EXHIBIT 10.11
CREDIT AGREEMENT
AMONG
NATIONWIDE ELECTRIC, INC.,
AS BORROWER,
VARIOUS FINANCIAL INSTITUTIONS
AND
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
AS AGENT,
CLOSING DATE: DECEMBER 22, 1998
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$30,000,000 REVOLVING AND TERM
CREDIT FACILITY
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NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
TABLE OF CONTENTS
ARTICLE I Definitions........................................................................... 1
Section 1.1 Definitions....................................................................... 1
Section 1.2 Cross References.................................................................. 13
ARTICLE II Amount and Terms of the Loans........................................................ 13
Section 2.1 Revolving Advances................................................................ 13
Section 2.2 Term Facility..................................................................... 14
Section 2.3 Redemption of Preferred Stock..................................................... 14
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Section 2.4 Increase in Facility Amounts...................................................... 15
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Section 2.5 Procedures for Borrowing.......................................................... 16
Section 2.6 Converting Floating Rate Advances to Eurodollar Rate Advances; Procedures......... 17
Section 2.7 Procedures at End of a Interest Period............................................ 18
Section 2.8 Setting and Notice of Rates....................................................... 18
Section 2.9 Funding Losses.................................................................... 18
Section 2.10 Right of Banks to Fund through Other Offices...................................... 18
Section 2.11 Discretion of Banks as to Manner of Funding....................................... 19
Section 2.12 Letters of Credit................................................................. 19
Section 2.13 Payment of Amounts Drawn Under Letters of Credit; Obligation of Reimbursement..... 20
Section 2.14 Special Account................................................................... 21
Section 2.15 Obligations Absolute.............................................................. 21
Section 2.16 Interest; Participations; Usury................................................... 22
Section 2.17 Payment of Term Advances.......................................................... 23
Section 2.18 Collateral........................................................................ 23
Section 2.19 Fees.............................................................................. 23
Section 2.20 Voluntary Prepayments............................................................. 24
Section 2.21 Mandatory Prepayment.............................................................. 25
Section 2.22 Computation of Interest and Fees; When Interest Due and Payable................... 25
Section 2.23 Payment........................................................................... 25
Section 2.24 Payment on Nonbusiness Days....................................................... 25
Section 2.25 Use of Proceeds................................................................... 25
Section 2.26 Permitted Acquisitions............................................................ 26
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Section 2.27 Capital Adequacy; Increased Costs and Reduced Return.............................. 26
Section 2.28 Funding Exceptions................................................................ 27
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Section 2.29 Liability Records................................................................. 28
ARTICLE III Conditions Precedent................................................................ 28
Section 3.1 Initial Conditions Precedent...................................................... 28
Section 3.2 Conditions Precedent to Advances Used for Permitted Acquisitions.................. 30
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Section 3.3 Conditions Precedent to All Advances.............................................. 30
ARTICLE IV Representations and Warranties....................................................... 30
Section 4.1 Corporate Existence and Power.............................................. 30
Section 4.2 Authorization of Borrowing; No Conflict as to Law or Agreements............ 31
Section 4.3 Legal Agreements........................................................... 31
Section 4.4 Corporate Structure........................................................ 31
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Section 4.5 Financial Condition........................................................ 31
Section 4.6 Adverse Change............................................................. 31
Section 4.7 Litigation................................................................. 31
Section 4.8 Hazardous Substances....................................................... 32
Section 4.9 Investment Company Act..................................................... 32
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Section 4.10 Public Utility Holding Company Act......................................... 32
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Section 4.11 Default.................................................................... 32
Section 4.12 Regulation U............................................................... 32
Section 4.13 Taxes...................................................................... 32
Section 4.14 Titles and Liens........................................................... 32
Section 4.15 Solvency................................................................... 33
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Section 4.16 ERISA...................................................................... 33
ARTICLE V Affirmative Covenants.......................................................... 34
Section 5.1 Financial Statements....................................................... 34
Section 5.2 Books and Records; Inspection and Examination.............................. 36
Section 5.3 Compliance with Laws....................................................... 36
Section 5.4 Payment of Taxes and Other Claims.......................................... 36
Section 5.5 Maintenance of Properties.................................................. 36
Section 5.6 Insurance.................................................................. 36
Section 5.7 Preservation of Corporate Existence........................................ 37
Section 5.8 Year 2000.................................................................. 37
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Section 5.9 Maximum Consolidated Cash Flow Leverage Ratio.............................. 37
Section 5.10 Minimum Consolidated Fixed Charge Coverage Ratio........................... 37
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Section 5.11 Minimum Consolidated Tangible Net Worth.................................... 37
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ARTICLE VI Negative Covenants............................................................ 38
Section 6.1 Liens...................................................................... 38
Section 6.2 Indebtedness............................................................... 39
Section 6.3 Guaranties................................................................. 40
Section 6.4 Investments................................................................ 40
Section 6.5 Dividends; Redemptions..................................................... 40
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Section 6.6 Issuance of Stock.......................................................... 41
Section 6.7 Sale of Assets............................................................. 41
Section 6.8 Consolidation and Merger; Change of Control................................ 41
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Section 6.9 Sale and Leaseback......................................................... 42
Section 6.10 Subordinated Debt.......................................................... 42
Section 6.11 Capital Expenditures....................................................... 42
Section 6.12 Accounts Payable........................................................... 42
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Section 6.13 Hazardous Substances....................................................... 42
Section 6.14 Restrictions on Nature of Business......................................... 42
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ARTICLE VII Events of Default, Rights and Remedies.......................................... 43
Section 7.1 Events of Default............................................................. 43
Section 7.2 Rights and Remedies........................................................... 45
ARTICLE VIII Agency........................................................................ 45
Section 8.1 Authorization; Powers; Agent for Collateral Purposes.......................... 45
Section 8.2 Distribution of Collections; Norwest Advances; Banks' Right to Refuse to Fund
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Advances During Default Periods; Bank Refuses to Fund........................ 46
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Section 8.3 Expenses...................................................................... 47
Section 8.4 Use of the Term "Agent"....................................................... 48
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Section 8.5 Collections Received Directly by Banks........................................ 48
Section 8.6 Indemnification............................................................... 48
Section 8.7 Priority in Collateral........................................................ 48
Section 8.8 Exculpation................................................................... 49
Section 8.9 Agent and Affiliates.......................................................... 49
Section 8.10 Credit Investigation.......................................................... 49
Section 8.11 Defaults...................................................................... 49
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Section 8.12 Resignation................................................................... 50
Section 8.13 Obligations Several........................................................... 50
Section 8.14 Sale or Assignment; Addition of Banks......................................... 50
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Section 8.15 Participation................................................................. 51
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Section 8.16 Borrower not a Beneficiary or Party........................................... 52
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ARTICLE IX MISCELLANEOUS.................................................................... 52
Section 9.1 No Waiver; Cumulative Remedies................................................ 52
Section 9.2 Amendments, Etc............................................................... 52
Section 9.3 Notices....................................................................... 52
Section 9.4 Consent of Required Banks; Amendments, Requested Waivers, Etc................. 53
Section 9.5 Disclosure of Information..................................................... 53
Section 9.6 Costs and Expenses............................................................ 53
Section 9.7 Indemnification by Borrower................................................... 54
Section 9.8 Execution in Counterparts..................................................... 54
Section 9.9 Binding Effect, Assignment.................................................... 54
Section 9.10 Governing Law................................................................. 54
Section 9.11 Severability of Provisions.................................................... 54
Section 9.12 Prior Agreements.............................................................. 55
Section 9.13 Headings...................................................................... 55
Section 9.14 Consent to Jurisdiction....................................................... 55
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Section 9.15 Waiver of Jury Trial.......................................................... 55
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CREDIT AGREEMENT
Dated as of December 22, 1998
Nationwide Electric, Inc., a Delaware corporation (the "Borrower"),
Norwest Bank Minnesota, National Association, a national banking association
("Norwest" and in its capacity as administrative agent for the Banks as
specified below, the "Agent") and each of the banks appearing on the signature
pages hereof, together with such other banks as may from time to time become a
party to this Agreement pursuant to the terms and conditions of Article VIII
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hereof (collectively the "Banks" and individually each called a "Bank"), agree
as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. For all purposes of this Agreement, except as
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otherwise expressly provided or unless the context otherwise requires:
(a) the terms defined in this Article have the meanings assigned
to them in this Article, and include the plural as well as the
singular; and
(b) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with GAAP.
"Accounts" means, as to any Person, the aggregate unpaid obligations
of customers and other account debtors to such Person arising out of the
sale or lease of goods or rendition of services by such Person on an open
account or deferred payment basis.
"Advance" means an advance of funds by the Banks to the Borrower
pursuant to Article II.
