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CREDIT AGREEMENT
by and among
THREE-FIVE SYSTEMS, INC.
and its Subsidiaries
The Banks Named Herein
and
IMPERIAL BANK
as Agent
Dated as of
January 21, 2000
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TABLE OF CONTENTS
Page
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RECITALS.......................................................................1
ARTICLE 1 DEFINITION OF TERMS.................................................2
1.1 Definitions.....................................................2
1.2 Terms Generally................................................12
ARTICLE 2 THE RLC............................................................13
2.1 RLC Commitment.................................................13
2.2 Revolving Line.................................................13
2.3 RLC Notes......................................................13
2.4 RLC............................................................14
2.5 Excess Balance Repayment.......................................17
2.6 Reduction of RLC Commitment....................................17
2.7 Conditions.....................................................17
2.8 Other RLC Advances.............................................17
2.9 Assignment.....................................................17
2.10 Issuance of Letters of Credit..................................18
2.11 Issuance Procedure for Letter of Credit........................18
2.12 Letter of Credit Fees..........................................19
2.13 Disbursements..................................................19
2.14 Reimbursement Obligations of Borrower..........................19
2.15 Nature of Reimbursement Obligations............................19
2.16 Banks Obligation...............................................20
2.17 Certain Requirements...........................................20
2.18 Risk Participations, Drawings, and Reimbursements..............21
2.19 Repayment of Participations....................................22
2.20 Role of the Issuing Bank.......................................23
ARTICLE 3 PAYMENTS, FEES AND EURODOLLAR PROVISIONS...........................24
3.1 Payments.......................................................24
3.2 Loan Fees......................................................25
3.3 Computations...................................................25
3.4 Maintenance of Accounts........................................25
3.5 Certain Contingencies..........................................25
3.6 Increased Capital Requirements; Tax............................26
3.7 Special Provisions for LIBOR Rate Advances.....................27
3.8 Prepayments....................................................29
3.9 Non U.S. Subsidiaries - Currency Indemnity.....................30
ARTICLE 4 [INTENTIONALLY LEFT BLANK].........................................31
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ARTICLE 5 CONDITIONS PRECEDENT...............................................32
5.1 Initial Advance................................................32
5.2 No Event of Default............................................33
5.3 No Material Adverse Effect.....................................33
5.4 Representations and Warranties.................................33
ARTICLE 6 REPRESENTATIONS AND WARRANTIES.....................................34
6.1 Recitals.......................................................34
6.2 Organization and Good Standing.................................34
6.3 Authorization and Power........................................34
6.4 Enforceable Obligations........................................34
6.5 No Conflicts or Consents.......................................34
6.6 No Litigation..................................................35
6.7 Financial Condition............................................35
6.8 Taxes..........................................................35
6.9 No Stock Purchase..............................................35
6.10 Advances.......................................................35
6.11 Solvent........................................................35
6.12 ERISA..........................................................36
6.13 Full Disclosure................................................36
6.14 No Default.....................................................36
6.15 Significant Debt Agreements....................................36
6.16 Compliance with Law............................................36
6.17 Subsidiaries...................................................36
ARTICLE 7 AFFIRMATIVE COVENANTS..............................................37
7.1 Financial Statements, Reports and Documents....................37
7.2 Maintenance of Existence.......................................38
7.3 Maintain Business..............................................38
7.4 Insurance......................................................38
7.5 Compliance with Credit Documents...............................39
7.6 Books and Records; Access......................................39
7.7 Payment of Taxes and Other Indebtedness........................39
7.8 Notice of Default..............................................39
7.9 Other Notices..................................................39
7.10 ERISA Compliance...............................................39
7.11 Further Assurances.............................................40
7.12 Compliance with Significant Debt Agreements....................40
7.13 Compliance with Law............................................40
7.14 Authorizations and Approvals...................................40
7.15 News Releases..................................................40
7.16 New Subsidiaries...............................................40
7.17 Change in Control..............................................41
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ARTICLE 8 NEGATIVE COVENANTS.................................................42
8.1 No Debt........................................................42
8.2 Liens..........................................................42
8.3 Loans..........................................................42
8.4 Dividends......................................................42
8.5 Existence; Sale or Transfer of Assets..........................42
8.6 Fiscal Year....................................................43
8.7 Margin Stock...................................................43
8.8 Amendments to Organizational Documents.........................43
8.9 [Intentionally left blank.]....................................43
8.10 Permitted Acquisitions.........................................43
8.11 Financial Covenants............................................43
ARTICLE 9 EVENTS OF DEFAULT..................................................45
9.1 Events of Default..............................................45
9.2 Remedies Upon Event of Default.................................47
9.3 Performance by the Banks.......................................48
ARTICLE 9A AGENT.............................................................50
9A.1 Appointment and Authorization..................................50
9A.2 Exculpation....................................................50
9A.3 Agent and Affiliates...........................................50
9A.4 Banks' Credit Decisions........................................50
9A.5 Indemnification................................................51
9A.6 Administration.................................................51
9A.7 Default by a Bank..............................................53
9A.8 Collections; Sharing of Payments...............................53
9A.9 Successor Agent................................................53
9A.10 Issuing Bank...................................................54
ARTICLE 10 MISCELLANEOUS.....................................................55
10.1 Modification...................................................55
10.2 Waiver.........................................................55
10.3 Payment of Expenses............................................55
10.4 Notices........................................................55
10.5 Governing Law; Jurisdiction, Venue; Arbitration................57
10.6 Invalid Provisions.............................................57
10.7 Binding Effect.................................................57
10.8 Entirety.......................................................58
10.9 Relationship of the Banks and Borrower.........................58
10.10 Time of the Essence............................................58
10.11 Good Faith Standard............................................58
10.12 Assignments and Participations; Transferees....................58
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10.13 Headings.......................................................61
10.14 Survival.......................................................61
10.15 No Third Party Beneficiary.....................................61
10.16 Joint Liability................................................61
10.17 Schedules and Exhibits Incorporated............................62
10.18 Waiver of Jury Trial...........................................62
10.19 Counterparts...................................................62
Schedule 1.1 - Pro Rata Share and Notice Address of each Bank
Schedule 6.17 - Subsidiaries
Schedule 8.2 - Existing Liens
Exhibit "A" - Form of Compliance Certificate
Exhibit "B" - Form of Advance Notice
Exhibit "C" - Form of Notes
Exhibit "D" - Form of Assumption Agreement
Exhibit "E" - Administrative Details Reply Form
Exhibit "F" - Form of Assignment and Acceptance
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CREDIT AGREEMENT
BY THIS CREDIT AGREEMENT (together with any amendments or modifications,
the "Credit Agreement"), entered into as of the 21st day of January, 2000, by
and between THREE- FIVE SYSTEMS, INC., a Delaware corporation (the "Company"),
all present and future Subsidiaries (as hereinafter defined) of the Company
(with the Company, the "Borrower"), the banks listed from time to time in
Schedule 1.1 (the "Banks"), and IMPERIAL BANK, a California banking corporation,
as administrative agent for the Banks (in such capacity, together with any
successor agent appointed hereunder, the "Agent") and as Issuing Bank (as
hereinafter defined) in consideration of the mutual promises herein contained
and for other valuable consideration, the parties hereto do hereby agree as
follows:
RECITALS
A. Borrower has requested that the Banks establish a revolving line of
credit (the "RLC") in the principal amount of $25,000,000.00 to provide working
capital financing and for the issuance from time to time of letters of credit.
B. The Banks have agreed to do so upon the terms, conditions and provisions
set forth herein.
C. Effective as of the delivery of this Credit Agreement, the Borrower
acknowledges and agrees that the Credit Agreement dated as of November 5, 1998
between the Borrower, Imperial Bank Arizona, an Arizona banking corporation, as
the Administrative Agent, and the Banks listed therein (the "Prior Banks") shall
be terminated and the Prior Banks shall have no further obligations to the
Borrower under said Credit Agreement and the Borrower shall have no further
obligation to the Prior Banks under said Credit Agreement.
Accordingly, the parties hereto agree as follows:
ARTICLE 1
DEFINITION OF TERMS
1.1 DEFINITIONS. For the purposes of this Credit Agreement, unless the
context otherwise requires, the following terms shall have the respective
meanings assigned to them in this Article 1 or in the section hereof referred to
below:
"ADMINISTRATIVE QUESTIONNAIRE" means that Administrative Details Reply
Form substantially in the form of Exhibit "E" attached hereto delivered to the
Agent pursuant to Section 10.12.
"ADVANCE" means an RLC Advance.
"AFFILIATE" of any Person means any Person which, directly or
indirectly, controls, is controlled by, or is under common control with, such
Person. For the purposes of this definition, "control" (including, with
correlative meanings, the terms "controlled by" and "under common control
with"), as used with respect to any Person, shall mean the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of such Person, whether by contract or otherwise.
"AGENT": See the Preamble hereto.
"ASSIGNMENT AND ACCEPTANCE" means that Assignment and Acceptance
substantially in the form of Exhibit "F" attached hereto delivered to the Agent
pursuant to Section 10.12.
"AUTHORIZED OFFICER" means the chief executive officer, chief
financial officer or the chief accounting officer of Borrower, or such other
individual who is from time to time designated to the Banks in writing by said
officer as authorized to act for Borrower with respect to the Loans.
"BANKING DAY" means a day of the year on which commercial banks are
not required or authorized to close in Inglewood, California, and/or Phoenix,
Arizona, and, with respect to a LIBOR Rate Advance, a day on which dealings are
carried on in the London interbank market.
"BANKS": See the Preamble hereto.
"BORROWER": See the Preamble hereto.
"CASH FLOW" means the sum for the relevant period of Borrower's Net
Income, tax expense (less taxes actually paid in cash), depreciation expense,
amortization of intangibles expense and interest expense, all to the extent
deducted in the calculation of Net Income.
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"CHANGE IN CONTROL" means the occurrence or existence of either of the
following events or conditions without the prior written consent of the Banks,
if different than the state of affairs as of the Closing Date:
(a) the acquisition by any Person or two or more Persons acting
in concert of "beneficial ownership" (within the meaning of Rule 13d-3
promulgated by the SEC under the Exchange Act or as otherwise
specified under the provisions of this Credit Agreement) of securities
of Borrower having more than 50% of the ordinary voting power for the
election of directors; or
(b) the acquisition of Control of Borrower by any Person or two
or more Persons acting in concert of Control of Borrower.
"CLOSING DATE" means the date of delivery of this Credit Agreement.
"CO-BORROWERS," each a "CO-BORROWER" means the Subsidiaries that are a
party to this Credit Agreement from time to time.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMMITMENT" means the RLC Commitment.
"COMPANY": See the Preamble hereto.
"COMPLIANCE CERTIFICATE": See Section 7.1(c).
"CONTROL" when used with respect to any Person means the power,
directly or indirectly, to direct the management policies of such Person,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"CONTROLLED GROUP" means, severally and collectively, the members of
the group controlling, controlled by and/or in common control of Borrower,
within the meaning of Section 4001(b) of ERISA.
"CONTROLLED SUBSIDIARY" means any Subsidiary in which the Company owns
in excess of fifty percent (50.0%) of both all voting rights and all equity
interests.
"CREDIT AGREEMENT": See the Preamble hereto.
"CREDIT DOCUMENTS" means this Credit Agreement, the Notes (including
any renewals, extensions, restatements and refundings thereof) and any written
agreements, certificates or documents (and with respect to this Credit
Agreement, the Note and such other written agreements and documents, any
amendments or supplements thereto or modifications thereof) executed or
delivered pursuant to the terms of this Credit Agreement.
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"CREDIT FACILITIES" means the RLC.
"DEBT COVERAGE RATIO" means for any date the ratio of Borrower's Cash
Flow to its Debt Service Requirement, calculated on a rolling four-quarter
basis.
"DEBT SERVICE REQUIREMENT" means the sum of the following that are due
within the relevant period: all current maturities of long-term debt (excluding
the RLC), capital lease obligations and interest expense.
"DEFAULT RATE" means an interest rate per annum equal to five percent
(5.0%) over the Variable Rate, which Default Rate shall change when and as the
Variable Rate changes.
"DISBURSEMENT": See Section 2.13.
"DISBURSEMENT DATE": See Section 2.13.
"DOLLARS" and the sign "$" mean lawful currency of the United States
of America.
"EQUITY" means Borrower's stockholders' equity, determined on a
consolidated basis in accordance with GAAP.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, together with all final and permanent regulations issued pursuant
thereto. References herein to sections and subsections of ERISA are deemed to
refer to any successor or substitute provisions therefor.
"EUROCURRENCY LIABILITIES" has the meaning assigned to that term in
Regulation D of the Board of Governors to the Federal Reserve System, as in
effect from time to time.
"EURODOLLAR RATE RESERVE PERCENTAGE" for the LIBOR Interest Period for
each LIBOR Rate Advance means the reserve percentage applicable two (2) Banking
Days before the first day of such LIBOR Interest Period under regulations issued
from time to time by the Board of Governors of the Federal Reserve System (or
any successor) for determining the maximum reserve requirement (including, but
not limited to, any emergency, supplemental, or other marginal reserve
requirement) for a member bank of the Federal Reserve System in San Francisco
with respect to liabilities or assets consisting of or including Eurocurrency
Liabilities (or with respect to any other category of liabilities which includes
deposits by reference to which the interest rate on LIBOR Rate Advances) having
a term equal to such Interest Period.
"EVENT OF DEFAULT": See Section 9.1.
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"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"FEDERAL FUNDS RATE" means, as of any date of determination, the rate
set forth in the weekly statistical release designated as H.15(519), or any
successor publication, published by the Federal Reserve Board (including any
such successor, "H.15(519)") for such date opposite the caption "Federal Funds
(Effective)." If for any relevant date such rate is not yet published in
H.15(519), the rate for such date will be the rate set forth in the daily
statistical release designated as the Composite 3:30 p.m. Quotations for U.S.
Government Securities, or any successor publication, published by the Federal
Reserve Bank of New York (including any such successor, the "Composite 3:30 p.m.
Quotation") for such date under the caption "Federal Funds Effective Rate." If
on any relevant date the appropriate rate for such date is not yet published in
either H.15(519) or the Composite 3:30 p.m. Quotations, the rate for such date
will be the arithmetic mean of the rates for the last transaction in overnight
Federal funds arranged prior to 9:00 a.m. (New York City time) on that date by
each of three leading brokers of Federal funds transactions in New York City
selected by the Agent.
"FINANCIAL COVENANTS": See Section 8.11 hereof.
"FUNDED DEBT" means as of the end of any fiscal quarter, with respect
to any Person, its interest-bearing Indebtedness including without limitation
any capital lease debt.
"GAAP" means those generally accepted accounting principles and
practices which are recognized as such by the American Institute of Certified
Public Accountants acting through its Accounting Principles Board or by the
Financial Accounting Standards Board or through other appropriate boards or
committees thereof and which are consistently applied for all periods after the
date hereof so as to properly reflect the financial condition, and the results
of operations and changes in the financial position, of Borrower, including
without limitation accounting rules promulgated pursuant to Regulations SX and
SK, except that any accounting principle or practice required to be changed by
the said Accounting Principles Board or Financial Accounting Standards Board (or
other appropriate board or committee of the said Boards) in order to continue as
a generally accepted accounting principle or practice may be so changed.
"GOVERNMENTAL AUTHORITY" means any government (or any political
subdivision or jurisdiction thereof), court, bureau, agency or other
governmental authority having jurisdiction over Borrower or any of its business,
operations or properties.
"HONOR DATE" has the meaning specified in Section 2.18(b).
"IMPERIAL" means Imperial Bank, a California banking corporation.
"INDEBTEDNESS" means, with respect to any Person, all of its monetary
and contingent obligations and liabilities, including without limitation each of
the following (without duplication): (a) obligations of that Person to any other
Person for payment of borrowed money, (b) capital lease obligations, (c) notes
and drafts drawn or accepted by that Person payable to any other Person, whether
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or not representing obligations for borrowed money (but without duplication of
indebtedness for borrowed money), (d) any obligation for the purchase price of
property the payment of which is deferred for more than one year or evidenced by
a note or equivalent instrument, (e) guarantees of Indebtedness of third
parties, and (f) a recourse or nonrecourse payment obligation of any other
Person that is secured by a Lien on any property of the first Person, whether or
not assumed by the first Person, up to the fair market value (from time to time)
of such property (absent manifest evidence to the contrary, the fair market
value of such property shall be the amount determined under GAAP for financial
reporting purposes), but excluding any trades accounts payables and any
accruals.
"INSOLVENCY PROCEEDING" means any proceeding undertaken under the
Debtor Relief Laws.
"ISSUANCE DATE" means the date on which a Letter of Credit is
delivered to the beneficiary thereof.
"ISSUANCE REQUEST" means a request for a Letter of Credit duly
executed by Borrower in a form satisfactory to the Issuing Bank.
"ISSUE" means, with respect to any Letter of Credit, to issue or, by
amendment or otherwise, to extend the expiry of, or to renew or increase or
decrease the amount of, such Letter of Credit; and the terms "ISSUED," "ISSUING"
and "ISSUANCE" have corresponding meanings.
"ISSUING BANK" means Imperial and/or any Affiliate thereof in its
capacity as issuer of one or more Letters of Credit hereunder, together with any
replacement Letter of Credit issuer arising under this Credit Agreement.
"LC BORROWING" means an extension of credit resulting from a drawing
under any Letter of Credit which shall not have been reimbursed on the date when
made nor converted into a Variable Rate Advance.
"LC OBLIGATIONS" means at any time the sum of (a) the Outstanding LC
Balance under the RLC, plus (b) the amount of all unreimbursed drawings under
all Letters of Credit, including all outstanding LC Borrowings.
"LETTER OF CREDIT" means a letter of credit issued by the Issuing Bank
for the account of Borrower pursuant to Article 2.
"LEVERAGE RATIO" means as of any date the ratio of Funded Debt to
Equity.
"LIBOR" means the London Interbank Offered Rate, determined as
provided herein, for the applicable LIBOR Interest Period to be specified by the
Borrower as provided herein. For each Advance under the LIBOR option, the LIBOR
rate will remain in effect through the end of the LIBOR Interest Period. If
prior to the due date for a LIBOR Rate Advance Borrower requests a continuation
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of said LIBOR Rate Advance, Borrower's request shall comply with the request
procedure specified below and the LIBOR rate for the LIBOR Rate Advance shall be
re-determined for the next LIBOR Interest Period as provided below. LIBOR shall
mean with respect to any LIBOR Interest Period the rate equal to the arithmetic
mean (rounded upwards, if necessary, to the nearest one-sixteenth (1/16th) of
one percent (1%)) of:
(a) the offered rates per annum for deposits in U.S. Dollars for
a period equal to such LIBOR Interest Period which appears at 11:00
a.m., London time, on the Reuters Screen LIBOR Page on the Banking Day
that is two (2) Banking Days before the first day of such LIBOR
Interest Period, in each case if at least four (4) such offered rates
appear on such page, or
(b) if clause (a) is not available, (x) the offered rate per
annum for deposits in U.S. Dollars for a period equal to such LIBOR
Interest Period for a LIBOR Rate Advance hereunder which appears as of
11:00 a.m., London time on the Telerate Monitor on Telerate Screen
3750 on the Banking Day which is two (2) Banking Days before the first
day of such LIBOR Interest Period; or (y) if clause (x) above is not
available, the arithmetic mean (rounded upwards, if necessary, to the
nearest one-sixteenth (1/16th) of one percent (1%)) of the interest
rates per annum offered by at least three (3) prime banks selected by
the Banks at approximately 11:00 a.m., London time, on the Banking Day
which is two (2) Banking Days before such date for deposits in U.S.
