EXHIBIT 4.12
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AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
Dated as of December 30, 1996
between
ELXSI
and
BANK OF AMERICA ILLINOIS
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TABLE OF CONTENTS
PAGE
1. DEFINITIONS AND OTHER TERMS........................................2
1.1 Definitions...................................................2
1.2 Other Definitional Provisions................................19
1.3 Interpretation of Agreement..................................20
1.4 Compliance with Financial Restrictions.......................20
1.5 Effect of Restatement........................................20
2. LOANS; LETTERS OF CREDIT; OTHER MATTERS................................20
2.1 Loans.........................................................20
2.1.1 Revolving Loans.....................................20
2.1.2 Maximum Outstanding Revolving Loans.................21
2.1.3 Mandatory Reductions................................21
2.1.4 Voluntary Reductions................................21
2.1.5 Effect of Reductions................................22
2.1.6 Supplemental Revolving Loans........................22
2.1.7 Additional Revolving Loans..........................22
2.1.8 Mandatory Repayments................................23
2.2 Letters of Credit.............................................23
2.3 Loan Account; Demand Deposit Account..........................26
2.4 Interest and Fees.............................................26
2.4.1 Interest.............................................26
2.4.2 Nonuse Fee...........................................28
2.4.3 Method of Calculating Interest and Fees..............28
2.4.4 Payment of Interest and Fees.........................28
2.5 Requests for Loans and Other Information......................28
2.6 Notes.......................................................29
2.7 [Intentionally Omitted].....................................30
2.8 [Intentionally Omitted].....................................30
2.9 All Loans One Obligation....................................30
2.10 Closing Fee.................................................30
2.11 Making of Payments; Application of
Collections; Charging of Accounts.........................30
2.12 Lender's Election Not to Enforce............................31
2.13 Reaffirmation...............................................31
2.14 Setoff......................................................32
2.15 Increased Costs.............................................32
2.16 Borrowing Elections.........................................32
2.17 Continuation and Conversion Elections.......................33
2.18 Funding.....................................................34
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2.19 Eurodollar Rate Lending Unlawful............................34
2.20 Eurodollar Deposits Unavailable.............................34
2.21 Increased Eurodollar Rate Loan Costs, etc...................35
2.22 Funding Losses..............................................35
3. COLLATERAL..........................................................36
3.1 Grant of Security Interest..................................36
3.2 Accounts Receivable and Cash................................37
3.3 Inventory...................................................40
3.4 Equipment...................................................41
3.5 Supplemental Documentation..................................42
3.6 Releases of Certain Collateral..............................42
4. REPRESENTATIONS AND WARRANTIES......................................42
4.1 Organization................................................42
4.2 Authorization...............................................43
4.3 No Conflicts................................................43
4.4 Validity and Binding Effect.................................43
4.5 No Default..................................................43
4.6 Financial Statements........................................43
4.7 Insurance...................................................44
4.8 Litigation; Contingent Liabilities..........................44
4.9 Liens.......................................................44
4.10 Subsidiaries................................................45
4.11 Partnership; Joint Ventures.................................45
4.12 Business and Collateral Locations...........................45
4.13 Real Property...............................................45
4.14 Related Agreements..........................................46
4.15 Control of Collateral; Lease of Property....................46
4.16 Intellectual Property; Licenses.............................46
4.17 Solvency....................................................47
4.18 Contracts; Labor Matters....................................47
4.19 Pension and Welfare Plans...................................47
4.20 Regulation U................................................48
4.21 Compliance..................................................48
4.22 Taxes.......................................................48
4.23 Investment Company Act Representation.......................48
4.24 Public Utility Holding Company Act Representation...........48
4.25 Environmental, Safety and Health Matters....................48
5. BORROWER COVENANTS..................................................49
5.1 Financial Statements and Other Reports......................49
5.1.1 Financial Reports....................................49
(a) Annual Audit Report............................49
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(b) Monthly Financial Statement....................50
(c) Officer's Certificate..........................50
(d) Management Letters.............................50
5.1.2 Same Store Sales Reports............................50
5.1.3 Azimuth Group Deliveries............................50
5.1.4 Borrowing Base Certificates.........................50
5.1.5 Other Reports.......................................51
(a) SEC and Other Reports..........................51
(b) Report of Change Relating to Borrower,
Subsidiaries or Partnership.................51
(c) Other Reports..................................51
5.2 Notices.....................................................51
(a) Default..............................................51
(b) Litigation...........................................51
(c) Judgment.............................................51
(d) Pension Plans and Welfare Plans......................51
(e) Business and Collateral Information..................52
(f) Change of Name or Status.............................52
(g) Insurance Information................................52
(h) Environmental and Safety and Health Matters..........52
(i) Material Adverse Change..............................53
(j) Default by Others....................................53
(k) Moveable Collateral..................................53
(l) Change in Management or Line(s) of Business..........53
(m) Other Notices........................................53
5.3 Existence...................................................53
5.4 Nature of Business..........................................53
5.5 Books, Records and Access...................................53
5.6 Insurance...................................................54
5.7 Insurance Survey............................................55
5.8 Repair......................................................55
5.9 Taxes.......................................................55
5.10 Compliance..................................................55
5.11 Pension Plans...............................................55
5.12 Merger, Purchase and Sale...................................56
5.13 Restricted Payments.........................................56
5.14 Borrower's and Subsidiaries' Stock..........................57
5.15 Indebtedness................................................57
5.16 Liens.......................................................57
5.17 Guaranties..................................................58
5.18 Investments.................................................58
5.19 Subsidiaries................................................59
5.20 Leases......................................................59
5.21 Change in Accounts Receivable...............................59
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5.22 Future Environmental Assessments............................59
5.23 Related Agreements..........................................59
5.24 Unconditional Purchase Options..............................60
5.25 Use of Proceeds.............................................60
5.26 Transactions with Related Parties...........................60
5.27 Mortgagee...................................................61
5.28 No Amendment to Certain Documents; Actions
Regarding Azimuth Group...................................61
5.29 Intellectual Property Collateral............................61
6. DEFAULT.............................................................63
6.1 Event of Default............................................63
(a) Non-Payment..........................................63
(b) Non-Payment of or Default under Other
Indebtedness.......................................63
(c) Validity.............................................63
(d) Other Obligations....................................63
(e) Insolvency...........................................64
(f) Pension Plans........................................64
(g) Non-Compliance With This Agreement...................64
(h) Non-Compliance With Related Agreements...............64
(i) Warranty.............................................65
(j) Litigation...........................................65
(k) Conduct of Business..................................65
(l) Ownership............................................65
(m) Material Adverse Change..............................65
6.2 Effect of Event of Default; Remedies........................66
7. ADDITIONAL PROVISIONS REGARDING COLLATERAL AND
LENDER'S RIGHTS.....................................................67
7.1 Notice of Disposition of Collateral.........................67
7.2 Application of Proceeds of Collateral.......................67
7.3 Care of Collateral..........................................67
7.4 Performance of Borrower's Obligations.......................67
7.5 Lender's Rights.............................................68
8. CONDITIONS PRECEDENT; DELIVERY OF DOCUMENTS AND OTHER
MATTERS.............................................................68
8.1 Conditions Precedent to Effectiveness of Agreement..........68
8.1.1 Agreement...........................................68
8.1.2 Additional Revolving Note...........................68
8.1.3 Related Agreements..................................69
8.1.4 No Defaults.........................................69
8.1.5 Exhibits; Schedules.................................69
8.1.6 Closing Fee.........................................69
8.1.7 Documents...........................................69
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(a) Resolutions............................................69
(b) Incumbency Certificates................................69
(c) Borrower's Certificate.................................69
(d) Bylaws.................................................70
(e) Articles...............................................70
(f) Registration; Good Standing............................70
(g) Legal Opinions.........................................70
(h) Disbursement Letter....................................70
(i) Azimuth Documents......................................70
(j) Assignments of Group Security Interests................70
(k) Pledged Securities and Instruments.....................71
(l) Other Documents........................................71
8.2 Continuing Conditions Precedent to all Loans and
Letters of Credit; Certification............................71
(a) No Change in Condition.................................71
(b) Default................................................71
(c) Insurance..............................................71
(d) Warranties.............................................72
(e) No Material Transaction................................72
(f) Accounting Methods.....................................72
8.3 Conditions Precedent to all Additional
Revolving Loans.............................................72
(a) Default................................................72
(b) Receipt of Current Borrowing Base Certificates.........72
(c) Borrowing Requests.....................................72
9. INDEMNITY............................................................73
9.1 Environmental, Safety and Health Indemnity...................73
9.2 General Indemnity............................................73
9.3 Capital Adequacy.............................................74
10. ADDITIONAL PROVISIONS................................................74
11. GENERAL..............................................................74
11.1 Borrower Waiver.............................................74
11.2 Power of Attorney...........................................74
11.3 Expenses; Attorneys' Fees...................................75
11.4 Lender Fees and Charges.....................................76
11.5 Lawful Interest.............................................76
11.6 No Waiver by Lender; Amendments.............................76
11.7 Termination of Credit.......................................76
11.8 Notices.....................................................77
11.9 Assignments and Participations; Information.................77
11.10 Severability..................................................77
11.11 Successors....................................................78
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11.12 Construction; Governing Law..................................78
11.13 CONSENT TO JURISDICTION......................................78
11.14 Subsidiary Reference.........................................78
11.15 WAIVER OF JURY TRIAL.........................................78
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LIST OF EXHIBITS AND SCHEDULES
Exhibits:
Exhibit A Form of Insurance Endorsement (ss.5.6)
Exhibit B Form of Landlord's Consent (ss.1.1)
Exhibit C Form of Mortgage (ss.1.1)
Exhibit D Copy of Parent Pledge Agreement (ss.1.1)
Exhibit E Copy of Parent Subordination Agreement (ss.1.1)
Exhibit F Form of Amended and Restated Trademark
Security Agreement (ss.1.1)
Exhibit H Form of Accountant's Letter (ss.5.1.1(a)(i))
Exhibit I Form of Borrowing Request
Exhibit J Form of Warehousemen's Consent
Exhibit K Form of Bailee's/Processor's Consent
Exhibit L Form of Assignment of Business Interruption
Insurance Proceeds
Exhibit M Form of Copyright Security Agreement
Exhibit N Form of Patent Security Agreement
Exhibit O Form of Mortgage Supplement
Exhibit P Form of Continuation/Conversion Notice
Schedules:
Schedule 3.2 Depositary Accounts
Schedule 4.1 Borrower Trade Names, State of Incorporation
& Qualification
Schedule 4.5 Existing Defaults
Schedule 4.7 Insurance Summary
Schedule 4.8 Schedule of Litigation & Contingent Liabilities
Schedule 4.11 Schedule of Partnerships & Joint Ventures
Schedule 4.12 Schedule of Business & Collateral Locations
Schedule 4.13 Schedule of Real Property Descriptions and
Owners
Schedule 4.15 Schedule of Leases
Schedule 4.16 Schedule of Intellectual Property
Schedule 4.18 Schedule of Labor Matters
Schedule 4.19 Schedule of Contingent Employee Benefit Plan
Liabilities
Schedule 4.21 Schedule of Noncompliance
Schedule 4.25 Schedule of Environmental Matters
Schedule 5.15 Schedule of Indebtedness
Schedule 5.16 Schedule of Liens
Schedule 5.18 Schedule of Investments
AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
THIS AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT is made as of
December 30, 1996 by and between BANK OF AMERICA ILLINOIS, an Illinois banking
corporation having its principal office at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("Lender"), and ELXSI, a California corporation having its
principal office at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ ("Borrower").
W I T N E S S E T H:
WHEREAS, Borrower and Lender (formerly Continental Bank N.A.) previously
entered into that certain Loan and Security Agreement dated as of July 1, 1991
(as previously amended, the "Original Loan Agreement") whereunder Lender agreed
to extend loans and other financial accommodations from time to time to
Borrower;
WHEREAS, Borrower and Lender also previously entered into that certain
Amended and Restated Loan and Security Agreement dated as of October 30, 1992,
as amended by the First Amendment to Amended and Restated Loan and Security
Agreement dated as of February 4, 1993, the Second Amendment to Amended and
Restated Loan and Security Agreement dated as of December 6, 1994, the Third
Amendment to Amended and Restated Loan and Security Agreement dated as of
January 25, 1995, the Fourth Amendment to Amended and Restated Loan and Security
Agreement dated as of May 5, 1995 and the Fifth Amendment to Amended and
Restated Loan and Security Agreement dated as of July 3, 1995 (as so amended,
the "First Restated Loan Agreement") whereunder Borrower and Lender amended and
restated the Original Loan Agreement;
WHEREAS, Borrower and Lender also previously entered into that certain
Amended and Restated Loan and Security Agreement dated as of June 27, 1996 (the
"Existing Loan Agreement") whereunder Borrower and Lender amended and restated
the First Restated Loan Agreement;
WHEREAS, Borrower has requested Lender to make available Additional
Revolving Loans to Borrower under an additional revolving credit facility,
subject to certain restrictions set forth herein, in an aggregate principal
amount not to exceed $8,850,000 at any time outstanding, the proceeds of which
Additional Revolving Loans will be used by Borrower solely to fund the purchase
of the Subsidiary Loans by Borrower on the Restatement Date pursuant to the
terms and conditions of the Recapitalization Agreement and, from and after the
Restatement Date, solely to fund advances to Contempo, Compo West Loan Agreement
and the DEI Loan Agreement, respectively, to be used by each of Contempo,
Contempo West and DEI for its respective working capital and general corporate
purposes;
WHEREAS, Lender is willing to continue to extend its commitment to make
Revolving Loans and Supplemental Revolving Loans, and to continue to issue
Letters of Credit to Borrower,
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in each case for the purposes stated herein and on the terms and subject to the
conditions hereinafter set forth;
WHEREAS, Lender is willing to extend its commitment to make Additional
Revolving Loans to Borrower for the sole purpose stated above and subject to
the conditions hereinafter set forth;
WHEREAS, Borrower and Lender now desire to amend and restate the
Existing Loan Agreement to, among other things, set forth the terms and
conditions under which Lender hereafter will continue to make Revolving Loans
and Supplemental Revolving Loans, and continue to issue Letters of Credit to or
for the account of Borrower, and make Additional Revolving Loans to Borrower,
and to restate the Existing Loan Agreement to reflect the amendments thereto;
and
WHEREAS, this Agreement shall become effective upon the date (the
"Restatement Date") on which, after it has been executed by Borrower and Lender,
Borrower has satisfied all of the conditions precedent more particularly set
forth in Section 8.1 but in the event such conditions have not been satisfied
or waived on or before December 31, 1996, this Agreement (other than Section
2.10) shall be of no force or effect and the Existing Credit Agreement shall
continue in full force and effect;
NOW, THEREFORE, in consideration of any loan or advance or grant of
credit (including any loan or advance or grant of credit by renewal or
extension) hereafter made to Borrower by Lender, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Existing Loan Agreement is hereby amended and resta
I. DEFINITIONS AND OTHER TERMS.
1.1 Definitions. In addition to terms defined elsewhere in this
Agreement or any Supplement, Schedule or Exhibit hereto, when used herein, the
following terms shall have the following meanings (such meanings shall be
equally applicable to the singular and plural forms of the terms used, as the
context requires):
"Account Debtor" means any Person who is or who may become
obligated to Borrower under, with respect to, or on account of, an Account
Receivable, Contract Right, General Intangible or other Collateral or Third
Party Collateral.
"Account Receivable" means any account of Borrower and any other
right of Borrower to payment for goods sold or leased or for services rendered,
whether or not evidenced by an instrument or chattel paper and whether or not
yet earned by performance.
"Additional Revolving Credit Amount" means $8,850,000, as
adjusted pursuant to this Agreement, including pursuant to Sections 2.1.3 and
2.1.4.
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"Additional Revolving Loan" is defined in Section 2.1.7.
"Agreement" means this Amended and Restated Loan and Security
Agreement, as it may be amended, restated, supplemented or otherwise modified
from time to time.
"Applicable Margins" shall mean, for any date, the Eurodollar
Rate Margin and the Reference Rate Margin, as applicable, as in effect for such
date.
"Application" means an application by Borrower, in a form and
containing terms and provisions acceptable to Lender, for the issuance by Lender
of a Letter of Credit.
"Assignee Deposit Account" has the meaning ascribed to such term
in Section 3.2(d).
"Attorneys' Fees" means the reasonable fees and charges of the
attorneys (and all paralegals, secretaries, accountants and other staff
employed by such attorneys) employed by Lender (including but not limited to
attorneys and paralegals who are employees of Lender) from time to time (i) in
connection with the negotiation, preparation, execution, delivery,
administration and enforcement of this Agreement, any Related Agreement, any
Supplemental Documentation and all other documents or instruments provided for
herein or in any thereof or delivered or to be delivered hereunder or under any
thereof or in connection herewith or with any thereof, (ii) to prepare
documentation related to the Loans made and other Liabilities incurred
hereunder, (iii) to prepare any amendment to or waiver under this Agreement or
any Related Agreement, (iv) to represent Lender in any litigation, contest,
dispute, suit or proceeding or to commence, defend or intervene in any
litigation, contest, dispute, suit or proceeding or to file a petition,
complaint, answer, motion or other pleading, or to take any other action in or
with respect to, any litigation, contest, dispute, suit or proceeding (whether
instituted by Lender, Borrower or any other Person and whether inted Agreement,
or Borrower's or any other Obligor's or any Subsidiary's affairs in connection
therewith, (v) to protect, collect, lease, sell, take possession of, or
liquidate any of the Collateral or any Third Party Collateral in accordance
with the terms hereof or any Related Agreement or Supplemental Documentation,
(vi) to attempt to enforce any security interest in any of the Collateral or
any Third Party Collateral or to give any advice with respect to such
enforcement and (vii) to enforce any of Lender's rights to collect any of the
Liabilities.
"Azimuth" means Azimuth Corporation, a Delaware corporation.
"Azimuth Documents" means, collectively, the Recapitalization
Agreement, the Azimuth Group Loan Agreements, the Related Agreements (as such
term is defined in the Azimuth Loan Agreement) and the Other Loan Documents (as
such term is defined in the Azimuth Loan Agreement).
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"Azimuth Group Loan Agreements" means, collectively, the Azimuth
Loan Agreement, the Contempo Loan Agreement, the Contempo West Loan Agreement
and the DEI Loan Agreement.
"Azimuth Loan Agreement" means that certain Second Amended and
Restated Loan and Security Agreement dated as of October 9, 1995 between Lender
and Azimuth, as amended, restated, supplemented or otherwise modified from time
to time (including pursuant to the Recapitalization Agreement).
"Bailee's/Processor's Consent" means a document in the form of
Exhibit K, with appropriate insertions, or such other form as shall be
acceptable to Lender.
"▇▇▇▇▇▇▇▇'▇ Business" means the portion of Borrower's business
conducted by Borrower prior to the Merger.
"Borrower" is defined in the introduction of this Agreement.
"Borrowing Base Certificate" shall have the respective meaning
provided (i) in the Contempo Loan Agreement when used with reference to
Contempo, (ii) the Contempo West Loan Agreement when used with reference to
Contempo West and (iii) the DEI Loan Agreement when used with reference to DEI.
"Borrowing Request" means a Borrowing Request in the form of
Exhibit I hereto.
"Business Day" means:
(a) any day which is neither a Saturday or Sunday nor a legal
holiday on which banks are authorized or required to be closed
in Chicago, Illinois; and
(b) (i) relative to the date of making or continuing any
Loans as, or converting any Loans from or into, Eurodollar Rate
Loans,
(ii) making any payment or prepayment of principal of or
payment of interest on any portion of the principal amount of
any Loans being maintained as Eurodollar Rate Loans, or
(iii) Borrower's giving any notice (or the number of
Business Days to elapse prior to the effectiveness thereof) in
connection with any matter referred to in clause(b)(i) or
(b)(ii) above,
any day on which dealings in Dollars are carried on in the interbank
eurodollar market of Lender's Eurodollar Office.
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"Capitalized Lease" means any lease which is or should be
capitalized on the balance sheet of the lessee in accordance with GAAP.
"Closing Date" means July 1, 1991.
"Code" means the Internal Revenue Code of 1986, as amended, and
any successor statute of similar import, together with the regulations
thereunder, in each case as in effect from time to time. References to sections
of the Code shall be construed to also refer to any successor sections.
"Collateral" has the meaning ascribed to such term in
Section 3.1.
"Commercial Letter of Credit" means any Letter of Credit which
is drawable upon presentation of a sight draft and other documents evidencing
the sale or shipment of goods purchased by Borrower in the ordinary course of
Borrower's business.
"Compensatory Amount" shall have the meaning ascribed thereto in
Section 2.15 hereof.
"Computer Hardware and Software Collateral" means:
(a) all of Borrower's: computer and other electronic data
processing hardware, integrated computer systems, central processing
units, memory units, display terminals, printers, features, computer
elements, card readers, tape drives, hard and soft disk drives, cables,
electrical supply hardware, generators, power equalizers, accessories
and all peripheral devices and other related computer hardware;
(b) all of Borrower's: software programs (including both source
code, object code and all related applications and data files), whether
now owned, licensed or leased or hereafter acquired by Borrower,
designed for use on the computers and electronic data processing
hardware described in clause (a) above;
(c) all firmware of Borrower associated with the property
described in clauses (a) and (b) of this definition;
(d) all documentation (including flow charts, logic diagrams,
manuals, guides and specifications) with respect to the hardware,
software and firmware described in the preceding clauses (a) through
(c) of this definition; and
(e) all rights with respect to all of the foregoing, including
without limitation, any and all copyrights, licenses, options,
warranties, service contracts, program services, test rights,
maintenance rights, support rights, improvement rights, renewal rights
and indemnifications and any substitutions, replacements, additions or
model conversions of any of the foregoing.
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"Contempo" means Contempo Design, Inc., an Illinois corporation.
"Contempo Loan Agreement" means that certain Loan and Security
Agreement dated as of October 9, 1995 by and between Lender and Contempo, as
amended, restated, supplemented or otherwise modified from time to time
(including pursuant to the Recapitalization Agreement).
"Contempo West" means Contempo Design West, Inc., a Delaware
corporation.
"Contempo West Loan Agreement" means that certain Loan and
Security Agreement dated as of October 9, 1995 by and between Lender and
Contempo West, as amended, restated, supplemented or otherwise modified from
time to time (including pursuant to the Recapitalization Agreement).
"Continuation/Conversion Notice" means a notice of continuation
or conversion and a certificate duly executed by the chief executive,
accounting, or other authorized officer of Borrower on behalf of Borrower, each
such notice and certificate to be substantially in the form of Exhibit P
hereto.
"Contract Right" means any right of Borrower to payment under a
contract, which right is not yet earned by performance and not evidenced by an
instrument or chattel paper.
"Copyright Collateral" means:
(a) all copyrights and all semi-conductor chip product mask
works of the Borrower, whether statutory or common law, registered or
unregistered, now or hereafter in force throughout the world including
all of Borrower's right, title and interest in and to all copyrights
and mask works registered in the United States Copyright Office or
anywhere else in the world and also including the copyrights and mask
works referred to in Item A of Schedule 4.16 hereto, and all
applications for registration thereof, whether pending or in
preparation, all copyright and mask work licenses, including each
copyright and mask work license referred to in Item B of Schedule 4.16
hereto, the right to ▇▇▇ for past, present and future infringements of
any thereof, all rights corresponding thereto throughout the world and
all extensions and renewals of any thereof; and
(b) all proceeds of the foregoing, including licenses, royalties,
income, payments, claims, damages and proceeds of suit.
"Copyright Security Agreement" means the Copyright Security
Agreement between Borrower and Lender in the form of Exhibit M, with
appropriate insertions, as it may be amended, restated, supplemented or
otherwise modified from time to time.
"Credit" means the facilities established under this Agreement
pursuant to which Lender will make Revolving Loans, Supplemental Revolving
Loans and Additional Revolving Loans to, and issue Letters of Credit for the
account of, Borrower.
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"Credit Reduction Amount" means, for each Credit Reduction Date,
commencing with the first Credit Reduction Date to occur on December 31, 1996,
an amount equal to $250,000, in each case subject to adjustment as provided in
Section 2.1.
"Credit Reduction Date" means the last Business Day of each
calendar month other than January, February, and March of each calendar year.
"Cues Business" means the portion of Borrower's business which
was conducted by Cues and Holdingcues prior to the Merger.
"Default Rate" means, with respect to any Loan after any portion
thereof is not paid when due, whether by acceleration or otherwise, a rate of
interest per annum equal to two percent (2.0%) in excess of the rate then borne
by Reference Rate Loans.
"DEI" means Delaware Electro Industries, Inc., a Delaware
corporation.
"DEI Loan Agreement" means that certain Loan and Security
Agreement dated as of October 9, 1995 by and between Lender and DEI, as amended,
restated, supplemented or otherwise modified from time to time (including
pursuant to the Recapitalization Agreement).
"Demand Deposit Account" has the meaning ascribed to such term
in Section 2.3.
"Depositary Accounts" has the meaning ascribed to such term in
Section 3.2(d).
"Dollar" and the sign "$" mean lawful money of the United States
of America.
"EBITDA" means Borrower's consolidated net earnings before
interest expense, depreciation, amortization and provision for Taxes for the
fiscal quarter of Borrower ending on the date of det quarter to the extent that
the aggregate of all such gains and extraordinary or nonrecurring items of
income exceeds the aggregate of losses on such sales or other dispositions and
extraordinary or nonrecurring charges during such quarter, and (ii) interest
expense shall include, without limitation, implicit interest expense on
Capitalized Leases.
"Environmental Laws" means the federal Clean Air Act, the
federal Clean Water Act, the federal Resource Conservation and Recovery Act,
the federal Comprehensive Environmental Response, Compensation and Liability
Act, any so-called "Superfund" or "Superlien" law, the federal Toxic Substances
Control Act, and any other federal, state or local statute, law, ordinance,
code, rule, regulation, order or decree or other legal, judicial or regulatory
requirement regulating, relating to, or imposing liability or standards of
conduct (including, but not limited to, permit requirements and emission or
effluent restrictions) concerning any Hazardous Materials or any
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hazardous, toxic or dangerous waste, substance or constituent, or any pollutant
or contaminant, whether solid, liquid or gas, in each case as from time to time
in effect.
