OF THE STATE OF ILLINOIS. EACH OF THE BORROWER AND
LENDER (I) WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION TO ENFORCE OR
DEFEND ANY MATTER ARISING FROM OR RELATED TO THIS AGREEMENT OR ANY OF THE LOAN
DOCUMENTS OR RESTRUCTURE DOCUMENTS; (II) IRREVOCABLY SUBMITS TO THE JURISDICTION
OF ANY STATE OR FEDERAL COURT LOCATED IN DUPAGE COUNTY, ILLINOIS OVER ANY ACTION
OR PROCEEDING TO ENFORCE OR DEFEND ANY MATTER ARISING FROM OR RELATED TO THIS
AGREEMENT OR ANY OF THE LOAN DOCUMENTS; (III) IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT BORROWER MAY EFFECTIVELY DO SO, THE DEFENSE OF AN INCONVENIENT FORUM TO
THE MAINTENANCE OF ANY SUCH ACTION OR PROCEEDING; (IV) AGREES THAT A FINAL
JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE
ENFORCED IN ANY OTHER JURISDICTION BY SUIT ON THE JUDGMENT OR IN ANY OTHER
MANNER PROVIDED BY LAW; AND (V) AGREES NOT TO INSTITUTE ANY LEGAL ACTION OR
PROCEEDING AGAINST BANK OR ANY OF BANK'S DIRECTORS, OFFICERS, EMPLOYEES, AGENTS
OR PROPERTY, CONCERNING ANY MATTER ARISING OUT OF OR RELATING TO THIS AGREEMENT
OR ANY OF THE LOAN DOCUMENTS OR RESTRUCTURE DOCUMENTS IN ANY COURT OTHER THAN
ONE LOCATED IN
50
DUPAGE COUNTY, ILLINOIS. BORROWER WAIVES PERSONAL SERVICE OF THE SUMMONS AND
COMPLAINT, OR OTHER PROCESS OR PAPERS ISSUED IN ANY ACTION OR PROCEEDING TO
ENFORCE OR DEFEND ANY MATTER ARISING FROM OR RELATED TO THIS AGREEMENT OR ANY OF
THE LOAN DOCUMENTS OR RESTRUCTURE DOCUMENTS, AND AGREES THAT SERVICE OF SUCH
SUMMONS AND COMPLAINT, OR OTHER PROCESS OR PAPERS MAY BE MADE BY REGISTERED OR
CERTIFIED MAIL ADDRESSED TO BORROWER AT THE ADDRESS SET FORTH IN SECTION 19.
SHOULD BORROWER FAIL TO APPEAR OR ANSWER ANY SUMMONS, COMPLAINT, PROCESS OR
PAPERS SERVED WITHIN THIRTY (30) DAYS AFTER THE DELIVERY THEREOF, IT SHALL BE
DEEMED IN DEFAULT AND AN ORDER AND/OR JUDGMENT MAY BE ENTERED AGAINST IT AS
DEMANDED OR PRAYED FOR IN SUCH SUMMONS, COMPLAINT, PROCESS OR PAPERS. NOTHING IN
THIS PARAGRAPH SHALL AFFECT OR IMPAIR BANK'S RIGHT TO SERVE LEGAL PROCESS IN ANY
MANNER PERMITTED BY LAW OR BANK'S RIGHT TO BRING ANY ACTION OR PROCEEDING
AGAINST BORROWER OR ITS PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION.
21. ENTIRE AGREEMENT. This Credit Agreement and the other
Operative Documents and Restructure Documents shall constitute the entire
agreement of the parties pertaining to the subject matter hereof and supersede
all prior or contemporaneous agreements and understandings of the parties in
connection therewith.
22. COUNTERPARTS. This Agreement may be executed in separate
counterparts, each of which, when so executed, shall be deemed to be an original
and all of which, when taken together, shall constitute one and the same
agreement.
23. HEADINGS. Section and paragraph or sub-section headings in
this Agreement are for convenience and reference only and shall not govern, or
be used in, the interpretation of any of the provisions of this Agreement.
24. JOINT AND SEVERAL LIABILITY. The liabilities and obligations
of the Company and Poly Circuits hereunder shall be joint and several.
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IN WITNESS WHEREOF, this Reimbursement Agreement has been duly
executed, is dated and effective as of the day and year specified at the
beginning hereof.
BANK ONE, NA, M-WAVE, INC., a Delaware corporation
a national banking association
By: _________________________________
Name:_________________________ By: ________________________________
Title:________________________ Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chief Financial Officer
POLY CIRCUITS, INC., an Illinois corporation
By: _________________________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chief Financial Officer
52