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GENUS, INC.
CREDIT AGREEMENT
Dated as of August 15, 1997
_________________________________
SUMITOMO BANK OF CALIFORNIA
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TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.01 Certain Defined Terms . . . . . . . . . . . . . . . . . . 1
SECTION 1.02 Accounting Principles . . . . . . . . . . . . . . . . . . 19
(a) Accounting Terms . . . . . . . . . . . . . . . . . . 19
(b) GAAP Changes . . . . . . . . . . . . . . . . . . . . 19
(c) "Fiscal Year" and "Fiscal Quarter" . . . . . . . . . 19
SECTION 1.03 Interpretation. . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE II THE LOANS . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 2.01 The Loans . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 2.02 Borrowing Procedure; Notice to Bank . . . . . . . . . . . 21
SECTION 2.03 Lending Offices . . . . . . . . . . . . . . . . . . . . . 21
SECTION 2.04 Recordkeeping . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 2.05 Minimum Amounts . . . . . . . . . . . . . . . . . . . . . 21
SECTION 2.06 Required Notice . . . . . . . . . . . . . . . . . . . . . 22
SECTION 2.07 The Note. . . . . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE III INTEREST AND FEES; CONVERSION OR CONTINUATION . . . . . . 22
SECTION 3.01 Interest. . . . . . . . . . . . . . . . . . . . . . . . . 22
(a) Interest Rate . . . . . . . . . . . . . . . . . . . 22
(b) Interest Periods . . . . . . . . . . . . . . . . . . 22
(c) Interest Payment Dates . . . . . . . . . . . . . . . 23
(d) Notice to the Borrower . . . . . . . . . . . . . . . 23
SECTION 3.02 Default Rate of Interest. . . . . . . . . . . . . . . . . 24
SECTION 3.03 Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . 24
(a) Commitment Fee . . . . . . . . . . . . . . . . . . . 24
(b) Standby L/C Issuance Fee . . . . . . . . . . . . . . 24
(c) Confirmation Fee . . . . . . . . . . . . . . . . . . 24
(d) Fees Nonrefundable . . . . . . . . . . . . . . . . . 24
SECTION 3.04 Computations. . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 3.05 Conversion or Continuation. . . . . . . . . . . . . . . . 25
(a) Election . . . . . . . . . . . . . . . . . . . . . . 25
(b) Automatic Conversion . . . . . . . . . . . . . . . . 25
(c) Notice to the Bank . . . . . . . . . . . . . . . . . 25
SECTION 3.06 Highest Lawful Rate . . . . . . . . . . . . . . . . . . . 25
ARTICLE IV THE LETTERS OF CREDIT . . . . . . . . . . . . . . . . . . 26
SECTION 4.01 The Letter of Credit Subfacility. . . . . . . . . . . . . 26
SECTION 4.02 Issuance, Amendment and Renewal of Letters of Credit. . . 27
SECTION 4.03 Drawings and Reimbursements . . . . . . . . . . . . . . . 29
SECTION 4.04 [Intentionally Omitted. . . . . . . . . . . . . . . . . . 29
SECTION 4.05 Role of the Bank. . . . . . . . . . . . . . . . . . . . . 29
SECTION 4.06 Obligations Absolute. . . . . . . . . . . . . . . . . . . 30
i.
SECTION 4.07 Cash Collateral Pledge. . . . . . . . . . . . . . . . . . 31
SECTION 4.08 Letter of Credit Fees . . . . . . . . . . . . . . . . . . 31
SECTION 4.09 Uniform Customs and Practice. . . . . . . . . . . . . . . 32
ARTICLE V REDUCTION OF COMMITMENTS;
REPAYMENT; PREPAYMENT . . . . . . . . . . . . . . . . . . 32
SECTION 5.01 Reduction or Termination of the Commitment. . . . . . . . 32
(a) Optional Reduction or Termination. . . . . . . . . . 32
(b) Mandatory Termination. . . . . . . . . . . . . . . . 32
(c) Adjustment of Commitment Fee; No Reinstatement . . . 32
SECTION 5.02 Repayment of the Loans. . . . . . . . . . . . . . . . . . 32
SECTION 5.03 Prepayments . . . . . . . . . . . . . . . . . . . . . . . 33
(a) Optional Prepayments . . . . . . . . . . . . . . . . 33
(b) Notice; Application. . . . . . . . . . . . . . . . . 33
ARTICLE VI YIELD PROTECTION AND ILLEGALITY . . . . . . . . . . . . . 33
SECTION 6.01 Inability to Determine Rates. . . . . . . . . . . . . . . 33
SECTION 6.02 Funding Losses. . . . . . . . . . . . . . . . . . . . . . 33
SECTION 6.03 Regulatory Changes. . . . . . . . . . . . . . . . . . . . 34
(a) Increased Costs. . . . . . . . . . . . . . . . . . . 34
(b) Capital Requirements . . . . . . . . . . . . . . . . 35
(c) Requests . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 6.04 Illegality. . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 6.05 Funding Assumptions . . . . . . . . . . . . . . . . . . . 36
SECTION 6.06 Obligation to Mitigate. . . . . . . . . . . . . . . . . . 36
ARTICLE VII PAYMENTS. . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 7.01 Payments. . . . . . . . . . . . . . . . . . . . . . . . . 36
(a) Payments . . . . . . . . . . . . . . . . . . . . . . 36
(b) Authorization to Bank. . . . . . . . . . . . . . . . 36
(c) Extension. . . . . . . . . . . . . . . . . . . . . . 36
(d) Application. . . . . . . . . . . . . . . . . . . . . 37
SECTION 7.02 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . 37
(a) No Reduction of Payments . . . . . . . . . . . . . . 37
(b) Deduction or Withholding; Tax Receipts . . . . . . . 37
(c) Indemnity. . . . . . . . . . . . . . . . . . . . . . 37
ARTICLE VIII CONDITIONS PRECEDENT. . . . . . . . . . . . . . . . . . . 38
SECTION 8.01 Conditions Precedent to the Initial Loan. . . . . . . . . 38
(a) Fees and Expenses. . . . . . . . . . . . . . . . . . 38
(b) Loan Documents . . . . . . . . . . . . . . . . . . . 38
(c) Documents and Actions Relating to Collateral . . . . 38
(d) Additional Closing Documents and Actions . . . . . . 39
(e) Corporate Documents. . . . . . . . . . . . . . . . . 39
ii.
(f) Receivables Audit. . . . . . . . . . . . . . . . . . 40
(g) Legal Opinion. . . . . . . . . . . . . . . . . . . . 40
SECTION 8.02 Conditions Precedent to All Loans . . . . . . . . . . . . 40
(a) Notice . . . . . . . . . . . . . . . . . . . . . . . 40
(b) Material Adverse Effect. . . . . . . . . . . . . . . 40
(c) Representations and Warranties; No Default . . . . . 40
(d) Additional Documents . . . . . . . . . . . . . . . . 41
ARTICLE IX REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . 41
SECTION 9.01 Representations and Warranties. . . . . . . . . . . . . . 41
(a) Organization and Powers. . . . . . . . . . . . . . . 41
(b) Authorization; No Conflict . . . . . . . . . . . . . 41
(c) Binding Obligation . . . . . . . . . . . . . . . . . 41
(d) Consents . . . . . . . . . . . . . . . . . . . . . . 42
(e) No Defaults. . . . . . . . . . . . . . . . . . . . . 42
(f) Title to Properties; Liens . . . . . . . . . . . . . 42
(g) Litigation . . . . . . . . . . . . . . . . . . . . . 42
(h) Compliance with Environmental Laws . . . . . . . . . 42
(i) Governmental Regulation. . . . . . . . . . . . . . . 43
(j) ERISA. . . . . . . . . . . . . . . . . . . . . . . . 43
(k) Subsidiaries . . . . . . . . . . . . . . . . . . . . 43
(l) Margin Regulations . . . . . . . . . . . . . . . . . 44
(m) Taxes. . . . . . . . . . . . . . . . . . . . . . . . 44
(n) Patents and Other Rights . . . . . . . . . . . . . . 44
(o) Insurance. . . . . . . . . . . . . . . . . . . . . . 44
(p) Financial Statements and Projections . . . . . . . . 44
(q) Liabilities. . . . . . . . . . . . . . . . . . . . . 44
(r) Labor Disputes, Etc. . . . . . . . . . . . . . . . . 45
(s) Solvency . . . . . . . . . . . . . . . . . . . . . . 45
(t) Disclosure . . . . . . . . . . . . . . . . . . . . . 45
ARTICLE X COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 10.01 Reporting Covenants . . . . . . . . . . . . . . . . . . . 45
(a) Financial Statements and Other Reports . . . . . . . 45
(b) Additional Information . . . . . . . . . . . . . . . 47
SECTION 10.02 Financial Covenants . . . . . . . . . . . . . . . . . . . 48
(a) Minimum Quick Ratio. . . . . . . . . . . . . . . . . 48
(b) Minimum Consolidated Tangible Net Worth. . . . . . . 48
(c) Leverage Ratio . . . . . . . . . . . . . . . . . . . 48
(d) Profitability. . . . . . . . . . . . . . . . . . . . 48
SECTION 10.03 Additional Affirmative Covenants. . . . . . . . . . . . . 48
(a) Preservation of Existence, Etc.. . . . . . . . . . . 48
(b) Payment of Obligations . . . . . . . . . . . . . . . 49
(c) Maintenance of Insurance . . . . . . . . . . . . . . 49
(d) Keeping of Records and Books of Account. . . . . . . 49
(e) Inspection Rights. . . . . . . . . . . . . . . . . . 50
(f) Compliance with Laws, Etc. . . . . . . . . . . . . . 50
(g) Maintenance of Properties, Etc.. . . . . . . . . . . 50
(h) Licenses . . . . . . . . . . . . . . . . . . . . . . 50
iii.
(i) Action Under Environmental Laws. . . . . . . . . . . 50
(j) Use of Proceeds. . . . . . . . . . . . . . . . . . . 51
(k) Further Assurances and Additional Acts . . . . . . . 51
(l) Operating Accounts . . . . . . . . . . . . . . . . . 51
(m) Borrowing Base Certificate and Collateral Reports. . 51
SECTION 10.04 Negative Covenants. . . . . . . . . . . . . . . . . . . . 51
(a) Indebtedness . . . . . . . . . . . . . . . . . . . . 51
(b) Liens; Negative Pledges. . . . . . . . . . . . . . . 52
(c) Change in Nature of Business . . . . . . . . . . . . 53
(d) Restrictions on Fundamental Changes. . . . . . . . . 53
(e) Sales of Assets. . . . . . . . . . . . . . . . . . . 53
(f) Loans and Investments. . . . . . . . . . . . . . . . 53
(g) Capital Expenditures . . . . . . . . . . . . . . . . 54
(h) Sales and Leasebacks . . . . . . . . . . . . . . . . 54
(i) Distributions. . . . . . . . . . . . . . . . . . . . 54
(j) Transactions with Related Parties. . . . . . . . . . 55
(k) Hazardous Substances . . . . . . . . . . . . . . . . 55
(l) Accounting Changes . . . . . . . . . . . . . . . . . 55
ARTICLE XI EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . 55
SECTION 11.01 Events of Default . . . . . . . . . . . . . . . . . . . . 55
(a) Payments . . . . . . . . . . . . . . . . . . . . . . 55
(b) Representations and Warranties . . . . . . . . . . . 55
(c) Failure by Borrower to Perform Certain Covenants . . 56
(d) Failure by Borrower to Perform Other Covenants . . . 56
(e) Insolvency; Voluntary Proceedings. . . . . . . . . . 56
(f) Involuntary Proceedings. . . . . . . . . . . . . . . 56
(g) Default Under Other Indebtedness . . . . . . . . . . 56
(h) Judgments. . . . . . . . . . . . . . . . . . . . . . 57
(i) ERISA. . . . . . . . . . . . . . . . . . . . . . . . 57
(j) Dissolution, Etc.. . . . . . . . . . . . . . . . . . 58
(k) Material Adverse Effect. . . . . . . . . . . . . . . 58
(l) Change in Ownership or Control . . . . . . . . . . . 58
(m) Collateral Documents . . . . . . . . . . . . . . . . 58
SECTION 11.02 Effect of Event of Default. . . . . . . . . . . . . . . . 58
ARTICLE XII MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 12.01 Amendments and Waivers. . . . . . . . . . . . . . . . . . 59
SECTION 12.02 Notices . . . . . . . . . . . . . . . . . . . . . . . . . 59
(a) Notices. . . . . . . . . . . . . . . . . . . . . . . 59
(b) Facsimile and Telephonic Notice. . . . . . . . . . . 60
SECTION 12.03 No Waiver; Cumulative Remedies. . . . . . . . . . . . . . 60
SECTION 12.04 Costs and Expenses; Indemnification . . . . . . . . . . . 60
(a) Costs and Expenses . . . . . . . . . . . . . . . . . 60
iv.
(b) Indemnification. . . . . . . . . . . . . . . . . . . 61
(c) Other Charges. . . . . . . . . . . . . . . . . . . . 61
SECTION 12.05 RIGHT OF SET-OFF. . . . . . . . . . . . . . . . . . . . . 62
SECTION 12.06 SURVIVAL. . . . . . . . . . . . . . . . . . . . . . . . . 62
SECTION 12.07 BENEFITS OF AGREEMENT . . . . . . . . . . . . . . . . . . 62
SECTION 12.08 BINDING EFFECT; ASSIGNMENT. . . . . . . . . . . . . . . . 62
(a) BINDING EFFECT . . . . . . . . . . . . . . . . . . . 62
(b) ASSIGNMENT . . . . . . . . . . . . . . . . . . . . . 62
SECTION 12.09 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . 63
SECTION 12.10 SUBMISSION TO JURISDICTION. . . . . . . . . . . . . . . . 64
(a) SUBMISSION TO JURISDICTION . . . . . . . . . . . . . 64
(b) NO LIMITATION. . . . . . . . . . . . . . . . . . . . 64
SECTION 12.11 WAIVER OF JURY TRIAL. . . . . . . . . . . . . . . . . . . 64
SECTION 12.12 LIMITATION ON LIABILITY . . . . . . . . . . . . . . . . . 64
SECTION 12.13 ENTIRE AGREEMENT. . . . . . . . . . . . . . . . . . . . . 65
SECTION 12.14 SEVERABILITY. . . . . . . . . . . . . . . . . . . . . . . 65
SECTION 12.15 COUNTERPARTS. . . . . . . . . . . . . . . . . . . . . . . 65
v.
SCHEDULES
Schedule 1 Lending Office; Address for Notices; Borrower's Account
EXHIBITS
Exhibit A Form of Note
Exhibit B Form of Notice of Borrowing
Exhibit C Form of Compliance Certificate
Exhibit D Form of Security Agreement
vi.
CREDIT AGREEMENT
THIS CREDIT AGREEMENT (this "Agreement"), dated as of August 15, 1997,
is made between Genus, Inc., a California corporation (the "Borrower"), and
Sumitomo Bank of California (the "Bank").
The Borrower has requested the Bank (i) to make revolving loans to the
Borrower in an aggregate principal amount of up to $10,000,000 at any time
outstanding, and (ii) to make available to Borrower that certain letter of
credit subfacility in the amount of $3,000,000. The Bank is willing to make
such loans to the Borrower upon the terms and subject to the conditions set
forth in this Agreement.
Accordingly, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01 CERTAIN DEFINED TERMS. As used in this Agreement, the
following terms shall have the following meanings:
"AFFILIATE" means any Person which, directly or indirectly, controls,
is controlled by or is under common control with another Person. For purposes
of the foregoing, "control," "controlled by" and "under common control with"
with respect to any Person shall mean the possession, directly or indirectly, of
the power (i) to vote 10% or more of the securities having ordinary voting power
of the election of directors of such Person, or (ii) to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities or by contract or otherwise.
"APPLICABLE MARGIN" means (i) with respect to Base Rate Loans, .25%
per annum; and (ii) with respect to LIBOR Rate Loans, 2.00% per annum.
"BANK" has the meaning set forth in the recital of parties to this
Agreement.
"BANKRUPTCY CODE" means Title 11 of the United States Code entitled
"Bankruptcy."
"BASE RATE" means, for any day, the rate of interest announced by the
Bank as its prime rate of interest in California. Each change in the interest
rate on the Loans or other Obligations bearing interest at the Base Rate based
on a change in the Base Rate shall be effective as of the effective date of such
change in the Base Rate.
1.
"BASE RATE LOAN" means a Loan bearing interest at a rate determined by
reference to the Base Rate.
"BORROWER" has the meaning set forth in the recital of parties to this
Agreement.
"BORROWER'S ACCOUNT" means the account of the Borrower with the Bank
set forth on Schedule 1, or such other account as the Borrower from time to time
shall designate in a written notice to the Bank.
"BORROWING BASE" means at any time the sum of (i) 20% of Eligible
Inventory at such time (up to a maximum amount of $2,500,000) PLUS (ii) 75% of
Eligible Receivables at such time.
"BORROWING BASE CERTIFICATE" means a certificate of a Responsible
Officer of the Borrower, in form and substance satisfactory to Bank, with such
changes thereto as the Bank may from time to time reasonably request.
"BUSINESS DAY" means a day (i) other than Saturday or Sunday, and
(ii) on which commercial banks are open for business in New York, New York, and
San Francisco, California.
"CAPITAL LEASE" means, for any Person, any lease of property (whether
real, personal or mixed) which, in accordance with GAAP, would, at the time a
determination is made, be required to be recorded as a capital lease in respect
of which such Person is liable as lessee.
"CLOSING DATE" means the date on which all conditions precedent set
forth in Section 8.01 are satisfied or waived by the Bank.
"COLLATERAL" means the property described in the Collateral Documents,
and all other property now existing or hereafter acquired which may at any time
be or become subject to a Lien in favor of the Bank pursuant to the Collateral
Documents or otherwise, securing the payment and performance of the Obligations.
"COLLATERAL DOCUMENTS" means the Security Agreement and any other
agreement pursuant to which the Borrower or any other Person provides a Lien on
its personal property assets in favor of the Bank and all financing statements,
fixture filings, patent filings, trademark and copyright filings, assignments,
acknowledgments and other filings, documents and agreements made or delivered
pursuant thereto.
"COMPLIANCE CERTIFICATE" means a certificate of a Responsible Officer
of the Borrower, in substantially the form of Exhibit C, with such changes
thereto as the Bank may from time to time reasonably request.
2.
"CONSOLIDATED CURRENT ASSETS" means, as of any date of determination,
the current assets of the Borrower and its Subsidiaries on a consolidated basis,
as determined in accordance with GAAP.
"CONSOLIDATED CURRENT LIABILITIES" means, as of any date of
determination, the current liabilities of the Borrower and its Subsidiaries on a
consolidated basis, as determined in accordance with GAAP.
"CONSOLIDATED INTEREST EXPENSE" means, for any period, interest
expense (including that attributable to Capital Leases) of the Borrower and its
Subsidiaries on a consolidated basis, including all commissions, discounts and
other fees and charges owed with respect to standby letters of credit, as
determined in accordance with GAAP.
"CONSOLIDATED NET INCOME" means, for any period, the net income of the
Borrower and its Subsidiaries on a consolidated basis for such period taken as a
single accounting period, as determined in accordance with GAAP.