"Environmental Lien" means a Lien in favor of any governmental
entity for (1) any liability under any Environmental Law or (2) damages arising
from or costs incurred by such governmental entity in response to a spillage,
disposal or release into the environment of any Hazardous Material or any
hazardous, toxic or dangerous waste, substance or constituent, or any pollutant
or contaminant or other substance.
"Equipment" means all equipment of Borrower of every description,
including, without limitation, fixtures, furniture, vehicles and trade fixtures,
together with any and all accessions, parts and equipment attached thereto or
used in connection therewith, and any substitutions therefor and replacements
thereof.
"ERISA" meansmport, together with the regulations thereunder, in
each case as in effect from time to time. References to sections of ERISA shall
be construed to also refer to any successor sections.
"ERISA Affiliate" means any corporation, partnership, or other
trade or business (whether or not incorporated) that is, along with Borrower
treated as a single employer under Sections 414(b), (c), (m) or (o) of the Code.
"Eurodollar Office" means, relative to Lender, the office of
Lender designated as such below its signature hereto (or, in the case of an
assignee, in the assignment executed by it) or such other office of Lender as
designated from time to time by notice from Lender to Borrower, whether or not
outside the United States of America, which shall be making or maintaining
Eurodollar Rate Loans of Lender hereunder.
"Eurodollar Rate" means, relative to the Interest Period for
each Eurodollar Rate Loan comprising all or any part of the same advance, the
rate of interest equal to the average (rounded upwards, if necessary, to the
nearest 0.0625%) of the rates per annum at which Dollar deposits in immediately
available funds are offered to Lender's Eurodollar Office in the interbank
eurodollar market as at or about 10:00 a.m., Chicago time, two Business Days
prior to the beginning of such Interest Period, for delivery on the first day
of such Interest Period, in an amount approximately equal or comparable to the
amount of such advance and for a period equal to such Interest Period.
"Eurodollar Rate (Adjusted)" means, relative to any portion of a
Loan to be made, continued, or maintained as, or converted into, a Eurodollar
Rate Loan for any Interest Period, a rate per annum (rounded upwards, if
necessary, to the nearest 0.0625%) determined pursuant to the following formula:
Eurodollar Rate = Eurodollar Rate
----------------------
-8-
(Adjusted) 1 - the Eurodollar
Reserve Percentage.
"Eurodollar Rate Loan" means a Loan bearing interest, at all
times during the Interest Period applicable to such Loan, at a rate of interest
determined by reference to the Eurodollar Rate (Adjusted).
"Eurodollar Rate Margin" shall mean the per annum marginal
interest rate set forth below as determined by the corresponding Funded
Debt/EBITDA Ratio determined as of the last day of each Fiscal Quarter in each
fiscal year (and to become effective as provided in Section 2.4.1(b)).
Eurodollar Rate Margin Funded Debt/EBITDA Ratio
---------------------- ---------------------------------------
2.75% greater than 2.00
2.00% less than or equal to 2.00 but
greater than 1.25
1.75% less than or equal to 1.25
"Eurodollar Reserve Percentage" means, relative to each Interest
Period, a percentage (expressed as a decimal) equal to the daily average during
such Interest Period of the percentages in effect on each day of such Interest
Period, as prescribed by the Federal Reserve Board, for determining the maximum
reserve requirements applicable to "Eurocurrency Liabilities" pursuant to
Regulation D or any other applicable regulation of the Federal Reserve Board
which prescribes reserve requirements applicable to "Eurocurrency Liabilities"
as currently defined in Regulation D.
"Event of Default" is defined in Section 6.1.
"Excess Cash Flow" means, for any period, an amount equal to (a)
the consolidated net income of Borrower for such period after deduction of
income tax expenses (excluding deferred income taxes) for such period, plus
depreciation and amortization expenses (inc to the extent such payments are
permitted hereunder).
"Excluded Taxes" means taxes imposed on the net income of Lender
or imposed on Lender by reason of Lender being engaged in a trade or business
in the United States of America or having a fixed place of business therein.
"Federal Reserve Board" means the Board of Governors of the
Federal Reserve System or any successor thereto.
-9-
"Fiscal Year" means any period of 12 consecutive calendar months
ending on the 31st day of December. References to a Fiscal Year with a number
corresponding to any calendar year (e.g., "Fiscal Year 1996) refer to the Fiscal
Year ending on the 31st day of December occurring during such calendar year.
"Fixtures" means all fixtures of Borrower of every description
and all substitutions and replacements of any thereof.
"Funded Debt" means, as of any date of determination, the
principal amount of Borrower's Indebtedness outstanding which would be
reflected as liabilities on a balance prepared in accordance with GAAP (but
excluding from the determination thereof all Indebtedness owing with respect to
Additional Revolving Loans).
"Funded Debt/EBITDA Ratio" means the ratio of Borrower's Funded
Debt determined as of the last day of any specified fiscal quarter of Borrower
divided by Borrower's EBITDA for the four (4) fiscal quarters then ended.
"GAAP" means generally accepted accounting principles as in
effect from time to time; provided that the financial tests set forth in
Sections 4.1 through 4.4 of Supplement A shall at all times be calculated in
accordance with generally accepted accounting principles as in effect on the
Closing Date unless Borrower and Lender shall have agreed to modifications to
such covenants to account for any changes in such principles after the date
hereof.
"General Intangibles" means all of Borrower's intangible
personal property, including things in action, causes of action and all other
personal property of Borrower of every kind and nature (other than accounts,
inventory, equipment, chattel paper, documents, instruments and money),
including, without limitation, corper lists, tax refund claims, claims against
carriers and shippers, guarantee claims, security interests, security deposits
or other security held by or granted to Borrower to secure any payment from an
Account Debtor, and any rights to indemnification.
"Hazardous Materials" means any toxic substance, hazardous
substance, hazardous material, hazardous chemical or hazardous waste defined or
qualifying as such in (or for the purposes of) any Environmental Law, or any
pollutant or contaminant, and shall include, but not be limited to, petroleum,
including crude oil or any fraction thereof which is liquid at standard
conditions of temperature or pressure (60 degrees Fahrenheit and 14.7 pounds
per square inch absolute), any radioactive material, including, but not
limited to, any source, special nuclear or by-product material as defined at
42 U.S.C. section 2011 et seq., as amended or hereafter amended,
polychlorinated biphenyls and asbestos in any form or condition.
"Indebtedness" of any Person means, without duplication, (i) any
obligation of such Person for borrowed money, including, without limitation,
(a) any obligation of such Person evidenced by bonds, debentures, notes or
other similar debt instruments and (b) any obligation for
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borrowed money which is non-recourse to the credit of such Person but which is
secured by a Lien on any asset of such Person, (ii) any obligation of such
Person on account of deposits or advances, (iii) any obligation of such Person
for the deferred purchase price of any property or services, except Trade
Accounts Payable, (iv) any obligation of such Person as lessee under a
Capitalized Lease and (v) any Indebtedness of another Person secured by a Lien
on any asset of such first Person, whether or not such Indebtedness is assumed
by such first Person. For all purposes of this Agreement, the Indebtedness of
any Person shall include the Indebtedness of any partnership or joint venture in
which such Person is a general partner or joint venturer. Notwithstanding the
foregoing, for purposes of computing Borrower's compliance with Section 2.2, 2.4
and 2.5 of Supplement A hereto, and for purposes of computing Funded Debt, there
shall be excluded from the determination of "Indebtedness" the Subordinated Note
and all Indebtedness of Borrower to Parent.
"Intellectual Property Collateral" means, collectively, the
Computer Hardware and Software Collateral, the Copyright Collateral, the Patent
Collateral, the Trademark Collateral and the Trade Secrets Collateral.
"Interest Period" means, relative to any Eurodollar Rate Loan,
the period from the date on which such Eurodollar Rate Loan is made or continued
as, or converted into, a Eurodollar Rate Loan pursuant to Section 2.16 or 2.17,
and, unless the maturity of such Eurodollar Rate Loan is accelerated, the day
which numerically corresponds to such date one, two or three months thereafter,
as Borrower may select in its relevant notice pursuant to Section 2.16 or 2.17;
provided that:
(a) Borrower shall not be permitted to select Interest Periods to
be in effect at any one time which have expiration dates occurring on
more than four different dates;
(b) if there exists no numerically corresponding day in such
month, such Interest Period shall end on the last Business Day of such
month;
(c) if such Interest Period would otherwise end on a day which
is not a Business Day, such Interest Period shall end on the next
following Business Day (unless such next following Business Day is a
Business Day falling in a new calendar month, in which case such
Interest Period
shall end on the Business Day next preceding such numerically
corresponding day); and
(d) Borrower shall not be permitted to select, and there shall
not be applicable, any Interest Period that would end later than the
Termination Date.
"Inventory" means any and all of the goods of Borrower
(including, without limitation, goods in transit) wheresoever located which are
or may at any time be leased by Borrower to a lessee, held for sale or lease,
furnished under any contract of service by, or held as raw materials, work in
process, or supplies or materials used or consumed in the business of, Borrower
or which are held for use in connection with the manufacture, packing,
shipping, advertising, selling or finishing of such goods, and all goods the
sale or other disposition of which
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has given rise to an Account Receivable, Contract Right or General Intangible
and which are returned to and/or repossessed and/or stopped in transit by
Borrower or Lender or any agent or bailee of any of them, and all documents of
title or other documents representing the same.
"Investment" of any Person means any investment, made in cash or
by delivery of any kind of property or asset, in any other Person, whether by
acquisition of shares of stock or similar interest, Indebtedness or other
obligation or security, or by loan, advance or capital contribution, or
otherwise.
"Investment Property" shall have the meaning ascribed thereto in
Section 9-115 of the UCC in those jurisdictions in which such definition has
been adopted and shall include, without limitation (i) all securities, whether
certificated or uncertificated, including, without limitation, stocks, bonds,
interests in limited liability companies, partnership interests, treasury
securities, certificates of deposit, and mutual fund shares; (ii) all
securities entitlements of Borrower, including without limitation, the rights
of Borrower to any securities account and the financial assets held by a
securities intermediary in such securities account and any free credit balance
or other money owing by any securities intermediary with respect to that
account; (iii)
all securities accounts held by Borrower; (iv) all commodity contracts held by
Borrower; and (v) all commodity accounts held by Borrower.
"Landlord's Consent" means a Landlord's Consent substantially in
the form of Exhibit B, with appropriate insertions, or such other form as shall
be acceptable to Lender, as it may be amended or modified from time to time.
"L/C Draft" means a draft drawn on Lender pursuant to a Letter
of Credit.
"Lender" is defined in the introduction to this Agreement.
"Letter of Credit" means a letter of credit issued by Lender
under this Agreement on the Application of Borrower.
"Letter of Credit Obligations" means at any time an amount equal
to the sum of (i) the aggregate amount available to be drawn under outstanding
Letters of Credit, plus (ii) all amounts drawn, but not yet reimbursed, under
Letters of Credit, plus (iii) the aggregate outstanding face amount of all
accepted but unpaid L/C Drafts.
"Liabilities" means all of the liabilities, obligations,
reimbursement obligations in connection with any letter of credit and
indebtedness of Borrower, any Subsidiary or any other Obligor to Lender of any
kind or nature, however created, arising or evi to (i) Borrower's obligations
under any Note, (ii) Borrower's obligations under this Agreement, (iii)
interest, charges, expenses, Attorneys' Fees and other sums chargeable to
Borrower by Lender under this Agreement or any Related Agreement, (iv) the
obligations of Borrower, any Subsidiary or any other obligor under any Related
Agreement, including obligations of performance,
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and (v) Borrower's obligations with respect to any Letter of Credit or
Application therefor. "Liabilities" shall also include any and all amendments
(including any amendment and restatement), extensions or renewals of any of the
foregoing.
"Lien" means any mortgage, pledge, hypothecation, judgment lien
or similar legal process, title retention lien, or other lien, encumbrance or
security interest, including, without limitation, the interest of a vendor
under any conditional sale or other title retention agreement and the interest
of a lessor under any Capitalized Lease.
"Loan" means (i) the Revolving Loans made pursuant to
Section 2.1.1, (ii) the Supplemental Revolving Loans made pursuant to
Section 2.1.6, (iii) the Additional Revolving Loans made pursuant to
Section 2.1.7 and (iv) any other loan or advance made to Borrower by Lender
under or pursuant to this Agreement.
"Loan Account" has the meaning ascribed to such term in
Section 2.3.
"Management Agreement" means the Management Agreement dated as
of September 25, 1989, as amended, between Borrower, as assignee of Parent, and
Cadmus Corporation, a Massachusetts corporation ("Cadmus"), as assignee of
▇▇▇▇▇▇ Management Incorporated (assignee of Winchester National, Inc. d/b/a
▇▇▇▇▇▇ & Company).
"Margin Stock" has the meaning ascribed to such term in
Regulation U of the Federal Reserve Board or any regulation substituted
therefor, as in effect from time to time.
"Merger" means the merger of Han of Merger, dated October 16,
1992, among Borrower, Cadmus and Holdingcues.
"Mortgage" means any mortgage, deed of trust, leasehold mortgage,
and/or assignment of leases and rents between Borrower and Lender, each
substantially in the form of Exhibit C, with appropriate insertions, in each
case as amended or otherwise modified from time to time.
"Mortgage Supplement" means a supplement to a Mortgage which was
executed in connection with the Existing Loan Agreement, in the form of Exhibit
O.
"Multiemployer Plan" means a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA which is maintained for employees of Borrower, any
other Obligor or any ERISA Affiliate, or to which Borrower, any other Obligor
or any ERISA Affiliate has contributed or is contributing.
"Net Worth" means at any time, the sum of (a) the consolidated
shareholder's equity (including capital stock, additional paid-in capital and
retained earnings after deducting treasury
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stock) of Borrower calculated in accordance with GAAP and (b) the outstanding
principal amount of all Subordinated Debt.
"Note" means any promissory note of Borrower evidencing any loan
or advance (including but not limited to any Revolving Loans, any Supplemental
Revolving Loans and any Additional Revolving Loans) made by Lender to Borrower
pursuant to this Agreement.
"Obligor" means Borrower and each other Person who is or shall
become primarily or secondarily liable on any of the Liabilities, or who grants
to Lender a Lien on any property of such Person as security for any of the
Liabilities.
"Occupational Safety and Health Law" means the federal
Occupational Safety and Health Act of 1970 and any other federal, state or
local statute, law, ordinance, code, rule, regulation, order or decree
regulating, relating to or imposing liability or standards of conduct
concerning employee health and/or safety.
"Original Loan Agreement" is defined in the Recitals to this
Agreement.
"Parent" means ELXSI Corporation, a Delaware corporation and the
owner of 100% of the issued and outstanding capital stock of Borrower, and any
successor thereto.
"Parent Pledge Agreement" means the Pledge Agreement between
Parent and Lender, a copy of which is attached as Exhibit D, as it may be
amended, restated, supplemented or otherwise modified from time to
timeSubordination Agreement between Parent, Lender and Borrower, a copy of
which is attached as Exhibit E, as it may be amended, restated, supplemented or
otherwise modified from time to time.
"Participant" means any Person, now or at any time hereafter,
participating with Lender in the Loans made to Borrower pursuant to this
Agreement or any Related Agreement.
"Patent Collateral" means all of the following property of
Borrower, whether presently existing or hereafter arising or acquired:
(a) all letters patent and applications for letters patent,
including each letter patent and letter patent application referred to
in Item A of Schedule 4.16 hereto;
(b) all patent licenses, including each patent license
referred to in Item B of Schedule 4.16 hereto;
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(c) all reissues, divisions, continuations, extensions,
renewals and continuations-in-part of any of the items described in the
foregoing clauses (a) and (b); and
(d) all proceeds of, and rights associated with, the foregoing
(including license royalties and proceeds of infringement suits), the
right to ▇▇▇ third parties for past, present or future infringements of
any letter patent or letter patent application, including any letter
patent or letter patent application referred to in Item A of Schedule
4.16 hereto, and for any patent license, including any patent license
referred to in Item B of Schedule 4.16 hereto, and all corresponding
rights throughout the world.
"Patent Security Agreement" means the Patent Security Agreement
between Borrower and Lender in the form of Exhibit N, with appropriate
insertions, as amended, restated, supplemented or otherwise modified from time
to time.
"PBGC" means the Pension Benefit Guaranty Corporation and any
entity succeeding to any or all of its functions under ERISA.
"Pension Plan" means a "pension plan," as such term is defined
in Section 3(2) of ERISA, which is subject to the provisions of Title IV of
ERISA (other than a Multiemployer Plan) and which is maintained by Borrower,
any other Obligor or any ERISA Affiliate or for which any of the foregoing may
have any liability, including any liability by reason of being deemed to be a
contributing sponsor under Section 4069 of ERISA or having been a substantial
employer within the meaning of Section 4063 of ERISA at any time during the
five years preceding the time of determination.
"Person" means any individual, sole proprietorship, partnership,
joint venture, trust, unincorporated organization, association, corporation,
institution, entity, or government (whether national, federal, state, county,
city, municipal or otherwise, including, without limitation, any
instrumentality, division, agency, body or department thereof).
"Real Property" means each parcel of real property owned or
leased by Borrower iden "Recapitalization Agreement" means that
certain Recapitalization Agreement dated
as of December 30, 1996 by and among Azimuth, DEI, Contempo, Contempo West,
Borrower and Lender, and all documents, instruments and agreements delivered
pursuant thereto, all as amended, restated, supplemented or otherwise modified
from time to time.
"Reference Rate" means, at any time and from time to time, the
rate per annum then most recently announced by Lender at its head office as its
reference rate. The Reference Rate is not necessarily intended to be the lowest
rate of interest determined by Lender in connection with extensions of credit.
Changes in the rate of interest on that portion of any Loans maintained as
Reference Rate Loans shall take effect simultaneously with each change in the
Reference Rate. Lender shall give notice promptly to Borrower of changes in the
Reference Rate.
-15-
"Reference Rate Loan" means a Loan bearing interest at a
fluctuating rate determined by reference to the Reference Rate.
"Reference Rate Margin" shall mean the per annum marginal
interest rate set forth below as determined by the corresponding Funded
Debt/EBITDA Ratio determined as of the last day of each Fiscal Quarter of each
fiscal year.
Reference Rate Margin Funded Debt/EBITDA Ratio
--------------------- --------------------------
.25% greater than 2.00
0% less than or equal to 2.00
"Regulatory Change" means, relative to Lender:
(a) any change after the Second Restatement Date in (or the
adoption, implementation, phase-in or commencement of effectiveness of)
any applicable law, guideline or request (whether or not having the
force of law); or
(b) any change after the Second Restatement Date in the
application to Lender of any applicable law, guideline or request
(whether or not having the force of law), including a determination by
Lender to apply the requirements of changes to Regulations H and Y of
the Federal Reserve. Board issued on January 19, 1989 and the
regulations of the Comptroller of the Currency, 12 C.F.R. Part 3,
Appendix A, issued on January 27, 1989 to its Loans hereunder.
"Related Agreement" means any agreement, instrument or document
(including, without limitation, notes, guarantees, mortgages, deeds of trust,
chattel mortgages, pledges, powers of attorney, consents, assignments,
contracts, notices, security agreements, leases, financing statements,
subordination agreements and trust account agreements) heretofore, now, or
hereafter delivered to Lender with respect to or in connection with or pursuant
to this Agreement or any of the Liabilities (including, without limitation, any
Azimuth Document), and executed by or on behalf of Borrower or any other
Obligor.
"Related Party" means any Person (other than a Subsidiary) (i)
which directly or indirectly through one or more intermediaries controls, or is
controlled by, or is under common control with, Borrower, (ii) which
beneficially owns or holds ten percent (10%) or more of the equity interest of
Borrower or (iii) ten percent (10%) or more of the equity interest of which is
beneficially owned or held by Borrower or a Subsidiary. The term "control"
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise.
-16-
"Reportable Event" means a "reportable event" as defined in
ERISA, other than a reportable event not subject to the provision for 30-day
notice to the PBGC under applicable regulations.
"Revolving is Agreement, including pursuant to Sections 2.1.3
and 2.1.4.
"Revolving Loan" is defined in Section 2.1.1.
"Revolving Loan Availability" means the Revolving Credit Amount
minus the Letter of Credit Obligations.
"Second Restatement Date" means June 27, 1996.
"Standby Letter of Credit" means any Letter of Credit which is
not a Commercial Letter of Credit.
"Subordinated Debt" means (a) the Subordinated Note and (b) that
portion of any other Indebtedness of Borrower which contains terms satisfactory
to Lender and is subordinated, in a manner satisfactory to Lender, as to right
and time of payment of principal and interest thereon, to all of the
Liabilities.
"Subordinated Note" means that certain 15% subordinated
Promissory Note dated June 27, 1991 issued by Borrower to Parent in the
original principal amount of $4,500,000.
"Subsidiary" means any Person of which or in which Borrower and
its other Subsidiaries own directly or indirectly 50% or more of (i) the
combined voting power of all classes of stock having general voting power under
ordinary circumstances to elect a majority of the board of directors of such
Person, if it is a corporation, (ii) the capital interest or profits interest
of such Person, if it is a partnership, joint venture or similar entity or
(iii) the beneficial interest of such Person, if it is a trust, association or
other unincorporated organization. Unless otherwise indicated, the term
"Subsidiary", refers to a Subsidiary of Borrower.
"Subsidiary Loans" shall have the meaning provided in the
Recapitalization Agreement.
"Supplemental Documentation" has the meaning ascribed to such
term in Section 3.5.
"Supplemental Revolving Credit Amount" means $5,100,000, as
adjusted pursuant to this Agreement; including pursuant to Section 2.1.3 and
2.1.4.
"Supplemental Revolving Loan" is defined in Section 2.1.6.
-17-
"Taxes" with respect to any Person means taxes, assessments or
other governmental charges or levies imposed upon such Person, its income or
any of its properties, franchises or assets.
"Termination Date" means June 30, 1998 or such later date as may
be fixed pursuant to Section 11.7.
"Third Party Collateral" means any property of any Person other
than Borrower which secures payment or performance of any Liabilities.
"Trade Accounts Payable" of any Person means trade accounts
payable of such Person with a maturity of not greater than 90 days incurred in
the ordinary course of such Person's business.
"Trade Secret" has the meaning ascribed to that term in the
definition of Trade Secrets Collateral.
"Trade Secrets Collateral" means common law and statutory trade
secrets and all other confidential or proprietary or useful information and all
know-how used in or contemplated at any time for use in the business of
Borrower (all of the foregoing being collectively called a "Trade Secret"),
whether or not such Trade Secret has been reduced to a writing or other
tangible form, including all documents and things embodying or incorporating
such Trade Secret, all Trade Secret licenses, and including the right to ▇▇▇
for and to enjoin and to collect damages for the actual or threatened
misappropriation of any Trade Secret and for the breach or enforcement of any
such Trade Secret license.
"Trademark" has the meaning ascribed to that term in the
definition of Trademark Collateral.
"Trademark Collateral" means:
(a) all of Borrower's trademarks, trade names, corporate names,
company names, business names, fictitious business names, trade styles,
service marks, certification marks, collective marks, logos, other
source of business identifiers, prints and labels on which any of the
foregoing have appeared or appear, designs and general intangibles of a
like nature (all of the foregoing items in this clause (a) being
collectively called a "Trademark"), now existing anywhere in the world
or hereafter adopted or acquired, whether currently in use or not, all
registrations and recordings thereof and all applications in connection
therewith, whether pending or in preparation for filing, including
registrations, recordings and applications in the United States Patent
and Trademark Office or in any office or agency of the United States of
America or any State thereof or any foreign country, including each
Trademark, Trademark registration, recording and application therefor
referred to in Item A of Schedule 4.16 hereto;
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(b) all Trademark licenses, including each Trademark license
referred to in Item B of Schedule 4.16 hereto;
(c) all reissues, extensions or renewals of any of the items
described in clauses (a) and (b);
(d) all of the goodwill of the business connected with the
use of, and symbolized by, the items described in clauses (a) and (b);
and
(e) all proceeds of, and rights associated with, the foregoing,
including any claim by Borrower against third parties for past, present
or future infringement or dilution of any Trademark or Trademark
registration, including any Trademark or Trademark registration
referred to in Item A of Schedule 4.16 hereto, or Trademark license,
including each Trademark license referred to in Item B of Schedule 4.16
hereto, or for any injury to the goodwill associated with the use of
any such Trademark or for breach or enforcement of any Trademark
license.
"Trademark Security Agreement" means the Amended and Restated
Trademark Security Agreement between Borrower and Lender substantially in the
form of Exhibit F, with appropriate insertions, as it may be amended, restated,
supplemented or otherwise modified or supplemented from time to time.
"UCC" means the Uniform Commercial Code as in effect in the
State of Illinois, and any successor statute, as in effect from time to time.
References to sections of the UCC shall be construed to also refer to any
successor sections.
"Unmatured Event of Default" means any event or condition which,
with the lapse of time or giving of notice to Borrower or both, would
constitute an Event of Default.
"Warehouseman's Consent" means a document in the form of Exhibit
J, with appropriate insertions, or such other form as shall be acceptable to
the Lender.
1.2 Other Definitional Provisions. Unless otherwise defined or the
context otherwise requires, all financial and accounting terms used herein or
in any certificate or other document made or delivered pursuant hereto shall be
defined in accordance with GAAP. Unless otherwise defined therein, all terms
defined in this Agreement shall have the defined meanings when used in any Note
or in any certificate or other document made or delivered pursuant hereto.
Terms used and not defined in this Agreement which are defined in any
Supplement or Exhibit hereto shall, unless the context otherwise indicates,
have the meanings given them in such Supplement or Exhibit. Terms used and not
defined in this Agreement in reference to the Lien granted hereunder, the
Collateral or Third Party Collateral shall, unless the context indicates
otherwise, have the meanings provided for by the UCC to the extent the same
are used or defined therein.
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1.3 Interpretation of Agreement. A reference to a Section, an Exhibit,
a Supplement or a Schedule is, unless otherwise stated, a reference to a
section hereof, an exhibit hereto or a schedule hereto, as the case may be.
Section captions used in this Agreement are for convenience only and shall not
affect the construction of this Agreement. Reference to "this Agreement" shall
include the provisions of Supplement A.
1.4 Compliance with Financial Restrictions. Compliance with each of the
financial ratios and restrictions contained in Section 5 or Supplement A shall,
except to the extent otherwise provided herein, be determined in accordance
with GAAP consistently followed.