Dollars to prime banks in the London interbank market, in each case
for a period equal to such LIBOR Interest Period for a LIBOR Rate
Advance hereunder in an amount equal to the amount to which the LIBOR
applies. "Reuters Screen LIBOR Page" as used herein means the display
designated as page LIBOR on the Reuters Monitor Money Rates Service or
such other page as may replace the LIBOR page on that service for the
purpose of displaying London interbank offered rates of major banks.
"LIBOR BASED RATE" means the rate per annum equal (A) to the sum of
LIBOR and one hundred fifty basis points (150 bp), divided by (B) a percentage
equal to one hundred percent (100%) minus the Eurodollar Rate Reserve Percentage
for the period equal to the applicable LIBOR Interest Period.
"LIBOR INTEREST PERIOD" means, for each LIBOR Rate Advance, the period
commencing on the date of such LIBOR Rate Advance and ending on the last day of
the period selected by Borrower pursuant to the provisions herein and,
thereafter, each subsequent period commencing on the last day of the immediately
preceding LIBOR Interest Period and ending on the last day of the period
selected by Borrower pursuant to the provisions herein. The duration of each
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LIBOR Interest Period shall be one, two, three or six months, as selected by
Borrower (A), for a new Advance, in the request for a LIBOR Rate Advance or (B),
for an outstanding Advance, in the request for a LIBOR Rate Advance to continue
bearing interest at the LIBOR Based Rate or (C), for an outstanding Variable
Rate Advance, in the request to convert to a LIBOR Rate Advance; provided,
however, that:
(i) LIBOR Interest Periods commencing on the same date shall be
of the same duration;
(ii) Whenever the last day of any LIBOR Interest Period would
otherwise occur on a day other than a Banking Day, the last day of
such LIBOR Interest Period shall be extended to occur on the next
succeeding Banking Day, provided that if such extension would cause
the last day of such LIBOR Interest Period to occur in the next
following calendar month, the last day of such LIBOR Interest Period
shall occur on the next preceding Banking Day; and
(iii) No LIBOR Interest Period with respect to any RLC Advance
shall extend beyond the RLC Maturity Date.
"LIBOR RATE ADVANCE" means an Advance or a portion of a Loan
designated by Borrower, that bears, or is requested to bear, interest at a LIBOR
Based Rate. Each LIBOR Rate Advance shall be in a minimum amount of $500,000.00
with integral multiples of $1,000.00 in excess thereof.
"LIEN" means any lien, mortgage, security interest, tax lien, pledge,
encumbrance, conditional sale or title retention arrangement, or any other
interest in property designed to secure the repayment of Indebtedness whether
arising by agreement or under any statute or law, or otherwise.
"LOANS" or "LOAN" means the RLC.
"LOAN FEES": See Section 3.2 hereof.
"MATERIAL ADVERSE EFFECT" means any circumstance or event which (i)
has any material adverse effect upon the validity or enforceability of any
Credit Document, (ii) materially impairs the ability of Borrower to fulfill its
obligations under the Credit Documents, or (iii) causes an Event of Default or
any event which, with notice or lapse of time or both, would become an Event of
Default.
"MATURITY DATE" means the RLC Maturity Date.
"MAXIMUM LC COMMITMENT" means SEVEN MILLION FIVE HUNDRED THOUSAND AND
NO/100 DOLLARS ($7,500,000.00).
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"NET INCOME" means for any period the net income of Borrower for such
period in accordance with GAAP, determined on a consolidated basis.
"NEW SUBSIDIARY": See Section 7.16 hereof.
"NOTE" means the RLC Note.
"OBLIGATION" means all present and future indebtedness, obligations
and liabilities of Borrower to the Banks, and all renewals and extensions
thereof, or any part thereof, arising pursuant to this Credit Agreement or
represented by the Notes, including without limitation the Loans and all
interest accruing thereon, and attorneys' fees incurred in the enforcement or
collection thereof, regardless of whether such indebtedness, obligations and
liabilities are direct, indirect, fixed, contingent, joint, several or joint and
several; together with all indebtedness, obligations and liabilities of Borrower
evidenced or arising pursuant to any of the other Credit Documents, and all
renewals and extensions thereof, or part thereof.
"OUTSTANDING LC BALANCE" in effect at any time means the maximum
aggregate amount available to be drawn at such time under all outstanding
Letters of Credit, the determination of such maximum amount to assume compliance
with all conditions for a Disbursement.
"PAYMENT DATE" means:
(i) as to a Variable Rate Advance, the first day of each month,
provided that if any such day is not a Banking Day, then such Payment
Date shall be the next successive Banking Day; and
(ii) as to a LIBOR Rate Advance, the earlier of (A) the last day
of its LIBOR Interest Period, or (B) the last day of each three month
period during such LIBOR Interest Period.
"PBGC" means the Pension Benefit Guaranty Corporation, and any
successor to all or substantially all of the Pension Benefit Guaranty
Corporation's functions under ERISA.
"PERMITTED LIENS" means Liens which consist of the following:
(a) Liens for taxes, assessments or governmental charges not yet
delinquent;
(b) Liens to which the Banks shall consent in writing, in their
sole and absolute discretion; and
(c) Existing Liens listed on Schedule 8.2.
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"PERSON" includes an individual, a corporation, a joint venture, a
partnership, a trust, a limited liability company, an unincorporated
organization or a government or any agency or political subdivision thereof.
"PLAN" means an employee defined benefit plan or other plan maintained
by Borrower for employees of Borrower and covered by Title IV of ERISA, or
subject to the minimum funding standards under Section 412 of the Code.
"PRIME RATE" means the interest rate per annum publicly announced by
Imperial Bank, a California banking corporation, or its successors, as its
"prime rate" as in effect from time to time. Borrower acknowledges that the
Prime Rate is not necessarily the best or lowest rate offered by Imperial Bank
and Imperial Bank may lend to its customers at rates that are at, above or below
its Prime Rate.
"PRO RATA SHARE" means, as to each Bank, that amount shown at any time
on Schedule 1.1 attached hereto as that Bank's share of the Commitment, each
Advance and each Letter of Credit.
"QUARTERLY END DATE" means the last day of each March, June, September
and December.
"REGULATION U" means Regulation U promulgated by the Board of
Governors of the Federal Reserve System, 12 C.F.R. Part 221, or any other
regulation hereafter promulgated by said Board to replace the prior Regulation U
and having substantially the same function.
"REGULATORY CHANGE" means any change effective after the date of this
Credit Agreement in United States federal, state, or foreign law, regulations,
or rules or the adoption or making after such date of any interpretation,
directive, or request applying to a class of banks including the Banks, of or
under any United States federal, state, or foreign law, regulation or rule
(whether or not having the force of law) by any court or governmental or
monetary authority charged with the interpretation or administration thereof.
"REPORTABLE EVENT" means any "reportable event" as described in
Section 4043(b) of ERISA with respect to which the thirty (30) day notice
requirement has not been waived by the PBGC.
"REQUIRED BANKS" means, at any time, Banks having Pro Rata Shares
representing at least sixty-five percent (65.0%) of the aggregate Commitment.
"RLC": See Recital A hereto.
"RLC ADVANCE" means a disbursement of the proceeds of the RLC.
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"RLC BALANCE" means (i) with respect to the RLC on any date, the
aggregate outstanding principal amount thereof after giving effect to any
borrowings and prepayments or repayments of RLC Advances occurring on such date;
plus (ii) with respect to any outstanding LC Obligations on any date, the amount
of such LC Obligations on such date after giving effect to any Issuances of
Letters of Credit occurring on such date and any other changes in the aggregate
amount of the LC Obligations as of such date, including changes occurring as a
result of any reimbursements of outstanding unpaid drawings under any Letters of
Credit or any reductions in the maximum amount available for drawing under
Letters of Credit taking effect on such date.
"RLC COMMITMENT" means TWENTY-FIVE MILLION AND NO/100 DOLLARS
($25,000,000.00).
"RLC FEE": See Section 3.2(b).
"RLC MATURITY DATE" means January 19, 2001.
"RLC NON-USE FEE": See Section 3.2(a).
"RLC NOTE" means a Revolving Promissory Note of even date herewith
substantially in the form attached hereto as Exhibit C, in the amount of a
Bank's Pro Rata Share of the RLC Commitment, executed by Borrower and delivered
to a Bank pursuant to the terms of this Credit Agreement, together with any
renewals, extensions, modifications, restatements or replacements thereof.
"SEC" means the Securities and Exchange Commission.
"SIGNIFICANT DEBT AGREEMENT" means all documents, instruments and
agreements executed by Borrower, evidencing (i) any unsecured Indebtedness of
Borrower in excess of $1,000,000.00 in outstanding principal (or principal
equivalent) amount, or (ii) any secured Indebtedness of Borrower in excess of
$100,000.00 in outstanding principal (or principal equivalent) amount, or any
guaranty in excess of $1,000,000.00 in outstanding principal (or principal
equivalent) amount.
"STATED AMOUNT" of a Letter of Credit means the amount of the Letter
of Credit as stated in the Letter of Credit.
"STATED EXPIRY DATE" of a Letter of Credit means the stated expiry
date or expiration date as stated in the Letter of Credit.
"SUBSIDIARY" means any business association directly or indirectly
controlled by the Borrower.
"TANGIBLE NET WORTH" means, at any given date, the total shareholder's
equity (including capital stock, additional paid in capital and retained
earnings after deducting treasury stock) which would appear on a balance sheet
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of Borrower prepared as of such date in accordance with generally accepted
accounting principles consistently applied, LESS the aggregate book value of
"Intangible Assets" (as defined below) shown on such balance sheet. "Intangible
Assets" means those assets that are (i) deferred assets, other than prepaid
taxes; (ii) patents, copyrights, trademarks, tradenames, franchises, goodwill,
experimental expenses and other similar assets which would be classified as
intangible assets on a balance sheet prepared in accordance with generally
accepted accounting principles consistently applied; and (iii) unamortized debt
discount and expense.
"TANGIBLE NET WORTH MINIMUM" means the sum of $88,000,000.00 as of
September 30, 1999, plus fifty percent (50.0%) of its positive Net Income plus
any additional equity raised by Borrower for each fiscal quarter, commencing
December 31, 1999.
"U.S." means the United States of America.
"VARIABLE RATE" means the rate per annum equal to the Prime Rate per
annum as in effect from time to time. The Variable Rate will change on each day
that the "Prime Rate" changes.
"VARIABLE RATE ADVANCE" means an Advance or a portion of a Loan
designated by Borrower, that bears, or is requested to bear, interest at the
Variable Rate.
1.2 TERMS GENERALLY.
(a) The definitions in Section 1.1 shall apply equally to both the
singular and plural forms of the terms defined.
(b) Whenever the context may require, any pronoun shall include the
corresponding masculine, feminine and neuter forms.
(c) All references herein to Articles, Sections, Exhibits and
Schedules shall be deemed references to Articles and Sections of, and
Exhibits and Schedules to, this Agreement unless the context shall
otherwise require.
(d) Except as otherwise expressly provided herein, all terms of an
accounting or financial nature shall be construed in accordance with GAAP,
as in effect from time to time.
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ARTICLE 2
THE RLC
2.1 RLC COMMITMENT. Each Bank agrees, severally but not jointly, to loan to
or for the benefit of Borrower, and Borrower shall be entitled to draw upon and
borrow, in the manner and upon the terms and conditions contained in this Credit
Agreement, an amount that shall not exceed that Bank's Pro Rata Share of the RLC
Commitment.
2.2 REVOLVING LINE.
(a) Subject to the terms and conditions set forth in this Credit
Agreement, each Bank shall provide to Borrower a revolving line of credit
(each, a "RLC"), against which a Bank shall fund its Pro Rata Share of each
RLC Advance to be made to Borrower, repaid by Borrower, and readvanced to
Borrower, as Borrower may request, and the Issuing Bank shall issue such
Letters of Credit as Borrower shall request, which may be terminated or
repaid by Borrower and reissued provided that (i) there is no Event of
Default under any provision of this Credit Agreement, (ii) no RLC Advance
shall be made or Letter of Credit issued that would cause the RLC Balance
to exceed the RLC Commitment, (iii) no Bank shall be obligated under any
circumstances to fund an RLC Advance in excess of that Bank's Pro Rata
Share of the requested RLC Advance, (iv) the aggregate amount of a Bank's
funding of the RLC Balance at any one time outstanding shall not exceed its
Pro Rata Share of the RLC Commitment, and (v) no Letter of Credit shall be
issued with a Stated Expiry Date later than the RLC Maturity Date. The
Banks shall not be obligated to fund their Pro Rata Share of any RLC
Advance if, after giving effect thereto, any of the foregoing limitations
would be exceeded.
(b) The failure of any Bank to fund its Pro Rata Share of an RLC
Advance in accordance with its Pro Rata Share of the RLC Commitment shall
not relieve any other Bank of its several obligations hereunder, but no
Bank shall be liable with respect to the obligation of any other Bank
hereunder.
(c) RLC Advances may be made for the purpose of providing to Borrower
working capital financing or in connection with a Disbursement under a
Letter of Credit.
2.3 RLC NOTES. The RLC of each Bank shall be evidenced by an RLC Note and
shall bear interest and be payable to the order of such Bank upon the terms and
conditions contained therein. The aggregate amount funded by a Bank under its
RLC Note less all repayments of principal thereof shall be the principal amount
owing and unpaid on its RLC Note and its RLC. The principal amount funded by a
Bank and all principal payments and prepayments thereof may be noted by such
Bank on a schedule attached to its RLC Note and shall be entered by the Bank on
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its ledgers and computer records; provided that the failure of the Bank to make
such notations or entries shall not affect the principal amount owing and unpaid
on its RLC Note. The entries made in the ordinary course of business by a Bank
on its ledgers and computer records and any notations made in the ordinary
course of business by a Bank on any such schedule annexed to its RLC Note shall
be presumed to be accurate until the contrary is established. If requested,
Borrower shall confirm in writing to the Agent each RLC Advance.
2.4 RLC. The RLC shall bear interest and be payable to the Banks upon the
terms and conditions contained therein, which include the following provisions:
(a) Interest shall accrue:
(i) On the unpaid principal of an RLC Advance at the Variable
Rate except to the extent that an RLC Advance bears interest at the
LIBOR Based Rate.
(ii) On the unpaid principal of an RLC Advance at the LIBOR Based
Rate to the extent Borrower shall elect and to the extent not
otherwise provided herein.
(b) All interest shall be computed on the basis of a 360-day year and
accrue on a daily basis for the actual number of days elapsed. All accrued
interest shall be due and payable on each Payment Date.
(c) The entire unpaid principal balance, all accrued and unpaid
interest, and all other amounts payable under the RLC Note shall be due and
payable in full on the RLC Maturity Date.
(d) Each request for an RLC Advance shall be substantially in the form
attached hereto as Exhibit "B" from an Authorized Officer and shall, in
addition to complying with the other requirements in this Credit Agreement,
(i) specify the date and amount of the requested RLC Advance, (ii) specify
whether the RLC Advance shall be an RLC Advance that bears interest at the
Variable Rate or shall be an RLC Advance that bears interest at the LIBOR
Based Rate, (iii) be in a minimum amount of $500,000.00 with integral
multiples of $1,000.00 in excess thereof, and (iv) if the RLC Advance is to
bear interest at the LIBOR Based Rate, (A) specify the LIBOR Interest
Period, and (B) be delivered to Agent before 9:00 a.m. (Inglewood,
California local time) at least three (3) Banking Days prior to the date of
the requested RLC Advance. Any request for an RLC Advance not complying
with the foregoing requirements for an RLC Advance bearing interest at the
LIBOR Based Rate shall bear interest at the Variable Rate; provided that in
the event such non-compliance is due to Borrower's failure to specify the
required information, the Banks agree to notify Borrower of such failure
and to provide Borrower the opportunity to provide such information prior
to directing that the RLC Advance bear interest at the Variable Rate.
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(e) After receiving a request for an RLC Advance in the manner
provided herein, the Agent shall promptly, before 11:30 a.m. (Inglewood,
California local time) on the date an RLC Advance is requested, notify each
Bank by telephone (confirmed promptly in writing), telefacsimile or cable
of the terms of such request and such Bank's Pro Rata Share of the
requested Rate Advance. Each Bank shall, before 1:00 p.m. (Inglewood,
California local time) on the date an RLC Advance is to be made as
specified in a request for an RLC Advance, deposit with the Agent such
Bank's Pro Rata Share of the requested RLC Advance in immediately available
funds. Upon fulfillment of all applicable conditions set forth herein and
after receipt by the Agent of such funds, the Agent shall pay or deliver
all funds so received to the order of Borrower at the principal office of
the Agent. The failure of any Bank to fund its Pro Rata Share of any RLC
Advance required of it hereunder shall not relieve any other Bank of its
obligation to fund its Pro Rata Share of any RLC Advance hereunder. If any
Bank fails to fund its Pro Rata Share of the requested RLC Advance and if
all conditions to such RLC Advance have apparently been satisfied, the
Agent will make available to Borrower the funds received by it from the
other Bank. Neither the Agent nor any Bank shall be responsible for the
performance by any other Bank of its obligations hereunder.
Unless the Agent shall have received notice from a Bank prior to the
date of any RLC Advance that such Bank will not make available to the Agent
such Bank's Pro Rata Share of the requested RLC Advance, the Agent may
assume that such Bank has made such amount available to the Agent on the
date of such RLC Advance in accordance with this Section and the Agent may,
in reliance upon such assumption, make available a corresponding amount to
or on behalf of Borrower on such date. If and to the extent any Bank shall
not have so made its Pro Rata Share of the requested RLC Advance available
to the Agent (the "Principal Shortfall Amount"), Borrower agrees to repay
the Principal Shortfall Amount to the Agent forthwith on demand, together
with interest thereon for each day from (and including) the date such
amount is made available to or on behalf of Borrower to (but excluding) the
date such amount is repaid to the Agent, at the rate per annum equal to the
rate otherwise applicable to the RLC Advance in question.
(f) If Borrower desires that a LIBOR Rate Advance continue to bear
interest at the LIBOR Based Rate after the end of an existing LIBOR
Interest Period, Borrower shall deliver to the Agent at least three (3)
Banking Days prior to the end of the existing LIBOR Interest Period; a
notice making such election and specifying the new LIBOR Interest Period.
If Borrower does not deliver such notice within such time, then after the
existing LIBOR Interest Period the LIBOR Rate Advance shall become a
Variable Rate Advance and shall bear interest at the Variable Rate.
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(g) Borrower may upon written notice to and received by the Agent not
later than 9:00 a.m. (Inglewood, California local time) (i) on the third
Banking Day, in the case of any conversion of a Variable Rate Advance into
a LIBOR Rate Advance and (ii) on the first Banking Day in the case of any
conversion of a LIBOR Rate Advance into a Variable Rate Advance, prior to
the date of the proposed conversion, convert any RLC Advance of one type
into an RLC Advance of the other type; provided, however, that any
conversion of a LIBOR Rate Advance (A) shall only be made on the last day
of the applicable LIBOR Interest Period except as otherwise provided
herein, and (B) shall be made only as to an RLC Advance in a minimum amount
of $500,000.00 with integral multiples of $1,000.00 in excess thereof. Each
such notice of a conversion shall specify the date of such conversion and
the RLC Advance(s) to be converted. After receiving any such notice, the
Agent shall promptly notify each Bank by telephone, telefacsimile or cable
and deliver a copy thereof to each Bank.
(h) Each request for an RLC Advance as well as each election by the
Borrower that an RLC Advance continue to bear interest at the LIBOR Based
Rate after the end of an existing LIBOR Interest Period and each conversion
request shall be irrevocable and binding on Borrower once the request is
received by the Agent and the Agent notifies the Banks of the request.