"Affiliate" means as to any Company, (a) any other Company, (b) any
director or officer of any Company, (c) any Person who, individually or
with his immediate family, beneficially owns or holds 5% or more of the
voting interest of any Company, or (d) any Limited Liability Entity,
partnership or other Person in which any Person or group of Persons
described above directly or indirectly owns a 5% or greater equity
interest.
"Agent" means Norwest in its separate capacity as administrative agent
under this Agreement.
"Aggregate Revolving Facility Amount" means the sum of the Revolving
Facility Amounts of the all of the Banks.
"Aggregate Term Facility Amount" means the sum of the Term Facility
Amounts of the all of the Banks.
"Agreement" means this Credit Agreement, as the same may be amended,
supplemented or restated from time to time.
"Banking Day" means a day other than a Saturday, Sunday or other day
on which banks are generally not open for business in Minneapolis,
Minnesota and New York, New York, and, if such day relates to a Eurodollar
Rate Advance, a day on which dealings are carried on in the London
interbank Eurodollar market.
"Base Rate" means the rate of interest publicly announced from time to
time by the Agent as its "prime" or "base" rate or, if the Agent ceases to
announce a rate so designated, any similar successor rate designated by the
Bank.
"Borrowing Base" means, at any time, the lesser of:
(i) the sum of the Aggregate Revolving Facility Amount and the
Aggregate Term Facility Amount, or
(ii) subject to change from time to time in the reasonable discretion
of all the Banks, the sum of:
(A) 80% of the Eligible Accounts of the Companies; plus
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(B) 50% of the Eligible Inventory of the Companies; plus
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(C) 50% of the net book value of Eligible Equipment of the
Companies; minus
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(D) the Reserve;
in each case computed on the basis of the most recent Borrowing Base
Certificate furnished to the Agent as required by Section 3.1(n) or 5.1(d).
"Borrower Pledge Agreement" means a Collateral Pledge Agreement
executed by the Borrower, granting the Agent a security interest in all
stock of the Subsidiaries now or hereafter owned by the Borrower to secure
payment of the Obligations.
"Borrowing Base Certificate" means a certificate in the form of
Exhibit D hereto correctly setting forth the Accounts, the Eligible
Accounts, Inventory, Eligible Inventory, net book value of Equipment and
the Borrowing Base of the Companies as of a particular date.
"Capital Expenditure" means any expenditure of money for the purchase
or construction of fixed assets or for the purchase or construction of any
other assets, or for improvements or additions thereto, which are
capitalized on a Person's balance sheet.
"Capitalized Lease Liabilities" of any Person means all monetary
obligations of such Person under any leasing or similar arrangement which,
in accordance with GAAP,
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would be classified as capitalized leases, and, for purposes of this
Agreement, the amount of such obligations shall be the capitalized amount
thereof, determined in accordance with GAAP.
"Cash Flow Leverage Ratio" as of a date of determination means the
ratio of (i) Funded Debt as of such date less Subordinated Debt as of such
date to (ii) EBITDA for the four quarters ending on such date.
"Collateral Pledge Agreement" means a Collateral Pledge Agreement,
substantially in the form of Exhibit J, executed by the Borrower or a
Guarantor, granting the Agent a security interest in stock of one or more
Subsidiaries to secure payment of the Obligations and, in the case of a
Guarantor, such Guarantor's Guaranty.
"Collections" means any amounts paid by or recovered from (i) the
Borrower pursuant to the Loan Documents, (ii) any Guarantor or other Person
liable in respect of any of the Obligations, (iii) any Bank's exercise of
any right of setoff against the Borrower or any Guarantor, and (iv) the
recovery or realization on any collateral securing the Obligations or the
Guaranties, or any property or claim given in substitution therefor.
"Commitment" means, for Norwest, its commitment to make Advances to
and to issue Letters of Credit for the account of the Borrower, and for the
other Banks, their commitments to make Advances to the Borrower and to
participate in the Obligation of Reimbursement in accordance with Article
II.
"Company" means the Borrower or any Existing Subsidiary or new
Subsidiary acquired directly or indirectly by the Borrower in accordance
with Section 2.26 and "Companies" means the Borrower, the Existing
Subsidiaries and each new Subsidiary acquired directly or indirectly by the
Borrower in accordance with Section 2.26.
"Compliance Certificate" means a certificate in substantially the form
of Exhibit C, or such other form as the Borrower and the Agent may from
time to time agree upon in writing, executed by the chief financial officer
of the Borrower, stating (i) that any financial statements delivered
therewith have been prepared in accordance with GAAP, subject to year-end
adjustments, (ii) whether or not such officer has knowledge of the
occurrence of any Default or Event of Default hereunder not theretofore
reported and remedied and, if so, stating in reasonable detail the facts
with respect thereto and (iii) all relevant facts in reasonable detail to
evidence, and the computations as to, whether or not the Borrower is in
compliance with the Financial Covenants.
"Consolidated Cash Flow Leverage Ratio" as of a date of determination
means the consolidated Cash Flow Leverage Ratio of the Borrower and the
Subsidiaries, calculated in accordance with GAAP on a trailing four fiscal
quarter basis, after giving pro forma effect to the acquisition of the
Existing Subsidiaries and any Permitted Acquisition after the date hereof.
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"Consolidated Fixed Charge Coverage Ratio" as of a date of
determination means the ratio of (a) the sum of (i) EBITDA less (ii) cash
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expenditures for taxes, (iii) unfinanced Capital Expenditures and (iv)
dividends on all stock (including preferred stock) of the Borrower to (b)
the sum of (i) twenty percent (20%) of the outstanding principal balance of
all Term Advances on the date of determination, and (ii) payments made on
Capitalized Lease Liabilities, (iii) Interest Expense for the Borrower and
(iv) scheduled payments on Funded Debt other than the Term Advances,
determined on a trailing four fiscal quarter basis, after giving pro forma
effect to the acquisition of the Existing Subsidiaries and any Permitted
Acquisition after the date hereof.
"Consolidated Net Income" means, with respect to the applicable period
of computation, the after tax net income from continuing operations of the
Borrower and all Subsidiaries on a consolidated basis, determined in
accordance with GAAP.
"Consolidated Tangible Net Worth" as of a date of determination means
the consolidated Tangible Net Worth of the Borrower and the Subsidiaries.
"Debt" of any Person means (i) all items of indebtedness or liability
which in accordance with GAAP would be included in determining total
liabilities as shown on the liabilities side of a balance sheet of that
Person as at the date as of which Debt is to be determined, excluding,
however, accounts payable and accrued liabilities incurred in the ordinary
course of that Person's business that are owed to sellers of goods or
services to that Person and are in an amount not greater than the cost of
such goods or services, and (ii) indebtedness secured by any Lien on
property owned by such Person, whether or not the indebtedness secured
thereby shall have been assumed, and (iii) guaranties and endorsements
(other than (a) any Guaranty by a Subsidiary or (b) for purposes of
collection in the ordinary course of business) by such Person and other
contingent obligations of such Person in respect of, or to purchase or
otherwise acquire, indebtedness of others. For purposes of determining a
Person's aggregate Debt at any time, "Debt" shall also include the
aggregate payments required to be made by such Person at any time under any
lease that is considered a capitalized lease under GAAP.
"Default" means an event that, with the giving of notice, the passage
of time or both, would constitute an Event of Default.
"Default Period" means any period of time beginning on the first day
of any month during which a Default or Event of Default has occurred and
ending on the date the Bank notifies the Borrower in writing that such
Default or Event of Default has been cured or waived.
"Default Rate" means an annual rate equal to two percent (2%) over the
Floating Rate or the Eurodollar Rate, which rate shall change when and as
such rates change.
"EBITDA" means, the sum of (i) pretax earnings from continuing
operations, (ii) Interest Expense and (iii) depreciation, depletion, and
amortization of tangible and intangible assets, in each case calculated in
accordance with GAAP on a trailing four
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fiscal quarter basis, after giving pro forma effect to the acquisition of
the Existing Subsidiaries and any Permitted Acquisition after the date
hereof.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended and any regulations issued thereunder.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) that is, along with the Borrower, a member of a controlled
group of corporations or a controlled group of trades or businesses, as
described in sections 414(b) and 414(c), respectively, of the Internal
Revenue Code of 1986, as amended.
"Eligible Accounts" means the dollar value of the Accounts of the
Companies in which the Agent holds a first perfected security interest
reduced by:
(i) the amount of any Account which is not paid by the account
debtor within 90 days from the invoice date;
(ii) the amount of any Account as to which the account debtor
disputes liability or makes any claim with respect to the
Account;
(iii) the amount of any Account as to which a Company has knowledge
that a petition in bankruptcy or other application for relief
under any insolvency law has been filed with respect to the
account debtor owing the Account or as to which the account
debtor on the Account has made an assignment for the benefit of
creditors, or failed, suspended or gone out of business;
(iv) Accounts which are subject to any Lien in favor of any Person
other than Agent, provided, however, that Accounts subject to a
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bond shall not fail to qualify as "Eligible Accounts" under
this clause (iv) except to the extent they exceed twenty
percent (20%) of all Eligible Accounts;
(v) the amount of any Account which is owed by a Person that does
not have its principal place of business in the United States
or Canada unless supported by a letter of credit in the amount
of the Account issued by a financial institution reasonably
satisfactory to the Agent;
(vi) the amount of any Account which is owed by any account debtor
who has not paid 10% or more of any such account debtor's
Accounts within 90 days from the invoice date, to the extent
not deducted pursuant to clause (i);
(vii) the amount of any Account as to which the account debtor is an
Affiliate;
(viii) the amount of any creditor balances; and
(ix) all other Accounts deemed ineligible by the Agent in its
reasonable discretion.
