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EXHIBIT 10.19
LOAN AND SECURITY AGREEMENT
DATED AS OF JUNE 30, 1997
AMONG
BANKAMERICA BUSINESS CREDIT, INC.
AS THE LENDER
AND
CALIFORNIA MICROWAVE, INC.
AND
EFDATA CORP.
AS JOINT AND SEVERAL BORROWERS
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TABLE OF CONTENTS
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1. DEFINITIONS........................................................ 1
1.1 Defined Terms............................................... 1
1.2 Accounting Terms............................................ 24
1.3 Other Terms................................................. 24
2. LOANS, LETTERS OF CREDIT AND BELGIAN GUARANTIES.................... 25
2.1 Total Facility.............................................. 25
2.2 Revolving Loans............................................. 25
2.3 Letters of Credit........................................... 27
2.4 Belgian Guaranties.......................................... 31
2.5 ACH Transactions and FX Transactions........................ 32
3. INTEREST AND OTHER CHARGES......................................... 33
3.1 Interest.................................................... 33
3.2 Conversion and Continuation Elections....................... 34
3.3 Maximum Interest Rate....................................... 35
3.4 Facility Fee................................................ 36
3.5 Collateral Management Fee................................... 36
3.6 Letter of Credit Fee........................................ 36
3.7 Belgian Guaranty Fee and Dollar Equivalent Amounts.......... 36
4. PAYMENTS........................................................... 37
4.1 Repayments.................................................. 37
4.2 Place and Form of Payments; Extension of Time............... 37
4.3 Application and Reversal of Payments........................ 37
4.4 INDEMNITY FOR RETURNED PAYMENTS............................. 38
5. LENDER'S BOOKS AND RECORDS; MONTHLY STATEMENTS..................... 38
6. TAXES, YIELD PROTECTION AND ILLEGALITY............................. 38
6.1 Taxes....................................................... 38
6.2 Illegality.................................................. 39
6.3 Increased Costs and Reduction of Return..................... 40
6.4 Funding Losses.............................................. 40
6.5 Inability to Determine Rates................................ 41
6.6 Survival.................................................... 41
7. COLLATERAL......................................................... 41
7.1 Grant of Security Interest.................................. 41
7.2 Perfection and Protection of Security Interest.............. 42
7.3 Location of Collateral...................................... 43
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7.4 Title to, Liens on, and Sale and Use of Collateral.......... 43
7.5 Appraisals.................................................. 43
7.6 Access and Examination...................................... 43
7.7 Insurance................................................... 44
7.8 Collateral Reporting........................................ 44
7.9 Accounts.................................................... 45
7.10 Collection of Accounts; Payments............................ 46
7.11 Inventory................................................... 47
7.12 Equipment................................................... 47
7.13 Documents, Instruments, and Chattel Paper................... 48
7.14 Right to Cure............................................... 48
7.15 Power of Attorney........................................... 48
7.16 Lender's Rights, Duties, and Liabilities.................... 49
7.17 Site Visits, Observations and Testing....................... 49
7.18 Release of Security Interest in Equipment................... 50
8. BOOKS AND RECORDS; FINANCIAL INFORMATION; NOTICES.................. 50
8.1 Books and Records........................................... 50
8.2 Financial Information....................................... 50
8.3 Notices to Lender........................................... 52
8.4 Sharing of Information...................................... 54
9. GENERAL WARRANTIES AND REPRESENTATIONS............................. 54
9.1 Authorization, Validity, and Enforceability of this
Agreement and the Loan Documents.......................... 54
9.2 Validity and Priority of Security Interest.................. 54
9.3 Organization and Qualification.............................. 55
9.4 Corporate Name; Prior Transactions.......................... 55
9.5 Subsidiaries and Affiliates................................. 55
9.6 Financial Statements and Projections........................ 55
9.7 Capitalization.............................................. 56
9.8 Solvency.................................................... 56
9.9 Debt........................................................ 56
9.10 Distributions............................................... 56
9.11 Title to Property........................................... 56
9.12 Adequate Assets............................................. 56
9.13 Real Property; Leases....................................... 57
9.14 Proprietary Rights.......................................... 57
9.15 Trade Names and Terms of Sale............................... 57
9.16 Litigation.................................................. 57
9.17 Restrictive Agreements...................................... 57
9.18 Labor Disputes.............................................. 57
9.19 Environmental Laws.......................................... 58
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9.20 No Violation of Law.......................................... 59
9.21 No Default................................................... 59
9.22 ERISA Compliance............................................. 59
9.23 Taxes........................................................ 60
9.24 Use of Proceeds.............................................. 60
9.25 Private Offerings............................................ 60
9.26 Broker's Fees................................................ 60
9.27 Patent and Trademark Assignments............................. 60
9.28 No Material Adverse Change................................... 61
9.29 Disclosure................................................... 61
9.30 Motorola Letter.............................................. 61
10. AFFIRMATIVE AND NEGATIVE COVENANTS.................................. 61
10.1 Taxes and Other Obligations.................................. 61
10.2 Corporate Existence and Good Standing........................ 61
10.3 Compliance with Law and Agreements........................... 61
10.4 Maintenance of Property and Insurance........................ 61
10.5 Environmental Laws........................................... 62
10.6 ERISA........................................................ 62
10.7 Mergers, Consolidations, Acquisitions, or Sales.............. 62
10.8 Distributions; Capital Changes............................... 62
10.9 Transactions Affecting Collateral or Obligations............. 62
10.10 Guaranties................................................... 62
10.11 Debt......................................................... 63
10.12 Prepayment................................................... 63
10.13 Transactions with Affiliates................................. 63
10.14 Joint Ventures............................................... 63
10.15 Business Conducted........................................... 63
10.16 Liens........................................................ 63
10.17 Sale and Leaseback Transactions.............................. 63
10.18 New Subsidiaries............................................. 64
10.19 Restricted Investments....................................... 64
10.20 Subsidiaries................................................. 64
10.21 Operating Lease Obligations.................................. 64
10.22 Minimum Fixed Coverage....................................... 64
10.23 Adjusted Tangible Net Worth.................................. 64
10.24 Further Assurances........................................... 65
10.25 ABN AMRO Agreement, Maturity Factoring Agreement,
Permitted Equipment Sale Financing
and Subordinated Note Agreements........................... 65
10.26 ABN AMRO Agreement Sales..................................... 65
10.27 Maturity Factoring Agreement UCC Forms....................... 65
10.28 Belgian Guaranties........................................... 65
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11. CONDITIONS TO CLOSING............................................... 65
11.1 Conditions Precedent to Making of Loans and Issuance
of Letters of Credit on the Closing Date................... 65
11.2 Conditions Precedent to Each Loan............................ 67
12. DEFAULT............................................................. 68
12.1 Events of Default............................................ 68
13. REMEDIES............................................................ 70
14. TERM AND TERMINATION................................................ 71
15. MISCELLANEOUS....................................................... 72
15.1 Cumulative Remedies; No Prior Recourse to Collateral......... 72
15.2 No Implied Waivers........................................... 72
15.3 Severability................................................. 72
15.4 Governing Law................................................ 72
15.5 Consent to Jurisdiction and Venue; Service of Process........ 73
15.6 Waiver of Jury Trial......................................... 73
15.7 Arbitration; Reference Proceeding............................ 73
15.8 Survival of Representations and Warranties................... 74
15.9 Other Security and Guaranties................................ 74
15.10 Fees and Expenses............................................ 75
15.11 Notices...................................................... 75
15.12 Indemnification.............................................. 76
15.13 Waiver of Notices............................................ 77
15.14 Binding Effect; Assignment................................... 78
15.15 Modification................................................. 78
15.16 Counterparts................................................. 78
15.17 Captions..................................................... 78
15.18 Right of Set-Off............................................. 78
15.19 Participating Lender's Security Interests.................... 78
15.20 Joint and Several Obligations; Obligations Absolute.......... 79
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LOAN AND SECURITY AGREEMENT, dated as of June 30, 1997, among
BANKAMERICA BUSINESS CREDIT, INC., a Delaware corporation, with offices at ▇▇
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (the "Lender"), CALIFORNIA
MICROWAVE, INC., a Delaware corporation with offices at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ ("CMI") and EFDATA CORP., a California corporation with
offices at ▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ("EFData") (EFData and CMI each
a "Borrower" and together the "Borrowers").
W I T N E S S E T H
WHEREAS, CMI was a party to that certain First Amended and
Restated Credit Agreement dated as of December 31, 1996 (as amended to date)
(the "Syndicated Facility") among CMI, as borrower, the financial institutions
referred to therein as banks (the "Syndicate Banks") and Bank of America NT&SA
as agent for the Syndicate Banks (in such capacity the "Syndicate Agent"),
Issuing Bank and Belgian Guarantor Bank (as defined in the Syndicated Facility);
and
WHEREAS, the Borrowers wish to replace the Syndicated Facility
and have requested the Lender to enter into this Agreement; and
WHEREAS, the Lender is prepared to extend to the Borrowers, on a
joint and several basis, a revolving line of credit for loans, letters of credit
and Belgian Guaranties (as defined herein) in an amount not to exceed
$40,000,000 in the aggregate; and
WHEREAS, upon repayment of the Syndicated Facility, such
Syndicated Facility will be terminated; and
WHEREAS, the Lender has agreed to indemnify the Bank in respect
of the Existing Letters of Credit and the Existing Belgian Guaranties;
NOW, THEREFORE, in consideration of the mutual conditions and
agreements set forth in this Agreement, and for good and valuable consideration,
the receipt of which is hereby acknowledged, the Borrowers and the Lender hereby
agree as follows:
1. DEFINITIONS.
1.1 Defined Terms. As used herein:
"ABN AMRO Agreement" means that certain Master Purchase Agreement
dated as of June 24, 1996 between CMI and ABN AMRO Bank N.V. (as amended or
otherwise altered) pursuant to which ABN AMRO Bank N.V. has, among other things,
agreed to purchase accounts receivable of CMI up to a total available program
amount of $15,000,000, and any successor agreement thereto consented to by the
Lender in writing.
"ABN AMRO Default" means any event of default under the terms of
the ABN AMRO Agreement or any other event requiring CMI to repurchase, or
otherwise indemnify ABN AMRO Bank N.V. with respect to, any ABN AMRO
Receivables.
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"ABN AMRO Receivables" means the Obligations (as defined in the
ABN AMRO Agreement) (i) acquired by ABN AMRO prior to the date of this Agreement
and listed in Schedule 1.1, and (ii) acquired by ABN AMRO from CMI pursuant to
the ABN AMRO Agreement on or after the date hereof with the approval, in the
manner provided for in this Agreement, of BABC.
"Account" with respect to any Persons means such Person's right
to payment for a sale or lease and delivery of goods or rendition of services.
"Account Debtor" means each Person obligated in any way on or in
connection with an Account.
"ACH Settlement Risk Reserve" means any and all reserves which
the Lender from time to time establishes, in its sole discretion, with respect
to ACH Transactions.
"ACH Transactions" means all debts, liabilities and obligations
now or hereafter owing from a Borrower to the Bank arising from or related to
cash management services including the automatic clearing house transfer of
funds by the Bank for the account of such Borrower pursuant to agreement or
overdrafts.
"Adjusted Net Earnings from Operations" means, with respect to
any fiscal period CMI's net income on a consolidated basis, as determined in
accordance with GAAP and reported on the Financial Statements for such period.
"Adjusted Tangible Assets" means all of CMI's assets, determined
on a consolidated basis in accordance with GAAP, except: (a) deferred assets,
other than prepaid insurance and prepaid taxes; (b) patents, copyrights,
trademarks, trade names, franchises, goodwill, and other similar intangibles;
(c) Restricted Investments; (d) unamortized debt discount and expense; (e)
assets of CMI constituting Intercompany Accounts; (f) fixed assets to the extent
of any write-up in the book value thereof resulting from a revaluation effective
after the Closing Date; and (g) deferred tax assets.
"Adjusted Tangible Net Worth" means, at any date: (a) the book
value (after deducting related depreciation, obsolescence, amortization,
valuation, and other proper reserves as determined in accordance with GAAP) at
which the Adjusted Tangible Assets would be shown on a balance sheet of CMI and
its consolidated Subsidiaries at such date prepared in accordance with GAAP;
less (b) the amount at which CMI's liabilities would be shown on such balance
sheet, including as liabilities all reserves for contingencies and other
potential liabilities which would be required to be shown on such balance sheet.
"Affiliate" means with respect to any Person: (a) any other
Person which, directly or indirectly, controls, is controlled by or is under
common control with, such Person; (b) any other Person which beneficially owns
or holds, directly or indirectly, five percent or more of any class of voting
stock of such Person; or (c) any other Person in which five percent of any class
of the voting stock is beneficially owned or held, directly or indirectly, by
such Person. The term control
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(including the terms "controlled by" and "under common control with"), means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of the Person in question.
"Aggregate Availability" means, at any time, the lesser of:
(1) the amount of forty million and 0/100 Dollars
($40,000,000) (the "Maximum Revolving Credit Line"); or
(2) the aggregate of the (i) CMI Availability, (ii) EFData
Availability, (iii) Inventory Loans Limits of the
Borrowers and (iv) Equipment Loans Limits of the
Borrowers.
"Aggregate Belgian Guaranty Amount" means the Dollar Equivalent
of BF 269,571,669 or such lesser amount as may be certified to the Lender, from
time to time thereafter and in a form satisfactory to the Lender, by CMI and the
Belgian Beneficiary as being the then maximum exposure under the Belgian
Guaranties, following a permanent reduction of the total aggregate amount
available to be claimed under all Belgian Guaranties.
"A/R Loans" means Revolving Loans advanced against the Net Amount
of Eligible Accounts (as adjusted pursuant to this Agreement) of a Borrower.
"Availability Limits" means the Aggregate Availability, CMI
Availability, EFData Availability, CMI Inventory Loans Limit, EFData Inventory
Loans Limit, CMI Equipment Loans Limit, EFData Equipment Loans Limit, CMI
Eligible Permitted Accounts Limit and EFData Eligible Permitted Accounts Limit.
"Bank" means Bank of America National Trust and Savings
Association.
"Bank Indemnity" means that certain indemnity agreement between
the Lender and Bank dated as of even date herewith, in form and substance
satisfactory to the Lender.
"Belgian Beneficiary" means the Direction des Telecommunications
of the Belgian Army.
"Belgian Guaranties" means guaranties issued in favor of the
Belgian Beneficiary by the Bank for the account of CMI pursuant to this
Agreement and pursuant to the commitment to issue guaranties provided by the
Bank to the Belgian Beneficiary.
"Belgian Guaranty Fee" means has the meaning specified in Section
3.7.
"Belgian Guaranty Fee Percentage" means 2.5% per annum.
"Belgian Guaranty Obligations" means, without duplication, the
sum of (a) the aggregate unpaid Dollar Equivalent amount of all outstanding
Belgian Guaranties, and (b) the Dollar Equivalent amount of all unreimbursed
payments made by the Bank under the Belgian Guaranties.
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"BF" means Belgian Francs.
"Borrowing" means a borrowing hereunder consisting of Revolving
Loans, the issuance or maintenance of Letters of Credit or the issuance or
maintenance of Belgian Guaranties.
"Broker" has the meaning ascribed to it in Section 8102 of the
UCC.
"Business Day" means (a) any day that is not a Saturday, Sunday,
or a day on which banks in San Francisco, California, are required or permitted
to be closed, (b) with respect to all notices, determinations, fundings and
payments in connection with the LIBOR Rate or LIBOR Rate Loans, any day that is
a Business Day pursuant to clause (a) above and that is also a day on which
trading is carried on by and between banks in the London interbank market and
(c) with respect to actions arising in connection with a Belgian Guaranty
additionally a day on which banks are customarily open for the transaction of
business in Belgium.
"Capital Adequacy Regulation" means any guideline, request or
directive of any central bank or other Public Authority, or any other law, rule
or regulation, whether or not having the force of law, in each case, regarding
capital adequacy of any bank or of any corporation controlling a bank.
"Capital Expenditures" means all payments due (whether or not
paid) in respect of the cost of any fixed asset or improvement, or replacement,
substitution, or addition thereto, which has a useful life of more than one
year, including, without limitation, those arising in connection with the direct
or indirect acquisition of such assets by way of increased product or service
charges or offset items or in connection with Capital Leases.
"Capital Lease" means any lease of Property by the Borrowers
that, in accordance with GAAP, should be reflected as a capital lease on the
balance sheet of the relevant Borrower.
"Change of Control" means (a) any "person" (as such term is used
in subsections 13(d) and 14(d) of the Exchange Act) or group of persons on or
after the Closing Date, is or becomes the "beneficial owner" (as defined in Rule
13d-3 under said Act), directly or indirectly, of securities of a corporation
representing 20% or more of the combined voting power of the Corporation's
then-outstanding voting securities, or (b) the existing directors of a
corporation for any reason cease to constitute a majority of such corporation's
board of directors. "Existing directors" means (x) individuals constituting such
corporation's board of directors on the Closing Date, and (y) any subsequent
director whose election by the board of directors or nomination for election by
such corporation's shareholders was approved by a vote of at least two-thirds of
the directors then in office, which directors either were directors on the
Closing Date or whose election or nomination for election was previously so
approved.
"Chattel Paper" means all writings of whatever sort which
evidence a monetary obligation and a security interest in or lease of specific
goods, whether now existing or hereafter arising.
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"Closing Date" means the date of this Agreement.
"CMFS" means California Microwave Foreign Sales Corporation, a
Barbados corporation.
"CMI Availability" means, at any time, an amount equal to
eighty-five percent (85%) of CMI's aggregate Net Amount of Eligible Accounts,
provided, however, that at all times CMI's Availability shall be reduced by the
sum of:
(a) the unpaid balance of A/R Loans made for the account
of CMI outstanding at that time;
(b) the aggregate undrawn face amount of all outstanding
Letters of Credit which the Lender has caused to be issued, obtained or
maintained for CMI's account (including the Existing Letters of Credit issued
for the account of CMI);
(c) the Aggregate Belgian Guaranty Amount;
(d) reserves for accrued interest on the Revolving Loans
made for the account of CMI;
(e) the Environmental Compliance Reserve relevant to CMI;
(f) the ACH Settlement Risk Reserve relevant to CMI;
(g) the FX Settlement Risk Reserve relevant to CMI;
(h) reserves for performance bonds outstanding (without
duplication of the obligations described in clause (b) above) with respect to
Eligible Accounts and Eligible Permitted Accounts of CMI;
(i) reserves with respect to warranty claims relating to
CMI's Eligible Accounts and Eligible Permitted Accounts;
(j) a reserve equal to the amount of any deductibles for
foreign credit insurance should any Eligible Accounts or Eligible Permitted
Accounts be considered eligible by virtue of the existence of such foreign
credit insurance; and
(k) all other reserves which the Lender in its reasonable
discretion deems necessary or desirable to maintain with respect to CMI's
account, including, without limitation, any amounts which the Lender may be
obligated to pay in the future for the account of CMI.
"CMNS" means California Microwave Navigation Systems, Inc., a
Delaware corporation.
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"Code" means the Internal Revenue Code of 1986, as amended.
"Collateral" has the meaning set forth in Section 7.1.
"Collateral Management Fee" has the meaning specified in Section
3.5.
"Commodity Account" has the meaning ascribed to it in Section
9115 of the UCC.
"Commodity Contract" has the meaning ascribed to it in Section
9115 of the UCC.
"Commodity Intermediary" has the meaning ascribed to it in
Section 9115 of the UCC.
"Contaminant" means any waste, pollutant, hazardous substance,
toxic substance, hazardous waste, special waste, petroleum or petroleum-derived
substance or waste, asbestos in any form or condition, polychlorinated biphenyls
("PCBs"), or other substance or material, the handling, release, or possession
of which is regulated to protect health, safety, or environment, or any
constituent of any such substance or waste.
"Debt" means, with respect to any Person, all liabilities,
obligations and indebtedness of such Person to any other Person, of any kind or
nature, now or hereafter owing, arising, due or payable, howsoever evidenced,
created, incurred, acquired or owing, whether primary, secondary, direct,
contingent, fixed or otherwise, and including, without in any way limiting the
generality of the foregoing: (a) a Person's liabilities and obligations to trade
creditors; (b) all Obligations; (c) all obligations and liabilities of any other
Person secured by any Lien on a Person's Property, even though the Person shall
not have assumed or become liable for the payment thereof; provided, however,
that all such obligations and liabilities which are limited in recourse to such
Property shall be included in Debt only to the extent of the book value of such
Property as would be shown on a balance sheet of the Person prepared in
accordance with GAAP; (d) all obligations or liabilities created or arising
under any Capital Lease or conditional sale or other title retention agreement
with respect to Property used or acquired by such Person, even if the rights and
remedies of the lessor, seller or lender thereunder are limited to repossession
of such Property; provided, however, that all such obligations and liabilities
which are limited in recourse to such Property shall be included in Debt only to
the extent of the book value of such Property as would be shown on a balance
sheet of such Person prepared in accordance with GAAP; (e) all accrued pension
fund and other employee benefit plan obligations and liabilities; (f) all
obligations and liabilities under Guaranties; and (g) deferred taxes.
"Distribution" means, in respect of any corporation: (a) the
payment or making of any dividend or other distribution of Property in respect
of capital stock of such corporation, other than distributions in capital stock
of the same class; or (b) the redemption or other acquisition by such
corporation of any capital stock of such corporation.
"DOL" means the United States Department of Labor or any
successor department or agency.
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"Dollars" means United States Dollars.
"Dollar Equivalent" means, at any time, (a) as to any amount
denominated in Dollars, the amount thereof at such time, and (b) as to any
amount denominated in any other currency, the equivalent amount in Dollars as
determined by the Lender or Bank, as the case may be, at such time on the basis
of the Spot Rate for the purchase of Dollars with such other currency.
"EBITDA" means, with respect to any fiscal period of CMI: (a)
CMI's consolidated net income after provision for income taxes for such fiscal
period, as determined in accordance with GAAP and reported on the Financial
Statements for such period; plus (b) all of the following of the CMI: (i)
consolidated interest expense; (ii) income tax expense; (iii) depreciation and
amortization (including amortization of any goodwill or other intangibles, which
includes, but is not limited to, FASB 109); (iv) LIFO expense; (v) FASB 106 post
retirement expense; and (vi) extraordinary losses, considered extraordinary in
accordance with GAAP, so long as such losses arise from non-cash expenses; minus
(c) all of the following: (i) gain arising from the CMI's sale of any capital
asset; (ii) gain arising from any write-up in the book value of any asset of the
CMI; (iii) earnings of any corporation, substantially all the assets of which
have been acquired by the CMI in any manner, to the extent realized by such
other corporation prior to the date of acquisition; (iv) earnings of any
business entity in which the CMI has an ownership interest (other than its
Subsidiaries) unless (and only to the extent) such earnings shall actually have
been received by the CMI in the form of cash distributions; (v) earnings of any
Person to which assets of the CMI shall have been sold, transferred or disposed
of, or into which the CMI shall have been merged, or which has been a party with
the CMI to any consolidation or other form of reorganization, prior to the date
of such transaction; (vi) gain arising from the acquisition of Debt or equity
securities of the CMI or from cancellation or forgiveness of Debt; (vii) gain
arising from extraordinary items, as determined in accordance with GAAP, or any
other non-recurring transaction; and (viii) LIFO income.
"EFData Availability" means, at any time, an amount equal to
eighty-five percent (85%) of EFData's aggregate Net Amount of Eligible Accounts,
provided, however, that at all times EFData's Availability shall be reduced by
the sum of:
(a) the unpaid balance of A/R Loans outstanding at that
time made for the account of EFData;
(b) the aggregate undrawn face amount of all outstanding
Letters of Credit which the Lender has caused to be issued, obtained or
maintained for EFData's account (including the Existing Letters of Credit issued
for the account of EFData);
(c) reserves for accrued interest on the Revolving Loans
made for the account of EFData;
(d) the Environmental Compliance Reserve relevant to
EFData;
(e) the ACH Settlement Risk Reserve relevant to EFData;
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(f) the FX Settlement Risk Reserve relevant to EFData;
(g) reserves for performance bonds outstanding (without
duplication of the obligations described in clause (b)) with respect to Eligible
Accounts and Eligible Permitted Accounts of EFData;
(h) reserves with respect to warranty claims relating to
EFData's Eligible Accounts and Eligible Permitted Accounts;
(i) a reserve equal to the amount of any deductibles for
foreign credit insurance should any Eligible Accounts or Eligible Permitted
Accounts be considered eligible by virtue of the existence of such foreign
credit insurance; and
(j) all other reserves which the Lender in its reasonable
discretion deems necessary or desirable to maintain with respect to the EFData's
account, including, without limitation, any amounts which the Lender may be
obligated to pay in the future for the account of EFData.
"Eligible Accounts" means, with respect to any Person, those
Accounts which are not ineligible as the basis for Borrowings, based on the
following criteria and on such other criteria as the Lender may from time to
time establish in its reasonable commercial discretion. Without intending to
limit the Lender's discretion to establish other criteria of eligibility,
Eligible Accounts shall not include any Account:
(a) which is more than 60 days past its original due date;
provided that no Account may be outstanding for more than 120 days past its
original invoice date;
(b) with respect to which any of the representations,
warranties, covenants, and agreements contained in this Agreement are not or
have ceased to be complete and correct or have been breached;
(c) with respect to which, in whole or in part, a check,
promissory note, draft, trade acceptance or other instrument for the payment of
money has been received, presented for payment and returned uncollected for any
reason;
(d) which represents a progress billing (as hereinafter
defined) or as to which the Person has extended the time for payment without the
consent of the Lender; for the purposes hereof, "progress billing" means any
invoice for goods sold or leased or services rendered under a contract or
agreement pursuant to which the Account Debtor's obligation to pay such invoice
is conditioned upon the Person's completion of any further performance under the
contract or agreement;
(e) as to which any one or more of the following events
has occurred with respect to the Account Debtor on such Account: death or
judicial declaration of incompetency of an Account Debtor who is an individual;
the filing by or against the Account Debtor of a request or
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petition for liquidation, reorganization, arrangement, adjustment of debts,
adjudication as a bankrupt, winding-up, or other relief under the bankruptcy,
insolvency, or similar laws of the United States, any state or territory
thereof, or any foreign jurisdiction, now or hereafter in effect; the making of
any general assignment by the Account Debtor for the benefit of creditors; the
appointment of a receiver or trustee for the Account Debtor or for any of the
assets of the Account Debtor, including, without limitation, the appointment of
or taking possession by a "custodian," as defined in the Federal Bankruptcy
Code; the institution by or against the Account Debtor of any other type of
insolvency proceeding (under the bankruptcy laws of the United States or
otherwise) or of any formal or informal proceeding for the dissolution or
liquidation of, settlement of claims against, or winding up of affairs of, the
Account Debtor; the sale, assignment, or transfer of all or any material part of
the assets of the Account Debtor; the nonpayment generally by the Account Debtor
of its debts as they become due; or the cessation of the business of the Account
Debtor as a going concern;
(f) owed by an Account Debtor if the aggregate dollar
amount of all Accounts owed by such Account Debtor exceeds a credit limit
determined by Lender in its sole discretion, but only to the extent such
Accounts exceed such limit;
(g) owed by an Account Debtor which: (i) does not maintain
its chief executive office in the United States; or (ii) is not organized under
the laws of the United States or any state thereof; or (iii) is the government
of any foreign country or sovereign state, or of any state, province,
municipality, or other political subdivision thereof, or of any department,
agency, public corporation, or other instrumentality thereof; except to the
extent that such Account is secured or payable by a letter of credit or foreign
credit insurance acceptable to Lender;
(h) owed by an Account Debtor which is an Affiliate or
employee of such Person;
(i) except as provided in (g) above and (k) below, as to
which either the perfection, enforceability, or validity of the Security
Interest in such Account, or the Lender's right or ability to obtain direct
payment to the Lender of the Proceeds of such Account, is governed by any
federal, state, or local statutory requirements other than those of the UCC;
(j) which is owed by an Account Debtor to which such
Person is indebted in any way, or which is subject to any right of setoff or
recoupment by the Account Debtor, unless the Account Debtor has entered into an
agreement acceptable to the Lender to waive setoff and recoupment rights; if the
Account Debtor thereon has disputed liability or made any claim with respect to
any other Account due from such Account Debtor to such Person; or if commissions
are payable on any such account to the extent of any such commissions, but in
each such case only to the extent of such indebtedness, setoff, recoupment,
dispute, claim or commissions;
(k) which is owed by the government of the United States
of America, or any department, agency, public corporation, or other
instrumentality thereof, unless the Federal Assignment of Claims Act of 1940, as
amended, and any other steps necessary to perfect the Security Interest and
protect the Lender's rights therein, have been complied with to the Lender's
satisfaction with respect to such Account;
9.