Prior to the Agent's notice of the request to the Banks, Borrower may
revoke the request. Borrower shall indemnify each Bank against any cost,
loss or expense incurred by any Bank as a result of Borrower's failure to
fulfill, on or before the date specified for an RLC Advance in any request
for an RLC Advance, the conditions to such RLC Advance set forth herein,
including any cost, loss or expense incurred by reason of the liquidation
or reemployment of deposits or other funds acquired by a Bank to fund such
RLC Advance when such RLC Advance, as a result of such failure, is not made
on the date so specified.
(i) No RLC Advance shall be requested by Borrower to bear a LIBOR
Based Rate, whether pursuant to a request for an RLC Advance or a
conversion hereunder, so long as there shall have occurred an Event of
Default and such Event of Default is continuing.
(j) Nothing herein shall be deemed to relieve any Bank from its
obligation to fulfill its Pro Rata Share of the RLC Commitment hereunder or
to prejudice any right which the Agent or the Borrower may have against any
Bank as a result of any default by such Bank hereunder.
(k) If any payment of interest and/or principal is not received by the
Agent when such payment is due, then in addition to the remedies conferred
upon the Banks under the Credit Documents, a late charge of five percent
(5%) of the amount of the installment due and unpaid will be added to the
delinquent amount to compensate the Banks for the expense of handling the
delinquency for any payment past due in excess of ten (10) days, regardless
of any notice and cure period.
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(l) Upon the occurrence of an Event of Default and after maturity,
including maturity upon acceleration, the unpaid principal balance, all
accrued and unpaid interest and all other amounts payable hereunder shall
bear interest at the Default Rate.
2.5 EXCESS BALANCE REPAYMENT. There shall be due and payable from Borrower
to the Banks, and Borrower shall immediately repay to the Banks three (3) days
after notice to Borrower, from time to time, any amount by which the RLC Balance
exceeds the RLC Commitment.
2.6 REDUCTION OF RLC COMMITMENT. Borrower shall have the right at any time
upon at least seven days' prior written notice to the Agent to reduce the
aggregate amount of the RLC Commitment; PROVIDED, that the amount of each such
reduction shall be in a minimum aggregate amount of $1,000,000.00 or an integral
aggregate multiple of $100,000.00 in excess thereof and that no such reduction
shall reduce (i) the amount of the RLC Commitment to less than the RLC Balance,
or (ii) the amount of a Bank's Pro Rata Share of the RLC Commitment to less than
the amount of the RLC Balance funded by such Bank. Any reduction in the
aggregate amount of the RLC Commitment shall reduce each Bank's share of the RLC
Commitment by its Pro Rata Share of the aggregate amount of such reduction. The
Agent shall promptly notify each Bank of any such notice of reduction received
from the Borrower. Any reduction in the RLC Commitment may not be reinstated
without the mutual prior consent of the Borrower and the Banks.
2.7 CONDITIONS. The Banks shall have no obligation to fund their Pro Rata
Shares of any RLC Advance unless and until all of the conditions and
requirements of this Credit Agreement are fully satisfied. However, the Banks in
their sole and absolute discretion may elect to make one or more RLC Advances
prior to full satisfaction of one or more such conditions and/or requirements.
Notwithstanding that such an RLC Advance or RLC Advances are made, such
unsatisfied conditions and/or requirements shall not be waived or released
thereby. Borrower shall be and continue to be obligated to fully satisfy such
conditions and requirements, and the Banks, at any time, in their sole and
absolute discretion, may stop making RLC Advances until all conditions and
requirements are fully satisfied.
2.8 OTHER RLC ADVANCES. The Agent, at the direction of the Banks, after
giving written notice to Borrower, from time to time, may make RLC Advances in
any amount in payment of (i) interest accrued and payable upon the RLC, (ii) any
indebtedness, charges and expenses that are the obligation of Borrower under
this Credit Agreement, and (iii) any charges or matters necessary to cure any
Event of Default.
2.9 ASSIGNMENT. Borrower shall have no right to any RLC Advance other than
to have the same disbursed by the Agent in accordance with the disbursement
provisions contained in this Credit Agreement. Any assignment or transfer,
voluntary or involuntary, of this Credit Agreement or any right hereunder shall
not be binding upon or in any way affect the Banks without their written
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consent; the Agent, at the direction of the Banks may make RLC Advances under
the disbursement provisions herein, notwithstanding any such assignment or
transfer.
2.10 ISSUANCE OF LETTERS OF CREDIT.
(a) Subject to the terms and conditions of this Credit Agreement, (i)
the Issuing Bank agrees from time to time before the RLC Maturity Date to
issue Letters of Credit for the account of the Borrower; and (ii) the Banks
severally agree to participate in Letters of Credit issued for the account
of the Borrower, subject to the prior approval by each Bank of the
provisions of each Letter of Credit. Each reference in this Credit
Agreement to the "issue" or "issuance" or other forms of such words in
relation to Letters of Credit shall be deemed to include any extension or
renewal of a Letter of Credit.
(b) Each Letter of Credit shall (i) by its terms be issued in a Stated
Amount; (ii) have a Stated Expiry Date no later than the RLC Maturity Date;
(iii) expire or be terminated by the beneficiary thereunder on or before
its Stated Expiry Date; (iv) not cause the RLC Balance after the issuance
of said Letter of Credit to exceed the RLC Commitment; and (v) not cause
the Outstanding LC Balance after the issuance of said Letter of Credit to
exceed the Maximum LC Commitment.
(c) In addition to the conditions otherwise specified in this Section,
the obligation of the Issuing Bank to issue a Letter of Credit shall be
subject to the further condition precedent that the following statements
shall be correct, and each of the application for such Letter of Credit and
the issuance of such Letter of Credit shall constitute a representation and
warranty by Borrower that on the date of the issuance of such Letter of
Credit such statements are correct:
(i) The representations and warranties in Article 6 are correct
on and as of the date of the issuance of such Letter of Credit, before
and after giving effect to such issuance, as though made on and as of
such date;
(ii) No Event of Default has occurred and is continuing; and
(iii) The conditions in Section 2.2(a) are satisfied as of the
date of issuance of the Letter of Credit, before and after giving
effect to such issuance.
2.11 ISSUANCE PROCEDURE FOR LETTER OF CREDIT. By delivery to the Issuing
Bank of an Issuance Request on or before 9:00 a.m. (Inglewood, California time)
three (3) Banking Days prior to the requested Issuance Date, and the execution
of such applications and agreements as the Issuing Bank may reasonably request,
Borrower may request the issuance of a Letter of Credit in such form as Borrower
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may reasonably request. Each Issuance Request shall include the form of the
Letter of Credit, the amount and other terms thereof. Subject to the terms and
conditions of this Credit Agreement, the Issuing Bank will issue such Letter of
Credit on the Issuance Date specified in the Issuance Request submitted in
connection therewith. The Issuing Bank and Borrower agree that all Letters of
Credit issued pursuant to the terms of this Article shall be subject to the
terms and conditions, and entitled to the benefits, of this Credit Agreement and
the other Credit Documents.
2.12 LETTER OF CREDIT FEES. Borrower agrees to pay to the Issuing Bank a
non-refundable Letter of Credit fee agreed to by Borrower in writing upon the
application of a Letter of Credit. Borrower further agrees to pay to the Issuing
Bank a charge for all reasonable expenses of the Issuing Bank in connection with
the issuance, amendment, modification or negotiation of the Letter of Credit.
2.13 DISBURSEMENTS. The Issuing Bank will notify Borrower of the
presentment for payment of a Letter of Credit by any beneficiary thereto,
together with notice of the date (the "Disbursement Date") such payment shall be
made. Subject to the terms and provisions of the Letter of Credit, the Issuing
Bank shall make such payment (a "Disbursement") to the beneficiary of the Letter
of Credit. Each such Disbursement shall be deemed to be an RLC Advance
hereunder.
2.14 REIMBURSEMENT OBLIGATIONS OF BORROWER. Borrower's obligation under
Section 2.13 to reimburse the Banks with respect to each Disbursement (including
interest thereon) in respect of 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
the Banks, the Issuing Bank, the Agent or the beneficiary thereof, including any
defense based upon the occurrence of any Event of Default, any draft, demand or
certificate or other document presented under the Letter of Credit proving to be
forged, fraudulent, invalid or insufficient, the failure of any Disbursement to
conform to the terms of the Letter of Credit (if, in Issuing Bank's good faith
opinion, such Disbursement is determined to be appropriate) or any
non-application or misapplication by the beneficiary of the proceeds of such
Disbursement, or the legality, validity, form, regularity or enforceability of
the Letter of Credit; PROVIDED, HOWEVER, that nothing herein shall adversely
affect the right of Borrower to commence any proceeding against Issuing Bank for
any wrongful Disbursement made by Issuing Bank under the Letter of Credit as a
result of acts or omissions constituting gross negligence or willful misconduct
on the part of Issuing Bank.
2.15 NATURE OF REIMBURSEMENT OBLIGATIONS. Borrower shall assume all risks
of the acts, omissions or misuse of any Letter of Credit by the beneficiary
thereof. Neither the Banks nor the Issuing Bank (except to the extent of its own
gross negligence or willful misconduct) shall be responsible for:
(a) the form, validity, sufficiency, accuracy, genuineness or legal
effect of any Letter of Credit or any document submitted by any party in
connection with the issuance of any Letter of Credit, even if such document
should in fact prove to be in any or all respects invalid, insufficient,
inaccurate, fraudulent or forged;
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(b) the form, validity, sufficiency, accuracy, genuineness or legal
effect of any instrument transferring or assigning or purporting to
transfer or assign any Letter of Credit;
(c) failure of any beneficiary of any Letter of Credit to comply fully
with conditions required in order to demand payment under a Letter of
Credit;
(d) errors, omissions, interruption or delays in transmission or
delivery of any messages, by mail, cable, telegraph, telex or otherwise; or
(e) any loss or delay in the transmission or otherwise of any document
or draft required by or from a beneficiary of a Letter of Credit in order
to make a Disbursement under a Letter of Credit or of the proceeds thereof.
None of the foregoing shall affect, impair or prevent the vesting of any of the
rights or powers granted the Banks or the Issuing Bank hereunder. In furtherance
and extension, and not in limitation or derogation of any of the foregoing, any
action taken or omitted to be taken by the Banks or the Issuing Bank in good
faith shall be binding upon the Borrower and shall not put the Banks or the
Issuing Bank under any resulting liability to Borrower.
2.16 BANKS OBLIGATION. Nothing herein shall be deemed to relieve any Bank
from its obligations to fulfill its Pro Rata Share of the RLC Commitment
hereunder or to prejudice any right which the Agent or the Borrower may have
against any Bank as a result of any default by such Bank hereunder.
2.17 CERTAIN REQUIREMENTS. The Issuing Bank is under no obligation to Issue
any Letter of Credit if:
(i) any order, judgment or decree of any Governmental Authority or
arbitrator shall by its terms purport to enjoin or restrain the Issuing
Bank from Issuing such Letter of Credit, or any requirement of law
applicable to the Issuing Bank or any request or directive (with which it
is customary for banks in the relevant jurisdiction to comply whether or
not having the force of law) from any Governmental Authority with
jurisdiction over the Issuing Bank shall prohibit, or request that the
Issuing Bank refrain from, the Issuance of letters of credit generally or
such Letter of Credit in particular or shall impose upon the Issuing Bank
with respect to such Letter of Credit any restriction, reserve, or capital
requirement (for which the Issuing Bank is not otherwise compensated
hereunder) not in effect on the Closing Date, or shall impose upon the
Issuing Bank any unreimbursed loss, cost, or expense which was not
applicable on the Closing Date and which the Issuing Bank in good ▇▇▇▇▇
▇▇▇▇▇ material to it;
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(ii) the Issuing Bank has received written notice from any Bank, the
Agent or Borrower, on or prior to the Banking Day prior to the requested
date of Issuance of such Letter of Credit, that one or more of the
applicable conditions contained in Article 5 is not then satisfied;
(iii) the Stated Expiry Date of any requested Letter of Credit is not
in accord with the requirements of Section 2.10(b), unless all of the Banks
have approved such Stated Expiry Date;
(iv) any requested Letter of Credit does not provide for drafts, or is
not otherwise in form and substance acceptable to the Issuing Bank, or the
Issuance of a Letter of Credit shall violate any applicable policies of the
Issuing Bank; or
(v) such Letter of Credit is to be denominated in a currency other
than Dollars.
2.18 RISK PARTICIPATIONS, DRAWINGS, AND REIMBURSEMENTS.
(a) Immediately upon the Issuance of each Letter of Credit, each Bank
shall be deemed to, and hereby irrevocably and unconditionally agrees to,
purchase from the Issuing Bank a participation in such Letter of Credit and
each drawing thereunder in an amount equal to the product of (i) the Pro
Rata Share of such Bank, times (ii) the maximum amount available to be
drawn under such Letter of Credit and the amount of any Drawing,
respectively. For purposes of the applicable Commitment, each Issuance of a
Letter of Credit shall be deemed to utilize each Bank's Pro Rata Share of
said Commitment by an amount equal to the amount of such participation.
(b) In the event of any request for a drawing under a Letter of Credit
by the beneficiary or transferee thereof, the Issuing Bank will promptly
notify the Borrower. The Issuing Bank shall honor any Disbursement request
under any Letter of Credit only if (i) such request is delivered to the
Issuing Bank by the beneficiary of such Letter of Credit, and (ii) such
request is accompanied by the original documents required by the Letter of
Credit for any Disbursement. Except as otherwise provided herein, the
Borrower shall reimburse the Issuing Bank prior to 11:00 a.m. (Inglewood,
California local time) on each date that any amount is paid by the Issuing
Bank under any Letter of Credit (each such date, an "Honor Date"), in an
amount equal to the amount so paid by the Issuing Bank. In the event the
Borrower is required but fails to reimburse the Issuing Bank for the full
amount of any drawing under any Letter of Credit by 11:00 a.m. (Inglewood,
California local time) on the Honor Date, the Issuing Bank will promptly
notify the Agent and the Agent will promptly notify each Bank thereof. Any
notice given by the Issuing Bank or the Agent pursuant to this Section may
be oral if immediately confirmed in writing (including by facsimile);
provided that the lack of such an immediate confirmation shall not affect
the conclusiveness or binding effect of such notice.
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(c) Each Bank shall upon any notice pursuant to this Section make
available to the Agent for the account of the Issuing Bank an amount in
Dollars and in immediately available funds equal to its Pro Rata Share of
the amount of the drawing, whereupon the Banks shall (subject to paragraph
(d)) each be deemed to have made a Variable Rate Advance to the Borrower in
that amount. If any Bank so notified fails to make available to the Agent
for the account of the Issuing Bank the amount of such Bank's Pro Rata
Share of the amount of the drawing by no later than 3:00 p.m. (Inglewood,
California local time) on the Honor Date, then interest shall accrue on
such Bank's obligation to make such payment, from the Honor Date to the
date such Bank makes such payment, at a rate per annum equal to the Federal
Funds Rate in effect from time to time during such period and such amount
and interest shall be immediately due and payable to the Agent; the
obligation of such Bank to make such payment to the Agent shall not be
waived by the Agent without the prior written consent of the Borrower. The
Agent will promptly give notice of the occurrence of the Honor Date, but
failure of the Agent to give any such notice on the Honor Date or in
sufficient time to enable any Bank to effect such payment on such date
shall not relieve such Bank from its obligations under this Section.
(d) With respect to any unreimbursed drawing, the Borrower shall be
deemed to have incurred from the Issuing Bank a Variable Rate RLC Advance
in the amount of such drawing.
(e) Each Bank's obligation in accordance with this Credit Agreement to
make the Variable Rate Advance, as contemplated by this Section, as a
result of a drawing under a Letter of Credit, shall be absolute and
unconditional and without recourse to the Issuing Bank and shall not be
affected by any circumstance, including (i) any set-off, counterclaim,
recoupment, defense, or other right which such Bank may have against the
Issuing Bank, the Borrower, or any other Person for any reason whatsoever,
(ii) the occurrence or continuance of a default, an Event of Default, or a
Material Adverse Effect, or (iii) any other circumstance, happening, or
event whatsoever, whether or not similar to any of the foregoing.
2.19 REPAYMENT OF PARTICIPATIONS.
(a) Upon (and only upon) receipt by the Agent for the account of the
Issuing Bank of immediately available funds from the Borrower (i) in
reimbursement of any payment made by the Issuing Bank under a Letter of
Credit with respect to which any Bank has paid the Agent for the account of
the Issuing Bank for such Bank's participation in such Letter of Credit
pursuant to Section 2.18, or (ii) in payment of interest thereon, the Agent
will pay to each Bank, in the same funds as those received by the Agent for
the account of the Issuing Bank, the amount of such Bank's Pro Rata Share
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of such funds, and the Issuing Bank shall receive the amount of the Pro
Rata Share of such funds of any Bank that did not so pay the Agent for the
account of the Issuing Bank.
(b) If the Agent or the Issuing Bank is required at any time to return
to the Borrower, or to a trustee, receiver, liquidator, custodian, or any
official in any Insolvency Proceeding, any portion of the payments made by
the Borrower to the Agent for the account of the Issuing Bank pursuant to
paragraph (a) in reimbursement of a payment made under a Letter of Credit
or interest or fee thereon, each Bank shall, on demand of the Agent,
forthwith return to the Agent or the Issuing Bank the amount of its Pro
Rata Share of any amounts so returned by the Agent or the Issuing Bank plus
interest thereon from the date such demand is made to the date such amounts
are returned by such Bank to the Agent or the Issuing Bank, at a rate per
annum equal to the Federal Funds Rate in effect from time to time.
2.20 ROLE OF THE ISSUING BANK.
(a) Each Bank and Borrower agree that, in paying any drawing under a
Letter of Credit, the Issuing Bank shall not have any responsibility to
obtain any document (other than any sight draft and certificates expressly
required by the Letter of Credit) or to ascertain or inquire as to the
validity or accuracy of any such document or the authority of the Person
executing or delivering any such document.
(b) No Agent-related Person nor any of the respective correspondents,
participants or assignees of the Issuing Bank shall be liable to any Bank
for: (i) any action taken or omitted in connection herewith at the request
or with the approval of the Banks or (ii) any action taken or omitted in
the absence of gross negligence or willful misconduct.
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ARTICLE 3
PAYMENTS, FEES AND EURODOLLAR PROVISIONS
3.1 PAYMENTS.
(a) All payments and prepayments by the Borrower of principal of and
interest on the Notes and all fees, expenses and any other Obligation
payable to the Agent or the Banks in connection with the Loans shall be
nonrefundable and made in Dollars or immediately available funds to the
Banks not later than 11:00 a.m. (Inglewood, California local time) on the
dates called for under this Credit Agreement, at the main office of the
Agent in Inglewood, California. Funds received after such hour shall be
deemed to have been received by the Agent on the next Banking Day. Payment
to the Agent as aforesaid shall be deemed payment to the Banks as well,
regardless of whether the Agent makes the distributions contemplated by
Section 9A.8(a) hereof.
(b) Unless otherwise required by applicable law, payments will be
applied first to accrued, unpaid interest, then to principal, and any
remaining amount to any unpaid collection costs, late charges and other
charges; provided, however, upon delinquency or other default, the Banks
reserve the right to apply payments among principal, interest, late
charges, collection costs and other charges at its discretion.
(c) Interest shall be due and payable on the Loan on each Payment Date
through the end of the preceding month and on the Maturity Date.
(d) Whenever any payment to be made hereunder shall be stated to be
due on a day which is not a Banking Day, such payment shall be made on the
next succeeding Banking Day, and such extension of time shall in such case
be included in the computation of interest, commission or fee, as the case
may be.