1.5 Effect of Restatement. This Agreement shall, except as otherwise
expressly set forth herein, supersede the Existing Loan Agreement from and
after the Restatement Date with respect to the transactions hereunder and with
respect to the Loans and Letters of Credit outstanding under the Existing Loan
Agreement as of Restatement Date. The parties hereto acknowledge and agree,
however, that (i) this Agreement and all other Related Agreements executed and
delivered herewith do not constitute a novation, payment and reborrowing or
termination of the Liabilities under the Existing Loan Agreement and the other
Related Agreements as in effect prior to the Restatement Date, (ii) such
Liabilities are in all respects continuing with only the terms being modified
as provided in this Agreement and the other Related Agreements, (iii) the liens
and security interests in favor of Lender securing payment of such Liabilities
are in all respects continuing and in full force and effect with respect to all
Liabilities and (iv) all references in the other Related Agreements to this
Agreement shall be deemed to refer without further amendment to this Agreement.
2. LOANS; LETTERS OF CREDIT; OTHER MATTERS.
2.1 Loans.
2.1.1 Revolving Loans.
(a) Subject to the terms and conditions of this
Agreement and the Related Agreements, and in reliance upon the
warranties of Borrower set forth herein and in the Related
Agreements, Lender agrees to continue to make such loans or
advances (individually each a "Revolving Loan" and collectively
the "Revolving Loans") from time to time before the Termination
Date to Borrower as Borrower may from time to time request;
provided, however, that, except as provided in the proviso to
Section 2.1.2, the aggregate principal amount of all Revolving
Loans at any time outstanding shall not exceed the Revolving
Loan Availability. Revolving Loans may be repaid and, subject to
the the Credit is otherwise terminated as
provided in this Agreement. Borrower and Lender acknowledge the
making of the Revolving Loans which are outstanding on the
Restatement Date in accordance with the terms of the Existing
Loan Agreement and agree that, from and after the Restatement
Date, such Revolving Loans shall continue to be outstanding
pursuant to the terms and conditions of this Agreement.
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(b) All Revolving Loans hereunder shall be paid by
Borrower on the Termination Date, unless payable sooner pursuant
to the provisions of this Agreement, but may, at Borrower's
election, be repaid in whole or in part at any time prior to
such date without premium or penalty.
2.1.2 Maximum Outstanding Revolving Loans. Notwithstanding any
other provision of this Agreement, the aggregate outstanding principal
balance of the Revolving Loans shall not at any time exceed the
Revolving Credit Amount as in effect at such time; provided, however,
that the foregoing shall not limit the right of Lender to advance
Revolving Loans to Borrower pursuant to the provisions of Section 2.2,
3.2, 5.5, 5.6, 5.22, 7.4, 11.3 or 11.4 or any other provision of this
Agreement or any Related Agreement that permits Lender to advance
Revolving Loans to Borrower. If at any time the amount of Revolving
Loans exceeds the Revolving Loan Availability, Borrower shall
immediately upon demand repay such excess.
2.1.3 Mandatory Reductions. (a) On each Credit Reduction Date,
the Revolving Credit Amount shall be reduced by the Credit Reduction
Amount for such date. (b) On the date of Borrower's receipt of proceeds
from any loan permitted pursuant to Section 5.15(e), the Revolving
Credit Amount shall first be reduced, until reduced to zero, and
thereafter the Supplemental Revolving Credit Amount and the Additional
Revolving Credit Amount; on a pro rata basis (or on such other basis as
Borrower may reasonably request), shall be reduced, by an amount equal
to 75% of the net proceeds of such loan. (c) On the date of Borrower's
sale of any business location on the first page of Schedule 4.12
pursuant to the proviso in Section 5.12(b), the Revolving Credit Amount
shall first be reduced, until reduced to zero, and thereafter the
Supplemental Revolving Credit Amount and the Additional Revolving
Credit Amount, on a pro rata basis (or on such other basis as Borrower
may reasonably request), shall be reduced, by an amount equal to 75%
of the gross sales price for such business location (it being
understood that if Borrower receives non-cash proceeds in connection
with any such sale, the gross sales price for such sale shall be
determined by Lender in good faith after consultation with Borrower).
2.1.4 Voluntary Reductions. In addition to the mandatory
reductions of the Revolving Credit Amount, Supplemental Revolving
Credit Amount and Additional Revolving Credit Amount under Section
2.1.3 above, Borrower may voluntarily, at any time, on at least three
(3) Business Days' prior written notice received by Lender, permanently
reduce the Revolving Credit Amount, the Supplemental Revolving Credit
Amount and/or the Additional Revolving Credit Amount; provided that
Borrower may not at any time reduce (i) the Revolving Credit Amount to
an amount which is less than the then-outstanding principal balance of
all Revolving Loans, (ii) the Supplemental Revolving Credit Amount to
an amount which is less than the then-outstanding principal balance of
all Supplemental Revolving Loans, and (iii) the Additional Revolving
Credit Amount to an amount which is less than the then-outstanding
principal balance of all Additional Revolving Loans.
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2.1.5 Effect of Reductions. Any unscheduled reduction of the
Revolving Credit Amount pursuant to clause (b) of Section 2.1.3 or
pursuant to Section 2.1.4 shall reduce the Credit Reduction Amounts for
subsequent Credit Reduction Dates as follows: 25% of such reduction
shall reduce the Credit Reduction Amounts for subsequent Credit
Reduction Dates in the order of their occurrence; and 75% of such
reduction shall reduce the Credit Reduction Amounts for subsequent
Credit Reduction Dates in the inverse order of their occurrence. Any
unscheduled reduction of the Revolving Credit Amount pursuant to clause
(c) of Section 2.1.3 shall reduce the Credit Reduction Amount for each
subsequent Credit Reduction Date by $5,000 for each business location
sold pursuant to the proviso in Section 5.12(b).
2.1.6 Supplemental Revolving Loans.
(a) Subject to the terms and conditions of this
Agreement and the Related Agreements, and in reliance upon the
warranties of Borrower set forth herein and in the Related
Agreements, Lender agrees to continue to make such loans or
advances (individually each a "Supplemental Revolving Loan" and
collectively the "Supplemental Revolving Loans") from time to
time before the Termination Date to Borrower as Borrower may
from time to time request; provided, however, that the aggregate
principal amount of all Supplemental Revolving Loans at any time
outstanding shall not exceed the Supplemental Revolving Credit
Amount. Supplemental Revolving Loans may be repaid and, subject
to the terms and conditions hereof, reborrowed to but not
including the Termination Date unless the Credit is otherwise
terminated as provided in this Agreement. Borrower and Lender
acknowledge the making of the Supplemental Revolving Loans which
are outstanding on the Restatement Date in accordance with the
terms of the Existing Loan Agreement and agree that, from and
after the Restatement Date, such Supplemental Revolving Loans
shall continue to be outstanding pursuant to the terms and
conditions of this Agreement.
(b) All Supplemental Revolving Loans hereunder
shall be paid by Borrower on the Termination Date, unless
payable sooner pursuant to the provisions of this Agreement, but
may, at Borrower's election, be repaid in whole or in part at
any time prior to such date without premium or penalty.
2.1.7 Additional Revolving Loans.
(a) Subject to the terms and conditions of this
Agreement and the Related Agreements, and in reliance upon the
warranties of Borrower set forth herein and in the Related
Agreements, Lender agrees to make such loans or advances
(individually each an "Additional Revolving Loan" and
collectively the "Additional Revolving Loans") from time to time
before the Termination Date to Borrower as Borrower may from
time to time request; provided, however, that the aggregate
principal amount of all Additional Revolving Loans at any time
outstanding shall not
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exceed the Additional Revolving Credit Amount. Additional
Revolving Loans may be repaid and, subject to the terms and
conditions hereof, reborrowed to but not including the
Termination Date unless the Credit is otherwise terminated as
provided in this Agreement.
(b) All Additional Revolving Loans hereunder shall
be paid by Borrower on the Termination Date, unless payable
sooner pursuant to the provisions of this Agreement, but may, at
Borrower's election, be repaid in whole or in part at any time
prior to such date without premium or penalty.
2.1.8 Mandatory Repayments. Promptly upon receipt by Borrower of
any repayments of principal under the Azimuth Group Loan Agreements,
Borrower shall within one Business Day repay outstanding Additional
Revolving Loans in a principal amount equal to all such repayments of
principal received by Borrower.
2.2 Letters of Credit.
(a) In addition to Loans made pursuant to Section 2.1, but
subject to satisfaction of the conditions precedent set forth in
Section 8, Lender will, upon receipt of duly executed Applications and
such other documents, instruments and/or agreements as Lender may
reasonably require, issue Letters of Credit on such terms as are
satisfactory to Lender; provided, however, that Lender shall not be
required to issue any Letter of Credit at any time:
(i) if, before or after giving effect to such Letter of
Credit, the Letter of Credit Obligations would exceed the lesser
of (A) the Revolving Credit Amount minus the outstanding
principal balance of the Revolving Loans or (B) $2,500,000; and
(ii) which has an expiration date which is (A) more
than one (1) year after the date of issuance (provided that a
Standby Letter of Credit may provide for an annual renewal if
such renewal is consented to by Lender and all conditions
precedent to the issuance of Letters of Credit are met at the
time of such renewal), or (B) after sixty (60) Business Days
immediately preceding the scheduled Termination Date.
Borrower and Lender acknowledge the issuance of the
Letters of Credit which are outstanding on the Restatement Date in
accordance with the terms of the Existing Loan Agreement and agree that,
from and after the Restatement Date, such Letters of Credit shall
continue to be outstanding pursuant to the terms and conditions of this
Agreement.
(b) Borrower agrees to pay Lender, on demand, Lender's standard
administrative operating fees and charges in effect from time to time
for issuing and administering any Letters of Credit. Borrower further
agrees to pay Lender a commission (i) on each Standby
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Letter of Credit and related L/C Draft accepted by Lender but not yet
paid equal to two and one-half percent (2.5%) per annum (calculated on
the basis of a year consisting of 360 days and paid for actual days
elapsed) on the aggregate daily average amount available to be drawn
under such Standby Letter of Credit and aggregate unpaid amount under
such L/C Drafts, payable quarterly in arrears, and (ii) on each
Commercial Letter of Credit, and related L/C Draft accepted by Lender
but not yet paid equal to two and one-half percent (2.5%) per annum
(calculated on the basis of a year consisting of 360 days and paid for
actual days elapsed) for the period from the date of issuance to the
date of expiry, of the original face amount of such Commercial Letter
of Credit payable upon the initial draw under, or acceptance of any L/C
Draft with respect to, such Letter of Credit. Lender may provide for
the payment of any fees, charges or commission due by advancing the
amount thereof to borrower as a Revolving Loan.
(c) Borrower agrees to reimburse Lender, on demand, for each
payment made by Lender under or pursuant to any Letter of Credit or L/C
Draft. Borrower further agrees to pay to Lender, on demand, interest at
the Default Rate applicable to Revolving Loans on any amount paid by
Lender under or pursuant to any Letter of Credit or L/C Draft from the
date of payment until the date of reimbursement to Lender. Lender may
provide for the payment of any reimbursement obligations and any
interest accrued thereon by advancing the amount thereof to Borrower as
a Revolving Loan; provided, however, that, subject to the conditions
precedent set forth in Section 8.2, if at the time Lender makes a
payment under or pursuant to a Letter of Credit or L/C Draft the
Revolving Loan Availability is at least equal to Borrower's
reimbursement obligation with respect to such payment, Borrower hereby
authorizes Lender, and Lender will, immediately and without any request
by or notice to Borrower, provide for the payment of any reimbursement
obligations due to Lender and any interest accrued thereon by making a
Revolving Loan to Borrower in the amount thereof, which reimbursement
obligation shall be thereupon satisfied to the extent of the Revolving
Loan so made.
(d) Borrower's obligation to reimburse Lender for payments and
disbursements made by Lender under any Letter of Credit shall be
absolute and unconditional under any and all circumstances and
irrespective of any setoff, counterclaim or defense to payment which
Borrower may have or have had against Lender or any other Person.
Borrower assumes all risks of the acts or omissions of the users of the
Letters of Credit and all risks of the misuse of the Letters of Credit.
Neither Lender nor any of its correspondents shall be responsible: (i)
for the form, validity, sufficiency, accuracy, genuineness or legal
effect of any document specified in the Applications even if it should
in fact prove to be in any or all respects invalid, insufficient,
inaccurate, fraudulent, or forged; (ii) for the validity or sufficiency
of any instrument transferring or assigning or purporting to transfer
or assign any Letter of Credit or any of the rights or benefits
thereunder or proceeds thereof, in whole or in part, which may prove to
be invalid or ineffective for any reason; (iii) for failure of any L/C
Draft to bear any reference or adequate reference to any Letter of
Credit, or failure of anyone to note the amount of any draft on the
reverse of any Letter of Credit or to surrender or to take up any
Letter of Credit or to send forward any such document apart from drafts
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as required by the terms of any Letter of Credit, each of which
provisions, if contained in the Letter of Credit itself, it is agreed,
may be waived by Lender; (iv) for errors, omissions, interruptions or
delays in transmission or delivery of any messages, by mail, cable,
telegraph, telex or otherwise, whether or not they be in cipher;
(v) for any error, neglect, default, suspension or insolvency of any
correspondents of Lender; (vi) for errors in translation or for errors
in interpretation of technical terms; (vii) for any loss or delay, in
the transmission or otherwise, of any such document or draft or of
proceeds thereof; or (viii) for any other in making or failing to make
payment under any Letter of Credit, except only that Borrower shall
have a claim against Lender, and Lender shall be liable to Borrower, to
the extent, but only to the extent, of any direct, as opposed to
consequential, damages suffered by Borrower which Borrower proves were
caused by Lender's willful misconduct or gross negligence in
determining whether documents presented under any Letter of Credit
comply with the terms of such Letter of Credit. None of the above shall
affect, impair or prevent the vesting of any of the rights or powers of
Lender. Lender shall have the right to transmit the terms of any Letter
of Credit without translating them.
(e) Notwithstanding anything to the contrary herein or in any
Application, upon the occurrence and during the continuance of an Event
of Default, an amount equal to the aggregate amount of the outstanding
Letter of Credit Obligations shall, at Lender's option and without
demand upon or further notice to Borrower, be deemed (as between Lender
and Borrower) to have been paid or disbursed by Lender under the Letters
of Credit and L/C Drafts accepted by Lender (notwithstanding that
such amounts may not in fact have been so paid or disbursed), and a
Revolving Loan to Borrower in the amount of such Letter of Credit
Obligations to have been made and accepted, which Loan shall be
immediately due and payable. In lieu of the foregoing, at the election
of Lender at any time after an Event of Default has occurred and is
continuing, Borrower shall, upon Lender's demand, deliver to Lender
cash collateral equal to the aggregate Letter of Credit Obligations.
Any such cash collateral and/or any amounts received by Lender in
payment of the Loan made pursuant to this paragraph (e) shall be held
by Lender in the Assignee Deposit Account or a separate account
appropriately designated as a cash collateral account in relation to
this Agreement and the Letters of Credit and shall be retained
by Lender as collateral security in respect of, first, Borrower's
Liabilities under or in connection with the Letters of Credit and L/C
Drafts and, then, all other Liabilities. Such amounts shall not be
used by Lender to pay any amounts drawn or paid under or pursuant to
any Letter of Credit or L/C Draft, but may be applied to reimburse
Lender for drawings or payments under or pursuant to Letters of Credit
or L/C Drafts which Lender has paid, or if no such reimbursement is
required, to payment of such other Liabilities as Lender shall
determine. Any amounts remaining in any cash collateral account
established pursuant to this paragraph (e) following payment in
full of all Liabilities shall be returned to Borrower.
(f) In determining whether to make any payment under or pursuant
to any Letter of Credit or any related L/C Draft, Lender shall have no
obligation to Borrower or any other Person other than to confirm that
any documents required to be delivered have been delivered and that
such documents comply on their face with the requirements of such
Letter
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of Credit. No action taken or omitted by Lender under or in connection
with any Letter of Credit or L/C Draft, if taken or omitted in the
absence of gross negligence or willful misconduct, shall put Lender
under any resulting liability to Borrower.
2.3 Loan Account; Demand Deposit Account. Lender shall establish or
cause to be established on its books in Borrower's name one or more accounts
(each a "Loan Account") to evidence Loans made to Borrower. Lender will credit
or cause to be credited to a commercial account (a "Demand Deposit Account")
maintained by Borrower at Lender's ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
office the amount of any sums advanced as Loans hereunder. Any amounts advanced
as Loans hereunder which are credited to Borrower's Demand Deposit Account,
together with any other amounts advanced to Borrower as a Loan pursuant to this
Agreement, will be debited to the applicable Loan Account and result in an
increase in the principal balance outstanding in such Loan Account in the
amount thereof.
2.4 Interest and Fees.
2.4.1 Interest. (a) From the date any Revolving Loan,
Supplemental Revolving Loan or Additional Revolving Loan is made,
converted or continued on or after the Second Restatement Date to the
date the principal amount of such loan is repaid in full, interest
shall accrue on the outstanding principal amount of such Loan at a
rate per annum determined as follows:
(i) in the case of a Revolving Loan that is a Reference
Rate Loan, at a per annum rate equal to the Reference Rate from
time to time in effect, plus the Reference Rate Margin from time
to time in effect;
(ii) in the case of a Revolving Loan that is a
Eurodollar Rate Loan, during each Interest Period applicable
thereto, at a per annum rate equal to the Eurodollar Rate
(Adjusted) for such Interest Period, plus the Eurodollar Rate
Margin from time to time during such Interest Period in effect;
(iii) in the case of a Supplemental Revolving Loan that
is a Reference Rate Loan, at a per annum rate equal to the
Reference Rate from time to time in effect, plus the Reference
Rate Margin from time to time in effect; and
(iv) in the case of a Supplemental Revolving Loan that
is a Eurodollar Rate Loan, during each Interest Period
applicable thereto, at a per annum rate equal to the Eurodollar
Rate (Adjusted) for such Interest Period, plus the Eurodollar
Rate Margin from time to time during such Interest Period in
effect.
(v) in the case of an Additional Revolving Loan that is a
Reference Rate Loan, at a per annum rate equal to the Reference
Rate from time to time in effect, plus the Reference Rate Margin
from time to time in effect; and
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(vi) in the case of an Additional Revolving Loan that is
a Eurodollar Rate Loan, during each Interest Period applicable
thereto, at a per annum rate equal to the Eurodollar Rate
(Adjusted) for such Interest Period, plus the Eurodollar Rate
Margin from time to time during such Interest Period in effect.
(b) The Applicable Margins in effect for any date shall be
determined based upon the Funded Debt/EBITDA Ratio measured as of the
last day of the most recently completed fiscal quarter of Borrower of
each Fiscal Year, commencing on five (5) Business Days following the
date of delivery to Lender of an officer's certificate with financial
statements for the month ending March 31, 1996; provided that if any
change in the Funded Debt/EBITDA Ratio results in an adjustment in the
Applicable Margins, such adjustment shall become effective on the fifth
(5th) Business Day following the delivery to Lender of quarterly
financial statements demonstrating the need for such adjustment and, as
to each Eurodollar Rate Loan outstanding at the time of such delivery,
only upon expiration of the then current Interest Period applicable
thereto; provided further, that notwithstanding the foregoing Borrower
may only borrow Reference Rate Loans at a Reference Rate Margin equal
to 0% until five (5) Business Days after Lender receives an officer's
certificate with the monthly financial statements for the month ending
March 31, 1996.
(c) If any Loan or portion thereof is not paid when due, whether
by acceleration or otherwise, the entire unpaid principal amount of
such Loan shall bear interest thereafter at the Default Rate until such
amount is paid in full.
(d) Interest accrued on each Loan shall be payable, without
duplication:
(i) on the Termination Date;
(ii) On that portion of the outstanding
principal amount thereof maintained as a Reference Rate Loan,
on the first day of each month;
(iii) On that portion of the outstanding principal
amount thereof maintained as a Eurodollar Rate Loan, on the last
day of each applicable Interest Period, and if, such Interest
Period shall exceed three months, on that day of the third month
of such Interest Period numerically corresponding to the first
day of such Interest Period (or, if there is no such numerically
corresponding day in such third month, on the last day of such
third month); and
(iv) upon acceleration of the Loans pursuant to
Section 6.2, immediately upon such acceleration.
(e) Whenever any payment shall otherwise be due on a day that is
not a Business Day, such payment shall (except as otherwise required by
clause (d) of the definition of the term "Interest Period" with respect
to payments on Loans maintained as Eurodollar Rate
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Loans) be made on the next succeeding Business Day, and such extension
of time shall be included in computing interest and fees, if any, in
connection with such payment.
(f) All determinations by Lender of any rate of interest
applicable to any Loan or other Liability shall be conclusive absent
manifest error.
2.4.2 Nonuse Fee. Borrower agrees to pay to Lender (a) a fee
equal to three- tenths of one percent (.30%) per annum on the daily
average amount by which the Revolving Credit Amount exceeds the sum of
the outstanding principal balance of the Revolving Loans plus the
Letter of Credit Obligations, (b) a fee equal to three-tenths of one
percent (.30%) per annum on the daily average amount by which the
Supplemental Revolving Credit Amount exceeds the outstanding principal
balance of the Supplemental Revolving Loans, and (c) a fee equal to
three-tenths of one percent (.30%) per annum on the daily average
amount by which the Additional Revolving Credit Amount exceeds the
outstanding principal balance of the Additional Revolving Loans. The
fees provided for in this Section 2.4.2 shall be payable monthly in
arrears on the first day of each month and on the date the Credit
terminates, in each case for the period then ended.
2.4.3 Method of Calculating Interest and Fees. Interest on the
unpaid principal amount of each Loan shall accrue from and including
the date such Loan is made to, but not including, the date such Loan is
paid. Interest and fees shall be calculated on the basis of a year
consisting of 360 days and paid for actual days elapsed.
2.4.4 Payment of Interest and Fees. Lender may provide for the
payment of any unpaid accrued interest and any fees by charging the
Demand Deposit Account or any other bank account maintained by Borrower
with Lender.
2.5 Requests for Loans and Other Information.
(a) Borrower may make a request for a Loan hereunder by either
(i) delivering or telecopying to Lender a Borrowing Request or (ii) giving
telephonic notice thereof to Lender, promptly confirmed in writing by
transmittal of a Borrowing Request to Lender (1) with respect to a Eurodollar
Rate Loan at or before 10:00 a.m. Chicago time on not less than 3 nor more than
5 Business Days' prior notice and (ii) with respect to Reference Rate Loans, at
or before 12:00 noon, Chicago time on the Business Day that such Reference Rate
Loan is to be made. In the case of Reference Rate Loans, each Loan advance
shall be in a minimum principal amount of $25,000 and an integral multiple of
$5,000 in excess of that amount, except for Revolving Loans made pursuant to
the provisions of Section 2.2, 2.10, 3.2, 5.5, 5.6, 5.22, 7.4, 11.3 or 11.4 or
any other provision of this Agreement or any Related Agreement that permits
Lender to advance Revolving Loans to Borrower. In the case of Eurodollar Rate
Loans, each Loan advance shall be in a minimum principal amount of $1,000,000
and an integral multiple of $500,000 in excess of such amount. Each request for
a Loan advance shall constitute Borrower's representation and warranty to
Lender that all of the applicable conditions contained in Section 8.2 have been
met and will continue to be met after giving affect to that Revolving Loan
advance.
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(b) In the event that Borrower shall at any time make a request
for a Loan hereunder, Borrower agrees to forthwith provide Lender with
such information, at such frequency and in such format, as is
reasonably required by Lender, such information to be as current as
practicable as of the time of such request.
(c) Borrower shall provide Lender with documentation
satisfactory to Lender indicating the names of those employees of
Borrower authorized by Borrower to sign Borrowing Requests and
Continuation/Conversion Notices on behalf of Borrower and Borrower
shall provide Lender with documentation satisfactory to Lender
indicating the names of the employees of Borrower authorized by
Borrower to make telephonic requests for Loans and conversions/
continuations, and/or to authorize disbursement of the proceeds of
Loans by wire transfer or otherwise, and Lender shall be entitled to
rely upon such documentation until notified in writing by Borrower of
any change(s) in the names of the employees so authorized. Lender shall
be entitled to act on the instructions of anyone reasonably believed by
Lender to be one of the persons authorized to request Loans or
disbursements of Loan proceeds by telephone and Borrower shall (in the
absence of Lender's gross negligence or willful misconduct) be bound
thereby in the same manner as if the person were actually so
authorized. Borrower agrees to indemnify and hold Lender harmless
from any and all claims, damages, liabilities, losses, costs
and expenses (including Attorneys' Fees) which may arise or be created
by the acceptance of instructions for making or paying Loans by wire
transfer or telephone (in the absence of Lender's gross negligence or
willful misconduct).
2.6 Notes. Except to the extent a Loan may, in Lender's sole and
absolute discretion, be evidenced by a Note, all Loans and payments hereunder
shall be recorded on Lender's books, which shall be rebuttable presumptive
evidence of the amount of such Loans outstanding at any time hereunder. Lender
will account monthly as to all Loans and payments hereunder and, absent
demonstrable error, each monthly accounting will be fully binding on Borrower
unless, within thirty (30) days of Borrower's receipt thereof, Borrower shall
provide Lender with a specific listing of exceptions. Notwithstanding any term
or condition of this Agreement to the contrary, however, the failure of Lender
to record the date and amount of any Loan hereunder shall not limit or
otherwise affect the obligation of Borrower to repay any such Loan.
2.7 [Intentionally Omitted]
2.8 [Intentionally Omitted]
2.9 All Loans One Obligation. The Revolving Loans, Supplemental
Revolving Loans, Additional Revolving Loans and all other Loans under this
Agreement shall constitute one Loan, and all Indebtedness and other Liabilities
of Borrower to Lender under this Agreement and any of the Related Agreements
shall constitute one general obligation secured by Lender's Lien on all of the
Collateral and Third Party Collateral and by all other Liens heretofore, now,
or at any time hereafter granted by Borrower or any other Obligor to Lender.
Borrower agrees that all of the rights of Lender set forth in this Agreement
shall apply to any modification of or supplement to this
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Agreement, any Supplement or Exhibit hereto, and the Related Agreements, unless
otherwise agreed in writing.
2.10 Closing Fee. Borrower agrees to pay to Lender a closing fee of
$50,000 on the Restatement Date. With Lender's consent, the amount of any
closing fee due on the Restatement Date may be advanced to Borrower as a
Revolving Loan.