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"Eligible Equipment" means all Equipment of the Companies, excluding,
however, fixtures, leasehold improvements, and Equipment subject to a Lien
in favor of any Person other than the Agent or the Banks.
"Eligible Inventory" means all Inventory of the Companies, at the
lower of cost or market value as determined in accordance with GAAP;
provided, however, that the following shall not in any event be deemed
Eligible Inventory:
(i) Inventory that is: in-transit; located at any warehouse, job
site or other premises not approved by the Agent in writing;
located outside of the states, or localities, as applicable, in
which financing statements have been filed to perfect a first
priority security interest in such Inventory in favor of the
Agent; covered by any negotiable or non-negotiable warehouse
receipt, bill of lading or other document of title; on
consignment from any Person; on consignment to any Person or
subject to any bailment unless such consignee or bailee has
executed an agreement with the Agent;
(ii) Supplies, packaging, maintenance parts or sample Inventory;
(iii) Work-in-process Inventory;
(iv) Inventory of a Company that is damaged, obsolete, designated as
slow moving by that Company's independent public accountants, or
not currently saleable in the normal course of such Company's
operations;
(v) Inventory that a Company has returned, has attempted to return,
is in the process of returning or intends to return to the
vendor thereof;
(vi) Inventory that is subject to a security interest in favor of any
Person other than the Agent; and
(vii) Inventory otherwise deemed ineligible by the Agent in its
reasonable discretion.
"Environmental Law" means the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. (S) 9601 et seq. as amended by
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the Superfund Amendment and Reauthorization Act of 1996, the Resource
Conservation and Recovery Act, 42 U.S.C. (S) 6901 et seq., the Hazardous
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Materials Transportation Act, 49 U.S.C. (S) 1802 et seq., the Toxic
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Substances Control Act, 15 U.S.C. (S) 2601 et seq., the Federal Water
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Pollution Control Act, 33 U.S.C. (S) 1252 et seq., the Clean Water Act, 33
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U.S.C. (S) 1321 et seq., the Clean Air Act, 42 U.S.C. (S) 7401 et seq., and
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any other federal, state, county, municipal, local or other statute, law,
ordinance or regulation which may relate to or deal with human health or
the environment, all as may be from time to time amended.
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"Eurodollar Business Day" means a Bank Business Day on which dealings
in U.S. dollar deposits are carried on in the London interbank market.
"Eurodollar Rate" means the annual rate equal to the sum of (i) the
rate obtained by dividing (a) the rate (rounded up to the nearest 1/8 of
1%) determined by the Agent to be the average rate at which U.S. dollar
deposits are offered to the Agent by major banks in the London interbank
market for funds to be made available on the first day of any Interest
Period in an amount approximately equal to the amount for which a
Eurodollar Rate quotation has been requested and maturing at the end of
such Interest Period, by (b) a percentage equal to 100% minus the Federal
Reserve System requirement (expressed as a percentage) applicable to such
deposits, and (ii) the applicable Margin.
"Eurodollar Rate Advance" means any Advance which bears interest at a
rate determined by reference to a Eurodollar Rate.
"Event of Default" has the meaning specified in Section 7.1.
"Existing Subsidiaries" means Eagle Electric Holdings, Inc., a
Minnesota corporation, Eagle Electric Holdings, Inc., a Delaware
corporation, Eagle Electrical Systems, Inc., an Ohio corporation, Parsons
Electric Holdings, Inc., a Delaware corporation, Parsons Electric Co., a
Minnesota corporation, The Allison Company, a Georgia corporation, Allison-
Smith Company, a Georgia corporation, and Henderson Electric Co., Inc., a
Delaware corporation.
"Facility" means the Revolving Facility or the Term Facility and
"Facilities" means both the Revolving Facility and the Term Facility.
"Facility Amount" means the Revolving Facility Amount or the Term
Facility Amount.
"Federal Funds Rate" means the average rate for overnight federal
funds transactions, as determined by the Agent in any reasonable manner.
"Financial Covenant" means any of the Borrower's obligations set forth
in Sections 5.9, 5.10, 5.11, 6.11 and 6.12.
"Floating Rate" means an annual rate equal to the sum of the Base Rate
and the applicable Margin, which rate shall change when and as the Base
Rate or the Margin changes.
"Floating Rate Advance" means any Advance which bears interest at a
rate determined by reference to the Floating Rate.
"Funded Debt", for any Person, means all interest bearing Debt of such
Person and shall include all interest-bearing Debt created, assumed or
guaranteed by such Person either directly or indirectly, including
obligations secured by liens upon property
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of such Person and upon which such entity customarily pays the interest,
all rental payments under capitalized leases and, in the case of the
Borrower, the L/C Amount.
"GAAP" means generally accepted accounting principles applied on a
basis consistent with the accounting practices applied in the annual
financial statements referred to in Section 4.5.
"Guarantor Documents" means, for each Guarantor, that Gurantor's
Guaranty, its Guarantor Security Agreement and any Collateral Pledge
Agreement executed by that Guarantor.
"Guarantor Security Agreement" means a Security Agreement,
substantially in the form of Exhibit H, by a Guarantor in favor of the
Agent.
"Guarantors" means the Existing Subsidiaries and any other Person now
or hereafter guarantying the Obligations.
"Guaranty" means a Guaranty, substantially in the form of Exhibit I,
by a Guarantor in favor of the Agent.
"Hazardous Substance" means any asbestos, urea-formaldehyde,
polychlorinated biphenyls ("PCBs"), nuclear fuel or material, chemical
waste, radioactive material, explosives, known carcinogens, petroleum
products and by-products and other toxic or hazardous pollutants,
contaminants, chemicals, materials or substances listed or identified in,
or regulated by, any Environmental Law.
"Interest Expense" means, as to any Person for a designated period,
that Person's total gross interest expense during such period (excluding
interest income), determined in accordance with GAAP.
"Interest Period" means, relative to any Eurodollar Rate Advance, the
period beginning on (and including) the date on which such Eurodollar Rate
Advance is made, or continued as, or converted into, a Eurodollar Rate
Advance pursuant to Sections 2.5, 2.6 or 2.7 and shall end on (but exclude)
the day which numerically corresponds to such date one (1), two (2), three
(3), or six (6) months thereafter (or, if such month has no numerically
corresponding day, on the last Business Day of such month), as the Borrower
may select in its relevant notice pursuant to Sections 2.5, 2.6, or 2.7;
provided, however, that:
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(a) no more than three (3) different Interest Periods may be
outstanding at any one time;
(b) if an Interest Period would otherwise end on a day which is
not a Banking Day, such Interest Period shall end on the next
following Banking Day (unless such next following Banking Day is the
first Banking Day of a month, in
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which case such Interest Period shall end on the next preceding
Banking Day); and
(c) no Interest Period applicable to an Advance may end later
than the Maturity Date.
"Inventory" means, as to any Person, all of such Person's inventory,
as such term is defined in the UCC, whether now owned or hereafter
acquired, whether consisting of whole goods, spare parts or components,
supplies or materials, whether acquired, held or furnished for sale, for
lease or under service contracts or for manufacture or processing, and
wherever located.
"L/C Amount" means the sum of (i) the aggregate face amount of any
issued and outstanding Letters of Credit and (ii) the unpaid amount of the
Obligation of Reimbursement.
"L/C Application" means an application and agreement for letters of
credit in Norwest's then-current standard form.
"Letter of Credit" has the meaning specified in Section 2.12.
"Lien" means any mortgage, deed of trust, lien, pledge, security
interest or other charge or encumbrance, of any kind whatsoever, including
but not limited to the interest of the lessor or titleholder under any
capitalized lease, title retention contract or similar agreement.
"Limited Liability Entity" means any corporation, limited liability
company, limited partnership, business trust or any other form of entity
which under the applicable law pursuant to which it is organized the owners
of the equity interests thereof are shielded from personal liability for
the debts or obligations of such entity.
"Loan Documents" means this Agreement, the Notes and the Security
Agreement and each Borrower Pledge Agreement.