(e) Borrower authorizes the Agent to collect all interest, fees, costs
and/or expenses due under this Credit Agreement by charging Borrower's
demand deposit account number ▇▇▇▇▇▇▇▇ with the Agent, or any other demand
deposit account maintained by Borrower with the Agent, for the full amount
thereof. Should there be insufficient funds in any such demand deposit
account to pay all such sums when due, the full amount of such deficiency
shall be immediately due and payable by Borrower. Provided no Event of
Default and no event, that with the giving of notice or the passage of
time, or both, would be an Event of Default, shall have occurred and be
continuing, Agent shall provide Borrower with written notice at least five
(5) days prior to charging Borrower's account pursuant to this paragraph.
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3.2 LOAN FEES.
(a) RLC Non-Use Fee. Borrower agrees to pay the Agent for distribution
to the Banks pursuant to Section 9A.8 hereof a quarterly fee (the "RLC
Non-Use Fee") in an annualized amount equal to one-quarter percent (0.25%)
of the average daily undrawn balance of the RLC Commitment during the prior
calendar quarterly period. For purposes of calculating the RLC Non-Use Fee,
the Outstanding LC Balance on any date shall be deemed to have been drawn.
The RLC Non-Use Fee shall accrue from the Closing Date and shall be due and
payable in arrears within three (3) Banking Days after written notice of
such amount due by the Agent to Borrower and shall be non-refundable. The
first such payment shall be prorated from the Closing Date and shall be due
on March 31, 2000 and thereafter on each Quarterly End Date.
(b) RLC Fee. Borrower agrees to pay Agent on the Closing Date for
distribution to the Banks pursuant to Section 9A.8 hereof a fee (the "RLC
Fee") in an amount equal to one eighth percent (0.125%) of the RLC
Commitment.
3.3 COMPUTATIONS. All fees and interest on each Note shall be computed on
the basis of a year of 360-days/year and accrue on a daily basis for the actual
number of days elapsed.
3.4 MAINTENANCE OF ACCOUNTS. The Banks shall maintain, in accordance with
their usual practice, an account or accounts evidencing the indebtedness of the
Borrower and the amounts payable and paid from time to time hereunder. In any
legal action or proceeding in respect of this Credit Agreement, the entries made
in the ordinary course of business in such account or accounts shall be evidence
of the existence and amounts of the obligations of the Borrower therein recorded
and shall be presumed to be accurate until the contrary is established. The
failure to record any such amount shall not, however, limit or otherwise affect
the obligations of the Borrower hereunder to repay all amounts owed hereunder,
together with all interest accrued thereon as provided in the Notes.
3.5 CERTAIN CONTINGENCIES.
(a) If the contingency contemplated by Section 3.6, 3.7(b) or 3.7(c)
should occur, the Borrower may at any time after receipt of such notice,
and as long as the circumstances giving rise to the relevant claim
continue, require the Banks to terminate upon not less than thirty days'
notice the participation agreement with such participant, unless such
participant has waived any claim to payment under those provisions.
(b) If circumstances arise which would (or would upon the giving of
notice) entitle a Bank to receive additional payments pursuant to Section
3.6, 3.7(b) or 3.7(c), then the Bank shall promptly, upon becoming aware of
such circumstances, notify the Borrower and, to the extent that it can
legally do so without material prejudice to its own position, the Bank
shall take such reasonable steps as may be available to it to mitigate the
effects of such circumstances.
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3.6 INCREASED CAPITAL REQUIREMENTS; TAX.
(a) In the event that, as a result of any Regulatory Change,
compliance by any Bank with any applicable law or governmental rule,
requirement, regulation, guideline or order (with which it is customary for
banks in the relevant jurisdiction to comply whether or not having the
force of law) has or would have the effect of reducing the rate of return
on the capital of the Bank or any institution controlling the Bank as a
consequence of or with reference to any Commitment, the issuance of a
Letter of Credit or amounts outstanding under the Notes to a level below
that which the Bank or such other corporation could have achieved but for
such change or compliance (taking into consideration the policies of the
Bank or such other corporation with respect to capital), then from time to
time the Borrower shall pay to such Bank such additional amount or amounts
as will compensate the Bank for such reduction. The Bank will notify the
Borrower of any Regulatory Change that will entitle the Bank to
compensation pursuant to this Section as promptly as practicable, but in
any event within ninety (90) days after the Bank obtains knowledge thereof;
provided, however, that if the Bank fails to give such notice within ninety
(90) days after it obtains knowledge of such a Regulatory Change, the Bank
shall, with respect to compensation payable in respect of any costs
resulting from such Regulatory Change, only be entitled to payment for
costs incurred from and after the date that the Bank does give such notice.
Such Bank shall deliver to the Borrower a written certificate which states
the additional amount(s) due and payable, showing in reasonable detail the
calculation of such amount and provide evidence to substantiate the Bank's
claim for such amount(s).
(b) Each Bank that is organized outside the United States (i) on or
before the date it becomes a party to this Credit Agreement and (ii) with
respect to each lending office located outside the United States of such
Bank, shall deliver to the Borrower and the Agent such certificates,
documents or other evidence, as required by the Code or Treasury
Regulations issued pursuant thereto, including Internal Revenue Service
Form 1001 or Form 4224, properly completed and duly executed by such Bank
establishing that payments received hereunder are (i) not subject to
withholding under the Code because such payment is effectively connected
with the conduct by such Bank of a trade or business in the United States
or (ii) totally exempt from United States Federal withholding tax under a
provision of an applicable tax treaty. In addition, each such Bank shall,
if legally able to do so, thereafter deliver such certificates, documents
or other evidence from time to time establishing that payments received
hereunder are not subject to such withholding upon receipt of a written
request therefor from the Borrower or the Agent. Unless the Borrower and
the Agent have received forms or other documents satisfactory to them
indicating that payments hereunder or under the Notes are not subject to
United States Federal withholding tax, the Borrower or the Agent shall
withhold such taxes from such payments at the applicable statutory rate.
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(c) The Borrower shall not be required to pay any additional amounts
to any Bank or the Agent in respect to United States Federal withholding
tax if the obligation to pay such additional amounts would not have arisen
but for a failure by such Bank or the Agent to deliver the certificates,
documents or other evidence specified in the preceding paragraph (b) unless
such failure is attributable to (i) a change in applicable law, regulation
or official interpretation thereof or (ii) an amendment or modification to
or a revocation of any applicable tax treaty or a change in official
position regarding the application or interpretation thereof, in each case
on or after the date such Bank or the Agent becomes a party to this Credit
Agreement.
(d) Nothing contained in this Section shall require any Bank or the
Agent to make available any of its tax returns (or any other information
relating to its taxes) which it deems to be confidential.
3.7 SPECIAL PROVISIONS FOR LIBOR RATE ADVANCES.
(a) Funding: Notwithstanding any provision of the Credit Documents to
the contrary, the Banks shall be entitled to fund and maintain their
funding of all or any part of any Advance in any manner they see fit;
provided, however, that for the purposes of the Notes, all determinations
thereunder shall be made as if the Banks had actually funded and maintained
each Advance bearing interest at the LIBOR Based Rate during the LIBOR
Interest Period therefor through the purchase of deposits having a maturity
corresponding to the last day of the LIBOR Interest Period and bearing an
interest rate equal to the LIBOR Based Rate for such LIBOR Interest Period.
(b) Inadequacy of Eurodollar Pricing: If, due to any Regulatory
Change, there shall be any increase in the cost to a Bank of agreeing to
make or making, funding, or maintaining Advances bearing interest at the
LIBOR Based Rate (including, without limitation, any increase in any
applicable reserve requirement), then the Borrower shall from time to time,
upon demand by the Bank, pay to the Bank such amounts as the Bank may
reasonably determine to be necessary to compensate the Bank for any
additional costs that the Bank reasonably determines are attributable to
such Regulatory Change. The Bank will notify the Borrower of any Regulatory
Change that will entitle the Bank to compensation pursuant to this
paragraph as promptly as practicable, but in any event within ninety (90)
days after the Bank obtains knowledge thereof; provided, however, that if
the Bank fails to give such notice within ninety (90) days after it obtains
knowledge of such a Regulatory Change, the Bank shall, with respect to
compensation payable in respect of any costs resulting from such Regulatory
-27-
Change, only be entitled to payment for costs incurred from and after the
date that the Bank does give such notice. The Bank will furnish to the
Borrower a certificate setting forth in reasonable detail the basis for the
amount of each request by the Bank for compensation under this paragraph.
Determinations by the Bank of the amounts required to compensate the Bank
shall be conclusive, absent manifest error. The Bank shall be entitled to
compensation in connection with any Regulatory Change only for costs
actually incurred by the Bank.
(c) Illegality: Notwithstanding any provision of the Credit Documents,
if a Bank shall notify the Borrower that as a result of a Regulatory Change
it is unlawful for the Bank to make Advances at the LIBOR Based Rate, or to
fund or maintain Advances bearing interest at the LIBOR Based Rate , (i)
the obligations of the Bank to make Advances at the LIBOR Based Rate and to
convert Advances to the LIBOR Based Rate shall be suspended until the Bank
shall notify the Borrower that the circumstances causing such suspension no
longer exist, and (ii) in the event such Regulatory Change makes the
maintenance of Advances at the LIBOR Based Rate unlawful, the Borrower
shall forthwith prepay in full all Advances bearing interest at the LIBOR
Based Rate then outstanding, together with interest accrued thereon and all
amounts in connection with such prepayment specified herein, unless the
Borrower, within five (5) Banking Days of notice from the Bank, converts
all Advances bearing interest at the LIBOR Based Rate then outstanding into
Advances bearing interest at the Variable Rate pursuant to the conversion
procedures herein and pays all amounts in connection with such prepayments
or conversions specified herein.
(d) Market Disruption: Notwithstanding any other provision of the
Credit Documents, if prior to the commencement of any LIBOR Interest
Period, the Banks shall determine (i) that United States dollar deposits in
the amount of any Advance bearing interest at the LIBOR Based Rate to be
outstanding during such LIBOR Interest Period are not readily available to
the Banks in the London interbank market, or (ii) by reason of
circumstances affecting the London interbank market, adequate and
reasonable means do not exist for ascertaining the LIBOR Based Rate for
such LIBOR Interest Period in the manner prescribed in the definition of
"LIBOR Based Rate," then the Agent shall promptly give notice thereof to
the Borrower and the obligation of the Banks to create, continue, or effect
by conversion any Advance bearing interest at the LIBOR Based Rate in such
amount and for such LIBOR Interest Period shall terminate until United
States dollar deposits in such amount and for the LIBOR Interest Period
shall again be readily available in the London interbank market and
adequate and reasonable means exist for ascertaining the LIBOR Based Rate.
(e) Prepayment: Borrower may, upon at least two (2) Banking Days'
notice in the case of LIBOR Based Rate Advances and one (1) Banking Day's
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notice in the case of Variable Rate Advances to the Agent stating the
proposed date and aggregate principal amount of the prepayment, and if such
notice is given Borrower shall, prepay the outstanding principal balance of
the Loan in whole or in part at any time prior to the applicable Maturity
Date as stated in such notice by Borrower. With any prepayment of a LIBOR
Based Rate Advance or with any conversion of a LIBOR Based Rate Advance to
a Variable Rate Advance, in either case other than on the last Banking Day
of the LIBOR Interest Period for such LIBOR Based Rate Advance (including
any such prepayment made voluntarily or involuntarily as a result of the
acceleration of maturity upon a default or otherwise), Borrower shall pay
all accrued interest on the principal amount prepaid with such prepayment
and, on demand, shall reimburse the Banks and hold the Banks harmless from
all losses and expenses incurred by the Banks as a result of such
prepayment, including, without limitation, any losses and expenses arising
from the liquidation or reemployment of deposits acquired to fund or
maintain the principal amount prepaid. Such reimbursement shall be
calculated as though the Banks funded the principal amount prepaid through
the purchase of U.S. Dollar deposits in the London, England interbank
market having a maturity corresponding to such LIBOR Interest Period and
bearing an interest rate equal to the LIBOR Based Rate for such LIBOR
Interest Period, whether in fact that is the case or not. The Banks'
determination of the amount of such reimbursement shall be conclusive in
the absence of manifest error.
3.8 PREPAYMENTS.
(a) Borrower shall have the option to prepay the Loans, in full or in
part, at any time, subject to payment of all amounts specified hereinbelow
with respect to any LIBOR Rate Advance.
(b) If for any reason (including voluntary prepayment, voluntary
conversion of a LIBOR Rate Advance into a Variable Rate Advance, or
acceleration, but excluding any mandatory prepayment or mandatory
conversion such as pursuant to Section 3.7(b)), the Banks receive all or
part of the principal amount of a LIBOR Rate Advance prior to the last day
of the LIBOR Interest Period for such Advance, the Borrower shall
immediately notify the Borrower's account officer at the Agent and, on
demand by the Banks, pay the "LIBOR Breakage Fees," defined as the amount
(if any) by which (i) the additional interest which would have been payable
on the amount so received had it not been received until the last day of
such LIBOR Interest Period exceeds (ii) the interest which would have been
recoverable by the Banks (without regard to whether the Banks actually so
invest said funds) by placing the amount so received on deposit in the
certificate of deposit markets or the offshore currency interbank markets
or United States Treasury investment products, as the case may be for a
period starting on the date on which it was so received and ending on the
last day of such LIBOR Interest Period at the interest rate determined by
the Banks in their reasonable discretion. The Banks' determination as to
such amount shall be conclusive and final, absent manifest error.
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(c) The Borrower shall pay to the Banks, upon the demand of the
Required Banks, such other amount or amounts as shall be sufficient to
compensate them for any loss, costs or expense ("LIBOR Prepayment Charges")
incurred by them as a result of any prepayment by the Borrower (including
voluntary prepayment, voluntary conversion of a LIBOR Rate Advance into a
Variable Rate Advance, or prepayment due to acceleration, but excluding any
mandatory prepayment or mandatory conversion such as pursuant to Section
3.7(b)) of all or part of the principal amount of a LIBOR Rate Advance
prior to the last day of the LIBOR Interest Period for such Advance
(including without limitation, any failure by the Borrower to borrow a
LIBOR Rate Advance on the loan date for such borrowing specified in the
relevant notice of borrowing hereunder). Such LIBOR Prepayment Charges
shall include, without limitation, any interest or fees payable by the
Banks to lenders of funds obtained by them in order to make or maintain
their loans based on the London interbank eurodollar market. The Banks'
determination as to such LIBOR Prepayment Charges shall be conclusive and
final, absent manifest error.
(d) The Banks agree that they shall make a best effort to minimize any
such LIBOR Breakage Fees or any such LIBOR Prepayment Charges.
3.9 NON U.S. SUBSIDIARIES - CURRENCY INDEMNITY. Borrower shall pay to the
Banks, upon the demand of the Required Banks, such other amount or amounts as
shall be sufficient to compensate them for any loss, cost or expense ("Currency
Loss") incurred by them as a result of any repayment being made in a currency
other than Dollars. The Banks' determination as to such Currency Loss shall be
conclusive and final, absent manifest error.
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ARTICLE 4
[INTENTIONALLY LEFT BLANK]
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ARTICLE 5
CONDITIONS PRECEDENT
The obligations of the Banks to make the Loans and to make the initial
Advance hereunder or the Issuing Bank's obligation to issue the initial Letter
of Credit is subject to the full prior satisfaction of each of the following
conditions precedent and, as to each future Advance, to the full prior
satisfaction at each such time of each of the conditions precedent in Sections
5.2, 5.3 and 5.4 hereof:
5.1 INITIAL ADVANCE. Prior to its making the initial Advance, the Agent
shall have received the following, each in form and substance satisfactory to
the Required Banks:
(a) THIS CREDIT AGREEMENT. This Credit Agreement, duly executed by
Borrower.
(b) THE NOTES. The Notes, each duly executed, as provided in Article 2
hereof.
(c) OFFICER'S CERTIFICATE. A certificate signed by an Authorized
Officer of the Company and an Authorized Agent's Certificate as to each
Subsidiary, stating that (to the best knowledge and belief thereof, after
reasonable inquiry and review of matters pertinent to the subject matter of
such certificate): (i) all of the representations and warranties contained
in Article 6 of this Credit Agreement and in the other Credit Documents
are, in all material respects, true and correct as of the date hereof
(other than those of such representations which by their express terms
speak to a date prior to such date, which representations are, in all
material respects, true and correct as of such respective dates); (ii) no
event has occurred and is continuing, or would result from the advance of
the proceeds of the Loans, which would constitute an Event of Default; and
(iii) no change or changes having a Material Adverse Effect have occurred
in the business or financial condition of Borrower since the date of the
last financial statements of Borrower heretofore delivered to the Banks.
(d) ORGANIZATIONAL DOCUMENTS. A copy of the current organizational
documents of Borrower, including all amendments thereto, except for non
U.S. Subsidiaries certified as current and complete by the appropriate
authority of the state of said corporation's incorporation, together with
evidence of said corporation's good standing in said corporation's state of
incorporation and in every other state in which it is doing business or the
conduct of said corporation's business requires such standing for the
enforcement of material contracts.
(e) CERTIFICATE. A certificate of the corporate secretary of Company,
signed by the duly appointed secretary thereof and issued as of the Closing
Date, certifying that (i) attached thereto is a true and complete copy of
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the corporate by-laws of said corporation in effect on the date of passage
of the corporate resolutions described immediately below and at all
subsequent times to and including the date of the certificate, (ii) no
change has been made to said corporation's charter documents other than as
reflected in the certified copies submitted in connection with the delivery
of this Credit Agreement or as approved in writing by the Agent, and (iii)
attached thereto are proper resolutions, authorizations and certificates
relating to the authority of any person executing documents on behalf of
such entity. As to each Subsidiary, a unanimous Written Consent in Lieu of
Special Meeting of the Sole Shareholder together with an Authorized Agent's
Certificate as to the organizational documents of the Subsidiary,
certifying that no change has been made to said documents.
(f) COSTS. Payment of costs of the Agent and the Banks.
(g) OPINION OF COUNSEL. An opinion of counsel to the Company as to
those matters reasonably required by the Banks.
(h) COMPLIANCE CERTIFICATE. A Compliance Certificate in the form of
Exhibit "A" attached hereto executed by the Company, indicating that
Borrower is in compliance with all Financial Covenants as of September 30,
1999.
(i) ADDITIONAL INFORMATION. Such other information and documents as
may reasonably be required by the Banks or their counsel.
5.2 NO EVENT OF DEFAULT. No Event of Default known to Borrower shall have
occurred and be continuing, or result from the making of the Loans.
5.3 NO MATERIAL ADVERSE EFFECT. Since the date of the most recent financial
statements provided to the Banks by Borrower, no change shall have occurred in
the business or financial condition of Borrower that could have a Material
Adverse Effect.
5.4 REPRESENTATIONS AND WARRANTIES. The representations and warranties
contained in Article 6 hereof shall be true and correct in all material
respects, with the same force and effect as though made on and as of the Closing
Date (other than those of such representations which by their express terms
speak to a date prior to that date, which representations shall, in all material
respects, be true and correct as of such respective date).
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ARTICLE 6
REPRESENTATIONS AND WARRANTIES
To induce the Banks to make the Loans, the Company and, to the extent
applicable, each Co-Borrower represents and warrants to the Banks that:
6.1 RECITALS. The recitals and statements of intent appearing in this
Credit Agreement are true and correct.
6.2 ORGANIZATION AND GOOD STANDING. It is duly organized under the laws of
the jurisdiction of its organization, is validly existing and is in good
standing, to the extent required by law, in each jurisdiction in which it is
doing business. It has the legal power and authority to own its properties and
assets and to transact the business in which it is engaged and is or will be
qualified in those jurisdictions wherein the nature of its proposed business and
property will make such qualifications necessary or appropriate in the future.