2.11 Making of Payments; Application of Collections; Charging of
Accounts.
(a) All payments hereunder shall be made without set-off or
counterclaim and shall be made to Lender in immediately available funds
(except as Lender may otherwise consent) prior to 12:30 p.m., Chicago
time, on the date due at its office at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or at such other place as may be designated by
Lender to Borrower in writing. Any payments received after such time
shall be deemed received on the next Business Day. Whenever any payment
to be made hereunder or under any Note or Related Agreement shall be
stated to be due on a date other than a Business Day, such payment may
be made on the next succeeding Business Day, and such extension of time
shall be included in the calculation of interest and any fees.
(b) Borrower authorizes Lender, and on each Business Day Lender
will, subject to the provisions of this paragraph (b), apply any
amounts received by Lender (whether deposited in the Assignee Deposit
Account of Borrower or otherwise received by Lender) from the
collection of items of payment and from proceeds of any Collateral or
Third Party Collateral (whether received upon any sale or other
distribution of Collateral or Third Party Collateral by Lender or
otherwise), against the principal and/or interest of any Loans made
hereunder and/or any other Liabilities, whether or not then due, in
such order of application as Lender may determine, unless such
payments or proceeds are, in Lender's sole and absolute discretion,
released to Borrower; provided, however, that so long as no Event of
Default exists, any such amounts received by Lender shall be applied
as follows: first, to payment of amounts then due with respect to fees
(including Attorneys' Fees), charges and expenses for which Borrower
is liable pursuant to this Agreement and the Related Agreements;
second, to payment of amounts then due with respect to interest on the
Loans; third, to payment of amounts then due with respect to principal
of the Loans; fourth, to prepayment of the Revolving Loans; fifth, to
prepayment of the Supplemental Revolving Loans; and sixth, to
prepayment of the Additional Revolving Loans; provided, further, that
no checks, drafts or other instruments received by Lender shall
constitute final payment to Lender unless and until such item of
payment has actually been collected. All items or amounts which are
delivered to Lender by or on behalf of Borrower or any Obligor or any
Account Debtor on account of partial or full payment or otherwise as
proceeds of any of the Collateral or Third Party Collateral (including
any items or amounts which may have been deposited to the Assignee
Deposit Account) may from time to time in Lender's sole and absolute
discretpayment of the Liabilities, whether or not then due as provided
in the preceding sentence. Notwithstanding anything to the contrary
herein, (i) all cash, checks, instruments and other
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items of payment, for purposes of determining (x) the occurrence of an
Event of Default and (y) whether, under Sections 2.1 and 2.2, there is
availability for Loans or Letters of Credit, shall be deemed received
upon actual receipt by Lender, unless the same is subsequently
dishonored for any reason whatsoever, and (ii) solely for purposes of
interest calculation hereunder, all cash, checks, instruments and other
items of payment shall be deemed to have been applied against the
Liabilities on the first Business Day after receipt by Lender of
available funds with respect thereto.
(c) Borrower hereby authorizes Lender to, and Lender may, in its
sole and absolute discretion, charge to Borrower at any time when due
all or any portion of any of the Liabilities (and interest, if any,
thereon), including but not limited to any Attorneys' Fees and other
costs and expenses of Lender for which Borrower or any other Obligor is
liable pursuant to the terms of this Agreement or any Related Agreement,
by charging Borrower's Demand Deposit Account or any other bank account
of Borrower with Lender; provided, however, that the provisions of this
Section 2.11(c) shall not affect Borrower's obligation to pay when due
all amounts payable by Borrower or any other obligor under this
Agreement, any Note or any Related Agreement, whether or not there are
sufficient funds therefor in the Demand Deposit Account or any such
other bank account of Borrower.
2.12 Lender's Election Not to Enforce. Notwithstanding any term or
condition of this Agreement to the contrary, Lender, in its sole and absolute
discretion, at any time and from time to time, may suspend or refrain from
enforcing any or all of the restrictions imposed in this Section 2, but no such
suspension or failure to enforce shall impair any right or power of Lender under
this Agreement, including, without limitation, any right of Lender to refrain
from making a Loan or issuing a Letter of Credit if all conditions precedent to
Lender's obligation to making such Loan or issuing such Letter of Credit have
not been satisfied.
2.13 Reaffirmation. Each request for a Loan or a Letter of Credit by
Borrower pursuant to this Agreement shall constitute an automatic certification
by Borrower to Lender that (i) all of the representations and warranties of
Borrower and each other Obligor in this Agreement and each of the Related
Agreements are true and correct on the date of such request to the same extent
as if made on such date, except (x) to the extent any such representation or
warranty relates solely to an earlier date (including the date hereof) and was
true and correct on such earlier date and (y) for such changes as are the result
of any act or omission specifically permitted hereunder (or under such Related
Agreement) or otherwise expressly agreed to by Lender and (ii) immediately
before and after making the requested Loan or issuing the requested Letter of
Credit, no Event of Default, or Unmatured Event of Default, then exists or
would result therefrom.
2.14 Setoff. In addition to and not in limitation of all other rights
and remedies (including other rights of offset or banker's lien) that
Lender or any other holder of any Note may have under applicable law, Lender
or such other holder shall, at any time any Event of Default, or any Unmatured
Event of Default under clause (e) of Section 6.1, exists, have the right to
appropriate and apply to the payment of the Liabilities (whether or not then
due), in such order of application as Lender or such other holder may elect,
any and all balances, credits, deposits (general or special,
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time or demand, provisional or final), accounts or monies of Borrower then or
thereafter with Lender or such other holder. Lender shall use reasonable
efforts to give Borrower prompt notice of any appropriation and application
pursuant to the preceding sentence (but failure to give such notice shall not
impose any liability on Lender or relieve Borrower of any of its obligations).
2.15 Increased Costs. If any Regulatory Change imposes, modifies or
deems applicable any capital adequacy, capital maintenance or similar
requirement (including a request or requirement which affects the manner in
which Lender allocates capital resources to its commitments, including its
commitments hereunder) and as a result thereof, in the reasonable opinion of
Lender, the rate of return on Lender's capital as a consequence of its
commitments or Loans, or the issuance any Letter of Credit hereunder, is
reduced to a level below that which Lender could have achieved but for such
circumstances, then and in each such case upon notice from time to time by
Lender to Borrower, Borrower shall pay to Lender such additional amount or
amounts as shall compensate Lender for such reduction in its rate of return
(herein such additional amounts being collectively called a "Compensatory
Amount") ; provided that (a) each Compensatory Amount shall be reduced to the
extent, if any, that Lender increases the Reference Rate, or the Eurodollar
Rate (Adjusted) is increased, in order to recover all or part of the increased
costs which are imposed by such Regulatory Change and (b) in determining any
increased expense, reduction in rate of return on capital or reduction in an
amount received, Lender shall act reasonably and in good faith and will, to the
extent the increased costs or reductions in amounts received or receivable
relate to Lender's loans and commitments in general and are not specifically
attributable to the Loans and the commitments hereunder, use averaging and
attribution methods which are reasonable and which cover all loans similar to
the Loans made, and all Letters of Credit similar to Letters of Credit issued,
by Lender whether or not the loan documentation for such other loans permits
the Lender to receive increased costs of the type described in this Section
2.15. Such notice shall contain a statement of Lender as to any such additional
amount or amounts (including calculations thereof in reasonable absence of
manifest error, be conclusive evidence of the matters stated therein and be
binding upon Borrower.
2.16 Borrowing Elections. At the election of Borrower pursuant to a
Borrowing Request delivered pursuant to Section 2.6, Loans comprising any
borrowing may be made as Reference Rate Loans or Eurodollar Rate Loans. Each
Borrowing Request shall be irrevocable and binding upon Borrower.
2.17 Continuation and Conversion Elections. At the election of Borrower
pursuant to a Continuation/Conversion Notice delivered by either (1) delivering
or telecopying to Lender a Continuation/Conversion Notice or (2) giving
telephonic notice thereof to Lender, in each case at or before 10:00 a.m.,
Chicago time (and, in the case of any such telephonic notice, promptly
confirming such notice by delivering or telecopying a Continuation/Conversion
Notice therefor, signed by an authorized officer of Borrower, to Lender), on
any Business Day, Borrower may elect, from time to time on not less than 3 nor
more than 5 prior Business Days' notice:
(a) that all, or any portion in an aggregate minimum amount of
$1,000,000 and an integral multiple of $500,000 in excess of such
amount, of the Revolving Loan,
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Supplemental Revolving Loan or Additional Revolving Loan be converted
from Reference Rate Loans into Eurodollar Rate Loans or from Eurodollar
Rate Loans into Reference Rate Loans (subject to the minimum borrowing
requirements set forth in Section 2.5(a)); and
(b) on the expiration of the Interest Period applicable to the
Eurodollar Rate Loans comprising all or part of the Revolving Loan, the
Supplemental Revolving Loan or the Additional Revolving Loan, that all,
or any portion in an aggregate minimum amount of $1,000,000 and an
integral multiple of $500,000 in excess of such amount, of such Loans
be continued as Eurodollar Rate Loans (in the absence of delivery of
such notice under either this clause (b) or clause (a) above, Borrower
will be deemed to have elected that such Eurodollar Rate Loans be
converted into Reference Rate Loans);
provided that:
(i) no portion of the outstanding principal amount of any
Loans may be continued as, or be converted into, Eurodollar Rate
Loans when any Event of Default has occurred and is continuing;
(ii) no portion of the outstanding principal amount of
any Loans may be continued as, or be converted into, Eurodollar
Rate Loans if, after giving effect to such action, the Interest
Period applicable thereto shall extend beyond the date of any
mandatory repayment of Loans unless a sufficient principal
amount of such Loans is being maintained as Reference Rate Loans
or Eurodollar Rate Loans having an Interest Period ending on or
prior to the date of any such mandatory repayment to permit such
repayment to be applied in full to Reference Rate Loans; and
(iii) no portion of the outstanding principal amount of
any Loans may be continued as, or converted into, Eurodollar
Rate Loans or Reference Rate Loans if, after giving effect to
such action, the aggregate principal amount of any Eurodollar
Rate Loans having a particular Interest Period is less than
$1,000,000 or not an integral multiple of $500,000.
2.18 Funding. In the event Borrower elects to obtain any Loans as
Eurodollar Rate Loans pursuant to Section 2.16, or elects to continue or convert
any portion of the principal amount of any Reference Rate Loans to Eurodollar
Rate Loans pursuant to Section 2.17, Lender may, if it so elects, fulfill its
obligation to make or continue any portion of the principal amount of any Loan
as, or to convert any portion of the principal amount of any Loan into, a
Eurodollar Rate Loan in accordance with any election made by Borrower by causing
a foreign branch or affiliate of Lender or an international banking facility
created by Lender to make such Eurodollar Rate Loan; provided that in such event
such Eurodollar Rate Loan shall be deemed to have been made by Lender, and the
obligation of Borrower to repay such Eurodollar Rate Loan shall nevertheless be
to Lender and shall be deemed to be held by it, to the extent of such Eurodollar
Rate Loan, for the account of such foreign branch, affiliate or international
banking facility. In addition, Borrower hereby consents and agrees that, for
purposes of any determination to be made for purposes of this Agreement
(including
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Sections 2.19, 2.20, 2.21 and 2.22)), it shall be conclusively assumed that
Lender elected to fund all Eurodollar Rate Loans by purchasing Dollar deposits
in its Eurodollar Office's interbank eurodollar market.
2.19 Eurodollar Rate Lending Unlawful. If, as the result of any
Regulatory Change, Lender shall determine (which determination shall be
conclusive and binding on Borrower) that it is unlawful for Lender to make,
continue, or maintain any Loan as, or to convert any Loan into, a Eurodollar
Rate Loan, the obligations of Lender to make, continue, or maintain, as the
case may be, any portion of the principal amount of any Loans as, or to convert
any Loans into, Eurodollar Rate Loans shall, upon such determination (and
telephonic notice thereof confirmed in writing to Borrower), forthwith be
suspended (but only to the extent unlawful) until Lender shall notify Borrower
that the circumstances causing such suspension no longer exist, and all
Eurodollar Rate Loans shall automatically convert into Reference Rate Loans.
2.20 Eurodollar Deposits Unavailable. If prior to the date on which all
or any portion of the principal amount of any Loan is to be made or continued
as, or be converted into, Eurodollar Rate Loans, Lender shall have determined
(and telephonic notice thereof, confirmed in writing, shall have been given to
Borrower) that:
(a) Dollar deposits in the relevant amount and for the
relevant Interest Period are not available to Lender in the interbank
eurodollar market; or
(b) by reason of circumstances affecting the interbank
eurodollar market, adequate means do not exist, for ascertaining the
interest rate applicable hereunder to such Eurodollar Rate Loan,
then, the obligations of Lender under Sections 2.16 and 2.17 to make or
continue any portion of the principal amount of any Loans as, or to
convert any Loans into, Eurodollar Rate Loans shall forthwith be
suspended until Lender shall notify Borrower that the circumstances
causing such suspension no longer exist.
2.21 Increased Eurodollar Rate Loan Costs, etc. Borrower agrees to
reimburse Lender for any increase in the cost to Lender of making, continuing
or maintaining (or of its obligation to make, continue or maintain) any
portion of the principal amount of any of its Loans as, or of converting (or of
its obligation to convert) any portion of the principal amount of any of its
Loans into, Eurodollar Rate Loans and for any reduction in the amount of any
sum receivable by Lender hereunder in respect of making, continuing or
maintaining any portion of the principal amount of any of its Loans as, or
converting any portion of the principal amount of any Loans into, Eurodollar
Rate Loans, which increased cost or reduced amount (a) results from a
Regulatory Change and (b) is not attributable to Excluded Taxes applicable to
Lender, in each case imposed by the jurisdiction under the laws of which it is
constituted or in which it is doing business or, a Tax of any jurisdiction
imposed by withholding with respect to a payment hereunder. In any such event,
Lender shall promptly notify Borrower thereof, stating the reasons therefor and
the additional amount required fully to compensate Lender for such increased
cost or reduced amount. Such additional amounts
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shall be payable in full on the earlier of each interest payment date occurring
after they have accrued and on demand. A statement as to any such increased
cost or reduced amount or any change therein (including calculations thereof in
reasonable detail) shall be submitted by Lender to Borrower and shall, in the
absence of manifest error, be conclusive and binding on Borrower; provided that
Borrower shall not be liable in respect of any such increased cost or reduced
amount as to which Lender became aware and failed to notify Borrower promptly
if and to the extent that prompt notice could have avoided or materially
lessened payment by Borrower hereunder.
2.22 Funding Losses. In the event Lender shall incur any loss or
expense (including any loss or expense incurred by reason of the liquidation or
reemployment of deposits or other funds acquired by Lender to make, continue,
or maintain any portion of the principal amount of any Loan as, or to convert
any portion of the principal amount of any Loan into, a Eurodollar Rate Loan)
as a result of:
(a) repayment or prepayment of the principal amount of any
Eurodollar Rate Loans on a date other than the scheduled last day of
the Interest Period applicable thereto;
(b) any conversion of all or any portion of the outstanding
principal amount of any Eurodollar Rate Loans to Reference Rate Loans
pursuant to Section 2.16 or 2.19 prior to the expiration of the
Interest Period then applicable thereto;
(c) any Loans not being made as Eurodollar Rate Loans in
accordance with the Borrowing Request therefor, unless pursuant to
Section 2.19 or 2.20; or
(d) any Loans not being continued as, or converted into,
Eurodollar Rate Loans in accordance with the Continuation/Conversion
Notice given therefor, unless pursuant to Section 2.19 or 2.20,
then, upon the request of Lender to Borrower, Borrower shall pay to
Lender such amount as will (in the reasonable determination of Lender)
reimburse Lender for such loss or expense. A statement as to any such
loss or expense (including calculations thereof in reasonable detail)
shall be submitted by Lender to Borrower and shall, in the absence of
manifest error, be conclusive and binding on Borrower. Any payment
required under this Section 2.22 shall not constitute a premium or
penalty under any circumstances.
3. COLLATERAL.
3.1 Grant of Security Interest. As security for the payment of all Loans
now or hereafter made by Lender to Borrower hereunder or under any Note, and as
security for the payment or other satisfaction of all other Liabilities
(including, without limitation, all reimbursement obligations under any Letters
of Credit), Borrower hereby reaffirms its grant of a security interest under
the Original Loan Agreement and in connection with the Existing Loan Agreement
and further grants to Lender a security interest in and to the following
property of Borrower, whether now owned or existing, or
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hereafter acquired or coming into existence, wherever now or hereafter located
(all such property is hereinafter referred to collectively as the
"Collateral"):
(a) Accounts Receivable;
(b) Equipment and Fixtures;
(c) Inventory;
(d) General Intangibles;
(e) Contract Rights and documents of title;
(f) All chattel paper and instruments evidencing, arising out of
or relating to any obligation to Borrower for goods sold or leased or
services rendered, or otherwise arising out of or relating to any
property described in clauses (a) through (e) above;
(g) Any and all balances, credits, deposits (general or special,
time or demand, provisional or final), accounts or monies of or in the
name of Borrower now or hereafter with Lender and any and all property
of every kind or description of or in the name of Borrower now or
hereafter, for any reason or purpose whatsoever, in the possession or
control of, or in transit to, or standing to Borrower's credit on the
books of, Lender, any agent or bailee for Lender, or any Participant;
(h) All interest of Borrower in any goods, the sale or lease of
which shall have given or shall give rise to, and in all guaranties and
other property securing the payment of or performance under, any
Accounts Receivable, Contract Rights, General Intangibles or any
chattel paper or instruments referred to in clause (f) above;
(i) Any and all other property of Borrower, of any kind or
description (including but not limited to real estate of Borrower),
including, without limitation, any property of Borrower subject to a
separate mortgage, pledge or security interest in favor of Lender or in
which Lender now or hereafter has or acquires a security interest
securing any Liabilities pursuant to an agreement or instrument other
than this Agreement;
(j) All Intellectual Property Collateral;
(k) All Investment Property;
(l) All of Borrower's right, title and interest in and to all
replacements, substitutions, additions or accessions to or for any of
the foregoing;
(m) All of Borrower's right, title and interest in and to all
books, correspondence, credit files, records, invoices and other papers
and documents, including, without limitation
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all tapes, cards, computer runs, computer programs and other papers and
documents in the possession or control of Borrower or any provider of
computer services from time to time acting for Borrower, and all rights
in, to and under all policies of insurance, including claims of rights
to payments thereunder and proceeds therefrom, including any credit
insurance; and
(n) All products and proceeds (including but not limited to any
Accounts Receivable or other proceeds arising from the sale or other
disposition of any Collateral, any returns of any Equipment or
Inventory sold by Borrower, and the proceeds of any insurance covering
any of the Collateral) of any of the foregoing.
Notwithstanding the foregoing, Lender agrees that the term
"Collateral" shall not include any property released by Lender pursuant
to Section 3.6 so long as Lender is prohibited from having a Lien on
such property pursuant to the terms of any document relating to
Indebtedness that is secured by a Lien on such property which is
permitted by Section 5.16.
3.2 Accounts Receivable and Cash.
(a) If requested by Lender, Borrower shall advise Lender
promptly of any Inventory returned by or repossessed from any Account
Debtor, or otherwise recovered, shall receive such Inventory in trust
and, unless otherwise instructed to deliver such Inventory to Lender,
shall resell it for Lender. If requested by Lender, Borrower shall
notify Lender immediately of all disputes and claims by any Account
Debtor and settle or adjust them at no expense to Lender. If Lender
directs, no discount or credit allowance shall be granted thereafter by
Borrower to any Account Debtor. Any and all Account Debtor payments and
all net amounts received by Lender in settlement, adjustment or
liquidation of any Account Receivable may be applied by Lender to the
Liabilities or credited to the Demand Deposit Account (subject to
collection) with Lender, as Lender may deem appropriate, as more fully
described in Section 2.11. If requested by Lender, Borrower will make
proper entries in its books and records disclosing the assignment of
Accounts Receivable to Lender.
(b) Borrower warrants that: (i) to the best of Borrower's
knowledge all of the Accounts Receivable are and will continue to be
bona fide existing obligations created by the sale of goods, the
rendering of services, or the furnishing of other good and sufficient
consideration to Account Debtors in the regular course of business and
(ii) to the best of Borrower's knowledge, all shipping or delivery
receipts and other documents furnished or to be furnished to Lender in
connection therewith are and will be genuine.
(c) Lender is authorized and empowered (which authorization and
power, being coupled with an interest, is irrevocable until the last to
occur of termination of this Agreement and payment and performance in
full of all of the Liabilities under this Agreement) at any time in its
sole and absolute discretion:
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(1) To request, in Lender's name, Borrower's name or the
name of a third party, confirmation from any Account Debtor or
party obligated under or with respect to any Collateral of the
amount shown by the Accounts Receivable or other Collateral to
be payable, or any other matter stated therein;
(2) To endorse in Borrower's name and to collect any
chattel paper, checks, notes, drafts, instruments or other items
of payment tendered to or received by Lender in payment of any
Account Receivable or other obligation owing to Borrower;
(3) To notify, either in Lender's name or Borrower's
name, and/or to require Borrower to notify, any Account Debtor
or other Person obligated under or in respect of any Collateral,
of the fact of Lender's Lien thereon and of the collateral
assignment thereof to Lender;
(4) To direct, either in Lender's name or Borrower's
name, and/or to require Borrower to direct, any Account Debtor
or other Person obligated under or in respect of any Collateral
to make payment directly to Lender of any amounts due or to
become due thereunder or with respect thereto; and
(5) After the occurrence and during the continuance of an
Event of Default, to demand, collect, surrender, release or
exchange all or any part of any Collateral or any amounts due
thereunder or with respect thereto, or compromise or extend or
renew for any period (whether or not longer than the initial
period) any and all sums which are now or may hereafter become
due or owing upon or with respect to any of the Collateral, or
enforce, by suit or otherwise, payment or performance of any of
the Collateral either in Lender's own name or in the name of
Borrower.
Under no circumstances shall Lender be under any duty to act in regard
to any of the foregoing matters. The costs relating to any of the
foregoing matters, including Attorneys' Fees and out-of-pocket
expenses, and the cost of any Assignee Deposit Account or other bank
account or accounts which may be required hereunder, shall be borne
solely by Borrower whether the same are incurred by Lender or Borrower,
and Lender may advance same to Borrower as a Revolving Loan.
(d) Borrower may maintain at the institutions described in
Schedule 3.2 (and such other institutions which Borrower shall have
notified Lender of in writing from time to time for this purpose)
accounts ("Depositary Accounts") for the deposits of revenues from the
operation of the ▇▇▇▇▇▇▇▇'▇ Business; provided that Borrower shall on a
daily basis cause funds to be transferred from such Depositary Accounts
to a special bank account (the "Assignee Deposit Account") with Lender
(or such other financial institution as Lender shall consent) over
which Lender alone has the power of withdrawal, to the extent
necessary to cause the aggregate funds on deposit for any restaurant of
Borrower not to exceed $3,000.
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(e) Borrower shall, forthwith upon receipt by Borrower of all
checks, drafts, cash and other remittances in payment of or as proceeds
of, or on account of, any of the Accounts Receivable or other
Collateral derived from the Cues Business, to deposit the same in the
Assignee Deposit Account. Borrower shall, to the extent required by
Lender, designate with each such deposit the particular Account
Receivable or other item of Collateral upon which such remittance was
made.
(f) Borrower acknowledges that the maintenance of the Assignee
Deposit Account is solely for the convenience of Lender in facilitating
its own operations and Borrower does not and shall not have any right,
title or interest in the Assignee Deposit Account or in the amounts at
any time appearing to the credit thereof (it being understood that so
long as no Event of Default exists Lender shall be required to apply
such amounts as provided in the first proviso to Section 2.11(b)). Upon
the full and final liquidation of all Liabilities, Lender will pay over
to Borrower any excess amounts received by Lender as payment or
proceeds of Collateral, whether received by Lender as a deposit in the
Assignee Deposit Account or received by Lender as a direct payment on
any of the sums due hereunder.
(g) Borrower appoints Lender, or any Person whom Lender may from
time to time designate, as Borrower's attorney and agent-in-fact with
power: (i) to open an escrow account or Assignee Deposit Account under
Lender's sole control for the collection of Accounts Receivable or
other Collateral, if not required contemporaneously with the execution
hereof, and (ii) to do all other things which Lender is permitted to do
under this Agreement or any Related Agreement. Neither Lender nor any
of its directors, officers, employees or agents will be liable for any
acts of commission or omission nor for any error in judgment or mistake
of fact or law, unless the same shall have resulted from gross
negligence or willful misconduct. The foregoing appointment and power,
being coupled with an interest, is irrevocable until all Liabilities
under this Agreement are paid and performed in full and this Agreement
is terminated. Except as otherwise expressly provided herein, Borrower
expressly waives presentment, demand, notice of dishonor and protest of
all instruments and any other notice to which it might otherwise be
entitled.
(h) If any Account Receivable, Contract Right or General
Intangible arises out of a contract with the United States of America
or any department, agency, or instrumentality thereof, Borrower will
immediately notify Lender in writing and, if Lender so requests,
Borrower will promptly execute any instruments and take any steps
reasonably required by Lender in order that all monies due and to
become due under such contract shall be assigned to Lender and notice
thereof given to the government under the Federal Assignment of Claims
Act of 1940, as amended, or other applicable laws or regulations.
(i) If any Account Receivable or Contract Right is evidenced by
chattel paper or promissory notes, trade acceptances, or other
instruments for the payment of money, Borrower will, unless (i)
deposited in a Depositary Account, the Assignee Deposit Account or any
other bank account of Borrower with Lender or (ii) Lender shall
otherwise agree,
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deliver the originals of same to Lender, appropriately endorsed to
Lender's order and, regardless of the form of such endorsement,
Borrower hereby expressly waives presentment, demand, notice of
dishonor, protest and notice of protest and all other notices with
respect thereto.
3.3 Inventory. (a) Unless Lender shall otherwise agree, if Borrower
sells Inventory related to the Cues Business for cash, all full and partial
payments therefor shall be immediately (and, in any event, not later than the
end of the day received) delivered by Borrower to Lender in their original form
for deposit in the Assignee Deposit Account or for other application to
reduction of the Liabilities, in either case in accordance with Section 2.11.
Pending such delivery, all such cash shall be held by Borrower in trust for
Lender.