"CONSOLIDATED TANGIBLE NET WORTH" means, as of any date of
determination, Consolidated Total Assets MINUS Consolidated Total Liabilities;
PROVIDED, HOWEVER, that there shall be excluded from Consolidated Total Assets
the following: (i) all assets which would be classified as intangible assets in
accordance with GAAP, including goodwill, organizational expense, research and
development expense, patent applications, patents, trademarks, trade names,
brands, copyrights, trade secrets, customer lists, licenses, franchises and
covenants not to compete; (ii) all unamortized debt discount and expense; and
(iii) all treasury stock.
"CONSOLIDATED TOTAL ASSETS" means, as of any date of determination,
the total assets of the Borrower and its Subsidiaries on a consolidated basis,
as determined in accordance with GAAP.
"CONSOLIDATED TOTAL LIABILITIES" means, as of any date of
determination, the total liabilities of the Borrower and its Subsidiaries on a
consolidated basis, as determined in accordance with GAAP.
"DEFAULT" means an Event of Default or an event or condition which
with notice or lapse of time or both would constitute an Event of Default.
"DISCLOSURE LETTER" means that certain letter of even date herewith
from the Borrower to the Bank setting forth certain exceptions, disclosures and
other matters relating to this Agreement.
3.
"DOLLARS" and the sign "$" each means lawful money of the United
States.
"EFFECTIVE AMOUNT" means (i) with respect to any Revolving Loans on
any date, the aggregate outstanding principal amount thereof after giving effect
to any Borrowings and prepayments or repayments of Revolving Loans occurring on
such date; and (ii) with respect to any outstanding L/C Obligations on any date,
the amount of such L/C Obligations on such date after giving effect to any
Issuances of Letters of Credit occurring on such date and any other changes in
the aggregate amount of the L/C Obligations as of such date, including as a
result of any reimbursements of outstanding unpaid drawings under any Letters of
Credit or any reductions in the maximum amount available for drawing under
Letters of Credit taking effect on such date.
"ELIGIBLE INVENTORY" means at any time the aggregate amount of the
Borrower's Inventory consisting of raw materials and spare parts held for use in
the ordinary and usual course of business, valued at the lower of cost or fair
market value, net of applicable allowances and reserves (including allowances or
reserves for shrinkage or obsolescence), EXCLUDING Inventory which is not in the
direct possession of the Borrower at one of the locations set forth in the
Disclosure Letter;
"ELIGIBLE RECEIVABLES" means at any time the aggregate amount of the
Borrower's Receivables, payable in cash in Dollars, net of applicable
allowances, reserves, discounts, returns, credits or offsets (including
allowances or reserves for doubtful accounts), excluding the following:
(i) Receivables for which the Borrower's right to receive payment has
not been fully earned by performance or is contingent upon the fulfillment of
any condition whatsoever or which otherwise do not arise from a bona fide
completed transaction;
(ii) Receivables against which there are asserted any defenses,
counterclaims, discounts (other than normal trade discounts granted in the
ordinary course of business) or offsets of any nature, whether well-founded or
otherwise, but only to the extent of such defense, counterclaim, discount or
offset;
(iii) Receivables that do not comply with all applicable legal
requirements, including all laws, rules, regulations and orders of any
Governmental Authority;
(iv) Receivables which represent a prepayment or progress payment or
arising out of the placement of goods on consignment, guaranteed sale or other
arrangement by reason of which the payment by the Receivable Debtor may be
conditional or contingent;
4.
(v) Receivables which are not owned by the Borrower free and clear of
all Liens and rights of others (other than the Liens in favor of the Bank);
(vi) Receivables in which the Bank shall not have a valid and
perfected first-priority Lien;
(vii) Receivables owing by any officer, director, employee, agent,
partner, Subsidiary or Affiliate of the Borrower;
(viii) Receivables owing (A) by the United States or any department,
agency or instrumentality thereof or (B) by a State or any department, agency,
instrumentality or political subdivision thereof, unless in the case of
Receivables described in sub-clause (A), the Bank has agreed to the contrary in
writing and the Borrower has complied with the Federal Assignment of Claims Act
with respect to such Receivables;
(ix) Receivables not paid in full within 120 days from the date of
invoice;
(x) that portion of Receivables owing by any single Receivable Debtor
which exceeds 10% of the aggregate amount of Receivables owing to the Borrower
by all Receivable Debtors; provided, however that the portion of Receivables
owing to the Samsung Group or any Affiliate thereof may account for up to 45% of
the aggregate amount of Receivables owing to the Borrower by all Receivable
Debtors;
(xi) Receivables owing by any Receivable Debtor who is the subject of
an Insolvency Proceeding;
(xii) Receivables which are evidenced by a promissory note or other
instrument;
(xiii) Receivables with respect to which the terms or conditions
prohibit or restrict assignment or collection rights; and
(xiv) Receivables with respect to which the Bank, in its reasonable
discretion, deems the creditworthiness or financial condition of the Receivable
Debtor to be unsatisfactory or the prospect of payment or performance to be
impaired, and other Receivables which, in the Bank's reasonable discretion, are
otherwise ineligible.
Notwithstanding the foregoing, Eligible Receivables shall also include
"ship-in-place" units for which (a) title and ownership responsibility have
passed to the purchaser, (b) invoices have been generated, but not necessarily
issued, to purchaser, (c) shipment is scheduled to occur within 30 days of
purchaser's receipt of such invoice, and (d) payment is required
5.
within 30 days following shipment of such units so long as such Receivables
are not otherwise ineligible as set forth above.
Any Receivable which is at any time an Eligible Receivable, but which
subsequently fails to meet any of the foregoing eligibility requirements, shall
forthwith cease to be an Eligible Receivable until such time as such Receivable
shall meet all of the foregoing requirements.
"ENVIRONMENTAL LAWS" means all federal, state or local laws, statutes,
common law duties, rules, regulations, ordinances and codes, together with all
administrative orders, directives, requests, licenses, authorizations and
permits of, and agreements with (including consent decrees), any Governmental
Authorities, in each case relating to or imposing liability or standards of
conduct concerning public health, safety and environmental protection matters,
including the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, the Clean Air Act, the Federal Water Pollution Control Act of 1972,
the Solid Waste Disposal Act, the Federal Resource Conservation and Recovery
Act, the Toxic Substances Control Act, the Emergency Planning and Community
Right-to-Know Act, the California Hazardous Waste Control Law, the California
Solid Waste Management, Resource Recovery and Recycling Act, the California
Water Code and the California Health and Safety Code.
"ERISA" means the Employee Retirement Income Security Act of 1974,
including (unless the context otherwise requires) any rules or regulations
promulgated thereunder.
"ERISA AFFILIATE" means any trade or business (whether or not
incorporated) which is under common control with the Borrower within the meaning
of Section 4001(a)(14) of ERISA and Sections 414(b), (c) and (m) of the Internal
Revenue Code.
"EVENT OF DEFAULT" has the meaning set forth in Section 11.01.
"EXISTING CREDIT" means the existing credit facility of Borrower with
Silicon Valley Bank, including any and all letters of credit, or confirmation of
any letter of credit, issued by Bank of America in connection therewith.
"FDIC" means the Federal Deposit Insurance Corporation, or any
successor thereto.
"FEDERAL FUNDS RATE" means, for any day, the rate per annum (rounded
upward, if necessary, to the nearest 1/100 of 1%), as determined by the Bank,
equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers, as published for any day of determination (or if such day of
determination is not a Business Day, for the next preceding
6.
Business Day) by the Federal Reserve Bank of New York, or, if such rate is
not so published for any day which is a Business Day, the average of the
quotations for such day on such transactions received by the Bank from three
Federal funds brokers of recognized standing selected by it.
"FRB" means the Board of Governors of the Federal Reserve System, and
any Governmental Authority succeeding to any of its principal functions.
"GAAP" means generally accepted accounting principles in the U.S. as
in effect from time to time.
"GOVERNMENTAL AUTHORITY" means any federal, state, local or other
governmental department, commission, board, bureau, agency, central bank, court,
tribunal or other instrumentality or authority, domestic or foreign, exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"GUARANTY OBLIGATION" means, as applied to any Person, any direct or
indirect liability, contingent or otherwise, of that Person with respect to any
Indebtedness, lease, dividend, letter of credit or other obligation (the
"primary obligations") of another Person (the "primary obligor"), including any
obligation of that Person (i) to purchase, repurchase or otherwise acquire such
primary obligations or any property constituting direct or indirect security
therefor, or (ii) to advance or provide funds (A) for the payment or discharge
of any such primary obligation, or (B) to maintain working capital or equity
capital of the primary obligor or otherwise to maintain the net worth or
solvency or any balance sheet item, level of income or financial condition of
the primary obligor, or (iii) to purchase property, securities or services
primarily for the purpose of assuring the owner of any such primary obligation
of the ability of the primary obligor to make payment of such primary
obligation, (iv) in connection with any synthetic lease or other similar off
balance sheet lease transaction, or (v) otherwise to assure or hold harmless the
holder of any such primary obligation against loss in respect thereof.
"HAZARDOUS SUBSTANCES" means any toxic or hazardous substances,
materials, wastes, contaminants or pollutants, including asbestos, PCBs,
petroleum products and byproducts, and any substances defined or listed as
"hazardous substances," "hazardous materials," "hazardous wastes" or "toxic
substances" (or similarly identified), regulated under or forming the basis for
liability under any applicable Environmental Law.
"IRS" means the Internal Revenue Service, or any successor thereto.
7.
"INDEBTEDNESS" means, for any Person: (i) all indebtedness or other
obligations of such Person for borrowed money or for the deferred purchase price
of property or services; (ii) all obligations evidenced by notes, bonds,
debentures or similar instruments, including obligations so evidenced incurred
in connection with the acquisition of property, assets or businesses; (iii) all
indebtedness created or arising under any conditional sale or other title
retention agreement with respect to property acquired by such Person (even
though the rights and remedies of the seller or lender under such agreement in
the event of default are limited to repossession or sale of such property); (iv)
all obligations under Capital Leases (to the extent shown as capital leases on
such Person's balance sheet); (v) all reimbursement or other obligations of such
Person under or in respect of letters of credit and bankers acceptances; (vi)
all reimbursement or other obligations of such Person in respect of any bank
guaranties, shipside bonds, surety bonds and similar instruments issued for the
account of such Person or as to which such Person is otherwise liable for
reimbursement of drawings or payments; (vii) all Guaranty Obligations; and
(viii) all indebtedness of another Person secured by any Lien upon or in
property owned by the Person for whom Indebtedness is being determined, whether
or not such Person has assumed or become liable for the payment of such
indebtedness of such other Person. For all purposes of this Agreement, the
Indebtedness of any Person shall include all recourse Indebtedness of any
partnership or joint venture or limited liability company in which such Person
is a general partner or a joint venturer or a member (provided and to the extent
that there is recourse to the Borrower arising from such Indebtedness).
"INSOLVENCY PROCEEDING" means (i) any case, action or proceeding
before any court or other Governmental Authority relating to bankruptcy,
reorganization, insolvency, liquidation, receivership, dissolution, winding-up
or relief of debtors, or (ii) any general assignment for the benefit of
creditors, composition, marshalling of assets for creditors, or other, similar
arrangement in respect of its creditors generally or any substantial portion of
its creditors, in each case undertaken under U.S. Federal, state or foreign law,
including the Bankruptcy Code.
"INTERBANK RATE" means for each Interest Period for each LIBOR Rate
Loan the rate per annum determined by the Bank to be the average (rounded
upward, if necessary, to the nearest 1/16 of 1%) of the rates at which deposits
in Dollars are offered to the Bank by prime banks in the London interbank
market, at approximately 10:00 A.M. (California time), two LIBOR Business Days
before the first day of such Interest Period, in an amount substantially equal
to the proposed LIBOR Rate Loan and for a period of time comparable to such
Interest Period.
8.
"INTEREST PAYMENT DATE" means a date specified for the payment of
interest pursuant to Section 3.01(c).
"INTEREST PERIOD" means, with respect to any LIBOR Rate Loan, the
period determined in accordance with Section 3.01(b) applicable thereto.
"INTERNAL REVENUE CODE" means the Internal Revenue Code of 1986,
including (unless the context otherwise requires) any rules or regulations
promulgated thereunder.
"INVENTORY" means all "inventory" (as such term is defined in the
UCC).
"L/C ADVANCE" means Bank's participation in any L/C Borrowing.
"L/C AMENDMENT APPLICATION" means an application form for amendment of
outstanding standby or commercial documentary letters of credit as shall at any
time be in use at the Bank.
"L/C APPLICATION" means an application form for issuances of standby
letters of credit as shall at any time be in use at the Bank, the terms of which
shall not conflict with or differ from the terms hereof. In the event of any
such conflict or difference, the terms of this Agreement shall control.
"L/C BORROWING" means an extension of credit resulting from a drawing
under any Letter of Credit which shall not have been reimbursed on the date when
made nor converted into a Borrowing of Revolving Loans under subsection 4.03(a).
"L/C COMMITMENT" means the commitment of the Bank to issue Letters of
Credit from time to time issued or outstanding under Article IV, in an aggregate
amount not to exceed on any date the amount of $3,000,000, as the same shall be
reduced as a result of a reduction in the L/C Commitment pursuant to
Section 4.07 or Section 5.01; PROVIDED that the L/C Commitment is a part of the
Revolving Commitment, rather than a separate, independent commitment.
"L/C OBLIGATIONS" means at any time the sum of (a) the aggregate
undrawn amount of all Letters of Credit then outstanding, plus (b) the amount of
all unreimbursed drawings under all Letters of Credit, including all outstanding
L/C Borrowings.
"L/C-RELATED DOCUMENTS" means the Letters of Credit, the L/C
Applications, the L/C Amendment Applications and any other document relating to
any Letter of Credit, including any of the Bank's standard form documents for
letter of credit issuances.
9.
"L/C SUBFACILITY" means the letter of credit subfacility in the amount
of $3,000,000 extended to Borrower hereunder to secure certain obligations
arising under or in connection with the Ion Technology Products tenant lease in
Newburyport, Massachusetts.
"LENDING OFFICE" means each office of the Bank as the Bank may from
time to time designate (whether or not such office is specified on Schedule 1).
"LETTERS OF CREDIT" or "L/C" means any letter of credit (whether
standby letters of credit or commercial documentary letters of credit) issued by
the Bank pursuant to Article IV.
"LIBOR BUSINESS DAY" means a Business Day on which dealings in Dollar
deposits are carried on in the London interbank market.
"LIBOR RATE" means for each Interest Period for each LIBOR Rate Loan
the rate per annum (rounded upward, if necessary, to the nearest 1/100 of 1%)
determined by the Bank pursuant to the following formula:
INTERBANK RATE
LIBOR Rate = -------------------------------
100% - LIBOR Reserve Percentage
The LIBOR Rate shall be adjusted automatically as of the effective date of any
change in the LIBOR Reserve Percentage.
"LIBOR RATE LOAN" means a Loan bearing interest at a rate determined
by reference to the LIBOR Rate.
"LIBOR RESERVE PERCENTAGE" means the maximum reserve requirement
percentage (including any ordinary, supplemental, marginal and emergency
reserves), if any, as determined by the Bank, then applicable under Regulation D
in respect of LIBOR funding (currently referred to as "LIBOR Liabilities") of a
member bank in the Federal Reserve System with deposits exceeding
$1,000,000,000.
"LIEN" means any mortgage, deed of trust, pledge, security interest,
assignment, deposit arrangement, charge or encumbrance, lien (statutory or
other), or other preferential arrangement (including any conditional sale or
other title retention agreement, any financing lease having substantially the
same economic effect as any of the foregoing or any agreement to give any
security interest).
"LOAN DOCUMENTS" means this Agreement, the Note, the Collateral
Documents and all other certificates, documents, agreements and instruments
delivered to the Bank under or in connection with this Agreement.
10.
"LOANS" means the Revolving Loans and any L/C Advance.
"MATERIAL ADVERSE EFFECT" means any event, matter, condition or
circumstance which (i) has or would reasonably be expected to have a material
adverse effect on the business, properties, results of operations or condition
(financial or otherwise) of the Borrower and its Subsidiaries taken as a whole;
(ii) would materially impair the ability of the Borrower or any other Person to
perform or observe its obligations under or in respect of the Loan Documents; or
(iii) affects the legality, validity, binding effect or enforceability of any of
the Loan Documents or the perfection or priority of any Lien granted to the Bank
under any of the Collateral Documents.
"MAXIMUM RATE" has the meaning set forth in Section 3.06.
"MINIMUM QUICK RATIO" means the sum of accounts receivable, cash and
marketable securities of the Borrower divided by the sum of Consolidated Current
Liabilities, calculated on a consolidated basis.
"MINIMUM AMOUNT" has the meaning set forth in Section 2.05.
"MULTIEMPLOYER PLAN" means a "multiemployer plan" as defined in
Sections 3(37) and 4001(a)(3) of ERISA.
"NOTE" means the Promissory Note of the Borrower payable to the order
of the Bank, in substantially the form of Exhibit A.
"NOTICE" means a Notice of Borrowing, a Notice of Conversion or
Continuation or a Notice of Prepayment.
"NOTICE OF BORROWING" has the meaning set forth in Section 2.02.
"NOTICE OF CONVERSION OR CONTINUATION" has the meaning set forth in
Section 3.05(c).
"NOTICE OF PREPAYMENT" has the meaning set forth in Section 5.03(b).
"OBLIGATIONS" means the indebtedness, liabilities and other
obligations of the Borrower to the Bank under or in connection with the Loan
Documents, including all Loans, all interest accrued thereon, all fees due under
this Agreement and all other amounts payable by the Borrower to the Bank
thereunder or in connection therewith, whether now or hereafter existing or
arising, and whether due or to become due, absolute or contingent, liquidated or
unliquidated, determined or undetermined.
11.
"OPERATING LEASE" means, for any Person, any lease of any property of
any kind by that Person as lessee which is not a Capital Lease.
"PBGC" mean the Pension Benefit Guaranty Corporation, or any successor
thereto.
"PENSION PLAN" means any employee pension benefit plan covered by
Title IV of ERISA (other than a Multiemployer Plan) that is maintained for
employees of the Borrower or any ERISA Affiliate or with regard to which the
Borrower or an ERISA Affiliate is a contributing sponsor within the meaning of
Sections 4001(a)(13) or 4069 of ERISA.