6.3 AUTHORIZATION AND POWER. It has the corporate power and requisite
authority to execute, deliver and perform this Credit Agreement, the Notes and
the other Credit Documents to be executed by it; it is duly authorized to, and
has taken all action, corporate or otherwise, necessary to authorize it to,
execute, deliver and perform this Credit Agreement, the Notes and such other
Credit Documents and is and will continue to be duly authorized to perform this
Credit Agreement, the Notes and such other Credit Documents.
6.4 ENFORCEABLE OBLIGATIONS. This Credit Agreement, the Notes and the other
Credit Documents are the legal, valid and binding obligations of Borrower,
enforceable against Borrower in accordance with their respective terms, except
as limited by bankruptcy, insolvency or other laws or equitable principles of
general application relating to the enforcement of creditors' rights.
6.5 NO CONFLICTS OR CONSENTS. Neither the execution and delivery of this
Credit Agreement, the Notes or the other Credit Documents to which it is a
party, nor the consummation of any of the transactions herein or therein
contemplated, nor compliance with the terms and provisions hereof or with the
terms and provisions thereof, (a) will contravene or conflict with: (i) any
provision of law, statute or regulation to which it is subject, (ii) any
judgment, license, order or permit applicable to it, (iii) any indenture, loan
agreement, mortgage, deed of trust, or other agreement or instrument to which it
is a party or by which it may be bound, or to which it may be subject, or (b)
will violate any provision of its organizational documents. No consent,
approval, authorization or order of any court or Governmental Authority or other
Person is required in connection with the execution and delivery by it of the
Credit Documents or to consummate the transactions contemplated hereby or
thereby, or if required, such consent, approval, authorization or order shall
have been obtained.
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6.6 NO LITIGATION. There are no actions, suits or legal, equitable,
arbitration or administrative proceedings pending, or to its actual knowledge
overtly threatened, against Borrower that would, if adversely determined, have a
Material Adverse Effect.
6.7 FINANCIAL CONDITION. It has delivered to the Banks copies of the its
audited consolidated financial statements as most recently filed with the SEC.
Such financial statements, in all material respects, fairly present the
financial position of Borrower as of such date and have been prepared in
accordance with GAAP. Since the date thereof, it has not discovered any
obligations, liabilities or indebtedness (including contingent and indirect
liabilities and obligations or unusual forward or long-term commitments) which
in the aggregate are material and adverse to the financial position or business
of Borrower that should have been but were not reflected in such financial
statements. No changes having a Material Adverse Effect have occurred in the
financial condition or business of Borrower since its most recent filings with
the SEC.
6.8 TAXES. It has filed or caused to be filed all returns and reports which
are required to be filed by any jurisdiction, and has paid or made provision for
the payment of all taxes, assessments, fees or other governmental charges
imposed upon its properties, income or franchises, as to which the failure to
file or pay would have a Material Adverse Effect, except such assessments or
taxes, if any, which are being contested in good faith by appropriate
proceedings.
6.9 NO STOCK PURCHASE. No part of the proceeds of any financial
accommodation made by the Banks in connection with this Credit Agreement will be
used to purchase or carry "margin stock," as that term is defined in Regulation
U, or to extend credit to others for the purpose of purchasing or carrying such
margin stock.
6.10 ADVANCES. Each request for an Advance or for the extension of any
financial accommodation by the Banks whatsoever shall constitute an affirmation
that the representations and warranties of Section 6.7 are true and correct with
respect to any financial statements submitted by Borrower to the Banks between
the date of this Credit Agreement and the date of such request, and that the
representations and warranties of Sections 6.1, 6.4, 6.5, 6.6, 6.7 and 6.8
hereof are true and correct as of the time of such request. All representations
and warranties made herein shall survive the execution of this Credit Agreement,
all advances of proceeds of the Loans and the execution and delivery of all
other documents and instruments in connection with the Loans and/or this Credit
Agreement, so long as any Bank has any commitment to lend hereunder and until
the Loans have been paid in full and all of Borrower's obligations under this
Credit Agreement and the Notes been fully discharged.
6.11 SOLVENT. Company (both before and after giving effect to the Loans
contemplated hereby) is solvent, has assets having a fair value in excess of the
amount required to pay its probable liabilities on its existing debts as they
become absolute and matured, and has, and is expected to have, access to
adequate capital for the conduct of its business and the ability to pay its
debts from time to time incurred in connection therewith as such debts mature.
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6.12 ERISA. (a) No Reportable Event has occurred and is continuing with
respect to any Plan; (b) PBGC has not instituted proceedings to terminate any
Plan; (c) neither the Borrower, any member of the Controlled Group, nor any
duly-appointed administrator of a Plan (i) has incurred any liability to PBGC
with respect to any Plan other than for premiums not yet due or payable or (ii)
has instituted or intends to institute proceedings to terminate any Plan under
Section 4041 or 4041A of ERISA; and (d) each Plan of Borrower has been
maintained and funded in all material respects in accordance with its terms and
in all material respects in accordance with all provisions of ERISA applicable
thereto. Neither the Borrower nor any of its Subsidiaries participates in, or is
required to make contributions to, any Multi-employer Plan (as that term is
defined in Section 3(37) of ERISA).
6.13 FULL DISCLOSURE. No certificate or statement delivered herewith or
heretofore by it to the Banks in connection with negotiations of this Credit
Agreement, when read together with the S-3 dated September 27, 1999, contains
any untrue statement of a material fact or omits to state any material fact
necessary to keep the statements contained herein or therein from being
misleading.
6.14 NO DEFAULT. No event or condition has occurred and is continuing that
constitutes an Event of Default.
6.15 SIGNIFICANT DEBT AGREEMENTS. It is not in default in any material
respect under any Significant Debt Agreement.
6.16 COMPLIANCE WITH LAW. It is in substantial compliance with all laws,
rules, regulations, orders and decrees that are applicable to it, or its
properties, noncompliance with which would have a Material Adverse Effect.
6.17 SUBSIDIARIES. Except for Subsidiaries listed on Schedule 6.17, Company
has no existing Subsidiary that conducts any business or operations.
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ARTICLE 7
AFFIRMATIVE COVENANTS
Until payment in full of the Notes and the complete performance of the
Obligation, and so long as any Bank has any Commitment outstanding to any
Borrower, the Company and, to the extent applicable, each Co-Borrower agrees
that:
7.1 FINANCIAL STATEMENTS, REPORTS AND DOCUMENTS. Borrower shall deliver, or
cause to be delivered, to the Banks each of the following:
(a) CONSOLIDATED QUARTERLY STATEMENTS OF THE COMPANY. As soon as
available, and in any event within forty-five (45) days after the end of
the first three (3) fiscal quarterly periods of each fiscal year of the
Company, copies of the consolidated balance sheet of the Company as of the
end of such fiscal quarter, and consolidated statements of income of the
Company for that fiscal quarter and for the portion of the fiscal year
ending with such fiscal quarter, in each case setting forth in comparative
form the figures for the corresponding period of the preceding fiscal year,
all in reasonable detail and fairly stated and prepared in accordance with
GAAP.
(b) CONSOLIDATED ANNUAL STATEMENTS OF THE COMPANY. As soon as
available and in any event within ninety (90) days after the close of each
fiscal year of the Company, audited consolidated financial statements of
the Company, including its consolidated balance sheet as of the close of
such fiscal year and consolidated statements of income of the Company for
such fiscal year, in each case setting forth in comparative form the
figures for the preceding fiscal year, all in reasonable detail and
accompanied by an unqualified opinion thereon of independent public
accountants of recognized national standing selected by the Company and
acceptable to the Banks, to the effect that such financial statements have
been prepared in accordance with GAAP (except for changes in which such
accountants concur) and that the examination of such accounts in connection
with such financial statements has been made in accordance with generally
accepted auditing standards and, accordingly, includes such tests of the
accounting records and such other auditing procedures as were considered
necessary in the circumstances.
(c) COMPLIANCE CERTIFICATE OF THE COMPANY. Within forty-five (45) days
after the end of each fiscal quarter of the Company, a certificate (the
"Compliance Certificate") substantially in the form of Exhibit "A" attached
hereto signed by an Authorized Officer, (i) stating that a review of the
activities of the Company during such quarter or year has been made under
his/her supervision, that, as of such date, the Company has observed,
performed and fulfilled each and every obligation and covenant contained
herein and no Event of Default exists under any of the same or, if any
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Event of Default shall have occurred, specifying the nature and status
thereof, and stating that all financial statements delivered to the Banks
during the respective period pursuant to Section 7.1(a) and 7.1(b) hereof,
to such officer's knowledge after due inquiry, fairly present in all
material respects the financial position of the Company and the results of
its operations at the dates and for the periods indicated, and have been
prepared in accordance with GAAP, subject to year end audit and
adjustments, and (ii) setting forth in such level of detail as the Banks
shall reasonably require a calculation of the Financial Covenants as of the
end of that fiscal quarter.
(d) MANAGEMENT LETTERS. With the audited fiscal year-end statements
submitted under Section 7.1(b) above, the management letter, if any, of the
Company's certified public accountants issued in connection with such
audit.
(e) SEC FILINGS. When filed, copies of each filing with the SEC made
by the Company, including without limitation its annual 10-K and quarterly
10-Q reports.
(f) PROJECTIONS. No later than thirty-one (31) days before the end of
each fiscal year, financial statements of the Company for the following
fiscal year and each fiscal quarter thereof, based on its current financial
projections for such fiscal year.
(g) OTHER INFORMATION. Such other information concerning the business,
properties or financial condition of Borrower as the Banks shall reasonably
request.
7.2 MAINTENANCE OF EXISTENCE. Borrower shall maintain its existence with no
material amendments or changes in its organizational documents without the prior
written approval of the Required Banks, not to be unreasonably withheld,
conditioned or delayed.
7.3 MAINTAIN BUSINESS. Borrower shall maintain in full force and effect all
agreements, rights, trademarks, patents and licenses necessary to carry out its
business in its reasonable business judgment, shall keep all of its assets and
properties in good condition and repair, ordinary wear and tear excepted, and
shall make all needed and proper repairs and improvements to its properties in
order to properly conduct its business in its reasonable business judgment.
7.4 INSURANCE. To the extent Borrower is not self-insured, Borrower shall
maintain in full force and effect at all times policies of fire, flood and
extended coverage insurance and policies of public liability property damage,
▇▇▇▇▇▇▇'▇ compensation insurance in scope and amount not less than, and not less
extensive than, the scope and amount of insurance coverages customary for
companies of comparable size and financial strength in the trades or businesses
in which Borrower is from time to time engaged. Upon request by the Banks,
Borrower shall deliver to the Banks certificates of, and copies of the originals
of, all such policies of insurance in effect from time to time, to be retained
by the Banks so long as the Banks shall have any commitment to lend to Borrower
and/or any portion of the Loans shall be outstanding or unsatisfied.
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7.5 COMPLIANCE WITH CREDIT DOCUMENTS. Borrower will comply with any and all
covenants and provisions of this Credit Agreement, the Notes and all other
Credit Documents.
7.6 BOOKS AND RECORDS; ACCESS. Borrower shall maintain, in a safe place,
proper and accurate books, ledgers, correspondence and other records relating to
its operations and business affairs. The Banks shall have the right from time to
time, upon reasonable notice to Borrower, to examine and audit (within a
reasonable scope of audit) at Borrower's expense (such expense not to exceed
$5,000.00 per annum) and to make abstracts from and photocopies of Borrower's
books, ledgers, correspondence and other records.
7.7 PAYMENT OF TAXES AND OTHER INDEBTEDNESS. Borrower shall pay all of its
current obligations before they become delinquent under applicable agreements or
normal trade practices, including all accounts payable and all federal, state
and local taxes, assessments, levies and governmental charges and all other
payments required under any federal state or local law. Borrower may, however,
contest in good faith the validity or amount of any such current obligations,
including accounts payable and any such taxes, assessments, levies or other such
governmental charges provided that the Banks may require Borrower to provide
security with respect thereto in the form of a bond, insurance, security
deposit, cash reserve or other evidence satisfactory to the Banks of Borrower's
ability to pay and discharge such matter in the event such contest is
unsuccessful where the failure to provide such security would result in the
occurrence of a Material Adverse Event.
7.8 NOTICE OF DEFAULT. Borrower will furnish to the Banks immediately upon
becoming actually aware of the existence of any event or condition that
constitutes an Event of Default, a written notice specifying the nature and
period of existence thereof and the action which it is taking or proposes to
take with respect thereto.
7.9 OTHER NOTICES. Borrower will promptly notify the Banks of (a) any
Material Adverse Effect, (b) any waiver, release or default under any
Significant Debt Agreement, (c) except as to any claim not covered as a result
of an insurance deductible provision, any claim not covered by insurance against
Borrower or any of Borrower's properties that has a Material Adverse Effect, and
(d) the commencement of, and any material determination in, any litigation with
any third party or any proceeding before any Governmental Authority affecting
it, except litigation or proceedings which, if adversely determined, would not
have a Material Adverse Effect.
7.10 ERISA COMPLIANCE. With respect to its Plans, Borrower shall (a) at all
times comply with the minimum funding standards set forth in Section 302 of
ERISA and Section 412 of the Code or shall have duly obtained a formal waiver of
such compliance from the proper authority; (b) at the Banks' request, within
thirty (30) days after the filing thereof, furnish to the Banks copies of each
annual report/return (Form 5500 Series), as well as all schedules and
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attachments required to be filed with the Department of Labor and/or the
Internal Revenue Service pursuant to ERISA, in connection with each of its Plans
for each year of the plan; (c) notify the Banks within a reasonable time of any
fact, including, but not limited to, any Reportable Event arising in connection
with any of its Plans, which constitutes grounds for termination thereof by the
PBGC or for the appointment by the appropriate United States District Court of a
trustee to administer such Plan, together with a statement, if requested by the
Banks, as to the reason therefor and the action, if any, proposed to be taken
with respect thereto; and (d) furnish to the Banks within a reasonable time,
upon the Banks' request, such additional information concerning any of its Plans
as may be reasonably requested.
7.11 FURTHER ASSURANCES. Borrower will make, execute or endorse, and
acknowledge and deliver or file or cause the same to be done, all such notices,
certifications and additional agreements, undertakings or other assurances, and
take any and all such other action, as the Banks may, from time to time, deem
reasonably necessary or proper to fully evidence the Loan.
7.12 COMPLIANCE WITH SIGNIFICANT DEBT AGREEMENTS. Borrower will comply in
all material respects with all Significant Debt Agreements.
7.13 COMPLIANCE WITH LAW. Borrower will comply with all applicable laws,
rules, regulations, and all final, nonappealable orders of any Governmental
Authority applicable to it or any of its property, business operations or
transactions, a breach of which could result in a Material Adverse Effect.
7.14 AUTHORIZATIONS AND APPROVALS. Borrower will promptly obtain, from time
to time at its own expense, all such governmental licenses, authorizations,
consents, permits and approvals as may be required to enable it to comply with
its obligations hereunder and under the other Credit Documents and to operate
its businesses as presently or hereafter duly conducted.
7.15 NEWS RELEASES. Borrower shall forward to the Banks copies of all news
releases made by it to the news media as to anything of material significance
with respect to its financial status or its business operations or, in each
case, that of its Subsidiaries.
7.16 NEW SUBSIDIARIES. Company shall promptly and diligently take all
actions necessary to cause any existing Subsidiary which is not a Co-Borrower
and that subsequently undertakes to conduct any business or operations and
qualifies as a Controlled Subsidiary, and any new Controlled Subsidiary (each a
"New Subsidiary") to become a Co-Borrower. Within thirty (30) days of being
acquired, or in the case of an existing Subsidiary within thirty (30) days of
the later of undertaking to conduct any business or operations or qualifying as
a Controlled Subsidiary, such New Subsidiary shall deliver to the Banks an
executed Assumption Agreement in the form attached hereto as Exhibit "D", and
such other documents as the Banks may reasonably request. The term "Co-Borrower"
shall mean that such Subsidiary shall be jointly liable, and each severally and
unconditionally liable, for the full payment and satisfaction of the Loans and
all other obligations of Borrower under this Credit Agreement.
7.17 CHANGE IN CONTROL. Should there be a Change in Control, the Loans
shall be immediately due and payable.
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ARTICLE 8
NEGATIVE COVENANTS
Until payment in full of the Notes and the performance of the Obligation,
and so long as any Bank has any Commitment outstanding to any Borrower, the
Company and, to the extent applicable, each Co-Borrower agrees that:
8.1 NO DEBT. The Company shall not become without the prior written consent
of Banks or remain obligated either directly or as a guarantor or surety for any
Indebtedness for borrowed money, or for any Indebtedness incurred in connection
with the acquisition (which shall not include bona fide leases) of any property,
real or personal, tangible or intangible including, but not limited to, lease
purchase agreements, except:
(a) Indebtedness to the Banks hereunder.
(b) Unsecured trade, utility or accounts payable arising in the
ordinary course of its business.
(c) Lease purchase agreements and purchase money security interests
not exceeding the sum of $3,000,000.00 in payments during any fiscal year.
(d) Borrower's line of credit up to $350,000 with Barclays Bank PLC
(U.K.) secured by U.K. receivables and inventory.
(e) Indebtedness secured by liens permitted under Section 8.2 hereof.
(f) Borrower's credit facility in an amount not to exceed
$4,000,000.00 with the Bank of China secured by a standby letter of credit
issued by Imperial.
8.2 LIENS. On and after the date hereof, the Company will not create or
suffer to exist Liens upon its property, real or personal, including without
limitation its patents, copyrights and trademarks, except Permitted Liens,
including without limitation those listed on Schedule 8.2 attached hereto.
8.3 LOANS. It will not make any loan, advance, or direct extension of
credit in excess of $1,000,000.00, or, except as permitted under Section 8.10,
any investment (consisting of equity or debt convertible into equity) in excess
of $3,000,000.00, in aggregate on an annual basis to any person(s) or entities
other than in the ordinary course of business.
8.4 DIVIDENDS. It will not declare or pay any cash dividend.
8.5 EXISTENCE; SALE OR TRANSFER OF ASSETS. It will not (i) dissolve or
liquidate, or merge or consolidate with or into any corporation or entity, or
(ii) turn over the management or operation of its property, assets or businesses
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to any other person, firm or corporation, or (iii) sell, lease, transfer or
dispose of more than $2,000,000.00 of its assets (excluding inventory) in any
calendar year. The Company will not transfer more than $2,000,000.00 in
aggregate value per calendar year of its assets that consist of accounts
receivable or existing fixed assets located in the U.S. to locations outside the
U.S. Notwithstanding anything herein to the contrary, the Company may transfer
to locations outside the U.S. equipment purchased by the Company in the U.S.
with the sole intent to transfer it to its non-U.S. Subsidiaries.
8.6 FISCAL YEAR. It will not change the times of commencement or
termination of its fiscal year or other accounting periods; or change its
methods of accounting other than to conform to GAAP applied on a consistent
basis. After any such changes, its method of accounting shall conform to GAAP.
8.7 MARGIN STOCK. Borrower shall not use any proceeds of the Loans, or any
proceeds of any other or future financial accommodation from the Banks for the
purpose, whether immediate, incidental or ultimate, of purchasing or carrying
any "margin stock" as that term is defined in Regulation U or to reduce or
retire any indebtedness undertaken for such purposes within the meaning of said
Regulation U, and will not use such proceeds in a manner that would involve
Borrower in a violation of Regulation U or of any other Regulation of the Board
of Governors of its Federal Reserve System, nor use such proceeds for any
purpose not permitted by Section 7 of the Exchange Act, as amended, or any of
the rules or regulations respecting the extensions of credit promulgated
thereunder.