(b) Lender shall not be liable or responsible in any way for the
safekeeping of any Inventory delivered to it, to any bailee appointed by or for
it, to any warehouseman, or under any other circumstances. Lender shall not be
responsible for collection of any proceeds or for losses in collected proceeds
held by Borrower in trust for Lender. Any and all risk of loss for any or all
of the foregoing shall be upon Borrower, except (notwithstanding any other
provision of this Section 3.3 to the contrary) for such loss as shall result
from Lender's gross negligence or willful misconduct.
(c) If requested by Lender, Borrower shall, upon acquiring an interest
in any Inventory related to the Cues Business, deliver to Lender a description
of such Inventory, together with such supplier's invoices, warranties,
production, cost and other records as Lender may request. If requested by
Lender, Borrower shall deliver to Lender schedules of the sale of any Inventory
related to the Cues Business immediately upon its sale. Any material change in
the value or condition of any Inventory related to the Cues Business, and any
errors discovered in any schedule or description delivered to Lender, shall be
reported to Lender immediately. Borrower confirms that the warranties and
representations in this Agreement shall apply to each schedule. Borrower
represents and warrants that, as to each schedule and description of Inventory
delivered to Lender:
(1) The descriptions, origins, sizes, qualities, quantities,
weights, and markings of all goods stated thereon, or on any attachment
thereto, are true and correct in all material respects;
(2) None of the goods are defective, of second quality, used, or
goods returned after shipment, except where described as such; and
(3) All Inventory not included on such schedule or description
has been previously scheduled or described.
(d) If requested by Lender, Borrower will notify Lender immediately if
Borrower obtains possession (by return, repossession or otherwise) of any
Inventory related to the Cues Business which has been sold, and will inform
Lender of the identity of the returned or repossessed Inventory, the applicable
Amount Debtor and the amount of the applicable Account Receivable.
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3.4 Equipment.
(a) Borrower shall at all times keep, and cause each Subsidiary
to keep, its Equipment in good operating condition and repair, ordinary
wear and tear excepted, and neither Borrower nor any Subsidiary shall,
without the prior written consent of Lender, sell, lease, or otherwise
dispose of any Equipment, or any part thereof or interest therein;
provided, however, that without Lender's consent Borrower may dispose
of obsolete or unuseful Equipment provided all Equipment disposed of in
any Fiscal Year has an aggregate market value of $50,000 or less.
(b) In the event any Equipment (other than pursuant to Section
2.1.3(c) with respect to sales of Equipment in connection with the sale
of a business location) is sold, transferred or otherwise disposed of
by Borrower or any Subsidiary, unless Lender shall agree otherwise,
Borrower or the applicable Subsidiary shall deliver all of the proceeds
of such sale, transfer or disposition to Lender, which proceeds shall
be deposited in the Assignee Deposit Account or otherwise applied to
the repayment of the Liabilities, in either case in accordance with
Section 2.11.
(c) Borrower will, upon request of Lender, submit to Lender a
current listing of all Equipment of Borrower and its Subsidiaries,
which listing shall indicate the type, model, serial number and
location of such Equipment.
3.5 Supplemental Documentation. At Lender's request, Borrower shall
execute and/or deliver to Lender, at any time or times hereafter, such
agreements, documents, financing statements, warehouse receipts, bills of
lading, notices of assignment of Accounts Receivable, schedules of Accounts
Receivable assigned, and other written matter necessary or reasonably requested
by Lender to perfect and maintain perfected Lender's security interest in the
Collateral (all the above hereinafter referred to as "Supplemental
Documentation"), in form and substance reasonably acceptable to Lender, and pay
all taxes, fees and other costs and expenses associated with any recording or
filing of the Supplemental Documentation. Borrower hereby irrevocably makes,
constitutes and appoints Lender (and all Persons designated by Lender for that
purpose) as Borrower's true and lawful attorney (and agent-in-fact) (which
appointment and power, being coupled with an interest, is irrevocable until the
last to occur of termination of this Agreement and payment and performance in
full of all of the Liabilities under this Agreement) to sign the name of
Borrower on any of the Supplemental Documentation and to deliver any of the
Supplemental Documentation to such Persons as Lender, in its sole and absolute
discretion, may elect. Borrower agrees that a carbon, photographic,
photostatic, or other reproduction of this Agreement or of a financing
statement is sufficient as a financing statement.
3.6 Releases of Certain Collateral. Lender agrees that, so long as no
Event of Default or Unmatured Event of Default has occurred and is continuing,
Lender will, concurrently with any reduction in the Revolving Credit Amount
pursuant to clause (c) of Section 2.1.3, subordinate (or, if requested by
Borrower after Borrower has made reasonable efforts to obtain consent to a
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subordination, release) its interest in the Real Estate (and any related
fixtures) and proceeds thereof that constitute the security for the making of
the loan giving rise to such reduction.
4. REPRESENTATIONS AND WARRANTIES.
To induce Lender to make Loans to, and issue Letters of Credit for the
account of, Borrower under this Agreement, Borrower makes the following
representations and warranties, all of which shall be true and correct as of
the Restatement Date and shall survive the execution of this Agreement and the
Restatement Date, provided that any representation or warranty made by Borrower
under the Original Loan Agreement or the Existing Loan Agreement shall survive
the execution and delivery of this Agreement:
4.1 Organization. Borrower and all of its corporate Subsidiaries are
corporations duly organized, validly existing and in good standing under the
laws of the jurisdictions of their respective incorporation. All of Borrower's
other Subsidiaries, if any, are entities duly organized, validly existing and
in good standing under the laws of the jurisdictions of their respective
organization. Borrower and all of its Subsidiaries are in good standing and are
duly qualified to do business in each jurisdiction where (x) because of the
nature of their respective activities or properties, such qualification is
required and (y) the failure to be so qualified would have a material adverse
effect on the financial condition or operations of Borrower or of Borrower and
the Subsidiaries taken as a whole. Except as set forth in Schedule 4.1, on the
Restatement Date, Borrower and each Subsidiary conducts business in its own
name exclusively. Schedule 4.1 sets forth a complete and accurate list, as of
the Restatement Date, of (a) the state or other jurisdiction of formation of
Borrower, (b) each state in which Borrower is qualified to do business and (c)
all of Borrower's trade names, trade styles and doing business forms.
4.2 Authorization. Each of Borrower and any other Obligor a party
thereto is duly authorized to execute and deliver this Agreement, any Notes,
and any Related Agreements or Supplemental Documentation contemplated by this
Agreement. Borrower is and will continue to be duly authorized to borrow monies
hereunder. Each of Borrower and each other Obligor a party thereto is duly
authorized to perform its obligations under this Agreement, any Notes and any
such Related Agreements and Supplemental Documentation. The execution, delivery
and performance by each of Borrower and any other Obligor a party thereto of
this Agreement, any Notes, and any Related Agreements or Supplemental
Documentation contemplated by this Agreement, and the borrowings hereunder, do
not and will not require any consent or approval of any governmental agency or
authority.
4.3 No Conflicts. The execution, delivery and performance by Borrower
and any other Obligor a party thereto of this Agreement, any Notes, and any
Related Agreements or Supplemental Documentation contemplated by this Agreement
do not and will not conflict with (i) any provision of law, (ii) the charter or
by-laws of Borrower or any such Obligor, (iii) any agreement binding upon
Borrower or any such Obligor or (iv) any court or administrative order or
decree applicable to Borrower or any such Obligor, and do not and will not
require, or result in, the creation or
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imposition of any Lien on any asset of Borrower or any of its Subsidiaries or
any such Obligor except as provided herein.
4.4 Validity and Binding Effect. This Agreement, any Notes, and any
Related Agreements or Supplemental Documentation contemplated by this Agreement
are or, when duly executed and delivered, will be legal, valid and binding
obligations of Borrower and any other Obligor a party thereto, enforceable
against Borrower and any such other Obligor in accordance with their respective
terms, except as enforceability may be limited by bankruptcy, insolvency or
other similar laws of general application affecting the enforcement of
creditors' rights or by general principles of equity limiting the availability
of equitable remedies.
4.5 No Default. Except as set forth in Schedule 4.5, neither Borrower
nor any of its Subsidiaries is in default under any agreement or instrument to
which Borrower or any Subsidiary is a party or by which any of their respective
properties or assets is bound or affected, which default might materially and
adversely affect (i) Lender's Lien on or rights with respect to any material
Collateral or Third Party Collateral or (ii) the financial condition or
operations of Borrower or Borrower and its Subsidiaries taken as a whole. No
Event of Default or Unmatured Event of Default has occurred and is continuing.
4.6 Financial Statements. The audited consolidated balance sheets of
Parent and Borrower, as at December 31, 1995, and the related statements of
income, stockholder's equity and cash flows, and the unaudited consolidated
balance sheets of Parent and Borrower, as at September 30, 1996, and the
related statements of income, stockholder's equity and cash flows, copies of
which have been or will be furnished to Lender, have been prepared in
conformity with GAAP applied on a basis consistent with that of the preceding
fiscal year and period and present fairly the financial condition of Parent or
Borrower, as applicable, and their respective Subsidiaries as at such dates and
he results of their operations for the periods then ended, subject (in the case
of the interim financial statement) to year-end audit adjustments, and (in the
case of the audited financial statements) have been prepared without a
qualification which is of a "going concern" or similar nature, or which relates
to the limited scope of examination of matters relevant to such financial
statement. Since December 31, 1995, there has been no material adverse change
in the financial condition of Parent, Borrower, any Subsidiary or Parent,
Borrower and their respective Subsidiaries taken as a whole. The pro forma
consolidated balance sheet of Borrower and its Subsidiaries as at March 31,
1996, a copy of which has been furnished to Lender, has been prepared in
accordance with GAAP and fairly presents the financial condition of Borrower
and its Subsidiaries as at such date.
4.7 Insurance. Schedule 4.7 hereto is a complete and accurate summary
of the property and casualty insurance program carried by Borrower and its
Subsidiaries on the Restatement Date. Schedule 4.7 includes the insurer's(s')
name(s), policy number(s), expiration date(s), amount(s) of coverage, type(s)
of coverage, the annual premium(s), Best's policyholder's and financial size
ratings of the insurer(s), exclusions, deductibles and self-insured retention
and describes in detail any retrospective rating plan, fronting arrangement or
any other self-insurance or risk assumption agreed to by Borrower or any
Subsidiary or imposed upon Borrower or any Subsidiary by any such insurer,
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all as of the Restatement Date. This summary also includes any self-insurance
program that is in effect.
4.8 Litigation; Contingent Liabilities.
(a) Except for those referred to in Schedule 4.8 (or otherwise
disclosed to Lender pursuant to Section 5.2), no claims, litigation,
arbitration proceedings or governmental proceedings are pending or
threatened against or are affecting Borrower or any Subsidiary, the
results of which might materially and adversely affect (i) the
financial condition or operations of Borrower or Borrower and its
Subsidiaries taken as a whole or (ii) Lender's interest in or Lien on
any material Collateral or Third Party Collateral.
(b) Other than any liability incident to the claims, litigation
or proceedings disclosed in Schedule 4.8, Schedule 4.19 or Schedule
4.25 (or otherwise disclosed to Lender pursuant to Section 5.2), or
provided for or disclosed in the financial statements referred to in
Section 4.6, neither Borrower nor any of its Subsidiaries has any
contingent liabilities which are material to Borrower or Borrower and
its Subsidiaries taken as a whole.
4.9 Liens. None of the Collateral or other property, revenues or assets
of Borrower or any Subsidiary is subject to any Lien (including but not limited
to Liens pursuant to Capitalized Leases under which Borrower or any Subsidiary
is a lessee) except Liens permitted by Section 5.16.
4.10 Subsidiaries. Borrower has no Subsidiaries except for Cues B.V.
and Knopafex Ltd., of which it owns 100% of the issued and outstanding capital
stock.
4.11 Partnership; Joint Ventures. Neither Borrower nor any of its
Subsidiaries is a partner or joint venturer in any partnership or joint venture
other than the partnerships and joint ventures listed on Schedule 4.11.
Schedule 4.11 sets forth, for each such partnership or joint venture, a
complete and accurate statement of (a) Borrower's and each Subsidiary's
percentage ownership of each such partnership or joint venture, (b) the state
or other jurisdiction of formation or incorporation, as appropriate, of each
such partnership or joint venture, (c) each state in which each such
partnership or joint venture is qualified to do business on the Restatement
Date and (d) all of each such partnership's or joint venture's trade names,
trade styles or doing business forms on the Restatement Date.
4.12 Business and Collateral Locations.
(a) On the Restatement Date, (x) the office where Borrower keeps
Borrower's books and records concerning Borrower's Accounts Receivable
and other Collateral is located at ▇▇▇▇ ▇▇▇▇▇▇▇'▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
and (y) Borrower's chief place of business and chief executive office
is located at the address of Borrower set forth on the signature pages
of this Agreement. Schedule 4.12 contains a complete and accurate list,
as of the Restatement Date, of (i) all of Borrower's places of business
other than those referred to in the first sentence of
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this paragraph (a) and (ii) all locations and places of business of
eacj Subsidiary. On the Restatement Date, the names of any landlords,
over landlords and/or mortgagees of any such locations (including the
locations referred to in the first sentence of this paragraph (a)), are
identified in Schedule 4.12.
(b) Schedule 4.12 contains a complete and accurate list, as of
the Restatement Date, of (i) the locations of all of Borrower's
Inventory, Equipment and Fixtures, (ii) if applicable, the locations
of all tangible Third Party Collateral (except any part thereof which
prior to the execution of this Agreement Borrower shall have advised
Lender in writing consists of Collateral or Third Party Collateral, as
applicable, normally used in more than one state) and (iii) if any
Inventory, Equipment or other Collateral or any Third Party Collateral
is not in the possession or control of Borrower or the owner of such
Third Party Collateral, the name and mailing address of each bailee,
processor, warehouseman or other Person in possession or control
thereof.
4.13 Real Property. Schedule 4.13 contains a complete and accurate
list, as of the Restatement Date, of (a) the address and legal descriptions of
any real property owned by Borrower or any Subsidiary or on which any Fixtures
are located and (b) in the case of Fixtures located on property not owned by
Borrower or any Subsidiary, the name(s) and mailing addresses of the record
owners of such property.
4.14 Related Agreements. All representations and warranties of Borrower
contained in any Related Agreements are true and correct as if made on the
Restatement Date (except (x) to the extent any such representation or warranty
relates solely to an earlier date and was true and correct on such earlier date
(including the date thereof) and (y) for such changes as are the result of any
act or omission specifically permitted hereunder or under such Related
Agreement or otherwise expressly permitted by Lender) and Borrower hereby
adopts and affirms all such representations and warranties which Borrower
agrees shall be incorporated by reference herein and made a part hereof.
4.15 Control of Collateral; Lease of Property. Borrower is not now
conducting, or permitting or suffering to be conducted, any activities pursuant
to or in conjunction with which any of the Collateral is now, or will be (while
any Liabilities exist or this Agreement is in effect), in the possession of any
Subsidiary or Obligor (other than Borrower). Except for Capitalized Leases
included on Schedule 5.15, Schedule 4.15 contains a complete and accurate list
as of the Restatement Date of (a) all leases under which Borrower or a
Subsidiary is the lessee covering any machinery, equipment or real property
used by Borrower or any Subsidiary and (b) the name and mailing address of each
lessor or owner of such machinery, equipment or real property.
4.16 Intellectual Property; Licenses. Borrower and each of its
Subsidiaries possesses adequate Intellectual Property Collateral to continue to
conduct its respective business as heretofore conducted by it, and all such
Intellectual Property Collateral existing on the Restatement Date (together
with, in the case of patents, Trademarks and copyrights, the date of issuance
thereof) are listed on Schedule 4.16. With respect to all Intellectual Property
Collateral which is not of negligible economic value and is necessary to the
continued operation of Borrower's business:
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(i) it is valid and enforceable, is subsisting, and has not been
adjudged invalid or unenforceable, in whole or in part;
(ii) Borrower has made all necessary filings and recordations to
protect its interest therein, including, without limitation,
recordations of all of its interest in the Patent Collateral and
Trademark Collateral in the United States Patent and Trademark Office
and in corresponding offices throughout the world and its claims to the
Copyright Collateral in the United States Copyright Office and in
corresponding offices throughout the world;
(iii) Borrower is the exclusive owner of the entire and
unencumbered right, title and interest therein and thereto and no claim
has been made that the use of any Intellectual Property Collateral does
or may violate the asserted rights of any third party; and
(iv) Borrower has performed and will continue to perform all acts
and has paid and will continue to pay all required fees and taxes to
maintain each and every item of Intellectual Property Collateral in full
force and effect throughout the world, as applicable.
Borrower owns directly or is entitled to use, by license or otherwise, all
patents, Trademarks, Trade Secrets, copyrights, mask works, licenses,
technology, know-how, processes and rights with respect to any of the foregoing
used in, necessary for or of importance to the conduct of Borrower's business.
4.17 Solvency. As of the Restatement Date, and at all times thereafter,
Borrower and each of its Subsidiaries has capital sufficient to carry on its
respective business and transactions and all business and transactions in which
it is about to engage, and is now solvent and able to pay its respective debts
as they mature, and Borrower and each of its Subsidiaries now owns property
having a value, both at fair valuation and at present fair salable value,
greater than the amount required to pay Borrower's or such Subsidiary's debts.
4.18 Contracts; Labor Matters. Except as disclosed on Schedule 4.18: (a)
neither Borrower nor any Subsidiary is a party to any contract or agreement, or
is subject to any charge, corporate restriction, judgment, decree or order,
which materially and adversely affects its business, property, assets,
operations or condition, financial or otherwise; (b) no labor contract to which
Borrower or any Subsidiary is a party or is otherwise subject is scheduled to
expire prior to the initial Termination Date; (c) neither Borrower nor any
Subsidiary has, within the two-year period preceding the Restatement Date, taken
any action which would have constituted or resulted in a "plant closing" or
"mass layoff", within the meaning of the Federal Worker Adjustment and
Retraining Notification Act of 1988 or any similar applicable federal, state or
local law; and (d) on the Restatement Date (i) neither Borrower nor any
Subsidiary is a party to any labor dispute and (ii) there are no strikes or
walkouts relating to any labor contracts to which Borrower or any Subsidiary is
a party or is otherwise subject.
4.19 Pension and Welfare Plans. Each Pension Plan complies in all
material respects with all applicable statutes and governmental rules and
regulations; no Reportable Event has occurred
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with respect to any Pension Plan; neither Borrower nor any ERISA Affiliate has
withdrawn from any Multiemployer Plan in a "complete withdrawal" or a "partial
withdrawal" as defined in Sections 4203 or 4205 of ERISA, respectively, which
resulted in a withdrawal liability that has not been satisfied or which could
result in a withdrawal liability for the Borrower or any ERISA Affiliate in
excess of, for all such withdrawals, $25,000; no steps have been instituted to
terminate any Pension Plan (other than in connection with a termination that
qualifies under Section 4041(b) of ERISA); no contribution failure has occurred
with respect to any Pension Plan sufficient to give rise to a Lien under Section
302(f) of ERISA; no condition exists or event or transaction has occurred in
connection with any Pension Plan or Multiemployer Plan which could result in the
incurrence by Borrower, any other Obligor or any ERISA Affiliate of any material
liability, fine or penalty; and neither Borrower nor any other Obligor nor any
ERISA Affiliate is a "contributing sponsor" as defined in Section 4001(a)(13) of
ERISA of a "single-employer plan" as defined in Section 4001(a)(15) of ERISA
which has two or more contributing sponsors, at least two of whom are not under
common control. Except as listed in Schedule 4.19, neither Borrower nor any
Subsidiary nor any other Obligor has any contingent liability with respect to
any "employee welfare benefit plans," as such term is defined in Section 3(1) of
ERISA, which covers retired or terminated employees and their beneficiaries,
other than liability for continuation coverage described in Part 6 of Subtitle B
of Title I of ERISA.
4.20 Regulation U. Borrower is not engaged in the business of
purchasing or selling Margin Stock or extending credit to others for the purpose
of purchasing or carrying Margin Stock, and no part of the proceeds of any
borrowing hereunder will be used to purchase or carry any Margin Stock or for
any other purpose which would violate any of the margin regulations of the
Federal Reserve Board.
4.21 Compliance. Except as described on Schedule 4.21 or Schedule 4.25,
Borrower and its Subsidiaries are in material compliance with all statutes and
governmental rules and regulations applicable to them.
4.22 Taxes. Each of Borrower and its Subsidiaries has filed all tax
returns which are required to have been filed and has paid, or made adequate
provisions for the payment of, all of its Taxes which are due and payable,
except such Taxes, if any, as are being contested in good faith and by
appropriate proceedings and as to which such reserves or other appropriate
provisions as may be required by GAAP have been maintained.
Borrower is not aware of any proposed assessment against Borrower or any of its
Subsidiaries for additional Taxes (or any basis for any such assessment) which
might be material to Borrower and its Subsidiaries taken as a whole.
4.23 Investment Company Act Representation. 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.
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4.24 Public Utility Holding Company Act Representation. Borrower is not
a "holding company" or a "subsidiary company" of a "holding company" or an
"affiliate" of a "holding company" within the meaning of the Public Utility
Holding Company Act of 1935, as amended.
4.25 Environmental, Safety and Health Matters. Except as disclosed on
Schedule 4.25, as of the Restatement Date Borrower and each of its Subsidiaries
and each property, operation and facility that Borrower or any Subsidiary may
own, operate or control (i) complies in all respects with (A) all applicable
Environmental Laws and (B) all applicable Occupational Safety and Health Laws;
(ii) is not subject to any judicial or administrative proceeding alleging the
violation of any Environmental Law or Occupational Safety and Health Law; (iii)
has not received any notice or inquiry (A) that it may be in violation of any
Environmental Law or Occupational Safety and Health Law, (B) threatening the
commencement of any proceeding relating to allegedly unlawful, unsafe or
unhealthy conditions or (C) alleging that it is or may be responsible for any
response, cleanup or corrective action, including but not limited to any
remedial investigation/feasibility studies, under any Environmental Law or
Occupational Safety and Health Law; (iv) is not the subject of federal or state
investigation evaluating whether any investigation, remedial action or other
response is needed to respond to (A) a spillage, disposal or release or
threatened release into the environment of any Hazardous Material or other
hazardous, toxic or dangerous waste, substance or constituent, or other
substance or (B) any allegedly unsafe or unhealthful condition; (v) has not
filed any notice under or relating to any Environmental Law or Occupational
Safety and Health Law indicating or reporting (A) any past or present spillage,
disposal or release into the environment of, or treatment, storage or disposal
of, any Hazardous Material or other hazardous, toxic or dangerous waste,
substance or constituent, or other substance or (B) any potentially unsafe or
unhealthful condition, and there exists no basis for such notice irrespective of
whether such notice was actually filed; and (vi) has no contingent liability in
connection with (A) any actual or potential spillage, disposal or release iof,
or otherwise with respect to, any Hazardous Material or other hazardous, toxic
or dangerous waste, substance or constituent, or other substance, whether on any
premises owned or occupied by Borrower or any Subsidiary or on any other
premises, or (B) any unsafe or unhealthful condition. Except as disclosed on
Schedule 4.25, there are no underground storage tanks, whether or not in use, in
or under any property or facilities owned, operated or controlled by Borrower or
any Subsidiary, and there are no Hazardous Materials on, in or under any
property or facilities owned, operated or controlled by Borrower or any
Subsidiary, including but not limited to such Hazardous Materials that may be
contained in underground storage tanks, but excepting such Hazardous Materials
used in accordance with all applicable laws and in the same manner as an
ordinary consumer (e.g., gasoline in tanks of motor vehicles, small amounts of
cosmetic cleaners, heating oil in tanks, etc.).
5. BORROWER COVENANTS.
From the Restatement Date and thereafter until the Credit is terminated
and all Liabilities of Borrower hereunder are paid in full, Borrower agrees
that, unless Lender shall otherwise consent in writing, it will:
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5.1 Financial Statements and Other Reports. Furnish to Lender in form
reasonably satisfactory to Lender:
5.1.1 Financial Reports:
(a) Annual Audit Report. Within ninety (90) days
after each Fiscal Year of Borrower, a copy of the annual audit
report of Borrower and its consolidated Subsidiaries prepared on
a consolidated (and, if requested by Lender, consolidating) basis
in conformity with GAAP and certified by an independent certified
public accountant who shall be of recognized national standing or
otherwise reasonably satisfactory to Lender, together with (i) a
letter from such accountant substantially in the form of Exhibit
H, (ii) a certificate from such accountant containing a
computation of, and showing compliance with, each of the
covenants contained in Section 5.13, 5.15(d), 5.15(e) and 5.20
and Sections 2.1 through 2.5 of Supplement A, and (iii) a
certificate from such accountant to the effect that, in making
the examination necessary for the signing of such annual audit
report, such accountant has not become aware of any Event of
Default or Unmatured Event of Default that has occurred and is
continuing, or, if such accountant has become aware of any such
event, describing it;
(b) Monthly Financial Statement. Within thirty (30)
days after the end of each month (other than the last month) of
each Fiscal Year, a copy of the unaudited financial statement of
(x) Parent and its consolidated Subsidiaries, (y) the ▇▇▇▇▇▇▇▇
Business and (z) the Cues Business prepared on a consolidated
basis in conformity with GAAP (subject to normal year-end
adjustments and except that such statements need not include
notes), signed by Borrower's chief financial officer and
consisting of at least a balance sheet as at the close of such
month and statements of earnings and cash flows for such month
and for the period from the beginning of such Fiscal Year to the
close of such month;
(c) Officer's Certificate. Together with the
financial statements furnished by Borrower under the preceding
clauses (a) and (b) (but only for the months of March, June and
September), a certificate of Borrower's chief financial officer
or treasurer, dated the date of such annual audit report or such
monthly financial statement, as the case may be, containing a
statement that no Event of Default or Unmatured Event of Default
has occurred and is continuing, or, if there is any such event,
describing it and the steps, if any, being taken to cure it, and
containing a computation of, and showing compliance with, each of
the covenants contained in Section 5.13, 5.15(d), 5.15(e) and
5.20 and Sections 2.1 through 2.5 of Supplement A; and
(d) Management Letters. Promptly upon receipt
thereof, a copy of any "management letter" or other material
communication from Borrower's
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auditors (including a copy of any such letter which accompanies
the audit report referred to in clause (a)).