"Margin" means, with respect to computation of the Eurodollar Rate,
the Floating Rate and the unused line fee described in Section 2.19(b), the
applicable increment (expressed in basis points) set forth and described in
the table below, established as of the last day of each fiscal quarter
according to the Borrower's Consolidated Cash Flow Leverage Ratio as shown
on its Compliance Certificate:
Margins
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Consolidated Cash Flow Floating Eurodollar
Leverage Ratio Rate Rate unused fee
1.50 to 1.00 or less 0 140 25
Greater than 1.50 to 1.00 0 165 30
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but less than or equal
to 2.00 to 1.00
Greater than 2.00 to 1.00 25 190 35
"Material Adverse Effect" means, with respect to any event or
circumstance, a material adverse effect on:
(a) the business, financial condition or operations of the Companies
and Permitted Acquisitions, taken as a whole;
(b) the validity or enforceability of any Loan Document or Guarantor
Document; or
(d) the status, existence, perfection, priority (subject to Permitted
Liens) or enforceability of the Liens granted to the Banks pursuant to the
Security Documents or the Guarantor Documents.
"Maturity Date" means December 1, 2001.
"Multiemployer Plan" means a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA.
"Net Equity Proceeds" means the net cash proceeds actually received by
the Borrower from sale of additional common or preferred stock of the
Borrower or instruments convertible into common or preferred stock of the
Borrower on or after the Funding Date, after payment of all fees,
discounts, commissions and expenses to underwriters, placement agents,
legal counsel, accountants and other miscellaneous fees and expenses
related to such sale.
"Notes" means the Revolving Notes or the Term Notes.
"Obligation of Reimbursement" has the meaning given in Section
2.13(a).
"Obligations" means each and every debt, liability and obligation of
every type and description arising under or in connection with any of the
Loan Documents, which the Borrower may now or at any time hereafter owe to
a Bank, whether such debt, liability or obligation now exists or is
hereafter created or incurred, whether it is direct or indirect, due or to
become due, absolute or contingent, primary or secondary, liquidated or
unliquidated, or sole, joint, several or joint and several, and including
specifically, but not limited to, the Obligation of Reimbursement and any
L/C Application completed by the Borrower, and all indebtedness,
liabilities and obligations of the Borrower arising under or evidenced by
the Notes.
"Percentage" means as to each Bank, its Revolving Facility Percentage
or its Term Facility Percentage.
"Permitted Acquisitions" has the meaning given in Section 2.26.
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"Permitted Liens" has the meaning given in Section 6.1.
"Permitted Preferred Stock Dividends" means dividends payable on (i)
Series A Preferred Stock, as set forth in the Certificate of Designation,
Preferences and Rights of Series A Nonvoting Convertible Preferred Stock
dated May 31, 1998 and (ii) the Borrower's Series B Convertible Preferred
Stock, as set forth in the Certificate of Designation, Preferences and
Rights of Series B Convertible Preferred Stock dated October 22, 1998.
"Person" means any individual, corporation, partnership, limited
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political
subdivision thereof.
"Plan" means an employee benefit plan or other plan maintained for
employees of the Borrower or any ERISA Affiliate and covered by Title IV of
ERISA.
"Platform Acquisition" means a Permitted Acquisition in a market in
which the Borrower does not have operations at the time of the acquisition.
"Redemption Revolving Advances" has the meaning given in Section 2.3.
"Reportable Event" means (i) a "reportable event" described in Section
4043 of ERISA and the regulations issued thereunder, (ii) a withdrawal from
any Plan, as described in Section 4063 of ERISA, (iii) an action to
terminate a Plan for which a notice is required to be filed under Section
4041 of ERISA, (iv) any other event or condition that might constitute
grounds for termination of, or the appointment of a trustee to administer,
any Plan, or (v) a complete or partial withdrawal from a Multiemployer Plan
as described in Sections 4203 and 4205 of ERISA.
"Required Banks" means Banks holding together at least 66.67% of the
Obligations, determined as if a Settlement Date had just occurred.
"Reserve" has the meaning given in Section 2.3(a).
"Revolving Facility" means the revolving credit facility described in
Section 2.1 and the letter of credit facility described in Section 2.12.
"Revolving Facility Amount" means, with respect to each Bank, the
amount designated as such opposite that Bank's name on the signature page
hereof, unless said amount is reduced pursuant to Section 2.20, in which
event it means the amount to which said amount is reduced.
"Revolving Facility Availability" means the Borrowing Base less the
----
L/C Amount and the outstanding principal balance of the Term Notes.
"Revolving Facility Percentage" means, with respect to each Bank, the
percentage designated as such opposite that Bank's name on the signature
page hereof.
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"Revolving Notes" means the Borrower's promissory notes payable to the
order of each of the Banks in substantially the form attached hereto as
Exhibit A, dated as of the Funding Date.
"Security Agreement" means the Security Agreement of the Borrower in
favor of the Agent of even date herewith.
"Series A Preferred Stock" means the Borrower's Series A Nonvoting
Convertible Preferred Stock, with the rights and privileges described in
the Certificate of Designation, Preferences and Rights of Series A
Nonvoting Convertible Preferred Stock dated May 31, 1998.
"Settlement Date" means (a) every Tuesday hereafter, commencing with
Tuesday, December 29, 1998, or, if such day is not a Banking Day, the next
succeeding Banking Day, and (b) any other Banking Day designated as a
"Settlement Date" by the Agent in its discretion upon not less than one (1)
Banking Day's notice to each Bank.
"Special Account" means a specified cash collateral account maintained
by the Agent in connection with Letters of Credit, as contemplated by
Section 2.14.
"Subordinated Debt" as to any Person, means Debt of that Person which
is subordinated in right of payment to all indebtedness of that Person to
the Banks, on terms that have been approved in writing by the Banks and
that have been noted by appropriate legend on all instruments evidencing
such Debt. For the avoidance of doubt, "Subordinated Debt" does not include
preferred stock.
"Subsidiary" means (i) any corporation of which more than 50% of the
outstanding shares of capital stock having general voting power under
ordinary circumstances to elect a majority of the board of directors of
such corporation, irrespective of whether or not at the time stock of any
other class or classes shall have or might have voting power by reason of
the happening of any contingency, is at the time directly or indirectly
owned by the Borrower, by the Borrower and one or more other Subsidiaries,
or by one or more other Subsidiaries, (ii) any partnership of which 50% or
more of the partnership interests therein are directly or indirectly owned
by the Borrower, by the Borrower and one or more other Subsidiaries, or by
one or more other Subsidiaries, and (iii) any limited liability company or
other form of business organization the effective control of which is held
by the Borrower, the Borrower and one or more other Subsidiaries, or by one
or more other Subsidiaries.
"Tangible Net Worth" as to any Person, means the difference between
(i) the tangible assets of that Person, which, in accordance with GAAP are
tangible assets, after deducting adequate reserves in each case where, in
accordance with GAAP, a reserve is proper and (ii) all Debt of that Person;
provided, however, that notwithstanding the foregoing in no event shall
-------- -------
there be included as such tangible assets patents, trademarks, trade names,
copyrights, licenses, goodwill, receivables from Affiliates, directors,
officers or employees, deferred charges or treasury stock or any securities
or Debt of that
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Person or any other securities unless the same are readily marketable in
the United States of America or entitled to be used as a credit against
federal income tax liabilities and non-compete agreements.
"Term Advance" has the meaning specified in Section 2.2.
"Term Facility" means the credit facility described in Section 2.2.
"Term Facility Amount" means, with respect to each Bank, the amount
designated as such opposite that Bank's name on the signature page hereof.
"Term Facility Availability" means the Borrowing Base less the L/C
----
Amount and the outstanding principal balance of the Revolving Notes.
"Term Facility Percentage" means, with respect to each Bank, the
percentage designated as such opposite that Bank's name on the signature
page hereof.
"Term Notes" means the Borrower's promissory notes, payable to the
order of each Bank, in substantially the form attached hereto as Exhibit B,
dated as of the Funding Date.
"Termination Date" means the earliest of (i) the Maturity Date, (ii)
the date the Borrower terminates the Credit Facility, or (iii) the date the
Agent demands payment of the Obligations.
"UCC" means the Uniform Commercial Code as in effect from time to time
in Minnesota or in any state whose laws are held to govern the creation,
perfection or foreclosure of any security interest granted pursuant to the
Security Agreement.
"Welfare Plan" means a "welfare plan" as defined in Section 3(1) of
ERISA.
Section 1.2 Cross References. All references in this Agreement to
----------------
Articles, Sections and subsections, shall be to Articles, Sections and
subsections of this Agreement unless otherwise explicitly specified.