15
(l) which arises out of a sale to an Account Debtor on a
▇▇▇▇-and-hold, guaranteed sale, sale and return, sale on approval, consignment,
or other repurchase or return basis;
(m) which is evidenced by a promissory note or other
instrument or by chattel paper;
(n) if fifty percent (50%) or more of the aggregate dollar
amount of outstanding Accounts owed at such time by the Account Debtor to such
Person is classified as ineligible under the other criteria set forth herein;
(o) to the extent that the dollar amount of such Account
when aggregated with the dollar amount of outstanding Accounts (if any) of
either Borrower to the same Account Debtor would exceed ten percent (10%) of the
aggregate dollar amount of all Eligible Accounts and all Eligible Permitted
Accounts of the Borrowers;
(p) with respect to which the Account Debtor is located in
any state requiring the filing of a Notice of Business Activities Report or
similar report in order to permit such Person to seek judicial enforcement in
such state of payment of such Account, unless such Person has qualified to do
business in such state or has filed a Notice of Business Activities Report or
equivalent report for the then current year; or
(q) which arises out of a sale not made in the ordinary
course of such Person's business;
(r) with respect to which the goods giving rise to such
Account have not been shipped and delivered to and accepted by the Account
Debtor or the services giving rise to such Account have not been performed by
such Person, and, if applicable, accepted by the Account Debtor, or the Account
Debtor revokes its acceptance of such goods or services;
(s) which is not subject to a first priority and perfected
security interest in favor of the Lender;
(t) with respect to Accounts that do not comply with any
applicable legal requirements, including all laws, rules, regulations and orders
of any Governmental Authority;
(u) if Lender believes, in its reasonable credit judgment,
that the prospect of collection of such Account is impaired or that the Account
may not be paid by reason of the Account Debtor's financial inability to pay;
(v) which is an ABN AMRO Receivable; or
(w) which is owed by an Account Debtor to which the
Lender, in its reasonable credit judgment, otherwise deems to be uncreditworthy.
10.
16
If any Account at any time ceases to be an Eligible Account or Eligible
Permitted Account by reason of any of the foregoing exclusions or any failure to
meet any other eligibility criteria established by the Lender in the exercise of
its reasonable discretion then such Account shall promptly be excluded from the
calculation of Eligible Accounts or Eligible Permitted Account (as appropriate).
"Eligible Permitted Accounts" means an Account of an Account
Debtor listed in Schedule 1.2 (as such list, in the sole discretion of the
Lender, may be amended from time to time) which would be an Eligible Account but
for the provisions of paragraph (a) of the definition of Eligible Accounts and
which is payable within 120 to 180 days from invoice; provided that (i) no such
Account shall be permitted if it has been outstanding more than 180 days from
the original invoice date, and (ii) with respect to accounts of foreign account
debtors, no such Account shall be permitted unless it is secured or payable by
letter of credit or foreign credit insurance acceptable to the Lender.
"Eligible Permitted Accounts Limit" means with respect to any
Borrower, an amount equal to such portion (if any) of the Eligible Permitted
Accounts Subfacility Amount as may be allocated to such Borrower by the Lender,
from time to time, in its sole discretion.
"Eligible Permitted Accounts Subfacility Amount" means
$5,000,000.
"Environmental Compliance Reserve" means all reserves which the
Lender from time to time establishes for CMI and/or any of its Subsidiaries for
amounts that are reasonably required to be expended in order for CMI and/or its
Subsidiaries or CMI's and/or its Subsidiaries' operations and Property to comply
with Environmental Laws or in order to correct any violation by CMI and/or its
Subsidiaries or CMI's and/or its Subsidiaries' operations or Property of
Environmental Laws.
"Environmental Laws" means all present and future federal, state
and local laws, rules, regulations, ordinances, programs, permits, guidance,
orders and consent decrees relating to health, safety, hazardous substances, and
environmental matters applicable to CMI's or its Subsidiaries' business and
facilities (whether or not owned). Such laws and regulations include but are not
limited to the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901 et
seq., as amended; the Comprehensive Environmental Response Compensation and
Liability Act, 42 U.S.C. Section 9601 et seq., as amended; the Toxic Substances
Control Act, 15 U.S.C. Section 2601 et seq., as amended; the Clean Water Act, 33
U.S.C. Section 466 et seq., as amended; the Clean Air Act, 42 U.S.C. Section
7401 et seq., as amended; state and federal lien and environmental cleanup
programs; and U.S. Department of Transportation regulations.
"Environmental Lien" means a Lien in favor of any Public
Authority for (a) any liability under any Environmental Laws, or (b) damages
arising from, or costs incurred by such Public Authority in response to, a
Release or threatened Release of a Contaminant into the environment.
"Equipment" means, with respect to any Person, all of such
Person's now owned and hereafter acquired machinery, equipment, furniture,
furnishings, fixtures, and other tangible personal
11.
17
property (except Inventory), including, without limitation, data processing
hardware and software, motor vehicles, aircraft, dies, tools, jigs, and office
equipment, as well as all of such types of property leased by such Person and
all of such Person's rights and interests with respect thereto under such leases
(including, without limitation, options to purchase); together with all present
and future additions and accessions thereto, replacements therefor, component
and auxiliary parts and supplies used or to be used in connection therewith, and
all substitutes for any of the foregoing, and all manuals, drawings,
instructions, warranties and rights with respect thereto; wherever any of the
foregoing is located.
"Equipment Loans" means Revolving Loans advanced against the
value of the Equipment of the Borrowers.
"Equipment Loans Limit" means with respect to any Borrower, an
amount equal to such portion (if any) of the Equipment Loans Subfacility Amount
as may be allocated to such Borrower by the Lender, from time to time, in its
sole discretion.
"Equipment Loans Subfacility Amount" means $5,000,000.
"ERISA" means the Employee Retirement Income Security Act of
1974., as amended.
"ERISA Affiliate" means, with respect to any Person, any trade or
business (whether or not incorporated) which is a member of a controlled group
or under common control with such Person within the meaning of Section 414(b) or
(c) of the Code (and Sections 414(m) and (o) of the Code for purposes of
provisions relating to Section 412 of the Code).
"ERISA Event" means with respect to any Person, any ERISA
Affiliate or any Pension Plan, the occurrence of any of the following: (a) a
Reportable Event; (b) a withdrawal by a substantial employer (as defined in
Section 4001(a)(12) of ERISA) subject to Section 4063 of ERISA; (c) a cessation
of operations which is treated as a withdrawal under Section 4062(e) of ERISA;
(d) a complete or partial withdrawal under Section 4203 or 4205 of ERISA from a
Multiemployer Plan; (e) a notification that a Multiemployer Plan is in
reorganization under Section 4242 of ERISA; (f) the filing of a notice of intent
to terminate a Pension Plan under 4041 of ERISA; (g) the treatment of an
amendment of a Pension Plan as a termination under 4041 of ERISA; (h) the
termination of a Multiemployer Plan under Section 4041A of ERISA; (i) the
commencement of proceedings by the PBGC to terminate a Pension Plan under 4042
of ERISA; (j) an event or condition which could reasonably be expected to
constitute grounds under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, a Pension Plan; or (k) the imposition of
any liability under Title IV of ERISA, other than PBGC premiums due but not
delinquent under Section 4007 of ERISA.
"Event" means any event or condition which, with notice, the
passage of time, the happening of any other condition or event, or any
combination thereof, would constitute an Event of Default.
"Event of Default" has the meaning specified in Section 12.1.
12.
18
"Existing Belgian Guaranties" means the Belgian Guaranties
described in Schedule 2.4.
"Existing Collateral Documents" means the (i) the Guaranty dated
as of December 31, 1996, executed by CMNS in favor of the Syndicate Agent, (ii)
the Security Agreement dated as of December 31, 1996, between CMNS and the
Syndicate Agent, (iii) the Guaranty dated as of December 31, 1996, executed by
EFData in favor of the Syndicate Agent, (iv) the Security Agreement dated as of
December 31, 1996, between EFData and the Syndicate Agent and (v) the Security
Agreement dated as of December 31, 1996, between CMI and the Syndicate Agent.
"Existing Letters of Credit" means the letters of credit
described in Schedule 2.3.
"Existing Syndicate Debt" means the outstanding revolving loans
under the Syndicated Facility as of the Closing Date.
"FX Settlement Risk Reserve" means any and all reserves which the
Lender from time to time establishes, in its sole discretion, with respect to FX
Transactions.
"FX Transactions" means all debts, liabilities and obligations
now or hereafter owing from a Borrower to the Bank arising from or related to
the foreign exchange facilities provided by the Bank to and for the account of
such Borrower.
"Facility Fee" has the meaning specified in Section 3.4.
"Financial Statements" means, according to the context in which
it is used, the financial statements attached hereto as Exhibit A-1, and the pro
forma balance sheet attached hereto as Exhibit A-2 or any financial statements
required to be given to the Lender pursuant to Section 8.2(a) (b) and (c), or
any combination thereof.
"Fiscal Year" means the Borrowers' fiscal year for financial
accounting purposes (which fiscal year shall be the same for both Borrowers).
The current Fiscal Year of the Borrowers will end on June 30, 1997.
"Fixed Charge Coverage Ratio" means, the ratio, determined for
CMI and its Subsidiaries on a consolidated basis, of (a) EBITDA for the period
in question, to (b) the sum of (i) the regular and scheduled cash principal
payments on its Debt for borrowed money during such period, plus (ii) interest
expense (whether or not paid in cash) paid on Debt for borrowed money during
such period, plus (iii) actual Capital Expenditures (net of amounts financed)
during such period, plus (iv) cash paid from restructuring charges in excess of
$3,000,000 per fiscal quarter, plus (v) actual cash taxes paid during such
period.
"Funding Date" means the date on which a Borrowing occurs.
"GAAP" means at any particular time generally accepted accounting
principles as in effect at such time.
13.
19
"General Intangibles" with respect to any Person, means all
general intangibles of such Person, now existing or hereafter acquired or
arising, and in any event includes: (a) all tax and other refunds, rebates or
credits of every kind and nature to which such Person is now or hereafter may
become entitled; (b) all good will, choses in action and causes of action,
whether legal or equitable, whether in contract or tort and however arising; (c)
all interests in limited and general partnerships and limited liability
companies; (d) all rights of stoppage in transit, replevin and reclamation; (e)
all licenses, permits, consents, indulgences and rights of whatever kind issued
in favor of or otherwise recognized as belonging to such Person by any Public
Authority; and (f) all indemnity agreements, guaranties, insurance policies and
other contractual, equitable and legal rights of whatever kind or nature; in
each case whether now existing or hereafter acquired or arising.
"Guaranty" by any Person means all obligations of such Person
which in any manner directly or indirectly guarantee or assure, or in effect
guarantee or assure, the payment or performance of any indebtedness, dividend or
other obligation of any other Person (the "guaranteed obligations"), or to
assure or in effect assure the holder of the guaranteed obligations against loss
in respect thereof, including, without limitation, any such obligations incurred
through an agreement, contingent or otherwise: (a) to purchase the guaranteed
obligations or any Property constituting security therefor; (b) to advance or
supply funds for the purchase or payment of the guaranteed obligations or to
maintain a working capital or other balance sheet condition; or (c) to lease
Property or to purchase any debt or equity securities or other Property or
services.
"Intercompany Accounts" means all assets and liabilities, however
arising, which are due to either Borrower from which are due from either
Borrower to, or which otherwise arise from any transaction by either Borrower
with, any Affiliate.
"Intercreditor Agreement" means that certain Intercreditor
Agreement dated of even date herewith between the Lender and ABN AMRO Bank N.V.
relating to the operation of the ABN AMRO Agreement (as amended or otherwise
altered).
"Interest Period" means, as to any LIBOR Rate Loan, the period
commencing on the Funding Date of such Loan or on the Conversion/Continuation
Date on which the Loan is converted into or continued as a LIBOR Rate Loan, and
ending on the date one, two, or three months thereafter as selected by the
relevant Borrower in its Notice of Borrowing or Notice of
Conversion/Continuation; provided, however, that:
(i) if any Interest Period would otherwise end on a day
that is not a Business Day, that Interest Period shall be
extended to the following Business Day unless the result of such
extension would be to carry such Interest Period into another
calendar month, in which event such Interest Period shall end on
the preceding Business Day;
(ii) any Interest Period pertaining to a LIBOR Rate Loan
that begins on the last Business Day of a calendar month (or on a
day for which there is no numerically corresponding day in the
calendar month at the end of such Interest
14.
20
Period) shall end on the last Business Day of the calendar month
at the end of such Interest Period; and
(iii) no Interest Period shall extend beyond the Stated
Termination Date or any renewal term.
"Inventory" means with respect to any Person all of such Person's
now owned and hereafter acquired inventory, goods (including goods in transit)
and merchandise, wherever located, to be furnished under any contract of service
or held for sale or lease or consignment or other disposition rejected and
repossessed, all display or demonstration goods, all raw materials,
work-in-process, finished goods, returned goods, and materials and supplies of
any kind, nature or description which are or might be used or consumed in such
Person's business or used in connection with the manufacture, production,
packing, shipping, advertising, selling or finishing of such goods, merchandise
and such other personal property, and all items hereafter acquired by such
Person by way of substitution or replacement and all additions and accessions
thereto, and all documents of title or other documents representing them.
"Inventory Loans" means Revolving Loans advanced against the
value of the Inventory of a Borrower.
"Inventory Loans Limit" means with respect to any Borrower, an
amount equal to 10% of the value of Inventory of such Borrower (located within
the United States in a State in which a first priority security interest in such
Inventory in favor of the Lender has been perfected) as disclosed on the most
recent inventory report for such Borrower delivered pursuant to Section 7.8(f);
provided that at no time may the Inventory Limit of a Borrower exceed such
portion (if any) of the Inventory Loans Subfacility Amount as may be allocated
to the relevant Borrower by the Lender, from time to time, in its sole
discretion.
"Inventory Loans Subfacility Amount" means $5,000,000.
"Investment Property" has the meaning ascribed to it in Section
9115 of the UCC.
"IRS" means the Internal Revenue Service or any successor agency.
"Latest Projections" means: (a) on the Closing Date and
thereafter until the Lender receives new projections pursuant to Section 8.2(f),
the projections of CMI and its consolidated Subsidiaries quarterly financial
condition, results of operations, and cash flow for the one-year period ending
June 30, 1998, attached hereto as Exhibit A-3; and (b) thereafter, the
projections most recently received by the Lender pursuant to Section 8.2(f).
"Letter of Credit" has the meaning specified in Section 2.3.
"Letter of Credit Fee" has the meaning specified in Section 3.6.
15.
21
"Letter of Credit Fee Percentage" has the meaning specified in
Section 3.6.
"LIBOR Interest Rate Determination Date" means each date of
calculating the LIBOR Rate for purposes of determining the interest rate with
respect to an Interest Period. The LIBOR Interest Rate Determination Date for
any LIBOR Rate Loan shall be the second Business Day prior to the first day of
the related Interest Period for such LIBOR Rate Loan.
"LIBOR Rate" means, for any Interest Period, with respect to
LIBOR Rate Loans comprising part of the same Borrowing, the rate of interest per
annum (rounded upward to the next 1/1000th of 1.0%) determined as follows:
LIBOR Rate = LIBOR
------------------------------------
1.00 - Eurodollar Reserve Percentage
Where,
"Eurodollar Reserve Percentage" means for any day for any
Interest Period the maximum reserve percentage (expressed as a decimal,
rounded upward to the next 1/100th of 1.0%) in effect on such day
(whether or not applicable to the Lender) under regulations issued from
time to time by the Board of Governors of the Federal Reserve for
determining the maximum reserve requirement (including any emergency,
supplemental or other marginal reserve requirement) with respect to
Eurocurrency funding (currently referred to as "Eurocurrency
liabilities"); and
"LIBOR" means the rate of interest per annum (rounded
upward to the next 1/16 of 1%) notified to the Lender by Bank as the
rate of interest at which United States Dollar deposits in the
approximate amount of the Loan to be made or continued as, or converted
into, a LIBOR Rate Loan and having a maturity comparable to such
Interest Period would be offered by Bank's applicable lending office to
major banks in the London interbank market at their request at
approximately 11:00 a.m. (London time) two Business Days prior to the
commencement of such Interest Period.
The LIBOR Rate shall be adjusted automatically as to all LIBOR Rate
Loans then outstanding as of the effective date of any change in the
Eurodollar Reserve Percentage.
"LIBOR Rate Loans" means Revolving Loans during any period in
which they bear interest based on the LIBOR Rate.
"Lien" means: (a) any interest in Property securing an obligation
owed to, or a claim by, a Person other than the owner of the Property, whether
such interest is based on the common law, statute, or contract, and including
without limitation, a security interest, charge, claim, or lien arising from a
mortgage, deed of trust, encumbrance, pledge, hypothecation, assignment, deposit
arrangement, agreement, security agreement, conditional sale or trust receipt or
a lease, consignment or bailment for security purposes; and (b) to the extent
not included under clause (c), any reservation,
16.
22
exception, encroachment, easement, right-of-way, covenant, condition,
restriction, lease or other title exception or encumbrance affecting Property.
"Loans" means, collectively, all loans and advances provided for
in Section 2.
"Loan Documents" means this Agreement, the Patent and Trademark
Assignments, the Intercreditor Agreement, and all other agreements, instruments,
and documents heretofore, now or hereafter evidencing, securing, guaranteeing or
otherwise relating to the Obligations, the Collateral, the Security Interest, or
any other aspect of the transactions contemplated by this Agreement.
"Maturity Factoring Agreement" means that certain Agreement for
Maturity Factoring Accounts Receivable dated as of July 31, 1987 between
Microwave Radio Corporation and BancBoston Financial Company, as amended by that
letter agreement dated April 19, 1995 between Microwave Radio Corporation and
BNY Financial Corporation, as set forth in Exhibit C.
"Motorola Debt" means the $5,700,000 California Microwave, Inc.
5% Convertible Subordinated Notes Due October 1, 1998.
"Motorola Letter" means the letter or other document evidencing
the agreement of the holders of the Motorola Debt to waive any rights of setoff
or counterclaim in respect of any indebtedness or obligations of such holders
against the Motorola Debt or other indebtedness of CMI to such holders.
"Multiemployer Plan" means with respect to any Person a
multiemployer plan as defined in Section 4001(a)(3) of ERISA to which such
Person or any ERISA Affiliate makes, is making, made, or was at any time during
the current year or the immediately preceding six (6) years obligated to make
contributions.
"Net Amount of Eligible Accounts" with respect to any Person
means the gross amount of Eligible Accounts and Eligible Permitted Accounts of
such Person less sales, excise or similar taxes, and less returns, discounts,
claims, credits and allowances of any nature at any time issued, owing, granted,
outstanding, available or claimed in respect of such Eligible Accounts or
Eligible Permitted Accounts.
"Notice of Borrowing" has the meaning specified in Section
2.2(d).
"Notice of Conversion/Continuation" has the meaning specified in
Section 3.2(b).
"Obligations" means all present and future loans, advances,
liabilities, obligations, covenants, duties, and Debt owing by either Borrower
to the Lender, whether or not arising under this Agreement, whether or not
evidenced by any note, or other instrument or document, whether arising from an
extension of credit, opening of a letter of credit, acceptance, loan, guaranty,
indemnification or otherwise, whether direct or indirect (including, without
limitation, those acquired by assignment from others, and any participation by
the Lender in either Borrower's debts owing to
17.
23
others), absolute or contingent, due or to become due, primary or secondary, as
principal or guarantor, and including, without limitation, all interest,
charges, expenses, fees, attorneys' fees, filing fees and any other sums
chargeable to either Borrower hereunder, under another Loan Document, or under
any other agreement or instrument with the Lender. "Obligations" includes,
without limitation, (a) all debts, liabilities, and obligations now or hereafter
owing from the Borrowers to Lender under or in connection with the Letters of
Credit or Belgian Guaranties and (b) all debts, liabilities and obligations now
or hereafter owing from the Borrowers to the Lender arising from or related to
ACH Transactions or FX Transactions pursuant to the indemnity provided in
Section 2.5 hereof and (c) all amounts which may be payable to the Bank pursuant
to the Bank Indemnity.
"Other Taxes" means any present or future stamp or documentary
taxes or any other excise or property taxes, charges or similar levies which
arise from any payment made hereunder or from the execution, delivery or
registration of, or otherwise with respect to, this Agreement or any other Loan
Documents.
"Participating Lender" means any Person who shall have been
granted the right by the Lender to participate in the Loans and who shall have
entered into a participation agreement in form and substance satisfactory to the
Lender.
"Patent and Trademark Assignments" means the assignment of
patents and assignment of trademarks, each to be dated as of the date hereof and
each in form and substance satisfactory to the Lender, evidencing and perfecting
the Lender's Security Interest in the Borrowers' present or future patents,
trademarks and related licenses and rights.
"Payment Account" means each blocked bank account or bank account
associated with a lock box, established pursuant to Section 7.7, to which the
funds of the Borrowers (including, without limitation, Proceeds of Accounts and
other Collateral) are deposited or credited, and which is maintained in the name
of the Lender or either or both of the Borrowers, as the Lender may determine,
on terms acceptable to the Lender.
"PBGC" means the Pension Benefit Guaranty Corporation or any
Person succeeding to the functions thereof.
"Pension Plan" means a pension plan (as defined in Section 3(2)
of ERISA) subject to Title IV of ERISA which the Borrowers or any ERISA
Affiliate of the Borrowers sponsors, maintains, or to which it makes, is making,
or is obligated to make contributions or, in the case of a Multiemployer Plan,
has made contributions at any time during the current year or the immediately
preceding six (6) plan years.
"Permitted Debt" means the Debt listed in Schedule 10.11;
provided that such instruments or agreements shall not be amended, supplemented,
replaced or altered without the prior consent of the Lender.
18.
24
"Permitted Disposition" means sales of chattel paper and/or
contract rights as part of any Permitted Equipment Sales Financing or, to the
extent permitted by the Intercreditor Agreement and this Agreement, sales of
accounts receivable pursuant to the ABN AMRO Agreement.
"Permitted Equipment Sale Financing" means any transaction (a)
pursuant to that certain Financing Program Agreement dated as of May 9, 1996 (as
amended), by and between BA Credit Corporation, by which certain equipment
provided by CMI to third party users and related contracts are purchased or
financed by BA Credit Corporation, or (b) pursuant to similar arrangements to
finance the acquisition or leasing by third parties of equipment provided by CMI
without recourse to CMI.
"Permitted Guaranties" means:
(a) the Guaranties of the Borrowers and their Subsidiaries
existing on the Closing Date and listed on Schedule 10.10; provided that such
Guaranties shall not be amended or altered without the prior consent of the
Lender; and
(b) Guaranties undertaken as part of a Permitted Equipment
Sales Financing or with respect to recourse obligations under the ABN AMRO
Agreement relating to a Permitted Disposition.
"Permitted Liens" means:
(a) Liens for taxes not yet delinquent or Liens for taxes
in an amount not to exceed $100,000 being contested in good faith by appropriate
proceedings diligently pursued, provided that a reserve or other appropriate
provision, if any, as shall be required by GAAP shall have been made therefor on
the applicable Financial Statements and that a stay of enforcement of any such
Lien is in effect;
(b) Liens in favor of the Lender;
(c) Liens arising by operation of law in favor of
warehousemen, landlords, carriers, mechanics, materialmen, laborers, employees
or suppliers, incurred in the ordinary course of business of CMI or its
Subsidiaries and not in connection with the borrowing of money, for sums not yet
delinquent or which are being contested in good faith and by proper proceedings
diligently pursued, provided that a reserve or other appropriate provision, if
any, required by GAAP shall have been made therefor on the applicable Financial
Statements and a stay of enforcement of any such Lien is in effect;
(d) Liens arising from cash deposits in connection with
workers' compensation or other unemployment insurance incurred in the ordinary
course of the CMI's or its Subsidiaries' business;
(e) Liens created by deposits of cash to secure
performance of bids, tenders, leases (to the extent permitted under this
Agreement), or trade contracts, incurred in the
19.
25
ordinary course of business of CMI or its Subsidiaries and not in connection
with the borrowing of money;
(f) Liens (other than Liens with respect to Collateral) of
or resulting from any judgment or award, the time for the appeal or petition for
rehearing of which has not yet expired, or in respect of which CMI or any of its
Subsidiaries, as appropriate, is in good faith prosecuting an appeal or
proceeding for a review, and in respect of which a stay of execution pending
such appeal or proceeding for review has been secured;
(g) Easements, rights of way, zoning and similar covenants
and restrictions and similar encumbrances which customarily exist on real
property and which do not materially interfere with or impair the use or
operation of the Collateral by CMI or its Subsidiaries or the value of the
Lender's Security Interest therein, or materially interfere with the ordinary
conduct of the business of CMI or its Subsidiaries;
(h) purchase money security interests in Equipment and
liens of lessors under Capital Leases to the extent that the acquisition or
lease of the underlying asset was permitted under Section 10.11, the security
interest or lien only encumbers the asset purchased or leased, and so long as
the security interest or lien only secures the purchase price of the asset;
(i) Liens (other than Liens on Collateral) existing on
Property of the Borrowers or their Subsidiaries on the Closing Date as set forth
in Schedule 10.16 securing Permitted Debt outstanding on such date;
(j) Liens granted as part of any Permitted Equipment Sales
Financing; and
(k) Liens granted in connection with the ABN AMRO
Agreement to the extent permitted pursuant to the Intercreditor Agreement.
"Permitted Rentals" has the meaning specified in Section 10.21.
"Permitted Sale" means the disposal by CMI of its Satellite
Transmission Systems Division and/or Microwave Network Systems Division, on
terms acceptable to the Lender in its sole discretion.
"Person" means any individual, sole proprietorship, partnership,
joint venture, trust, unincorporated organization, limited liability company
association, corporation, Public Authority, or any other entity.