5.1.2 Same Store Sales Reports. Not later than July 31st and
January 31st of each year, a report for each of Borrower's restaurants
and stores of sales for the preceding six months and year-to-date, with
a comparison of such sales figures to the corresponding periods in the
prior Fiscal Year, all in form reasonably satisfactory to Lender.
5.1.3 Azimuth Group Deliveries. Promptly upon receipt by
Borrower, all financial statements, reports, officer's certificates,
notices and all other information received by Borrower from Azimuth,
Contempo, Contempo West and DEI pursuant to the Azimuth Loan Agreement,
the Contempo Loan Agreement, the Contempo West Loan Agreement and the
DEI Loan Agreement, respectively.
5.1.4 Borrowing Base Certificates. A current Borrowing Base
Certificate of Contempo, Contempo West and DEI at the end of each month
and together with each Borrowing Request for an Additional Revolving
Loan, with each Borrowing Base Certificate being in compliance with
applicable requirements for Contempo, Contempo West and DEI set forth in
the Contempo Loan Agreement, the Contempo West Loan Agreement and the
DEI Loan Agreement, respectively.
5.1.5 Other Reports:
(a) SEC and Other Reports. Copies of each filing
and report made by Parent with or to any securities exchange or
the Securities and Exchange Commission and of each communication
from Parent to shareholders generally, promptly upon the filing
or making thereof;
(b) Report of Change Relating to Borrower,
Subsidiaries or Partnership. Promptly from time to time, a
written report of any change in the information set forth in
Schedule 4.1 or Schedule 4.11 concerning Borrower, any
Subsidiary, or any partnership or joint venture; and
(c) Other Reports. Promptly from time to time,
such other reports and information as Lender may reasonably
request.
5.2 Notices. Notify Lender in writing of any of the following
immediately upon learning of the occurrence thereof (or, (i) in the case of
clause (d) of this Section 5.21, promptly upon learning of the occurrence
thereof followed within 30 days after such occurrence by a description of the
steps being taken with respect thereto, and (ii) in the case of the matters
specified in items (i), (ii), (iv) (v) and (vi) of clause (e) and in clause (f)
of this Section 5.2, at least 30 days prior to the occurrence thereof to the
extent applicable to the Borrower, any Subsidiary or any other Obligor),
describing the same and, if applicable, the steps being taken by the Person(s)
affected with respect thereto:
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(a) Default. The occurrence of (i) an Event of Default or
Unmatured Event of Default and (ii) to the extent not included in the
foregoing clause (i), the default by Borrower, any other Obligor, any
Subsidiary or any Related Party under any material note, indenture, loan
agreement, mortgage, lease, deed or other material similar agreement to
which Borrower, any other Obligor, any Subsidiary or any Related Party,
as appropriate, is a party or by which it is bound;
(b) Litigation. The institution of any litigation, arbitration
proceeding or governmental proceeding affecting Borrower, any other
Obligor, any Subsidiary, any Related Party, any Collateral or any Third
Party Collateral, whether or not considered to be covered by insurance;
(c) Judgment. The entry of any judgment or decree
against Borrower, any other Obligor, any Subsidiary or any Related
Party, if the amount of such judgment exceeds $25,000;
(d) Pension Plans and Welfare Plans. The occurrence of a
Reportable Event with respect to any Pension Plan; the filing of a
notice of intent to terminate a Pension Plan by Borrower, any ERISA
Affiliate, or any other Obligor; the institution of proceedings to
terminate a Pension Plan by the PBGC or any other Person; the withdrawal
in a "complete withdrawal" or a "partial withdrawal as defined in
Sections 4203 and 4205, respectively, of ERISA by Borrower, any ERISA
Affiliate or any other Obligor from any Multiemployer Plan; the failure
of Borrower, any other Obligor or any ERISA Affiliate to make a required
contribution to any Pension Plan, including but not limited to any
failure to pay an amount sufficient to give rise to a Lien under Section
302(f) of ERISA; the taking of any action with respect to a Pension Plan
which could result in the requirement that Borrower, any other Obligor
or any ERISA Affiliate furnish a bond or other security to the PBGC or
such Pension Plan; the occurrence of any other event (other than an
amendment to any Pension Plan which is required by a change in a
provision of ERISA or the Code applicable to such plan) with respect to
any Pension Plan which could result in the incurrence by Borrower, any
other Obligor or any ERISA Affiliate of any material liability, fine or
penalty; or the incurrence of any material increase in the contingent
liability of Borrower, any other Obligor or any Subsidiary with respect
to any "employee welfare benefit plan" as defined in Section 3(1) of
ERISA which covers retired or terminated employees and their
beneficiaries, other than liability for continuation coverage described
in Part 6 of Subtitle B of Title I of ERISA;
(e) Business and Collateral Information. Any change or proposed
change in any of the information set forth on Schedule 4.12, Schedule
4.13 or Schedule 4.15, including but not limited to (i) any change in
the location of any Inventory or Equipment or any Third Party
Collateral, (ii) the identity of any new bailee, processor, warehouseman
or other Person in possession or control of any Inventory, Equipment or
other Collateral or any Third Party Collateral, (iii) any change in the
name or address of the lessor or owner of any real property or equipment
leased to Borrower, any Subsidiary or any other Obligor, (iv) any
proposed change in the location of Borrower's or any Subsidiary's chief
executive office or chief place
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of business, (v) any proposed opening, closing or other change in the
list of offices and other places of business of Borrower and each
Subsidiary and (vi) any opening, closing or other change in the offices
and other places of business of each other Obligor;
(f) Change of Name or Status. Any change in the name or
address of Borrower, any other Obligor or any Subsidiary, or any
change in the list of trade names and tradestyles set forth in Schedule
4.1;
(g) Insurance Information. Any material change in the
information set forth in Schedule 4.7;
(h) Environmental and Safety and Health Matters. The occurrence
of any event or the acquisition of any information which, if it had
occurred or was true on or before the Restatement Date, would have been
required to have been disclosed and included on Schedule 4.25, including
but not limited to the existence of any Environmental Lien and receipt
of any notice from any federal, state or local government or agency with
respect to any actual or alleged violation of any Environmental Law or
any Occupational Safety and Health Law;
(i) Material Adverse Change. The occurrence of a material
adverse change in the business, operations or financial condition of
Borrower, any other Obligor or any Subsidiary;
(j) Default by Others. Any material default by any Account Debtor
or other Person obligated to Borrower, any other Obligor, or any
Subsidiary under any contract, chattel paper, note or other evidence of
amounts payable or due or to become due to Borrower, such Obligor or
such Subsidiary if the amount payable under such contract, chattel
paper, note or other evidence of amounts payable or due of to become due
is material;
(k) Moveable Collateral. If any of the Collateral or Third Party
Collateral consists of goods of a type normally used in more than one
state, whether or not actually so used, any use of any such goods in any
state other than a state in which Borrower shall have previously advised
Lender such goods will be used. Borrower agrees that such goods will
not, unless Lender shall otherwise consent in writing, be used outside
the continental United States;
(l) Change in Management or Line(s) of Business. Any substantial
change in the senior management of Borrower or any Subsidiary, or any
change in Borrower's or any Subsidiary's line(s) of business; and
(m) Other Notices. Any notices required to be provided pursuant
to any Related Agreement or the other provisions of this Agreement, and
notice of the occurrence of such other events as Lender may reasonably
from time to time specify.
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5.3 Existence. Maintain and preserve, and cause each Subsidiary to
maintain and preserve, its respective existence as a corporation or other form
of business organization (except as permitted by Section 5.12), as the case may
be, and all rights, privileges, licenses, patents, patent rights, copyrights,
trademarks, trade names, trade styles, franchises and other authority to the
extent material and necessary for the conduct of its respective business in the
ordinary course as conducted from time to time.
5.4 Nature of Business. Engage, and cause each Subsidiary to engage, in
substantially the same fields of business as it is engaged in on the Restatement
Date (and no other business).
5.5 Books, Records and Access. Maintain, and cause each Subsidiary to
maintain, complete and accurate books and records (including but not limited to
records relating to Accounts Receivable, Inventory, Equipment and other
Collateral), in which full and correct entries shall be made of all dealings and
transactions in relation to its respective business and activities such that
financial statements in conformity with GAAP can be prepared. Cause its books
and records as at the end of any calendar month to be posted and closed not more
than twenty-five (25) days after the last business day of such month. Permit,
and cause each Subsidiary to permit, access by Lender and its agents or
employees to the books and records of Borrower and such Subsidiary at Borrower's
or such Subsidiary's place or places of business at intervals to be determined
by Lender and without hindrance or delay, and permit and cause each Subsidiary
to permit Lender or its agents and employees to inspect Borrower's Inventory and
Equipment and such Subsidiary's inventory and equipment, to perform appraisals
of Borrower's Equipment and such Subsidiary's equipment, and to inspect, audit,
check and make copies and/or extracts from the books, records, computer data and
records, computer programs, journals, orders, receipts, correspondence and other
data relating to Inventory, Accounts Receivable, Contract Rights, General
Intangibles, Equipment and any other Collateral or Third Party Collateral, or
relating to any other transactions between the parties hereto. Any and all such
inspections and/or audits shall be at Borrower's expense, and Lender may advance
same to Borrower as a Revolving Loan. Notwithstanding the foregoing or any other
provision of this Agreement or any Related Agreement, (a) as long as no Event of
Default or Unmatured Event of Default has occurred or is continuing, Borrower
shall not be required to reimburse Lender for appraisals of Borrower's Equipment
or the equipment of its Subsidiaries more frequently than once each Fiscal Year
and (b) Lender shall exercise its rights under this Section 5.5 (and under the
other provisions of this Agreement and each Related Agreement) in a manner which
will not unduly interfere with the ordinary business operations of Borrower and
its Subsidiaries.
5.6 Insurance. Maintain, and cause each Subsidiary to maintain,
insurance to such extent and against such hazards and liabilities as is commonly
maintained by companies similarly situated or as Lender may reasonably request
from time to time. Keep the Collateral properly housed and insured for its full
insurable value against loss or damage by fire, theft, explosion, sprinklers,
collision (in the case of motor vehicles) and such other risks as are
customarily insured against by persons engaged in business similar to that of
Borrower, with such companies, in such amounts and under policies in such form
as shall be reasonably satisfactory to Lender. Certificates of such policies of
insurance have been delivered to Lender prior to the Restatement Date together
with evidence of payment of all premiums therefor. Borrower shall cause each
issuer of an insurance
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policy to provide Lender, prior to the Restatement Date, with an endorsement or
an independent instrument (i) substantially in the form of Exhibit A or such
other form and containing such other terms as shall be reasonably acceptable to
Lender and (ii) showing loss payable to Lender and, if required by Lender,
naming Lender as an additional insured. Borrower hereby directs all insurers
under such policies of insurance to pay all proceeds payable thereunder directly
to Lender. Borrower appoints Lender and any Person whom Lender may from time to
time designate (and all officers, employees or agents designated by Lender or
such Person) as Borrower's true and lawful attorney and agent-intact with power
to make, settle and adjust claims under such policies of insurance, endorse the
name of Borrower on any check, draft, instrument or other item of payment for
the proceeds of such policies of insurance and, at any time an Event of Default
exists, make all determinations and decisions with respect to such policies of
insurance. The foregoing appointment and power, being coupled with an interest,
is irrevocable until all Liabilities are paid and performedreement is
terminated. In the event Borrower at any time or times hereafter shall fail to
obtain or maintain any of the policies of insurance required herein or to pay
any premium in whole or in part relating thereto, then Lender, without waiving
or releasing any obligation of or default by Borrower hereunder, may at any time
thereafter (but shall be under no obligation to do so) obtain and maintain such
policies of insurance and pay such premiums and take any other action with
respect thereto which Lender deems advisable. All sums so disbursed by Lender,
including reasonable Attorneys' Fees, court costs, expenses and other charges
relating thereto, shall be payable on demand by Borrower to Lender, and Lender
may, in its sole and absolute discretion, advance such sums to Borrower as a
Revolving Loan.
5.7 Insurance Survey. Provide to Lender at least annually within 90 days
of the end of Borrower's Fiscal Year, a certificate signed by its chief
financial officer that attests to and summarizes the property and casualty
insurance program carried by Borrower and its Subsidiaries. This summary shall
include the insurer's(s') name(s), policy number(s), expiration date(s),
amount(s) of coverage, type(s) of coverage, the annual premium(s), Best's
policyholder's and financial size ratings of the insurer(s), exclusions,
deductibles and self-insured retention and shall describe in detail any
retrospective rating plan, fronting arrangement or any other self-insurance or
risk assumption agreed to by Borrower or any Subsidiary or imposed upon Borrower
or any Subsidiary by any such insurer, as well as any self-insurance program
that is in effect. Borrower shall notify Lender in writing (1) at least 20 days
prior to any cancellation or material change of any such insurance by Borrower
or any Subsidiary and (2) within 5 business days after receipt of any notice
(whether formal or informal) of any cancellation or change in any of its
insurance by any of its insurers or any material change in the cost thereof or
which reduces the policyholder's or financial size ratings of the insurance
carriers of Borrower or any of its Subsidiaries, as established by Best's
Insurance Reports. Annually, Lender shall have the right to request Borrower to
have a risk management survey completed by a recognized independent risk
management consultant acceptable to it and Lender which will identify, quantify
and assess any catastrophic uninsured, underinsured or self-insured exposures
faced by Borrower and its Subsidiaries. The cost of such survey shall be borne
solely by Borrower. A copy of the results of such survey shall be promptly
delivered by Borrower to Lender.
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5.8 Repair. Maintain, preserve and keep, and cause each Subsidiary to
maintain, preserve and keep, its properties in operating condition and repair,
ordinary wear and tear excepted, and from time to time make, and cause each
Subsidiary to make, all necessary and proper repairs, renewals, replacements,
additions, betterments and improvements thereto so that at all times the
efficiency thereof shall be reasonably preserved and maintained.
5.9 Taxes. Pay, and cause each Subsidiary to pay, when due, all of its
Taxes, unless and only to the extent that Borrower or such Subsidiary is
contesting such Taxes in good faith and by appropriate proceedings and Borrower
or such Subsidiary has set aside on its books such reserves or other appropriate
provisions therefor as may be required by GAAP.
5.10 Compliance. Comply, and cause each Subsidiary to comply, in all
material respects with all statutes and governmental rules and regulations
applicable to it.
5.11 Pension Plans. Not permit, and not permit any Subsidiary to permit,
any condition to exist in connection with any Pension Plan which might
reasonably constitute grounds for the PBGC to institute proceedings to have such
Pension Plan terminated or a trustee appointed to administer such Pension Plan;
not fail, and not permit any Subsidiary to fail, to make a required contribution
to any Pension Plan if such failure would be sufficient to give rise to a Lien
under Section 302(f) of ERISA; and not engage in, or permit to exist or occur,
or permit any of its Subsidiaries to engage in, or permit to exist or occur, any
other condition, event or transaction with respect to any Pension Plan which
could result in the incurrence by Borrower or any of its Subsidiaries of any
material liability, fine or penalty.
5.12 Merger, Purchase and Sale. Not, and not permit any Subsidiary to:
(a) be a party to any merger, liquidation or consolidation (other than the
Merger), provided that any Subsidiary may merge with and into, or liquidate
into, Borrower or another Subsidiary; (b) except in the normal course of its
business or as otherwise permitted herein (including Sections 3.4(a) and
5.16(e)) or in any Related Agreement, sell, transfer, convey, lease or otherwise
dispose of any of its assets (provided, however, that Borrower may sell the real
and personal property and other assets at or comprising the operations of any
business location listed on Schedule 4.12 if the following two conditions are
met: (i) Borrower receives Lender's prior written consent to such sale, and (ii)
such sale is made at fair market value to a Person other than a Related Party);
(c) sell or assign, with or without recourse, any Accounts Receivable, Contract
Rights, notes receivable or chattel paper, except as otherwise expressly
permitted in this Agreement or any Related Agreement; or (d) purchase or
otherwise acquire all or substantially all the assets of any Person (unless and
to the extent that such assets constitute no more than two (2) restaurant
locations in any Fiscal Year; it being understood and agreed that the addition
of new restaurant locations solely through the assumption or incurrence of lease
obligations shall not be deemed to be a purchase for purposes of this clause
(d)).
5.13 Restricted Payments. Not purchase or redeem any shares of its stock
(other than for stock of Borrower), declare or pay any dividends thereon (other
than stock dividends), make any distribution to stockholders as such (other than
distributions of stock of Borrower) or set aside any
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funds for any such purpose, not prepay, purchase or redeem, and not permit any
Subsidiary to purchase, any Subordinated Debt, not make any advances to Parent
and, if an Event of Default or Unmatured Event of Default exists or would result
therefrom, not, and not permit any Subsidiary to, pay any management or similar
fees to Parent or any of its affiliates pursuant to the terms of the Management
Agreement (except that any such fees may be paid whether or not an Event of
Default or Unmatured Event of Default exists or would result therefrom, solely
to extent such fees are to pay regular salaries (and not bonuses) of any
employees or officers of Parent); provided, however, that: (a) Borrower may pay
dividends and advances to Parent in an aggregate amount not exceeding 50% of
Borrower's Excess Cash Flow for the immediately preceding Fiscal Year so long as
(i) Lender shall have received Borrower's annual audit report pursuant to
Section 5.1.1(a) for such preceding Fiscal Year, (ii) after giving effect to any
such proposed dividend or advance the amount of the Revolving Loan Availability
will exceed the outstanding principal amount of the Revolving Loans by at least
$500,000, (iii) no Event of Default or Unmatured Event of Default shall then
exist or will result from any such dividend payment or advance and (iv) Borrower
shall have given Lender prior written notice of any such proposed dividend or
advance and certified its compliance with this Section 5.13; (b) Borrower may,
within 60 days after obtaining the proceeds of any loan permitted pursuant to
Section 5.15(e), pay a dividend or advance to Parent in an amount not exceeding
25% of the proceeds of such loan so long as the conditions specified in
sub-clauses (ove have been met; (c) Borrower may make scheduled payments of
principal of and interest on the Subordinated Note, so long as the conditions
specified in sub-clauses (ii), (iii) and (iv) of clause (a) above have been met
(it being understood that each reference to a "dividend" in such sub-clauses
shall be deemed, for purposes of this clause (c), to be a reference to the
relevant payment on the Subordinated Note); and (d) Borrower may, within ten
(10) days after obtaining the proceeds of any Supplemental Revolving Loan
permitted hereunder, pay a dividend or advance in the amount of such proceeds of
such Loan to Parent to be used by Parent as specified by Section 5.25 so long as
the conditions specified in subclauses (iii) and (iv) of clause (a) above have
been met. Dividends and advances permitted and paid under clause (a), (b) or (d)
of the foregoing sentence shall not reduce the amount of dividends or advances
payable under any other such sub-clause.
5.14 Borrower's and Subsidiaries' Stock. Not permit any Subsidiary to
purchase or otherwise acquire any shares of the stock of Borrower, and not take
any action, or permit any Subsidiary to take any action, which will result in a
decrease in Borrower's ultimate ownership interest in any Subsidiary.
5.15 Indebtedness. Not, and not permit any Subsidiary to, incur or
permit to exist any Indebtedness (including but not limited to Indebtedness as
lessee under Capitalized Leases), except: (a) Indebtedness under the terms of
this Agreement; (b) Subordinated Debt; (c) other Indebtedness outstanding on the
date hereof and listed on Schedule 5.15; (d) Indebtedness hereafter incurred in
connection with Liens permitted under Section 5.16(d); (e) Indebtedness
hereafter incurred in connection with Liens permitted under Section 5.16(e); and
(f) other Indebtedness approved in writing by Lender.
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5.16 Liens. Not, and not permit any Subsidiary to, create or permit to
exist any Lien with respect to any of its property, revenue or assets now owned
or hereafter acquired, except: (a) Liens for Taxes which are not delinquent or
which are being contested in good faith and by appropriate proceedings and as to
which such reserves or other appropriate provisions as may be required by GAAP
are being maintained; (b) carriers', warehousemen's, mechanics', materialmen's,
repairmen's, and other like statutory Liens arising in the ordinary course of
business securing obligations which are not overdue or which are being contested
in good faith and by appropriate proceedings and as to which such reserves or
other appropriate provisions as may be required by GAAP are being maintained;
(c) pledges or deposits in connection with workers' compensation, unemployment
insurance and other similar legislation or regulations; (d) Liens in connection
with the acquisition of property after the Second Restatement Date by way of
purchase money mortgage, conditional sale or other title retention agreement,
Capitalized Lease or other deferred payment contract, and attaching only to the
property being acquired (and proceeds thereof and accessions thereto), if (i)
except in the case of a Capitalized Lease, the Indebtedness secured thereby does
not exceed 75% of the fair market value of such property at the time of the
acquisition thereof and (ii) the aggregate principal and interest payments of
the Indebtedness of Borrower and its Subsidiaries secured by such Liens does not
exceed (x) $450,000 in Fiscal Year 1996, (y) $900,000 in Fiscal Year 1997 and
(z) $1,350,000 in Fiscal Year 1998; (e) liens on Real Property and any related
fixtures (and proceeds thereof and accessions thereto) securing loans to
Borrower obtained after the Second Restatement Date, provided the initial amount
of the loan secured by any such Lien is not less than 75% of the appraised value
of the Real Property securing such loan; (f) Liens in favor of Lendn Schedule
5.16 (and in the case of Capitalized Leases listed or referred to thereon,
Capitalized Leases entered into after the Second Restatement Date for the same
property or assets, provided that any increase in the Indebtedness payable under
such new Capitalized Leases shall be permitted, and count against the
limitations set forth, under clause (d)(ii) above); (h) lessor's Liens and
reasonable deposits pursuant to operating leases permitted hereunder under which
Borrower or a Subsidiary is the lessee; (i) Liens disclosed in the ALTA Title
Loan Insurance Policies and ALTA Class A Surveys delivered pursuant to Section
8.1.10(c) of the Original Loan Agreement, or otherwise under the Original Loan
Agreement or the Existing Loan Agreement, and not objected to by Lender on or
prior to the Second Restatement Date; (j) zoning or building restrictions and
other minor encumbrances on and defects in title to real property which do not
materially impair the use or value thereof; (k) Liens incurred or deposits made
to secure the performance of surety or appeal bonds and attaching to property
not exceeding $200,000; (l) attachment or judgment Liens not exceeding $200,000;
(m) bankers' liens arising by operation of law in connection with the Depositary
Accounts; and (n) Liens consented to in writing by Lender.
5.17 Guaranties. Not, and not permit any Subsidiary to, become or be a
guarantor or surety of, or otherwise become or be responsible in any manner
(whether by agreement to purchase any obligations, stock, assets, goods or
services, or to supply or advance any funds, assets, goods or services, or
otherwise) with respect to, any undertaking of any other Person, except for the
endorsement, in the ordinary course of collection, of instruments payable to it
or its order.
5.18 Investments. Not, and not permit any Subsidiary to, make or
permit to exist any Investment in any Person, except for: (a) advances to
employees of Borrower or any of its
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Subsidiaries for travel or other ordinary business expenses provided that the
aggregate amount outstanding at any one time shall not exceed $10,000 for any
single employee and $25,000 in the aggregate for all employees; (b) advances to
subcontractors and suppliers not at any time exceeding an aggregate outstanding
amount of $10,000; (c) extensions of credit in the nature of Accounts Receivable
or notes receivable arising from the sale of goods and services in the ordinary
course of business; (d) shares of stock, obligations or other securities
received in settlement of claims arising in the ordinary course of business; (e)
Investments (other than Investments in the nature of loans or advances)
outstanding on the date hereof in Subsidiaries by Borrower and other
Subsidiaries; (f) Investments in the nature of loans and advances constituting
Indebtedness of Subsidiaries to Borrower and to other Subsidiaries outstanding
on the Second Restatement Date and listed on Schedule 5.18; (g) other
Investments outstanding on the Second Restatement Date and listed on Schedule
5.18; (h) Investments in Depositary Accounts; (i) deposits permitted by Section
5.16; (j) a loan to ELX Limited Partnership made in December 1994 in an original
principal amount of $1,155,625 and any accrued interest thereon; (k) Investments
in the nature of loans and advances made to Parent as permitted under Section
5.13; (l) Subsidiary Loans made pursuant to the Contempo Loan Agreement, the
Contempo West Loan Agreement or the DEI Loan Agreement, as the case may be; and
(m) other Investments consented to by Lender in writing.
5.19 Subsidiaries. Not, and not permit any Subsidiary to, acquire any
stock or similar interest in any Person, and not create, establish or acquire
any Subsidiaries other than those existing on the Second Restatement Date.
5.20 Leases. Not enter into or permit to exist, or permit any Subsidiary
to enter into or permit to exist, any arrangements for the leasing by Borrower
or such Subsidiary, as lessee under a lease which is not a Capitalized Lease, of
any real or personal property (or any interest therein) other than under (a)
leases in existence on the Second Restatement Date and listed on Schedule 4.15
and extensions and renewals thereof (provided that any increase in the rental
payments thereunder will count against the permitted lease rentals in clause (b)
below) and (b) leases entered into after the Second Restatement Date having base
rentals not exceeding (in the aggregate for all such leases) (i) $400,000 in
Fiscal Year 1996, (ii) $800,000 in Fiscal Year 1997 and (iii) $1,200,000 in
Fiscal Year 1998
5.21 Change in Accounts Receivable. After the occurrence of an Event of
Default or Unmatured Event of Default, permit or agree to any extension,
compromise or settlement or make any change or modification of any kind or
nature with respect to any Account Receivable, including any of the terms
relating thereto.
5.22 Future Environmental Assessments. Borrower shall provide such
information and certifications which Lender may reasonably request from time to
time pertaining to the environmental aspects of Borrower and its Subsidiaries
and any property owned, operated or controlled by Borrower or any Subsidiary. To
investigate environmental aspects of Borrower and its Subsidiaries and their
properties, facilities and operations, Lender or its agents shall have the right
at any time to enter upon the property of Borrower or any Subsidiary, take
samples, review the books, records or other documents of Borrower and its
Subsidiaries, interview officers and
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employees of Borrower or its Subsidiaries, and conduct such other activities as
Lender, in its sole discretion, deems appropriate. Borrower shall, and shall
cause its Subsidiaries to, cooperate fully in the conduct of any such
assessment. If Lender decides to cause such an assessment to be conducted
because of (a) Lender's considering taking possession of or title to the
property after the occurrence of an Event of Default or (b) a material change in
the use of the property which, in Lender's reasonable opinion, increases the
risk of non-compliance with Environmental Laws or increases the risk of cost or
liabilities thereunder, then Borrower shall pay upon demand all costs and
expenses (including Attorney's Fees) connected with such assessment. Lender may,
in its discretion, provide for the payment of any amount due from Borrower under
this Section 5.22 by making Borrower a Revolving Loan. Nothing in this Section
5.22, and no actions taken by Lender pursuant thereto, shall give, or be
construed as controlling or giving, to Lender the right or obligation to direct
or control the conduct or action or inaction of Borrower or any Subsidiary with
respect to any environmental matters, including but not limited to those
pertaining to compliance with any Environmental Laws.