ARTICLE II
AMOUNT AND TERMS OF THE LOANS
Section 2.1 Revolving Advances. Each Bank agrees, severally and not
------------------
jointly, to make advances to the Borrower from time to time during the period
from the date all of the conditions set forth in Section 3.1 have been satisfied
(the "Funding Date") to the Termination Date, on the terms and subject to the
conditions herein set forth (the "Revolving Advances"). Each Bank's obligation
to make Revolving Advances to the Borrower shall be limited to such Bank's
Revolving Facility Percentage of the Revolving Advance requested by the
Borrower, provided, however, that (i) the outstanding principal balance of
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Revolving Advances made by a Bank shall not exceed that Bank's Revolving
Facility Amount less that Bank's Revolving
----
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Facility Percentage of the L/C Amount, (ii) the outstanding principal balance of
Revolving Advances made by a Bank shall not exceed that Bank's Revolving
Facility Percentage of Revolving Facility Availability, and (iii) the sum of (A)
the outstanding principal balance of all Revolving Advances made by all Banks,
(B) the L/C Amount and (C) the outstanding principal balance of all Term
Advances made by all Banks shall not exceed the Borrowing Base. The Borrower's
obligation to pay each Bank's Revolving Facility Percentage of the Revolving
Advances shall be evidenced by a Revolving Note payable to the order of such
Bank. Within the limits set forth in this Section 2.1, the Borrower may obtain
Revolving Advances hereunder, repay Revolving Advances pursuant to Section 2.20
and reborrow under this Section 2.1.
Section 2.2 Term Facility. Each Bank agrees severally, but not
-------------
jointly, to make advances from time to time to the Borrower (each a "Term
Advance"), from the Funding Date to the second anniversary of the Funding Date,
on the terms and subject to the conditions herein set forth. Each Bank's
obligation to make Term Advances to the Borrower shall be limited to such Bank's
Term Facility Percentage of the Term Advance requested by the Borrower,
provided, however, that (i) the sum of all Term Advances made by a Bank shall
- -------- -------
not exceed that Bank's Term Facility Amount, (ii) the sum of all Term Advances
made by a Bank shall not exceed that Bank's Term Facility Percentage of Term
Facility Availability and (iii) the sum of (A) the outstanding principal balance
of all Revolving Advances, (B) the L/C Amount and (C) the outstanding principal
balance of all Term Advances shall not exceed the Borrowing Base. The Borrower's
obligation to repay the Term Advances made by each Bank shall be evidenced by a
Term Note payable to the order of such Bank.
Section 2.3 Redemption of Preferred Stock. The terms of the Series A
-----------------------------
Preferred Stock as set forth in the Certificate of Designation, Preferences and
Rights of Series A Nonvoting Convertible Preferred Stock dated May 31, 1998,
require the Borrower to begin redeeming such stock on March 31, 1999 and to
redeem all such stock on or before August 1, 1999, or face conversion of the
Preferred Stock into common stock of the Borrower. The Borrower may redeem
Series A Preferred Stock at any time from Net Equity Proceeds. The Borrower may
use Revolving Advances to redeem the Series A Preferred Stock ("Redemption
Revolving Advances") provided the following conditions are satisfied:
(a) BORROWING BASE RESERVE. A reserve (the "Reserve") shall be
incorporated in the Borrowing Base in the amount of (i) $2,000,000 from
January 1, 1999 through March 30, 1999, (ii) $4,000,000 from March 31, 1999
to May 30, 1999 and (iii) $6,000,000 from May 31, 1999 and thereafter,
reduced in each case by the amount paid by the Borrower to the holder of
the Series A Preferred Stock to redeem such stock.
(b) NOTICE TO AGENT. The Borrower shall provide the Agent with at
least fifteen (15) days prior written notice of its intent to obtain
Redemption Revolving Advances. Such notice shall specify the dollar amount
of the Redemption Revolving Advances, the number of shares of Series A
Preferred Stock to be redeemed and instructions for wiring the proceeds of
such Redemption Revolving Advances to the holder(s) of the stock being
redeemed.
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(c) REPAYMENT OR CONVERSION TO TERM ADVANCE. If the Borrower fails to
repay the Redemption Revolving Advances before October 31, 1999, on such
date, (i) the Borrower shall be deemed to have requested a Term Advance in
the amount of the outstanding principal balance of the Redemption Revolving
Advances; (ii) the proceeds of such Term Advance shall be used to repay the
Redemption Revolving Advance; (iii) the Borrower shall pay a fee to the
Agent as described in the letter agreement between the Borrower and the
Agent of even date herewith.
Section 2.4 Increase in Facility Amounts. As set forth below and
----------------------------
pursuant to other procedures that the Agent and the Required Banks may
establish, the Borrower may request that the Aggregate Revolving Facility Amount
and/or Aggregate Term Facility Amount be increased.
(a) INCREASE REQUESTS. So long as no Default Period exists, the
Borrower may request, at any time and from time to time after the Agent
receives and approves the Borrower's unqualified audit for its fiscal year
ended March 31, 1999, by written notice to the Agent (each an "Increase
Request"), that the Aggregate Revolving Facility Amount, the Aggregate Term
Facility Amount, or both, be increased (the amount of such requested
increase, if any, in the Aggregate Revolving Facility Amount shall be the
"Revolving Increase Amount"; and the amount of such requested increase, if
any, in the Aggregate Term Facility Amount shall be the "Term Increase
Amount"). Such Increase Requests shall be irrevocable and binding on the
Borrower.
(b) APPROVAL OF INCREASE REQUESTS. The Agent shall promptly notify
each Bank of the receipt of an Increase Request. Provided (i) the Agent
shall have received and accepted an unqualified audit for the Borrower's
fiscal year ended March 31, 1999, (ii) the sum of the Aggregate Revolving
Facility Amount and the Aggregate Term Facility Amount, after giving effect
to the Revolving Increase Amount and/or the Term Increase Amount, does not
exceed $50,000,000, and (iii) the Revolving Increase Amount, if any, and
the Term Increase Amount, if any, are each equal to $5,000,000 or an
integral multiple thereof, the Agent may approve or deny the Increase
Request; otherwise, the Increase Request shall be denied unless all the
Banks approve it.
(c) APPORTIONMENT OF INCREASE REQUESTS. Upon receipt and approval of
an Increase Request, the Agent shall offer to each Bank the opportunity to
increase its Revolving Facility Amount, if applicable, by an amount up to
such Bank's Revolving Facility Percentage times the Revolving Increase
Amount, and its Term Facility Amount, if applicable, by an amount up to
such Bank's Term Facility Percentage times the Term Facility Increase. If a
Bank agrees, in its individual and sole discretion, to so increase its
Revolving Facility Amount or Term Facility Amount (an "Accepting Bank"), it
shall deliver to the Agent, no later than 14 days from the date on which
the Agent notified the Banks of such request, a written notice of such
agreement specifying the amount by which its Revolving Facility Amount
and/or Term Facility Amount shall be increased; provided, however, that in
-------- -------
no event shall a Bank's Revolving Facility Percentage be different from its
Term Facility Percentage after giving effect to any such
-15-
increase. No Bank's Revolving Facility Amount or Term Facility Amount shall
be increased unless such Bank so accepts. If a Bank fails to accept or
respond to the Agent's request for an increase in its Revolving Facility
Amount or Term Facility Amount (a "Declining Bank"), such Declining Bank's
share of the increase may be allocated by the Agent to one or more
Accepting Banks which, in such Bank's sole and absolute discretion, accepts
in writing any such allocation by the Agent.
(d) SHORTFALL AMOUNTS; ADDITIONAL BANKS. If, after following the
procedure set forth in Subsection (c), less than all of the Revolving
Increase Amount and/or the Term Increase Amount, as the case may be, has
been apportioned among the Banks (such unapportioned amount, a "Shortfall
Amount"), the Agent may extend offers to other financial institutions in
accordance with Section 8.14, to become Banks under this Agreement (each a
"New Bank") with respect to such Shortfall Amount. If no new Banks accept
such offers, the Increase Request shall be deemed rejected, or at the
Borrower's option, modified to reflect the actual increases approved by the
Accepting Banks.
(e) FEE. The Borrower shall pay the Agent the arrangement fee in
connection with each accepted Increase Request in accordance with the
letter agreement between the Borrower and the Agent of even date herewith.
(f) DOCUMENTATION. The increase in the Revolving Facility Amounts
and/or Term Facility Amounts of Accepting Banks and the assignment to any
New Banks shall occur on such date as determined by the Agent, with prior
notice thereof to the Borrower, the Banks and the New Banks. Before such
increase, the Borrower shall execute new Notes reflecting the increased
Facility Amounts of all Accepting Banks and New Banks and deliver same to
the Agent, which shall deliver each Bank's new Notes upon surrender of its
old Notes.
Section 2.5 Procedures for Borrowing.
------------------------
(a) Each Advance that the Banks may make shall be funded as either a
Floating Rate Advance or a Eurodollar Rate Advance, as the Borrower shall
specify in the related notice of borrowing or notice of conversion pursuant
to this Section 2.5 or Section 2.6, provided that during Default Periods,
no Eurodollar Rate Advances shall be made. Floating Rate Advances and
Eurodollar Rate Advances may be outstanding at the same time. Each request
for a Floating Rate Advance shall be in the amount of $50,000 or a higher
integral multiple of $50,000. Each request for a Eurodollar Rate Advance
shall be in the amount of $500,000 or a higher integral multiple of
$100,000.