"PERMITTED INVESTMENTS" means any of the following Dollar denominated
investments, maturing within one year from the date of acquisition, selected by
the Borrower:
(i) marketable direct obligations issued or unconditionally guaranteed
by the United States government or issued by any agency thereof and backed by
the full faith and credit of the United States;
(ii) marketable direct obligations issued by any state of the United
States or any political subdivision of any such state or any public
instrumentality thereof and, at the time of acquisition, having the highest
credit rating obtainable from either Standard & Poor's Ratings Group ("S&P") or
▇▇▇▇▇'▇ Investors Service, Inc. ("Moody's");
(iii) commercial paper or corporate promissory notes bearing at the
time of acquisition the highest credit rating either of S&P or Moody's issued by
United States, Australian, Canadian, European or Japanese bank holding companies
or industrial or financial companies (other than an Affiliate of the Borrower);
(iv) certificates of deposit issued by and bankers acceptances of and
interest bearing deposits with the Bank, or with any United States, Australian,
Canadian, European or Japanese commercial banks having capital and surplus of at
least $500,000,000 or the equivalent and which issues (or the parent of which
issues) commercial paper or other short term securities bearing the highest
credit rating obtainable from either S&P or Moody's;
(v) money market funds organized under the laws of the United States
or any state thereof that invest solely in any of the foregoing investments
permitted under clauses (i), (ii), (iii) and (iv);
(vi) investments permitted under the Borrower's investment policy and
under any amendment thereto (provided that
12.
such policy and any such amendment have been approved by the Bank, such
approval not to be unreasonably withheld);
(vii) Investments arising from transactions by the Borrower or any of
its Subsidiaries with customers or suppliers in the ordinary course of business,
including Investments (including debt obligations) received in connection with
the bankruptcy or reorganization of customers and suppliers and in settlement of
delinquent obligations of, and other disputes with, customers or suppliers,
arising in the ordinary course of business and in the exercise of the reasonable
business judgment of the Borrower or such Subsidiary;
(viii) Investments consisting of notes receivable of, or prepaid
royalties and other credit extensions to, customers and suppliers who are not
Affiliates in the ordinary course of business;
(ix) Investments (whether consisting of the purchase of securities,
loans, capital contributions or otherwise) of Borrower in or to Subsidiaries and
Investments by Borrower in or to companies which simultaneously with such
Investments become Subsidiaries, provided that the amount of (i) all such
Investments by Borrower in or to Subsidiaries, minus (ii) the sum of
(x) Investments by Subsidiaries in or to Borrower, plus (y) payments to Borrower
on account of Investments of Borrower in or to Subsidiaries, plus
(z) distributions or dividends by Subsidiaries to Borrower, in each case, made,
incurred or arising on or after the date hereof, does not at any time exceed
$500,000; in no event shall Investments in Subsidiaries include amounts used to
cover operating expenses in the ordinary course of business required to service
and/or maintain Borrower's products;
(x) Investments consisting of (i) travel advances and employee
relocation loans in the ordinary course of business, (ii) other employee loans
and advances (not to exceed $50,000) in the ordinary course of business,
(iii) other loans to officers and employees approved by the Board of Directors
in an aggregate amount not in excess of $500,000 outstanding at any time;
(xi) Investments arising in connection with Permitted Swap
Obligations; and
(xi) Investments existing as of the date hereof as identified in the
Disclosure Letter.
"PERMITTED LIENS" means:
(i) Liens in favor of the Bank;
(ii) the existing Liens listed in Item 1.01(b) of the Disclosure
Letter or incurred in connection with the extension,
13.
renewal or refinancing of the Indebtedness secured by such existing Liens,
PROVIDED that any extension, renewal or replacement Lien shall be limited to
the property encumbered by the existing Lien and the principal amount of the
Indebtedness being extended, renewed or refinanced does not increase;
(iii) Liens for taxes, fees, assessments or other governmental
charges or levies, either not delinquent or being contested in good faith by
appropriate proceedings and which are adequately reserved for in accordance with
GAAP;
(iv) Liens of materialmen, mechanics, warehousemen, carriers or
employees or other like Liens arising in the ordinary course of business and
securing obligations either not delinquent or being contested in good faith by
appropriate proceedings and which are adequately reserved for in accordance with
GAAP and which do not in the aggregate materially impair the use or value of the
property or risk the loss or forfeiture of title thereto;
(v) Liens consisting of deposits or pledges to secure the payment of
worker's compensation, unemployment insurance or other social security benefits
or obligations, or to secure the performance of bids, trade contracts, leases
(other than Capital Leases), public or statutory obligations, surety or appeal
bonds or other obligations of a like nature incurred in the ordinary course of
business (other than for Indebtedness or any Liens arising under ERISA);
(vi) easements, rights of way, servitudes or zoning or building
restrictions and other minor encumbrances on real property and irregularities in
the title to such property which do not in the aggregate materially impair the
use or value of such property or risk the loss or forfeiture of title thereto;
(vii) statutory landlord's Liens under leases to which the Borrower
or any of its Subsidiaries is a party;
(viii) Liens arising solely by virtue of any statutory or common law
provision relating to banker's liens, rights of set-off or similar rights and
remedies as to deposit accounts or other funds maintained with a creditor
depository institution; PROVIDED that (i) such deposit account is not a
dedicated cash collateral account and is not subject to restrictions against
access by the Borrower in excess of those set forth by regulations promulgated
by the FRB, and (ii) such deposit account is not intended by the Borrower or any
Subsidiary to provide collateral to the depository institution;
(ix) Liens (A) upon or in any property (including any additions and
accessions thereto, replacements thereof and proceeds thereof) acquired or held
by the Borrower or any of its Subsidiaries to secure the purchase price of such
property or Indebtedness incurred solely for the purpose of financing the
14.
acquisition of such property, or (B) existing on such property at the time of
its acquisition, provided that the Lien is confined solely to the property so
acquired and improvements thereon (including any additions and accessions
thereto, replacements thereof and proceeds thereof); and
(x) Liens on assets of Persons which become Subsidiaries of the
Borrower after the date hereof, PROVIDED that such Liens existed at the time any
such Persons became Subsidiaries of the Borrower and were not created in
anticipation thereof.
(xi) Leases or subleases and licenses and sublicenses granted to
others in the ordinary course of the Borrower's business which do not interfere
in any material respect with the business operations of the Borrower and its
Subsidiaries taken as a whole;
(xii) Liens on assets (including the proceeds thereof and accessions
thereto) that existed at the time such assets were acquired by the Borrower or
any Subsidiary (including Liens on assets of any corporation that existed at the
time it became or becomes a Subsidiary);
(xiii) Liens in favor of customs and revenue authorities arising as a
matter of law to secure payment of customs duties in connection with the
importation of goods;
(xiv) Liens on insurance proceeds securing the payment of financed
insurance premiums;
(xv) Liens incurred in connection with sale-leaseback transactions
permitted under Section 10.04(h) hereof;
(xvi) Liens in the nature of operating leases which are otherwise
permitted hereunder;
(xvii) Liens consisting of judgment or judicial attachment liens,
which do not otherwise constitute an Event of Default under Section 11.01(f) or
Section 11.01(h); and
(xviii) Liens not otherwise described in this definition securing
obligations not exceeding $100,000.
"PERMITTED SWAP OBLIGATIONS" means all obligations (contingent or
otherwise) of the Borrower or any Subsidiary existing or arising under (i) Swap
Contracts in which the Bank is the counter party, or (ii) Swap Contracts in
which the Bank is not the counter party, provided that each of the following
criteria is satisfied: (a) such obligations are (or were) entered into by such
Person in the ordinary course of business for the purpose of directly mitigating
risks associated with liabilities, commitments or assets held by such Person, or
15.
changes in the value of securities issued by such Person in conjunction with a
securities repurchase program not otherwise prohibited hereunder, and not for
purposes of speculation or taking a "market view;" (b) such Swap Contracts do
not contain (i) any provision ("walk-away" provision) exonerating the non-
defaulting party from its obligation to make payments on outstanding
transactions to the defaulting party, or (ii) any provision creating or
permitting the declaration of an event of default, termination event or similar
event upon the occurrence of an Event of Default hereunder and (c) a perfected
security interest in such Person's rights and interests to and in such Swap
Contracts has been granted, and exists, in favor of the Bank, as collateral for
the Obligations.
"PERSON" means an individual, corporation, partnership, limited
liability company, joint venture, trust, unincorporated organization or any
other entity of whatever nature or any Governmental Authority.
"PLAN" means any employee pension benefit plan as defined in
Section 3(2) of ERISA (including any Multiemployer Plan) and any employee
welfare benefit plan, as defined in Section 3(1) of ERISA (including any plan
providing benefits to former employees or their survivors).
"PREMISES" means any and all real property including all buildings and
improvements now or hereafter located thereon and all appurtenances thereto, now
or hereafter owned, leased, occupied or used by the Borrower.
"RECEIVABLE DEBTOR" means any Person obligated on a Receivable.
"RECEIVABLES" means all rights to payment arising out of the sale or
lease of goods or the performance of services in the ordinary and usual course
of business, however evidenced.
"REGULATION D" means Regulation D of the FRB.
"REGULATORY CHANGE" has the meaning set forth in Section 6.03.
"RELATED PERSON" means any Affiliate, director, officer, employee,
agent, counsel or other advisor of any Person.
"REQUIRED NOTICE DATE" has the meaning set forth in Section 2.06.
"RESPONSIBLE OFFICER" means, with respect to any Person, the chief
executive officer, the president, the chief financial officer or the treasurer
of such Person, or any other senior officer of such Person having substantially
the same authority and responsibility; or, with respect to compliance with
16.
financial covenants, the chief financial officer or the treasurer of any such
Person, or any other senior officer of such Person involved principally in the
financial administration or controllership function of such Person and having
substantially the same authority and responsibility.
"REVOLVING COMMITMENT" means, when used with reference to the Bank at
the time any determination thereof is to be made, $10,000,000 as from time to
time reduced pursuant to Section 5.01, or, where the context so requires, the
obligation of the Bank to make Revolving Loans up to such amount on the terms
and conditions set forth in this Agreement; PROVIDED, HOWEVER, in the event that
the Bank at any time elects to utilize the Borrowing Base, no more than
$2,500,000 will at any time be advanced against Eligible Inventory.
"REVOLVING EXPIRY DATE" means June 30, 1998.
"REVOLVING LOAN" has the meaning set forth in Section 2.01.
"SEC" means the Securities and Exchange Commission, or any successor
thereto.
"SECURITY AGREEMENT" means the Security Agreement between the Borrower
and the Bank, in substantially the form of Exhibit D.
"SOLVENT" means, as to any Person at any time, that (i) the fair value
of the property of such Person is greater than the amount of such Person's
liabilities (including disputed, contingent and unliquidated liabilities) as
such value is established and liabilities evaluated for purposes of
Section 101(31) of the Bankruptcy Code; (ii) the present fair saleable value of
the property of such Person is not less than the amount that will be required to
pay the probable liability of such Person on its debts as they become absolute
and matured; (iii) such Person is able to realize upon its property and pay its
debts and other liabilities (including disputed, contingent and unliquidated
liabilities) as they mature in the normal course of business; (iv) such Person
does not intend to, and does not believe that it will, incur debts or
liabilities beyond such Person's ability to pay as such debts and liabilities
mature; and (v) such Person is not engaged in business or a transaction, and is
not about to engage in business or a transaction, for which such Person's
property would constitute unreasonably small capital.
"SUBORDINATED DEBT" means any Indebtedness of the Borrower or any
Subsidiary incurred after the date hereof in accordance with
Section 10.04(a)(vi).
17.
"SUBSIDIARY" means any corporation, association, partnership, joint
venture or other business entity of which more than 50% of the voting stock or
other equity interest is owned directly or indirectly by any Person or one or
more of the other Subsidiaries of such Person or a combination thereof.
"SWAP CONTRACT" means any agreement, whether or not in writing,
relating to any transaction that is a rate swap, basis swap, forward rate
transaction, commodity swap, commodity option, equity or equity index swap or
option, bond, note or ▇▇▇▇ option, interest rate option, forward foreign
exchange transaction, cap, collar or floor transaction, currency swap, cross-
currency rate swap, swaption, currency option or any other, similar transaction
(including any option to enter into any of the foregoing) or any combination of
the foregoing, and, unless the context otherwise clearly requires, any master
agreement relating to or governing any or all of the foregoing.
"TAXES" has the meaning set forth in Section 7.02.
"TERMINATION EVENT" means any of the following:
(i) with respect to a Pension Plan, a reportable event described in
Section 4043 of ERISA and the regulations issued thereunder (other than a
reportable event not subject to the provisions for 30-day notice to the PBGC
under such regulations);
(ii) the withdrawal of the Borrower or an ERISA Affiliate from a Plan
during a plan year in which the withdrawing employer was a "substantial
employer" as defined in Section 4001(a)(2) or 4062(e) of ERISA;
(iii) the taking of any actions (including the filing of a notice of
intent to terminate) by the Borrower, an ERISA Affiliate, the PBGC, a Plan
Administrator, or any other Person to terminate a Pension Plan or the treatment
of a Plan amendment as a termination of a Pension Plan under Section 4041 of
ERISA;
(iv) any other event or condition which might constitute grounds
under Section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Pension Plan; or
(v) the complete or partial withdrawal of the Borrower or an ERISA
Affiliate from a Multiemployer Plan.
"UCC" means the Uniform Commercial Code of the jurisdiction the law of
which governs the Loan Document in which such term is used or the attachment,
perfection or priority of the Lien on any Collateral.
"UNFUNDED ACCRUED BENEFITS" means the excess of a Pension Plan's
accrued benefits, as defined in Section 3(23) of
18.
ERISA, over the current value of that Plan's assets, as defined in Section
3(26) of ERISA.
"UNITED STATES" and "U.S." each means the United States of America.
SECTION 1.02 ACCOUNTING PRINCIPLES.
(a) ACCOUNTING TERMS. Unless otherwise defined or the context
otherwise requires, all accounting terms not expressly defined herein shall be
construed, and all accounting determinations and computations required under the
Loan Documents shall be made, in accordance with GAAP, consistently applied.
(b) GAAP CHANGES. If GAAP shall have been modified after the Closing
Date and the application of such modified GAAP shall have a material effect on
any financial computations hereunder (including the computations required for
the purpose of determining compliance with the covenants set forth in
Section 10.02), then such computations shall be made and the financial
statements, certificates and reports due hereunder shall be prepared, and all
accounting terms not otherwise defined herein shall be construed, in accordance
with GAAP as in effect prior to such modification, unless and until the Bank and
the Borrower shall have agreed upon the terms of the application of such
modified GAAP.
(c) "FISCAL YEAR" and "FISCAL QUARTER". References herein to "fiscal
year" and "fiscal quarter" refer to such fiscal periods of the Borrower.
SECTION 1.03 INTERPRETATION. In the Loan Documents, except to the
extent the context otherwise requires:
(i) Any reference to an Article, a Section, a Schedule or an Exhibit
is a reference to an article or section thereof, or a schedule or an exhibit
thereto, respectively, and to a subsection or a clause is, unless otherwise
stated, a reference to a subsection or a clause of the Section or subsection in
which the reference appears.
(ii) The words "hereof," "herein," "hereto," "hereunder" and the like
mean and refer to this Agreement or any other Loan Document as a whole and not
merely to the specific Article, Section, subsection, paragraph or clause in
which the respective word appears.
(iii) The meaning of defined terms shall be equally applicable to
both the singular and plural forms of the terms defined.
19.
(iv) The words "including," "includes" and "include" shall be deemed
to be followed by the words "without limitation."
(v) References to agreements and other contractual instruments shall
be deemed to include all subsequent amendments and other modifications thereto,
but only to the extent such amendments and other modifications are not
prohibited by the terms of the Loan Documents.
(vi) References to statutes or regulations are to be construed as
including all statutory and regulatory provisions consolidating, amending or
replacing the statute or regulation referred to.
(vii) Any table of contents, captions and headings are for
convenience of reference only and shall not affect the construction of this
Agreement or any other Loan Document.
(viii) In the computation of periods of time from a specified date to
a later specified date, the word "from" means "from and including"; the words
"to" and "until" each mean "to but excluding"; and the word "through" means "to
and including."
(ix) The use of a word of any gender shall include each of the
masculine, feminine and neuter genders.
(x) This Agreement and the other Loan Documents are the result of
negotiations between the Bank and the Borrower, have been reviewed by counsel to
the Bank and the Borrower, and are the products of both parties. Accordingly,
they shall not be construed against the Bank merely because of the Bank's
involvement in their preparation.
ARTICLE II
THE LOANS
SECTION 2.01 THE LOANS. The Bank agrees, on the terms and
conditions hereinafter set forth, to make revolving loans (each a "Revolving
Loan" and, collectively, the "Revolving Loans") to the Borrower from time to
time on any Business Day during the period from the Closing Date until the
Revolving Expiry Date, in an aggregate principal amount up to but not exceeding
at any time outstanding the Revolving Commitment. Within the limits of the
Revolving Commitment, during such period the Borrower may borrow, repay the
Revolving Loans in whole or in part, and reborrow, all in accordance with the
terms and conditions hereof; PROVIDED, HOWEVER, if Borrower at any time fails to
meet any of the financial covenants contained in Section 10.02 hereof, then Bank
may, in its sole discretion, require that the aggregate principal amount of
Revolving Loans then outstanding (or at any time outstanding thereafter,
regardless of whether Borrower cures any such failure) shall not exceed the
Borrowing Base then in effect. Within the foregoing limits,
20.
during such period the Borrower may borrow, repay the Revolving Loans in
whole or in part, and reborrow, all in accordance with the terms and
conditions hereof. The Bank shall provide written notice to Borrower
promptly following any determination that the Borrowing Base shall be
applicable hereunder.
SECTION 2.02 BORROWING PROCEDURE; NOTICE TO BANK. Each Loan shall be
made on a Business Day upon written or telephonic notice (in the latter case to
be confirmed promptly in writing) from the Borrower to the Bank, which notice
shall be received by the Bank not later than 10:00 A.M. (California time) on the
Required Notice Date. Each such notice, except as provided in Section 6.01 and
6.04, shall be irrevocable and binding on the Borrower, shall be in
substantially the form of Exhibit B (a "Notice of Borrowing") and shall specify
whether the borrowing consists of a Base Rate Loan or LIBOR Rate Loan, and the
other information required thereby. Upon fulfillment of the applicable
conditions set forth in Article VII, and unless other payment instructions are
provided by the Borrower, the Bank shall make the Loan available to the Borrower
by crediting the Borrower's Account with same day or immediately available funds
on such borrowing date.
SECTION 2.03 LENDING OFFICES. The Loans made by the Bank may be
made from and maintained at any Lending Office.
SECTION 2.04 RECORDKEEPING. The Bank shall record in its internal
records the date and amount of each Loan made, each conversion to a different
interest rate, each relevant Interest Period, the amount of principal and
interest due and payable from time to time hereunder, each payment thereof and
the resulting unpaid principal balance of such Loan. Any such recordation shall
be rebuttable presumptive evidence of the accuracy of the information so
recorded. Any failure so to record or any error in doing so shall not, however,
limit or otherwise affect the obligations of the Borrower hereunder to pay any
amount owing with respect to the Loans.
SECTION 2.05 MINIMUM AMOUNTS. Any borrowing, conversion,
continuation, Commitment reduction or prepayment of any Loan hereunder shall be
in an amount determined as follows (each such specified amount a "Minimum
Amount"): (i) any borrowing or partial prepayment of any Base Rate Loan shall
be in the amount of $100,000 or a greater amount which is an integral multiple
of $100,000; (ii) any borrowing, continuation or partial prepayment of, or
conversion into, any LIBOR Rate Loan shall be in the amount of $200,000 or a
greater amount which is an integral multiple of $200,000.
21.
SECTION 2.06 REQUIRED NOTICE. Any Notice hereunder shall be given
not later than the date determined as follows (each such specified date a
"Required Notice Date"): (i) any Notice with respect to a borrowing of, or
conversion into, any Base Rate Loan shall be given at least one Business Day
prior to the date of the proposed borrowing or conversion; and (ii) any Notice
with respect to any borrowing or continuation of, or conversion into, any LIBOR
Rate Loan shall be given at least three LIBOR Business Days prior to the date of
the proposed borrowing, conversion or continuation.
SECTION 2.07 THE NOTE. As additional evidence of the Indebtedness
of the Borrower to the Bank resulting from the Revolving Loans made by the Bank,
the Borrower shall execute and deliver to the Bank the Note, dated the Closing
Date, setting forth the Revolving Commitment as the maximum principal amount
thereof.
ARTICLE III
INTEREST AND FEES; CONVERSION OR CONTINUATION
SECTION 3.01 INTEREST.