5.23 Related Agreements. Not enter into, or permit any Subsidiary to
enter into, any agreement containing any provision which would be violated or
breached by the performance by Borrower or such Subsidiary of its obligations
hereunder or under any Related Agreement or any instrument or document delivered
or to be delivered by Borrower or such Subsidiary in connection herewith.
5.24 Unconditional Purchase Options. Not enter into or be a party to, or
permit any Subsidiary to enter into or be a party to, any contract for the
purchase of materials, supplies or other property or services, if such contract
requires that payment be made by it regardless of whether or not delivery is
ever made of such materials, supplies or other property or services.
5.25 Use of Proceeds. Not use or permit any proceeds (a) of the Loans to
be used, either directly or indirectly, for the purpose, whether immediate,
incidental or ultimate, of (i) "purchasing or carrying" any Margin Stock (except
as provided in clause (b) below), and furnish to Lender, upon request, a
statement in conformity with the requirements of Federal Reserve Form U-1
referred to in Regulation U of the Federal Reserve Board or (ii) funding all or
any part of any hostile take-over or tender offer, or (b) of the Supplemental
Revolving Loans to be used other than as a dividend or advance paid by Borrower
to Parent to be used by Parent (i) on the Restatement Date (A) to fund the
repurchase by Parent from Bank of America Capital Corporation (as successor to
Continental Illinois Corporation) ("BACC") of that certain Series B Warrant
dated January 23, 1990 to purchase 604,656 shares of Parent's Series A
Non-Voting Convertible Preferred Stock, $.001 par value, previously issued and
sold to BACC, for a repurchase price of $477,678.24, (B) to fund the repayment
in full by Parent to BACC of that certain Senior Subordinated Note dated
September 25, 1989 in the original principal amount of $401,765 and issued by
Parent in favor of BACC, together with all interest and other amounts owing to
BACC thereunder, in an aggregate amount of $245,679.30 (C) to fund the repayment
in full by Parent to BACC that certain Senior Subordinated Note dated June 27,
1991 in the original principal amount of $502,206.25 and issued by Parent in
favor of BACC, together with all interest and other amounts owing to BACC
thereunder, in an aggregate amount of $511,511.53, and (D) to fund a loan by
Parent to ELX Limited Partnership in
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the amount of $909,150.00 to be used by ELX Limited Partnership solely to
purchase from BACC 220,400 shares of Parent's Common Stock, par value $.001 per
share, in an aggregate amount of $909,150.00, and (ii) prior to and after the
Restatement Date solely to purchase Parent Securities and to pay and fees, costs
and expenses incurred in connection with such purchase, or (c) of the Additional
Revolving Loans to be used (i) on the Restatement Date other than to fund the
purchase by Borrower of the Subsidiary Loans outstanding on the Restatement Date
pursuant to the terms and conditions of the Recapitalization Agreement and (ii)
from and after the Restatement Date other than to fund future Subsidiary Loans
to Contempo, Contempo West and DEI under the Contempo Loan Agreement, the
Contempo West Loan Agreement and the DEI Loan Agreement, respectively, to be
used by Contempo, Contempo West and DEI for its respective working capital and
permitted corporate purposes.
5.26 Transactions with Related Parties. Not, and not permit any
Subsidiary to, enter into or be a party to any transaction or arrangement,
including, without limitation, the purchase, sale, lease or exchange of property
or the rendering of any service, with any Related Party, except in the ordinary
course of and pursuant to the reasonable requirements of Borrower's or such
Subsidiary's business and upon fair and reasonable terms no less favorable to
Borrower or such Subsidiary than would obtain in a comparable arm's-length
transaction with a Person not a Related Party; provided, however, that the
foregoing shall not prohibit (a) the existence or performance of the Management
Agreement; (b) the transactions contemplated under the Recapitalization
Agreement; or (c) any other transaction or arrangement permitted by any other
provision of this Agreement (including, without limitation, Sections 5.12(a),
5.13, 5.15(c) and 5.18).
5.27 Mortgagee. Cause all real property owned or leased by Borrower, or
in which Borrower has an interest, to be subject to a Mortgage in favor of
Lender which is satisfactory in form and substance to Lender (except to the
extent otherwise expressly consented to in writing by Lender).
5.28 No Amendment to Certain Documents; Actions Regarding Azimuth
Group.
(a) Not enter into or permit to exist any amendment or
modification of the Management Agreement.
(b) Not enter into or permit to exist any amendment or
modification of any of the Azimuth Documents or any waiver of any
provision set forth in any of the Azimuth Documents.
(c) Not commence or join with any creditor of Azimuth, Contempo,
Contempo West or DEI other than Lender in commencing any proceedings to
collect or enforce any obligations under the Azimuth Documents, or
exercise any rights or remedies under the Azimuth Documents, in each
case without the prior written consent of Lender to be given in Lender's
sole and absolute discretion.
5.29 Intellectual Property Collateral.
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(a) Not, and not permit any Subsidiary to, do any act, or omit to
do any act, whereby any of the Patent Collateral may lapse or become
abandoned or dedicated to the public or unenforceable;
(b) Not, and not permit any Subsidiary or any licensee of it
or of any Subsidiary to:
(i) fail to continue to use any of the Trademark
Collateral to the extent necessary in order to maintain all of
the Trademark Collateral in full force free from any claim of
abandonment for non-use;
(ii) fail in any material respect to maintain as in the
past the quality of products and services offered under all of
the Trademark Collateral;
(iii) fail to employ all of the Trademark Collateral
registered with any Federal or state or foreign authority with an
appropriate notice of such registration;
(iv) adopt or use any other Trademark which is
confusingly similar or a colorable imitation of any of the
Trademark Collateral;
(v) use any of the Trademark Collateral registered with
any Federal or state or foreign authority except for the uses for
which registration or application for registration of all of the
Trademark Collateral has been made; or
(vi) do or permit any act or knowingly omit to do any
act whereby any of the Trademark Collateral may lapse or become
invalid or unenforceable;
(c) Not, and not permit any Subsidiary to, do or permit any act
or knowingly omit to do any act whereby any of the Copyright Collateral
or any of the Trade Secrets Collateral may lapse or become invalid or
unenforceable or placed in the public domain except upon expiration of
the end of an unrenewable term of a registration thereof;
(d) Notify Lender immediately if it knows that any application or
registration relating to any of the Intellectual Property Collateral may
become abandoned or dedicated to the public or placed in the public
domain or invalid or unenforceable, or of any adverse determination or
development (including the institution of, or any such determination or
development in, any proceeding in the United States Patent and Trademark
Office, the United States Copyright Office or any foreign counterpart
thereof or any court) regarding Borrower's or any Subsidiary's ownership
of any of the Intellectual Property Collateral, its right to register
the same or to keep and maintain and enforce the same;
(e) Not, and not permit any Subsidiary or any of its or any
Subsidiary's agents, employees, designees or licensees to, file an
application for the registration of any Intellectual Property Collateral
with the United States Patent and Trademark Office, the
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United States Copyright Office or any similar office or agency in any
other country or any political subdivision thereof, unless it promptly
informs Lender, and upon request of Lender, executes and delivers any
and all agreements, instruments, documents and papers as Lender may
reasonably request to evidence Lender's security interest in such
Intellectual Property Collateral and the goodwill and general
intangibles of Borrower relating thereto or represented thereby;
(f) Take, and cause each Subsidiary to take, all necessary steps,
including in any proceeding before the United States Patent and
Trademark Office, the United States Copyright Office or any similar
office or agency in any other country or any political subdivision
thereof, to maintain and pursue any application (and to obtain the
relevant registration) filed with respect to, and to maintain any
registration of, the Intellectual Property Collateral, including the
filing of applications for renewal, affidavits of use, affidavits of
incontestability and opposition, interference and cancellation
proceedings and the payment of fees and taxes (except to the extent that
dedication, abandonment or invalidation is permitted under the foregoing
clauses (a), (b) and (c)); and
(g) Promptly upon request of Lender, execute and deliver to
Lender, and cause its Subsidiaries to execute and deliver to Lender, any
document reasonably required to acknowledge or register or perfect
Lender's interest in any part of the Intellectual Property Collateral.
6. DEFAULT.
6.1 Event of Default. Each of the following shall constitute an
Event of Default under this Agreement:
(a) Non-Payment. Default in the payment, when due or declared
due, of any of the Liabilities.
(b) Non-Payment of or Default under Other Indebtedness. Default
in the payment when due, whether by acceleration or otherwise (subject
to any applicable grace period), of any Indebtedness of, or guaranteed
by, Borrower, any other Obligor or any Subsidiary (other than (i) any
Indebtedness under this Agreement and any Note or (ii) any Indebtedness
of any Subsidiary to Borrower or to any other Subsidiary), or any event
or condition shall occur which results in the acceleration of the
maturity of any such Indebtedness or enables the holder or holders of
any such Indebtedness or any trustee or agent for such holders (any
required notice of default having been given and any applicable grace
period having expired) to accelerate the maturity of such other
Indebtedness; provided that the aggregate amount of all such
Indebtedness which is so affected shall equal or exceed $200,000.
(c) Validity. If the validity or enforceability of this
Agreement, any Mortgage, the Parent Pledge Agreement, the Parent
Subordination Agreement or any other Related
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Agreement shall be challenged by or on behalf of Borrower, any other
Obligor or any Related Party, or shall fail to remain in full force and
effect (other than as expressly permitted hereunder or thereunder).
(d) Other Obligations. Default in the payment when due, whether
by acceleration or otherwise, or in the performance or observance
(subject to any applicable grace period or waiver of such default) of,
(i) any obligation or agreement of Borrower, any other Obligor or any
Subsidiary to or with Lender (other than any obligation or agreement of
Borrower hereunder or under any Related Agreement) or (ii) any material
obligation or agreement of Borrower, any other Obligor or any Subsidiary
to or with any other Person (other than (x) any such material obligation
or agreement constituting or related to Indebtedness, (y) Trade Accounts
Payable and (z) any material obligation or agreement of any Subsidiary
to Borrower or to any other Subsidiary), except only to the extent that
the existence of any such default is being contested by Borrower, such
other Obligor or such Subsidiary, as the case may be, in good faith and
by appropriate proceedings and Borrower, such other Obligor or such
Subsidiary, as applicable, shall have set aside on its books such
reserves or other appropriate provisions therefor as may be required by
GAAP.
(e) Insolvency. Borrower, any other Obligor or any Subsidiary
becomes insolvent, or generally fails to pay, or admits in writing its
inability to pay, its debts as they mature, or applies for, consents to,
or acquiesces in the appointment of a trustee, receiver or other
custodian for Borrower, such other Obligor or such Subsidiary, or for a
substantial part of the property of Borrower, such other Obligor or such
Subsidiary, or makes a general assignment for the benefit of creditors;
or, in the absence of such application, consent or acquiescence, a
trustee, receiver or other custodian is appointed for Borrower, any
other Obligor or any Subsidiary, or for a substantial part of the
property of Borrower, any other Obligor or any Subsidiary and is not
discharged or dismissed within 60 days; or any bankruptcy,
reorganization, debt arrangement or other proceeding under any
bankruptcy or insolvency law, or any dissolution or liquidation
proceeding, is instituted by or against Borrower, any other Obligor or
any Subsidiary and, if such proceeding is instituted against Borrower,
such Obligor or such Subsidiary, Borrower, such Obligor or such
Subsidiary consents thereto or acquiesces therein or such proceeding is
not dismissed within 60 days or an order for relief is entered; or any
warrant of attachment or similar legal process is issued against any
substantial part of the property of Borrower, any other Obligor or any
Subsidiary.
(f) Pension Plans. The institution by Borrower, any ERISA
Affiliate or any other Person of steps to terminate any Pension Plan if,
in connection with such termination, Borrower or any ERISA Affiliate
would be required to make a contribution to such Pension Plan or to the
PBGC, or would incur a liability or obligation to such Pension Plan, in
excess of $100,000 or a contribution failure occurs with respect to any
Pension Plan sufficient to give rise to a Lien under Section 302(f) of
ERISA.
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(g) Non-Compliance With This Agreement. Default in the
performance of any of Borrower's agreements set forth in Section 2, 5.3,
5.5, 5.6 or 5.12 through 5.28 (and not constituting an Event of Default
under any of the other subsections of this Section 6.1); or default in
the performance of any of Borrower's agreements set forth in Section
3.2, 3.3, 3.4, 5.1.2 or 5.2 (and not constituting an Event of Default
under any of the other subsections of this Section 6.1), and continuance
of such default for three (3) Business Days after notice thereof to
Borrower from Lender; or default in the performance of any of Borrower's
other agreements herein set forth (and not constituting an Event of
Default under any of the other subsections of this Section 6.1), and
continuance of such default for thirty (30) days after notice thereof to
Borrower from Lender.
(h) Non-Compliance With Related Agreements. Default in the
performance by Borrower, any other Obligor or any Subsidiary of any of
its agreements set forth in any Mortgage, the Parent Pledge Agreement,
the Parent Subordination Agreement or any other Related Agreement (and
not constituting an Event of Default under any of the other subsections
of this Section 6.1), and continuance of such default after any required
notice from Lender and/or the expiration of the grace period (if any)
set forth therein.
(i) Warranty. Any warranty made by Borrower, any other Obligor or
any Subsidiary herein or in any Mortgage, the Parent Pledge Agreement,
the Parent Subordination Agreement or any other Related Agreement is
untrue or misleading in any material respect when made or deemed made;
or any schedule, statement, report, notice, certificate or other writing
furnished by Borrower, any other Obligor or any Subsidiary to Lender
hereunder, under any Related Agreement or in connection herewith or
therewith is untrue or misleading in any material respect on the date as
of which the facts set forth therein are stated or certified; or any
certification made or deemed made by Borrower, any other Obligor or any
Subsidiary to Lender is untrue or misleading in any material respect on
or as of the date made or deemed made.
(j) Litigation. There shall be entered against any one of
Borrower, any other Obligor or any Subsidiary one or more judgments or
decrees in excess of $100,000 in the aggregate at any one time
outstanding, excluding those judgments or decrees (i) that shall have
been outstanding less than 30 calendar days from the entry thereof or
(ii) for and to the extent which Borrower, such Subsidiary or such
Obligor, as applicable, is insured and with respect to which the insurer
has assumed responsibility in writing (or Borrower has provided other
evidence reasonably satisfactory to Lender of such insurer's liability
and ability to pay) or for and to the extent which Borrower, such
Subsidiary or such Obligor, as applicable, is otherwise indemnified if
the terms of such indemnification are reasonably satisfactory to Lender.
(k) Conduct of Business. If Borrower, any other Obligor or any
Subsidiary is enjoined, restrained or in any way prevented by court
order, which has not been dissolved or stayed within five (5) Business
Days, from conducting all or any material part of its business affairs.
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(l) Ownership. If (i) Parent shall fail to own all of the voting
stock of Borrower or shall fail to have control over the management and
operations of Borrower or (ii) a majority of Board of Directors of
Parent shall consist of directors whose election has not been approved
in advance by ▇▇▇▇▇▇ & Company, provided that if the existence of such
majority is the result of the death or resignation of a director whose
election was approved by ▇▇▇▇▇▇ & Company, there shall be no Event of
Default under this clause if the resulting vacancy is filled within 60
days by a director whose election was approved in advance in writing by
▇▇▇▇▇▇ Management Incorporated.
(m) Material Adverse Change. Lender shall have determined in good
faith that (i) a material adverse change has occurred since the Second
Restatement Date in the business, operations or financial condition of
Borrower, any other Obligor, or Borrower and its Subsidiaries taken as a
whole, (ii) Lender's interest in any material Collateral or Third Party
Collateral has been adversely affected or impaired (other than as a
result of releases or subordinations expressly provided for herein or in
any Related Document or otherwise agreed to by Lender), or the value
thereof to Lender has been diminished to a material extent, (iii) an
event has occurred or information has become available which, if it had
occurred or was true on the Restatement Date, would have been required
to have been disclosed on Schedule 4.25 and which, in Lender's judgment,
imposes or is reasonably likely to impose a material liability on
Borrower or any other Obligor or to result in an event described in
clause (ii) above, or (iv) the prospect of payment of any of the
Liabilities or performance of any other material obligation or agreement
of Borrower or any other Obligor hereunder or under any Related
Agreement is materially impaired, and the condition giving rise to such
determination does not constitute an Event of Default under any of the
other subsections of this Section 6.1 and continues to exist after
notice of such determination by Lender to Borrower.
(n) Azimuth Group Defaults. The occurrence of any Event of
Default (as such terms are defined in each of the Azimuth Group Loan
Agreements) under Section 6.1(a) of any Azimuth Group Loan Agreement and
such Event of Default shall continue unremedied for a period of thirty
(30) days.
6.2 Effect of Event of Default; Remedies.
(a) In the event that one or more Events of Default described in
Section 6.1(e) shall occur, then Lender's commitment and the Credit
shall terminate and all Liabilities shall be immediately due and payable
without demand, notice or declaration of any kind whatsoever.
(b) In the event an Event of Default other than the one described
in Section 6.1(e) shall occur, then Lender may declare its commitment
and the Credit to be terminated and/or declare all Liabilities to be
immediately due and payable without demand or notice of any kind
whatsoever, whereupon the Credit extended under this Agreement shall
terminate and/or all Liabilities shall be immediately due and payable.
Lender shall promptly advise
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Borrower of any such declaration, but failure to do so shall not impair
the effect of such declaration.
(c) In the event of the occurrence of any Event of Default,
Lender may exercise any one or more or all of the following remedies,
all of which are cumulative and non-exclusive:
(i) Any remedy contained in this Agreement or in any of
the Related Agreements or any Supplemental Documentation;
(ii) Any rights and remedies available to Lender under
the UCC and any other applicable law;
(iii) To the extent permitted by applicable law, Lender
may, without notice, demand or legal process of any kind, take
possession of any or all of the Collateral and Third Party
Collateral (in addition to Collateral and Third Party Collateral
which it may already have in its possession), wherever it may be
found, and for that purpose may pursue the same wherever it may
be found, and may enter into any premises where any of the
Collateral or Third Party Collateral may be or is supposed to be,
and search for, take possession of, remove, keep and store any of
the Collateral or Third Party Collateral until the same shall be
sold or otherwise disposed of, and Lender shall have the right to
store the same in any of Borrower's premises without cost to
Lender;
(iv) At Lender's request, Borrower will, at Borrower's
expense, assemble the tangible Collateral and Third Party
Collateral and make it available to Lender at a place or places
to be designated by Lender which is reasonably convenient to
Lender and Borrower; and
(v) Lender at its option, and pursuant to notification
given to Borrower as provided for below, may sell any Collateral
actually or constructively in its possession at public or private
sale and apply the proceeds thereof as provided below.
7. ADDITIONAL PROVISIONS REGARDING COLLATERAL AND LENDER'S RIGHTS.
7.1 Notice of Disposition of Collateral. Any notification of intended
disposition of any of the Collateral required by law shall be deemed reasonably
and properly given if given at least ten (10) calendar days before such
disposition.
7.2 Application of Proceeds of Collateral. Any proceeds of any
disposition by Lender of any of the Collateral may be applied by Lender to the
payment of expenses in connection with the taking possession of, storing,
preparing for sale, and disposition of Collateral, including
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Attorneys' Fees, and any balance of such proceeds may be applied by Lender
toward the payment of such of the Liabilities, and in such order of application,
as Lender may from time to time elect.
7.3 Care of Collateral. Lender shall be deemed to have exercised
reasonable care in the custody and preservation of any Collateral in its
possession if it takes such action for that purpose as Borrower requests in
writing, but failure of Lender to comply with such request shall not, of itself,
be deemed a failure to exercise reasonable care, and no failure of Lender to
preserve or protect any rights with respect to such Collateral against prior
parties, or to do any act with respect to the preservation of such Collateral
not so requested by Borrower, shall, in and of itself, be deemed a failure to
exercise reasonable care in the custody or preservation of such Collateral.
7.4 Performance of Borrower's Obligations. Lender shall have the right,
but shall not be obligated, to discharge any claims against or Liens, and any
Taxes at any time levied or placed upon any or all Collateral, including,
without limitation, those arising under statute or in favor of landlords, taxing
authorities, government, public and/or private warehousemen, common and/or
private carriers, processors, finishers, draymen, coopers, dryers, mechanics,
artisans, laborers, attorneys, courts, or others. Lender may also pay for
maintenance and preservation of Collateral. Lender may, but is not obligated to,
perform or fulfill any of Borrower's responsibilities under this Agreement which
Borrower has failed to perform or fulfill. Lender may advance to Borrower as a
Revolving Loan any payment made or expense incurred by Lender under this Section
7.4.
7.5 Lender's Rights. None of the following shall affect the obligations
of Borrower to Lender under this Agreement or Lender's right with respect to the
remaining Collateral or any Third Party Collateral (any or all of which actions
may be taken by Lender at any time, whether before or after an Event of Default,
at its sole and absolute discretion and without notice to Borrower):
(a) acceptance or retention by Lender of other property or
interests in property as security for the Liabilities, or acceptance or
retention of any Obligor(s), in addition to Borrower, with respect to
any of the Liabilities;
(b) release of its security interest in, or surrender or release
of, or the substitution or exchange of or for, all or any part of the
Collateral or any Third Party Collateral or any other property securing
any of the Liabilities, or any extension or renewal for one or more
periods (whether or not longer than the original period), or release,
compromise, alteration or exchange, of any obligations of any guarantor
or other Obligor with respect to any Collateral, any Third Party
Collateral or any such property;
(c) extension or renewal for one or more periods (whether or not
longer than the original period), or release, compromise, alteration or
exchange, of any of the Liabilities, or release or compromise of any
obligation of any Obligor with respect to any of the Liabilities; or
(d) failure by Lender to resort to other security or pursue any
Person liable for any of the Liabilities before resorting to the
Collateral or any Third Party Collateral.
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8. CONDITIONS PRECEDENT; DELIVERY OF DOCUMENTS AND OTHER
MATTERS.
8.1 Conditions Precedent to Effectiveness of Agreement. The amendments
to the Existing Loan Agreement embodied in this Agreement shall not be effective
(in which case the Existing Loan Agreement shall remain in full force and
effect) and the initial Additional Revolving Loans shall not be funded unless
and until the following conditions precedent have been satisfied, in each case
on or prior to the Restatement Date:
8.1.1 Agreement. Borrower and Lender shall have duly
executed and delivered this Agreement.
8.1.2 Additional Revolving Note. Borrower shall have duly
executed and delivered to Lender an Additional Revolving Loan Note.
8.1.3 Related Agreements. All of the Related Agreements shall
be in full force and effect.
8.1.4 No Defaults. No Event of Default or Unmatured Event of
Default shall have occurred and be continuing or will occur after giving
effect to the making of the initial Additional Revolving Loan and the
consummation of the transactions contemplated herein.
8.1.5 Exhibits; Schedules. All Exhibits and Schedules to this
Agreement shall have been updated and completed, and submitted to
Lender, in form and substance satisfactory to Lender, and shall contain
no facts or information which Lender, in its sole judgment, determines
to be unacceptable.
8.1.6 Closing Fee. If not funded with the proceeds of the initial
Revolving Loan under this Agreement, Lender shall have received the
closing fee referred to in Section 2.10 and any other fees due and
payable by Borrower or any other Person to Lender on the funding of the
initial Loan under this Agreement.
8.1.7 Documents. Lender shall have received all of the following,
each duly executed where appropriate and dated as of the Restatement
Date (or such other date as shall be satisfactory to Lender), in form
and substance satisfactory to Lender:
(a) Resolutions. A copy, duly certified by the secretary
or an assistant secretary of Borrower and Parent, of (1)
resolutions of the Board of Directors of such corporation
authorizing, as applicable, (A) the borrowings by Borrower
hereunder and (B) the execution, delivery and performance of this
Agreement and each Related Agreement to which such corporation is
a party, (2) all documents evidencing any other necessary
corporate action on the part of such corporation with respect to
this Agreement and the Related Agreements, and (3) all approvals
or consents, if any, with respect to this Agreement and the
Related Agreements;
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(b) Incumbency Certificates. A certificate of the
secretary or an assistant secretary of Borrower and Parent
certifying the names of the officers of such corporation
authorized to sign this Agreement and each Related Agreement to
which such corporation is a party, and all other documents and
certificates to be delivered by such corporation hereunder,
together with samples of the true signatures of such officers;
(c) Borrower's Certificate. The certificate of the
President or Chairman of the Board of Borrower certifying to the
fulfillment of all conditions precedent (other than any waived by
Lender) to closing the transaction contemplated by this Agreement
and to the truth and accuracy, as of such date, of the
representations and warranties of Borrower and each Obligor
contained in this Agreement, each Mortgage, the Trademark
Security Agreement and each other Related Agreement to which
Borrower is a party;
(d) Bylaws. A copy of Borrower's and Parent's
respective Bylaws duly certified by the secretary or an assistant
secretary of each of them;
(e) Articles. A copy of Borrower's and Parent's
respective Articles of Incorporation, duly certified by the
Secretary of State of the state of its incorporation
or by the secretary or an assistant secretary of each of them;
(f) Registration; Good Standing. A copy, duly certified by
the applicable Secretary of State (or other appropriate officer),
of (i) certificates of good standing for Borrower and Parent
issued by the Secretary of State (or other appropriate officer)
of the jurisdiction of incorporation of such entity and of each
other state where such entity is qualified to do business or
where, because of the nature of its business or properties,
qualification to do business is required, and (ii) in any state
or locality in which Borrower is doing business under an assumed
name, a certificate or other document (if available) issued by
the Secretary of State of each such state or by such locality
evidencing Borrower's authority to use such name;
(g) Legal Opinions. Legal opinions from Dechert Price
& ▇▇▇▇▇▇, special counsel to Borrower and Parent;
(h) Disbursement Letter. Written authorization and
instructions from Borrower, in form satisfactory to Lender, for
disbursement of the proceeds of the initial Loans under this
Agreement, including a wire transfer authorization form;
(i) Azimuth Documents. Executed copies of all Azimuth
Documents which shall be in form and substance satisfactory to
Lender, together with a certificate of the President, Chief
Financial Officer or Treasurer of Borrower certifying as of the
Restatement Date that (i) the Azimuth Documents are in full force
and effect on the Restatement Date, (ii) all parties to the
Azimuth Documents
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have performed and complied with all agreements and conditions
contained in the Azimuth Documents referred to therein required
to be performed or complied with on or before the Restatement
Date, and no party to any of the Azimuth Documents is in default
in the performance or compliance with any of the terms or
provisions thereof;
(j) Assignments of Group Security Interests. Duly executed
(i) assignments on form UCC-3 (or such other appropriate form) of
all Group Security Evidences (as such term is defined in the
Recapitalization Agreement) in the appropriate recordable or
fileable form, naming Borrower as the assignee and Lender as the
assignor of the Group Security (as such term is defined in the
Recapitalization Agreement) and (ii) assignments on form UCC-3
(or such other appropriate form) of all Group Security Evidences
in the appropriate recordable or fileable form, naming Lender as
the assignee and Borrower as the assignor of the Group Security.