"Plan" means an employee benefit plan (as defined in Section 3(3)
of ERISA) which the Borrowers or an ERISA Affiliate of the Borrowers sponsors or
maintains or to which the Borrowers or an ERISA Affiliate of the Borrowers
makes, is making, or is obligated to make contributions and includes any Pension
Plan.
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"Premises" means the land identified by addresses on Schedule
9.13 together with all buildings, improvements, and fixtures thereon and all
tenements, hereditaments, and appurtenances belonging or in any way appertaining
thereto, and which constitutes all of the real property in which CMI or any of
its Subsidiaries has any interests on the Closing Date.
"Proceeds" means all products and proceeds of any Collateral
(including, without limitation, "proceeds" as defined in UCC Section 9306), and
all proceeds of such proceeds and products, including, without limitation, all
cash and credit balances, all payments under any indemnity, warranty, or
guaranty payable with respect to any Collateral, all awards for taking by
eminent domain, all proceeds of fire or other insurance, and all money and other
Property obtained as a result of any claims against third parties or any legal
action or proceeding with respect to Collateral.
"Property" means any interest in any kind of property or asset,
whether real, personal or mixed, or tangible or intangible.
"Proprietary Rights" with respect to any Person, means all of
such Person's now owned and hereafter arising or acquired: licenses, franchises,
permits, patents, patent rights, copyrights, works which are the subject matter
of copyrights, trademarks, trade names, trade styles, patent and trademark
applications and licenses and rights thereunder, including without limitation
those patents, trademarks and copyrights set forth on Schedule 9.14, and all
other rights under any of the foregoing, all extensions, renewals, reissues,
divisions, continuations, and continuations-in-part of any of the foregoing, and
all rights to ▇▇▇ for past, present, and future infringement of any of the
foregoing; inventions, trade secrets, formulae, processes, compounds, drawings,
designs, blueprints, surveys, reports, manuals, and operating standards;
goodwill; customer and other lists in whatever form maintained; and trade secret
rights, copyright rights, rights in works of authorship, and contract rights
relating to computer software programs, in whatever form created or maintained.
"Public Authority" means the government of any country or
sovereign state, or of any state, province, municipality, or other political
subdivision thereof, or any department, agency, public corporation or other
instrumentality of any of the foregoing.
"Receivables" with respect to any Person, means all of such
Person's now owned and hereafter arising or acquired: Accounts (whether or not
earned by performance), including Accounts owed to such Person by any of its
Subsidiaries or Affiliates, together with all interest, late charges, penalties,
collection fees, and other sums which shall be due and payable in connection
with any Account; proceeds of any letters of credit naming such Person as
beneficiary; contract rights, chattel paper, instruments, documents, investment
property, security entitlements, General Intangibles (including, without
limitation, Reversions and other amounts payable to such Person from or with
respect to any Plan), and all forms of obligations owing to such Person
(including, without limitation, in respect of loans, advances, and extensions of
credit by such Person to its Subsidiaries and Affiliates); guarantees and other
security for any of the foregoing; goods represented by or the sale, lease or
delivery of which gave rise to any of the foregoing; merchandise returned to or
repossessed by such Person; and other rights or remedies of an unpaid vendor,
lienor, or secured party.
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"Reference Rate" means the rate of interest publicly announced
from time to time by the Bank as its reference rate. It is a rate set by the
Bank based upon various factors including the Bank's costs and desired return,
general economic conditions, and other factors, and is used as a reference point
for pricing some loans. However, the Bank may price loans at, above, or below
such announced rate. Any changes in the Reference Rate shall take effect on the
day specified in the public announcement of such change.
"Reference Rate Loans" means a Revolving Loan during any period
in which it bears interest based on the Reference Rate.
"Release" means a release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching or migration of a
Contaminant into the indoor or outdoor environment or into or out of any real
estate or other property, including the movement of Contaminants through or in
the air, soil, surface water, groundwater or real estate or other property.
"Reportable Event" means any of the events set forth in Section
4043(b) of ERISA or the regulations thereunder, other than any such event for
which the 30-day notice requirement under ERISA has been waived in regulations
issued by the PBGC.
"Requirement of Law" means any law (statutory or common), treaty,
rule or regulation or determination of an arbitrator or of a Public Authority.
"Restricted Investment" means any acquisition of Property by
either of the Borrowers or any of their Subsidiaries in exchange for cash or
other Property, whether in the form of an acquisition of stock, debt security,
or other indebtedness or obligation, or the purchase or acquisition of any other
Property, or a loan, advance, capital contribution, or subscription, except
acquisitions of the following: (a) fixed assets to be used in the business of
the Borrowers or their Subsidiaries, so long as the acquisition costs thereof
constitute Capital Expenditures permitted hereunder; (b) goods held for sale or
lease or to be used in the rendition of services by the Borrowers or their
Subsidiaries in the ordinary course of business; (c) direct obligations of the
United States of America, or any agency thereof, or obligations guaranteed by
the United States of America, provided that such obligations mature within one
year from the date of acquisition thereof; (d) certificates of deposit maturing
within one year from the date of acquisition, bankers acceptances, Eurodollar
bank deposits, or overnight bank deposits, in each case issued by, created by,
or with a bank or trust company organized under the laws of the United States or
any state thereof having capital and surplus aggregating at least $100,000,000;
and (e) commercial paper given the highest rating by a national credit rating
agency and maturing not more than 270 days from the date of creation thereof.
"Reversions" with respect to any Person, means any funds which
may become due to such Person in connection with the termination of any Plan or
other employee benefit plan.
"Revolving Loans" means revolving loans made to the Borrowers
pursuant to Section 2.2; consisting of A/R Loans, Inventory Loans or Equipment
Loans.
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"Sale Request" means a notification and request by CMI for
approval to sell ABN AMRO Receivables, substantially in the form of Exhibit B.
"Securities Account" has the meaning ascribed to it in Section
8501 of the UCC.
"Security Agreements" means the Patent and Trademark Assignments
and any other security agreements and guaranties, or similar documents, which
may be executed by any Person in favor of the Lender as security for the
Obligations.
"Security Interest" means collectively the Liens granted to the
Lender in the Collateral pursuant to the Loan Documents, or any other agreement
or instrument.
"Securities Intermediary" has the meaning ascribed to it in
Section 8102 of the UCC.
"Solvent" means when used with respect to any Person that at the
time of determination:
(i) the assets of such Person, at a fair valuation, are in
excess of the total amount of its debts (including, without limitation,
contingent liabilities); and
(ii) the present fair saleable value of its assets is
greater than its probable liability on its existing debts as such debts
become absolute and matured; and
(iii) it is then able and expects to be able to pay its
debts (including, without limitation, contingent debts and other
commitments) as they mature; and
(iv) it has capital sufficient to carry on its business as
conducted and as proposed to be conducted.
For purposes of determining whether a Person is Solvent, the amount of any
contingent liability shall be computed as the amount that, in light of all the
facts and circumstances existing at such time, represents the amount that can
reasonably be expected to become an actual or matured liability.
"Spot Rate" for a currency means the rate quoted by Bank as the
spot rate for the purchase by Bank of such currency with another currency
through its FX Trading Office (i) at approximately 8:00 a.m. (Los Angeles,
California time) on the date two Banking Days prior to the relevant
determination date.
"Stated Termination Date" has the meaning specified in Section
14.
"Subordinated Note Agreements" means (i) the Indenture dated as
of December 15, 1993 between CMI and Union Bank (as Trustee) relating to the 5
1/4% Convertible Subordinated Notes due 2003 and (ii) the Purchase Agreement
dated as of October 26, 1993 between CMI and Motorola, Inc. relating to the 5%
Convertible Subordinated Notes due 1998.
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"Subsidiary" of a Person means any corporation, association,
partnership, joint venture or other business entity of which more than 50% of
the voting stock or other equity interests (in the case of Persons other than
corporations), is owned or controlled directly or indirectly by the Person, or
one or more of the Subsidiaries of the Person, or a combination thereof.
"Syndicate Banks" has the meaning ascribed to it in the recitals
to this Agreement.
"Syndicate Agent" has the meaning ascribed to it in the recitals
to this Agreement.
"Syndicated Facility" has the meaning ascribed to it in the
recitals to this Agreement.
"Taxes" means any and all present or future taxes, assessments,
levies, imposts, impositions, deductions, charges or withholdings, and all
liabilities with respect thereto, excluding, in the case of the Lender, such
taxes (including income taxes or franchise taxes) as are imposed on or measured
by the Lender's net income by the jurisdiction (or any political subdivision
thereof) under the laws of which the Lender is organized or maintains a lending
office.
"UCC" means the Uniform Commercial Code (or any successor
statute) of the State of California or of any other state the laws of which are
required by Section 9-103 thereof to be applied in connection with the issue of
perfection of security interests.
"United States" and US" each means the United States of America.
"Unused Line Fee" has the meaning specified in Section 3.1(c).
1.2 Accounting Terms. Any accounting term used in this Agreement
shall have, unless otherwise specifically provided herein, the meaning
customarily given in accordance with GAAP, and all financial computations
hereunder shall be computed, unless otherwise specifically provided herein, in
accordance with GAAP as consistently applied and using the same method for
inventory valuation as used in the preparation of the Financial Statements.
1.3 Other Terms. All other undefined terms contained in this
Agreement shall, unless the context indicates otherwise, have the meanings
provided for by the UCC to the extent the same are used or defined therein.
Wherever appropriate in the context, terms used herein in the singular also
include the plural, and vice versa, and each masculine, feminine, or neuter
pronoun shall also include the other genders.
2. LOANS, LETTERS OF CREDIT AND BELGIAN GUARANTIES.
2.1 Total Facility. Subject to all of the terms and conditions of
this Agreement, the Lender shall make available a total credit facility of up to
$40,000,000 for the Borrowers' use from time to time during the term of this
Agreement. The credit facility shall be comprised of a revolving line of credit
up to the limits of the Aggregate Availability, consisting of Revolving Loans,
Letters of Credit and Belgian Guaranties as described in Sections 2.2, 2.3 and
2.4.
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2.2 Revolving Loans.
(a) Subject to the terms of paragraph (b) below, the
Lender shall, upon the request of a Borrower from time to time, make Revolving
Loans to such Borrower; provided that at no time may the aggregate amount of
Revolving Loans exceed the Aggregate Availability (with the Aggregate
Availability determined for this purpose as if the amount of the Revolving Loans
were zero). The commitment of the Lender to make Inventory Loans or Equipment
Loans shall terminate upon a Permitted Sale.
(b) At no time may the aggregate amount of: (i) A/R Loans
of a Borrower exceed: (x) in the case of CMI, the CMI Availability or (y) in the
case of EFData, the EFData Availability; and provided further that the aggregate
principal amount of A/R Loans advanced against Eligible Permitted Accounts of a
Borrower may at no time exceed the Eligible Permitted Accounts Limit applicable
to such Borrower; (ii) Inventory Loans of a Borrower exceed the Inventory Loans
Limit applicable to such Borrower; or (iii) Equipment Loans of a Borrower exceed
the Equipment Loans Limit applicable to such Borrower. The Lender shall be under
no obligation to make any Equipment Loan to a Borrower if, as at the date such
Loan is to be made, the net book value of the Equipment of the Borrowers as
disclosed in the most-recent balance sheet delivered pursuant to Section 8.2(c)
is less than $35,000,000. The Lender, in its discretion, may elect to exceed an
Availability Limit on one or more occasions, but if it does so, the Lender shall
not be deemed thereby to have changed any such limit or to be obligated to
exceed such limit on any other occasion. If the unpaid balance of the Revolving
Loans exceeds the Aggregate Availability (with Aggregate Availability determined
for this purpose as if the amount of the Revolving Loans were zero), then the
Lender may refuse to make or otherwise restrict Revolving Loans on such terms as
the Lender determines until such excess has been eliminated.
(c) The Borrowers, to the extent required or permitted by
Sections 2.2(d) and (e) below, may request Revolving Loans either telephonically
or in writing. Each oral request for a Revolving Loan shall be conclusively
presumed to be made by a person authorized by the relevant Borrower to do so and
the crediting of a Revolving Loan to such Borrower's deposit account, or
transmittal to such Person as such Borrower shall direct, shall conclusively
establish the obligation of the Borrowers to repay such Revolving Loan as
provided herein. If, and to the extent, at the time the requested Revolving Loan
is to be made there is insufficient CMI Availability or EFData Availability (as
applicable) to permit the Revolving Loan to be made as an A/R Loan, such
Revolving Loan shall be made as an Inventory Loan, provided that if, at such
time, the CMI Inventory Limit or EFData Inventory Limit (as applicable) would be
exceeded such Revolving Loan shall, subject to applicable Equipment Loan Limits,
be made as an Equipment Loan. If at any time after an Equipment Loan or
Inventory Loan is made, CMI Availability or EFData Availability (as applicable)
shall become available, then to the extent of such availability the Equipment
Loans or, if there are no Equipment Loans, Inventory Loans outstanding shall be
deemed converted into A/R Loans. If at any time while A/R Loans are outstanding
the CMI Availability or EFData Availability (as applicable) shall be reduced
below the outstanding amount of such A/R Loans, such A/R Loans shall be deemed,
subject to applicable Inventory Loans Limits or Equipment Loans Limits, to be
converted into Inventory Loans or Equipment Loans (as appropriate). The Lender
will charge all Revolving Loans and other Obligations to a loan account of the
Borrowers maintained with the
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Lender. All fees, commissions, costs, expenses, and other charges under or
pursuant to the Loan Documents, and all payments made and out-of-pocket expenses
incurred by the Lender pursuant to the Loan Documents, will be charged as
Revolving Loans to the relevant Borrower's loan account as of the date due from
such Borrower or the date paid or incurred by the Lender, as the case may be.
(d) Procedure for Borrowing.
(i) Each Borrowing of Revolving Loans shall be made
upon a Borrower's irrevocable written notice ("Notice of Borrowing")
delivered to the Lender which notice must be received by the Lender (A)
not later than 11:00 a.m. (Los Angeles, California time) three Business
Days prior to the requested Funding Date, in the case of LIBOR Rate
Loans, and (B) no later than 10:00 a.m. (Los Angeles, California time)
on the requested Funding Date, in the case of Reference Rate Loans,
specifying:
(ii) the amount of the Borrowing;
(iii) the requested Funding Date, which shall be a
Business Day;
(iv) in the case of A/R Loans, whether the
Revolving Loans requested are to be Reference Rate Loans or LIBOR Rate
Loans;
(v) the duration of the Interest Period if the
requested Revolving Loans are to be LIBOR Rate Loans. If the Notice of
Borrowing fails to specify the duration of the Interest Period for any
Borrowing comprised of LIBOR Rate Loans, such Interest Period shall be
three months; provided, however, that with respect to the Borrowings to
be made on the Closing Date, such Borrowings will consist of Reference
Rate Loans only; and
(vi) which Borrower will make the Borrowing.
(vii) after giving effect to any Borrowing, the
Borrowers collectively may not have more than three different Interest
Periods in effect.
(viii) with respect to any request for Reference
Rate Loans, in lieu of delivering the above-described Notice of
Borrowing a Borrower may give the Lender telephonic notice of such
request by the required time, with such telephonic notice to be
confirmed in writing within 24 hours of the giving of such notice but
Lender shall be entitled to rely on the telephonic notice in making such
Revolving Loans.
2.3 Letters of Credit.
(a) Subject to the terms and conditions of this Agreement,
the Lender shall, upon a Borrower's request from time to time, cause merchandise
or standby letters of credit to be issued for such Borrower's account (such
letters of credit the "Letters of Credit"). Letters of Credit shall be issued
through an issuer acceptable, in its sole discretion, to and nominated by the
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Lender. The Lender will not be required to cause to be issued any Letter of
Credit if: (i) the maximum face amount of the requested Letter of Credit, plus
the aggregate undrawn face amount of all outstanding Letters of Credit and
maximum exposure under outstanding Belgian Guaranties, would exceed $20,000,000;
(ii) the maximum face amount of the requested Letter of Credit and all
commissions, fees, and charges due from the Borrowers to Lender in connection
with the issuance thereof would cause the Borrowings to exceed the Aggregate
Availability or (iii) the expiration date of the Letter of Credit would exceed
the Stated Termination Date or any renewal term or be greater than thirty (30)
months from the date of issuance. All payments made and expenses incurred by the
Lender pursuant to or in connection with Letters of Credit will be charged to
the loan account of the Borrower requesting the relevant Letter of Credit as
Revolving Loans.
(b) Other Conditions. In addition to being subject to the
satisfaction of the applicable conditions precedent contained in Section 11, the
obligation of the Lender to cause to be issued any Letter of Credit is subject
to the following conditions precedent having been satisfied in a manner
satisfactory to the Lender:
(i) The relevant Borrower requesting issuance of
the Letter of Credit shall have delivered to the proposed issuer of such
Letter of Credit, at such times and in such manner as such proposed
issuer may prescribe, an application in form and substance satisfactory
to such proposed issuer and the Lender for the issuance of the Letter of
Credit and such other documents as may be required pursuant to the terms
thereof, and the form and terms of the proposed Letter of Credit shall
be satisfactory to the Lender and such proposed issuer; and
(ii) As of the date of issuance, no order of any
court, arbitrator or Public Authority shall purport by its terms to
enjoin or restrain money center banks generally from issuing letters of
credit of the type and in the amount of the proposed Letter of Credit,
and no law, rule or regulation applicable to money center banks
generally and no request or directive (whether or not having the force
of law) from any Public Authority with jurisdiction over money center
banks generally shall prohibit, or request that the proposed issuer of
such Letter of Credit refrain from, the issuance of letters of credit
generally or the issuance of such Letters of Credit.
(c) Issuance of Letters of Credit.
(i) Request for Issuance. The Borrower requesting
issuance of a Letter of Credit shall give the Lender four (4) Business
Days' prior written notice of such Borrower's request for the issuance
of a Letter of Credit. Such notice shall be irrevocable and shall
specify the original face amount of the Letter of Credit requested, the
effective date (which date shall be a Business Day) of issuance of such
requested Letter of Credit, whether such Letter of Credit may be drawn
in a single or in partial draws, the date on which such requested Letter
of Credit is to expire (which date shall be a Business Day), the purpose
for which such Letter of Credit is to be issued, and the beneficiary of
the requested Letter of Credit. The relevant Borrower shall attach to
such notice the proposed form of the Letter of Credit that the Lender is
requested to cause to be issued.
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(ii) No Extensions or Amendment. The Lender shall
not be obligated to cause any Letter of Credit to be extended or amended
unless the requirements of this Section 2.3 are met as though a new
Letter of Credit were being requested and issued.
(d) Payments Pursuant to Letters of Credit.
(i) Payment of Letter of Credit Obligations. The
Borrowers jointly and severally agree to reimburse the issuer for any
draw under any Letter of Credit immediately upon demand, and to pay the
issuer of the Letter of Credit the amount of all other obligations and
other amounts payable to such issuer under or in connection with any
Letter of Credit immediately when due, irrespective of any claim,
setoff, defense or other right which either Borrower may have at any
time against such issuer or any other Person.
(ii) Revolving Loans to Satisfy Reimbursement
Obligations. In the event that the issuer of any Letter of Credit honors
a draw under such Letter of Credit and the Borrowers shall not have
repaid such amount to the issuer of such Letter of Credit pursuant to
Section 2.3(d)(i), the Lender shall pay the issuer and such amount when
paid shall constitute a Revolving Loan which shall be deemed to have
been requested by the Borrower originally requesting the relevant Letter
of Credit.
(e) Compensation for Letters of Credit.
(i) Letter of Credit Fee. The Borrowers jointly and
severally agree to pay to the Lender with respect to each Letter of
Credit, the Letter of Credit Fee specified in, and in accordance with
the terms of, Section 3.6.
(ii) Issuer Fees and Charges. The Borrowers shall
pay to the issuer of any Letter of Credit, or to the Lender, for the
account of the issuer of any such Letter of Credit, solely for such
issuer's account, such fees and other charges as are charged by such
issuer for letters of credit issued by it, including, without
limitation, its standard fees for issuing, administering, amending,
renewing, paying and canceling letters of credit and all other fees
associated with issuing or servicing letters of credit, as and when
assessed.
(f) Indemnification; Exoneration; Power of Attorney.
(i) Indemnification. In addition to amounts payable
as elsewhere provided in this Section 2.3, each Borrower hereby agrees
to protect, indemnify, pay and save the Lender harmless from and against
any and all claims, demands, liabilities, damages, losses, costs,
charges and expenses (including reasonable attorneys' fees) which the
Lender may incur or be subject to as a consequence, direct or indirect,
of the issuance of any Letter of Credit or the provision of any credit
support or enhancement in connection therewith. The agreement in this
Section 2.3(f)(i) shall survive payment of all Obligations and the
termination of this Agreement.
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(ii) Assumption of Risk by the Borrowers. As among
a Borrower and the Lender, the Borrowers assume all risks of the acts
and omissions of, or misuse of any of the Letters of Credit by, the
respective beneficiaries of such Letters of Credit. In furtherance and
not in limitation of the foregoing, the Lender shall not be responsible
for: (A) the form, validity, sufficiency, accuracy, genuineness or legal
effect of any document submitted by any Person in connection with the
application for and issuance of and presentation of drafts with respect
to any of the Letters of Credit, even if it should prove to be in any or
all respects invalid, insufficient, inaccurate, fraudulent or forged;
(B) the validity or sufficiency of any instrument transferring or
assigning or purporting to transfer or assign any Letter of Credit or
the rights or benefits thereunder or proceeds thereof, in whole or in
part, which may prove to be invalid or ineffective for any reason; (C)
the failure of the beneficiary of any Letter of Credit to comply duly
with conditions required in order to draw upon such Letter of Credit;
(D) errors, omissions, interruptions, or delays in transmission or
delivery of any messages, by mail, cable, telegraph, telex or otherwise,
whether or not they be in cipher; (E) errors in interpretation of
technical terms; (F) any loss or delay in the transmission or otherwise
of any document required in order make a drawing under any Letter of
Credit or of the proceeds thereof; (G) the misapplication by the
beneficiary of any Letter of Credit of the proceeds of any drawing under
such Letter of Credit; or (H) any consequences arising from causes
beyond the control of the Lender, including, without limitation, any act
or omission, whether rightful or wrongful, of any present or future de
jure or de facto Public Authority. None of the foregoing shall affect,
impair or prevent the vesting of any rights or powers of the Lender
under this Section 2.3.
(iii) Exoneration. In furtherance and extension,
and not in limitation, of the specific provisions set forth above, any
action taken or omitted by the Lender under or in connection with any of
the Letters of Credit or any related certificates, if taken or omitted
in the absence of gross negligence or willful misconduct, shall not put
the Lender under any resulting liability to either Borrower or relieve
either Borrower of any of its obligations hereunder to any such Person.
(iv) Power of Attorney. In connection with all
Inventory financed by Letters of Credit, each Borrower hereby appoints
the Lender, or the Lender's designee, as its attorney, with full power
and authority: (A) to sign and/or endorse such Borrower's name upon any
warehouse or other receipts; (B) to sign such Borrower's name on bills
of lading and other negotiable and non-negotiable documents; (C) to
clear Inventory through customs in the Lender's or such Borrower's name,
and to sign and deliver to customs officials powers of attorney in such
Borrower's name for such purpose; (D) to complete in such Borrower's or
the Lender's name, any order, sale, or transaction, obtain the necessary
documents in connection therewith, and collect the proceeds thereof; and
(E) to do such other acts and things as are necessary in order to enable
the Lender to obtain possession of the Inventory and to obtain payment
of the Obligations. Neither the Lender nor its designee, as such
Borrower's attorney, will be liable for any acts or omissions, nor for
any error of judgement or mistakes of fact or law. These powers, being
coupled with an interest, are irrevocable until all Obligations have
been paid and satisfied.
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(v) Account Party. The Borrowers hereby each
authorize and direct any issuer of a Letter of Credit to name such
Borrower as the "Account Party" in any Letter of Credit requested by
such Borrower and to deliver to the Lender all instruments, documents
and other writings and property received by the issuer pursuant to a
Letter of Credit, and to accept and rely upon the Lender's instructions
and agreements with respect to all matters arising in connection with a
Letter of Credit or the application therefor.
(vi) Control of Inventory. In connection with all
Inventory financed by Letters of Credit, the Borrowers will, at the
Lender's request, instruct all suppliers, carriers, forwarders,
warehouses or others receiving or holding cash, checks, Inventory,
documents or instruments in which the Lender holds a security interest
to deliver them to the Lender and/or subject to the Lender's order, and
if they shall come into a Borrower's possession, to deliver them, upon
request, to the Lender in their original form. Each Borrower shall also,
at the Lender's request, designate the Lender as the consignee on all
bills of lading and other negotiable and non-negotiable documents.
(g) Supporting Letter of Credit; Cash Collateral. If,
notwithstanding the provisions of this Section 2.3 and Section 14 any Letter of
Credit is outstanding upon the termination of this Agreement, then upon such
termination the Borrowers shall deposit with the Lender, at its discretion, with
respect to each Letter of Credit then outstanding, either (i) a standby letter
of credit (a "Supporting Letter of Credit") in form and substance satisfactory
to the Lender, issued by an issuer satisfactory to the Lender in an amount equal
to the greatest amount for which such Letter of Credit may be drawn, under which
Supporting Letter of Credit the Lender is entitled to draw amounts necessary to
reimburse the Lender for payments made by the Lender under such Letter of Credit
or under any credit support or enhancement provided through the Lender with
respect thereto, or (ii) cash in amounts necessary to reimburse the Lender for
payments made by the Lender under such Letter of Credit or under any credit
support or enhancement provided through the Lender. Such Supporting Letter of
Credit or deposit of cash shall be held by the Lender, as security for, and to
provide for the payment of, the aggregate undrawn amount of such Letters of
Credit remaining outstanding.
(h) Existing Letters of Credit. On and after the Closing
Date the Existing Letters of Credit shall be deemed for all purposes (including
determination of Aggregate Availability and fees to be collected pursuant to
Section 3.6 and the reimbursement of costs and expenses) to be Letters of Credit
outstanding under this Agreement and shall be governed by and subject to the
application of this Agreement and the other Loan Documents.
2.4 Belgian Guaranties.
(a) On the terms and conditions set forth herein the
Lender shall, upon CMI's request from time to time, cause Belgian Guaranties to
be issued by the Bank for the account of CMI; provided, that the Lender shall
not be obliged to cause the Bank to issue any Belgian Guaranty if: (i) the date
for issue of the relevant Belgian Guaranty is not a Business Day, (ii) as of the
date of its issue the maximum exposure under the requested Belgian Guaranty
(together with all fees, charges, commissions and expenses in connection
therewith) (A) exceeds the Aggregate
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Belgian Guaranty Amount or (B) when aggregated with the undrawn amount of all
outstanding Letters of Credit and the maximum exposure under outstanding Belgian
Guaranties would exceed $20,000,000, (iii) the aggregate amount of Borrowings of
the Borrowers advanced against Eligible Permitted Accounts would exceed the
Eligible Permitted Accounts Subfacility Amount, and (iv) such requested Belgian
Guaranty relates to a contract with the Belgian Beneficiary whose terms have not
been approved by the Lender.