8.8 AMENDMENTS TO ORGANIZATIONAL DOCUMENTS. Borrower will not amend its
organizational documents if the result thereof could result in the occurrence
directly or indirectly of a Material Adverse Effect.
8.9 [Intentionally left blank.]
8.10 PERMITTED ACQUISITIONS. Without the prior written consent of Banks
(such consent not to be unreasonably withheld, conditioned or delayed), it will
not make investments for the purpose of acquiring businesses, whether by the
purchase of their assets or their equity interests, other than businesses
reasonably related to the business of Borrower in an aggregate amount not
exceeding $10,000,000 in any fiscal year.
8.11 FINANCIAL COVENANTS. It will not permit on a consolidated basis:
(a) Its Tangible Net Worth to be less than the Tangible Net Worth
Minimum at the end of any fiscal quarter.
(b) Its Leverage Ratio to be more than 0.5 to 1.0 at the end of any
fiscal quarter.
(c) Its Debt Coverage Ratio to be less than 3.0 to 1.0 at the end of
any fiscal quarter.
(d) Its Net Income for any two consecutive fiscal quarters beginning
with the quarter ending December 31, 1999 or for any fiscal year to be less
than zero (i.e. net loss).
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ARTICLE 9
EVENTS OF DEFAULT
9.1 EVENTS OF DEFAULT. An "Event of Default" shall exist if any one or more
of the following events (herein collectively called "Events of Default") shall
occur and be continuing:
(a) Failure to pay any installment of principal or interest under the
Loans within five (5) Banking Days of when the same become due and payable,
or the failure to pay any other sum due under the Loans or this Credit
Agreement when the same shall become due and payable and such failure
continues for five (5) Banking Days after notice thereof to Borrower;
(b) Any failure or neglect to perform or observe any of the material
terms, provisions, or covenants of this Credit Agreement (other than a
failure or neglect described in one or more of the other provisions of this
Section 9.1) and such failure or neglect either (i) cannot be remedied,
(ii) can be remedied within fifteen (15) days by prompt and diligent
action, but it continues unremedied for a period of fifteen (15) days after
notice thereof to Borrower, or (iii) can be remedied, although not within
fifteen (15) days even by prompt and diligent action, but such remedy is
not commenced within fifteen (15) days after notice thereof to Borrower or
is not diligently prosecuted to completion within a total of forty-five
(45) days from the date of such notice;
(c) Any warranty, representation or statement contained in this
Agreement, or made or furnished to the Banks by or on behalf of the
Borrower, that shall be or shall prove to have been false in any material
respect when made or furnished;
(d) The occurrence of any "event of default" or "default" by Borrower
under any Credit Document or any agreement, now or hereafter existing to
which any Bank and Borrower are a party, after the expiration of any notice
and cure period;
(e) Borrower shall (i) fail to pay any Indebtedness of Borrower (other
than the Notes) due under any Significant Debt Agreement, or any interest
or premium thereon, when due (whether by scheduled maturity, required
prepayment, acceleration, demand, or otherwise) or within any applicable
grace period, (ii) fail to perform or observe any term, covenant, or
condition on its part to be performed or observed under any agreement or
instrument relating to such Indebtedness, within any applicable grace
period when required to be performed or observed, if the effect of such
failure to perform or observe is to accelerate the maturity of such
Indebtedness, or any such Indebtedness shall be declared to be due and
payable, or required to be prepaid (other than by a regularly scheduled
prepayment), prior to the stated maturity thereof, or (iii) allow the
occurrence of any material event of default with respect to such
Indebtedness;
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(f) Any one or more of the Credit Documents shall have been determined
to be invalid or unenforceable against Borrower executing the same in
accordance with the respective terms thereof, or shall in any way be
terminated or become or be declared ineffective or inoperative, so as to
deny the Banks the substantial benefits contemplated by such Credit
Document or Credit Documents;
(g) Borrower shall (i) apply for or consent to the appointment of a
receiver, trustee, custodian, intervenor or liquidator of itself or of all
or a substantial part of its assets, (ii) file a voluntary petition in
bankruptcy or admit in writing that it is unable to pay its debts as they
become due, (iii) make a general assignment for the benefit of creditors,
(iv) file a petition or answer seeking reorganization of an arrangement
with creditors or to take advantage of any bankruptcy or insolvency laws,
(v) file an answer admitting the material allegations of, or consent to, or
default in answering, a petition filed against it in any bankruptcy,
reorganization or insolvency proceeding, or (vi) take corporate action for
the purpose of effecting any of the foregoing;
(h) An involuntary petition or complaint shall be filed against
Borrower, seeking bankruptcy or reorganization of Borrower, or the
appointment of a receiver, custodian, trustee, intervenor or liquidator of
Borrower, or all or substantially all of its assets, and such petition or
complaint shall not have been dismissed within sixty (60) days of the
filing thereof; or an order, order for relief, judgment or decree shall be
entered by any court of competent jurisdiction or other competent authority
approving a petition or complaint seeking reorganization of Borrower,
appointing a receiver, custodian, trustee, intervenor or liquidator of
Borrower, or all or substantially all of its assets, and such order,
judgment or decree shall continue unstayed and in effect for a period of
sixty (60) days;
(i) Any final judgment(s) (excluding those the enforcement of which is
suspended pending appeal) for the payment of money in excess of the sum of
$250,000.00 in the aggregate (other than any judgment covered by insurance
where coverage has been acknowledged by the insurer) shall be rendered
against Borrower, and such judgment or judgments shall not be satisfied,
settled, bonded or discharged at least ten (10) days prior to the date on
which any of its assets could be lawfully sold to satisfy such judgment;
(j) Either (i) proceedings shall have been instituted to terminate, or
a notice of termination shall have been filed with respect to, any Plans
(other than a Multi-Employer Pension Plan as that term is defined in
Section 4001(a)(3) of ERISA) by Borrower, any member of the Controlled
Group, PBGC or any representative of any thereof, or any such Plan shall be
terminated, in each case under Section 4041 or 4042 of ERISA, and such
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termination shall give rise to a liability of the Borrower or the
Controlled Group to the PBGC or the Plan under ERISA having an effect in
excess of $500,000.00 or (ii) a Reportable Event, the occurrence of which
would cause the imposition of a lien in excess of $500,000.00 under Section
4062 of ERISA, shall have occurred with respect to any Plan (other than a
Multi-Employer Pension Plan as that term is defined in Section 4001(a)(3)
of ERISA) and be continuing for a period of sixty (60) days;
(k) Any of the following events shall occur with respect to any Multi-
Employer Pension Plan (as that term is defined in Section 4001(a)(3) of
ERISA) to which Borrower contributes or contributed on behalf of its
employees and the Required Banks determine in good faith that the aggregate
liability likely to be incurred by Borrower, as a result of any of the
events specified in Subsections (i), (ii) and (iii) below, will have an
effect in excess of $500,000.00; (i) Borrower incurs a withdrawal liability
under Section 4201 of ERISA; (ii) any such plan is "in reorganization" as
that term is defined in Section 4241 of ERISA; or (iii) any such Plan is
terminated under Section 4041A of ERISA;
(l) The occurrence of a Change in Control without the written consent
of the Banks;
(m) The dissolution, liquidation, sale, transfer, lease or other
disposal of all or substantially all of the assets or business of Borrower;
(n) Any attachment, garnishment, levy or execution upon, or judicial
seizure of, any property of Borrower that has a fair market value in excess
of $500,000.00, that is not bonded or released within thirty (30) days;
(o) The institution of any legal action or proceedings to enforce a
lien or security interest in any property of Borrower that has a fair
market value in excess of $500,000.00;
(p) The failure of Borrower to comply with any Financial Covenant at
the end of any fiscal quarter; or
(q) The occurrence of a Material Adverse Event if the Banks in good
faith shall believe that the prospect of payment or performance of the
Loans is impaired.
9.2 REMEDIES UPON EVENT OF DEFAULT. If an Event of Default shall have
occurred and be continuing, then the Agent, at the request of the Required Banks
may, at their sole option, exercise any one or more of the following rights and
remedies, and any other remedies provided in any of the Credit Documents, as the
Required Banks in their sole discretion may deem necessary or appropriate, all
of which remedies shall be deemed cumulative, and not alternative:
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(i) Cease making Advances or extensions of financial
accommodations in any form to or for the benefit of Borrower and
declare the principal of, and all interest then accrued on, the Notes
and any other liabilities hereunder to be forthwith due and payable,
whereupon the same shall become immediately due and payable without
presentment, demand, protest, notice of default, notice of
acceleration or of intention to accelerate or other notice of any kind
all of which Borrower hereby expressly waives, anything contained
herein or in the Notes to the contrary notwithstanding;
(ii) Reduce any claim to judgment;
(iii) Without notice of default or demand, pursue and enforce any
of the Banks' and the Agent's rights and remedies under the Credit
Documents, or otherwise provided under or pursuant to any applicable
law or agreement;
(iv) Require the Borrower to deposit with the Agent cash in an
amount equal to the Outstanding LC Balance;
provided, however, that if any Event of Default specified in Sections 9.1(g) and
9.1(h) shall occur, the principal of, and all interest on, the Notes and other
liabilities hereunder shall thereupon become due and payable concurrently
therewith, without any further action by the Banks and without presentment,
demand, protest, notice of default, notice of acceleration or of intention to
accelerate or other notice of any kind, all of which Borrower hereby expressly
waives.
Upon the occurrence and during the continuance of any Event of Default, the
Agent on behalf of the Banks, at the request of the Required Banks is hereby
authorized at any time and from time to time, without notice to Borrower (any
such notice being expressly waived by Borrower), to set off and apply any and
all moneys, securities or other property of Borrower and the proceeds therefrom,
now or hereafter held or received by or in transit to the Banks or their agents,
from or for the account of Borrower, whether for safe keeping, custody, pledge,
trans mission, collection or otherwise, and also upon any and all deposits
(general or special) and credits of Borrower, and any and all claims of Borrower
against the Banks at any time existing. The Banks agree to notify Borrower
promptly after any such setoff and application, provided that the failure to
give such notice shall not affect the validity of such setoff and application.
The rights of the Banks under this Section are in addition to other rights and
remedies (including, without limitation, other rights of setoff) which the Banks
may have.
9.3 PERFORMANCE BY THE BANKS. Should Borrower fail to perform any covenant,
duty or agreement with respect to the payment of taxes, obtaining licenses or
permits, or any other requirement contained herein or in any of the Credit
Documents within the period provided herein, if any, for correction of such
failure, the Banks may, at their option, perform or attempt to perform such
covenant, duty or agreement on behalf of Borrower. In such event, Borrower
shall, at the request of the Required Banks, promptly pay any amount expended by
the Banks and/or the Agent in such performance or attempted performance to the
Agent at its office in Inglewood, California, together with interest thereon at
the Default Rate, from the date of such expenditure until paid. Notwithstanding
the foregoing, it is expressly understood that neither the Banks nor the Agent
assume any liability or responsibility for the performance of any duties of
Borrower hereunder or under any of the Credit Documents or other control over
the management and affairs of Borrower.
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ARTICLE 9A
AGENT
9A.1 APPOINTMENT AND AUTHORIZATION. Each Bank hereby irrevocably appoints
and authorizes the Agent to act on behalf of such Bank to the extent provided
herein or in any of the Credit Documents or any other document or instrument
delivered hereunder or in connection herewith, and to take such other action as
may be reasonably incidental thereto as determined by Agent. The Banks agree
that Borrower shall be entitled to rely upon any communications to them by the
Agent with respect to any request or notice from, decision or consent of, the
Banks.
9A.2 EXCULPATION. Agent shall be entitled to rely upon advice of counsel
concerning legal matters, and upon this Credit Agreement, any Credit Documents
and any schedule, certificate, statement, report, notice or other writing which
it believes to be genuine or to have been presented by a proper person. Neither
Agent nor any of its directors, officers, employees, or agents shall (a) be
responsible for any recitals, representations or warranties contained in, or for
the execution, validity, genuineness, effectiveness or enforceability of, this
Credit Agreement, any Credit Documents or any other instrument or document
delivered hereunder or in connection herewith, (b) be under any duty to inquire
into or pass upon any of the foregoing matters, or to make any inquiry
concerning the performance by the Borrower or any other obligor of its
obligations, or (c) in any event, be liable as such for any action taken or
omitted by it or them, except for its or their own gross negligence or willful
misconduct. The agency hereby created shall in no way impair or affect any of
the rights and powers of, or impose any duties or obligations upon, Agent in its
individual capacity.
9A.3 AGENT AND AFFILIATES. Agent has the same rights and powers hereunder
and under the Credit Documents as any other Bank and may exercise the same as
though it were not the Agent. Agent and its Affiliates may accept deposits from,
lend money to, and generally engage in any kind of banking, trust or other
business with Borrower and any Affiliate of Borrower, as if it were not the
Agent and without any duty to account therefor to the Banks. Agent need not
account to any other Bank for any monies received by it for reimbursement of its
costs and expenses as Agent hereunder, or for any monies received by it in its
capacity as a Bank hereunder, except as otherwise provided herein.
9A.4 BANKS' CREDIT DECISIONS. Each Bank has made, and shall continue to
make, its own independent investigation or evaluation of the operations,
business, property and condition, financial and otherwise, of the Borrower, in
connection with the making of its respective Commitment, and each has made its
own appraisal of the creditworthiness of the Borrower. Except as explicitly
provided herein, the Agent has no duty or responsibility, either initially or on
a continuing basis, to provide any Bank with any credit or other information
with respect to such operations, business, property, condition or
creditworthiness, whether such information comes into its possession on or
before an Event of Default or at any time thereafter. Each Bank agrees and
acknowledges that Agent makes no representations or warranties about the
creditworthiness of the Borrower or with respect to the legality, validity,
sufficiency or enforceability of this Credit Agreement or any of the Credit
Documents.
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9A.5 INDEMNIFICATION. Each Bank agrees to indemnify, hold harmless and
defend the Agent (to the extent not reimbursed by the Borrower), ratably
according to its Pro Rata Share, from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever which may be imposed
on, incurred by or asserted against the Agent in any way relating to or arising
out of this Credit Agreement or the Credit Documents or any action taken or
omitted by the Agent under the Credit Agreement or Credit Documents; provided,
that no Bank shall be liable for any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements resulting from the Agent's gross negligence or willful misconduct.
Without limitation of the foregoing, each Bank agrees to reimburse the Agent
promptly upon demand for its Pro Rata Share of any out-of-pocket expenses
(including, without limitation, attorney's fees and expenses) incurred by the
Agent in connection with the preparation, execution, delivery, administration,
modification, amendment or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respective rights or
responsibilities under, this Credit Agreement and the Credit Documents to the
extent that the Agent is not reimbursed for such expenses by the Borrower;
provided, that no Bank shall be liable for any portion of any such expenses
resulting from the Agent's gross negligence or willful misconduct.
9A.6 ADMINISTRATION.
(a) Agent shall administer and manage the Loans in the ordinary course
of its business and in accordance with its usual practices and that degree
of care it would use in administering, managing, and servicing facilities
of similar size and type for its own account. Each Bank expressly agrees
that, except as expressly otherwise provided herein, Agent shall, in
accordance with such practices and degree of care, make any and all
decisions and is hereby authorized to do or cause to be done any and all
acts regarding the administration of the facilities in accordance with its
sole and absolute discretion.
(b) Unless in each case consented to in writing by all the Banks, the
Agent shall not (i) agree to the modification or waiver of any of the terms
of any of the Credit Documents, or (ii) consent to any act or omission by
the Borrower, or (iii) exercise any rights which the Agent may have with
respect to the Loans, the Notes, or any of the other Credit Documents, if
any such agreement, consent or exercise would:
(i) change or modify the interest rate and repayment provisions
set forth in the Credit Documents;
(ii) increase any Commitment;
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(iii) extend the Maturity Date of any Loan;
(iv) postpone any date for payment or forgive the payment of
principal of, or interest on, the Loans or the payment of any other
sum due under the Credit Documents;
(v) change or modify or waive any Financial Covenant;
(vi) waive any Event of Default; or
(vii) allow any assignment by Borrower of any right or interest
in the Credit Documents.
(c) Other than upon the occurrence of an Event of Default hereunder,
any decision or consent required hereunder shall be made jointly by the
Banks and the Agent instructed accordingly. Upon the occurrence of an Event
of Default hereunder, the Banks shall consult with each other and determine
whether, and in what manner and to what extent, any and all rights
hereunder and under the Credit Documents shall be exercised. The course of
action so agreed upon shall set forth what matters, if any, shall require
the further consent of the Banks and shall be carried out by Agent in its
name on behalf of the Banks.
(d) [Intentionally left blank]
(e) As to any matters which are subject to the consent of all of the
Banks, the Agent shall not be permitted or required to exercise any
discretion or take any action except with such consent. The Agent shall be
fully protected by the Banks severally and in accordance with their
respective Pro Rata Share in so acting or in so refraining from action, but
in no event shall the Agent be required to take any action which exposes
the Agent to personal liability which is contrary to this Credit Agreement
or the Credit Documents or applicable law.
(f) All communications from the Agent to the Banks requesting the
Banks' determination, consent, approval or disapproval shall be given in
the form of a written notice to each Bank containing (i) a reasonably
detailed description of the matter or thing as to which such determination,
approval, consent or disapproval is requested, accompanied by such
information in Agent's possession which, in Agent's opinion, is reasonably
relevant to such determination, approval, consent or disapproval, and (ii)
the course of action and determination recommended by the Agent in respect
thereof. Each Bank shall reply within ten (10) Banking Days after such
written notice is given by Agent, and, if such reply is not so given by a
Bank, such course of action shall be deemed to have been approved by such
Bank.
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9A.7 DEFAULT BY A BANK. In the event that any Bank (the "Defaulting Bank")
fails to make timely payment to Agent of any sum due under this Credit
Agreement, including without limitation, such Bank's Pro Rata Share of any
Advance, Disbursement or liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs and expenses or any other expenses or amounts
due Agent, the non-defaulting Bank may, but shall not be required to, advance
such amount and recover such amount on demand from the Defaulting Bank, together
with interest thereon at the Federal Funds Rate commencing on the date such
amount was made available to Agent and ending on the date Agent recovers such
amount. Until the full repayment is made to Agent of such amount funded on
behalf of the Defaulting Bank together with interest thereon from the date
advanced to the date repaid by the Defaulting Bank at the Federal Funds Rate,
the right of the Defaulting Bank to participate in decisions or consents
hereunder shall be suspended and the entire interest in the Loans of the
Defaulting Bank shall be subordinated to the interest of the non-defaulting Bank
and all payments or recoveries on the Loans received by Agent from any source
whatsoever that would otherwise be credited by Agent to the Defaulting Bank
shall instead be credited to the non-defaulting Bank until full repayment is
made to the non-defaulting Bank. In addition, Agent shall be entitled to
exercise any and all remedies available to it at law or in equity against the
Defaulting Bank.
9A.8 COLLECTIONS; SHARING OF PAYMENTS.
(a) Agent, upon receipt, shall promptly distribute in like funds as
received to each Bank its Pro Rata Share of all payments of principal,
interest and fees received by Agent on or with respect to the Loans,
whether collected from Borrower, or any security for the Loans, or
otherwise, after first deducting any costs, fees or other charges due Agent
hereunder or under the Credit Documents, with the exception of any charge
for the administrative expenses of the Issuing Bank in connection with the
Letters of Credit paid by Borrower pursuant to Section 2.12, which amounts
shall be paid to the Issuing Bank.