(a) INTEREST RATE. The Borrower shall pay interest on the unpaid
principal amount of each Loan from the date of such Loan until such principal
amount shall be paid in full, at the following rates:
(i) during such periods as such Loan is a Base Rate Loan, at a rate
per annum equal at all times to the Base Rate MINUS the Applicable Margin; and
(ii) during such periods as such Loan is a LIBOR Rate Loan, at a rate
per annum equal at all times during each Interest Period for such LIBOR Rate
Loan to the LIBOR Rate for such Interest Period PLUS the Applicable Margin.
(b) INTEREST PERIODS. The initial and each subsequent Interest
Period for the LIBOR Rate Loans, shall be a period of 30, 60 or 90 days, or such
other period as requested by the Borrower and acceptable to the Bank. The
determination of Interest Periods shall be subject to the following provisions:
(A) in the case of immediately successive Interest Periods, each
successive Interest Period shall commence on the day on which the next preceding
Interest Period expires;
(B) if any Interest Period pertaining to a LIBOR Rate Loan would
otherwise end on a day which is not a Business Day, that Interest Period shall
be extended to the next succeeding Business Day unless the result of such
extension would be to carry such Interest Period into another calendar month, in
which
22.
event such Interest Period shall end on the immediately preceding Business
Day;
(C) no Interest Period shall extend beyond the Revolving Expiry Date;
(D) 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 ending calendar month of such Interest
Period) shall end on the last Business Day of the ending calendar month of such
Interest Period; and
(E) there shall be no more than four Interest Periods in effect at
any one time.
(c) INTEREST PAYMENT DATES. Subject to Section 3.02, interest on the
Loans shall be payable in arrears at the following times:
(i) interest on each Base Rate Loan shall be payable monthly on the
last Business Day in each month, on the date of any prepayment or conversion of
any such Base Rate Loan, and at maturity; and
(ii) interest on each LIBOR Rate Loan shall be payable on the last
day of each Interest Period for such LIBOR Rate Loan, PROVIDED that, if any
prepayment, conversion or continuation is effected other than on the last day of
such Interest Period, accrued interest on such LIBOR Rate Loan shall be due on
such prepayment, conversion or continuation date as to the principal amount of
such LIBOR Rate Loan prepaid, converted or continued.
The Borrower hereby authorizes the Bank (without any notice to or
further authorization from the Borrower) to directly debit from Borrower's
operating account with Bank any and all interest payments owing hereunder or in
connection herewith.
(d) NOTICE TO THE BORROWER. Each determination by the Bank hereunder
of a rate of interest and of any change therein, including any changes in
(i) the Applicable Margin, (ii) the Base Rate during any periods in which Base
Rate Loans shall be outstanding, and (iii) the LIBOR Reserve Percentage (if any)
during any periods in which LIBOR Rate Loans shall be outstanding, in the
absence of manifest error shall be conclusive and binding on the parties hereto
and shall be promptly notified by the Bank to the Borrower. Such notice shall
set forth in reasonable detail the basis for any such determination or change.
The failure of the Bank to give any such notice specified in this subsection
shall not affect the Borrower's obligation to pay such interest or fees.
23.
SECTION 3.02 DEFAULT RATE OF INTEREST. Notwithstanding
Section 3.01, during the existence of any Event of Default or after
acceleration, the Borrower shall pay interest (after as well as before any entry
of judgment to the extent permitted by law) on the unpaid principal amount of
all Obligations, (i) in the case of any Loans, at a rate per annum equal to the
applicable Base Rate or LIBOR Rate, as the case may be, PLUS 4.0% per annum, and
(ii) in the case of any other Obligations, at a rate per annum equal at all
times to the Base Rate PLUS 4.0% per annum; PROVIDED, HOWEVER, that, on and
after the expiration of any Interest Period applicable to any LIBOR Rate Loan
outstanding on the date of occurrence of such Event of Default or acceleration,
the Borrower shall pay interest on the principal amount of such Loan, during the
continuation of such Event of Default or after acceleration, at a rate per annum
equal at all times to the Base Rate PLUS 4.0% per annum.
SECTION 3.03 FEES.
(a) COMMITMENT FEE. The Borrower agrees to pay to the Bank a
commitment fee on the average daily unused portion of the Bank's Revolving
Commitment as in effect from time to time from Closing Date until the Revolving
Expiry Date at the rate of 0.25% per annum, payable quarterly in arrears on the
last Business Day of each calendar quarter in each year, commencing on the first
such date after Closing Date, and on the earlier of the date such Revolving
Commitment is terminated hereunder or the Revolving Expiry Date. For purposes
of calculating utilization under this subsection, the Revolving Commitment shall
be deemed used to the extent of the Effective Amount of all Loans, plus the
Effective Amount of all L/C Obligations.
(b) STANDBY L/C ISSUANCE FEE. The Borrower agrees to pay to the Bank
a standby L/C issuance fee in the amount of 1.25% of the total amount of any
issued Letter of Credit, payable on or before the date of issuance of such L/C.
(c) CONFIRMATION FEE. The Borrower agrees to pay to any confirming
bank a confirmation fee in such amount as may customarily be charged by such
confirming bank to confirm any L/C issued hereunder.
(d) FEES NONREFUNDABLE. All fees payable under this Section 3.03
shall be nonrefundable.
SECTION 3.04 COMPUTATIONS. All computations of interest with
respect to Base Rate Loans hereunder shall be made on the basis of a year of 365
days for the actual number of days occurring in the period for which such
interest is payable. All other computations of commitment fee and interest
hereunder shall be made on the basis of a year of 360 days for the actual number
of days occurring in the period for which such interest is payable, which
results in more interest being paid than if
24.
computed on the basis of a 365-day year. Notwithstanding the foregoing, if
any Loan is repaid on the same day on which it is made, such day shall be
included in computing interest on such Loan.
SECTION 3.05 CONVERSION OR CONTINUATION.
(a) ELECTION. The Borrower may elect (i) to convert all or any part
of (A) any outstanding Base Rate Loan into a LIBOR Rate Loan, or (B) any
outstanding LIBOR Rate Loan into a Base Rate Loan; or (ii) to continue all or
any part of a Loan with one type of interest rate as such; PROVIDED, HOWEVER,
that if the amount of any LIBOR Rate Loan shall have been reduced, by payment,
prepayment, or conversion of part thereof to be less than $200,000, such LIBOR
Rate Loan shall automatically convert into a Base Rate Loan, and on and after
such date the right of the Borrower to continue such Loan as, and convert such
Loan into, a LIBOR Rate Loan, as the case may be, shall terminate. Any
conversion or continuation of any LIBOR Rate Loan shall be made on the last day
of the current Interest Period for such LIBOR Rate Loan. No outstanding Loan
may be converted into or continued as a LIBOR Rate Loan if any Default has
occurred and is continuing.
(b) AUTOMATIC CONVERSION. On the last day of any Interest Period for
any LIBOR Rate Loan, such LIBOR Rate Loan shall, if not repaid, automatically
convert into a Base Rate Loan unless the Borrower shall have made a timely
election to continue such LIBOR Rate Loan as such for an additional Interest
Period or to convert such LIBOR Rate Loan, in each case as provided in
subsection (a).
(c) NOTICE TO THE BANK. The conversion or continuation of any Loans
contemplated by subsection (a) shall be made upon written or telephonic notice
(in the latter case to be confirmed promptly in writing) from the Borrower to
the Bank, which notice shall be received by the Bank not later than 10:00 A.M.
(California time) on the Required Notice Date. Each such notice (a "Notice of
Conversion or Continuation") shall, except as provided in Sections 6.01 and
6.04, be irrevocable and binding on the Borrower, shall refer to this Agreement
and shall specify: (i) the proposed date of the conversion or continuation,
which shall be a Business Day; (ii) the outstanding Loan (or part thereof) to be
converted into or continued as a Base Rate or LIBOR Rate Loan, which shall be in
a Minimum Amount; (iii) if the conversion or continuation consists of any LIBOR
Rate Loan, the duration of the Interest Period with respect thereto; and
(iv) that no Default exists hereunder.
SECTION 3.06 HIGHEST LAWFUL RATE. Anything herein to the contrary
notwithstanding, if during any period for which interest is computed hereunder,
the applicable interest rate,
25.
together with all fees, charges and other payments which are treated as
interest under applicable law, as provided for herein or in any other Loan
Document, would exceed the maximum rate of interest which may be charged,
contracted for, reserved, received or collected by the Bank in connection
with this Agreement under applicable law (the "Maximum Rate"), the Borrower
shall not be obligated to pay, and the Bank shall not be entitled to charge,
collect, receive, reserve or take, interest in excess of the Maximum Rate,
and during any such period the interest payable hereunder shall be limited to
the Maximum Rate.
ARTICLE IV
THE LETTERS OF CREDIT
SECTION 4.01 THE LETTER OF CREDIT SUBFACILITY.
(a) On the terms and conditions set forth herein, the Bank agrees,
(A) from time to time on any Business Day during the period from the Closing
Date to the Revolving Expiry Date to issue Letters of Credit for the account of
the Borrower, and to amend or renew Letters of Credit previously issued by it,
in accordance with subsections 4.02(c) and 4.02(d), and (B) to honor drafts
under the Letters of Credit; PROVIDED, that the Bank shall not be obligated to
issue any Letter of Credit if as of the date of issuance of such Letter of
Credit (the "ISSUANCE DATE") (1) the Effective Amount of all L/C Obligations
plus the Effective Amount of all Revolving Loans exceeds the Revolving
Commitment, or (2) the Effective Amount of L/C Obligations exceeds the L/C
Commitment. Within the foregoing limits, and subject to the other terms and
conditions hereof, the Borrower's ability to obtain Letters of Credit shall be
fully revolving, and, accordingly, the Borrower may, during the foregoing
period, obtain Letters of Credit to replace Letters of Credit which have expired
or which have been drawn upon and reimbursed.
(b) The Bank is under no obligation to issue any Letter of Credit if:
(i) any order, judgment or decree of any Governmental Authority or
arbitrator shall by its terms purport to enjoin or restrain the Bank from
issuing such Letter of Credit, or any Requirement of Law applicable to the Bank
or any request or directive (whether or not having the force of law) from any
Governmental Authority with jurisdiction over the Bank shall prohibit, or
request that the Bank refrain from, the issuance of letters of credit generally
or such Letter of Credit in particular or shall impose upon the Bank with
respect to such Letter of Credit any restriction, reserve or capital requirement
(for which the Bank is not otherwise compensated hereunder) not in effect on the
Closing Date, or shall impose upon the Bank any unreimbursed loss, cost or
expense which was not applicable on the Closing Date and which the Bank in good
▇▇▇▇▇ ▇▇▇▇▇ material to it;
26.
(ii) the Bank has received written notice from the Borrower, on or
prior to the Business Day prior to the requested date of issuance of such Letter
of Credit, that one or more of the applicable conditions contained in Article V
is not then satisfied;
(iii) the expiry date of any requested Letter of Credit is (A) more
than 365 days after the Issuance Date, unless the Bank has approved such expiry
date in writing, or (B) after the Revolving Expiry Date, unless the Bank has
approved such expiry date in writing;
(iv) the expiry date of any requested Letter of Credit is prior to
the maturity date of any financial obligation to be supported by the requested
Letter of Credit;
(v) any requested Letter of Credit does not provide for drafts, or is
not otherwise in form and substance acceptable to the Bank, or the issuance of a
Letter of Credit shall violate any applicable policies of the Bank;
(vi) any standby Letter of Credit is for the purpose of supporting the
issuance of any letter of credit by any other Person; or
(vii) such Letter of Credit is in a face amount less than $100,000 or
to be denominated in a currency other than Dollars.
SECTION 4.02 ISSUANCE, AMENDMENT AND RENEWAL OF LETTERS OF CREDIT.
(a) Each Letter of Credit shall be issued upon the irrevocable
written request of the Borrower received by the Bank at least four days (or such
shorter time as the Bank may agree in a particular instance in its sole
discretion) prior to the proposed date of issuance. Each such request for
issuance of a Letter of Credit shall be by facsimile, confirmed immediately in
an original writing, in the form of an L/C Application, and shall specify in
form and detail satisfactory to the Bank: (i) the proposed date of issuance of
the Letter of Credit (which shall be a Business Day); (ii) the face amount of
the Letter of Credit; (iii) the expiry date of the Letter of Credit; (iv) the
name and address of the beneficiary thereof; (v) the documents to be presented
by the beneficiary of the Letter of Credit in case of any drawing thereunder;
(vi) the full text of any certificate to be presented by the beneficiary in case
of any drawing thereunder; and (vii) such other matters as the Bank may require.
(b) From time to time while a Letter of Credit is outstanding and
prior to the Revolving Expiry Date, the Bank will, upon the written request of
the Borrower received by the Bank at least five days (or such shorter time as
the Bank may
27.
agree in a particular instance in its sole discretion) prior to the proposed
date of amendment, amend any Letter of Credit issued by it. Each such
request for amendment of a Letter of Credit shall be made by facsimile,
confirmed immediately in an original writing, made in the form of an L/C
Amendment Application and shall specify in form and detail satisfactory to
the Bank: (i) the Letter of Credit to be amended; (ii) the proposed date of
amendment of the Letter of Credit (which shall be a Business Day); (iii) the
nature of the proposed amendment; and (iv) such other matters as the Bank may
require. The Bank shall be under no obligation to amend any Letter of Credit
if: (A) the Bank would have no obligation at such time to issue such Letter
of Credit in its amended form under the terms of this Agreement; or (B) the
beneficiary of any such Letter of Credit does not accept the proposed
amendment to the Letter of Credit.
(c) While a Letter of Credit is outstanding and prior to the
Revolving Expiry Date, at the option of the Borrower and upon the written
request of the Borrower received by the Bank at least five days (or such shorter
time as the Bank may agree in a particular instance in its sole discretion)
prior to the proposed date of notification of renewal, the Bank shall be
entitled to authorize the automatic renewal of any Letter of Credit issued by
it. Each such request for renewal of a Letter of Credit shall be made by
facsimile, confirmed immediately in an original writing, in the form of an L/C
Amendment Application, and shall specify in form and detail satisfactory to the
Bank: (i) the Letter of Credit to be renewed; (ii)the proposed date of
notification of renewal of the Letter of Credit (which shall be a Business Day);
(iii) the revised expiry date of the Letter of Credit; and (iv) such other
matters as the Bank may require. The Bank shall be under no obligation so to
renew any Letter of Credit if: (A) the Bank would have no obligation at such
time to issue or amend such Letter of Credit in its renewed form under the terms
of this Agreement; or (B) the beneficiary of any such Letter of Credit does not
accept the proposed renewal of the Letter of Credit. If any outstanding Letter
of Credit shall provide that it shall be automatically renewed unless the
beneficiary thereof receives notice from the Bank that such Letter of Credit
shall not be renewed, and if at the time of renewal the Bank would be entitled
to authorize the automatic renewal of such Letter of Credit in accordance with
this subsection 4.02(c) upon the request of the Borrower but the Bank shall not
have received any L/C Amendment Application from the Borrower with respect to
such renewal or other written direction by the Borrower with respect thereto,
the Bank shall nonetheless be permitted to allow such Letter of Credit to renew,
and the Borrower and the Bank hereby authorize such renewal, and, accordingly,
the Bank shall be deemed to have received an L/C Amendment Application from the
Borrower requesting such renewal.
(d) The Bank may, at its election, deliver any notices of termination
or other communications to any Letter of Credit
28.
beneficiary or transferee, and take any other action as necessary or
appropriate, at any time and from time to time, in order to cause the expiry
date of such Letter of Credit to be a date not later than the Revolving
Expiry Date.
(e) This Agreement shall control in the event of any conflict with
any L/C-Related Document (other than any Letter of Credit).
SECTION 4.03 DRAWINGS AND REIMBURSEMENTS.
(a) In the event of any request for a drawing under a Letter of
Credit by the beneficiary or transferee thereof, the Bank will promptly notify
the Borrower. The Borrower shall reimburse the Bank prior to 10:00 a.m. (San
Francisco time), on each date that any amount is paid by the Bank under any
Letter of Credit (each such date, an "HONOR DATE") (provided that the Bank
notifies Borrower of such payment prior to 9:00 a.m. on the Honor Date), in an
amount equal to the amount so paid by the Bank. In the event the Borrower fails
to reimburse the Bank for the full amount of any drawing under any Letter of
Credit by 10:00 a.m. (San Francisco time) on the Honor Date, the Bank will
promptly notify the Borrower thereof, and the Borrower shall be deemed to have
requested that Base Rate Loans be made by the Bank to be disbursed on the Honor
Date under such Letter of Credit, subject to the amount of the unutilized
portion of the Revolving Commitment. Any notice given by the Bank pursuant to
this subsection 4.03(a) may be oral if immediately confirmed in writing
(including by facsimile); provided that the lack of such an immediate
confirmation shall not affect the conclusiveness or binding effect of such
notice.
(b) With respect to any unreimbursed drawing that is not converted
into Revolving Loans consisting of Base Rate Loans to the Borrower in whole or
in part, because of the Borrower's failure to satisfy the conditions set forth
in Section 8.01 or for any other reason, the Borrower shall be deemed to have
incurred from the Bank an L/C Borrowing in the amount of such drawing, which L/C
Borrowing shall be due and payable on demand (together with interest) and shall
bear interest at a rate per annum equal to the Base Rate plus 2.0% per annum.
SECTION 4.04 [INTENTIONALLY OMITTED].
SECTION 4.05 ROLE OF THE BANK.
(a) Bank and the Borrower agree that, in paying any drawing under a
Letter of Credit, the Bank shall not have any responsibility to obtain any
document (other than any sight draft and certificates expressly required by the
Letter of Credit) or to ascertain or inquire as to the validity or accuracy of
any such document or the authority of the Person executing or delivering any
such document.
29.
(b) No Person nor any of the respective correspondents, participants
or assignees of the Bank shall be liable to the Bank for: (i) any action taken
or omitted in connection herewith at the request or with the approval of the
Bank; (ii) any action taken or omitted in the absence of gross negligence or
willful misconduct; or (iii) the due execution, effectiveness, validity or
enforceability of any L/C-Related Document.
(c) The Borrower hereby assumes all risks of the acts or omissions of
any beneficiary or transferee with respect to its use of any Letter of Credit;
PROVIDED, however, that this assumption is not intended to, and shall not,
preclude the Borrower's pursuing such rights and remedies as it may have against
the beneficiary or transferee at law or under any other agreement. No Person,
nor any of the respective correspondents, participants or assignees of the Bank,
shall be liable or responsible for any of the matters described in clauses (i)
through (vii) of Section 4.06; PROVIDED, however, anything in such clauses to
the contrary notwithstanding, that the Borrower may have a claim against the
Bank, and the Bank may be liable to the Borrower, to the extent, but only to the
extent, of any direct, as opposed to consequential or exemplary, damages
suffered by the Borrower which the Borrower proves were caused by the Bank's
willful misconduct or gross negligence or the Bank's willful failure to pay
under any Letter of Credit after the presentation to it by the beneficiary of a
sight draft and certificate(s) strictly complying with the terms and conditions
of a Letter of Credit. In furtherance and not in limitation of the foregoing:
(i) the Bank may accept documents that appear on their face to be in order,
without responsibility for further investigation, regardless of any notice or
information to the contrary; and (ii) the Bank shall not be responsible for the
validity or sufficiency of any instrument transferring or assigning or
purporting to transfer or assign a 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.