(b) The Lender is under no obligation to cause the Bank to
execute and deliver any Belgian Guaranty if: (i) any order, judgment or decree
of any court arbitrator or Public Authority shall by its terms purport to enjoin
or restrain the Lender and/or Bank from executing and delivering such Belgian
Guaranty, or any law, rule or regulation applicable to the Lender and/or the
Bank or any request or directive (whether or not having the force of law) from
any Public Authority with jurisdiction over the Lender and/or the Bank shall
prohibit, or request that the Lender and/or the Bank refrain from, the execution
and delivery of guaranties generally or such Belgian Guaranty in particular or
shall impose upon the Lender and/or the Bank with respect to such Belgian
Guaranty any restriction, reserve or capital requirement (for which the Lender
and/or the Bank is not otherwise compensated hereunder), or shall impose upon
the Lender and/or the Bank any unreimbursed loss, cost or expense; or (ii) the
Bank has received written notice from the Lender or CMI, on or prior to the
Business Day prior to the requested date of issue of such Belgian Guaranty, that
one or more of the applicable conditions contained in Article 11 is not then
satisfied; or (iii) the issue of a Belgian Guaranty shall violate any applicable
policies of the Bank; or (iv) any requested Belgian Guaranty is not otherwise in
form and substance acceptable to the Lender or the Bank.
(c) Issuance of Belgian Guaranties. CMI shall give Lender
and the Bank at least four (4) Business Days (or such shorter period as the
Lender and Bank may agree) prior written notice of CMI's request for the
issuance of a Belgian Guaranty. Such notice shall be irrevocable and shall
specify the amount of the Belgian Guaranty requested, the date of issue of the
Belgian Guaranty, the type and nature of Belgian Guaranty requested and such
other information as the Lender or Bank may require.
(d) Payments Pursuant to Belgian Guaranties.
(i) Payment of Belgian Guaranty Obligations. The
Borrowers jointly and severally undertake to reimburse the Bank the Dollar
Equivalent of any payment under a Belgian Guaranty and other amounts payable
under or in connection with the Belgian Guaranties immediately upon demand,
irrespective of any claim, setoff, defense or other right which the Borrowers
may have at any time against the Bank, the beneficiary of the relevant Belgian
Guaranty or any other Person.
(ii) Revolving Loans to Satisfy Reimbursement
Obligations. In the event that the Bank honors a request for payment by a
beneficiary under a Belgian Guaranty and the Borrowers shall not have reimbursed
the Bank pursuant to Section 2.4(d)(i), the Lender shall pay the Bank the Dollar
Equivalent of such amount due and such payment shall constitute a Revolving
Loan, which shall be deemed to be a Reference Rate Loan requested by CMI.
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(e) Existing Belgian Guaranties. On and after the Closing
Date, the Existing Belgian Guaranties shall be deemed for all purposes to be
Belgian Guaranties outstanding under this Agreement and shall be governed by and
subject to the application of this Agreement and the other Loan Documents.
(f) Role of the Bank.
(i) The Lender and each Borrower agree that, in
making any payment under a Belgian Guaranty, the Lender and the Bank shall not
have any responsibility to obtain any document or to ascertain or inquire as to
the validity or accuracy of any such document or the authority of the Person
executing or delivery any such document.
(ii) The Lender and the Bank shall not be liable:
(A) in respect of the Bank, for any action taken or omitted in connection
herewith at the request of the Lender; (B) for any action taken or omitted in
the absence of gross negligence or willful misconduct; or (C) for the due
execution, effectiveness, validity or enforceability of any document related to
a Belgian Guaranty.
2.5 ACH Transactions and FX Transactions. Either Borrower may
request and the Lender may, in its sole and absolute discretion, arrange for
either Borrower to obtain from the Bank ACH Transactions and FX Transactions.
The Borrowers agree to indemnify and hold the Lender harmless from all losses,
liabilities, costs, expenses and claims incurred by the Lender arising from or
related to such ACH Transactions and FX Transactions pursuant to the indemnity
referred to in clause (c) below. The Borrowers agree to pay to the Bank all
amounts owing to the Bank pursuant to ACH Transactions and FX Transactions. In
the event that the Borrowers shall not have paid to the Bank such amounts, the
Lender shall pay the Bank and such amounts when paid by the Lender shall
constitute a Revolving Loan requested by the Borrowers. The Borrowers
acknowledge and agree that the obtaining of ACH Transactions and FX Transactions
from the Bank (a) is in the sole and absolute discretion of the Bank, (b) is
subject to all rules and regulations of the Bank, and (c) is due to the Bank
relying on the indemnity of the Lender to the Bank with respect to all risks of
loss associated with the ACH Transactions and FX Transactions.
3. INTEREST AND OTHER CHARGES.
3.1 Interest.
(a) All Obligations shall bear interest on the unpaid principal
amount thereof from the date made until paid in full in cash at a rate
determined by reference to the Reference Rate or the LIBOR Rate and Sections 3.1
(a)(i) or (ii), as applicable, but not to exceed the Maximum Rate. Subject to
the provisions of Section 3.2, A/R Loans may be converted into, or continued as,
Reference Rate Loans or LIBOR Rate Loans in the manner provided in Section 3.2.
Inventory Loans and Equipment Loans may only be maintained as Reference Rate
Loans. If at any time A/R Loans are outstanding with respect to which notice has
not been delivered to Lender in accordance with the terms of this Agreement
specifying the basis for determining the interest rate applicable thereto, then
those A/R Loans shall be Reference Rate Loans and shall bear interest at a
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rate determined by reference to the Reference Rate until notice to the contrary
has been given to the Lender and such notice has become effective. Except as
otherwise provided herein, the Obligations shall bear interest at: (i) a
fluctuating rate per annum equal to the Reference Rate plus the Reference Rate
Margin (as set forth below) for Obligations other than LIBOR Rate Loans,
Inventory Loans or Equipment Loans and (ii) at a rate per annum equal to the
LIBOR Rate plus the LIBOR Margin (as set forth below) for Obligations
constituting LIBOR Rate Loans and (iii) at a fluctuating rate per annum equal to
the Reference Rate plus the Inventory/Equipment Margin (as set forth below) for
Obligations constituting Inventory Loans or Equipment Loans. The initial
Reference Rate Margin, Inventory/Equipment Margin and LIBOR Margin for the six
month period following the Closing Date shall be 0.50%, 1.00% and 2.50%,
respectively. Thereafter the Reference Rate Margin, the Inventory/ Equipment
Margin and the LIBOR Margin shall be determined based upon the aggregate average
daily amount of Borrowings outstanding during the month preceding the borrowing
of the relevant Revolving Loan in accordance with the table set forth below:
INVENTORY/
AGGREGATE OF BORROWINGS REFERENCE EQUIPMENT LIBOR
OUTSTANDING (X) RATE MARGIN MARGIN
$ (%) (%) (%)
----------------------- --------- --------- -----
x <= 5,000,000 0.00 0.50 2.00
5,000,000 > x < = 10,000,000 0.25 0.75 2.25
x > 10,000,000 0.50 1.00 2.50
Each change in the Reference Rate shall be reflected in the interest
rate described above as of the effective date of such change. All interest
charges shall be computed on the basis of a year of three hundred sixty (360)
days and actual days elapsed. All interest shall be payable to Lender on the
first day of each month hereafter.
(b) If any Event of Default occurs, then, from the date
such Event of Default occurs until it is cured, or if not cured until all
Obligations are paid and performed in full, the Borrowers, upon demand of
Lender, will pay interest on the unpaid principal balances of the Revolving
Loans at a per annum rate 2% greater than the rate of interest otherwise
specified herein, and the applicable Letter of Credit Fee and Belgian Guaranty
Fee shall be increased by 2%.
(c) Unused Line Fee. For every month during the term of
this Agreement, the Borrowers shall pay the Lender a fee (the "Unused Line Fee")
in an amount equal to 0.25% per annum, multiplied by the average daily amount by
which the Maximum Revolving Credit Line exceeds the sum of (i) the average daily
outstanding amount of Revolving Loans during such month, (ii) the average daily
undrawn face amount of all outstanding Letters of Credit during such month, and
(iii) the Aggregate Belgian Guaranty Amount with the outstanding amount of
Revolving Loans calculated for this purpose by applying payments immediately
upon receipt. Such a fee, if any, shall be calculated on the basis of a year of
three hundred sixty (360) days and actual days elapsed, and shall be payable to
the Lender on the first day of each month and on the termination of this
Agreement, in each case, with respect to the prior month or portion thereof.
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3.2 Conversion and Continuation Elections.
(a) Each Borrower may, with respect to any Borrowing of
A/R Loans made by such Borrower, upon irrevocable written notice to the Lender
in accordance with Subsection 3.2(b):
(i) elect, as of any Business Day, in the case of
A/R Loans which are Reference Rate Loans, to convert any such Loans (or
any part thereof in an amount not less than $2,000,000, or that is in an
integral multiple of $1,000,000 in excess thereof) into LIBOR Rate
Loans; or
(ii) elect, as of the last day of the applicable
Interest Period, to continue any A/R Loans which are LIBOR Rate Loans
having Interest Periods expiring on such day (or any part thereof in an
amount not less than $2,000,000, or that is in an integral multiple of
$1,000,000 in excess thereof);
provided, that if at any time the aggregate amount of LIBOR Rate Loans in
respect of any Borrowing is reduced, by payment, prepayment, or conversion of
part thereof to be less than $1,000,000, such LIBOR Rate Loans shall
automatically convert into Reference Rate Loans, and on and after such date the
right of the Borrowers to continue such Loans as, and convert such Loans into,
LIBOR Rate Loans, as the case may be, shall terminate.
(b) The relevant Borrower shall deliver a notice of
conversion or continuation ("Notice of Conversion/Continuation") to be received
by the Lender (A) not later than 11:00 a.m.(Los Angeles, California time) at
least three (3) Business Days in advance of the date of conversion or
continuation, if the Loans are to be converted into or continued as LIBOR Rate
Loans and (B) not later than 10:00 a.m. (Los Angeles, California time) on the
date of conversion or continuation if the A/R Loans are to be converted into or
continued as Reference Rate Loans and specifying:
(i) the proposed Conversion/Continuation Date;
(ii) the aggregate amount of A/R Loans to be
converted or continued;
(iii) the type of A/R Loans resulting from the
proposed conversion or continuation;
(iv) the Borrower in respect of whom such Borrowing
was made.
(c) If upon the expiration of any Interest Period
applicable to LIBOR Rate Loans, the relevant Borrower has failed to select
timely a new Interest Period to be applicable to LIBOR Rate Loans or if any
Event or Event of Default then exists, the relevant Borrower shall be deemed to
have elected to convert such LIBOR Rate Loans into Reference Rate Loans
effective as of the expiration date of such Interest Period.
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(d) During the existence of a Event or Event of Default,
the Borrowers may not elect to have a Loan converted into or continued as a
LIBOR Rate Loan.
(e) After giving effect to any conversion or continuation
of Loans, there may not be more than three different Interest Periods in effect
for the Borrowers collectively.
3.3 Maximum Interest Rate. In no event shall any interest rate
provided for hereunder exceed the maximum rate permissible for corporate
borrowers under applicable law for loans of the type provided for hereunder (the
"Maximum Rate"). If, in any month, any interest rate, absent such limitation,
would have exceeded the Maximum Rate, then the interest rate for that month
shall be the Maximum Rate, and, if in future months, that interest rate would
otherwise be less than the Maximum Rate, then that interest rate shall remain at
the Maximum Rate until such time as the amount of interest paid hereunder equals
the amount of interest which would have been paid if the same had not been
limited by the Maximum Rate. In the event that, upon payment in full of the
Obligations, the total amount of interest paid or accrued under the terms of
this Agreement is less than the total amount of interest which would, but for
this Section 3.3, have been paid or accrued if the interest rates otherwise set
forth in this Agreement had at all times been in effect, then the Borrowers
shall, to the extent permitted by applicable law, pay the Lender, an amount
equal to the excess of (a) the lesser of (i) the amount of interest which would
have been charged if the Maximum Rate had, at all times, been in effect or (ii)
the amount of interest which would have accrued had the interest rates otherwise
set forth in this Agreement, at all times, been in effect over (b) the amount of
interest actually paid or accrued under this Agreement. In the event that a
court determines that the Lender has received interest and other charges
hereunder in excess of the Maximum Rate, such excess shall be deemed received on
account of, and shall automatically be applied to reduce, the Obligations other
than interest, in the inverse order of maturity, and if there are no Obligations
outstanding, the Lender shall refund to the Borrowers such excess.
3.4 Facility Fee. The Borrowers will pay the Lender on the
Closing Date a facility fee in the amount of $150,000 (the "Facility Fee"). The
Lender and the Borrowers agree that the Facility Fee shall be financed by the
Lender as a Revolving Loan.
3.5 Collateral Management Fee. The Borrowers will pay the Lender
an annual fee (the "Collateral Management Fee") on the Closing Date and each
anniversary thereafter prior to the termination of this Agreement, in the amount
of $25,000 for each year or portion thereof.
3.6 Letter of Credit Fee. The Borrowers agree to pay to the
Lender a fee (the "Letter of Credit Fee") equal to the rate per annum equal to
the Letter of Credit Fee Percentage of the undrawn face amount of each Letter of
Credit issued for either Borrowers' account at either Borrowers' request, plus
all out-of-pocket costs, fees and expenses incurred by the Lender in connection
with the application for, issuance of, or amendment to any Letter of Credit,
which costs, fees and expenses could include a "fronting fee" required to be
paid by the Lender to such issuer for the assumption of the settlement risk in
connection with the issuance of such Letter of Credit. The initial Letter of
Credit Fee Percentage applicable during the six month period following the
Closing Date shall be 1.50%. Thereafter the applicable Letter of Credit Fee
Percentage shall be determined
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based upon the aggregate average daily amount of Borrowings outstanding during
the month preceding the date of payment in accordance with the table set forth
below:
LETTER OF CREDIT
AGGREGATE BORROWINGS (X) FEE PERCENTAGE
($) (%)
------------------------ ----------------
x <= 10,000,000 1.00
x >= 10,000,000 1.25
To the extent, at any time, a Letter of Credit if being issued would be
treated for the purposes of the Availability Limits pursuant to Section 2.3(a)
as being advanced against the Inventory Loan Limit or Equipment Loan Limit of a
Borrower, the Letter of Credit fee applicable to such portion of such Letter of
Credit shall be increased by 0.50%.
The Letter of Credit Fee shall be payable monthly in arrears on the
first day of each month following any month in which a Letter of Credit was
issued and/or in which a Letter of Credit remains outstanding. The Letter of
Credit Fee shall be computed on the basis of a 360- day year for the actual
number of days elapsed.
3.7 Belgian Guaranty Fee and Dollar Equivalent Amounts.
(a) During the term of this Agreement, the Borrowers agree
to pay to the Lender a fee (the "Belgian Guaranty Fee"), payable on the first
day of each month, equal to the product of (i) the Belgian Guaranty Fee
Percentage multiplied by the maximum exposure under outstanding Belgian
Guaranties (as determined by the Lender in its sole discretion) plus (ii) all
out-of-pocket costs, fees and expenses of the Lender and the Bank in connection
with the application for, issuance of, or amendment to any Belgian Guaranty,
which costs, fees and expenses could include a "fronting fee" required to be
paid by the Lender to the Bank in connection with the issuance of such Belgian
Guaranty.
(b) The Belgian Guaranty Fee shall be payable monthly in
advance on the first day of each month hereafter; provided that the first
payment on account of the Belgian Guaranty Fee shall be payable on the Closing
Date in respect of the period from the Closing Date to the first day of the
month following the Closing Date. Such fee shall be calculated on the basis of a
year of three hundred and sixty (360) days and the actual days elapsed.
(c) The Lender may, from time to time in its sole
discretion, determine the Dollar Equivalent amount of Belgian Guaranty
Obligations, proposed Belgian Guaranties and the Aggregate Belgian Guaranty
Amount. Absent manifest error, any such determination by the Lender shall be
conclusive and binding on the Borrowers. Subject to Section 6.3, if the Lender
shall have determined that, due to a change in applicable rates of exchange
between Dollars and Belgian Francs, (A) the aggregate principal amount of all
Revolving Loans and outstanding Letters of Credit exceeds the Aggregate
Availability or (B) the Belgian Guaranty Obligations exceeds the Aggregate
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Belgian Guaranty Amount, then the Lender shall give notice to CMI which states
the Dollar Equivalent amount of any such excess and requires the Borrowers to
cash collateralize or to make mandatory prepayments so as to eliminate such
excess.
4. PAYMENTS.
4.1 Repayments. The Borrowers shall repay the outstanding
principal balance of the Revolving Loans, plus all accrued but unpaid interest
thereon, upon the termination of this Agreement for any reason. In addition, and
without limiting the generality of the foregoing, the Borrowers shall pay to the
Lender, on demand, (a) the amount by which the unpaid principal balance of the
Revolving Loans at any time exceeds the Aggregate Availability at such time
(determined for this purpose as if the amount of the Revolving Loans were zero)
and (b) the amount by which the aggregate amount of any Borrowings exceeds any
other applicable Availability Limit. Upon any Permitted Sale the Borrowers shall
immediately repay any Inventory Loans or Equipment Loans then outstanding.
4.2 Place and Form of Payments; Extension of Time. All payments
of principal, interest, premium, and other sums due to the Lender shall be made
at the Lender's address set forth in Section 15.11. Except for Proceeds received
directly by the Lender, all such payments shall be made in Dollars in
immediately available funds. If any payment of principal, interest, premium, or
other sum to be made hereunder becomes due and payable on a day other than a
Business Day, the due date of such payment shall be extended to the next
succeeding Business Day and interest thereon shall be payable at the applicable
interest rate during such extension.
4.3 Application and Reversal of Payments. The Lender shall
determine in its sole discretion the order and manner in which Proceeds of
Collateral and other payments that the Lender receives are applied to any type
of Revolving Loan, interest thereon, and any other Obligations, and the
Borrowers hereby irrevocably waive the right to direct the application of any
payment or Proceeds. The Lender shall have the continuing and exclusive right to
apply and reverse and reapply any and all such Proceeds and payments to any
portion of the Obligations.
4.4 INDEMNITY FOR RETURNED PAYMENTS. IF AFTER RECEIPT OF ANY
PAYMENT WHICH IS APPLIED TO THE PAYMENT OF ALL OR ANY PART OF THE OBLIGATIONS,
THE LENDER IS FOR ANY REASON COMPELLED TO SURRENDER SUCH PAYMENT TO ANY PERSON
BECAUSE SUCH PAYMENT IS INVALIDATED, DECLARED FRAUDULENT, SET ASIDE, DETERMINED
TO BE VOID OR VOIDABLE AS A PREFERENCE, IMPERMISSIBLE SETOFF, OR A DIVERSION OF
TRUST FUNDS, OR FOR ANY OTHER REASON, THEN: THE OBLIGATIONS OR PART THEREOF
INTENDED TO BE SATISFIED SHALL BE REVIVED AND CONTINUE AND THIS AGREEMENT SHALL
CONTINUE IN FULL FORCE AS IF SUCH PAYMENT HAD NOT BEEN RECEIVED BY THE LENDER
AND THE BORROWERS SHALL BE LIABLE TO PAY TO THE LENDER AND HEREBY DO INDEMNIFY
THE LENDER AND HOLD THE LENDER HARMLESS FOR THE AMOUNT OF SUCH PAYMENT
SURRENDERED. The provisions of this Section 4.4 shall be and remain effective
notwithstanding any contrary action which may have been taken by the Lender in
reliance upon such payment, and any such contrary
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action so taken shall be without prejudice to the Lender's rights under this
Agreement and shall be deemed to have been conditioned upon such payment having
become final and irrevocable. The provisions of this Section 4.4 shall survive
the termination of this Agreement.
5. LENDER'S BOOKS AND RECORDS; MONTHLY STATEMENTS. The Borrowers agree
that the Lender's books and records showing the Obligations and the transactions
pursuant to this Agreement and the other Loan Documents shall be admissible in
any action or proceeding arising therefrom, and shall constitute prima facie
proof thereof, irrespective of whether any Obligation is also evidenced by a
promissory note or other instrument. The Lender will provide to Borrowers a
monthly statement of Loans, payments, and other transactions pursuant to this
Agreement. Such statement shall be deemed correct, accurate, and binding on the
Borrowers and as an account stated (except for reversals and reapplications of
payments made as provided in Section 4.3 and corrections of errors discovered by
the Lender), unless the Borrowers notify the Lender in writing to the contrary
within thirty (30) days after such statement is rendered. In the event a timely
written notice of objections is given by the Borrowers only the items to which
exception is expressly made will be considered to be disputed by the Borrowers.
6. TAXES, YIELD PROTECTION AND ILLEGALITY.
6.1 Taxes.
(a) Any and all payments by the Borrowers to the Lender
under this Agreement and any other Loan Document shall be made free and clear
of, and without deduction or withholding for any Taxes. In addition, the
Borrowers shall pay all Other Taxes.
(b) The Borrowers agree to indemnify and hold harmless the
Lender for the full amount of Taxes or Other Taxes (including any Taxes or Other
Taxes imposed by any jurisdiction on amounts payable under this Section) paid by
the Lender and any liability (including penalties, interest, additions to tax
and expenses) arising therefrom or with respect thereto, whether or not such
Taxes or Other Taxes were correctly or legally asserted. Payment under this
indemnification shall be made within 30 days after the date the Lender makes
written demand therefor.
(c) If the Borrowers shall be required by law to deduct or
withhold any Taxes or Other Taxes from or in respect of any sum payable
hereunder to Lender, then:
(i) the sum payable shall be increased as necessary
so that after making all required deductions and withholdings (including
deductions and withholdings applicable to additional sums payable under
this Section) the Lender receives an amount equal to the sum it would
have received had no such deductions or withholdings been made;
(ii) the relevant Borrower shall make such
deductions and withholdings;
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(iii) the relevant Borrower shall pay the full
amount deducted or withheld to the relevant taxing authority or other
authority in accordance with applicable law; and
(iv) the relevant Borrower shall also pay to the
Lender at the time interest is paid, all additional amounts which the
Lender specifies as necessary to preserve the after-tax yield the Lender
would have received if such Taxes or Other Taxes had not been imposed.
(d) Within 30 days after the date of any payment by a Borrower of
Taxes or Other Taxes, such Borrower shall furnish the Lender the original or a
certified copy of a receipt evidencing payment thereof, or other evidence of
payment satisfactory to the Lender.
6.2 Illegality.
(a) If the Lender determines that the introduction of any
Requirement of Law, or any change in any Requirement of Law, or in the
interpretation or administration of any Requirement of Law, has made it
unlawful, or that any central bank or other Public Authority has asserted that
it is unlawful, for the Lender or its applicable lending office to make LIBOR
Rate Loans, then, on notice thereof by the Lender to the Borrowers, any
obligation of the Lender to make LIBOR Rate Loans shall be suspended until the
Lender notifies the Borrowers that the circumstances giving rise to such
determination no longer exist.
(b) If the Lender determines that it is unlawful to
maintain any LIBOR Rate Loan, each Borrower shall, upon its receipt of notice of
such fact and demand from the Lender, prepay in full such LIBOR Rate Loans then
outstanding to it, together with interest accrued thereon and amounts required
under Section 6.4, either on the last day of the Interest Period thereof, if the
Lender may lawfully continue to maintain such LIBOR Rate Loans to such day, or
immediately, if the Lender may not lawfully continue to maintain such LIBOR Rate
Loan. If the Borrowers are required to so prepay any LIBOR Rate Loan, then
concurrently with such prepayment, the Borrowers shall borrow from the Lender,
in the amount of such repayment, a Reference Rate Loan.
6.3 Increased Costs and Reduction of Return.
(a) If the Lender determines that, due to either (i) the
introduction of or any change in the interpretation of any law or regulation or
(ii) the compliance by the Lender with any guideline or request from any central
bank or other Public Authority (whether or not having the force of law), there
shall be any increase in the cost to the Lender of agreeing to make or making,
funding or maintaining any LIBOR Rate Loans, then the Borrowers shall be liable
for, and shall from time to time, upon demand, pay to the Lender, additional
amounts as are sufficient to compensate the Lender for such increased costs.
(b) If the Lender shall have determined that (i) the
introduction of any Capital Adequacy Regulation, (ii) any change in any Capital
Adequacy Regulation, (iii) any change in the interpretation or administration of
any Capital Adequacy Regulation by any central bank or
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other Public Authority charged with the interpretation or administration
thereof, or (iv) compliance by the Lender or any corporation controlling the
Lender with any Capital Adequacy Regulation, affects or would affect the amount
of capital, reserves, or special deposits required or expected to be maintained
by the Lender or any corporation controlling the Lender and (taking into
consideration such Lender's or such corporation's policies with respect to
capital adequacy and such Lender's desired return on capital) determines that
the amount of such capital, reserves, or special deposits is increased as a
consequence of its loans, credits or obligations under this Agreement, then,
upon demand of the Lender to the Borrowers, the Borrowers shall pay to the
Lender, from time to time as specified by the Lender, additional amounts
sufficient to compensate the Lender for such increase. Notwithstanding the
foregoing, all such amounts shall be subject to the provisions of Section 3.3.
6.4 Funding Losses. The Borrowers shall reimburse the Lender and
hold the Lender harmless from any loss or expense which the Lender may sustain
or incur as a consequence of:
(a) the failure of a Borrower to make on a timely basis
any payment of principal of any LIBOR Rate Loan;
(b) the failure of a Borrower to borrow, continue or
convert a Loan after such Borrower has given (or is deemed to have given) a
Notice of Borrowing or a Notice of Conversion/Continuation;
(c) the prepayment or other payment (including after
acceleration thereof) of an LIBOR Rate Loan on a day that is not the last day of
the relevant Interest Period;
including any such loss or expense arising from the liquidation or reemployment
of funds obtained by it to maintain its LIBOR Rate Loans or from fees payable to
terminate the deposits from which such funds were obtained.
6.5 Inability to Determine Rates. If the Lender determines that
for any reason adequate and reasonable means do not exist for determining the
LIBOR Rate for any requested Interest Period with respect to a proposed LIBOR
Rate Loan, or that the LIBOR Rate for any requested Interest Period with respect
to a proposed LIBOR Rate Loan does not adequately and fairly reflect the cost to
the Lender of funding such Loan, the Lender will promptly so notify the Borrower
requesting the LIBOR Rate Loan. Thereafter, the obligation of the Lender to make
or maintain LIBOR Rate Loans hereunder shall be suspended until the Lender
revokes such notice in writing. Upon receipt of such notice, such Borrower may
revoke any Notice of Borrowing or Notice of Conversion/Continuation then
submitted by it. If such Borrower does not revoke such Notice, the Lender shall
make, convert or continue the Loans, as proposed by such Borrower, in the amount
specified in the applicable notice submitted by such Borrower, but such Loans
shall be made, converted or continued as Reference Rate Loans instead of LIBOR
Rate Loans.
6.6 Survival. The agreements and obligations of the Borrowers in
this Section 6 shall survive the payment of all other Obligations.
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7. COLLATERAL.