(b) If any Bank shall receive and retain any payment, whether by set
off, application of deposit balance or security, or otherwise, in respect
of the obligations of Borrower hereunder in excess of such Bank's Pro Rata
Share, then such Bank shall purchase from the other Bank (for cash and at
face value and without recourse) such participation in the Loans held by it
as shall be necessary to cause such excess payment to be shared ratably as
aforesaid with the other Banks; provided, that if such excess payment or
part thereof is thereafter recovered from such purchasing Bank, the related
purchases from the other Bank shall be rescinded ratably and the purchase
price restored as to the portion of such excess payments so recovered, but
without interest.
9A.9 SUCCESSOR AGENT. The Agent may resign at any time by giving written
notice thereof to the Banks and the Borrower. Borrower and the Banks agree to
execute and deliver to such successor Agent such documents and agreements as
such successor Agent may require to carry out the succession contemplated
herein.
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9A.10 ISSUING BANK. The Issuing Bank shall act on behalf of the Banks with
respect to any Letters of Credit Issued by it and the documents associated
therewith until such time and except for so long as the Agent may agree at the
request of all the Banks to act for such Issuing Bank with respect thereto;
provided, however, that the Issuing Bank shall have all of the benefits and
immunities (i) provided to the Agent in this Article 9A with respect to any acts
taken or omissions suffered by the Issuing Bank in connection with Letters of
Credit Issued by it or proposed to be Issued by it and the application and
agreements for letters of credit pertaining to the Letters of Credit as fully as
if the term "Agent," as used in this Article 9A, included the Issuing Bank with
respect to such acts or omissions, and (ii) as additionally provided in this
Credit Agreement with respect to the Issuing Bank.
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ARTICLE 10
MISCELLANEOUS
10.1 MODIFICATION. Except as otherwise required in Section 9A.6(b), all
modifications, consents, amendments or waivers of any provision of any Credit
Document, or consent to any departure by Borrower therefrom, shall be effective
only if the same shall be in writing and accepted by the Required Banks.
10.2 WAIVER. No failure to exercise, and no delay in exercising, on the
part of the Banks, any right hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise thereof preclude any other further exercise
thereof or the exercise of any other right. The rights of the Banks and Agent
hereunder and under the Credit Documents shall be in addition to all other
rights provided by law. No modification or waiver of any provision of this
Credit Agreement, the Notes or any Credit Documents, nor consent to departure
therefrom, shall be effective unless in writing and no such consent or waiver
shall extend beyond the particular case and purpose involved. No notice or
demand given in any case shall constitute a waiver of the right to take other
action in the same, similar or other instances without such notice or demand.
10.3 PAYMENT OF EXPENSES. Borrower shall pay all costs and expenses of the
Banks and the Agent (including, without limitation, reasonable attorneys' fees
and costs) incurred by the Banks and the Agent in connection with the
documentation of the Loans, and the preservation and enforcement of rights of
the Banks and the Agent under this Credit Agreement, the Notes, and/or the other
Credit Documents; provided, however, that notwithstanding the aforesaid, with
respect to any legal action between the parties hereto that is pursued to
judgment the prevailing party only shall be reimbursed by the other party for
all costs and expenses (including, without limitation, reasonable attorneys'
fees and costs) incurred in connection with the preservation and enforcement of
its rights under this Credit Agreement, the Notes and/or other Credit Documents.
In addition, Borrower shall pay all costs and expenses of the Banks and the
Agent in connection with the negotiation, preparation, execution and delivery of
any and all amendments, modifications and supplements of or to this Credit
Agreement, the Notes or any other Credit Document. In addition Borrower agrees
to and shall indemnify, hold harmless and defend the Banks from any liability,
claims or losses resulting from the disbursement of the proceeds of the Loans
except for their own gross negligence or willful misconduct. This provision
shall survive repayment of the Loans and shall continue in full force and effect
so long as the possibility of such liability, claims or losses exists.
10.4 NOTICES. Except for telephonic notices permitted herein, any notices
or other communications required or permitted to be given by this Credit
Agreement or any other documents and instruments referred to herein must be (i)
given in writing and personally delivered or mailed by prepaid certified or
registered mail, or (ii) made by telefacsimile delivered or transmitted, to the
party to whom such notice or communication is directed, to the address of such
party as follows:
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Company: Three-Five Systems, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Vice President - Administration
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Agent: Imperial Bank
One Arizona Center
▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: Imperial Bank
▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Lending Services
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: Imperial Bank
▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Syndicated Finance Group
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Banks: See Schedule 1.1.
Any notice to be personally delivered may be delivered to the principal offices
(determined as of the date of such delivery) of the party to whom such notice is
directed. Any such notice or other communication shall be deemed to have been
given (whether actually received or not) on the day it is personally delivered
as aforesaid; or, if mailed, on the third day after it is mailed as aforesaid;
or, if transmitted by telefacsimile, on the day that such notice is transmitted
as aforesaid if sent before the end of the normal business hours of recipient.
Any party may change its address for purposes of this Credit Agreement by giving
notice of such change to the other parties pursuant to this Section. Any notice
required to be delivered by the Borrower to the Banks under the Credit Documents
shall be deemed to be so delivered if delivered to the Agent. Borrower agrees
that any notice required to be delivered by the Agent and/or the Banks under the
Credit Documents to the Borrower shall be deemed to be so delivered if delivered
to the Company.
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10.5 GOVERNING LAW; JURISDICTION, VENUE; ARBITRATION.
(a) The Credit Documents shall be governed by and construed in
accordance with the substantive laws (other than conflict laws) of the
State of Arizona, except to the extent the Banks has greater rights or
remedies under Federal law, whether as a national bank or otherwise, in
which case such choice of Arizona law shall not be deemed to deprive the
Banks of any such rights and remedies as may be available under Federal
law. Each party consents to the personal jurisdiction and venue of the
state courts located in Maricopa County, State of Arizona in connection
with any controversy related to this Credit Agreement, waives any argument
that venue in any such forum is not convenient and agrees that any
litigation initiated by any of them in connection with this Credit
Agreement shall be venued in the Superior Court of Maricopa County,
Arizona.
(b) Each Non-U.S. Subsidiary hereby appoints the Company as its agent
for the service of all process in the United States of America.
(c) All claims or controversies of any type regarding matters
occurring at any time arising under or relating to this Credit Agreement
(including, but not limited to, claims under contract, law or statute),
except the parties rights to seek injunctive relief between Borrower and
the Banks (including claims against any shareholders or affiliated entities
of the Banks in claims against any directors, officers, employees or agents
of the Banks or their affiliated entities), shall be settled and finally
determined by one arbitrator in Maricopa County, Arizona, in accordance
with the arbitration rules of JAMS/Endispute and judgment by the arbitrator
may be entered into any court having jurisdiction thereof. This agreement
to arbitrate includes all claims of breach of contract and all other claims
of any type to the maximum extent permissible. The prevailing party in any
such arbitration shall be awarded its reasonable costs and attorneys' fees
as determined by the arbitrator.
10.6 INVALID PROVISIONS. If any provision of any Credit Document is held to
be illegal, invalid or unenforceable under present or future laws during the
term of this Credit Agreement, such provision shall be fully severable; such
Credit Document shall be construed and enforced as if such illegal, invalid or
unenforceable provision had never comprised a part of such Credit Document; and
the remaining provisions of such Credit Document shall remain in full force and
effect and shall not be affected by the illegal, invalid or unenforceable
provision or by its severance from such Credit Document. Furthermore, in lieu of
each such illegal, invalid or unenforceable provision there shall be added as
part of such Credit Document a provision mutually agreeable to Borrower and the
Banks as similar in terms to such illegal, invalid or unenforceable provision as
may be possible and be legal, valid and enforceable.
10.7 BINDING EFFECT. The Credit Documents shall be binding upon and inure
to the benefit of Borrower, the Banks and the Agent and their respective
successors, assigns and legal representatives; provided, however, that Borrower
may not, without the prior written consent of the Banks, assign any rights,
powers, duties or obligations thereunder.
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10.8 ENTIRETY. The Credit Documents embody the entire agreement between the
parties and supersede all prior agreements and understandings, if any, relating
to the subject matter hereof and thereof.
10.9 RELATIONSHIP OF THE BANKS AND BORROWER. The Banks and Borrower each
have separate and independent rights and obligations under this Credit
Agreement. Nothing contained herein shall be construed as creating, forming or
constituting any partnership, joint venture, merger or consolidation of Borrower
and the Banks for any purpose or in any respect.
10.10 TIME OF THE ESSENCE. Time is expressly made of the essence of this
Credit Agreement.
10.11 GOOD FAITH STANDARD. Except where governed by a specific provision of
this Credit Agreement for a specific purpose, whenever the approval or consent
of the Banks is required hereunder, the Banks shall consider the request for
approval or consent on a timely basis, but the Banks shall have such time as may
be reasonably necessary to review and consider such request, as determined in
their sole judgment, and the Banks shall have the right to not give their
approval or consent or to impose such conditions or additional requirements with
respect to their approval or consent as the Banks in their sole judgment shall
determine. Approvals or consents by the Banks shall be effective only when given
in writing, except when otherwise specifically provided herein. The standard by
which the Banks shall be governed with respect to a request for approval or
consent shall be "good faith" as that term is defined in the Arizona Uniform
Commercial Code.
10.12 ASSIGNMENTS AND PARTICIPATIONS; TRANSFEREES.
(a) This Credit Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns,
except that the Borrower may not assign its rights or obligations
hereunder, under any Note or under any other Credit Document without the
prior written consent of all of the Banks.
(b) Each Bank may at any time grant participations in any portion of
the Loans and Credit Documents owned by it to an Affiliate of such Bank
without the consent of the other Banks. Otherwise each Bank may sell,
assign, transfer or otherwise dispose of any portion of its interest
therein (each such grant of a participation or interest so sold, assigned,
transferred or disposed of being herein called a "Transferred Interest") to
other financial institutions ("Transferees") only with the consent of the
other Banks. In addition, each Bank may pledge any portion of its Notes for
security purposes to any Federal Reserve Bank. Without in any way limiting
the rights of Transferees hereunder, the Borrower agrees that each
Transferee shall be entitled to the benefits of the Credit Documents to the
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extent of its Transferred Interest as if it were the "Bank" in an aggregate
amount equal to such Transferred Interest, and that each Transferee may
exercise any and all rights of banker's lien, setoff and counterclaim
available pursuant to law with respect to its Transferred Interest as fully
as if such Transferee were a direct lender to the Borrower. Borrower shall
not be obligated to deal with or communicate with any such participant.
(c) As to any such assignment to a Transferee, (i) each such
assignment shall be of a constant, and not a varying, percentage of all the
assigning Bank's rights and obligations under this Credit Agreement, (ii)
the amount of the Commitment of the assigning Bank subject to each such
assignment (determined as of the date the Assignment and Acceptance with
respect to such assignment is delivered to the Agent) shall not be less
than $1,000,000.00, (iii) the amount of the Commitment retained by the
assigning Bank, unless the Assignment and Acceptance covers all or the
remaining portion of the assigning Bank's interest, rights and obligations
under this Credit Agreement, after each such assignment shall not be less
than $1,000,000.00, (iv) the parties to each such assignment shall execute
and deliver to the Agent an Assignment and Acceptance, together with the
Note or Notes subject to such assignment, and (v) the Transferee, if it
shall not be a Bank, shall deliver to the Agent an Administrative
Questionnaire. Upon acceptance and recording pursuant to paragraph (f) of
this Section, from and after the effective date specified in each
Assignment and Acceptance, (A) the Transferee thereunder shall be a party
hereto and shall become a "Bank" hereunder, and, to the extent of the
interest assigned by such Assignment and Acceptance, have all the rights
and obligations of a Bank under this Credit Agreement and (B) the assigning
Bank thereunder shall, to the extent of the interest assigned by such
Assignment and Acceptance, be released from its obligations under this
Credit Agreement (and, in the case of an Assignment and Acceptance covering
all or the remaining portion of an assigning Bank's rights and obligations
under this Credit Agreement, such Bank shall cease to be a party hereto
(but shall continue to be entitled to the benefits of Sections 3.6, 3.7(b)
and 10.3).
(d) By executing and delivering an Assignment and Acceptance, the
assigning Bank thereunder and the Transferee thereunder shall be deemed to
confirm to and agree with each other and the other parties hereto as
follows: (i) such assigning Bank warrants that it is the legal and
beneficial owner of the interest being assigned thereby free and clear of
any adverse claim and that its Commitment and the outstanding balances of
its Loans, without giving effect to assignments thereof which have not
become effective, are as set forth in such Assignment and Acceptance, (ii)
except as set forth in (i) above, such assigning Bank makes no
representation or warranty and assumes no responsibility with respect to
any statements, warranties or representations made in or in connection with
this Credit Agreement, or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Credit Agreement,
any other Credit Document or any other instrument or document furnished
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pursuant hereto or the financial condition of the Borrower or the
performance or observance by the Borrower of any of its obligations under
this Credit Agreement, any other Credit Document or any other instrument or
document furnished pursuant hereto; (iii) such Transferee represents and
warrants that it is legally authorized to enter into such Assignment and
Acceptance; (iv) such Transferee confirms that it has received a copy of
this Credit Agreement, together with copies of the most recent financial
statements delivered pursuant to Section 7.1 and such other documents and
information as it has deemed appropriate to make its own credit analysis
and decision to enter into such Assignment and Acceptance; (v) such
Transferee will independently and without reliance upon the Agent, such
assigning Bank or any other Bank and based on such documents and
information as it shall deem appropriate at the time, continue to make its
own credit decisions in taking or not taking action under this Credit
Agreement; (vi) such Transferee appoints and authorizes the Agent to take
such action as agent on its behalf and to exercise such powers under this
Credit Agreement as are delegated to the Agent by the terms hereof,
together with such powers as are reasonably incidental thereto; and (vii)
such Transferee agrees that it will perform in accordance with their terms
all the obligations which by the terms of this Credit Agreement are
required to be performed by it as a Bank.
(e) The Agent shall maintain at one of its offices in Phoenix,
Arizona, a copy of each Assignment and Acceptance delivered to it and a
register for the recordation of the names and addresses of the Banks, and
the Commitment of, and principal amount of the Loans owing to, each Bank
pursuant to the terms hereof from time to time (the "Register"). The
entries in the Register shall be conclusive in the absence of manifest
error and the Borrower, the Agent and the Banks may treat each Person whose
name is recorded in the Register pursuant to the terms hereof as a Bank
hereunder for all purposes of this Credit Agreement. The Register shall be
available for inspection by the Borrower and any Bank, at any reasonable
time and from time to time upon reasonable prior notice.
(f) Upon its receipt of a duly completed Assignment and Acceptance
executed by an assigning Bank and an Transferee together with the Note or
Notes subject to such assignment, an Administrative Questionnaire completed
in respect of the Transferee (unless the Transferee shall already be a Bank
hereunder), the Agent shall (i) accept such Assignment and Acceptance, (ii)
record the information contained therein in the Register, and (iii) give
prompt notice thereof to the Banks. Within five Banking Days after receipt
of notice, the Borrower, as applicable, shall execute and deliver to the
Agent, in exchange for the surrendered Note or Notes, a new Note or Notes
to the order of such assigning Bank in a principal amount equal to the
applicable Commitment retained by it. Such new Note or Notes shall be in an
aggregate principal amount equal to the aggregate principal amount of such
surrendered Note or Notes; such new Notes shall be dated the date of the
surrendered Notes which they replace and shall otherwise be in
substantially the applicable form of Exhibit "C" hereto.
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10.13 HEADINGS. Section headings are for convenience of reference only and
shall in no way affect the interpretation of this Credit Agreement.
10.14 SURVIVAL. All representations and warranties made by Borrower herein
shall survive delivery of the Notes and the making of the Loans.
10.15 NO THIRD PARTY BENEFICIARY. The parties do not intend the benefits of
this Credit Agreement to inure to any third party, nor shall this Credit
Agreement be construed to make or render the Banks and the Agent liable to any
materialman, supplier, contractor, subcontractor, purchaser or lessee of any
property owned by Borrower, or for debts or claims accruing to any such persons
against Borrower. Notwithstanding anything contained herein or in the Notes, or
in any other Credit Document, or any conduct or course of conduct by any or all
of the parties hereto, before or after signing this Credit Agreement or any of
the other Credit Documents, neither this Credit Agreement nor any other Credit
Document shall be construed as creating any right, claim or cause of action
against the Banks and the Agent, or any of their officers, directors, agents or
employees, in favor of any materialman, supplier, contractor, subcontractor,
purchaser or lessee of any property owned by Borrower, nor to any other person
or entity other than Borrower.
10.16 JOINT LIABILITY.
(a) The Company and the Co-Borrowers each: (a) agrees that the
liability hereunder of all parties hereto is joint and several; and (b)
consents that the Banks may extend the time of payment or otherwise modify
the terms of payment of any part or the whole of the debt evidenced hereby,
at the request of any other person liable hereon, and such consent shall
not alter nor diminish the liability of any person hereon.
(b) In addition, the Company and the Co-Borrowers each waives and
agrees not to assert: (a) any right to require the Banks to proceed against
the obligations, to proceed against or exhaust any security for the
obligations, to pursue any other remedy available to the Banks, or to
pursue any remedy in any particular order or manner; (b) the benefit of any
statute of limitations affecting its liability hereunder or the enforcement
hereof; (c) the benefits of any legal or equitable doctrine or principle of
marshalling; (d) notice of the existence, creation or incurring of new or
additional indebtedness of Borrower to the Banks; (e) the benefits of any
statutory provision limiting the liability of a surety, including without
limitation the provisions of Sections 12-1641, ET SEQ., of the Arizona
Revised Statutes; (f) any defense arising by reason of any disability or
other defense of Borrower or by reason of the cessation from any cause
whatsoever (other than payment in full) of the liability of Borrower for
payment of any other party hereto; and (g) the benefits of any statutory
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provision limiting the right of the Banks to recover a deficiency judgment,
or to otherwise proceed against any person or entity obligated for payment
of the obligations, after any foreclosure or trustee's sale of any security
for the obligations, including without limitation the benefits, if any, to
a surety of Arizona Revised Statutes Section 33-814. Until payment in full
of the obligations and the Banks have no obligation to make any further
advances of the proceeds hereof, no party shall have any right of
subrogation and each hereby waives any right to enforce any remedy which
the Banks now have, or may hereafter have, against Borrower or any other
party, and waives any benefit of, and any right to participate in, any
security now or hereafter held by the Banks.
10.17 SCHEDULES AND EXHIBITS INCORPORATED. All schedules and exhibits
attached hereto are hereby incorporated into this Credit Agreement by each
reference thereto as if fully set forth at each such reference.
10.18 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY KNOWINGLY,
VOLUNTARILY, AND INTENTIONALLY WAIVES ANY RIGHTS IT MAY HAVE TO REQUIRE A TRIAL
BY JURY IN ANY COURT ACTION PERTAINING TO OBLIGATIONS SECURED OR THE CREDIT
DOCUMENTS, AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A
COURT AND NOT BEFORE A JURY.
10.19 COUNTERPARTS. This Credit Agreement may be executed in multiple
counterparts, each of which, when so executed, shall be deemed an original but
all such counterparts shall constitute but one and the same agreement.
IN WITNESS WHEREOF, the undersigned have executed this Credit Agreement as
of the day and year first above written.
THREE-FIVE SYSTEMS, INC., a Delaware
corporation
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------------
Title: Executive V.P. / CFO
----------------------------------
COMPANY
-59-
THREE-FIVE SYSTEMS (BEIJING), LTD., a
wholly foreign owned enterprise
organized under the laws of the People's
Republic of China.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------------
Title: Legal Representative
----------------------------------
THREE-FIVE SYSTEMS PACIFIC, INC., a
Philippine corporation
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------------
Title: Executive V.P. / CFO
----------------------------------
THREE-FIVE SYSTEMS LIMITED, a
corporation organized under the laws of
the United Kingdom
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------------
Title: Executive V.P. / CFO
----------------------------------
CO-BORROWERS
IMPERIAL BANK, a California banking
corporation
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------------
Title: S.V.P.