SECTION 4.06 OBLIGATIONS ABSOLUTE. The obligations of the Borrower
under this Agreement and any L/C-Related Document to reimburse the Bank for a
drawing under a Letter of Credit, and to repay any L/C Borrowing, shall be
unconditional and irrevocable, and shall be paid strictly in accordance with the
terms of this Agreement and each such other L/C-Related Document under all
circumstances, including the following:
(i) any lack of validity or enforceability of this Agreement or any
L/C-Related Document;
(ii) any change in the time, manner or place of payment of, or in any
other term of, all or any of the obligations of the Borrower in respect of any
Letter of Credit or
30.
any other amendment or waiver of or any consent to departure from all or any
of the L/C-Related Documents;
(iii) the existence of any claim, set-off, defense or other right
that the Borrower may have at any time against any beneficiary or any transferee
of any Letter of Credit (or any Person for whom any such beneficiary or any such
transferee may be acting), the Bank or any other Person, whether in connection
with this Agreement, the transactions contemplated hereby or by the L/C-Related
Documents or any unrelated transaction;
(iv) any draft, demand, certificate or other document presented under
any Letter of Credit proving to be forged, fraudulent, invalid or insufficient
in any respect or any statement therein being untrue or inaccurate in any
respect; or any loss or delay in the transmission or otherwise of any document
required in order to make a drawing under any Letter of Credit;
(v) any payment by the Bank under any Letter of Credit against
presentation of a draft or certificate that does not strictly comply with the
terms of any Letter of Credit; or any payment made by the Bank under any Letter
of Credit to any Person purporting to be a trustee in bankruptcy, debtor-in-
possession, assignee for the benefit of creditors, liquidator, receiver or other
representative of or successor to any beneficiary or any transferee of any
Letter of Credit, including any arising in connection with any Insolvency
Proceeding;
(vi) any exchange, release or non-perfection of any collateral, or
any release or amendment or waiver of or consent to departure from any other
guarantee, for all or any of the obligations of the Borrower in respect of any
Letter of Credit; or
(vii) any other circumstance or happening whatsoever, whether or not
similar to any of the foregoing, including any other circumstance that might
otherwise constitute a defense available to, or a discharge of, the Borrower or
a guarantor.
SECTION 4.07 CASH COLLATERAL PLEDGE. Upon the request of the Bank,
(A) if the Bank has honored any full or partial drawing request on any Letter of
Credit and such drawing has resulted in an L/C Borrowing hereunder, or (B) if,
as of the Revolving Expiry Date, any Letters of Credit may for any reason remain
outstanding and partially or wholly undrawn, then, the Borrower shall
immediately cash collateralize the L/C Obligations in an amount equal to such
L/C Obligations.
SECTION 4.08 LETTER OF CREDIT FEES.
(a) The Borrower shall pay to the Bank a letter of credit issuance
fee for each Letter of Credit issued by the Bank
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equal to 1.25% of the face amount (or increased face amount, as the case may
be) of such Letter of Credit. Such Letter of Credit issuance fee shall be due
and payable on each date of issuance of a Letter of Credit.
(b) The Borrower shall pay to the Bank from time to time on demand
the normal issuance, presentation, amendment and other processing fees, and
other standard costs and charges, of the Bank relating to letters of credit as
from time to time in effect.
SECTION 4.09 UNIFORM CUSTOMS AND PRACTICE. The Uniform Customs and
Practice for Documentary Credits as published by the International Chamber of
Commerce most recently at the time of issuance of any Letter of Credit shall
(unless otherwise expressly provided in the Letters of Credit) apply to the
Letters of Credit.
ARTICLE V
REDUCTION OF COMMITMENTS;
REPAYMENT; PREPAYMENT
SECTION 5.01 REDUCTION OR TERMINATION OF THE COMMITMENT.
(a) OPTIONAL REDUCTION OR TERMINATION. The Borrower may, upon prior
notice to the Bank as provided herein, terminate in whole or reduce in part, as
of the date specified by the Borrower in such notice, any then unused portion of
the Revolving Commitment, PROVIDED that each partial reduction shall be in a
Minimum Amount.
(b) MANDATORY TERMINATION. The Revolving Commitment shall terminate
on the Revolving Expiry Date. The Bank may grant or reject such request in its
sole discretion, and the Borrower acknowledges that there is no commitment or
understanding that the Revolving Expiry Date will be extended. If such request
is granted, the Revolving Expiry Date then in effect shall be so extended,
subject to such changed terms and payment of such fee (if any) as shall have
been agreed upon by the Borrower and the Bank.
(c) ADJUSTMENT OF COMMITMENT FEE; NO REINSTATEMENT.
From the effective date of any reduction or termination prior to the Revolving
Expiry Date, the commitment fee payable under Section 3.03(a) shall be computed
on the basis of the Revolving Commitment as so reduced or terminated. Once
reduced or terminated, the Revolving Commitment may not be increased or
otherwise reinstated.
SECTION 5.02 REPAYMENT OF THE LOANS. The Borrower shall repay to
the Bank in full on the Revolving Expiry Date the
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aggregate principal amount of the Revolving Loans outstanding on such date.
SECTION 5.03 PREPAYMENTS.
(a) OPTIONAL PREPAYMENTS. Subject to Section 5.02, Borrower may,
upon prior notice to the Bank not later than the Required Notice Date, prepay
the outstanding amount of the Loans in whole or in part, without premium or
penalty. Any partial prepayments shall be in Minimum Amounts.
(b) NOTICE; APPLICATION. The notice given of any prepayment (a
"Notice of Prepayment") shall specify the date and amount of the prepayment and
whether the prepayment is of Base Rate or LIBOR Rate Loans or a combination
thereof, and if of a combination thereof the amount of the prepayment allocable
to each. If the Notice of Prepayment is given, the Borrower shall make such
prepayment and the prepayment amount specified in such Notice shall be due and
payable on the date specified therein, with accrued interest to such date on the
amount prepaid.
ARTICLE VI
YIELD PROTECTION AND ILLEGALITY
SECTION 6.01 INABILITY TO DETERMINE RATES. If the Bank shall
determine in good faith that adequate and reasonable means do not exist to
ascertain the LIBOR Rate, or the Bank shall determine that the LIBOR Rate does
not accurately reflect the cost to it of making or maintaining LIBOR Rate Loans,
then the Bank shall give telephonic notice (promptly confirmed in writing) to
the Borrower of such determination. Such notice shall specify the basis for
such determination and shall, in the absence of manifest error, be conclusive
and binding for all purposes. Thereafter, the obligation of the Bank to make or
maintain LIBOR Rate Loans hereunder shall be suspended until the Bank revokes
such notice. Upon receipt of such notice, the Borrower may revoke any Notice
then submitted by it. If the Borrower does not revoke such Notice, the Bank
shall make, convert or continue Loans, as proposed by the Borrower, in the
amount specified in the Notice submitted by the Borrower, but such Loans shall
be made, converted or continued as Base Rate Loans instead of LIBOR Rate Loans.
SECTION 6.02 FUNDING LOSSES. If the Borrower: (i) repays, converts
or prepays any LIBOR Rate Loan on a date other than the last day of an Interest
Period for such LIBOR Rate Loan (whether as a result of an optional prepayment,
a mandatory prepayment, a payment as a result of acceleration or otherwise),
(ii) fails to borrow a LIBOR Rate Loan after giving its Notice (other than as a
result of the operation of Section 6.01 or Section 6.04); (iii) fails to convert
into or continue a LIBOR Rate Loan after giving its Notice (other than as a
result of the operation of Section 6.01 or 6.04), or (iv) if the Borrower fails
33.
to prepay a LIBOR Rate Loan after giving its Notice, then the Borrower shall pay
to the Bank an amount computed pursuant to the following formula:
L = (R-T) x P x D
-------------
360
L = amount payable to the Bank
R = interest rate on such Loan
T = effective interest rate per annum at which any readily marketable
bond or other obligation of the United States, selected at the
Bank's sole discretion, maturing on or near the last day of the
then applicable Interest Period of such Loan and in approximately
the same amount as such Loan can be purchased by the Bank on the
day of such payment of principal or failure to borrow or continue
or convert
P = the amount of principal prepaid or the amount of the
requested Loan
D = the number of days remaining in the Interest Period as of
the date of such payment or the number of days of the requested
Interest Period
The Borrower shall pay such amount upon presentation by the Bank of a statement
setting forth the amount and the Bank's calculation thereof pursuant hereto,
which statement shall be deemed true and correct absent manifest error.
SECTION 6.03 REGULATORY CHANGES.
(a) INCREASED COSTS. If there is announced after the date hereof,
the adoption of, or any change in, any applicable law, rule or regulation, or
any change therein, or any change in the interpretation or administration
thereof by any Governmental Authority charged with the interpretation or
administration thereof (a "Regulatory Change"), or compliance by the Bank (or
its Lending Office) with any request, guideline or directive (whether or not
having the force of law) of any such Governmental Authority announced after the
date hereof shall impose, modify or deem applicable any reserve, special deposit
or similar requirement (including any such requirement imposed by the FRB, but
excluding with respect to any LIBOR Rate Loan any such requirement included in
the calculation of the LIBOR Rate) against assets of, deposits with or for the
account of, or credit extended by, the Bank's Lending Office or shall impose on
the Bank (or its Lending Office) or the interbank eurodollar market any other
condition affecting its LIBOR Rate Loans or its obligation to make such LIBOR
Rate Loans, and the result of any of the foregoing is to increase the cost to
the Bank (or its Lending Office) of making or maintaining any LIBOR Rate Loan,
or to reduce the amount of any sum received or receivable by the Bank (or its
Lending Office) under this Agreement with respect
34.
thereto, by an amount deemed by the Bank to be material, then from time to
time, within 15 days after demand by the Bank, the Borrower shall pay to the
Bank such additional amounts as shall compensate the Bank for such increased
cost or reduction.
(b) CAPITAL REQUIREMENTS. If the Bank shall have determined that any
Regulatory Change regarding capital adequacy, or compliance by the Bank (or any
corporation controlling the Bank) with any request, guideline or directive
regarding capital adequacy (whether or not having the force of law) of any
Governmental Authority, in each case, announced after the date hereof, has or
shall have the effect of reducing the rate of return on the Bank's or such
corporation's capital as a consequence of the Bank's obligations hereunder to a
level below that which the Bank or such corporation would have achieved but for
such adoption, change or compliance (taking into consideration the Bank's or
such corporation's policies with respect to capital adequacy), by an amount
deemed by the Bank to be material, then from time to time, within 15 days after
demand by the Bank, the Borrower shall pay to the Bank such additional amounts
as shall compensate the Bank for such reduction.
(c) REQUESTS. Any such request for compensation by the Bank under
this Section 6.03 shall set forth the basis of calculation thereof and shall, in
the absence of manifest error, be conclusive and binding for all purposes. In
determining the amount of such compensation, the Bank may use any reasonable
averaging and attribution methods; PROVIDED, HOWEVER, that the Borrower shall
not be liable for any such amount attributable to any period prior to the date
180 days prior to the date that an officer of the Bank directly responsible for
the administration of this Agreement knew or reasonably should have known of
such claim for reimbursement or compensation, unless the Bank has notified the
Borrower of such claim within such 180 day period.
SECTION 6.04 ILLEGALITY. If the Bank shall determine that it has
become unlawful, as a result of any Regulatory Change, for the Bank to make,
convert into or maintain LIBOR Rate Loans as contemplated by this Agreement, the
Bank shall promptly give notice of such determination to the Borrower, and
(i) the obligation of the Bank to make or convert into LIBOR Rate Loans, as the
case may be, shall be suspended until the Bank gives notice that the
circumstances causing such suspension no longer exist; and (ii) each of the
Bank's outstanding LIBOR Rate Loans shall, if requested by the Bank, be
converted into a Base Rate Loan not later than upon expiration of the Interest
Period related to such LIBOR Rate Loan, or, if earlier, on such date as may be
required by the applicable Regulatory Change, as shall be specified in such
request. Any such determination shall, in the absence of manifest error, be
conclusive and binding for all purposes.
35.
SECTION 6.05 FUNDING ASSUMPTIONS. Solely for purposes of
calculating amounts payable by the Borrower to the Bank under this Article VI,
each LIBOR Rate Loan made by the Bank (and any related reserve, special deposit
or similar requirement) shall be conclusively deemed to have been funded at the
Interbank Rate used in determining the LIBOR Rate for such LIBOR Rate Loan by a
matching deposit or other borrowing in the interbank eurodollar market for a
comparable amount and for a comparable period, whether or not such LIBOR Rate
Loan is in fact so funded.
SECTION 6.06 OBLIGATION TO MITIGATE. The Bank agrees that as
promptly as practicable after it becomes aware of the occurrence of an event
that would entitle it to give notice pursuant to Section 6.03(a) or 6.04, and in
any event if so requested by the Borrower, the Bank shall use reasonable efforts
to make, fund or maintain its affected LIBOR Rate Loans through another Lending
Office if as a result thereof the increased costs would be avoided or materially
reduced or the illegality would thereby cease to exist and if, in the reasonable
opinion of the Bank, the making, funding or maintaining of such LIBOR Rate Loans
through such other Lending Office would not in any material respect be
disadvantageous to the Bank or contrary to the Bank's normal banking practices.
ARTICLE VII
PAYMENTS
SECTION 7.01 PAYMENTS.
(a) PAYMENTS. The Borrower shall make each payment under the Loan
Documents, unconditionally in full without set-off, counterclaim or other
defense (but without waiving such rights), not later than 11:00 A.M. (California
time) on the day when due to the Bank in Dollars and in same day or immediately
available funds, to the Lending Office and account of the Bank as it from time
to time shall designate in a written notice to the Borrower.
(b) AUTHORIZATION TO BANK. The Bank may (but shall not be obligated
to), and the Borrower hereby authorizes the Bank to, charge any deposit account
of the Borrower with the Bank for the amount of any payment which is not made by
the time specified in subsection (a). The Bank shall promptly notify the
Borrower after charging any such account.
(c) EXTENSION. Whenever any payment hereunder shall be stated to be
due, or whenever any Interest Payment Date or any other date specified hereunder
would otherwise occur, on a day other than a Business Day, then, except as
otherwise provided herein, such payment shall be made, and such Interest Payment
Date or other date shall occur, on the next succeeding Business Day, and such
extension of time shall in such case be included in
36.
the computation of payment of interest, standby L/C issuance fee or
commitment fee hereunder.
(d) APPLICATION. (i) Unless the Bank shall receive a timely election
by the Borrower with respect to the application of any principal payments, each
payment of principal by the Borrower shall be applied (A) first, to the Base
Rate Loans then outstanding, and (B) second, to the LIBOR Rate Loans then
outstanding (in such manner as the Bank shall determine in its sole discretion).
SECTION 7.02 TAXES.
(a) NO REDUCTION OF PAYMENTS. The Borrower shall pay all amounts of
principal, interest, fees and other amounts due under the Loan Documents free
and clear of, and without reduction for or on account of, any present and future
taxes, levies, imposts, duties, fees, assessments, charges, deductions or
withholdings and all liabilities with respect thereto excluding, in the case of
the Bank, income and franchise taxes imposed on it by the jurisdiction under the
laws of which the Bank is organized or in which its principal executive offices
may be located or any political subdivision or taxing authority thereof or
therein, and by the jurisdiction of the Bank's Lending Office and any political
subdivision or taxing authority thereof or therein (all such nonexcluded taxes,
levies, imposts, duties, fees, assessments, charges, deductions, withholdings
and liabilities being hereinafter referred to as "Taxes"). If any Taxes shall
be required by law to be deducted or withheld from any payment, the Borrower
shall increase the amount paid so that the Bank receives when due (and is
entitled to retain), after deduction or withholding for or on account of such
Taxes (including deductions or withholdings applicable to additional sums
payable under this Section 7.02), the full amount of the payment provided for in
the Loan Documents.
(b) DEDUCTION OR WITHHOLDING; TAX RECEIPTS. If the Borrower makes
any payment hereunder in respect of which it is required by law to make any
deduction or withholding, it shall pay the full amount to be deducted or
withheld to the relevant taxation or other authority within the time allowed for
such payment under applicable law and promptly thereafter shall furnish to the
Bank an original or certified copy of a receipt evidencing payment thereof,
together with such other information and documents as the Bank may reasonably
request.
(c) INDEMNITY. If the Bank is required by law to make any payment on
account of Taxes, or any liability in respect of any Tax is imposed, levied or
assessed against the Bank, the Borrower shall indemnify the Bank for and against
such payment or liability, together with any incremental taxes, interest or
penalties, and all costs and expenses, payable or incurred in connection
therewith, including Taxes imposed on amounts payable
37.
under this Section 7.02, whether or not such payment or liability was
correctly or legally asserted; provided, however, that the Borrower shall not
be responsible for such interest, penalties, costs or expenses unless (A) the
Bank has provided the Borrower with a notice specifying the Taxes payable at
least ten (10) Business Days prior to such Taxes becoming due and payable,
and (B) any interest, penalties, costs or expenses do not result from the
gross negligence or willful misconduct of the Bank. A certificate of the
Bank as to the amount of any such payment shall, in the absence of manifest
error, be conclusive and binding for all purposes; PROVIDED, HOWEVER, that
the Borrower shall not be liable for any such amount attributable to any
period prior to the date 180 days prior to the date that an officer of the
Bank directly responsible for the administration of this Agreement knew or
reasonably should have known of such Tax payment or liability, unless the
Bank has notified the Borrower of such Tax payment or liability within such
180 day period.
ARTICLE VIII
CONDITIONS PRECEDENT
SECTION 8.01 CONDITIONS PRECEDENT TO THE INITIAL LOAN. The
obligation of the Bank to make its initial Loan shall be subject to the
satisfaction of each of the following conditions precedent on or before the
Closing Date:
(a) FEES AND EXPENSES. The Borrower shall have paid (i) all fees
then due in accordance with Section 3.03 and (ii) all invoiced costs and
expenses then due in accordance with Section 12.04(a).
(b) LOAN DOCUMENTS. The Bank shall have received each of the Loan
Documents executed by each of the respective parties thereto.
(c) DOCUMENTS AND ACTIONS RELATING TO COLLATERAL. The Bank shall
have received the following, in form and substance satisfactory to it:
(i) evidence that all filings, registrations and recordings have been
made in the appropriate governmental offices, and all other action has been
taken, which shall be necessary to create, in favor of the Bank, a perfected
first priority Lien on the Collateral, subject only to Permitted Liens,
including evidence of filing of completed UCC-1 financing statements in the
appropriate governmental offices; and
(ii) the results, dated as of a recent date prior to the Closing
Date, of searches conducted (A) in the UCC filing records in each of the
governmental offices in each jurisdiction in which personal property and fixture
Collateral is located, and
38.
(B) of the records maintained by the U.S. Patent and Trademark Office with
respect to all United States patents and patent applications constituting
Collateral, which shall have revealed no Liens with respect to any of the
Collateral except Permitted Liens;
(d) ADDITIONAL CLOSING DOCUMENTS AND ACTIONS. The Bank shall have
received the following, in form and substance satisfactory to it:
(i) a payoff letter from Silicon Valley Bank to Borrower, confirming,
to the extent applicable: (i) the amounts due under the Existing Credit have
been paid in full; and (ii) that upon payment of such amounts, the Existing
Credit shall terminate on the Closing Date;
(ii) evidence of completion to the satisfaction of the Bank of such
investigations, reviews and audits with respect to the Borrower and its
operations as the Bank may deem appropriate;
(iii) evidence that all insurance required under this Agreement and
the Collateral Documents is in full force and effect, together with copies of
certificates of insurance and all endorsements thereto required under this
Agreement and the Collateral Documents;
(iv) evidence that all (A) authorizations or approvals of any
Governmental Authority and (B) approvals or consents of any other Person,
required in connection with the execution, delivery and performance of the Loan
Documents shall have been obtained;
(v) the unaudited balance sheet of the Borrower as at June 30, 1997,
and the related statements of income and cash flows, for the quarter then ended;
and
(vi) a completed Compliance Certificate, dated the Closing Date, as of
the end of the immediately preceding fiscal quarter.