7.1 Grant of Security Interest.
(a) As security for the Obligations, each of the Borrowers
hereby grants to the Lender a continuing security interest in, lien on, and
assignment of all of their respective: (i) Receivables, Inventory, Investment
Property, Proprietary Rights, Equipment and Proceeds thereof, wherever located
and whether now existing or hereafter arising or acquired; (ii) moneys,
securities and other property and the Proceeds thereof, now or hereafter held or
received by, or in transit to, the Lender from or for either Borrower, whether
for safekeeping, pledge, custody, transmission, collection or otherwise,
including, without limitation, all of the Borrowers' deposit accounts, credits,
and balances with the Lender and all claims of the Borrowers against the Lender
at any time existing; (iii) Borrowers' deposit accounts with any financial
institutions with which either Borrower maintains deposits; and (iv) Borrowers'
books, records and other Property relating to or referring to any of the
foregoing, including, without limitation, all books, records, ledger cards, data
processing records, computer software and other property and general intangibles
at any time evidencing or relating to the Receivables, Inventory, Investment
Property, Proprietary Rights, Equipment, Proceeds, and other property referred
to above (all of the foregoing, and all other property of either Borrower in
which the Lender may at any time be granted a Lien, being herein collectively
referred to as the "Collateral"). The Lender shall have all of the rights of a
secured party with respect to the Collateral under the UCC and other applicable
laws.
(b) All Obligations shall constitute a single loan secured
by the Collateral. The Lender may, in its sole discretion, (i) exchange, waive,
or release any of the Collateral, (ii) apply Collateral and direct the order or
manner of sale thereof as the Lender may determine, and (iii) settle,
compromise, collect, or otherwise liquidate any Collateral in any manner, all
without affecting the Obligations or the Lender's right to take any other action
with respect to any other Collateral.
7.2 Perfection and Protection of Security Interest. The
Borrowers shall, at their expense, perform all steps requested by the Lender at
any time to perfect, maintain, protect, and enforce the Security Interest
including, without limitation: (a) executing and recording of the Patent and
Trademark Assignments and executing and filing financing or continuation
statements, and amendments thereof, in form and substance satisfactory to the
Lender; (b) delivering to the Lender the originals of all instruments,
documents, and chattel paper, and all other Collateral of which the Lender
determines it should have physical possession in order to perfect and protect
the Security Interest therein, duly endorsed or assigned to the Lender without
restriction; (c) delivering to the Lender warehouse receipts covering any
portion of the Collateral located in warehouses and for which warehouse receipts
are issued; (d) transferring Inventory to warehouses designated by the Lender;
(e) placing notations on either Borrower's books of account to disclose the
Security Interest; (f) executing and delivering to the Lender a security
agreement relating to the Reversions in form and substance satisfactory to the
Lender; (g) delivering to the Lender all letters of credit on which either
Borrower is named beneficiary; (h) executing and delivering or procuring the
execution and delivery of additional security agreements relating to foreign
assets of the Borrowers and their Subsidiaries or domestic assets not covered by
this Agreement or the then-existing Security Agreements, in form and substance
satisfactory to the Lender; (i) enter, and procure the entry of any
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Securities Intermediary or Commodity Intermediary of either Borrower, into an
agreement with the Lender providing for the operation and "control" (as defined
in Section 8106 of the UCC) of Securities Accounts, Commodity Accounts and
Investment Property of either Borrower; and (j) taking such other steps as are
deemed necessary by the Lender to maintain the Security Interest. To the extent
permitted by applicable law, the Lender may file, without either Borrower's
signature, one or more financing statements disclosing the Security Interest.
The Borrowers agree that a carbon, photographic, photostatic, or other
reproduction of this Agreement or of a financing statement is sufficient as
financing statement. If any Collateral is at any time in the possession or
control of any warehouseman, bailee or either Borrower's agents or processors,
then the Borrowers shall notify the Lender thereof and shall notify such Person
of the Security Interest in such Collateral and, upon the Lender's request, if
an Event of Default has occurred and is continuing, instruct such Person to hold
all such Collateral for the Lender's account subject to the Lender's
instructions. If at any time any Collateral is located on any Premises that are
not owned by the Borrowers, then the Borrowers shall obtain written waivers, in
form and substance satisfactory to the Lender, of all present and future Liens
to which the owner or lessor or any mortgagee of such Premises may be entitled
to assert against the Collateral. The Borrowers shall upon request of Lender
notify the Lender of all Security Accounts and Commodity Accounts of the
Borrowers (from time to time) and their contents and shall identify any Brokers,
Securities Intermediaries or Commodity Intermediaries acting for either
Borrower. The Borrowers shall upon request of Lender notify any such Brokers,
Securities Intermediaries and Commodity Intermediaries of the Lender's security
interest in the Borrowers' Investment Property and of the authority of the
Lender to issue directions and entitlement orders with respect to such Property
and procure that such Persons show on their books that Lender is an entitlement
holder with respect to the Investment Property of the Borrowers. The Borrowers
shall ensure that, except for the Lender, Securities Intermediaries and
Commodity Intermediaries acting for the Borrowers, no Person shall at any time
be given "control" (as defined in Section 8106 of the UCC) over any Investment
Property of the Borrowers. From time to time, the Borrowers shall, upon the
Lender's request, execute and deliver confirmatory written instruments pledging
to the Lender the Collateral, but the Borrowers' failure to do so shall not
affect or limit the Security Interest or the Lender's other rights in and to the
Collateral. So long as this Agreement is in effect and until all Obligations
have been fully satisfied, the Security Interest shall continue in full force
and effect in all Collateral (whether or not deemed eligible for the purpose of
calculating the Aggregate Availability or as the basis for any advance, loan,
extension or credit, or other financial accommodation).
7.3 Location of Collateral. Each of the Borrowers jointly and
severally represents to the Lender that as of the Closing Date: (a) Schedule 7.3
hereto is a correct and complete list of each Borrower's chief executive office,
the location of their respective books and records, the locations of the
Collateral, and the locations of all of their other places of business, and (b)
Schedule 7.3 correctly identifies any of such facilities and locations that are
not owned by the Borrowers and sets forth the names of the owners and lessors or
sub-lessors of, and, to the best of the Borrowers' knowledge, the holders of any
mortgages on, such facilities and locations. The Borrowers covenant and agree
that they will not maintain any Collateral at any location other than those
listed on Schedule 7.3, and they will not otherwise change or add to any of such
locations, unless they give the Lender at least thirty (30) days prior written
notice thereof and execute any and all financing statements and other documents
that the Lender requests in connection therewith.
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7.4 Title to, Liens on, and Sale and Use of Collateral. The
Borrowers jointly and severally represent and warrant to the Lender that: (a)
all Collateral is and will continue to be owned by the Borrowers or their
Subsidiaries, free and clear of all Liens whatsoever, except for the Security
Interest and other Permitted Liens; (b) neither Borrower has entered into any
agreement with any Person (other than pursuant to this Agreement) providing for
the exercise of direction or control (within the meaning of Section 8106 of the
UCC) over any Investment Property; (c) the Security Interest will not be subject
to any prior Lien except for the Liens described in (c), (e), (h) and (i) of the
definition of Permitted Liens; (d) the Borrowers or their Subsidiaries, owning
Collateral will use, store, and maintain the Collateral with all reasonable care
and will use the Collateral for lawful purposes only; and (e) the Borrowers and
their Subsidiaries will not, without the Lender's prior written approval, sell,
lease, or dispose of or permit the sale or disposition of the Collateral or any
portion thereof, except for sales of Inventory in the ordinary course of
business and as permitted by Section 7.9. The inclusion of Proceeds in the
Collateral shall not be deemed the Lender's consent to any sale or other
disposition of the Collateral except as expressly permitted herein.
7.5 Appraisals. Whenever an Event or Event of Default exists,
the Borrowers shall, at their expense and upon the Lender's request, provide the
Lender with appraisals or updates thereof of any or all of the Collateral from
an appraiser acceptable to Lender.
7.6 Access and Examination. The Lender may at all reasonable
times have access to, examine, audit, make extracts from and inspect the
records, files, and books of account of the Borrowers or any of their
Subsidiaries and the Collateral and may discuss the Borrowers' and any of their
Subsidiaries' affairs with the Borrowers' or such Subsidiaries' officers and
management. The Borrowers and their Subsidiaries will deliver to the Lender any
instrument necessary for the Lender to obtain records from any service bureau
maintaining records for a Borrower or any of their Subsidiaries. The Lender may,
at any time when an Event of Default exists and at the Borrowers' expense, make
copies of all of the Borrowers' books and records, or require the Borrowers or
any of their Subsidiaries to deliver such copies to the Lender. The Lender may,
without expense to the Lender, use such of a Borrowers' or any of their
Subsidiaries' personnel, supplies, and Premises as may be reasonably necessary
for maintaining or enforcing the Security Interest. The Lender shall have the
right, at any time, in Lender's name or in the name of a nominee of the Lender,
to verify the validity, amount or any other matter relating to the Accounts of
the Borrowers or their Subsidiaries, by mail, telephone, or otherwise.
7.7 Insurance. The Borrowers shall insure the Collateral against
loss or damage by fire with extended coverage, theft, burglary, pilferage, loss
in transit, and such other hazards as the Lender shall specify, in amounts,
under policies and by insurers acceptable to the Lender. Borrowers shall also
maintain flood insurance for Inventory and Equipment located in an area
designated as a "flood prone" or a "flood risk area" (hereinafter "SFHA"), as
defined by the Flood Disaster Protection At of 1973, in an amount to be
reasonably determined by the Lender, and shall comply with the additional
requirements of the National Flood Insurance Program as set forth therein. The
Borrowers shall cause the Lender to be named in each insurance policy as secured
party and loss payee or additional insured, in a manner acceptable to the
Lender. Each policy of insurance shall contain a clause or endorsement requiring
the insurer to give not less than thirty (30) days prior written notice to the
Lender in the event of cancellation of the policy for any reason whatsoever and
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a clause or endorsement stating that the interest of the Lender shall not be
impaired or invalidated by any act or neglect of the Borrowers or the owner of
any premises where collateral is located nor by the occupation of such premises
for purposes more hazardous than are permitted by such policy. The Borrowers
shall pay all premiums for such insurance when due, and shall deliver to the
Lender certificates of insurance and, if requested, photocopies of the policies.
If the Borrowers fail to pay such fees or to procure such insurance or the
premiums therefor when due, the Lender may (but shall not be required to) do so
and charge the costs thereof to the either Borrower's loan account as a
Revolving Loan. The Borrowers shall promptly notify the Lender of any loss,
damage, or destruction to the Collateral or arising from its use, whether or not
covered by insurance. The Lender is hereby authorized to collect all insurance
proceeds directly. After deducting from such proceeds the expenses, if
any,incurred by Lender in the collection or handling thereof, Lender may apply
such proceeds to the reduction of the Obligations in such order as Lender
determines, or at the Lender's option may permit or require the Borrowers to use
such money, or any part thereof, to replace, repair, restore or rebuild the
Collateral in a diligent and expeditious manner.
7.8 Collateral Reporting. The Borrowers will provide the Lender
with the following documents, for each of the Borrowers, at the following times
in form satisfactory to the Lender: (a) on a daily basis, a schedule of credit
memos and reports, a schedule of collections of accounts receivable, and a
schedule of Accounts created since the last such schedule; (b) on a daily basis
a detailed list of invoices and remittances for each account; (c) on a monthly
basis, a copy of the final page of both cash and sales journals reconciled to
schedules received on a daily basis; (d) upon request, copies of invoices,
credit memos, shipping and delivery documents; (e) detailed monthly agings of
accounts receivable to be delivered no later than the 10th day of each month
respecting the immediately preceding month; (f) monthly inventory reports by
category (including valuations determined on a valuation method acceptable to
Lender) for all inventory located in the United States in a State in which a
first priority security interest in favor of the Lender has been perfected, to
be delivered by the 20th day of each month with respect to the immediately
preceding month; (g) upon request, monthly perpetual inventory reports; (h)
monthly agings of accounts payable no later than the 10th day of the following
month; (i) upon request, copies of purchase orders, invoices, and delivery
documents for Inventory and Equipment acquired by the Borrowers; (j) copies of
invoices issued against the Belgian Guaranties and copies of the Guarantees
issued; (k) other such reports as to the Collateral as the Lender shall request
from time to time; and (l) certificates of an officer or appropriate approved
employee designated by the chief executive officer, chief financial officer or
treasurer of the relevant Borrower and reasonably acceptable to Lender,
certifying as to the foregoing.
7.9 Accounts.
(a) The Borrowers hereby jointly and severally represent
and warrant to the Lender and agree with the Lender that: (i) each existing
Account represents, and each future Account will represent, a bona fide sale or
lease and delivery of goods by the Borrowers, or rendition of services by the
Borrowers, in the ordinary course of the Borrowers' business; (ii) each existing
Account of the Borrowers is, and each future Account of the Borrowers will be a
valid, binding and enforceable obligation of its relevant Account Debtor for a
liquidated amount payable by the Account Debtor thereon on the terms set forth
in the invoice therefor or in the schedule thereof
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delivered to the Lender, without offset, deduction, defense, or counterclaim;
(iii) no payment will be received with respect to any Account of the Borrowers,
and no credit, discount, or extension, or agreement therefor will be granted on
any Account of the Borrowers, except as reported to the Lender in accordance
with this Agreement; (iv) each copy of an invoice delivered to the Lender by the
Borrowers will be a genuine copy of the original invoice sent to the Account
Debtor named therein; and (v) all goods described in any invoice representing a
sale of goods will have been delivered to the Account Debtor and all services of
the Borrowers described in any invoice will have been performed.
(b) The Borrowers shall not re-date any invoice or sale or
make sales on extended dating beyond that customary in the relevant Borrower's
business or extend or modify any Account. If a Borrower becomes aware of any
matter affecting any Account of either Borrower, including information regarding
the Account Debtor's creditworthiness, such Borrower will promptly so advise the
Lender.
(c) The Borrowers shall not accept any note or other
instrument (except a check or other instrument for the immediate payment of
money) with respect to any Account (other than an ABN AMRO Receivable) of either
Borrower without the Lender's written consent. If the Lender consents to the
acceptance of any such note or other instrument, it shall be considered as
evidence of the such Account and not payment thereof, and the relevant Borrower
will promptly deliver such note or instrument to the Lender appropriately
endorsed. Regardless of the form of presentment, demand, notice of dishonor,
protest, and notice of protest with respect thereto, the Borrowers will remain
liable thereon until such note or instrument is paid in full.
(d) The Borrowers shall notify the Lender promptly of all
disputes and claims with any of their Account Debtors and settle or adjust them
at no expense to the Lender, but no discount, credit or allowance shall be
granted to any such Account Debtor without the Lender's consent, except for
discounts, credits and allowances made or given in the ordinary course of the
relevant Borrower's business when no Event of Default exists hereunder. The
Borrowers shall send the Lender a copy of each credit memoranda in excess of
$25,000 as soon as issued and copies of all credit memorandum on a weekly basis.
The Lender may at all times when an Event of Default exists hereunder settle or
adjust disputes and claims directly with customers or Account Debtors of the
Borrowers for amounts and upon terms which the Lender considers advisable and,
in all cases, the Lender will credit the Borrower's loan accounts with only the
net amounts received by the Lender in payment of any Accounts of the Borrowers.
(e) If an Account Debtor of either Borrower returns any
Inventory to a Borrower when no Event of Default exists, then the relevant
Borrower shall promptly determine the reason for such return and shall issue a
credit memorandum to such Account Debtor in the appropriate amount. The
Borrowers shall immediately report to the Lender any return involving an amount
in excess of $25,000 and shall report all returns to the Lender on a weekly
basis. Each such report shall indicate the reasons for the returns and the
locations and condition of the returned Inventory. In the event any Account
Debtor of a Borrower returns Inventory to such Borrower when an Event of Default
exists, such Borrower shall: (i) hold the returned Inventory in trust for the
Lender; (ii) segregate all returned Inventory from all of its other Property;
(iii) dispose of the
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returned Inventory solely according to the Lender's written instructions; and
(iv) not issue any credits or allowances with respect thereto without the
Lender's prior written consent. All returned Inventory shall remain subject to
the Security Interest. Whenever any Inventory is returned, the related Account
of the relevant Borrower shall be deemed ineligible, and Aggregate Availability,
CMI Availability and EFData Availability shall be adjusted accordingly.
7.10 Collection of Accounts; Payments.
(a) Until the Lender notifies the Borrowers to the
contrary, the Borrowers shall make collection of all Accounts (other than ABN
AMRO Receivables) of the Borrowers and other Collateral for the Lender, shall
receive all payments in respect thereto as the Lender's trustee, and shall
immediately deliver all such payments to the Lender in their original form duly
endorsed in blank or deposit them into a Payment Account established at the
Lender's request, as the Lender may direct. If the Lender requests, the
Borrowers shall establish a lock-box service for collections of their Accounts
(other than ABN AMRO Receivables) at a bank mutually acceptable to the Lender
and the Borrowers and pursuant to documentation satisfactory to the Lender. If
such lock-box service is established, the Borrowers shall instruct all their
relevant Account Debtors to make all payments directly to the address
established for such service. If, notwithstanding such instructions, the
Borrowers receive any Proceeds of their Accounts (other than ABN AMRO
Receivables), they shall receive such payments as the Lender's trustee, and
shall immediately deliver such payments to the Lender in their original form
duly endorsed in blank or deposit them into a Payment Account, as the Lender may
direct. All collections received in any such lock box or Payment Account or
directly by the Borrowers or the Lender, and all funds in any Payment Account or
other account to which such collections are deposited, shall be the sole
property of the Lender and subject to the Lender's sole control. The Lender or
the Lender's designee may, at any time after the occurrence of an Event of
Default, notify obligors that the Borrowers' Accounts (other than the ABN AMRO
Receivables) have been assigned to the Lender and of the Security Interest
therein, and may collect them directly and charge the collection costs and
expenses to the Borrowers' loan accounts as a Revolving Loan. At the Lender's
request, the Borrowers shall execute and deliver to the Lender such documents as
the Lender shall require to grant the Lender access to any post office box in
which collections of their Accounts (other than the ABN AMRO Receivables) are
received.
(b) If sales of the Borrowers' Inventory are made or
services are rendered for cash, the Borrowers shall immediately deliver to the
Lender the identical checks, cash, or other forms of payment which the Borrowers
receive.
(c) All payments received by the Lender on account of
Accounts (other than the ABN AMRO Receivables) or as Proceeds of other
Collateral will be the Lenders' sole property and will be immediately credited
to the Borrowers' loan accounts (conditional upon final collection) to reduce
Obligations. From and after the Closing Date, the Agent shall be entitled to
charge the Borrower interest on all such collections deemed to have been
received on a particular Business Day, in an amount equal to one-half (1/2) of
the amount that would be applicable (at the rates specified in Section 3.1) if
such collections have been in fact received at or before 12:00 (Los Angeles,
California time) on the next succeeding Business Day. This one-half (1/2)
Business Day
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"clearance charge" shall be due and payable irrespective of whether such
collections were provisionally applied to reduce the Obligations.
(d) In the event the Borrowers repay all of the
Obligations upon the termination of this Agreement, other than through the
Lender's receipt of payments on account of the Borrowers' Accounts or Proceeds
of other Collateral, such payment will be credited (conditional upon final
collection) to the Borrowers' loan accounts.
7.11 Inventory. The Borrowers jointly and severally represent
and warrant to the Lender that all of their Inventory is and will be held for
sale or lease, or to be furnished in connection with the rendition of services
in the ordinary course of the Borrowers' business and is and will be fit for
such purposes. The Borrowers will keep their Inventory in good and marketable
condition, at their own expense. The Borrowers will not, without prior written
notice to the Lender, acquire or accept any Inventory on consignment or
approval. The Borrowers agree that all their Inventory will be produced in
accordance with the Federal Fair Labor Standards Act of 1938, as amended, and
all rules, regulations, and orders thereunder. The Borrowers will maintain a
perpetual inventory reporting system at all times. The Borrowers will conduct a
physical count of their Inventory at least once per Fiscal Year, and at such
other times as the Lender requests, and shall promptly, upon completion, supply
the Lender with a copy of such count accompanied by a report of the value of
such Inventory (valued at the lower of cost, on a first-in, first-out basis, or
market value). The Borrowers will not without the Lender's prior written
consent, sell any of their Inventory on a ▇▇▇▇-and-hold, guaranteed sale, sale
and return, sale on approval, consignment, or other repurchase or return basis.
7.12 Equipment. The Borrowers jointly and severally represent
and warrant to the Lender that all of their Equipment is and will be used or
held for use in the Borrowers' businesses and is and will be fit for such
purposes. The Borrowers shall keep and maintain their Equipment in good
operating condition and repair (ordinary wear and tear excepted) and shall make
all necessary replacements thereof. The Borrowers shall promptly inform the
Lender of any material additions to or deletions from their Equipment. The
Borrowers shall not permit any of their Equipment to become a fixture to real
property or an accession to other personal property, unless the Lender has a
valid, perfected, and first priority Security Interest in such real or personal
property. The Borrowers will not, without the Lender's prior written consent,
alter or remove any identifying symbol or number on the Equipment. The Borrowers
shall not, without the Lender's prior written consent, sell, lease as a lessor,
or otherwise dispose of any of the Equipment; provided, however, that the
Borrowers may dispose of Equipment pursuant to a Permitted Sale and the
Borrowers may dispose without the Lender's consent, subject to the conditions
set forth below, of obsolete or unusable Equipment having an orderly liquidation
value no greater than $100,000 individually and $1,000,000 in the aggregate in
any Fiscal Year. In the event any of the Borrowers' Equipment is sold,
transferred or otherwise disposed of with the Lender's prior written consent or
as otherwise permitted hereby and: (a) such sale, transfer or disposition is
effected without replacement of such Equipment, or such Equipment is replaced by
Equipment leased by either Borrower, or by Equipment purchased by either
Borrower subject to a lien or other right constituting a Permitted Lien, then
the relevant Borrower shall deliver all of the cash proceeds of any such sale,
transfer or disposition to the Lender, which proceeds shall be applied to the
repayment of the Obligations; or
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(b) such sale, transfer or disposition is made in connection with the purchase
by either Borrower of replacement Equipment (other than subject to a Permitted
Lien), then the Borrowers shall use the proceeds of such sale, transfer or
disposition to finance the purchase by either Borrower of replacement Equipment
and shall deliver to the Lender written evidence of the use of the proceeds for
such purchase. All replacement Equipment purchased by the Borrowers shall be
free and clear of all liens, claims and encumbrances, except for the Security
Interest and other Permitted Liens.
7.13 Documents, Instruments, and Chattel Paper. The Borrowers
jointly and severally represent and warrant to the Lender that: (a) all
documents, instruments, and chattel paper describing, evidencing, or
constituting Collateral, and all signatures and endorsements thereon, are and
will be complete, valid, and genuine; and (b) all goods evidenced by such
documents, instruments, and chattel paper are and will be owned by the Borrowers
free and clear of all Liens other than Permitted Liens.
7.14 Right to Cure. The Lender may, in its sole discretion and
at any time, pay any amount or do any act required of either of the Borrowers
hereunder to preserve, protect, maintain or enforce the Obligations, the
Collateral or the Security Interest, which such Borrower fails to pay or do,
including, without limitation, payment of any judgment against such Borrower,
any insurance premium, any warehouse charge, any finishing or processing charge,
any landlord's claim, and any other Lien upon or with respect to the Collateral.
All payments that the Lender makes under this Section 7.11 and all out-of-pocket
costs and expenses that the Lender pays or incurs in connection with any action
taken by it hereunder shall be charged to the Borrowers' loan account as a
Revolving Loan. Any payment made or other action taken by the Lender under this
Section 7.11 shall be without prejudice to any right to assert an Event of
Default hereunder.
7.15 Power of Attorney. Each of the Borrowers hereby appoints
the Lender and the Lender's designees as such Borrower's attorney, with power:
(a) to endorse such Borrower's name on any checks, notes, acceptances, money
orders, or other forms of payment or security that come into the Lender's
possession; (b) to sign such Borrower's name on any invoice, ▇▇▇▇ of lading, or
other document of title relating to any Collateral, on drafts against customers,
on assignments of Accounts, on notices of assignment, financing statements and
other public records, on verifications of Accounts and on notices to Account
Debtors and to file any such financing statements by electronic means with or
without a signature as authorized or required by applicable law or filing
procedure; (c) to notify the post office authorities, when an Event of Default
exists, to change the address for delivery of such Borrower's mail to an address
designated by the Lender and to receive, open and dispose of all mail addressed
to such Borrower; (d) to send requests for verification of Accounts to Account
Debtors; (e) to give directions (including entitlement orders) to any Securities
Intermediary or Commodity Intermediary of the Borrowers, or other Person, as to
the disposition of any Investment Property of the Borrowers and to exercise
dominion and control over any Securities Account and Commodity Account of either
Borrower and to enter into agreements with any Securities Intermediary or
Commodity Intermediary as to the operation and control of such Securities
Accounts or Commodity Accounts; (f) to collect, receive, give receipt for and
otherwise deal with any dividends or other distributions and proceeds resulting
from any Investment Property; and (g) to do all things necessary to carry out
this Agreement. Each of the Borrowers ratifies and
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approves all acts of such attorney. Neither the Lender nor the attorney will be
liable for any acts or omissions or for any error of judgment or mistake of fact
or law. These powers, being coupled with an interest, shall be irrevocable until
this Agreement has been terminated and the Obligations have been fully
satisfied.
7.16 Lender's Rights, Duties, and Liabilities. The Borrowers
assume all responsibility and liability arising from or relating to the use,
sale, or other disposition of the Collateral. The Obligations shall not be
affected by any failure of the Lender to take any steps to perfect the Security
Interest or to collect or realize upon the Collateral, nor shall loss of or
damage to the Collateral release the Borrowers from any of the Obligations.
Following the occurrence of and continuation of an Event of Default, the Lender
may (but shall not be required to), without notice to or consent from either
Borrower, ▇▇▇ upon or otherwise collect, extend the time for payment of, modify
or amend the terms of, compromise or settle for cash, credit, or otherwise upon
any terms, grant other indulgences, extensions, renewals, compositions, or
releases, and take or omit to take any other action with respect to the
Collateral, any security therefor, any agreement relating thereto, any insurance
applicable thereto, or any Person liable directly or indirectly in connection
with any of the foregoing, without discharging or otherwise affecting the
liability of the Borrowers for the Obligations or under this Agreement or any
other agreement now or hereafter existing between the Lender and the Borrowers.
7.17 Site Visits, Observations and Testing. The Lender and its
agents and representatives will have the right at any reasonable time to enter
and visit the Premises and any other place where any property of the Borrowers
is located for the purposes of observing the Premises, taking and removing soil
or groundwater samples, and conducting tests on any part of the Premises. The
Lender is under no duty, however, to visit or observe the Premises or to conduct
tests, and any such acts by the Lender will be solely for the purposes of
protecting the Lender's security and preserving the Lender's rights under this
Agreement. No site visit, observation or testing by the Lender will result in a
waiver of any default of the Borrowers or impose any liability on the Lender. In
no event will any site visit, observation or testing by the Lender be a
representation that hazardous substances are or are not present in, on or under
the Premises, or that there has been or will be compliance with any law,
regulation or ordinance pertaining to hazardous substances or any other
applicable governmental law. Neither the Borrowers nor any other party is
entitled to rely on any site visit, observation or testing by the Lender. The
Lender owes no duty of care to protect the Borrowers or any other party against,
or to inform the Borrowers or any other party of, any hazardous substances or
any other adverse condition affecting the Premises. The Lender may in its
discretion disclose to the Borrowers or any other party any report or findings
made as a result of, or in connection with, any site visit, observation or
testing by the Lender. The Borrowers understand and agree that the Lender makes
no warranty or representation to the Borrowers or any other party regarding the
truth, accuracy or completeness of any such report or findings that may be
disclosed. The Borrowers also understand that depending on the results of any
site visit, observation or testing by the Lender and disclosed to the Borrowers,
the Borrowers may have a legal obligation to notify one or more environmental
agencies of the results, that such reporting requirements are site-specific, and
are to be evaluated by the Borrowers without advice or assistance from the
Lender. In each instance, the Lender will give the relevant Borrower reasonable
notice before entering the Premises
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or any other place the Lender is permitted to enter under this Section 7.17. The
Lender will make reasonable efforts to avoid interfering with the Borrower's use
of the Premises or any other property in exercising any rights provided
hereunder.