(b) The Borrower shall request each Advance not later than 11:00 a.m.,
Minneapolis, Minnesota time, on a Banking Day which, in the case of a
Floating Rate Advance, is the Advance date, or, in the case of a Eurodollar
Rate Advance, is at least three (3) Banking Days before the date the
Advance is to be made. Requests for a Floating Rate Advance may be made by
telephone; requests for Eurodollar Rate Advances shall be made in writing.
Each request for an Advance shall specify the date
-16-
of the requested Advance, the amount thereof, whether the Advance is a
Revolving Advance or a Term Advance, and whether the Advance is to bear
interest initially at a Floating Rate or a Eurodollar Rate, and in the case
of an Advance that is to bear interest initially at a Eurodollar Rate, the
applicable Interest Period. Each request for an Advance shall be made by
(i) any officer of the Borrower; or (ii) any person designated as the
Borrower's agent by any officer of the Borrower in a writing delivered to
the Agent; or (iii) any person reasonably believed by the Agent to be an
officer of the Borrower or such a designated agent.
(c) Unless the Agent elects to follow the procedure set forth in
Section 8.2(d), promptly upon receipt of each request for an Advance, the
Agent shall notify each Bank by telephone or telecopy of the request and
subject to fulfillment of the applicable conditions set forth in Article
III, each Bank shall make its Percentage of the requested Revolving Advance
available to the Agent in immediately available funds at the Agent's
address specified in Section 9.3, not later than 2:00 p.m. (Minneapolis,
Minnesota time) on the date of such Revolving Advance; provided that each
Bank shall have received funding notice not later than 12:00 noon
(Minneapolis, Minnesota time) on such day.
(d) Upon fulfillment of the applicable conditions set forth in Article
III, the Agent shall make the proceeds of each Bank's share of the Advance
available to the Borrower by crediting the same to the Borrower's demand
deposit account maintained with the Agent unless the Agent and the Borrower
shall agree to another manner of disbursement. Upon the Agent's request,
the Borrower shall promptly confirm each telephonic request for an Advance
by executing and delivering an appropriate confirmation certificate to the
Agent. The Borrower shall be obligated to repay all Advances
notwithstanding the Agent's failure to receive such confirmation and
notwithstanding the fact that the person requesting the same was not in
fact authorized to do so. Any request for an Advance, whether written or
telephonic, shall be deemed to be a representation by the Borrower that the
conditions set forth in Section 3.3 have been satisfied as of the time of
the request.
Section 2.6 Converting Floating Rate Advances to Eurodollar Rate
----------------------------------------------------
Advances; Procedures. So long as no Default Period exists, the Borrower may
- --------------------
convert all or any part of any outstanding Floating Rate Advance into a
Eurodollar Rate Advance by giving notice to the Agent of such conversion not
later than 3:00 p.m., Minneapolis, Minnesota time, on a Banking Day which is at
least three (3) Banking Days before the date of the requested conversion. Each
such notice shall be irrevocable, shall be effective upon receipt by the Agent,
shall be in writing or by telephone or telecopy transmission, to be confirmed in
writing by the Borrower if so requested by the Agent (in the form of Exhibit F),
and shall specify the date and amount of such conversion, the total amount of
the Advance to be so converted and the Interest Period therefor. Each conversion
of an Advance shall be on a Banking Day, and the aggregate amount of each such
conversion of a Floating Rate Advance to a Eurodollar Rate Advance shall be in
an amount equal to $500,000 or a higher integral multiple of $100,000.
-17-
Section 2.7 Procedures at End of a Interest Period. Unless the
--------------------------------------
Borrower requests a new Eurodollar Rate Advance in accordance with the
procedures set forth below, or prepays the principal of an outstanding
Eurodollar Rate Advance, at the expiration of an Interest Period, the Agent
shall automatically and without request of the Borrower convert each Eurodollar
Rate Advance to a Floating Rate Advance on the last day of the relevant Interest
Period. So long as no Default Period shall exist, the Borrower may cause all or
any part of any outstanding Eurodollar Rate Advance to continue to bear interest
at a Eurodollar Rate after the end of the then applicable Interest Period by
notifying the Agent not later than 10:30 a.m., Minneapolis, Minnesota time, on a
Banking Day which is at least three (3) Banking Days before the first day of the
new Interest Period. Each such notice shall be irrevocable, shall be in writing
or by telephone or telecopy transmission, to be confirmed in writing by the
Borrower if so requested by the Agent (in the form of Exhibit G), shall be
effective when received by the Agent, and shall specify the first day of the
applicable Interest Period, the amount of the expiring Eurodollar Rate Advance
to be continued and the Interest Period therefor. Each new Interest Period shall
begin on a Banking Day and the amount of each Advance bearing a new Eurodollar
Rate shall be in an amount equal to $500,000 or a higher integral multiple of
$100,000.
Section 2.8 Setting and Notice of Rates. The Agent shall determine the
---------------------------
applicable Eurodollar Rate for each Interest Period between the opening of
business and 12:00 Noon, Minneapolis, Minnesota time, on the second Banking Day
before the beginning of such Interest Period, and shall give notice thereof
(which may be by telephone) to the Borrower. Each such determination of the
applicable Eurodollar Rate shall be conclusive and binding upon the parties
hereto, in the absence of demonstrable error. The Agent, upon written request of
the Borrower, shall deliver to the Borrower a statement showing the computations
used by the Agent in determining the applicable Eurodollar Rate.
Section 2.9 Funding Losses. The Borrower shall, upon demand by a Bank
--------------
(which demand shall be accompanied by a statement setting forth the basis for
the calculations of the amount being claimed), indemnify that Bank against any
loss or expense which that Bank may have sustained or incurred (including,
without limitation, any net loss or expense incurred by reason of the
liquidation or reemployment of deposits or other funds acquired by that Bank to
fund or maintain Eurodollar Rate Advances) or which that Bank may be deemed to
have sustained or incurred, as reasonably determined by that Bank, (a) as a
consequence of any failure by the Borrower to make any payment when due of any
amount due in connection with any Eurodollar Rate Advances, (b) due to any
failure of the Borrower to borrow or convert any Eurodollar Rate Advances on a
date specified therefor in a notice thereof or (c) due to any payment or
prepayment of any Eurodollar Rate Advance on a date other than the last day of
the applicable Interest Period for such Eurodollar Rate Advance. For this
purpose, all notices under Sections 2.5, 2.6, or 2.7 shall be deemed to be
irrevocable.
Section 2.10 Right of Banks to Fund through Other Offices. Each Bank
--------------------------------------------
may fulfill its agreements hereunder with respect to any Eurodollar Rate Advance
by causing a foreign branch or affiliate to make such Eurodollar Rate Advance;
provided, that in such event the obligation of the Borrower to repay such
- --------
Eurodollar Rate Advance shall nevertheless be to
-18-
that Bank and such Eurodollar Rate Advance shall be deemed held by that Bank for
the account of such branch or affiliate.
Section 2.11 Discretion of Banks as to Manner of Funding.
-------------------------------------------
Notwithstanding any provision of this Agreement to the contrary, each Bank shall
be entitled to fund and maintain all or any part of its Eurodollar Rate Advances
in any manner it deems fit, it being understood, however, that for the purposes
of this Agreement (specifically including, without limitation, Section 2.9) all
determinations hereunder shall be made as if each Bank had actually funded and
maintained each Eurodollar Rate Advance during each Interest Period for such
Eurodollar Rate Advance through the purchase of deposits having a maturity
corresponding to such Interest Period and bearing an interest rate equal to the
appropriate Eurodollar Rate for such Interest Period.
Section 2.12 Letters of Credit.
-----------------
(a) Norwest agrees, on the terms and subject to the conditions herein
set forth, to issue, from the Funding Date to the Termination Date, one or
more irrevocable standby or documentary letters of credit (each, a "Letter
of Credit") for the account of any Company. Norwest shall have no
obligation to issue any Letter of Credit if the face amount of the Letter
of Credit to be issued, would exceed the lesser of:
(i) $3,000,000 less the L/C Amount, or
(ii) Revolving Facility Availability.
Each Letter of Credit, if any, shall be issued pursuant to a separate L/C
Application entered into between the Borrower and Norwest, completed in a
manner satisfactory to the Norwest at least three (3) Banking Days before
the Letter of Credit is issued. The terms and conditions set forth in each
such L/C Application shall supplement the terms and conditions hereof, but
if the terms of any such L/C Application and the terms of this Agreement
are inconsistent, the terms hereof shall control. Upon receipt thereof, the
Agent shall notify each Bank by telephone or telecopy of the request and of
the amount of such Bank's Revolving Facility Percentage of risk therein.