(e) CORPORATE DOCUMENTS. The Bank shall have received the following,
in form and substance satisfactory to it:
(i) certified copies of the certificate or articles, as the case may
be, of incorporation of the Borrower, together with certificates as to good
standing and tax status, from the Secretary of State or other Governmental
Authority, as applicable, of the Borrower's state of incorporation and
certificates from the Secretary of State or other Governmental Authority, as
applicable, of California as to the Borrower's status as a foreign corporation
and tax status, each dated as of a recent date prior to the Closing Date;
39.
(ii) a certificate of the Secretary or Assistant Secretary of the
Borrower, dated the Closing Date, certifying (A) copies of the bylaws of the
Borrower and the resolutions of the Board of Directors of the Borrower
authorizing the execution, delivery and performance of the Loan Documents and
(B) the incumbency, authority and signatures of each officer of the Borrower
authorized to execute and deliver the Loan Documents and act with respect
thereto, upon which certificate the Bank may conclusively rely until it shall
have received a further certificate of the Secretary or an Assistant Secretary
of the Borrower cancelling or amending such prior certificate;
(f) RECEIVABLES AUDIT. The Bank shall have completed to its
satisfaction an audit of the Borrower's Receivables, verifying, among other
things, Borrower's "ship-in-place" Receivables procedures, and such other
matters, as the Bank shall require.
(g) LEGAL OPINION. The Bank shall have received the opinion of
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, Professional Corporation, counsel to the
Borrower, dated the Closing Date, in form and substance satisfactory to the
Bank.
SECTION 8.02 CONDITIONS PRECEDENT TO ALL LOANS. The obligation of
the Bank to make each Loan shall be subject to the satisfaction of each of the
following conditions precedent:
(a) NOTICE. The Borrower shall have given the Notice of Borrowing as
provided in Section 2.02.
(b) MATERIAL ADVERSE EFFECT. On and as of the date of such Loan,
there shall have occurred no Material Adverse Effect since the date of this
Agreement (in the case of the initial Loan) or the date of the most recent
borrowing (in the case of any subsequent Loan), as the case may be.
(c) REPRESENTATIONS AND WARRANTIES; NO DEFAULT. On the date of such
Loan, both before and after giving effect thereto and to the application of
proceeds therefrom: (i) the representations and warranties contained in
Section 9.01 and in the other Loan Documents shall be true, and correct on and
as of the date of such Loan as though made on and as of such date; and (ii) no
Default shall have occurred and be continuing or shall result from the making of
such Loan. For purposes of this Section 8.02(c), clause (i) shall be deemed
instead to refer to the last day of the most recent month, quarter and year for
which financial statements have then been delivered in respect of the
representation and warranty made in Section 9.01(p); clause (i) shall not be
deemed to refer to any other representations and warranties which relate solely
to an earlier date (PROVIDED that such other representations and warranties
shall be true, and correct as of such earlier date); and clause (i) shall take
into account any amendments to the Schedules and other disclosures
40.
made in writing by the Borrower to the Bank after the Closing Date and
approved by the Bank. The giving of any Notice of Borrowing and the
acceptance by the Borrower of the proceeds of each Loan made following the
Closing Date shall each be deemed a certification to the Bank that on and as
of the date of such Loan such statements are true.
(d) ADDITIONAL DOCUMENTS. The Bank shall have received, in form and
substance satisfactory to it, such additional approvals, opinions, documents and
other information as the Bank may reasonably request.
ARTICLE IX
REPRESENTATIONS AND WARRANTIES
SECTION 9.01 REPRESENTATIONS AND WARRANTIES. The Borrower
represents and warrants to the Bank that :
(a) ORGANIZATION AND POWERS. Borrower is a corporation or
partnership duly organized or formed, as the case may be, validly existing and
in good standing under the laws of the jurisdiction of its incorporation or
formation, is qualified to do business and is in good standing in each
jurisdiction in which the failure so to qualify or be in good standing would
result in a Material Adverse Effect and has all requisite power and authority to
own its assets and carry on its business and to execute, deliver and perform its
obligations under the Loan Documents.
(b) AUTHORIZATION; NO CONFLICT. The execution, delivery and
performance by the Borrower of the Loan Documents have been duly authorized by
all necessary corporate action of the Borrower and do not and will not
(i) contravene the terms of the certificate or articles, as the case may be, of
incorporation and the bylaws of the Borrower or result in a breach of or
constitute a default under any indenture or loan or credit agreement or any
other agreement, lease or instrument to which the Borrower is a party or by
which it or its properties may be bound or affected; (ii) violate any provision
of any law, rule, regulation, order, writ, judgment, injunction, decree or the
like binding on or affecting the Borrower; or (iii) except as contemplated by
this Agreement, result in, or require, the creation or imposition of any Lien
upon or with respect to any of the properties of the Borrower.
(c) BINDING OBLIGATION. The Loan Documents constitute, or when
delivered under this Agreement will constitute, legal, valid and binding
obligations of the Borrower, enforceable against the Borrower in accordance with
their respective terms, except as enforceability may be limited by applicable
bankruptcy, insolvency or similar laws affecting the enforcement of creditors'
rights generally or by general equitable principles.
41.
(d) CONSENTS. No authorization, consent, approval, license,
exemption of, or filing or registration with, any Governmental Authority, or
approval or consent of any other Person, is required for the due execution,
delivery or performance by the Borrower of any of the Loan Documents, except as
contemplated hereby and for recordings or filings in connection with the
perfection of the Liens on the Collateral in favor of the Bank.
(e) NO DEFAULTS. Neither the Borrower nor any of its Subsidiaries is
in default under any material contract, lease, agreement, judgment, decree or
order to which it is a party or by which it or its properties may be bound
except where such default could not reasonably be expected to have a Material
Adverse Effect.
(f) TITLE TO PROPERTIES; LIENS. The Borrower and its Subsidiaries
have good and marketable title to their properties and assets, including all
property forming a part of the Collateral, and there is no Lien upon or with
respect to any of such properties or assets, including any of the Collateral,
except for Permitted Liens.
(g) LITIGATION. There are no actions, suits or proceedings pending
or, to the best of the Borrower's knowledge, threatened against or affecting the
Borrower or any of its Subsidiaries or the properties of the Borrower or any of
its Subsidiaries before any Governmental Authority or arbitrator which could
reasonably be expected to result in a Material Adverse Effect.
(h) COMPLIANCE WITH ENVIRONMENTAL LAWS. Each of the Borrower and its
Subsidiaries is in compliance in all material respects with all Environmental
Laws, whether in connection with the ownership, use, maintenance or operation of
its Premises or the conduct of any business thereon, or otherwise. Neither the
Borrower, any of its Subsidiaries nor to the best of the Borrower's knowledge,
any previous owner, tenant, occupant, user or operator of the Premises, or any
present tenant or other present occupant, user or operator of the Premises has
used, generated, manufactured, installed, treated, released, stored or disposed
of any Hazardous Substances on, under, or at the Premises, except in compliance
in all material respects with all applicable Environmental Laws. To the best of
Borrower knowledge no Hazardous Substances have at any time been spilled,
leaked, dumped, deposited, discharged, disposed of or released on, under, at or
from the Premises, nor have any of the Premises been used at any time by any
Person as a landfill or waste disposal site except in compliance in all material
respects with applicable law. There are no actions, suits, claims, notices of
violation, hearings, investigations or proceedings pending or, to the best of
the Borrower's knowledge, threatened against or affecting the Borrower or any of
its Subsidiaries or with respect to the
42.
ownership, use, maintenance and operation of the Premises, relating to
Environmental Laws or Hazardous Substances.
(i) GOVERNMENTAL REGULATION. Neither the Borrower nor any of its
Subsidiaries is subject to regulation under the Public Utility Holding Company
Act of 1935, the Federal Power Act, the Investment Company Act of 1940, the
Interstate Commerce Act, any state public utilities code or any other federal or
state statute or regulation limiting its ability to incur Indebtedness.
(j) ERISA.
(i) The Borrower and all ERISA Affiliates have satisfied all
applicable contribution requirements under Section 412(c)(11) of the Internal
Revenue Code and have never sought a waiver under Section 412(d) of the Internal
Revenue Code;
(ii) no Termination Event has occurred and is continuing, or is
reasonably expected to occur;
(iii) the aggregate amount of Unfunded Accrued Benefits under all
Pension Plans (excluding in such computation Pension Plans with assets greater
than accrued benefits) does not exceed $100,000;
(iv) there is no condition or event under which the Borrower, any
ERISA Affiliate, or any Plan maintained by the Borrower or any ERISA Affiliate
could be subject to any risk of material liability under ERISA or the Internal
Revenue Code, regardless of whether the Borrower or any ERISA Affiliate engaged
in a transaction giving rise to the liability;
(v) neither the Borrower nor any ERISA Affiliate has unfunded,
contingent liability that exceeds $100,000 with respect to Plans that provide
post-retirement welfare benefits; and
(vi) all Plans maintained by, or contributed to by, the Borrower or
any ERISA Affiliate comply in all material respects, and have been administered
in material compliance with, the requirements of applicable law (including, if
applicable, foreign law, ERISA and the Internal Revenue Code), and in accordance
with each Plan's terms.
(k) SUBSIDIARIES. The name, capital structure and ownership of each
Subsidiary of the Borrower on the date of this Agreement is as set forth in Item
9.01(k) of the Disclosure Letter. All of the outstanding capital stock of, or
other interest in, each such Subsidiary has been validly issued, and is fully
paid and nonassessable. Except as set forth in such Disclosure Letter, on the
date of this Agreement the Borrower has no material equity interest in any
Person.
43.
(l) MARGIN REGULATIONS. The Borrower is not engaged in the business
of extending credit for the purpose of purchasing or carrying "margin stock"
(within the meaning of Regulations G or U of the FRB). No part of the proceeds
of the Loans will be used to purchase or carry any margin stock or to extend
credit to others for the purpose of purchasing or carrying any margin stock.
(m) TAXES. Each of the Borrower and its Subsidiaries has duly filed
all material tax and information returns required to be filed, and has paid all
taxes, fees, assessments and other governmental charges or levies that have
become due and payable, except to the extent such taxes or other charges are
being or promptly will be contested in good faith and are adequately reserved
against in accordance with GAAP.
(n) PATENTS AND OTHER RIGHTS. Each of the Borrower and its
Subsidiaries owns or is licensed or otherwise has the right to use all permits,
franchises, licenses, patents, trademarks, trade names, service marks,
copyrights and all rights with respect thereto, that are necessary for the
ownership, maintenance and operation of its business and neither the Borrower
nor any such Subsidiary is in violation of any rights of others with respect to
the foregoing except where the foregoing could not reasonably be expected to
have a Material Adverse Effect.
(o) INSURANCE. The properties of the Borrower and its Subsidiaries
are insured, with financially sound and reputable insurance companies, in such
amounts, with such deductibles and covering such risks as is customarily carried
by companies engaged in similar businesses and owning similar properties in the
localities where the Borrower or such Subsidiary operates.
(p) FINANCIAL STATEMENTS AND PROJECTIONS. (i) The unaudited
consolidated balance sheet of the Borrower as at June 30, 1997, and the related
statements of income, shareholders' equity and cash flows, for the quarter then
ended and the six month period then ended, are complete and correct and fairly
present the financial condition of the Borrower at such dates and the results of
operations of the Borrower and its Subsidiaries for the periods covered by such
statements, in each case in accordance with GAAP consistently applied, subject
to normal year-end adjustments and the absence of notes. (ii) Since June 30,
1997, there has been no Material Adverse Effect.
(q) LIABILITIES. Neither the Borrower nor any of its Subsidiaries
has any material liabilities, fixed or contingent, that are required to be
disclosed in accordance with GAAP and not reflected in the financial statements
referred to in subsection (p), in the notes thereto or otherwise disclosed in
writing to the Bank, other than liabilities arising in the ordinary course of
business since June 30, 1997.
44.
(r) LABOR DISPUTES, ETC. There are no strikes, lockouts or other
labor disputes against the Borrower or any of its Subsidiaries, or, to the best
of the Borrower's knowledge, threatened against or affecting the Borrower or any
of its Subsidiaries, which could reasonably be expected to result in a Material
Adverse Effect.
(s) SOLVENCY. Each of the Borrower and its Subsidiaries is Solvent.
(t) DISCLOSURE. None of the representations or warranties made by
the Borrower or any of its Subsidiaries in the Loan Documents as of the date of
such representations and warranties, and none of the statements contained in any
other exhibit, report, certificate or written statement furnished by or on
behalf of the Borrower or any of its Subsidiaries to the Bank in connection with
the Loan Documents, contains any untrue statement of a material fact or omits
any material fact required to be stated therein or necessary to make the
statements made therein, in the light of the circumstances under which they are
made, not misleading, as of the time made or delivered. It is recognized by the
Bank that projections and forecasts provided by or on behalf of the Borrower,
although reflecting the Borrower's good faith projections or forecasts based on
methods and data which the Borrower believes to be reasonable and accurate, are
not to be viewed as facts and that actual results during the period or periods
covered by any such projections and forecasts may (and are likely to) differ
from the projected or forecasted results.
ARTICLE X
COVENANTS
SECTION 10.01 REPORTING COVENANTS. So long as any of the Obligations
shall remain unpaid or the Bank shall have any Commitment, the Borrower agrees
that:
(a) FINANCIAL STATEMENTS AND OTHER REPORTS. The Borrower shall
furnish to the Bank:
(i) as soon as available and in any event within 45 days after the
end of the first three fiscal quarters of each fiscal year, a consolidated
balance sheet of the Borrower and its Subsidiaries as of the end of such
quarter, and the related consolidated statements of income of the Borrower for
such quarter and the portion of the fiscal year through the end of such quarter,
prepared in accordance with GAAP consistently applied, all in reasonable detail,
together with a certificate of a Responsible Officer of the Borrower stating
that such financial statements fairly present in all material respects the
financial condition of the Borrower and its Subsidiaries as at such date and the
results of operations of the Borrower and its Subsidiaries for the period ended
on such date and have been prepared in accordance with GAAP consistently
applied, subject to changes
45.
resulting from normal, year-end audit adjustments and except for the absence
of notes;
(ii) as soon as available and in any event within 90 days after the
end of each fiscal year, a consolidated balance sheet of the Borrower and its
Subsidiaries as of the end of such fiscal year, and the related consolidated
statements of income, shareholders' equity and cash flows of the Borrower and
its Subsidiaries for such fiscal year, prepared in accordance with GAAP
consistently applied, all in reasonable detail and setting forth in comparative
form the figures for the previous fiscal year, accompanied by a report thereon
of Coopers & ▇▇▇▇▇▇▇ or another firm of independent certified public accountants
of recognized national standing acceptable to the Bank, which report shall be
unqualified as to scope of audit or the status of the Borrower and its
Subsidiaries as a going concern;
(iii) as soon as available and in any event within 20 days after the
end of each of the first two months of each fiscal quarter, a consolidated
balance sheet of the Borrower and its Subsidiaries as of the end of each such
month, and the related consolidated cash flow projections, aging and backlog
reports of the Borrower and its Subsidiaries for each such month and the portion
of the fiscal year through the end of such month, prepared in accordance with
GAAP consistently applied, all in reasonable detail, together with a certificate
of a Responsible Officer of the Borrower stating that such financial statements
fairly present in all material respects the financial condition of the Borrower
and its Subsidiaries as at such date and the results of operations of the
Borrower and its Subsidiaries for the period ended on such date and have been
prepared in accordance with GAAP consistently applied, subject to changes from
normal, year-end adjustments and except for the absence of notes;
(iv) as soon as available and in any event not later than 20 days
after the end of each calendar month, (A) a completed Borrowing Base
Certificate, if applicable, (B) full and complete reports with respect to the
Receivables, including such information as the Bank shall request, and (C) a
detailed schedule of the Borrower's Inventory, each as of the end of such
immediately preceding fiscal month and in form and substance satisfactory to the
Bank;
(v) promptly after the giving, sending or filing thereof, copies of
all reports, if any, which the Borrower or any of its Subsidiaries sends to the
holders of its respective capital stock or other securities and of all reports
or filings, if any, by the Borrower or any of its Subsidiaries with the SEC or
any national securities exchange.
As to any information contained in materials furnished pursuant to clause (iv),
the Borrower shall not be separately required to
46.
furnish such information under clause (i) or (ii), but the foregoing shall
not be in derogation of the obligation of the Borrower to furnish the
information and materials described in clauses (i) and (ii) at the times
specified therein.
(b) ADDITIONAL INFORMATION. The Borrower will furnish to the Bank:
(i) promptly after a Responsible Officer of the Borrower has
knowledge or becomes aware thereof, notice of the occurrence of any Default;
(ii) prompt written notice of (A) any proposed acquisition of stock,
assets or property by the Borrower or any of its Subsidiaries that could
reasonably be expected to result in environmental liability under Environmental
Laws, and (B)(1) any spillage, leakage, discharge, disposal, leaching, migration
or release of any Hazardous Substances required to be reported to any
Governmental Authority under applicable Environmental Laws, and (2) all actions,
suits, claims, notices of violation, hearings, investigations or proceedings
pending, or to the best of the Borrower's knowledge, threatened against or
affecting the Borrower or any of its Subsidiaries or with respect to the
ownership, use, maintenance and operation of the Premises, relating to
Environmental Laws or Hazardous Substances;
(iii) prompt written notice of all actions, suits and proceedings
before any Governmental Authority or arbitrator pending, or to the best of the
Borrower's knowledge, threatened against or affecting the Borrower or any of its
Subsidiaries which (A) could reasonably be expected to involve an aggregate
liability of $250,000 (or its equivalent in another currency) or more, or
(B) otherwise may have a Material Adverse Effect;
(iv) promptly after the Borrower has knowledge or becomes aware
thereof, (A) notice of the occurrence of any Termination Event, together with a
copy of any notice of such Termination Event to the PBGC, and (B) the details
concerning any action taken or proposed to be taken by the IRS, PBGC, Department
of Labor or other Person with respect thereto;
(v) within 30 days of the date thereof, or, if earlier, on the date
of delivery of any financial statements pursuant to subsection (a), notice of
any material change in accounting policies or financial reporting practices by
the Borrower or any of its Subsidiaries;
(vi) promptly after the occurrence thereof, notice of any labor
controversy resulting in or threatening to result in any strike, work stoppage,
boycott, shutdown or other material labor disruption against or involving the
Borrower or any of its Subsidiaries which could reasonably be expected result in
a Material Adverse Effect;
47.
(vii) prompt written notice of any other condition or event which has
resulted, or that could reasonably be expected to result, in a Material Adverse
Effect; and
(viii) such other information respecting the operations, properties,
business or condition (financial or otherwise) of the Borrower or its
Subsidiaries (including with respect to the Collateral) as the Bank may from
time to time reasonably request.
Each notice pursuant to this subsection (b) shall be accompanied by a written
statement by a Responsible Officer of the Borrower setting forth details of the
occurrence referred to therein, and stating what action the Borrower proposes to
take with respect thereto.