7.18 Release of Security Interest in Equipment. Upon a Permitted
Sale, the repayment of all Inventory Loans and Equipment Loans pursuant to
Section 4.1 and the termination of the Lender's commitment to make Inventory
Loans and Equipment Loans pursuant to Section 2.2(a), the Lender agrees, at the
cost and expense of the Borrowers, to release the Security Interest to the
extent, and solely to the extent, that it relates to the Equipment. At the
expense of the Borrowers the Lender agrees to execute and deliver all documents
which the Borrowers may reasonably request to evidence the termination of such
Security Interest in so far as it relates to the Equipment.
8. BOOKS AND RECORDS; FINANCIAL INFORMATION; NOTICES.
8.1 Books and Records. The Borrowers shall maintain, at all
times, correct and complete books, records and accounts in which complete,
correct and timely entries are made of their and their Subsidiaries transactions
in accordance with GAAP consistent with those applied in the preparation of the
Financial Statements. The Borrowers shall, by means of appropriate entries,
reflect in such accounts and in all Financial Statements proper liabilities and
reserves for all taxes and proper provision for depreciation and amortization of
Property and bad debts, all in accordance with GAAP. The Borrowers shall
maintain at all times books and records pertaining to the Collateral in such
detail, form, and scope as the Lender shall reasonably require, including
without limitation records of: (a) all payments received and all credits and
extensions granted with respect to the Borrowers' respective Accounts; (b) the
return, rejection, repossession, stoppage in transit, loss, damage, or
destruction of any of the Borrowers' respective Inventory; and (c) all other
dealings affecting the Collateral.
8.2 Financial Information. The Borrowers shall promptly furnish
to the Lender or its agents all such financial information as the Lender shall
reasonably request, and notify its auditors and accountants that the Lender is
authorized to obtain such information directly from them. Without limiting the
foregoing, the Borrowers and their Subsidiaries will furnish to the Lender, in
such detail as the Lender shall request, the following:
(a) As soon as available, but in any event not later than
90 days after the close of each Fiscal Year, consolidated and consolidating
audited balance sheets, and statements of income and expense, retained earnings,
and changes in financial position and stockholders equity for CMI and its
consolidated Subsidiaries for such Fiscal Year, and the accompanying notes
thereto, setting forth in each case in comparative form figures for the previous
Fiscal Year, all in reasonable detail, fairly presenting the financial position
and the results of operations of CMI and its consolidated Subsidiaries as at the
date thereof and for the Fiscal Year then ended, and prepared in accordance with
GAAP. Such statements shall be examined in accordance with generally accepted
auditing standards and accompanied by a report thereon unqualified as to scope
by independent certified public accountants selected by CMI and reasonably
satisfactory to the Lender.
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(b) As soon as available, but in any event not later than
50 days after the close of each fiscal quarter other than the fourth quarter of
a Fiscal Year, consolidated and consolidating unaudited balance sheets of CMI
and its consolidated Subsidiaries, as at the end of such quarter, and
consolidated and consolidating unaudited statements of income and expense and
changes in financial position for CMI and its consolidated Subsidiaries, for
such quarter and for the period from the beginning of the Fiscal Year to the end
of such quarter, together with the accompanying notes thereto, all in reasonable
detail, fairly presenting the financial position and results of operation of CMI
and its consolidated Subsidiaries, respectively, as at the date thereof and for
such periods, prepared in accordance with GAAP consistent with the audited
Financial Statements required pursuant to Section 8.2(a). Such statements shall
be certified to be fairly stated in all material respects by the chief
financial, treasurer or chief accounting officer of CMI subject to normal
year-end adjustments.
(c) As soon as available, but in any event not later than
30 days after the end of each month (except for the month of June which shall be
not later than 45 days after the end of such month), consolidated and
consolidating unaudited balance sheets of CMI and its consolidated Subsidiaries,
as at the end of such month, and consolidated and consolidating unaudited
statements of income and expenses and statement of cash flow for CMI and its
consolidated Subsidiaries, for such month and for the period from the beginning
of the Fiscal Year to the end of such month, all in reasonable detail, fairly
presenting the financial position and results of operation of CMI and its
consolidated Subsidiaries as at the date thereof and for such periods, and
prepared in accordance with GAAP consistent with the audited Financial
Statements required pursuant to Section 8.2(a). Such statements shall be
certified to be correct by the chief financial officer, treasurer or chief
accounting officer of CMI subject to normal year-end adjustments.
(d) With each of the audited Financial Statements
delivered pursuant to Section 8.2(a), a certificate of the independent certified
public accountants that examined such statements to the effect that they have
reviewed and are familiar with the Loan Documents and that, in examining such
Financial Statements, they did not become aware of any fact or condition which
then constituted an Event or Event of Default, except for those, if any,
described in reasonable detail in such certificate.
(e) With each of the annual audited and quarterly
unaudited Financial Statements delivered pursuant to Sections 8.2(a) and 8.2(b),
a certificate of the chief executive officer, chief financial officer or
treasurer of CMI (i) setting forth in reasonable detail the calculations
required to establish that the Borrowers were in compliance with their covenants
set forth in Sections 10.22 through 10.23 during the period covered in such
Financial Statements, and (ii) stating that, except as explained in reasonable
detail in such certificate, (A) all of the representations and warranties of the
Borrowers contained in this Agreement and the other Loan Documents are correct
and complete as at the date of such certificate as if made at such time, (B) no
Event or Event of Default then exists or existed during the period covered by
such Financial Statements and (iii) describing and analyzing in reasonable
detail all material trends, changes and developments in such Financial
Statements. If such certificate discloses that a representation or warranty is
not correct or complete, or that a covenant has not been complied with, or that
an Event
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or Event of Default existed or exists, such certificate shall set forth what
action the Borrowers have taken or propose to take with respect thereto.
(f) No sooner than 90 days and no later than 30 days prior
to the beginning of each Fiscal Year, consolidated and consolidating projected
balance sheets, statements of income and expense, and statements of cash flow
for CMI and its consolidated Subsidiaries, as at the end of and for each quarter
of such Fiscal Year.
(g) Within 45 days after the end of each fiscal quarter, a
report of the Capital Expenditures of CMI and its consolidated Subsidiaries for
such quarter and a statement of cash flow for CMI and its consolidated
Subsidiaries for the period from the beginning of the then current Fiscal Year
to the end of such quarter, prepared in accordance with GAAP consistent with the
audited Financial Statements required pursuant to Section 8.2(a).
(h) Promptly after their preparation, copies of any and
all proxy statements, financial statements, and reports which the Borrowers make
available to their stockholders and regular or special reports that the
Borrowers or any of their Subsidiaries file with the Securities and Exchange
Commission.
(i) Promptly after filing with the PBGC, DOL, or IRS, a
copy of each annual report or other filing or notice filed with respect to each
Plan of the Borrowers or any ERISA Affiliate of the Borrowers.
(j) Such additional information as the Lender may from
time to time reasonably request regarding the financial and business affairs of
the Borrowers or any of their Subsidiaries, including, without limitation,
projections of future operations on both an individual and a consolidated and
consolidating basis (as requested by the Lender).
8.3 Notices to Lender. The Borrowers shall notify the Lender in
writing of the following matters at the following times:
(a) Immediately after either of them becomes aware of the
existence of any Event or Event of Default.
(b) Immediately after becoming aware that the holder of
any capital stock or Debt of either of the Borrowers or their Subsidiaries has
given notice or taken any action with respect to a claimed default.
(c) Immediately after becoming aware of any material
adverse change in either Borrower's or any of their Subsidiaries' Property,
business, operations, or condition (financial or otherwise).
(d) Immediately after becoming aware of any pending or
threatened action, suit, proceeding, or counterclaim by any Person, or any
pending or threatened investigation
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by a Public Authority, which may materially and adversely affect the Collateral,
the repayment of the Obligations, the Lender's rights under the Loan Documents,
or the Borrowers' or any of their Subsidiaries' respective Property, business,
operations, or condition (financial or otherwise).
(e) Immediately after becoming aware of any pending or
threatened strike, work stoppage, material unfair labor practice claim, or other
material labor dispute affecting the Borrowers or any of their Subsidiaries.
(f) Immediately after becoming aware of any violation of
any law, statute, regulation, or ordinance of a Public Authority applicable to
either Borrower, any of their Subsidiaries, or their respective Properties which
may materially and adversely affect the Collateral, the repayment of the
Obligations, the Lender's rights under the Loan Documents, or the Borrowers' or
any of their Subsidiaries' respective Property, business, operations, or
condition (financial or otherwise).
(g) Immediately after becoming aware of any violation by
either Borrower of Environmental Laws or immediately upon receipt of any notice
that a Public Authority has asserted that a Borrower is not in compliance with
Environmental Laws or that its compliance is being investigated.
(h) Thirty (30) days prior to either Borrower changing its
name or the address of its chief executive office.
(i) Immediately after becoming aware of any ERISA Event
affecting either Borrower or an ERISA Affiliate of either Borrower, accompanied
by any materials required to be filed with the PBGC with respect thereto;
immediately after the receipt by either Borrower of any notice concerning the
imposition of any withdrawal liability under Section 4042 of ERISA with respect
to a Plan; immediately upon the establishment of any Pension Plan not existing
at the Closing Date or the commencement of contributions by a Borrower to any
Pension Plan to which such Borrower was not contributing at the Closing Date;
and immediately upon becoming aware of any other event or condition regarding a
Plan or a Borrower's or an ERISA Affiliate of a Borrower's compliance with
ERISA, which may materially and adversely affect such Borrower's or any of their
Subsidiaries' business, operation, or condition (financial or otherwise).
(j) Any change in the accounting policies or financial
reporting practices of CMI.
Each notice given under this Section 8.3 shall describe the subject matter
thereof in reasonable detail and shall set forth the action that the Borrowers
have taken or propose to take with respect thereto.
8.4 Sharing of Information. The Borrowers hereby acknowledge and
consent to the sharing of information concerning the Borrowers, the Collateral
and the Loan Documents between the Lender and ABN AMRO Bank N.V. in connection
with the operation of the Intercreditor Agreement.
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9. GENERAL WARRANTIES AND REPRESENTATIONS. The Borrowers jointly and
severally and continuously warrant and represent to the Lender, at all times
during the term of this Agreement and until all Obligations have been satisfied,
that, except as hereafter disclosed to and accepted by the Lender in writing:
9.1 Authorization, Validity, and Enforceability of this Agreement
and the Loan Documents. Each of the Borrowers has the corporate power and
authority to execute, deliver and perform this Agreement and the other Loan
Documents, to incur the Obligations, and to grant the Security Interest. Each of
the Borrowers has taken all necessary corporate action (including, without
limitation, obtaining approval of its stockholders) to authorize its execution,
delivery, and performance of this Agreement and the other Loan Documents. No
consent, approval, or authorization of, or declaration or filing with, any
Public Authority, and no consent of any other Person, is required in connection
with the Borrowers' execution, delivery, and performance of this Agreement and
the other Loan Documents, except for those already duly obtained. This Agreement
and the other Loan Documents have been duly executed and delivered by each of
the Borrowers and constitute the legal, valid and binding obligations of each of
the Borrowers, enforceable against them in accordance with their respective
terms without defense, setoff, or counterclaim. The Borrowers' execution,
delivery, and performance of this Agreement and the other Loan Documents do not
and will not conflict with, or constitute a violation or breach of, or
constitute a default under, or result in the creation or imposition of any Lien
upon the Property of either Borrower or any of their Subsidiaries (except as
contemplated by this Agreement and the other Loan Documents) by reason of the
terms of (a) any mortgage, lease, agreement, or instrument to which either
Borrower or any of their Subsidiaries is a party or which is binding upon them,
(b) any judgment, law, statute, rule or governmental regulation applicable to
either Borrower or any of their Subsidiaries, or (c) the certificate or articles
of incorporation or bylaws of either Borrower or any of their Subsidiaries.
9.2 Validity and Priority of Security Interest. The provisions of
this Agreement, the Existing Collateral Documents, and the other Loan Documents
create legal and valid Liens on all the Collateral in the Lender's favor, and
when all proper filings, recordings, and other actions necessary to perfect such
Liens have been made or taken, such Liens will constitute perfected and
continuing Liens on all the Collateral, having priority over all other Liens on
the Collateral except for the Permitted Liens identified in Section 7.2 and
enforceable against the Borrowers and all third parties. All representations and
warranties by the Borrowers or any of their Subsidiaries in the Existing
Collateral Documents are true and correct in all material respects on and as of
the date made or deemed made.
9.3 Organization and Qualification.
CMI: (a) is duly incorporated and organized and validly existing
in good standing under the laws of the State of Delaware; (b) is qualified to do
business as a foreign corporation and is in good standing in the States of
Arizona, California, New York, Maryland, Texas, Massachusetts, Georgia, New
Jersey and Virginia, which are the only states in which qualification is
necessary in order for it to own or lease its Property and conduct its business;
and (c) has all requisite power and authority to conduct its business and to own
its Property.
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EFData:
(a) is duly incorporated and organized and validly existing in good standing
under the laws of the State of California; (b) is qualified to do business as a
foreign corporation in the State of Arizona, which is the only state in which
qualification is necessary in order for it to own or lease its Property and
conduct its business; and (c) has all requisite power and authority to conduct
its business and to own its Property.
CMNS:
(a) is duly incorporated and organized and validly existing in good standing
under the laws of the State of Delaware; (b) is qualified to do business as a
foreign corporation and is in good standing in the Commonwealth of Virginia,
which is the only district or State in which qualification is necessary in order
for it to own or lease its Property and conduct its business; and (c) has all
requisite power and authority to conduct its business and to own its Property.
CMFS:
(a) is duly incorporated and organized and validly existing in good standing
under the laws of Barbados; (b) is not required to be qualified to do business
as a foreign corporation in any State; and (c) has all requisite power and
authority to conduct its business and to own its Property.
9.4 Corporate Name; Prior Transactions. The Borrowers have not,
during the past five years, been known by or used any other corporate or
fictitious name, or been a party to any merger or consolidation, or acquired all
or substantially all of the assets of any Person, or acquired any of their
Property out of the ordinary course of business, except as set forth on Schedule
9.4.
9.5 Subsidiaries and Affiliates. Schedule 9.5 is a correct and
complete list of the name and relationship to CMI of each and all of CMI's
Subsidiaries and other Affiliates.
9.6 Financial Statements and Projections.
(a) CMI has delivered to the Lender the audited balance
sheet and related statements of income, retained earnings, cash flows, and
changes in stockholders equity for CMI and its consolidated Subsidiaries as of
June 30, 1996 and for the Fiscal Year then ended, accompanied by the report
thereon of CMI's independent certified public accountants, Ernst & Young LLP.
CMI has also delivered to the Lender the unaudited balance sheet and related
statements of income and cash flows as of March 31, 1997 and for the nine months
then ended. Such financial statements are attached hereto as Exhibit A-1. All
such financial statements have been prepared in accordance with GAAP and present
accurately and fairly CMI's and its consolidated Subsidiaries' financial
position as at the dates thereof and their results of operations for the periods
then ended.
(b) The Latest Projections represent the Borrowers' best
estimate of the Borrowers' future financial performance for the periods set
forth therein. The Latest Projections have been prepared on the basis of the
assumptions set forth therein, which the Borrowers believe are fair and
reasonable in light of current and reasonably foreseeable business conditions.
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(c) The pro forma consolidated balance sheet of the
Borrower as at March 31, 1997 attached hereto as Exhibit A-2, presents fairly
and accurately the financial condition of CMI and its consolidated Subsidiaries
at such date and has been prepared in accordance with GAAP.
9.7 Capitalization. The authorized capital stock of the Borrowers
is as set forth in Schedule 9.7.
9.8 Solvency. The Borrowers and each of their Subsidiaries are
Solvent and the Borrowers will be Solvent prior to and after giving effect to
the making of each Revolving Loan.
9.9 Debt. The Borrowers have no Debt, except (a) the Obligations,
(b) Debt set forth in the most recent Financial Statements delivered to the
Lender, or the notes thereto, (c) trade payables and other contractual
obligations arising in the ordinary course of business since the date of such
Financial Statements, (d) Permitted Debt and (e) Debt incurred since the date of
such Financial Statements to finance Capital Expenditures permitted hereby.
9.10 Distributions. Since June 30, 1996 no Distribution has been
declared, paid, or made upon or in respect of any capital stock or other
securities of either Borrower.
9.11 Title to Property. Except for Property which the Borrowers
or their Subsidiaries lease, the Borrowers and their Subsidiaries have good and
marketable title in fee simple to the Premises and good, indefeasible, and
merchantable title to all of their other Property including, without limitation,
the assets reflected on the most recent Financial Statements delivered to the
Lender, except as disposed of since the date thereof in the ordinary course of
business.
9.12 Adequate Assets. Each of the Borrowers and their
Subsidiaries possesses adequate assets for the conduct of their respective
business.
9.13 Real Property; Leases. Schedule 9.13 contains a correct and
complete list of all real property owned by the Borrowers and their
Subsidiaries, all leases and subleases of real or personal property by the
Borrowers and their Subsidiaries as lessee or sublessee, and all leases and
subleases of real or personal property by the Borrowers and their Subsidiaries
as lessor or sublessor in each case which are material to the Borrowers and
their Subsidiaries. Each of such leases and subleases is valid and enforceable
in accordance with its terms and is in full force and effect and no default by
any party to any such lease or sublease exists.
9.14 Proprietary Rights. Schedule 9.14 contains a correct and
complete list of all the Borrowers' and their Subsidiaries' Proprietary Rights.
None of such Proprietary Rights are subject to any licensing agreement or
similar arrangement except as set forth on Schedule 9.14. None of such
Proprietary Rights infringe on or conflict with any other Person's Property and
no other Person's Property infringes on or conflicts with the Proprietary
Rights, except to the extent such infringement is not material to any Borrower
or its Subsidiaries. The Proprietary Rights described on Schedule 9.14
constitute all of the Property of such type necessary to the current and
anticipated future conduct of the Borrowers' and their Subsidiaries' respective
businesses.
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9.15 Trade Names and Terms of Sale. All trade names or styles
under which the Borrowers will sell their Inventory or create any Accounts, or
to which instruments in payment of their Accounts may be made payable, are
listed on Schedule 9.15.
9.16 Litigation. Except as set forth on Schedule 9.16, there is
no pending or, to the best of the Borrowers' knowledge, threatened action, suit,
proceeding, or counterclaim by any Person, or investigation by any Public
Authority, or any basis for any of the foregoing, which may materially and
adversely affect the Collateral, the repayment of the Obligations, the Lender's
rights under the Loan Documents, or the Borrowers' or their Subsidiaries
Property, business, operations, or condition (financial or otherwise).
9.17 Restrictive Agreements. The Borrowers are not a party to any
contract or agreement, and are not subject to any charter or other corporate
restriction, which affects its ability to execute, deliver, and perform the Loan
Documents and repay the Obligations or which materially and adversely affects
the Borrowers' or their Subsidiaries' Property, business, operations, or
condition (financial or otherwise).
9.18 Labor Disputes. Except as set forth on Schedule 9.18: (a)
there is no collective bargaining agreement or other labor contract covering
employees of the Borrowers or any of their Subsidiaries; (b) no such collective
bargaining agreement or other labor contract is scheduled to expire during the
term of this Agreement; (c) no union or other labor organization is seeking to
organize, or to be recognized as, a collective bargaining unit of employees of
either of the Borrowers or any of their Subsidiaries or for any similar purpose;
and (d) there is no pending or, to the best of the Borrowers' knowledge,
threatened strike, work stoppage, material unfair labor practice claim, or other
material labor dispute against or affecting the Borrowers or any of their
Subsidiaries or their respective employees.
9.19 Environmental Laws. Except as otherwise disclosed on
Schedule 9.19:
(a) The Borrowers and their Subsidiaries have complied in
all material respects with all Environmental Laws applicable to their Premises
and business, and neither the Borrowers nor any of their Subsidiaries nor any of
their present Premises or operations, nor their past property or operations, is
subject to any enforcement order from or liability agreement with any Public
Authority or private Person respecting (i) compliance with any Environmental Law
or (ii) any potential liabilities and costs or remedial action arising from the
Release or threatened Release of a Contaminant.
(b) The Borrowers and their Subsidiaries have obtained all
permits necessary for their current operations under Environmental Laws, and all
such permits are in good standing and the Borrowers and their Subsidiaries are
in compliance with all terms and conditions of such permits.
(c) Neither the Borrowers nor any of their Subsidiaries,
nor, to the best of the Borrowers' knowledge, any of their predecessors in
interest, has in violation of applicable law
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stored, treated or disposed of any Contaminant on any Premises, as defined
pursuant to 40 CFR Part 261 or any equivalent Environmental Law.
(d) Neither the Borrowers nor any of their Subsidiaries
has received any summons, complaint, order or similar written notice that it is
not currently in compliance with, or that any Public Authority is investigating
its compliance with, any Environmental Laws or that it is or may be liable to
any other Person as a result of a Release or threatened Release of a
Contaminant.
(e) None of the present or past operations of the
Borrowers and their Subsidiaries is the subject of any investigation by any
Public Authority evaluating whether any remedial action is needed to respond to
a Release or threatened Release of a Contaminant.
(f) To the best of the Borrowers' knowledge there is not
now, nor has there ever been on or in the Premises:
(i) any underground storage tanks or surface
impoundments,
(ii) any asbestos-containing material, or
(iii) any polychlorinated biphenyls (PCB's) used in
hydraulic oils, electrical transformers or other equipment.
(g) Neither the Borrowers nor any of their Subsidiaries
has filed any notice under any requirement of Environmental Law reporting a
spill or accidental and unpermitted release or discharge of a Contaminant into
the environment.
(h) Neither the Borrowers nor any of their Subsidiaries
has entered into any negotiations or settlement agreements with any Person
(including, without limitation, the prior owner of their property) imposing
material obligations or liabilities on the Borrowers or any of their
Subsidiaries with respect to any remedial action in response to the Release of a
Contaminant or environmentally related claim.
(i) None of the products manufactured, distributed or sold
by the Borrowers or any of their Subsidiaries contains asbestos material except
as disclosed to Bank prior to the date hereof.
(j) No Environmental Lien has attached to any Premises of
the Borrowers or any of their Subsidiaries.
9.20 No Violation of Law. The Borrowers are not in violation of
any law, statute, regulation, ordinance, judgment, order, or decree applicable
to it which violation would in any respect materially and adversely affect the
Collateral, the repayment of the Obligations, the Lender's rights under the Loan
Documents, or the Borrowers' or their Subsidiaries' Property, business,
operations, or condition (financial or otherwise).
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9.21 No Default. Neither the Borrowers nor their Subsidiaries are
in default with respect to any note, indenture, loan agreement, mortgage, lease,
deed, or other agreement to which such Borrower is a party or bound, which
default could reasonably be expected to materially and adversely affect the
Collateral, the repayment of the Obligations, the Lender's rights under the Loan
Documents, or the Borrowers' or their Subsidiaries' Property, business,
operations, or condition (financial or otherwise).
9.22 ERISA Compliance.
(a) Each Plan is in compliance in all material respects
with the applicable provisions of ERISA, the Code and other federal or state
law. Each Plan which is intended to qualify under Section 401(a) of the Code has
received a favorable determination letter from the IRS and to the best knowledge
of the Borrowers, nothing has occurred which would cause the loss of such
qualification. Each Borrower and each ERISA Affiliate of a Borrower has made all
required contributions to any Plan subject to Section 412 of the Code, and no
application for a funding waiver or an extension of any amortization period
pursuant to Section 412 of the Code has been made with respect to any Plan.
(b) There are no pending or, to the best knowledge of each
Borrower, threatened claims, actions or lawsuits, or action by any Public
Authority, with respect to any Plan which has resulted or could reasonably be
expected to result in a material adverse effect on the Borrowers' business or
operations. There has been no prohibited transaction or violation of the
fiduciary responsibility rules with respect to any Plan which has resulted or
could reasonably be expected to result in a material adverse effect on the
Borrower's business or operations.
(c) (i) No ERISA Event has occurred or is reasonably
expected to occur; (ii) no Pension Plan has any unfunded liability; (iii)
neither the Borrowers nor any of their ERISA Affiliates has incurred, or
reasonably expects to incur, any liability under Title IV of ERISA with respect
to any Pension Plan (other than premiums due and not delinquent under Section
4007 of ERISA); (iv) neither the Borrowers nor any of their ERISA Affiliates has
incurred, or reasonably expects to incur, any liability (and no event has
occurred which, with the giving of notice under Section 4219 of ERISA, would
result in such liability) under Section 4201 or 4243 of ERISA with respect to a
Multiemployer Plan; and (v) neither the Borrowers nor any of their ERISA
Affiliates has engaged in a transaction that could subject any Person to Section
4069 or 4212(c) of ERISA.
9.23 Taxes. The Borrowers and their Subsidiaries have filed all
tax returns and other reports required to be filed and have paid all Taxes,
assessments, fees and other governmental charges levied or imposed upon them or
their properties, income or assets that are otherwise due and payable. There is
no proposed tax assessment against the Borrowers or any of their Subsidiaries
that would, if made, have a material adverse effect on the Property, business,
operations or condition (financial or otherwise) of the Borrowers or any of
their Subsidiaries.
9.24 Use of Proceeds. None of the transactions contemplated in
this Agreement (including, without limitation, the use of proceeds from the
Loans) will violate or result in the
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violation of Section 7 of the Securities Exchange Act of 1934, as amended, or
any regulations issued pursuant thereto, including without limitation,
Regulations G,T,U and X of the Board of Governors of the Federal Reserve System
("Federal Reserve Board"), 12 CFR, Chapter II. The Borrowers do not own or
intend to carry or purchase any "margin stock" within the meaning of said
Regulation U or G. None of the proceed of the loans will be used, directly or
indirectly, to purchase or carry (or refinance any borrowing, the proceeds of
which were used to purchase or carry) any "security" within the meaning of the
Securities Exchange Act of 1934, as amended.
9.25 Private Offerings. The Borrowers have not, directly or
indirectly, offered the Loans for sale to, or solicited offers to buy part
thereof from, or otherwise approached or negotiated with respect thereto with
any prospective purchaser other than Lender. The Borrowers hereby agree that
neither they nor anyone acting on their behalf has offered or will offer the
Loans or any part thereof or any similar securities for issue or sale to or
solicit any offer to acquire any of the same from anyone so as to bring the
issuance thereof within the provisions of Section 5 of the Securities Act of
1933, as amended.
9.26 Broker's Fees. No Person is entitled to any brokerage or
finder's fee with respect to the transactions described in this Agreement.
9.27 Patent and Trademark Assignments.
(a) The provisions of the Patent and Trademark Assignments
are effective to create in favor of the Lender, legal, valid and enforceable
first priority security interest in all right, title and interest of the
Borrowers in the collateral described therein.
(b) All representations and warranties of the Borrowers
contained in the Patent and Trademark Assignments are true and correct in all
material respects on or as of the date made or deemed made.