(b) No Letter of Credit shall be issued with an expiry date later than
the earlier of twenty-four (24) months or the Termination Date in effect as
of the date of issuance.
(c) Any request to issue a Letter of Credit under this Section 2.12
shall be deemed to be a representation by the Borrower that the conditions
set forth in Section 3.1 have been satisfied as of the date of the request.
-19-
Section 2.13 Payment of Amounts Drawn Under Letters of Credit;
-------------------------------------------------
Obligation of Reimbursement. The Borrower shall reimburse Norwest for all draws
- ---------------------------
under any Letter of Credit in accordance with the applicable L/C Application and
as follows:
(a) OBLIGATION OF REIMBURSEMENT. The Borrower shall pay Norwest on the
day a draft is honored under any Letter of Credit a sum equal to all
amounts drawn under such Letter of Credit plus any and all reasonable
charges and expenses that Norwest may pay or incur relative to such draw
and the applicable L/C Application, plus interest on all such amounts,
charges and expenses as set forth below (the Borrower's obligation to pay
all such amounts is herein referred to as the "Obligation of
Reimbursement").
(b) REVOLVING ADVANCE TO PAY OBLIGATION OF REIMBURSEMENT. Whenever a
draft is submitted under a Letter of Credit, the Agent shall cause a
Revolving Advance to be made in the amount of the Obligation of
Reimbursement and shall apply the proceeds of such Revolving Advance
thereto. Such Revolving Advance shall be repayable in accordance with and
be treated in all other respects as a Revolving Advance hereunder.
(c) BORROWER'S OBLIGATION IF NO REVOLVING ADVANCE MADE. If a draft is
submitted under a Letter of Credit when the Borrower is unable, because a
Default Period then exists or for any other reason, to obtain a Revolving
Advance to pay the Obligation of Reimbursement, the Borrower shall pay to
Norwest on demand and in immediately available funds, the amount of the
Obligation of Reimbursement together with interest, accrued from the date
of the draft until payment in full at the Default Rate. Notwithstanding the
Borrower's inability to obtain a Revolving Advance for any reason, the
Agent is irrevocably authorized, in its sole discretion, to cause a
Revolving Advance to be made in an amount sufficient to discharge the
Obligation of Reimbursement and all accrued but unpaid interest thereon.
(d) ADVANCE EVIDENCED BY REVOLVING NOTES. The Borrower's obligation to
pay any Revolving Advance made under this Section 2.13, shall be evidenced
by Revolving Notes and shall bear interest as provided in Section 2.16.
(e) BANKS' PARTICIPATIONS IN OBLIGATION OF REIMBURSEMENT. Each Bank
shall be deemed to hold an undivided participating interest in the
Obligation of Reimbursement equal to that Bank's Revolving Facility
Percentage thereof. If Norwest makes any payment pursuant to the terms of a
Letter of Credit and is not promptly reimbursed by a Revolving Advance
under Section 2.1 or otherwise, the Agent may request that each Bank pay to
the Agent such Bank's Revolving Facility Percentage of the Obligation of
Reimbursement.
(i) Upon receipt of any such request before 11:00 a.m. (Minneapolis,
Minnesota time) on a Banking Day, each Bank shall be
unconditionally and irrevocably obligated to pay its Revolving
Facility Percentage of the Obligation of Reimbursement to the
Agent in immediately available
-20-
funds before 3:00 p.m. (Minneapolis, Minnesota time) on such
date. Notices received after 11:00 a.m. (Minneapolis, Minnesota
time) shall be deemed to have been received on the following
Banking Day.
(ii) If payment is not made by a Bank when due hereunder, such Bank
shall pay interest on the unpaid amount from the date of the
Agent's request through the date of payment at the Federal Funds
Rate.
(iii) After making any payment to the Agent under this subsection in
connection with a particular Obligation of Reimbursement, a Bank
shall be entitled to participate to the extent of its Revolving
Facility Percentage in the related reimbursements received by
the Agent, whether in the form of payments by the Borrower,
payments from third parties or proceeds of collateral. Upon
receiving any such reimbursement, the Agent will distribute to
each Bank its Revolving Facility Percentage of such
reimbursement. At the Agent's option, any payment by a Bank
hereunder may be deemed a Revolving Advance in accordance with
Section 2.1.
Section 2.14 Special Account. If the Revolving Facility is terminated
---------------
for any reason whatsoever while any Letter of Credit is outstanding the Borrower
shall thereupon pay the Agent in immediately available funds for deposit in the
Special Account an amount equal to the L/C Amount. The Special Account shall be
maintained by the Agent in its own name as a special pledged collateral account.
Any interest earned on amounts deposited in the Special Account shall be
credited to the Special Account. Amounts on deposit in the Special Account may
be applied by the Agent at any time or from time to time to the Obligations in
the Agent's sole discretion, and, except to the extent that the amount on
deposit in the Special Account exceeds the sum of the L/C Amount and any
anticipated fees, shall not be subject to withdrawal by the Borrower so long as
the Agent maintains a security interest therein. The Agent agrees to transfer
any balance in the Special Account to the Borrower at such time as the Agent is
required to release its security interest in the Special Account under
applicable law.
Section 2.15 Obligations Absolute. The Borrower's Obligation of
--------------------
Reimbursement arising under this Agreement shall be absolute, unconditional and
irrevocable, and shall be paid strictly in accordance with the terms of this
Agreement, under all circumstances whatsoever, including (without limitation)
the following circumstances:
(a) any lack of validity or enforceability of any Letter of Credit or
any other agreement or instrument relating to any Letter of Credit
(collectively the "Related Documents");
(b) any amendment or waiver of or any consent to departure from all or
any of the Related Documents;
(c) the existence of any claim, setoff, defense or other right which
the Borrower may have at any time, against any beneficiary or any
transferee of any Letter of Credit (or any persons or entities for whom any
such beneficiary or any such
-21-
transferee may be acting), or other person or entity, whether in connection
with this Agreement, the transactions contemplated herein or in the Related
Documents or any unrelated transactions;
(d) any statement or any 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
whatsoever;
(e) payment by or on behalf of Norwest under any Letter of Credit
against presentation of a draft or certificate which does not strictly
comply with the terms of such Letter of Credit; or
(f) any other circumstance or happening whatsoever, whether or not
similar to any of the foregoing.
Section 2.16 Interest; Participations; Usury.
-------------------------------
(a) FLOATING RATE ADVANCES. Except as set forth in Sections 2.16(c)
and 2.16(d), the outstanding principal balance of Floating Rate Advances
shall bear interest at the Floating Rate.
(b) EURODOLLAR RATE ADVANCES. Except as set forth in Sections 2.16(c)
and 2.16(d), the outstanding principal balance of Eurodollar Rate Advances
shall bear interest during each relevant Interest Period at the Eurodollar
Rate applicable to such Interest Period, provided that reductions and
increases in the Margin shall be determined within five calendar days
following receipt of the Borrower's financial statements and quarterly
Compliance Certificates required under Section 5.1 and shall be effective
as of the first day of the second month of the quarter; provided, further,
that if the Borrower fails to deliver any financial statements or
Compliance Certificates when required under Section 5.1, the Agent may, by
notice to the Borrower, increase the Margin to the highest amount until
such time as the Agent has received all such financial statements and
Compliance Certificates.
(c) DEFAULT INTEREST RATE. At any time during any Default Period, in
the Agent's sole discretion and without waiving any of the Banks' other
rights and remedies, the principal of the Advances outstanding from time to
time shall bear interest at the Default Rate, effective for any periods
designated by the Agent from time to time during that Default Period.
(d) USURY. In any event no rate change shall be put into effect which
would result in a rate greater than the highest rate permitted by law.
-22-
Section 2.17 Payment of Term Advances. The principal of each Term
------------------------
Advance shall be due and payable:
(a) beginning on the last day of the calendar quarter that falls at
least six (6) months after the date on which the Term Advance is made and
continuing on the last day of each calendar quarter thereafter, in
substantially equal quarterly installments sufficient to fully amortize
each Term Advance in equal quarterly installments over an assumed term of
five years; and
(b) on the Termination Date, all Term Advances and all interest
accrued thereon shall be due and payable in full.
Section 2.18 Collateral. Payment of the Obligations shall be secured
----------
by the Liens granted under the Loan Documents, and may also now or hereafter be
secured by one or more other Liens. Each such Lien shall be prior to all other
Liens of any kind whatsoever, subject only to such exceptions as the Bank may
expressly approve in writing.
Section 2.19 Fees.
----
(a) ARRANGEMENT FEE. The Borrower shall pay the Agent on the Funding
Date the arrangement fee described in the letter agreement of even date
herewith by and between the Borrower and the Agent.