SECTION 10.02 FINANCIAL COVENANTS. So long as any of the Obligations
shall remain unpaid or the Bank shall have any Commitment, the Borrower agrees
that:
(a) MINIMUM QUICK RATIO. The Borrower will maintain Minimum Quick
Ratio as of the end of each fiscal quarter of not less than 1.40 to 1.0;
(b) MINIMUM CONSOLIDATED TANGIBLE NET WORTH. The Borrower shall
maintain Consolidated Tangible Net Worth as of the end of each fiscal quarter of
not less than $67,000,000;
(c) LEVERAGE RATIO. The Borrower shall maintain a ratio of
Consolidated Total Liabilities to Consolidated Tangible Net Worth as of the end
of each fiscal quarter of not more than 0.50 to 1.0; and
(d) PROFITABILITY. The Borrower shall not incur, on a consolidated
(rolling four-quarter) basis from the Closing Date through the Revolving Expiry
Date either (i) two consecutive quarterly losses of any amount, whether any one
or both of such losses is on a net operating or a net after-taxes basis, or (ii)
a single quarterly loss in excess of $300,000 (on either a net operating or a
net after-taxes basis).
SECTION 10.03 ADDITIONAL AFFIRMATIVE COVENANTS. So long as any of
the Obligations shall remain unpaid or the Bank shall have any Commitment, the
Borrower agrees that:
(a) PRESERVATION OF EXISTENCE, ETC. The Borrower shall, and shall
cause each of its Subsidiaries to, maintain and preserve its legal existence,
its rights to transact business and all other rights, franchises and privileges
necessary or desirable in the normal course of its business and operations and
the ownership of its properties, except in connection with any transactions
permitted by Section 10.04.
48.
(b) PAYMENT OF OBLIGATIONS. The Borrower shall, and shall cause each
of its Subsidiaries to, pay and discharge (i) all material taxes, fees,
assessments and governmental charges or levies imposed upon it or upon its
properties or assets prior to the date on which penalties attach thereto, and
all lawful claims for labor, materials and supplies which, if unpaid, might
become a Lien upon any properties or assets of the Borrower or any Subsidiary,
except for Permitted Liens, except to the extent such taxes, fees, assessments
or governmental charges or levies, or such claims, are being contested in good
faith by appropriate proceedings and are adequately reserved against in
accordance with GAAP; and (ii) all lawful claims which, if unpaid, would by law
become a Lien upon its property not constituting a Permitted Lien.
(c) MAINTENANCE OF INSURANCE. The Borrower shall, and shall cause
each of its Subsidiaries to, carry and maintain in full force and effect, at its
own expense and with financially sound and reputable insurance companies,
insurance in such amounts, with such deductibles and covering such risks as is
customarily carried by companies engaged in the same or similar businesses and
owning similar properties in the localities where the Borrower or such
Subsidiary operates, including fire, extended coverage, business interruption,
public liability, property damage and worker's compensation. Insurance on the
Collateral shall name the Bank as loss payee. The Borrower's liability
insurance policies shall name the Bank as an additional insured. Upon the
request of the Bank, the Borrower shall furnish the Bank from time to time with
full information as to the insurance carried by it and, if so requested, copies
of all such insurance policies. The Borrower shall also furnish to the Bank
from time to time upon the request of the Bank a certificate of the Borrower's
insurance broker or other insurance specialist stating that all premiums then
due on the policies relating to insurance on the Collateral have been paid, that
such policies are in full force and effect and that such insurance coverage and
such policies comply with all the requirements of this subsection (c). All
insurance policies required under this subsection (c) shall provide that they
shall not be terminated or cancelled without at least 30 days' prior written
notice to the Borrower and the Bank. Receipt of notice of termination or
cancellation of any such insurance policies or reduction of coverages or amounts
thereunder shall entitle the Bank to renew any such policies, cause the
coverages and amounts thereof to be maintained at levels required pursuant to
the first sentence of this subsection (c) or otherwise to obtain similar
insurance in place of such policies, in each case at the expense of the
Borrower.
(d) KEEPING OF RECORDS AND BOOKS OF ACCOUNT. The Borrower shall, and
shall cause each of its Subsidiaries to, keep records and books of account,
which are sufficient to allow financial statements to be prepared in accordance
with GAAP.
49.
(e) INSPECTION RIGHTS. The Borrower shall at any reasonable time
with reasonable notice and from time to time (i) permit the Bank or any of its
agents or representatives to visit and inspect any of the properties of the
Borrower and its Subsidiaries and to examine and make copies of and abstracts
from the records and books of account of the Borrower and its Subsidiaries, and
to discuss the business affairs, finances and accounts of the Borrower and any
such Subsidiary with any of the officers, employees or accountants of the
Borrower or such Subsidiary, and if the Bank is at any time lending against the
Borrowing Base, (ii) permit the Bank or any of its agents or representatives to
conduct periodic audits of the Collateral at such frequencies as the Bank shall
deem appropriate.
(f) COMPLIANCE WITH LAWS, ETC. The Borrower shall, and shall cause
each of its Subsidiaries to, comply in all material respects with the
requirements of all applicable laws, rules, regulations and orders of any
Governmental Authority (including all Environmental Laws) except where the
failure to do so could not reasonably be expected to have a Material Adverse
Effect.
(g) MAINTENANCE OF PROPERTIES, ETC. The Borrower shall, and shall
cause each of its Subsidiaries to, maintain and preserve all of its properties
necessary or useful in the proper conduct of its business in good working order
and condition in accordance with the general practice of other corporations of
similar character and size, ordinary wear and tear excepted except where the
failure to do so could not reasonably be expected to have a Material Adverse
Effect.
(h) LICENSES. The Borrower shall, and shall cause each of its
Subsidiaries to, obtain and maintain all licenses, authorizations, consents,
filings, exemptions, registrations and other governmental approvals necessary in
connection with the execution, delivery and performance of the Loan Documents,
the consummation of the transactions therein contemplated or the operation and
conduct of its business and ownership of its properties except where the failure
to do so could not reasonably be expected to have a Material Adverse Effect.
(i) ACTION UNDER ENVIRONMENTAL LAWS. The Borrower shall, and shall
cause each of its Subsidiaries to, upon becoming aware of the presence of any
Hazardous Substance (in a manner not in material compliance with applicable law)
or the existence of any environmental liability under applicable Environmental
Laws with respect to the Premises, take all actions, at their cost and expense,
as shall be necessary or advisable to investigate and clean up the condition of
the Premises, including all removal, containment and remedial actions, and
restore the Premises to a condition in compliance with applicable Environmental
Laws.
50.
(j) USE OF PROCEEDS. The Borrower shall use the proceeds of the
Loans solely for the purpose of financing its working capital requirements and
general corporate purposes.
(k) FURTHER ASSURANCES AND ADDITIONAL ACTS. The Borrower shall
execute, acknowledge, deliver, file, notarize and register at its own expense
all such further agreements, instruments, certificates, documents and assurances
and perform such acts as the Bank shall deem reasonably necessary or appropriate
to effectuate the purposes of the Loan Documents, and promptly provide the Bank
with evidence of the foregoing reasonably satisfactory in form and substance to
the Bank.
(l) OPERATING ACCOUNTS. The Borrower shall maintain with the Bank
its primary operating accounts during the term of this Agreement.
(m) BORROWING BASE CERTIFICATE AND COLLATERAL REPORTS. As a condition
precedent to the obligation of the Bank to make any Loan following the breach of
any financial covenant contained in Section 10.02, the Borrower shall, if
requested by the Bank, deliver to the Bank a completed Borrowing Base
Certificate, together with the related collateral reports, required under
Section 10.01(a), and the statements contained therein shall be true, correct
and complete on and as of the date of such Loan as though made on and as of such
date, except for changes in the information set forth in such Borrowing Base
Certificate in the ordinary course of business. The giving of any Notice of
Borrowing and the acceptance by the Borrower of the proceeds of a Loan shall
each be deemed a certification to the Bank that on and as of the date of such
Loan such statements are true, correct and complete, except for changes in the
information set forth in such Borrowing Base Certificate in the ordinary course
of business.
SECTION 10.04 NEGATIVE COVENANTS. So long as any of the Obligations
shall remain unpaid or the Bank shall have any Commitment, the Borrower agrees
that:
(a) INDEBTEDNESS. The Borrower shall not, and shall not permit any
of its Subsidiaries to, create, incur, assume or otherwise become liable for or
suffer to exist any Indebtedness, other than:
(i) Indebtedness of the Borrower to the Bank hereunder;
(ii) Indebtedness of the Borrower and its Subsidiaries existing on
the Closing Date and set forth in Item 10.4(a) of the Disclosure Letter or
extensions, renewals and refinancings of such Indebtedness PROVIDED that the
principal amount of such Indebtedness being extended, renewed or refinanced does
not increase;
51.
(iii) Accounts payable to trade creditors for goods and services and
current operating liabilities (not the result of the borrowing of money)
incurred in the ordinary course of the Borrower's or such Subsidiary's business
in accordance with customary terms and paid within the customary time, unless
contested in good faith by appropriate proceedings and reserved for in
accordance with GAAP;
(iv) Indebtedness consisting of guarantees resulting from endorsement
of negotiable instruments for collection by the Borrower or any such Subsidiary
in the ordinary course of business;
(v) Indebtedness of the Borrower and its Subsidiaries under Capital
Leases in the ordinary course of business;
(vi) Indebtedness subordinated on terms satisfactory to the Bank to
the Obligations at any time outstanding; and
(vii) Indebtedness of any Subsidiary to the Borrower which
constitutes a Permitted Investment by the Borrower under Section 10.04(f);
(viii) Indebtedness of any Subsidiary to any other Subsidiary;
(ix) Indebtedness with respect to deferred compensation or employee
benefit programs incurred in the ordinary course of business or in connection
with the discontinuance or sale of businesses or facilities;
(x) Indebtedness incurred in connection with any sale-leaseback
transactions permitted under Section 10.04(h);
(xi) Payment obligations incurred in connection with Permitted Swap
Obligations;
(xii) Indebtedness permitted under Section 10.04(b) by reason of
clause (ix) of the definition of "Permitted Liens";
(xiii) Indebtedness consisting of guarantees and other Guaranty
Obligations of the obligations of vendors and suppliers of the Borrower or its
Subsidiaries in respect of transactions entered into in the ordinary course of
business; and
(xiv) Other Indebtedness in an aggregate amount not to exceed at any
one time outstanding $250,000
(b) LIENS; NEGATIVE PLEDGES. The Borrower shall not, and shall not
permit any of its Subsidiaries to, create, incur, assume or suffer to exist any
Lien upon or with respect to any of its properties, revenues or assets, whether
now owned or hereafter acquired, other than Permitted Liens.
52.
(c) CHANGE IN NATURE OF BUSINESS. The Borrower shall not, and shall
not permit any of its Subsidiaries to, engage in any material line of business
substantially different from those lines of business carried on by it at the
date hereof or which are reasonable extensions thereof or reasonably incidental
thereto.
(d) RESTRICTIONS ON FUNDAMENTAL CHANGES. The Borrower will not, and
will not permit any of its Subsidiaries to, merge with or consolidate into, or
acquire all or substantially all of the assets of, any Person, or sell,
transfer, lease or otherwise dispose of (whether in one transaction or in a
series of transactions) all or substantially all of its assets, except that:
(i) the Borrower or any of its Subsidiaries may sell or dispose of
assets in accordance with the provisions of subsection (e);
(ii) the Borrower or any of its Subsidiaries may make any Investment
permitted by subsection (f); and
(iii) the Borrower may merge with or consolidate into any other
Person, PROVIDED that (A) the Borrower is the surviving corporation, and (B) no
such merger or consolidation shall be made while there exists a Default or if a
Default would occur as a result thereof.
(e) SALES OF ASSETS. The Borrower shall not, and shall not permit
any of its Subsidiaries to, sell, lease, transfer, or otherwise dispose of, or
part with control of (each, a "Transfer") (whether in one transaction or a
series of transactions) any assets (including any shares of stock in any
Subsidiary or other Person), except the following:
(i) sales of inventory and licensing of intellectual property in the
ordinary course of business;
(ii) transfers consisting of the making or liquidation of Permitted
Investments;
(iii) sales of any assets which have become worn out or obsolete or
which are promptly being replaced, in the ordinary course of business;
(iv) transfers from any Subsidiary to another Subsidiary or to the
Borrower; and
(v) transfers in connection with sale-leaseback transactions permitted
under Section 10.04(h).
(f) LOANS AND INVESTMENTS. The Borrower shall not, and shall not
permit any of its Subsidiaries to, purchase or otherwise acquire the capital
stock, assets (constituting a
53.
business unit), obligations or other securities of or any interest in any
Person, or otherwise extend any credit to, guarantee the obligations of or
make any additional investments in any Person (each, an "Investment"), other
than in connection with:
(i) extensions of credit in the nature of accounts receivable or notes
receivable arising from the sales of goods or services in the ordinary course of
business; and
(ii) Permitted Investments.
(g) CAPITAL EXPENDITURES. The Borrower shall not, and shall not
permit any of its Subsidiaries to, make any expenditures for fixed or capital
assets in excess of $2,500,000 (in the aggregate), including obligations under
Capital Leases, other than in the ordinary course of business.
(h) SALES AND LEASEBACKS. Except in the ordinary course of business,
the Borrower shall not, and shall not permit any of its Subsidiaries to, become
liable, directly or indirectly, with respect to any lease, whether an Operating
Lease or a Capital Lease, of any property (whether real, personal or mixed),
whether now owned or hereafter acquired, (i) which the Borrower or such
Subsidiary has sold or transferred or is to sell or transfer to any other Person
or (ii) which the Borrower or such Subsidiary intends to use for substantially
the same purposes as any other property which has been or is to be sold or
transferred by the Borrower or such Subsidiary to any other Person in connection
with such lease.
(i) DISTRIBUTIONS. (i) The Borrower shall not declare or pay any
dividends in respect of the Borrower's capital stock, or purchase, redeem,
retire or otherwise acquire for value any of its capital stock now or hereafter
outstanding, return any capital to its shareholders as such, or make any
distribution of assets to its shareholders as such, or permit any of its
Subsidiaries to purchase, redeem, retire, or otherwise acquire for value any
stock of the Borrower except that the Borrower may (i) declare and make dividend
payments or other distributions payable solely in its capital stock or in
connection with the distribution of rights under a stockholders' rights plan;
(ii) purchase, redeem, retire or otherwise acquire (A) shares of its common
stock or warrants or options to acquire any such shares with the proceeds
received from the substantially concurrent issue of new shares of its common
stock (B) rights distributed in connection with any stockholders' rights plan;
and (iii) convert any convertible debt instrument into common stock or other
property in accordance with its terms.
(ii) The Borrower shall not permit any Subsidiary of the Borrower to
grant or otherwise agree to or suffer to exist any consensual restrictions on
the ability of such Subsidiary to
54.
pay dividends and make other distributions to the Borrower, or to pay any
Indebtedness owed to the Borrower or transfer properties and assets to the
Borrower.
(j) TRANSACTIONS WITH RELATED PARTIES. The Borrower shall not, and
shall not permit any of its Subsidiaries to, enter into any transaction,
including the purchase, sale or exchange of property or the rendering of any
services, with any Affiliate, any officer or director thereof or any Person
which beneficially owns or holds 2% or more of the equity securities, or 2% or
more of the equity interest, thereof (a "Related Party"), or enter into, assume
or suffer to exist, or permit any Subsidiary to enter into, assume or suffer to
exist, any employment or consulting contract with any Related Party, except a
transaction or contract which is in the ordinary course of the Borrower's or
such Subsidiary's business and which is upon fair and reasonable terms not less
favorable to the Borrower or such Subsidiary than it would obtain in a
comparable arm's length transaction with a Person not a Related Party.
(k) HAZARDOUS SUBSTANCES. The Borrower shall not, and shall not
permit any of its Subsidiaries to, use, generate, manufacture, install, treat,
release, store or dispose of any Hazardous Substances, except in compliance in
all material respects with all applicable Environmental Laws.
(l) ACCOUNTING CHANGES. The Borrower shall not, and shall not suffer
or permit any of its Subsidiaries to, make any significant change in accounting
treatment or reporting practices, except as required or permitted by GAAP, or
change its fiscal year or that of any of its consolidated Subsidiaries, except
to change the fiscal year of a Subsidiary acquired in connection with a
permitted acquisition to conform its fiscal year to the Borrower's.
ARTICLE XI
EVENTS OF DEFAULT
SECTION 11.01 EVENTS OF DEFAULT. Any of the following events which
shall occur shall constitute an "Event of Default":
(a) PAYMENTS. The Borrower shall fail to pay when due any amount of
principal of, or interest on, any Loan or the Note, or any fee or other amount
payable under any Loan Document, or pay any fees for professional services
incurred for outside advisors of the Bank within 30 days of receipt of any
invoice therefor.
(b) REPRESENTATIONS AND WARRANTIES. Any representation or warranty
by the Borrower under or in connection with the Loan Documents shall prove to
have been incorrect in any material respect when made or deemed made.
55.
(c) FAILURE BY BORROWER TO PERFORM CERTAIN COVENANTS. The Borrower
shall fail to perform or observe any term, covenant or agreement contained in
Section 10.02, Section 10.03(a), 10.03(j) or Section 10.04.
(d) FAILURE BY BORROWER TO PERFORM OTHER COVENANTS. The Borrower
shall fail to perform or observe any other term, covenant or agreement contained
in this Agreement or any other Loan Document on its part to be performed or
observed and any such failure shall remain unremedied for a period of 20 days
from the occurrence thereof.
(e) INSOLVENCY; VOLUNTARY PROCEEDINGS. The Borrower or any
Subsidiary (i) ceases or fails to be Solvent, or generally fails to pay, or
admits in writing its inability to pay, its debts as they become due, subject to
applicable grace periods, if any, whether at stated maturity or otherwise;
(ii) voluntarily ceases to conduct its business in the ordinary course;
(iii) commences any Insolvency Proceeding with respect to itself; or (iv) takes
any action to effectuate or authorize any of the foregoing.
(f) INVOLUNTARY PROCEEDINGS. (i) Any involuntary Insolvency
Proceeding is commenced or filed against the Borrower or any Subsidiary, or any
writ, judgment, warrant of attachment, execution or similar process, is issued
or levied against a substantial part of the Borrower's or any Subsidiary's
properties, and any such proceeding or petition shall not be dismissed, or such
writ, judgment, warrant of attachment, execution or similar process shall not be
released, vacated or fully bonded within 60 days after commencement, filing or
levy; (ii) the Borrower or any Subsidiary admits the material allegations of a
petition against it in any Insolvency Proceeding, or an order for relief (or
similar order under non-U.S. law) is ordered in any Insolvency Proceeding; or
(iii) the Borrower or any Subsidiary acquiesces in the appointment of a
receiver, trustee, custodian, conservator, liquidator, mortgagee in possession
(or agent therefor), or other similar Person for itself or a substantial portion
of its property or business.
(g) DEFAULT UNDER OTHER INDEBTEDNESS. (i) The Borrower or any of its
Subsidiaries shall fail (A) to make any payment of any principal of, or interest
or premium on, any Indebtedness (other than in respect of the Loans having an
aggregate principal amount (including undrawn committed or available amounts and
including amounts owing to all creditors under any combined or syndicated credit
arrangement) of more than $200,000 (or its equivalent in another currency)) when
due (whether by scheduled maturity, required prepayment, acceleration, demand or
otherwise) and such failure shall continue after the applicable grace period, if
any, specified in the agreement or instrument relating to such Indebtedness as
of the date of such failure; or (B) to perform or observe any term,
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covenant or condition on its part to be performed or observed under any
agreement or instrument relating to any such Indebtedness, when required to
be performed or observed, and such failure shall continue after the
applicable grace period, if any, specified in such agreement or instrument,
if the effect of such failure to perform or observe is to accelerate, or to
permit the acceleration of, the maturity of such Indebtedness; or (ii) any
such Indebtedness shall be declared to be due and payable, or required to be
prepaid (other than by a regularly scheduled required prepayment), prior to
the stated maturity thereof;
(h) JUDGMENTS. (i) A final judgment or order for the payment of
money in excess of $200,000 (or its equivalent in another currency) which is not
fully covered by third-party insurance shall be rendered against the Borrower or
any of its Subsidiaries; or (ii) any non-monetary judgment or order shall be
rendered against the Borrower or any such Subsidiary which has or would
reasonably be expected to have a Material Adverse Effect; and in each case there
shall be any period of 20 consecutive days during which a stay of enforcement of
such judgment or order, by reason of a pending appeal or otherwise, shall not be
in effect.