(k) Pledged Securities and Instruments. All original stock
certificates, promissory notes and other instruments pledged
under the Azimuth Documents, and all original New Revolving Notes
issued under the Azimuth Group Loan Agreements pursuant to
Section 3.2(h) of the Recapitalization Agreement.
(l) Other Documents. Lender shall have received such other
documents or legal opinions as Lender may reasonably request, all
in form and substance satisfactory to Lender. Borrower shall have
furnished to Lender such additional copies or executed
counterparts of the documents referred to above as Lender may
request.
In the event that all of the foregoing conditions precedent have
not been satisfied or waived on or before December 31, 1996, this Agreement
(other than the required payment of certain Closing Fee pursuant to Section
2.10) shall be of no further force and effect and the Existing Loan Agreement
shall continue in full force and effect.
8.2 Continuing Conditions Precedent to all Loans and Letters of Credit;
Certification. The obligation of Lender to make any Loan or issue any Letter of
Credit is subject to satisfaction of the following conditions precedent in
addition to those provided in Section 8.1:
(a) No Change in Condition. No change in the condition or
operations, financial or otherwise, of Borrower, any other Obligor or
Borrower and its Subsidiaries taken as whole shall have occurred since
the Second Restatement Date which change, in the reasonable credit
judgment of Lender, may have a material adverse effect on Borrower, any
other Obligor or Borrower and its Subsidiaries taken as a whole, or on
any material Collateral or Third Party Collateral;
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(b) Default. Before and after giving effect to the making of
such Loan or the issuance of such Letter of Credit, no Event of Default
or Unmatured Event of Default shall have occurred and be continuing;
(c) Insurance. There shall have been no material change, or
notice of prospective material change (whether such notice is formal or
informal), in the nature, extent, scope or cost of the insurance
policies of the Borrower or any Subsidiary listed on Schedule 4.7 which
change would have a material adverse effect on the financial condition
of Borrower, any Subsidiary or Borrower and its Subsidiaries taken as a
whole, or would significantly adversely affect Borrower's ability to
perform its obligations under this Agreement, any Note, or any Related
Agreement to which it is a party;
(d) Warranties. Before and after giving effect to the making of
such Loan or the issuance of such Letter of Credit, the warranties in
Section 4 shall be true and correct as though made on the date of such
Loan or Letter of Credit, except (x) to the extent any such
representation or warranty relates solely to an earlier date (including
the Restatement Date) and was true and correct on such earlier date and
(y) for such changes as are the result of any act or omission
specifically permitted hereunder (or under any Related Agreement) or
otherwise expressly permitted by Lender;
(e) No Material Transaction. None of Borrower, any Subsidiary or
any other Obligor shall have entered into any material (as determined by
Lender) commitment or transaction, including, without limitation,
transactions for borrowings and capital expenditures, which are not in
the ordinary course of their respective businesses (excluding
transactions expressly permitted hereunder (or under any Related
Agreement) or consented to by Lender in writing); and
(f) Accounting Methods. Borrower shall not have made any
material (as determined by Lender) change in its accounting methods or
principles except as required by GAAP.
Each request for a Loan or Letter of Credit hereunder made or deemed to
have been made by Borrower shall be deemed to be a certificate of Borrower as to
the matters set out in the foregoing provisions of this Section 8.2.
8.3 Conditions Precedent to all Additional Revolving Loans. The
obligation of the Lender to make any Additional Revolving Loan (including the
Additional Revolving Loan made on the Restatement Date) is subject to
satisfaction of the following conditions precedent in addition to those provided
in Sections 8.1 and 8.2:
(a) Default. Before and after giving effect to the making of such
Additional Revolving Loans, no Default or Event of Default (as such
terms are defined in each of the Azimuth Group Loan Agreements) shall
have occurred and be continuing;
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(b) Receipt of Current Borrowing Base Certificates. Lender
shall have received a duly executed current Borrowing Base Certificate
of Contempo, Contempo West and DEI as provided in Section 5.1.4; and
(c) Borrowing Requests. Lender shall have received copies of all
borrowing requests received by Borrower under any Azimuth Group Loan
Agreement with respect to any loans requested thereunder, or, if any
such request is made by telephone, written confirmation by Borrower of
the amount of such loan requested and whether such loan is requested by
Contempo, Contempo West or DEI.
Each request for an Additional Revolving Loan hereunder made or deemed
to have been made by Borrower shall be deemed to be a certificate of Borrower as
to the matters set out in the foregoing provisions of this Section 8.3.
9. INDEMNITY.
9.1 Environmental, Safety and Health Indemnity. Borrower hereby
indemnifies Lender and agrees to hold Lender harmless from and against any and
all losses, liabilities, damages, injuries, costs, expenses and claims of any
and every kind whatsoever (including, without limitation, court costs and
Attorneys' Fees) which at any time or from time to time may be paid, incurred or
suffered by, or asserted against, Lender for, with respect to, or as a direct or
indirect result of the violation by Borrower or any of its Subsidiaries of any
Environmental Law or Occupational Safety and Health Law, or with respect to, or
as a direct or indirect result of, (i) the presence on or under, or the escape,
seepage, leakage, spillage, disposal, discharge, emission or release from,
properties utilized by Borrower and/or any Subsidiary into or upon any land, the
atmosphere, or any watercourse, body of water, groundwater or wetland, of any
Hazardous Material or other hazardous, toxic or dangerous waste, substance or
constituent, or other substance (including, without limitation, any losses,
liabilities, damages, injuries, costs, expenses or claims asserted or arising
under any Environmental Law) or (ii) the existence of any unsafe or unhealthful
condition on or at any premises utilized by Borrower and/or any Subsidiary it
the conduct of its business (excluding, in each case, any of the foregoing
resulting from Lender's gross negligence or willful misconduct). The provisions
of and undertakings and indemnification set out in this Section 9.1 shall
survive satisfaction and payment of the Liabilities and termination of this
Agreement.
9.2 General Indemnity. In addition to the payment of expenses pursuant
to Section 11.3, whether or not the transactions contemplated hereby shall be
consummated, Borrower agrees to indemnify, pay and hold Lender and any holder of
any Note, and the officers, directors, employees, agents, and affiliates of
Lender and such holders (collectively, the "Indemnitees"), harmless from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, claims, costs, expenses and disbursements of any kind
or nature whatsoever (including, without limitation, the reasonable fees and
disbursements of counsel for any of such Indemnitees in connection with any
investigative, administrative or judicial proceeding commenced or threatened,
whether or not any of such Indemnitees shall be designated a party thereto) that
may be imposed on,
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incurred by, or asserted against any Indemnitee, in any manner relating to or
arising out of this Agreement, any Related Agreement or any other agreements
executed and delivered by Borrower or any other Obligor in connection herewith,
the statements contained in any commitment letter delivered by Lender, Lender's
agreement to make the Loans or to issue Letters of Credit hereunder, or the use
or intended use of the proceeds of any of the Loans or any proceeds of Letters
of Credit hereunder (the "indemnified liabilities"); provided that Borrower
shall have no obligation to an Indemnitee hereunder with respect to indemnified
liabilities arising from the gross negligence or willful misconduct of such
Indemnitee. To the extent that the undertaking to indemnify, pay and hold
harmless set forth in the preceding sentence may be unenforceable because it
violates any law or public policy, Borrower shall contribute the maximum portion
that it is permitted to pay under applicable law to the payment and satisfaction
of all indemnified liabilities incurred by the Indemnitees or any of them. The
provisions of the undertakings and indemnification set out ive satisfaction and
payment of the Liabilities and termination of this Agreement.
9.3 Capital Adequacy. If Lender shall reasonably determine that the
application or adoption of any law, rule, regulation, directive, interpretation,
treaty or guideline regarding capital adequacy, or any change therein or in the
interpretation or administration thereof, whether or not having the force of law
(including, without limitation, application of changes to Regulation H and
Regulation Y of the Federal Reserve Board issued by the Federal Reserve Board on
January 19, 1989 and regulations of the Comptroller of the Currency, Department
of the Treasury, 12 CFR Part 3, Appendix A, issued by the Comptroller of the
Currency on January 27, 1989) increases the amount of capital required or
expected to be maintained by Lender or any Person controlling Lender, and such
increase is based upon the existence of Lender's obligations hereunder and other
commitments of this type, then from time to time, within 10 days after demand
from Lender, Borrower shall pay to Lender such amount or amounts as will
compensate Lender or such controlling Person, as the case may be, for such
increased capital requirement. The determination of any amount to be paid by
Borrower under this Section 9.3 shall take into consideration the policies of
Lender or any Person controlling Lender with respect to capital adequacy and
shall be based upon any reasonable averaging, attribution and allocation
methods. A certificate of Lender setting forth the amount or amounts as shall be
necessary to compensate Lender as specified in this Section 9.3 shall be
delivered to Borrower and shall be conclusive in the absence of manifest error.
10. ADDITIONAL PROVISIONS.
Additional provisions are set forth in Supplement A.
11. GENERAL.
11.1 Borrower Waiver. Except as otherwise provided in this Agreement or
any Related Agreement, Borrower waives (i) presentment, demand and protest and
notice of presentment, protest, default, non-payment, maturity, release,
compromise, settlement, one or more extensions or renewals of any or all
commercial paper, accounts, contract rights, documents, instruments, chattel
paper and guaranties at any time held by Lender on which Borrower may in any way
be
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liable and hereby ratifies and confirms whatever Lender may do in this regard;
(ii) all rights to notice and a hearing prior to Lender's taking possession or
control of, or Lender's relevy, attachment or levy on or of, the Collateral or
any bond or security which might be required by any court prior to allowing
Lender to exercise any of Lender's remedies; and (iii) the benefit of all
valuation, appraisement and exemption laws. Borrower acknowledges that it has
been advised by counsel of its choice with respect to this Agreement and the
transactions evidenced by this Agreement.
11.2 Power of Attorney. Borrower appoints Lender, or any Person whom
Lender may from time to time designate, as Borrower's attorney and agent-in-fact
with power (which appointment and power, being coupled with an interest, is
irrevocable until all Liabilities are paid and performed in full and this
Agreement is terminated), without notice to Borrower, to:
(a) At such time or times hereafter as Lender or said agent, in
its sole and absolute discretion, may determine, in Borrower's or
Lender's name (i) endorse Borrower's name on any checks, notes, drafts
or any other items of payment relating to and/or proceeds of the
Collateral which come into the possession of Lender or under Lender's
control and apply such payment or proceeds to the Liabilities (subject
to the provisions of Section 2.11); (ii) endorse Borrower's name on any
chattel paper, document, instrument, invoice, freight ▇▇▇▇, ▇▇▇▇ of
lading or similar document or agreement in Lender's possession relating
to Accounts Receivable, Inventory or any other Collateral; (iii) use the
information recorded on or contained in any data processing equipment
and computer hardware and software to which Borrower has access relating
to Accounts Receivable, Inventory and/or other Collateral; (iv) after
the occurrence and during the continuance of an Event of Default, use
Borrower's stationery and sign the name of Borrower to verifications of
Accounts Receivable and notices thereof to Account Debtors; and (v) if
not done by Borrower, do all acts and things determined in good faith by
Lender to be necessary to fulfill Borrower's obligations under this
Agreement; and
(b) At such time or times after the occurrence and during the
continuance of an Event of Default as Lender or said agent, in its sole
and absolute discretion, may determine, in Borrower's or Lender's name:
(i) demand payment of the Accounts Receivable; (ii) enforce payment of
the Accounts Receivable, by legal proceedings or otherwise; (iii)
exercise all of Borrower's rights and remedies with respect to the
collection of the Accounts Receivable and other Collateral; (iv) settle,
adjust, compromise, extend or renew the Accounts Receivable; (v) settle,
adjust or compromise any legal proceedings brought to collect the
Accounts Receivable; (vi) if permitted by applicable law, sell or assign
the Accounts Receivable and/or other Collateral upon such terms for such
amounts and at such time or times as Lender may deem advisable; (vii)
discharge and release the Accounts Receivable and/or other Collateral;
(viii) prepare, file and sign Borrower's name on any proof of claim in
bankruptcy or similar document against any Account Debtor; (ix) prepare,
file and sign Borrower's name on any notice of lien, assignment or
satisfaction of lien or similar document in connection with the Accounts
Receivable and/or other Collateral; and (x) do all acts and things
necessary, in Lender's sole and absolute discretion, to obtain repayment
of the Liabilities and to fulfill Borrower's other obligations under
this Agreement.
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If Lender at any time designates any Person to act as Borrower's
attorney and agent-in-fact pursuant to this Section 11.2 or any other
provision of this Agreement or any Related Agreement that permits such
designation, Lender shall use reasonable efforts to give Borrower prompt
notice of such designation (but failure to give such notice shall not
impair the validity or effect of such designation or impose any
liability on Lender).
11.3 Expenses; Attorneys' Fees. Borrower agrees, whether or not any Loan
is made hereunder, to pay upon demand all Attorneys' Fees and all other
reasonable expenses incurred by Lender in connection with (i) the preparation,
negotiation and execution of this Agreement, any Related Agreement and any
document required to be furnished in connection herewith or therewith, (ii) the
preparation of any and all amendments to this Agreement or any of the Related
Agreements and all other instruments or documents provided for therein or
delivered or to be delivered thereunder or in connection therewith, (iii) the
collection or enforcement of Borrower's or any other Obligor's obligations
hereunder or under any Related Agreement and (iv) the collection or enforcement
of any of Lender's rights in or to any Collateral or Third Party Collateral.
Lender may advance all such amounts to Borrower as a Revolving Loan. Borrower
also agrees to pay, and save Lender harmless from all liability for, any stamp
or other taxes which may be payable with respect to the execution or delivery of
this Agreement, or any Related Agreement or Supplemental Documentation, or the
issuance of any Note or of any other instruments or documents provided for
herein or to be delivered hereunder or in connection herewith. Borrower's
obligations in this Section 11.3 shall survive any termination of this
Agreement.
11.4 Lender Fees and Charges. Borrower agrees to pay Lender on demand
the customary fees and charges of Lender for maintenance of accounts with Lender
or for providing other services to Borrower not provided for herein. Lender may,
in its sole and absolute discretion, provide for such payment by advancing the
amount thereof to Borrower as a Revolving Loan.
11.5 Lawful Interest. In no contingency or event whatsoever shall the
interest rate charged pursuant to the terms of this Agreement exceed the highest
rate permissible under any law which a court of competent jurisdiction shall, in
a final determination, deem applicable hereto. In the event that such a court
determines that Lender has received interest hereunder in excess of the highest
applicable rate, Lender shall promptly refund such excess interest to Borrower.
11.6 No Waiver by Lender; Amendments. No failure or delay on the part of
Lender in the exercise of any power or right, and no course of dealing between
Borrower and Lender, shall operate as a waiver of such power or right, nor shall
any single or partial exercise of any power or right preclude other or further
exercise thereof or the exercise of any other power or right. The remedies
provided for herein are cumulative and not exclusive of any remedies which may
be available to Lender at law or in equity. No notice to or demand on Borrower
not required hereunder shall in any event entitle Borrower to any other or
further notice or demand in similar or other circumstances or constitute a
waiver of the right of Lender to any other or further action in any
circumstances without notice or demand. No amendment, modification or waiver of,
or consent with respect to, any provision of this Agreement or any Related
Agreement shall in any event be effective unless the same shall be in writing
and signed and delivered by Lender. Any waiver of any provision of this
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Agreement, and any consent to any departure by Borrower from the terms of any
provision of this Agreement, shall be effective only in the specific instance
and for the specific purpose for which given.
11.7 Termination of Credit. (a) Unless the Termination Date is extended
pursuant to clause (b) of this Section 11.7, the Credit shall terminate on the
then scheduled Termination Date. Borrower may terminate the Credit at any time
upon notice to Lender and payment in full of the outstanding principal balance
of the Loans and all other Liabilities. The termination or cancellation of the
Credit shall not affect or impair the liabilities and obligations of Borrower or
any one or more of the Obligors to Lender or Lender's rights with respect to any
Loans and advances made and other Liabilities incurred prior to such termination
or with respect to the Collateral or any Third Party Collateral. All of Lender's
rights and remedies, the liens and security interests of Lender in the
Collateral and all of Borrower's duties and obligations under this Agreement
shall survive termination of the Credit until all of the Liabilities have been
finally paid and performed in full, at which time this Agreement and the Related
Agreements shall terminate (except any provisions hereof or thereof which by
their terms survive such termination).
(b) Borrower may, not more than 90 days nor less than 30 days prior to
any scheduled Termination Date, request that Lender extend the Credit for an
additional one-year period to the next anniversary of such date. Unless Lender,
in the exercise of its sole and absolute discretion, notifies Borrower of its
willingness to extend the Credit for such additional one-year period, the Credit
shall terminate on the then scheduled Termination Date and all loans and other
Liabilities shall thereupon be due and payable.
11.8 Notices. Except as otherwise expressly provided herein, any notice
hereunder to Borrower or Lender shall be in writing (including telegraphic,
telex, or facsimile communication) and shall be given to Borrower or Lender at
its address, telex number or facsimile number set forth on the signature pages
hereof or at such other address, telex number or facsimile number as Borrower or
Lender may, by written notice, designate as its address, telex number or
facsimile number for purposes of notices hereunder. All such notices shall be
deemed to be given when transmitted by telex and the appropriate answerback is
received, transmitted by facsimile, delivered to the telegraph office, delivered
by courier, personally delivered or, in the case of notice by mail, three (3)
Business Days following deposit in the United States mails, properly addressed
as herein provided, with proper postage prepaid; provided, however, that notice
to Lender of Borrower's intent to terminate the Credit shall not be effective
until actually received by Lender.
11.9 Assignments and Participations; Information. Borrower hereby
consents to Lender's grant of participations in or sale, assignment, transfer or
other disposition, at any time and from time to time hereafter, of this
Agreement or any Related Agreement, or of any portion of any thereof, including,
without limitation, Lender's rights, titles, interests, remedies, powers and/or
duties. Lender may furnish any information concerning Borrower in the possession
of Lender from time to time to assignees of the rights and/or obligations of
Lender hereunder and to participants in any Loan (including prospective
assignees and participants) and may furnish information in response to credit
inquiries consistent with general banking practice. Lender shall promptly notify
Borrower
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of Lender's grant of any participation in or sale, assignment, transfer or other
disposition of this Agreement or any Related Agreement, or of any portion of any
thereof. Borrower shall use its best efforts to assist Lender in its efforts to
sell assignments and participations.
11.10 Severability. Any provision of this Agreement which is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof or affecting the validity or
enforceability of such provision in any other jurisdiction.
11.11 Successors. This Agreement shall be binding upon Borrower and
Lender and their respective successors and assigns, and shall inure to the
benefit of Borrower and Lender and the successors and assigns of Lender.
Borrower shall not assign its rights or duties hereunder without the consent of
Lender.
11.12 Construction; Governing Law. Borrower acknowledges that this
Agreement shall not be binding upon Lender or become effective until and unless
accepted by Lender in writing. If so accepted by Lender, this Agreement and the
Related Agreements and Supplemental Documentation shall, unless otherwise
expressly provided therein, be deemed to have been negotiated and entered into
in, and shall be governed and controlled by the laws of, the State of Illinois
as to interpretation, enforcement, validity, construction, effect, choice of
law, and in all other respects, including, but not limited to, the legality of
the interest rate and other charges, but excluding perfection of security
interests and liens which shall be governed and controlled by the laws of the
relevant jurisdiction.
11.13 CONSENT TO JURISDICTION. TO INDUCE LENDER TO ACCEPT THIS
AGREEMENT, BORROWER IRREVOCABLY AGREES THAT, SUBJECT TO LENDER'S SOLE AND
ABSOLUTE ELECTION, ALL ACTIONS OR PROCEEDINGS IN ANY WAY, MANNER OR RESPECT
ARISING OUT OF OR FROM OR RELATED TO THIS AGREEMENT, THE RELATED AGREEMENTS, THE
SUPPLEMENTAL DOCUMENTATION OR THE COLLATERAL SHALL BE LITIGATED IN COURTS HAVING
SITUS WITHIN THE CITY OF CHICAGO, STATE OF ILLINOIS. BORROWER HEREBY CONSENTS
AND SUBMITS TO THE JURISDICTION OF ANY LOCAL, STATE OR FEDERAL COURT LOCATED
WITHIN SAID CITY AND STATE AND WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS
UPON BORROWER, AND AGREES THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE BY
REGISTERED MAIL DIRECTED TO BORROWER AT THE ADDRESS STATED ON THE SIGNATURE PAGE
HEREOF, AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED UPON ACTUAL RECEIPT
THEREOF.
11.14 Subsidiary Reference. Any reference herein to a Subsidiary or
Subsidiaries of Borrower, and any financial definition, ratio, restriction or
other provision of this Agreement which is stated to be applicable to "Borrower
and its Subsidiaries" or which is to be determined on a "consolidated" or
"consolidating" basis, shall apply only to the extent Borrower has any
Subsidiaries
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and, where applicable, to the extent any such Subsidiaries are consolidated with
Borrower for financial reporting purposes.
11.15 WAIVER OF JURY TRIAL. BORROWER AND LENDER EACH WAIVES ANY RIGHT TO
A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS (i)
UNDER THIS AGREEMENT OR ANY RELATED AGREEMENT OR UNDER ANY AMENDMENT,
INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE
DELIVERED IN CONNECTION HEREWITH OR (ii) ARISING FROM ANY BANKING RELATIONSHIP
EXISTING IN CONNECTION WITH THIS AGREEMENT, AND AGREES THAT ANY SUCH ACTION OR
PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the date
first written above.
ELXSI
By:__________________________________
Name:________________________________
Title:_______________________________
Address: ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇-▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: President
Facsimile number: 203/661-1119
BANK OF AMERICA ILLINOIS
By:__________________________________
Name:________________________________
Title:_______________________________
Address: ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Middle Market I
Facsimile number: 312/828-1974
SIGNATURE PAGE S-1
SUPPLEMENT A
to
AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
Dated as of December 30, 1996 Between
ELXSI and
BANK OF AMERICA ILLINOIS
1. Loan Agreement Reference. This Supplement A, as it may be amended or modified
from time to time, is a part of the Amended and Restated Loan and Security
Agreement, dated as of December ___, 1996, between Borrower and Lender (together
with all amendments, restatements, supplements and other modifications thereto,
the "Loan Agreement"). Terms used and not defined herein which are defined in
the Loan Agreement shall have the meaning ascribed to them therein unless the
context requires otherwise.
2. Additional Covenants. Until all of Borrower's Liabilities are paid in full,
Borrower agrees that, unless Lender otherwise consents in writing, it will:
2.1 Net Worth. Not permit at any time during any fiscal quarter,
measured as of the last day of the most recently completed fiscal quarter set
forth below, Net Worth to be less than the amount set forth below across from
such fiscal quarter:
Fiscal Quarter Ending Net Worth
--------------------- ---------
06/30/96 $22,000,000
09/30/96 $22,000,000
12/31/96 and thereafter $22,000,000
2.2 Liabilities to Net Worth Ratio. Not permit, on the last day of any
fiscal quarter, the ratio of the Borrower's consolidated total liabilities (but
excluding from the calculation thereof all principal and interest owing with
respect to Additional Revolving Loans) to the Borrower's Net Worth to exceed
1.50:1.
2.3 Capital Expenditures. Not, and not permit any Subsidiary to,
purchase or otherwise acquire (including, without limitation, acquisition by way
of Capitalized Lease), or commit to purchase or otherwise acquire, any fixed
asset if, after giving effect to such purchase or other acquisition, (A) the
aggregate capitalized cost of all fixed assets purchased or otherwise acquired
(other than by means of a Capitalized Lease) by Borrower and its Subsidiaries on
a consolidated basis plus (B) the aggregate annual payments under Capitalized
Leases (excluding the portion thereof representing imputed interest) of Borrower
and its Subsidiaries on a consolidated basis (excluding, in each of (A) and (B),
(a) any fixed asset which constitutes a replacement for an asset
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which was the subject of a casualty or governmental taking to the extent the
purchase or other acquisition thereof is funded by insurance proceeds or other
payments received as a result of such casualty or taking and (b) the first
$675,000 of capital expenditures related solely to removal of underground
storage tanks or other environmental problems at Borrower's restaurant
locations) would exceed (i) $3,250,000 in Fiscal Year 1996 and (ii) $3,000,000
in any Fiscal Year thereafter.
2.4 Interest Coverage Ratio. Not permit, on the last day of any fiscal
quarter, the ratio of (a) Borrower's EBITDA for the four (4) fiscal quarters
then ended to (b) Borrower's consolidated interest expense (but excluding from
the calculation thereof all interest expense with respect to Additional
Revolving Loans) the four (4) fiscal quarters then ended to be less than 3.00:1.
2.5 Funded Debt/EBITDA Ratio. Not permit, on the last day of any fiscal
quarter set forth below, the Funded Debt/EBITDA Ratio to be more than the ratio
set forth below opposite such fiscal quarter:
Fiscal Quarter Ending Ratio
--------------------- -----
3/31/96 and each fiscal quarter thereafter 2.00:1
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