----------------------------------
AGENT AND BANK
-60-
SCHEDULE 1.1
PRO RATA SHARE AND NOTICE ADDRESS OF EACH BANK
PRO RATA SHARE: IMPERIAL
-------------- --------
RLC Commitment $25,000,000
NOTICE ADDRESS:
--------------
Imperial: Imperial Bank
▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
SCHEDULE 6.17
SUBSIDIARIES
1. Three-Five Systems (Beijing), Ltd., a wholly foreign owned enterprise
organized under the laws of the People's Republic of China.
2. Three-Five Systems Pacific, Inc., a Philippine corporation.
3. Three-Five Systems Limited, a corporation organized under the laws of
the United Kingdom.
SCHEDULE 8.2
EXISTING LIENS
1. Any liens related to Borrower's line of credit with Barclays Bank PLC
(U.K.) Secured by U.K. receivables and inventory.
2. Lien to Pitney ▇▇▇▇▇ Credit per Arizona UCC-1 Financing Statement dated
February 15, 1995 filed February 21, 1995 with the Arizona Secretary of
State No. 820568.
3. Lien to Pitney ▇▇▇▇▇ Credit Corporation for Arizona UCC-1 Financing
Statement filed April 27, 1998 with the Arizona Secretary of State No.
01014229.
EXHIBIT "A"
COMPLIANCE CERTIFICATE FOR
FISCAL QUARTER ENDING
_____________, 20___
("REPORTING QUARTER")
Imperial Bank
One Arizona Center
▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Date: _____________(1)
Dear Ladies and Gentlemen:
This Compliance Certificate refers to the Credit Agreement dated as of
January 21, 2000 (as it may hereafter be amended, modified, extended or restated
from time to time, the "Credit Agreement"), between Three-Five Systems, Inc., an
Arizona corporation ("Company"), all present and future Subsidiaries of the
Company, the Banks named therein and Imperial Bank, a California banking
corporation as Agent. Capitalized terms used and not otherwise defined herein
shall have the meanings assigned to such terms in the Credit Agreement.
Pursuant to Section 7.1 of the Credit Agreement, the undersigned, an
Authorized Officer of Borrower, hereby certifies that:
1. Enclosed are the required financial statements for the [quarter] [fiscal
year] ending for the Borrower as required under Section 7.1 of the Credit
Agreement, which, to the undersigned's knowledge, after due inquiry, fairly
present in all material respects the financial position of the Borrower and the
results of its operations at the dates and for the periods indicated, and have
been prepared in accordance with GAAP.
2. To the best of the undersigned's knowledge, no "Event of Default" has
occurred [or if so, specifying the nature and extent thereof and any corrective
actions taken or to be taken].
----------
(1) To be submitted within 45 days after the end of each fiscal quarter and 90
days of each fiscal year of Borrower.
3. As of the last day of the Reporting Quarter, the computations below were
true and correct:
I. Section 8.11(a) - TANGIBLE NET WORTH
Shareholder's equity (capital stock,
paid-in capital, retained earnings)
-------------
less treasury stock
-------------
less Intangible Assets
-------------
equals Tangible Net Worth A
-------------
covenant requirement:
Initial Tangible Net Worth as of
September 30, 1999 $88,000,000 C
-------------
plus fifty percent (50.0%) of the
aggregate quarterly positive Net Income,
commencing 12/31/99
-------------
plus additional equity raised
-------------
equals covenant requirement B
-------------
A is required to be greater than or equal to B A>=B
=============
II. Section 8.11(b) - LEVERAGE RATIO (in thousands)
Numerator: Funded Debt $ A
-------------
divided by
Denominator: Equity B
-------------
Ratio equals A/B
-------------
Maximum
-------------
III. Section 8.11(c) - DEBT COVERAGE RATIO (ROLLING 4 QUARTERS)
Numerator: Net Income
-------------
-2-
plus tax expense
-------------
plus depreciation
-------------
plus amortization
-------------
plus interest expense
-------------
less taxes actually paid in cash
-------------
equals Cash Flow A
-------------
divided by
Denominator: CPLTD
-------------
plus CP Capital Leases
-------------
plus interest expense
-------------
equals Debt Service Requirement B
-------------
Ratio equals A/B
=============
Minimum 3.0x
=============
IV. Section 8.11(d) - NET INCOME
Two consecutive fiscal quarters (beginning
with 12/31/99)
-------------
Fiscal Year
-------------
Minimum $ 0
-------------
THREE-FIVE SYSTEMS, INC., a Delaware
corporation
By:
------------------------------------
Name:
-----------------------------------
Its:
-----------------------------------
-3-
EXHIBIT "B"
FORM OF ADVANCE NOTICE
Imperial Bank
One Arizona Center
▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Date:______________
Time:______________
Dear Ladies and Gentlemen:
The undersigned, Three-Five Systems, Inc., a Delaware corporation
("Company"), refers to the Credit Agreement dated as of January 21, 2000 (as it
may hereafter be amended, modified, extended or restated from time to time, the
"Credit Agreement"), between Company, all present and future Subsidiaries of the
Company, the Banks named therein and Imperial Bank, a California banking
corporation as Agent. Capitalized terms used herein and not otherwise defined
herein shall have the meanings assigned to such terms in the Credit Agreement.
The Borrower hereby gives notice that it requests an Advance pursuant to
the Credit Agreement and sets forth below the terms of such requested Advance:
A. Date of Advance
-------------
B. Principal Amount of Advance(1)
-------------
C. Type of Advance(2)
-------------
----------
(1) Each Advance shall be a principal amount which is not less than $500,000.00
with integral multiples of $1,000.00.
(2) Variable Rate or LIBOR Rate Advance.
FROM: THROUGH:
------------ ------------
D. LIBOR Interest Period(1)
------------ ------------
Maturity Date
------------
E. Conversion (Identity of Advance
to be Converted)
Date
------------
Type
------------
Amount
------------
Maturity Date
------------
Sincerely,
THREE-FIVE SYSTEMS, INC., a Delaware
corporation
By
-------------------------------------
Its
---------------------------------
----------
(1) One, two, three or six months and end not later than the Maturity Date.
-2-
EXHIBIT "C"
FORM OF NOTES
EXHIBIT "C"
REVOLVING PROMISSORY NOTE
(RLC)
$_______________ Phoenix, Arizona
______________, 2000
FOR VALUE RECEIVED, the undersigned (hereinafter called "Maker"), promises
to pay to the order of _________________________________________________ (the
"Payee"; Payee and each subsequent transferee and/or owner of this Note, whether
taking by endorsement or otherwise, are herein successively called "Holder"), at
Imperial Bank, 9920 South La Cienega Boulevard, Lending Services, ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or at such other place as Holder may from time to time
designate in writing, the principal sum of ____________________
___________________________ AND NO/100 DOLLARS ($_____________) or so much
thereof as Holder may advance to or for the benefit of Maker plus interest
calculated on a daily basis (based on a 360-day year) from the date hereof on
the principal balance from time to time outstanding as hereinafter provided,
principal, interest and all other sums payable hereunder to be paid in lawful
money of the United States of America as follows:
1 Interest shall accrue:
1.1 On the unpaid principal of an RLC Advance at the Variable
Rate, except to the extent that an RLC Advance bears interest at the
LIBOR Based Rate.
1.2 On the unpaid principal of an RLC Advance at the LIBOR Based
Rate, to the extent Borrower shall elect and to the extent not
otherwise provided in the Credit Agreement.
2 All accrued interest through the end of the preceding month shall
be due and payable on each Payment Date.
3 The entire unpaid principal balance, all accrued and unpaid
interest, and all other amounts payable hereunder shall be due and payable
in full on the RLC Maturity Date.
The "Variable Rate" means the rate per annum equal to the Prime Rate per
annum as in effect from time to time; the Variable Rate shall change on each day
that the "Prime Rate" changes. The LIBOR Based Rate means the rate per annum
equal (A) to the sum of LIBOR and one hundred fifty basis points (150 bp),
divided by (B) a percentage equal to one hundred percent (100%) minus the
Eurodollar Rate Reserve Percentage with respect to the applicable LIBOR Interest
Period. The "RLC Maturity Date" means January 19, 2001.
The principal balance of this Note represents a revolving credit all or any
part of which may be advanced to Maker, repaid by Maker, and re-advanced to
Maker from time to time, subject to the other terms hereof and the conditions,
if any, contained in the hereinafter defined Credit Agreement, and provided that
the principal balance outstanding at any one time shall not exceed the face
amount hereof.
Maker agrees to an effective rate of interest that is the rate stated above
plus any additional rate of interest resulting from any other charges in the
nature of interest paid or to be paid by or on behalf of Maker, or any benefit
received or to be received by Holder, in connection with this Note.
This Note is issued pursuant to that Credit Agreement dated as of January
21, 2000 (the "Credit Agreement") between Maker, the Banks named therein and
Imperial Bank, a California banking corporation as Agent. Capitalized terms used
and not otherwise defined herein shall have the meanings assigned to such terms
in the Credit Agreement.
Time is of the essence of this Note.
Maker shall pay all costs and expenses, including reasonable attorneys'
fees and court costs, incurred in the collection or enforcement of all or any
part of this Note.
Failure of Holder to exercise any option hereunder shall not constitute a
waiver of the right to exercise the same in the event of any subsequent default
or in the event of continuance of any existing default after demand for strict
performance hereof.
Maker and all sureties, guarantors and/or endorsers hereof (or of any
obligation hereunder) and accommodation parties hereon (severally each
hereinafter called a "Surety") each: (a) agree that the liability under this
Note of all parties hereto is joint and several; (b) severally waive any and all
formalities in connection with this Note to the maximum extent allowed by law,
including (but not limited to) demand, diligence, presentment for payment,
protest and demand, and notice of extension, dishonor, protest, demand and
nonpayment of this Note; and (c) consent that Holder may extend the time of
payment or otherwise modify the terms of payment of any part or the whole of the
debt evidenced by this Note, at the request of any other person liable hereon,
and such consent shall not alter nor diminish the liability of any person
hereon.
This Note shall be binding upon Maker and its successors and assigns and
shall inure to the benefit of Payee, and any subsequent holders of this Note,
and their successors and assigns.
All notices required or permitted in connection with this Note shall be
given at the place and in the manner provided in the Credit Agreement for the
giving of notices.
If any payment of interest and/or principal is not received by the Holder
hereof when such payment is due, then in addition to the remedies conferred upon
the Holder hereof and the other loan documents, a late charge of five percent
(5%) of the amount of the installment due and unpaid will be added to the
-2-
delinquent amount to compensate the Holder hereof for the expense of handling
the delinquency for any payment past due in excess of ten (10) days, regardless
of any notice and cure period.
This Note shall be governed by and construed in accordance with the
substantive laws (other than conflict laws) of the State of Arizona, except to
the extent Holder has greater rights or remedies under Federal law, whether as a
national bank or otherwise, in which case such choice of Arizona law shall not
be deemed to deprive Holder of any such rights and remedies as may be available
under Federal law. Each party consents to the personal jurisdiction and venue of
the state courts located in Maricopa County, State of Arizona in connection with
any controversy related to this Note, waives any argument that venue in any such
forum is not convenient and agrees that any litigation initiated by any of them
in connection with this Note shall be venued in the Superior Court of Maricopa
County, Arizona.
This Note may be executed in multiple counterparts, each of which, when so
executed, shall be deemed an original but all such counterparts shall constitute
but one and the same instrument.
IN WITNESS WHEREOF, these presents are executed as of the date first
written above.
THREE-FIVE SYSTEMS, INC., a Delaware
corporation
By:
------------------------------------
Name:
-----------------------------------
Its:
-----------------------------------
THREE-FIVE SYSTEMS (BEIJING), LTD., a
wholly foreign owned enterprise
organized under the laws of the People's
Republic of China
By:
------------------------------------
Name:
-----------------------------------
Its:
-----------------------------------
-3-
THREE-FIVE SYSTEMS PACIFIC, INC., a
Philippine corporation
By:
------------------------------------
Name:
-----------------------------------
Its:
-----------------------------------
THREE-FIVE SYSTEMS LIMITED, a
corporation organized under the laws of
the United Kingdom
By:
------------------------------------
Name:
-----------------------------------
Its:
-----------------------------------
MAKER
-4-
EXHIBIT "D"
ASSUMPTION AGREEMENT
BY THIS ASSUMPTION AGREEMENT (the "Agreement") made and entered into as of
the _____ day of _________________, 2000, ______________________________________
_______________________________________________________________, whose address
is _____________________________________________________________________________
(hereinafter called "Added Borrower"), in favor of IMPERIAL BANK, a California
banking corporation as Agent, whose address is ▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ Services, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (hereinafter called Agent"), in
consideration of the recitals herein contained and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged,
confirms and agrees as follows:
SECTION 1. RECITALS.
1.1 Added Borrower is a Subsidiary and an Affiliate (as those terms are
defined in the Credit Agreement hereinafter defined) of Three-Five Systems,
Inc., a Delaware corporation (the "Company"), and its then existing Subsidiaries
(with the Company, the "Borrower").
1.2 As such, Added Borrower is benefitted by the financial accommodations
(the "Loans") advanced by the Banks to the Borrower pursuant to that Credit
Agreement dated January 21, 2000 among the Banks named therein, the Agent and
Borrower (the "Credit Agreement").
1.3 A condition for the continuation of the Loans specified in the Credit
Agreement is that any subsequently acquired or created Subsidiary of the Company
assume as a "Co-Borrower" within the meaning of Section 7.17 of the Credit
Agreement the obligations of the Borrower under the Credit Agreement, and agree
to be bound by all of the terms, conditions and provisions thereof, and agree to
be jointly liable with the Borrower for the full payment and satisfaction of the
Loans and all other obligations of the Borrower under the Credit Agreement.
1.4 Because of the benefits derived by the Added Borrower from said
financial accommodations, which consideration is acknowledged by Added Borrower
as sufficient for its agreements herein, Added Borrower desires to so agree.
SECTION 2. ASSUMPTION.
2.1 Added Borrower hereby assumes as a "Co-Borrower" and agrees to perform
as a "Co-Borrower" all of the duties, obligations and promises of Borrower as
set forth in or arising under the Credit Agreement, to be bound as a Co-Borrower
by all of the terms, conditions and provisions of the Credit Agreement and to do
as a Co-Borrower any and all acts and things required under the Credit Agreement
to be done by Borrower.
SECTION 3. MISCELLANEOUS.
3.1 Added Borrower shall execute such additional documents and do such
other acts as may be reasonably necessary to fully implement the intent of this
Agreement.
3.2 This Agreement shall be governed by and construed according to the laws
of the State of Arizona.
3.3 This Agreement shall be binding upon, and shall inure to the benefit
of, the parties hereto and their heirs, personal representatives, successors and
assigns.
IN WITNESS WHEREOF, these presents are executed as of the date indicated
above.
----------------------------------------
By
-------------------------------------
Its
---------------------------------
ADDED BORROWER
-2-
EXHIBIT "E"
ADMINISTRATIVE DETAILS REPLY FORM
Re: Revolving Line of Credit for Three-Five Systems, Inc., a Delaware
corporation, and its Subsidiaries
1. NAME OF ENTITY FOR SIGNATURE PAGE:
---------------------------------------
2. NAME OF ENTITY AS IT SHOULD
APPEAR IN ANY PUBLICITY:
(if different than above)
---------------------------------------
3. NAME OF PERSON TO RECEIVE DRAFT
CREDIT AGREEMENT AT BANK:
---------------------------------------
4. NAME OF PERSON TO SIGN
CREDIT AGREEMENT:
---------------------------------------
5. CONTACTS: CREDIT CONTACT OPERATIONS CONTACT LEGAL COUNSEL
---------------- ------------------ -----------------
Name:
---------------- ------------------ -----------------
Title:
---------------- ------------------ -----------------
Address:
---------------- ------------------ -----------------
---------------- ------------------ -----------------
---------------- ------------------ -----------------
Telephone:
---------------- ------------------ -----------------
Facsimile #:
---------------- ------------------ -----------------
Telex #:
---------------- ------------------ -----------------
Answerback:
---------------- ------------------ -----------------
6. PAYMENT INSTRUCTIONS:
Method of Payment: Fedwire Chips
------------------- -----------------
Pay to:
----------------------------------------------------
Name of Bank:
----------------------------------------------------
City, State, Zip:
----------------------------------------------------
ABA Number: Reference:
---------------- ----------------------
Account Number: Account Name:
---------------- --------------------
Attention:
----------------------------------------------------
-2-
EXHIBIT "F"
ASSIGNMENT AND ACCEPTANCE
______________, 2000
Reference is made to the Credit Agreement dated as of January 21, 2000 (the
"Credit Agreement"), among THREE-FIVE SYSTEMS, INC., a Delaware corporation, and
its Subsidiaries (collectively, the "Borrower"), the banks named therein (the
"Banks") and IMPERIAL BANK, a California banking corporation, as Agent (in such
capacity, the "Agent"). Terms defined in the Credit Agreement and not otherwise
defined herein shall have the meanings assigned to such terms in the Credit
Agreement.
1. The Assignor hereby sells and assigns, without recourse, to the
Assignee, and the Assignee hereby purchases and assumes, without recourse, from
the Assignor, effective as of the Effective Date set forth on the reverse
hereof, the interests set forth on the reverse hereof (the "Assigned Interest")
in the Assignor's rights and obligations under the Credit Agreement, including,
without limitation, the interests set forth on the reverse hereof in the
Commitment of the Assignor on the Effective Date and the Loans owing to the
Assignor which are outstanding on the Effective Date, together with unpaid
interest accrued on the assigned Loans to the Effective Date and the amount, if
any, set forth on the reverse hereof of the Fees accrued to the Effective Date
for the account of the Assignor. Each of the Assignor and the Assignee hereby
makes and agrees to be bound by all the representations, warranties and
agreements set forth in Section 10.12 of the Credit Agreement, a copy of which
has been received by each such party. From and after the Effective Date (i) the
Assignee shall be a party to and be bound by the provisions of the Credit
Agreement and, to the extent of the interests assigned by this Assignment and
Acceptance, have the rights and obligations of a Bank thereunder and under the
Loan Documents and (ii) the Assignor shall, to the extent of the interests
assigned by this Assignment and Acceptance, relinquish its rights and be
released from its obligations under the Credit Agreement.
2. This Assignment and Acceptance is being delivered to the Agent together
with (i) the Notes evidencing the Loans included in the Assigned Interest, (ii)
if the Assignee is not already a Bank under the Credit Agreement, an
Administrative Details Reply Form in the form of Exhibit "E" to the Credit
Agreement and (iii) a processing fee of $2,500.00.
3. This Assignment and Acceptance shall be governed by and construed in
accordance with the laws of the State of Arizona.
Date of Assignment:
Legal Name of Assignor:
Legal Name of Assignee:
Assignee's Address for Notice:
Effective Date of Assignment:
Percentage Assigned of Commitment
(set forth as a percentage of the
Commitment and the aggregate
Commitments of all Banks
thereunder)
Principal Amount Assigned
Commitment $________________ ______________%
Assigned:
Loans: $________________
Fees Assigned
(if any): $________________
The terms set forth above and
on the reverse side hereof are
hereby agreed to: Accepted
, as Assignor
-------------------- ----------------------------------------------
By By
--------------------------------- -------------------------------------
Its Its
------------------------------ ---------------------------------
, as Assignor
-------------------- ----------------------------------------------
By By
--------------------------------- -------------------------------------
Its Its
------------------------------ ---------------------------------
-2-