(i) ERISA. (i) The Borrower or an ERISA Affiliate shall fail to
satisfy its contribution requirements under Section 412(c)(11) of the
Internal Revenue Code, whether or not it has sought a waiver under Section
412(d) of the Internal Revenue Code; (ii) in the case of a Termination Event
involving the withdrawal from a Pension Plan of a "substantial employer" (as
defined in Section 4001(a)(2) or Section 4062(e) of ERISA), the Borrower's or
an ERISA Affiliate's proportionate share of that Pension Plan's Unfunded
Accrued Benefits is more than $200,000; (iii) in the case of a Termination
Event involving the complete or partial withdrawal from a Multiemployer Plan,
the Borrower or an ERISA Affiliate has incurred a withdrawal liability in an
aggregate amount exceeding $200,000; (iv) in the case of a Termination Event
not described in clause (ii) or (iii), the Unfunded Accrued Benefits of the
relevant Pension Plan or Plans exceed $200,000; (v) a Plan of the Borrower or
an ERISA Affiliate that is intended to be qualified under Section 401(a) of
the Internal Revenue Code shall lose its qualification, and the loss can
reasonably be expected to impose on the Borrower or an ERISA Affiliate
liability (for additional taxes, to Plan participants, or otherwise) in the
aggregate amount of $100,000 or more; (vi) the commencement or increase of
contributions to, the adoption of, or the amendment of a Plan by, the
Borrower or an ERISA Affiliate shall result in a net increase in unfunded
liabilities to the Borrower or an ERISA Affiliate in excess of $100,000; or
(vii) the occurrence of any combination of events listed in clauses (ii)
through (vi) that involves a net increase in aggregate Unfunded Accrued
Benefits and unfunded liabilities in excess of $200,000.
(j) DISSOLUTION, ETC. The Borrower or any of its Subsidiaries shall
(i) liquidate, wind up or dissolve (or suffer
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any liquidation, wind-up or dissolution), except to the extent expressly
permitted by Section 10.04, (ii) suspend its operations other than in the
ordinary course of business, or (iii) take any corporate action to authorize
any of the actions or events set forth above in this subsection (j).
(k) MATERIAL ADVERSE EFFECT. A Material Adverse Effect shall occur.
(l) CHANGE IN OWNERSHIP OR CONTROL. 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 the
Borrower representing 20% or more of the combined voting power of the Borrower's
then-outstanding voting securities, or (b) the existing directors for any reason
cease to constitute a majority of the Borrower's board of directors. "Existing
directors" means (x) individuals constituting the Borrower'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 the Borrower's shareholders was
approved by a vote of at least a majority 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.
(m) COLLATERAL DOCUMENTS. The Borrower or any other Person shall
fail to perform or observe any term, covenant or agreement contained in the
Collateral Documents on its part to be performed or observed and any such
failure shall remain unremedied for a period of 20 days from the occurrence
thereof (unless the Bank reasonably determines that such failure is not capable
of remedy), or any "Event of Default" as defined in any Collateral Document
shall have occurred and is continuing; or any of the Collateral Documents after
delivery thereof shall for any reason be revoked or invalidated, or otherwise
cease to be in full force and effect, or the Borrower or any other Person shall
contest in any manner the validity or enforceability thereof, or the Borrower or
any other Person shall deny that it has any further liability or obligation
thereunder; or any of the Collateral Documents for any reason, except to the
extent permitted by the terms thereof, shall cease to create a valid and
perfected first priority Lien subject only to Permitted Liens in any of the
Collateral purported to be covered thereby.
SECTION 11.02 EFFECT OF EVENT OF DEFAULT. If any Event of Default
shall occur and be continuing, the Bank may (i) by notice to the Borrower,
(A) declare its Commitments to be terminated, whereupon the same shall forthwith
terminate, and (B) declare the entire unpaid principal amount of the Loans and
the Note, all interest accrued and unpaid thereon and all other Obligations to
be forthwith due and payable, whereupon the Loans and the Note, all such accrued
interest and all such other
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Obligations shall become and be forthwith due and payable, without
presentment, demand, protest or further notice of any kind, all of which are
hereby expressly waived by the Borrower, PROVIDED that if an event described
in Sections 11.01(e) or 11.01(f) shall occur, the result which would
otherwise occur only upon giving of notice by the Bank to the Borrower as
specified in this clause (i) shall occur automatically, without the giving of
any such notice; and (ii) whether or not the actions referred to in clause
(i) have been taken, (A) exercise any or all of the Bank's rights and
remedies under the Collateral Documents, and (B) proceed to enforce all other
rights and remedies available to the Bank under the Loan Documents and
applicable law.
ARTICLE XII
MISCELLANEOUS
SECTION 12.01 AMENDMENTS AND WAIVERS. No amendment to any provision
of this Agreement and the other Loan Documents shall be effective unless it is
in writing and has been signed by the Bank and the Borrower (or other party
thereto), and no waiver of any provision of this Agreement or any other Loan
Document, or consent to any departure by the Borrower or other party therefrom,
shall be effective unless it is in writing and has been signed by the Bank;
PROVIDED, HOWEVER, that notwithstanding the foregoing provisions of this
Section 12.01, any term or provision of any such other Loan Document may be
amended without the agreement or consent of, or prior notice to, the Borrower,
to the extent such Loan Document provides for amendments without Borrower
agreement or consent. Any such amendment, waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given.
SECTION 12.02 NOTICES.
(a) NOTICES. All notices and other communications provided for
hereunder and under the other Loan Documents shall, unless otherwise stated
herein, be in writing (including by facsimile transmission) and mailed, sent or
delivered to the respective parties hereto at or to their respective addresses
or facsimile numbers set forth in Schedule 1, or at or to such other address or
facsimile number as shall be designated by any party in a written notice to the
other parties hereto. All such notices and communications shall be effective
(i) if delivered by hand, when delivered; (ii) if sent by mail, upon the date of
receipt; and (iii) if sent by facsimile transmission, when sent; PROVIDED,
HOWEVER, that notices and communications to the Bank pursuant to Articles II,
III, IV and V shall not be effective until received.
(b) FACSIMILE AND TELEPHONIC NOTICE. The Borrower acknowledges and
agrees that the agreement of the Bank herein and in any other Loan Document to
receive certain notices by
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telephone and facsimile is solely for the convenience and at the request of
the Borrower. The Bank shall be entitled to rely on the authority of any
Person purporting to be a Person authorized by the Borrower to give such
notice and the Bank shall not have any liability to the Borrower or other
Person on account of any action taken or not taken by the Bank in reliance
upon such telephonic or facsimile notice. The obligation of the Borrower to
repay the Loans and the other Obligations shall not be affected in any way or
to any extent by any failure by the Bank to receive written confirmation of
any telephonic or facsimile notice or the receipt by the Bank of a
confirmation which is at variance with the terms understood by the Bank to be
contained in the telephonic or facsimile notice.
SECTION 12.03 NO WAIVER; CUMULATIVE REMEDIES. No failure on the part
of the Bank to exercise, and no delay in exercising, any right, remedy, power or
privilege under any Loan Document shall operate as a waiver thereof, nor shall
any single or partial exercise of any such right, remedy, power or privilege
preclude any other or further exercise thereof or the exercise of any other
right, remedy, power or privilege. The rights and remedies under the Loan
Documents are cumulative and not exclusive of any rights, remedies, powers and
privileges that may otherwise be available to the Bank.
SECTION 12.04 COSTS AND EXPENSES; INDEMNIFICATION.
(a) COSTS AND EXPENSES. The Borrower agrees to pay on demand,
whether or not the transactions contemplated hereby shall be consummated:
(i) the reasonable out-of-pocket costs and expenses of the Bank and
any of its Affiliates, and the reasonable fees and disbursements of counsel to
the Bank (including allocated costs of internal counsel), in connection with the
negotiation, preparation, execution, delivery and administration of the Loan
Documents, and any amendments, modifications or waivers of the terms thereof;
(ii) all appraisal (including the allocated cost of internal
appraisal services), audit, consulting, search, recording, filing and similar
costs, fees and expenses incurred or sustained by the Bank or any of its
Affiliates in connection with the Loan Documents or the Collateral; and
(iii) all costs and expenses of the Bank and its Affiliates, and fees
and disbursements of counsel (including allocated costs of internal counsel), in
connection with (A) any Default, (B) the enforcement or attempted enforcement
of, and preservation of any rights or interests under, the Loan Documents,
(C) any out-of-court workout or other refinancing or restructuring or any
bankruptcy case, and (D) the preservation of and realization upon any of the
Collateral, including any losses,
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costs and expenses sustained by the Bank as a result of any failure by the
Borrower to perform or observe its obligations contained in the Loan
Documents.
(b) INDEMNIFICATION. Whether or not the transactions contemplated
hereby shall be consummated, the Borrower hereby agrees to indemnify the Bank
and any Related Person thereof (each an "Indemnified Person") against, and
hold each of them harmless from, any and all liabilities, obligations,
losses, claims, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever, including the
reasonable fees and disbursements of counsel to an Indemnified Person
(including allocated costs of internal counsel), which may be imposed on,
incurred by, or asserted against any Indemnified Person, (i) in any way
relating to or arising out of any of the Loan Documents, the use or intended
use of the proceeds of the Loans, or the transactions contemplated hereby or
thereby, (ii) with respect to any investigation, litigation or other
proceeding relating to any of the foregoing, irrespective of whether the
Indemnified Person shall be designated a party thereto, or (iii) in any way
relating to or arising out of the use, generation, manufacture, installation,
treatment, storage or presence, or the spillage, leakage, leaching,
migration, dumping, deposit, discharge, disposal or release, at any time, of
any Hazardous Substances on, under, at or from any Premises, including any
personal injury or property damage suffered by any Person, and any
investigation, site assessment, environmental audit, feasibility study,
monitoring, clean-up, removal, containment, restoration, remedial response or
remedial work undertaken by or on behalf of any Indemnified Person at any
time, voluntarily or involuntarily, with respect to the Premises (the
"Indemnified Liabilities"); PROVIDED that the Borrower shall not be liable to
any Indemnified Person for any portion of such Indemnified Liabilities to the
extent they are found by a final decision of a court of competent
jurisdiction to have resulted from such Indemnified Person's gross negligence
or willful misconduct. If and to the extent that the foregoing
indemnification is for any reason held unenforceable, the Borrower agrees to
make the maximum contribution to the payment and satisfaction of each of the
Indemnified Liabilities which is permissible under applicable law.
(c) OTHER CHARGES. The Borrower agrees to indemnify the Bank against
and hold it harmless from any and all present and future stamp, transfer,
documentary and other such taxes, levies, fees, assessments and other charges
made by any jurisdiction by reason of the execution, delivery, performance and
enforcement of the Loan Documents.
SECTION 12.05 RIGHT OF SET-OFF. Upon the occurrence and during the
continuance of any Event of Default the Bank hereby is authorized at any time
and from time to time, without notice to the Borrower (any such notice being
expressly waived by
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the Borrower), 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 Bank to or for the credit or the account of the
Borrower against any and all of the Obligations of the Borrower now or
hereafter existing under this Agreement and the other Loan Documents,
irrespective of whether or not the Bank shall have made any demand under this
Agreement or any such other Loan Document and although such Obligations may
be unmatured. The Bank agrees promptly to notify the Borrower after any such
set-off and application made by the Bank; PROVIDED that the failure to give
such notice shall not affect the validity of such set-off and application.
The rights of the Bank under this Section 12.05 are in addition to other
rights and remedies (including other rights of set-off) which the Bank may
have.
SECTION 12.06 SURVIVAL. All covenants, agreements,
representations and warranties made in any Loan Documents shall, except to
the extent otherwise provided therein, survive the execution and delivery of
this Agreement, the making of the Loans and the execution and delivery of the
Note, and shall continue in full force and effect so long as the Bank has any
Commitment, any Loans remain outstanding or any other Obligations remain
unpaid or any obligation to perform any other act under any Loan Document
remains unsatisfied. Without limiting the generality of the foregoing, the
obligations of the Borrower under Sections 6.02, 6.03, 7.02 and 12.04, and
all similar obligations under the other Loan Documents (including all
obligations to pay costs and expenses and all indemnity obligations), shall
survive the repayment of the Loans and the termination of the Commitment.
SECTION 12.07 BENEFITS OF AGREEMENT. The Loan Documents are entered
into for the sole protection and benefit of the parties hereto and their
successors and assigns, and no other Person shall be a direct or indirect
beneficiary of, or shall have any direct or indirect cause of action or claim in
connection with, any Loan Document.
SECTION 12.08 BINDING EFFECT; ASSIGNMENT.
(a) BINDING EFFECT. This Agreement shall become effective when it
shall have been executed by the Borrower and the Bank and thereafter shall be
binding upon, inure to the benefit of and be enforceable by the Borrower, the
Bank and their respective successors and assigns.
(b) ASSIGNMENT. The Borrower shall not have the right to assign its
rights and obligations hereunder or under the other Loan Documents or any
interest herein or therein without the prior written consent of the Bank. The
Bank may sell, assign, transfer or grant participations in all or any portion of
the Bank's rights and obligations hereunder and under the other Loan
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Documents to any other bank or financial institution on the basis set forth
below in this subsection (b).
(i) In the event of any such assignment, which shall be made only
with the prior written consent of Borrower, not to be unreasonably withheld,
upon notice thereof to the Borrower, (provided no Default then exists) the
assignee shall be deemed the "Bank" for all purposes of this Agreement and the
other Loan Documents with respect to the rights and obligations assigned to it,
and the obligations of the Bank so assigned shall thereupon terminate.
(ii) In the event of any partial assignment, which shall be made only
with the prior written consent of Borrower, not to be unreasonably withheld, the
Bank, the Borrower and such assignee shall enter into at the Bank's or such
assignee's expense, such amendments to this Agreement and the other Loan
Documents as shall be necessary to effect such assignment.
(iii) In the event of any grant of a participation, the Bank shall
remain the "Bank" for purposes of this Agreement, the Borrower shall continue to
deal solely and directly with the Bank in connection with this Agreement and the
other Loan Documents and the participant shall not have any of the rights of the
Bank under this Agreement or the other Loan Documents, except that the
participant shall (A) be deemed to have a right of setoff under Section 12.05 in
respect of its participation to the same extent as if it were the "Bank"
hereunder, PROVIDED that such participant shall have agreed to share any amount
so realized with the Bank on terms and conditions satisfactory to the Bank, and
(B) such participant shall also be entitled to the benefits of Sections 6.02,
6.03, 7.02 and 12.04; provided no Default then exists and, provided, further,
that such participant shall not be given rights to consent to amendments to or
waivers involving this Agreement or the other Loan Documents except in the case
of provisions relating to the principal amount of the Loans, any amendments to
the interest rates and the maturity of the Loans.
(iv) The Borrower agrees that in connection with any such grant or
assignment, the Bank may deliver to the prospective participant or assignee
financial statements and other relevant information relating to the Borrower and
its Subsidiaries.
SECTION 12.09 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF CALIFORNIA.
SECTION 12.10 SUBMISSION TO JURISDICTION.
(a) SUBMISSION TO JURISDICTION. The Borrower hereby (i) submits to
the non-exclusive jurisdiction of the courts of the State of California sitting
in Santa ▇▇▇▇▇ county and the
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Federal courts of the United States for the Northern District of California
for the purpose of any action or proceeding arising out of or relating to the
Loan Documents, (ii) agrees that all claims in respect of any such action or
proceeding may be heard and determined in such courts, (iii) irrevocably
waives (to the extent permitted by applicable law) any objection which it now
or hereafter may have to the laying of venue of any such action or proceeding
brought in any of the foregoing courts, and any objection on the ground that
any such action or proceeding in any such court has been brought in an
inconvenient forum and (iv) agrees that a final judgment in any such action
or proceeding may be enforced in other jurisdictions by suit on the judgment
or in any other manner permitted by law.
(b) NO LIMITATION. Nothing in this Section 12.10 shall affect the
right of the Bank to serve legal process in any other manner permitted by law or
limit the right of the Bank to bring any action or proceeding against the
Borrower or its property in the courts of other jurisdictions.
SECTION 12.11 WAIVER OF JURY TRIAL. THE BORROWER AND THE BANK
HEREBY AGREE TO WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM
OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT,
THE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY
IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF
THE PARTIES AGAINST ANY OTHER PARTY OR PARTIES, WHETHER WITH RESPECT TO
CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. THE BORROWER AND THE BANK HEREBY
AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL
WITHOUT A JURY. WITHOUT IN ANY WAY LIMITING THE FOREGOING, THE PARTIES
FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY
OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM, OR OTHER PROCEEDING
WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY
OF THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS OR ANY PROVISION HEREOF OR
THEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS,
SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.
A COPY OF THIS SECTION 12.11 MAY BE FILED WITH ANY COURT AS WRITTEN EVIDENCE
OF THE WAIVER OF THE RIGHT TO TRIAL BY JURY AND CONSENT TO TRIAL BY COURT.
SECTION 12.12 LIMITATION ON LIABILITY. No claim shall be made by the
Borrower or its Affiliates against the Bank or any of its Related Persons for
any special, indirect, exemplary, consequential or punitive damages in respect
of any breach or wrongful conduct (whether or not the claim therefor is based on
contract, tort or duty imposed by law), in connection with, arising out of or in
any way related to the transactions
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contemplated by the Loan Documents or any act or omission or event occurring
in connection therewith; and the Borrower hereby waives, releases and agrees
not to ▇▇▇ upon any such claim for any such damages, whether or not accrued
and whether or not known or suspected to exist in its favor.
SECTION 12.13 ENTIRE AGREEMENT. The Loan Documents reflect the
entire agreement between the Borrower and the Bank with respect to the matters
set forth herein and therein and supersede any prior agreements, commitments,
drafts, communication, discussions and understandings, oral or written, with
respect thereto.
SECTION 12.14 SEVERABILITY. Whenever possible, each provision of the
Loan Documents shall be interpreted in such manner as to be effective and valid
under all applicable laws and regulations. If, however, any provision of any of
the Loan Documents shall be prohibited by or invalid under any such law or
regulation in any jurisdiction, it shall, as to such jurisdiction, be deemed
modified to conform to the minimum requirements of such law or regulation, or,
if for any reason it is not deemed so modified, it shall be ineffective and
invalid only to the extent of such prohibition or invalidity without affecting
the remaining provisions of such Loan Document, or the validity or effectiveness
of such provision in any other jurisdiction.
SECTION 12.15 COUNTERPARTS. This Agreement may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original and all of
which taken together shall constitute but one and the same agreement.
[SIGNATURE BLOCKS ON NEXT PAGE]
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement, as of the date first above written.
THE BORROWER
GENUS, INC.
By: _____________________________
Title:
THE BANK
SUMITOMO BANK OF CALIFORNIA
By: _____________________________
Title:
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