9.28 No Material Adverse Change. No material adverse change has
occurred in the Property, business, operations, or conditions (financial or
otherwise) of the Borrowers or their Subsidiaries since the date of the
Financial Statements delivered to the Lender.
9.29 Disclosure. Neither this Agreement nor any document or
statement furnished to the Lender by or on behalf of the Borrowers or any of
their Subsidiaries hereunder contains any untrue statement of a material fact or
omits to state any material fact necessary in order to make the statements
contained herein or therein not misleading.
9.30 Motorola Letter. The Motorola Letter delivered pursuant to
Section 11.1(r) represents the legal, valid and binding obligation of the
holders of the Motorola Debt, enforceable against them in accordance with its
terms.
10. AFFIRMATIVE AND NEGATIVE COVENANTS. The Borrowers covenant that, so
long as any of the Obligations remain outstanding or this Agreement is in
effect:
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10.1 Taxes and Other Obligations. Each of the Borrowers and each
of their Subsidiaries shall: (a) file when due all tax returns and other reports
which it is required to file, pay, or provide for the payment, when due, of all
Taxes, fees, assessments and other governmental charges against it or upon its
Property, income, and franchises, make all required withholding and other tax
deposits, and establish adequate reserves for the payment of all such items, and
shall provide to the Lender, upon request, satisfactory evidence of its timely
compliance with the foregoing; and (b) pay when due all Debt owed by it and
perform and discharge in a timely manner all other obligations undertaken by it;
provided, however that each of the Borrowers and their Subsidiaries need not pay
any tax, fee, assessment, governmental charge, or Debt, or perform or discharge
any other obligation, that it is contesting in good faith by appropriate
proceedings diligently pursued.
10.2 Corporate Existence and Good Standing. Each of the Borrowers
and each of their Subsidiaries shall maintain its corporate existence and its
qualification and good standing in all states and other jurisdictions necessary
to conduct its business and own its Property, and shall obtain and maintain all
licenses, permits, franchises and governmental authorizations necessary to
conduct its business and own its Property.
10.3 Compliance with Law and Agreements. Each of the Borrowers
and each of their Subsidiaries shall comply with the terms and provisions of
each judgment, law, statute, rule, and governmental regulation applicable to it
and each contract, mortgage, lien, lease, indenture, order, instrument,
agreement, or document to which it is a party or by which it is bound.
10.4 Maintenance of Property and Insurance. Each of the Borrowers
and each of their Subsidiaries shall: (a) maintain all of its Property necessary
or useful in its business in good operating condition and repair, ordinary wear
and tear excepted; (b) maintain with financially sound and reputable insurers
such other insurance with respect to its Property and business against
casualties and contingencies of such types (including, without limitation,
business interruption, environmental liability, public liability, product
liability, and larceny, embezzlement or other criminal misappropriation) and in
such amounts as is customary for Persons of established reputation engaged in
the same or a similar business and similarly situated, naming the Lender, at its
request, as additional insured under each such policy; and (c) preserve and
renew all Proprietary Rights which could reasonably be expected to be materially
necessary or useful in the conduct of its business.
10.5 Environmental Laws. Each of the Borrowers and their
Subsidiaries shall conduct its business in full compliance with all
Environmental Laws applicable to it, including, without limitation, those
relating to the generation, handling, use, storage, and disposal of
contaminants. Each of the Borrowers and their Subsidiaries shall take prompt and
appropriate action to respond to and remediate any non-compliance with
Environmental Laws and shall regularly report to the Lender on such response and
remediation. Without limiting the generality of the foregoing, whenever a
Borrower gives notice to the Lender pursuant to Section 8.3(g) the Borrowers
shall, at the Lender's request and the Borrowers' expense: (a) cause an
independent environmental engineer acceptable to the Lender to conduct such
tests of the site where a Borrower's or its Subsidiary's
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noncompliance or alleged non-compliance with Environmental Laws has occurred and
prepare and deliver to the Lender a report setting forth the results of such
tests, a proposed plan for responding to any environmental problems described
therein, and an estimate of the costs thereof; and (b) provide to the Lender a
supplemental report of such engineer whenever the scope of the environmental
problems, or response of the relevant Borrower or Subsidiary of a Borrower
thereto or the estimated costs thereof, shall change.
10.6 ERISA. The Borrowers shall cause each Plan, which has been
designated to be so, to be qualified within the meaning of Section 401(a) of the
Code and to be administered in all respects in compliance with Section 401(a) of
the Code. The Borrowers shall cause each Plan to be administered in all respect
in compliance with ERISA.
10.7 Mergers, Consolidations, Acquisitions, or Sales. Other than
with the prior written consent of the Lender, neither the Borrowers nor any of
their Subsidiaries shall enter into any transaction of merger, reorganization,
or consolidation, or transfer, sell, assign, lease, or otherwise dispose of all
or any part of their Property, or wind up, liquidate or dissolve, or agree to do
any of the foregoing, except sales of Inventory in the ordinary course of its
business, sales of Equipment permitted pursuant to Section 7.12, or Permitted
Dispositions.
10.8 Distributions; Capital Changes. Neither of the Borrowers nor
any of their Subsidiaries shall: (a) directly or indirectly declare or make, or
incur any liability to make, any Distribution, except Distributions to CMI by a
Subsidiary wholly owned by CMI or (b) make any change in its capital structure
which could adversely affect the repayment of the Obligations.
10.9 Transactions Affecting Collateral or Obligations. Neither
Borrower nor any of their Subsidiaries shall enter into any transaction which
materially and adversely affects the Collateral or a Borrower's ability to repay
the Obligations.
10.10 Guaranties. Neither Borrower nor any of their Subsidiaries
shall make, issue, or become liable on any Guaranty, except Guaranties in favor
of the Lender and endorsements of instruments for deposit or the Permitted
Guaranties.
10.11 Debt. Neither Borrower nor any of their Subsidiaries shall
incur or maintain any Debt, other than: (a) the Obligations; (b) trade payables
and contractual obligations to suppliers and customers incurred in the ordinary
course of business; (c) Permitted Debt; and (d) other Debt existing on the
Closing Date and reflected in the Financial Statements attached as Exhibit A-1;
provided that no amendment or alteration shall be permitted to such Debt.
10.12 Prepayment. Neither Borrower nor any of their Subsidiaries
shall voluntarily prepay, redeem or retire any Debt, except the Obligations in
accordance with their terms.
10.13 Transactions with Affiliates. Except as set forth below,
neither Borrower nor any of their Subsidiaries shall: (a) sell, transfer,
distribute, or pay any money or Property to any Affiliate (other than to
officers and directors of either Borrower and its Subsidiaries in the ordinary
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course of business), (b) lend or advance money or Property to any Affiliate
(other than to officers and directors of either Borrower and its Subsidiaries in
the ordinary course of business), (c) except as set forth in Section 10.20,
invest in (by capital contribution or otherwise) or purchase or repurchase any
stock or indebtedness or any Property of any Affiliate, or (d) become liable on
any Guaranty of the indebtedness, dividends, or other obligations of any
Affiliate. Notwithstanding the foregoing, if no Event of Default has occurred
and is continuing, the Borrowers and their Subsidiaries may engage in
transactions with Affiliates in the ordinary course of business in amounts and
upon terms fully disclosed to the Lender and no less favorable to the Borrowers
and their Subsidiaries than would obtain in a comparable arm's length
transaction with a third party who is not an Affiliate.
10.14 Joint Ventures. Other than with the prior written consent
of the Lender, either Borrower nor any of their Subsidiaries shall enter into
any joint venture or similar arrangements with any Person for the purpose of
conducting a common venture or purpose with such Person.
10.15 Business Conducted. Other than with the prior written
consent of the Lender, the Borrowers and their Subsidiaries shall not engage,
directly or indirectly, in any line of business other than the businesses in
which the Borrowers and their Subsidiaries are engaged on the Closing Date.
10.16 Liens. Neither the Borrowers nor any of their Subsidiaries
shall create, incur, assume, or permit to exist any Lien on any Property now
owned or hereafter acquired by any of them, except Permitted Liens.
10.17 Sale and Leaseback Transactions. Other than with the
written consent of the Lender, neither the Borrowers nor any of their
Subsidiaries shall, directly or indirectly, enter into any arrangement with any
Person providing for a Borrower or any of their Subsidiaries to lease or rent
Property that a Borrower or such Subsidiary has or will sell or otherwise
transfer to such Person.
10.18 New Subsidiaries. Other than with the written consent of
the Lender, the Borrowers shall not, directly or indirectly, organize or acquire
any Subsidiary other than those listed on Schedule 9.5.
10.19 Restricted Investments. Other than with the written consent
of the Lender, neither Borrower nor any of its Subsidiaries shall make any
Restricted Investment.
10.20 Subsidiaries. Neither Borrower shall make investments in,
transfer assets to, lend or advance money or Property to CMNS or CMFS; provided
that such investment, transfers, loans or advances shall be permitted up to a
maximum aggregate amount of $300,000 for each fiscal quarter of CMI. Neither
Borrower shall form any additional Subsidiaries. CMI shall dissolve CMNS by
December 31, 1997.
10.21 Operating Lease Obligations. Neither Borrower nor any of
their Subsidiaries shall enter into any lease of real or personal property as
lessee or sublessee (other than Capital
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Leases), if, after giving effect thereto, the aggregate amount of Rentals (as
hereinafter defined) payable by the Borrowers and their Subsidiaries in any
Fiscal Year in respect of such lease and all other such leases would exceed
$8,000,000 (such amount being referred to herein as "Permitted Rentals"). The
term "Rentals" means all payments due from the lessee or sublessee under a
lease, including, without limitation, basic rent, percentage rent, property
taxes, utility or maintenance costs, and insurance premiums.
10.22 Minimum Fixed Coverage. CMI will maintain a Fixed Charge
Coverage Ratio of not less than the correlative ratio for each of the following
periods.
Period Ratio
------ -----
The fiscal quarter ending June 30, 1997 0.1
The two fiscal quarters ending September 30, 1997 0.3
The three fiscal quarters ending December 31, 1997 0.6
The four fiscal quarters ending March 31, 1998 0.9
The four fiscal quarters ending June 30, 1998 1.3
The four fiscal quarters ending September 30, 1998 1.0
The four fiscal quarters ending December 31, 1998 1.0
The four fiscal quarters ending March 31, 1999 1.0
The four fiscal quarters ending June 30, 1999 1.0
The immediately preceding four fiscal 1.3
quarters ending on the last day of each
successive fiscal quarter after June 30, 1998
10.23 Adjusted Tangible Net Worth. CMI will maintain an Adjusted
Tangible Net Worth of not less than the following amounts as determined at the
end of each calendar month during the following periods (commencing on the first
day of such period):
Period Amount ($)
------ ----------
June 30, 1997 to May 31, 1998 61,500,000
June 30, 1998 to May 31, 1999 66,000,000
June 30, 1999 to May 31, 2000 75,000,000
June 30, 2000 and each month thereafter 80,000,000
10.24 Further Assurances. The Borrowers shall execute and
deliver, or cause to be executed and delivered, to the Lender such documents and
agreements, and shall take or cause to be taken such actions, as the Lender may,
from time to time, request to carry out the terms and conditions of this
Agreement and the other Loan Documents.
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10.25 ABN AMRO Agreement, Maturity Factoring Agreement, Permitted
Equipment Sale Financing and Subordinated Note Agreements. The Borrowers shall
not agree to any amendment, renewal, supplement, or other alteration of any of
the provisions of or terms relating to the ABN AMRO Agreement, Maturity
Factoring Agreement, Permitted Equipment Sale Financing or Subordinated Note
Agreements without the prior written consent of the Lender.
10.26 ABN AMRO Agreement Sales. CMI shall not make any sales of
any ABN AMRO Receivables in a manner inconsistent with the terms of the
Intercreditor Agreement. For the avoidance of doubt, and without limitation, CMI
shall not dispose of any account receivable pursuant to the ABN AMRO Agreement
unless it shall first have obtained the prior written consent of the Lender to
such sale. Should CMI desire to make a sale CMI shall deliver to the Lender a
written Sale Request, in form and substance satisfactory to the Lender and
Lender shall promptly respond to such Sale Request.
10.27 Maturity Factoring Agreement UCC Forms. CMI will use its
best efforts to cause the UCC forms filed with respect to the Maturity Factoring
Agreement to be amended in a manner satisfactory to Lender or terminated within
30 days of the Closing Date.
10.28 Belgian Guaranties. CMI shall not enter into any contract
or other binding agreement with the Belgian Beneficiary for the supply of
equipment and/or services unless the terms of such contract or agreement have
been approved by the Lender.
11. CONDITIONS TO CLOSING. The Lender will not be obligated to make the
initial Loans or to issue, obtain or maintain any Letters of Credit or Belgian
Guaranties on the Closing Date, unless the following conditions precedent have
been satisfied in a manner satisfactory to Lender:
11.1 Conditions Precedent to Making of Loans and Issuance of
Letters of Credit on the Closing Date.
(a) Representations and Warranties; Covenants. The
Borrowers' representations and warranties contained in this Agreement and the
other Loan Documents shall be correct and complete; the Borrowers shall have
performed and complied with all covenants, agreements, and conditions contained
herein and in the other Loan Documents which are required to have been performed
or complied with.
(b) Delivery of Documents. In addition to any documents
specifically listed in this Section 11.1, the Borrowers shall have delivered, or
caused to be delivered, to the Lender such documents, instruments and agreements
as the Lender shall request in connection herewith, duly executed by all parties
thereto other than the Lender, and in form and substance satisfactory to the
Lender and its counsel.
(c) Facility Fee. The Borrowers shall have paid in full
the Facility Fee.
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(d) Payment of Fees and Expenses. The Borrowers shall have
paid all fees and expenses of the Lender's outside counsel, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇ LLP, and all other fees and expenses of the Lender incurred in
connection with any of the Loan Documents and the transactions contemplated
thereby.
(e) Required Approvals. The Lender shall have received
certified copies of all consents or approvals of any Public Authority or other
Person which the Lender determines is required in connection with the
transactions contemplated by this Agreement.
(f) No Material Adverse Change. There shall have occurred
no material adverse change in the Borrowers' business or financial condition or
in the Collateral since February 28, 1997, and the Lender shall have received a
certificate of the Borrowers' chief executive officer, chief financial officer
or treasurer to such effect.
(g) Proceedings. All proceedings to be taken in connection
with the transactions contemplated by this Agreement, and all documents,
contemplated in connection herewith, shall be satisfactory in form and substance
to the Lender and its counsel.
(h) Excess Aggregate Availability. After taking into
account the Revolving Loans, the Letters of Credit and Belgian Guaranties issued
or outstanding on the Closing Date and with all obligations of the Borrowers
being current, there shall be remaining Aggregate Availability of at least ten
percent (10%) calculated prior to the making of such Revolving Loans and the
issuance or maintenance of such Letters of Credit and Belgian Guaranties.
(i) Repayment of Existing Syndicate Debt. On or before the
Closing Date the Existing Syndicate Debt shall be repaid or discharged by the
Borrowers and all obligations under the Syndicated Facility (save for
indemnities in favor of the Syndicate Agent and Syndicate Banks expected to
survive termination) shall be terminated.
(j) Existing Collateral Documents. The Existing Collateral
Documents shall have been terminated and signed releases of all financing
statements in connection therewith shall have been delivered to the Lender and
shall be in form and substance satisfactory to the Lender and its counsel.
(k) Security Agreements. The Security Agreements, executed
by the appropriate parties thereto, in appropriate form for recording, where
necessary, together with: (i) acknowledgment copies of filings, registrations
and recordings necessary and advisable to perfect the Liens in accordance with
applicable law; (ii) evidence that all other actions necessary or, in the
opinion of the Lender, desirable to perfect and protect the security interest
created by the Security Agreements have been taken; and (iii) evidence that all
other actions necessary or, in the opinion of the Lender, desirable to perfect
and protect the first priority Lien created by the Security Agreements, and to
enhance the Lender's ability to preserve and protect its interests in and access
to the Collateral, have been taken.
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(l) Insurance Certificates. The Borrowers shall have
provided the Lender with insurance certificates evidencing that the Borrowers
have obtained insurance coverage in an amount and of a nature acceptable to the
Lender.
(m) Legal Opinions. The Borrowers shall have procured the
delivery of legal opinions addressed to the Lender in a form and substance
satisfactory to the Lender and its counsel.
(n) Bank Indemnity. The Bank Indemnity shall have been
executed and delivered by the respective parties thereto.
(o) Intercreditor Agreement. The Intercreditor Agreement
shall have been executed and delivered by the parties thereto.
(p) Maturity Factoring Agreement. The Maturity Factoring
Agreement shall have been amended in a manner satisfactory to the Lender.
(q) Industrial Development Bonds. The Borrower shall have
obtained, in a form and substance satisfactory to the Lender, a permanent waiver
or discharge from the operation of any negative pledge, or similar covenant
restricting the ability of the Borrowers to grant liens over their property,
contained in the Reimbursement Agreement dated as of November 1, 1987 (as
amended) between CMI (as successor to Satellite Transmission Systems, Inc.) and
The Bank of Tokyo - Mitsubishi, Ltd., San ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ (successor to Bank of
Tokyo Limited, San ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇).
(r) Motorola Letter. The Borrower shall have obtained and
delivered to the Lender, in form and substance satisfactory to the Lender in its
sole discretion, the Motorola Letter.
11.2 Conditions Precedent to Each Loan. The obligation of the
Lender to make each Loan or to provide for the issuance or maintenance of any
Letter of Credit or Belgian Guaranty shall be subject to the conditions
precedent that on the date of any such extension of credit the following
statements shall be true, and the acceptance by the Borrowers of any extension
of credit shall be deemed to be a statement to the effect set forth in clauses
(a) and (b), with the same effect as the delivery to the Lender of a certificate
signed by the chief executive officer, chief financial officer or treasurer of
the Borrowers, dated the date of such extension of credit, stating that:
(a) The representations and warranties contained in this
Agreement and the other Loan Documents are correct in all material respects on
and as of the date of such extension of credit as though made on and as of such
date, except to the extent the Lender has been notified by the Borrowers that
any representation or warranty is not correct and the Lender has explicitly
waived in writing compliance with such representation or warranty;
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(b) No Event or Event of Default has occurred and is
continuing, or would result from such extension of credit;
(c) The Lender shall have received a Notice of Borrowing
or Notice of Continuation/Conversion or request to obtain a Letter of Credit or
Belgian Guaranty, as appropriate, in the manner and form required by this
Agreement.
12. DEFAULT.
12.1 Events of Default. It shall constitute an event of default
("Event of Default") if any one or more of the following shall occur for any
reason:
(a) failure to make payment of principal, interest, fees
or premium on any of the Obligations when due;
(b) any representation or warranty made or deemed made by
any of the Borrowers in this Agreement, any of the other Loan Documents, any
Financial Statement, or any certificate furnished by the Borrowers or any of
their Subsidiaries at any time to the Lender shall prove to be untrue in any
material respect as of the date when made, deemed made, or furnished;
(c) (i) default shall occur in the observance or
performance by any of the Borrowers of any of Sections 7.2, 7.4, 7.9, 7.10,
10.2, 10.4, 10.7 through 10.23, 10.25 and 10.26, (ii) default shall occur (which
shall not have been cured within 10 Business Days) in the observance or
performance by any of the Borrowers of any of the covenants and agreements
contained in the Loan Documents, or any other agreement entered into at any time
to which any of the Borrowers and the Lender are party, or (iii) if any such
agreement or document referred to in clause (ii) shall terminate (other than in
accordance with its terms or with the written consent of the Lender) or become
void or unenforceable without the written consent of the Lender;
(d) default shall occur by any of the Borrowers in the
payment of any principal or interest on any indebtedness for borrowed money with
a principal amount of $1,000,000 or more (other than the Obligations) beyond any
period of grace provided with respect thereto;
(e) any of the Borrowers or any of their Subsidiaries
shall: (i) file a voluntary petition in bankruptcy or file a voluntary petition
or an answer or otherwise commence any action or proceeding seeking
reorganization, arrangement or readjustment of its debts or for any other relief
under the Federal Bankruptcy Code, as amended, or under any other bankruptcy or
insolvency act or law, state or federal, now or hereafter existing, or consent
to, approve of, or acquiesce in, any such petition, action or proceeding; (ii)
apply for or acquiesce in the appointment of a receiver, assignee, liquidator,
sequestrator, custodian, trustee or similar officer for it or for all or any
part of its Property; (iii) make an assignment for the benefit of creditors; or
(iv) be unable generally to pay its debts as they become due;
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(f) an involuntary petition shall be filed or an action or
proceeding otherwise commenced (which shall not have been dismissed, withdrawn
or terminated within 60 days of the date filed or commenced) seeking
reorganization, arrangement or readjustment of a Borrower's or any of the
Borrowers' Subsidiary's debts or for any other relief under the Federal
Bankruptcy Code, as amended, or under any other bankruptcy or insolvency act or
law, state or federal, now or hereafter existing;
(g) a receiver, assignee, liquidator, sequestrator,
custodian, trustee or similar officer for any Borrower or any of their
Subsidiaries or for all or any part of their Property shall be appointed
involuntarily; or a warrant of attachment, execution or similar process shall be
issued against any part of the Property of any Borrower or any of their
Subsidiaries;
(h) the Borrowers or any of their Subsidiaries shall file
a certificate of dissolution under applicable state law or shall be liquidated,
dissolved or wound-up or shall commence or have commenced against it any action
or proceeding for dissolution, winding-up or liquidation, or shall take any
corporate action in furtherance thereof; provided that CMNS may be liquidated or
dissolved pursuant to Section 10.20;
(i) all or any material part of the Property of the
Borrowers shall be nationalized, expropriated or condemned, seized or otherwise
appropriated, or custody or control of such Property or of the Borrowers shall
be assumed by any Public Authority or any court of competent jurisdiction at the
instance of any Public Authority, except where contested in good faith by proper
proceedings diligently pursued where a stay of enforcement is in effect;
(j) any guaranty of the Obligations shall be terminated,
revoked or declared void, cease to be in full force and effect or otherwise
invalid, or a guarantor of the Obligations shall fail to perform or observe any
material covenant or agreement contained in such guaranty;
(k) one or more final judgments for the payment of money
aggregating in excess of $5,000,000 (whether or not covered by insurance) shall
be rendered against the Borrowers or any of their Subsidiaries and the Borrowers
or such Subsidiary shall fail to discharge the same within thirty (30) days from
the date of notice of entry thereof or to appeal therefrom;
(l) any loss, theft, damage or destruction of any item or
items of Collateral occurs which: (i) materially and adversely affects the
operation of the Borrowers' businesses or (ii) is material in amount and is not
adequately covered by insurance;
(m) there shall occur any Change of Control with respect
to either Borrower;
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(n) any event or condition shall occur or exist with
respect to a Plan that could, in the Lender's reasonable judgment, subject the
Borrowers or any of their Subsidiaries to any tax, penalty or liability under
ERISA, the Code or otherwise which in the aggregate is material in relation to
the business, operations, Property or financial or other condition of the
Borrowers;
(o) there occurs any material adverse change in either of
the Borrower's Property, business, operations, or condition (financial or
otherwise);
(p) there occurs an ABN AMRO Default; or
(q) the Motorola Letter shall be terminated, revoked or
declared void, cease to be in full force and effect or otherwise invalid, or the
holders of the Motorola Debt shall fail to perform or observe any material
covenant contained in the Motorola Letter.
13. REMEDIES.
(a) If an Event of Default has occurred and is continuing,
the Lender may, without notice to or demand on the Borrowers except for Events
of Default under Sections 12.1(b), (c), (d), and (k) through (p) for which
Lender agrees to provide notice to the applicable Borrower) do one or more of
the following at any time or times and in any order: (i) reduce the Aggregate
Availability or one or more of the elements thereof; (ii) restrict the amount of
or refuse to make Revolving Loans and restrict or refuse to arrange for Letters
of Credit; (iii) terminate this Agreement; (iv) declare any or all Obligations
to be immediately due and payable (provided however that upon the occurrence of
any Event of Default described in Sections 12.1(e). 12.1(f), 12.1(g), or
12.1(h), all Obligations shall automatically become immediately due and
payable); and (v) pursue its other rights and remedies under the Loan Documents
and applicable law.
(b) If an Event of Default has occurred and is continuing:
(i) the Lender shall have, in addition to all other rights, the rights and
remedies of a secured party under the UCC; (ii) the Lender may, at any time,
take possession of the Collateral and keep it on the Borrowers' Premises, at no
cost to the Lender, or remove any part of it to such other place or places as
the Lender may desire, or the Borrowers shall, upon the Lender's demand, at the
Borrowers' cost, assemble the Collateral and make it available to the Lender at
a place reasonably convenient to the Lender; (iii) the Lender may sell and
deliver any Collateral at public or private sales, for cash, upon credit or
otherwise, at such prices and upon such terms as the Lender deems advisable, in
its sole discretion, and may, if the Lender deems it reasonable, postpone or
adjourn any sale of the Collateral by an announcement at the time and place of
sale or of such postponed or adjourned sale without giving a new notice of sale;
and (iv) the Lender may collect receive, dispose of and realize any Investment
Property and withdraw Investment Property from any Securities Accounts or
Commodity Accounts of the Borrowers. Without in any way requiring notice to be
given in the following manner, the Borrowers agree that any notice by the Lender
of sale, disposition or other intended action hereunder or in connection
herewith, whether required by the UCC or otherwise, shall constitute reasonable
notice to the Borrowers if such notice is mailed by registered or certified
mail, return receipt requested, postage prepaid, or is delivered personally
against receipt, at least five (5)
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days prior to such action to the Borrowers' addresses specified in or pursuant
to Section 15.11. If any Collateral is sold on terms other than payment in full
at the time of sale, no credit shall be given against the Obligations until the
Lender receives payment, and if the buyer defaults in payment, the Lender may
resell the Collateral without further notice to the Borrowers. In the event the
Lender seeks to take possession of all or any portion of the Collateral by
judicial process, each of the Borrowers irrevocably waives: (a) the posting of
any bond, surety or security with respect thereto which might otherwise be
required; (b) any demand for possession prior to the commencement of any suit or
action to recover the Collateral; and (c) any requirement that the Lender retain
possession and not dispose of any Collateral until after trial or final
judgment. The Borrowers recognize that (due to securities laws or otherwise) the
Lender may be unable to make a public sale of Investment Property and expressly
agree that a private sale to a restricted group of persons, for investment
purposes rather than general distribution, shall be considered a commercially
reasonable sale. The Borrowers agree that the Lender has no obligation to
preserve rights to the Collateral or marshal any Collateral for the benefit of
any Person. The Lender is hereby granted a license or other right to use,
without charge, the Borrowers' labels, patents, copyrights, name, trade secrets,
trade names, trademarks, and advertising matter, or any similar property, in
completing production of, advertising or selling any Collateral, and the
Borrowers' rights under all licenses and all franchise agreements shall inure to
the Lender's benefit. The proceeds of sale shall be applied first to all
expenses of sale, including attorney's fees, and second, in whatever order the
Lender elects, to all Obligations. The Lender will return any excess to the
Borrower or such other Person as shall be legally entitled thereto and the
Borrower shall remain liable for any deficiency.
(c) If an Event of Default occurs, each of the Borrowers
hereby waives (i) all rights to notice and hearing prior to the exercise by the
Lender of the Lender's rights to repossess the Collateral without judicial
process or to replevy, attach or levy upon the Collateral without notice or
hearing, and (ii) all rights of set-off and counterclaim against Lender.
(d) If the Lender terminates this Agreement upon an Event
of Default, the Borrowers shall pay the Lender, immediately upon termination, a
fee equal to the early termination fee that would have been payable under
Section 14 if this Agreement had been terminated on that date pursuant to the
Borrowers' election.
14. TERM AND TERMINATION. This Agreement shall expire on June 30, 2000
(the "Stated Termination Date") unless earlier terminated or automatically
extended as provided in this Section. This Agreement shall automatically be
renewed on the Stated Termination Date and at the end of any renewal term for
successive one-year terms, unless this Agreement is terminated as provided
below. The Lender and the Borrowers shall have the right to terminate this
Agreement, without premium or penalty, on the Stated Termination Date or at the
end of any renewal term by giving the other written notice not less than sixty
(60) days prior to the end of such term by registered or certified mail. The
Borrowers may also terminate this Agreement at any time prior to the Stated
Termination Date or during any renewal term if: (a) they give the Lender sixty
(60) days prior written notice of termination by registered or certified mail;
(b) they pay and perform all Obligations on or prior to the effective date of
termination; and (c) they pay the Lender, on or prior to the effective date of
termination, and in addition to any other prepayment premium required
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hereunder and the fees required by Section 6.4, (i) two percent (2%) of the
average amount of the Revolving Loans, Letters of Credit and Belgian Guaranties
outstanding during the prior 180 day period (or lesser period if within 180 days
of the Closing Date) if such termination is made on or prior to the first
Anniversary Date; and (ii) one percent (1%) of the average amount of the
Revolving Loans, Letters of Credit and Belgian Guaranties outstanding during the
prior 180 day period if such termination is after the first Anniversary Date;
provided that should such termination after the first Anniversary Date result
from a refinancing by the Bank (either as sole lender or as Agent for a
syndicate of Lenders) of the credit facility constituted by this Loan Agreement,
such fee shall be waived. The Lender may also terminate this Agreement without
notice while an Event of Default exists. Upon the effective date of termination
of this Agreement for any reason whatsoever, all Obligations shall become
immediately due and payable and Borrowers shall immediately arrange for the
cancellation as of such termination date of Letters of Credit and Belgian
Guaranties then outstanding. Notwithstanding the termination of this Agreement,
until all Obligations (other than, to the extent that such rights remain
inchoate, the rights of the Lender pursuant to Section 6.6) are paid and
performed in full, the Lender shall retain all its rights and remedies hereunder
(including, without limitation, in all then existing and after-arising
Collateral).
15. MISCELLANEOUS.
15.1 Cumulative Remedies; No Prior Recourse to Collateral. The
enumeration herein of the Lender's rights and remedies is not intended to be
exclusive, and such rights and remedies are in addition to and not by way of
limitation of any other rights or remedies that the Lender may have under the
UCC or other applicable law. The Lender shall have the right, in its sole
discretion, to determine which rights and remedies are to be exercised and in
which order. The exercise of one right or remedy shall not preclude the exercise
of any others, all of which shall be cumulative. The Lender may, without
limitation, proceed directly against the Borrowers to collect the Obligations
without any prior recourse to the Collateral.
15.2 No Implied Waivers. No act, failure or delay by the Lender
shall constitute a waiver of any of its rights and remedies. No single or
partial waiver by the Lender of any provision of this Agreement or any other
Loan Document, or of breach or default hereunder or thereunder, or of any right
or remedy which the Lender may have, shall operate as a waiver of any other
provision, breach, default, right or remedy or of the same provision, breach,
default, right or remedy on a future occasion. No waiver by the Lender shall
affect its rights to require strict performance of this Agreement.
15.3 Severability. If any provision of this Agreement shall be
prohibited or invalid, under applicable law, it shall be ineffective only to
such extent, without invalidating the remainder of this Agreement.
15.4 Governing Law. This Agreement shall be deemed to have been
made in the State of California and shall be governed by and interpreted in
accordance with the laws of such state, except that no doctrine of choice of law
shall be used to apply the laws of any other state or jurisdiction.
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15.5 Consent to Jurisdiction and Venue; Service of Process. Each
of the Borrowers agrees that, in addition to any other courts that may have
jurisdiction under applicable laws, any action or proceeding to enforce or
arising out of this Agreement or any of the other Loan Documents may be
commenced in the Courts of the State of California for San Francisco County, or
in the United States District Court for the Northern District of California, and
the Borrowers consent and submit in advance to such jurisdiction and agree that
venue will be proper in such courts on any such matter. Each of the Borrowers
hereby waives personal service of process and agrees that a summons and
complaint commencing an action or proceeding in any such court shall be properly
served and shall confer personal jurisdiction if served by registered or
certified mail to the Borrowers. Should the Borrowers fail to appear or answer
any summons, complaint, process or papers so served within thirty (30) days
after the mailing or other service thereof, it shall be deemed in default and an
order or judgment may be entered against it as demanded or prayed for in such
summons, complaint, process or papers. The choice of forum set forth in this
section shall not be deemed to preclude the enforcement of any judgment obtained
in such forum, or the taking of any action under this Agreement to enforce the
same, in any appropriate jurisdiction.
15.6 Waiver of Jury Trial. THE BORROWERS EACH HEREBY WAIVE TRIAL
BY JURY, RIGHTS OF SETOFF, AND THE RIGHT TO IMPOSE COUNTERCLAIMS IN ANY
LITIGATION IN ANY COURT WITH RESPECT TO, IN CONNECTION WITH, OR ARISING OUT OF
THIS AGREEMENT, THE OTHER LOAN DOCUMENTS, THE OBLIGATIONS OR THE COLLATERAL, OR
ANY INSTRUMENT OR DOCUMENT DELIVERED PURSUANT HERETO OR THERETO, OR ANY OTHER
CLAIM OR DISPUTE HOWSOEVER ARISING, BETWEEN THE BORROWERS AND THE LENDER. THE
BORROWERS EACH CONFIRM THAT THE FOREGOING WAIVERS ARE INFORMED AND FREELY MADE.
15.7 Arbitration; Reference Proceeding.
(a) ANY CONTROVERSY OR CLAIM BETWEEN OR AMONG THE PARTIES,
INCLUDING BUT NOT LIMITED TO THOSE ARISING OUT OF OR RELATING TO THIS AGREEMENT
OR ANY AGREEMENTS OR INSTRUMENTS RELATING HERETO OR DELIVERED IN CONNECTION
HEREWITH AND ANY CLAIM BASED ON OR ARISING FROM AN ALLEGED TORT, SHALL AT THE
REQUEST OF ANY PARTY BE DETERMINED BY ARBITRATION. THE ARBITRATION SHALL BE
CONDUCTED IN ACCORDANCE WITH THE UNITED STATES ARBITRATION ACT (TITLE 9, U.S.
CODE), NOTWITHSTANDING ANY CHOICE OF LAW PROVISION IN THIS AGREEMENT, AND UNDER
THE COMMERCIAL RULES OF THE AMERICAN ARBITRATION ASSOCIATION ("AAA"). THE
ARBITRATION SHALL BE CONDUCTED WITHIN SAN FRANCISCO COUNTY, CALIFORNIA. THE
ARBITRATOR(S) SHALL GIVE EFFECT TO STATUTES OF LIMITATION IN DETERMINING ANY
CLAIM. ANY CONTROVERSY CONCERNING WHETHER AN ISSUE IS ARBITRABLE SHALL BE
DETERMINED BY THE ARBITRATOR(S). JUDGMENT UPON THE ARBITRATION AWARD MAY BE
ENTERED IN ANY COURT HAVING JURISDICTION. THE INSTITUTION AND
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MAINTENANCE OF AN ACTION FOR JUDICIAL RELIEF OR PURSUIT OF A PROVISIONAL OR
ANCILLARY REMEDY SHALL NOT CONSTITUTE A WAIVER OF THE RIGHT OF ANY PARTY,
INCLUDING THE PLAINTIFF, TO SUBMIT THE CONTROVERSY OR CLAIM TO ARBITRATION IF
ANY OTHER PARTY CONTESTS SUCH ACTION FOR JUDICIAL RELIEF.
(b) Notwithstanding the provisions of subparagraph (a), no
controversy or claim shall be submitted to arbitration without the consent of
all parties if, at the time of the proposed submission, such controversy or
claim arises from or relates to an obligation to the Lender which is secured by
real property collateral located in California. If all parties do not consent to
submission of such a controversy or claim to arbitration, the controversy or
claim shall be determined as provided in subparagraph (c).
(c) A controversy or claim which is not submitted to
arbitration as provided and limited in subparagraphs (a) and (b) shall, at the
request of any party, be determined by a reference in accordance with California
Code of Civil Procedure Section 638 et seq. If such an election is made, the
parties shall designate to the court a referee or referees selected under the
auspices of the AAA in the same manner as arbitrators are selected in
AAA--sponsored proceedings. The presiding referee of the panel, or the referee
if there is a single referee, shall be an active attorney or retired judge.
Judgment upon the award rendered by such referee or referees shall be entered in
the court in which such proceeding was commenced in accordance with California
Code of Civil Procedure Sections 644 and 645.
(d) No provision of this paragraph shall limit the right
of any party to this Agreement to exercise self-help remedies such as setoff, to
foreclose against or sell any real or personal property collateral or security,
or to obtain provisional or ancillary remedies from a court of competent
jurisdiction before, after, or during the pendency of any arbitration or other
proceeding. The exercise of a remedy does not waive the right of either party to
resort to arbitration or reference. At the Lender's option, foreclosure under a
deed of trust or mortgage may be accomplished either by exercise of power of
sale under the deed of trust or mortgage or by judicial foreclosure.
15.8 Survival of Representations and Warranties. All of the
Borrowers' representations and warranties contained in this Agreement shall
survive the execution, delivery, and acceptance thereof by the parties,
notwithstanding any investigation by the Lender or its agents.
15.9 Other Security and Guaranties. The Lender may, without
notice or demand and without affecting the Borrowers' obligations hereunder,
from time to time: (a) take from any Person and hold collateral (other than the
Collateral) for the payment of all or any part of the Obligations and exchange,
enforce or release such collateral or any part thereof; and (b) accept and hold
any endorsement or guaranty of payment of all or any part of the Obligations and
release or substitute any such endorser or guarantor, or any Person who has
given any Lien in any other collateral as security for the payment of all or any
part of the Obligations, or any other Person in any way obligated to pay all or
any part of the Obligations.
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15.10 Fees and Expenses. The Borrowers shall pay to the Lender on
demand all costs and expenses that the Lender pays or incurs in connection with
the negotiation, preparation, consummation, administration, enforcement, and
termination of this Agreement and the other Loan Documents, including, without
limitation: (a) attorneys' and paralegals' fees and disbursements of counsel to
the Lender (including, without limitation, a reasonable estimate of the
allocable cost of in-house counsel and staff); (b) costs and expenses including
attorneys' and paralegals' fees and disbursements (including, without
limitation, a reasonable estimate of the allocable cost of in-house counsel and
staff) for any amendment, supplement, waiver, consent, or subsequent closing in
connection with the Loan Documents and the transactions contemplated thereby;
(c) costs and expenses of lien and title searches and title insurance; (d)
Taxes, fees and other charges for recording the mortgages, filing financing
statements and continuations, and other actions to perfect, protect, and
continue the Security Interest; (e) sums paid or incurred to pay any amount or
take any action required of the Borrowers under the Loan Documents that the
Borrowers fail to pay or take; (f) costs of appraisals, inspections, and
verifications of the Collateral, including, without limitation, travel, lodging,
meals, and other expenses together with an allocated charge of $575 per day for
each auditor employed by the Lender for inspections of the Collateral and the
Borrowers' operations; (g) costs and expenses of forwarding loan proceeds,
collecting checks and other items of payment, and establishing and maintaining
Payment Accounts and lock boxes; (h) all amounts that the Borrowers are required
to pay in connection with the Letters of Credit or Belgian Guaranties; (i) costs
and expenses of preserving and protecting the Collateral; and (j) costs and
expenses including attorneys' and paralegals' fees and disbursements (including,
without limitation, a reasonable estimate of the allocable cost of in-house
counsel and staff) paid or incurred to obtain payment of the Obligations,
enforce the Security Interest, sell or otherwise realize upon the Collateral,
and otherwise enforce the provisions of the Loan Documents, or to defend any
claims made or threatened against the Lender arising out of the transactions
contemplated hereby (including without limitation, preparations for and
consultations concerning any such matters). The foregoing shall not be construed
to limit any other provisions of the Loan Documents regarding costs and expenses
to be paid by the Borrowers. All of the foregoing costs and expenses shall be
charged to the Borrowers' loan account as Revolving Loans.
15.11 Notices.
(a) The Borrowers agree that all notices, requests or
other communications (including pursuant to Section 15.5) with respect to the
Borrowers may be made by notice to or from CMI individually whether or not any
copy is also sent to EFData.
(b) Except as otherwise provided herein, all notices,
demands, and requests that either party is required or elects to give to the
other shall be in writing, shall be delivered personally against receipt, or
sent by recognized overnight courier services, or mailed by registered or
certified mail, return receipt requested, postage prepaid, and shall be
addressed to the party to be notified as follows:
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If to the Lender: BankAmerica Business Credit, Inc.
▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
with a copy to: Bank of America N.T. & S.A., Legal Department
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, Esq.
If to the Borrowers: California Microwave, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Treasurer
EFData Corp.
▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: President
with a copy to: ▇▇▇▇▇▇ ▇▇▇▇ Nemerovski ▇▇▇▇▇▇ ▇▇▇▇ & Rabkin
Three Embarcadero Center, 7th Floor
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
or to such other address as each party may designate for itself by like notice.
Any such notice, demand, or request shall be deemed given when received if
personally delivered or sent by overnight courier, or when deposited in the
United States mails, postage paid, if sent by registered or certified mail.
15.12 Indemnification.
(a) THE BORROWERS HEREBY INDEMNIFY, DEFEND AND HOLD THE
LENDER, AND ITS DIRECTORS, OFFICERS, AGENTS, EMPLOYEES AND COUNSEL, HARMLESS
FROM AND AGAINST ANY AND ALL LOSSES, CLAIMS, DAMAGES, LIABILITIES, DEFICIENCIES,
JUDGMENTS, PENALTIES OR EXPENSES IMPOSED ON, INCURRED BY OR ASSERTED AGAINST ANY
OF THEM, WHETHER DIRECT, INDIRECT OR CONSEQUENTIAL ARISING OUT OF OR BY REASON
OF ANY LITIGATION, INVESTIGATIONS, CLAIMS, OR PROCEEDINGS (WHETHER BASED ON ANY
FEDERAL, STATE OR LOCAL LAWS OR OTHER STATUTES OR REGULATIONS, INCLUDING,
WITHOUT LIMITATION, SECURITIES, ENVIRONMENTAL, OR COMMERCIAL LAWS AND
REGULATIONS, UNDER COMMON LAW OR AT EQUITY, OR ON CONTRACT OR OTHERWISE)
COMMENCED OR THREATENED, WHICH ARISE OUT OF OR ARE IN ANY WAY
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BASED UPON THE NEGOTIATION, PREPARATION, EXECUTION, DELIVERY, ENFORCEMENT,
PERFORMANCE OR ADMINISTRATION OF THIS AGREEMENT, ANY OTHER LOAN DOCUMENT, OR ANY
UNDERTAKING OR PROCEEDING RELATED TO ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY
OR ANY ACT, OMISSION TO ACT, EVENT OR TRANSACTION RELATED OR ATTENDANT THERETO,
INCLUDING, WITHOUT LIMITATION, AMOUNTS PAID IN SETTLEMENT, COURT COSTS, AND THE
FEES AND EXPENSES OF COUNSEL REASONABLY INCURRED IN CONNECTION WITH ANY SUCH
LITIGATION, INVESTIGATION, CLAIM OR PROCEEDING AND FURTHER INCLUDING, WITHOUT
LIMITATION, ALL LOSSES, DAMAGES (INCLUDING CONSEQUENTIAL DAMAGES), EXPENSES OR
LIABILITIES SUSTAINED BY THE LENDER IN CONNECTION WITH ANY ENVIRONMENTAL
INSPECTION, MONITORING, SAMPLING, OR CLEANUP OF THE ENCUMBERED REAL ESTATE
REQUIRED OR MANDATED BY ANY ENVIRONMENTAL LAW; PROVIDED, HOWEVER, THAT THE
BORROWERS SHALL NOT INDEMNIFY THE LENDER, ITS DIRECTORS, OFFICERS, AGENTS,
EMPLOYEES AND COUNSEL FROM SUCH DAMAGES RESULTING FROM THEIR GROSS NEGLIGENCE OR
WILLFUL MISCONDUCT.
(b) The Borrowers hereby indemnify, defend and hold
harmless the Lender from any loss or liability directly or indirectly arising
out of the use, generation, manufacture, production, storage, release,
threatened release, discharge, disposal or presence of a hazardous substance.
This indemnity will apply whether the hazardous substance is on, under or about
the Borrowers' or their Subsidiaries' property or operations or property leased
to the Borrowers or their Subsidiaries. The indemnity includes but is not
limited to attorneys' fees (including the reasonable estimate of the allocated
cost of in-house counsel and staff). The indemnity extends to the Lender, its
parent, subsidiaries and all of their directors, officers, employees, agents,
successors, attorneys and assigns. "Hazardous substances" means any substance,
material or waste that is or becomes designated or regulated as "toxic,"
"hazardous," "pollutant," or "contaminant" or a similar designation or
regulation under any federal, state or local law (whether under common law,
statute, regulation or otherwise) or judicial or administrative interpretation
of such, including without limitation petroleum or natural gas.
(c) Without limiting the foregoing, if, by reason of any
suit or proceeding of any kind, nature, or description against the Borrowers, or
by the Borrowers or any other party against the Lender, which in the Lender's
sole discretion makes it advisable for the Lender to seek counsel for protection
and preservation of its liens and security assets, or to defend its own
interest, such expenses and counsel fees shall be allowed to the Lender. To the
extent that the undertaking to indemnify, pay and hold harmless set forth in
this Section 15.12 may be unenforceable because it is violative of any law or
public policy, the Borrowers shall contribute the maximum portion which it is
permitted to pay and satisfy under applicable law, to the payment and
satisfaction of all indemnified matters incurred by the Lender. The indemnity
contained in Section 15.12 shall survive the payment of the Obligations and the
termination of this Agreement. All of the foregoing costs and expenses shall be
part of the Obligations and secured by the Collateral.
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15.13 Waiver of Notices. Unless otherwise expressly provided
herein, the Borrowers waive presentment, protest and notice of demand or
dishonor and protest as to any instrument, as well as any and all other notices
to which it might otherwise be entitled. No notice to or demand on the Borrowers
which the Lender may elect to give shall entitle the Borrowers to any or further
notice or demand in the same, similar or other circumstances.
15.14 Binding Effect; Assignment. The provisions of this
Agreement shall be binding upon and inure to the benefit of the respective
representatives, successors and assigns of the parties hereto; provided,
however, that no interest herein may be assigned by the Borrowers without the
prior written consent of the Lender. The rights and benefits of the Lender
hereunder shall, if the Lender so agrees, inure to any assignee of the
Obligations or any part thereof.
15.15 Modification. This Agreement is intended by the Borrowers
and the Lender to be the final, complete, and exclusive expression of the
agreement between them. This Agreement supersedes any and all prior oral or
written agreements relating to the subject matter hereof and may not be
contradicted by evidence of prior, contemporaneous or subsequent oral agreements
of the parties. There are no oral agreements between the parties. No
modification, rescission, waiver, release, or amendment of any provision of this
Agreement shall be made, except by a written agreement signed by the Borrowers
and a duly authorized officer of the Lender (provided that revised schedules may
be substituted for existing schedules to the extent the Lender consents in
writing to any request therefor by the Borrower).
15.16 Counterparts. This Agreement may be executed in any number
of counterparts, and by the Lender and the Borrowers in separate counterparts,
each of which shall be an original, but all of which shall together constitute
one and the same agreement.
15.17 Captions. The captions contained in this Agreement are for
convenience only, are without substantive meaning and should not be construed to
modify, enlarge, or restrict any provision.
15.18 Right of Set-Off. Whenever an Event of Default exists, the
Lender is hereby authorized at any time and from time to time, to the fullest
extent permitted by law, to set off and apply any and all deposits (general or
special, time or demand, provisional or final) at any time held and other
indebtedness at any time owing by the Lender or any affiliate of the Lender to
or for the credit or the account of the Borrowers against any and all of the
Obligations, whether or not then due and payable. The Lender agrees promptly to
notify the Borrowers after any such set-off and application made by the Lender,
provided that the failure to give such notice shall not affect the validity of
such set-off and application.
15.19 Participating Lender's Security Interests. The Lender may,
without notice to or consent by the Borrowers, grant one or more participations
in the Loans to Participating Lenders. If a Participating Lender shall at any
time with the Borrowers' knowledge participate with the Lender in the Loans, the
Borrowers hereby grant to such Participating Lender, and the Lender and such
Participating Lender shall have and are hereby given, a continuing lien on and
security interest in
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any money, securities and other property of the Borrowers in the custody or
possession of the Participating Lender, including the right of setoff, to the
extent of the Participating Lender's participation in the Obligations, and such
Participating Lender shall be deemed to have the same right of setoff to the
extent of Participating Lender's participation in the Obligations under this
Agreement as it would have it were a direct lender.
15.20 Joint and Several Obligations; Obligations Absolute.
(a) Each Borrower hereby agrees that all of the
Obligations set forth herein are the joint and several obligations of the
Borrowers and acknowledges that each Loan to, each Letter of Credit and each
Belgian Guaranty issued for the account of, either Borrower will benefit each of
the Borrowers. Each Borrower hereby further agrees and unconditionally
guarantees to the Lender that the obligations of the other Borrower under this
Agreement, to the extent such obligations are the joint and several obligations
of the Borrowers (such obligations of the other Borrower being referred to
herein, with respect to each Borrower, as the "Other Borrower's Obligations")
will be paid strictly in accordance with the terms of this Agreement, regardless
of any law, regulation or order now or hereafter in effect in any jurisdiction
affecting any of such terms or the rights of the Lender with respect thereto.
The liability of each Borrower for the Other Borrower's Obligations shall be
absolute and unconditional irrespective of:
(i) any lack of validity or enforceability of this
Agreement, the other Loan Documents or any other agreement or instrument
relating hereto or thereto;
(ii) any change in the time, manner or place of
payment of, or in any other term of, all or any of the Other Borrower's
Obligations, or any other amendment or waiver of or any consent to
departure from this Agreement or the other Loan Documents;
(iii) any exchange, release or non-perfection of
any Collateral, or any release or amendment or waiver of or consent to
departure from any guaranty, for all or any of the Other Borrower's
Obligations; or
(iv) any other circumstance which might otherwise
constitute a defense available to, or a discharge of, any Borrower other
than such Borrower or a guarantor.
Each Borrower's obligations under this Agreement shall continue to be effective
or be reinstated, as the case may be, if at any time any payment of any of the
Other Borrower's Obligations is rescinded or must otherwise be returned by the
Lender upon the insolvency, bankruptcy or reorganization of a Borrower or
otherwise, all as though such payment had not been made.
(b) Each Borrower hereby waives, to the extent permitted
by applicable law, with respect to the Other Borrower's Obligations:
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(i) any requirement that the Lender secure or
insure any security interest or lien on any property subject thereto or
exhaust any right or take any action against the other Borrower or any
other Person or any Collateral;
(ii) any defense arising by reason of any claim or
defense based upon an election of remedies by the Lender (including,
without limitation, an election to nonjudicially foreclose on any real
or personal property Collateral) which in any manner impairs, reduces,
releases or otherwise adversely affects its subrogation, reimbursement
or contribution rights or other rights to proceed against the other
Borrower or any other Person or any Collateral;
(iii) any defense arising by reason of the failure
of the other Borrower or any of its Subsidiaries to properly execute any
Loan Document or otherwise comply with applicable legal formalities;
(iv) any defense or benefits that may be derived
from California Civil Code Section 2808, 2809, 2810, 2819, 2845 or 2850,
or California Code of Civil Procedure Section 580a, 580d or 726, or
comparable provisions of the laws of any other jurisdiction and all
other suretyship defenses it would otherwise have under the laws of
California or any other jurisdiction. Accordingly, each of the Borrowers
waives all rights and defenses that such Borrower may have because the
other Borrower's Obligations are secured by real property. This means,
among other things: (A) the Lender may collect from a Borrower without
first foreclosing on any real or personal property Collateral pledged by
a Borrower; and (B) if the Lender forecloses on any real property
Collateral pledged by a Borrower: (1) the amount of the debt may be
reduced only by the price for which that Collateral is sold at the
foreclosure sale, even if the Collateral is worth more than the sale
price, and (2) the Lender may collect from a Borrower even if the
Lender, by foreclosing on the real property Collateral, has destroyed
any right such Borrower may have to collect from the other Borrower.
This is an unconditional and irrevocable waiver of any rights and
defenses the Borrowers may have because the other Borrower's debt is
secured by real property;
(v) any duty on the part of the Lender to disclose
to such Borrower any matter, fact or thing relating to the business,
operation or condition of the other Borrower and its respective assets
now known or hereafter known by the Lender;
(vi) all benefits of any statute of limitations
affecting such Borrower's liability in respect of the Other Borrower's
Obligations;
= (vii) all setoffs and counterclaims;
(viii) promptness, diligence, presentment, demand
for performance and protest;
80.
86
(ix) notice of nonperformance, default,
acceleration, protest or dishonor;
(x) except for any notice otherwise required by
applicable laws that may not be effectively waived by such Borrower,
notice of sale or other disposition of any Collateral; and
(xi) notice of the existence, creation, renewal,
modification, execution or incurring of any Other Borrower's
Obligations.
81.
87
IN WITNESS WHEREOF, the parties have entered into this Agreement
on the date first above written.
CALIFORNIA MICROWAVE, INC.
By:
-------------------------------------
Title:
EFDATA CORP.
By:
-------------------------------------
Title:
BANKAMERICA BUSINESS CREDIT INC.
By:
-------------------------------------
Title:
82.
88
List of Exhibits/Schedules
--------------------------
Exhibit A Financial Statements and Projections
Exhibit A-1 Financial Statement
Exhibit A-2 Proforma Financial Statements
Exhibit A-3 Projections
Exhibit B Form of Sale Request
Exhibit C Maturity Factoring Accounts Receivable Agreement
Schedule 1.1 Existing ABN AMRO Receivables
Schedule 1.2 Eligible Permitted Accounts
Schedule 2.3 Existing Letters of Credit
Schedule 2.4 Existing Belgian Guaranties
Schedule 7.3 Locations of Collateral
Schedule 9.4 Names of Borrowers and Trade Styles
Schedule 9.5 Subsidiaries and Affiliates
Schedule 9.7 Capitalization of Borrowers
Schedule 9.13 Real Estate - Owned and Leased
Schedule 9.14 Proprietary Rights (patents, trademarks,
and copyrights)
Schedule 9.15 Trade Names
Schedule 9.16 Litigation
Schedule 9.18 Labor Disputes
Schedule 9.19 Environmental Laws
Schedule 10.10 Permitted Guaranties
Schedule 10.11 Permitted Debt
Schedule 10.16 Permitted Liens