(b) UNUSED FEE. The Borrower shall pay the Agent for the benefit of
each Bank an annual fee equal to the Margin times the average daily Unused
Revolving Facility Amount and the Unused Term Facility Amount from the date
of this Agreement to and including the Termination Date, due and payable
quarterly in arrears on the last day of each calendar quarter and on the
Termination Date. For the purposes of this Subsection (b), "Unused
Revolving Facility Amount" means, for each Bank, such Bank's Revolving
Facility Amount reduced by the sum of (i) outstanding Revolving Advances
made by such Bank and (ii) such Bank's Revolving Facility Percentage of the
L/C Amount; and "Unused Term Facility Amount means, for each Bank, such
Bank's Term Facility Amount reduced by the sum of all Term Advances made by
such Bank.
(c) AGENT FEE. The Borrower shall pay the Agent on the date of this
Agreement and on each anniversary thereof until the Termination Date the
administrative agent fee described in the letter agreement of even date
herewith by and between the Borrower and the Agent.
(d) LETTER OF CREDIT FEES. The Borrower shall pay Norwest an issuance
fee for each Letter of Credit equal to twelve and one half (12.5) basis
points of the face amount of each Letter of Credit. The Borrower shall also
pay [Norwest][the Agent for the ratable benefit of the Banks] a fee with
respect to each outstanding Letter of Credit, if any, accruing on a daily
basis and computed at the annual rate equal to the Margin applicable to
Eurodollar Advances times the L/C Amount from and including the date of
issuance of such Letter of Credit until such date as such Letter of Credit
shall terminate
-23-
by its terms, due and payable quarterly in arrears on the last day of each
calendar quarter and on the Termination Date.
(e) LETTER OF CREDIT ADMINISTRATIVE FEES. The Borrower shall pay the
Agent, on written demand, the administrative fees charged by the Agent in
connection with the honoring of drawings under any Letter of Credit,
amendments thereto, transfers thereof and all other activity with respect
to the Letters of Credit at the then-current rates published by the Agent
for such services rendered on behalf of customers of the Agent generally.
(f) AUDIT FEES. The Borrower shall pay the Agent, on demand, audit
fees in connection with any audits or inspections conducted by the Agent of
any Collateral or the operations or business of the Borrower at the
standard rate or rates established from time to time by the Agent as its
audit fees (which fees are currently $62.50 per hour per auditor), together
with all actual out-of-pocket costs and expenses incurred in conducting any
such audit or inspection.
Section 2.20 Voluntary Prepayments. The Borrower may prepay the Notes
---------------------
in whole or in part, reduce the Revolving Facility Amount or terminate the
Credit Facilities without penalty or premium, at any time and from time to time;
provided that
(a) the Borrower gives the Agent at least 10 days' prior written
notice of any prepayment of the Term Notes;
(b) any prepayment of the Revolving Advances or the Term Advances
shall be pro rata among the Banks in accordance with their respective
Revolving Facility Percentages and Term Facility Percentages;
(c) any prepayment of the full amount of any Notes shall include
accrued interest thereon;
(d) any reduction in the Revolving Facility Amounts must be in an
amount not less than $1,000,000 or an integral multiple thereof;
(e) the Revolving Facility Amount shall not be reduced to an amount
less than the sum of the L/C Amount and the aggregate outstanding principal
balance of the Revolving Advances owed to all Banks at the time of any such
reduction and no such reduction shall reduce any Bank's Revolving Facility
Amount to an amount less than the then-aggregate outstanding balance of the
Revolving Advances due and owing to such Bank plus such Bank's Revolving
Facility Percentage of the L/C Amount.
(f) no Letter of Credit has been issued and is outstanding with an
expiration date after the date of any such early termination.
(g) any prepayment of the Term Advances must be in an amount not less
than $250,000;
-24-
(h) any partial prepayments of the Term Advances shall be applied to
principal payments due and owing in inverse order of their maturities; and
(i) no prepayment may be applied to any portion of the principal
balance of any Note which, at the time of such prepayment, bears interest
at a Eurodollar Rate.
Section 2.21 Mandatory Prepayment. If the sum of the outstanding
--------------------
principal balance of the Revolving Advances plus the L/C Amount shall at any
time exceed the difference of the Borrowing Base and the outstanding principal
balance of the Term Advances, the Borrower shall (i) first, immediately prepay
the Revolving Advances to the extent necessary to eliminate such excess; and
(ii) if prepayment in full of the Revolving Advances is insufficient to
eliminate such excess, pay to the Agent in immediately available funds for
deposit in the Special Account an amount equal to the remaining excess. Any
payment received by the Agent under this Section 2.21 may be applied to the
Obligations in such order as the Agent, in its discretion, may from time to time
determine.
Section 2.22 Computation of Interest and Fees; When Interest Due and
-------------------------------------------------------
Payable. Interest accruing on the outstanding principal balance of the Advances
- -------
and fees hereunder outstanding from time to time shall be computed on the basis
of actual number of days elapsed in a year of 360 days. Interest on Floating
Rate Advances shall be payable in arrears on the first day of each month and on
the Termination Date. Accrued interest on each Eurodollar Rate Advance shall be
due and payable on the last day of the Interest Period relating to such
Eurodollar Rate Advance; provided, however, that if any Interest Period is
-------- -------
longer than three (3) months, interest shall be due and payable monthly in
arrears on the last day of the third month occurring after commencement of such
Interest Period, on the last day of each three month period thereafter (if any)
and on the last day of such Interest Period.
Section 2.23 Payment. All payments of principal and interest under the
-------
Notes and of the fees hereunder shall be made to the Agent in immediately
available funds. The Borrower agrees that the amounts shown on the books and
records of the Agent as being the principal balances of the Notes shall be prima
facie evidence of such principal amounts. The Borrower hereby authorizes the
Agent to charge against the Borrower's account with the Agent an amount equal to
the accrued interest and fees from time to time due and payable under the Notes
or hereunder, or (at the option of the Agent) to make a Revolving Advance in
such amount, all without receipt of any request for such charge or Revolving
Advance.
Section 2.24 Payment on Nonbusiness Days. Whenever any payment to be
---------------------------
made hereunder or under any Note shall be stated to be due on a day other than a
Bank Business Day, such payment may be made on the next succeeding Bank Business
Day, and such extension of time shall in each case be included in the
computation of interest on such Note or the fees hereunder, as the case may be.
Section 2.25 Use of Proceeds. The Borrower shall use proceeds of the
---------------
Revolving Facility exclusively to provide working capital, finance accounts
receivable, inventory and cash which may be acquired in connection with a
Permitted Acquisition, for general corporate purposes, to make loans and
advances to its Subsidiaries and to make equity investments in its
-25-
Subsidiaries. The Borrower shall use proceeds of the Term Facility exclusively
to finance Permitted Acquisitions.
Section 2.26 Permitted Acquisitions. Notwithstanding Sections 6.6 and
----------------------
6.8, the Borrower or any Subsidiary may issue stock, Subordinated Debt, cash, or
any combination thereof, in exchange for or otherwise acquire, all of the
ownership interests of, or all or substantially all of the assets of, or merge
or consolidate with, any Limited Liability Entity in the electrical contracting
business (each a "Permitted Acquisition"), provided the conditions set forth on
Schedule 2.26 shall have been satisfied.
Section 2.27 Capital Adequacy; Increased Costs and Reduced Return. If
----------------------------------------------------
any Related Bank determines at any time that its Return has been reduced as a
result of any Rule Change, such Related Bank may require the Borrower to pay it
the amount necessary to restore its Return to what it would have been had there
been no Rule Change. For purposes of this Section 2.27:
(a) "Capital Adequacy Rule" means any law, rule, regulation,
guideline, directive, requirement or request regarding capital adequacy, or
the interpretation or administration thereof by any governmental or
regulatory authority, central bank or comparable agency, whether or not
having the force of law, that applies to any Related Bank. Such rules
include rules requiring financial institutions to maintain total capital in
amounts based upon percentages of outstanding loans, binding loan
commitments and letters of credit.
(b) "Eurodollar Rule" means Regulation D of the Board of Governors of
the Federal Reserve System, any applicable law, rule or regulation, with
respect to (i) taxes, duties or other charges, exemptions with respect to
Eurodollar Rate Advances or a Bank's obligation to make Eurodollar Rate
Advances, and (ii) reserves imposed by the Board of Governors of the
Federal Reserve System (but excluding any reserve included in the
determination of interest rates pursuant to Section 2.8), special deposits
or similar requirements against assets of, deposits with or for the account
of, or credit extended by, any Related Bank, and any other condition
affecting a Bank's making, maintaining or funding of Eurodollar Rate
Advances or its obligation to make Eurodollar Rate Advances.
(c) "Related Bank" includes (but is not limited to) a Bank, any parent
corporation of a Bank and any assignee of any interest of a Bank hereunder
and any participant in the Advances or Obligation of Reimbursement.
(d) "Return", for any period, means the return as determined by a
Related Bank on the Advances based upon its total capital requirements and
a reasonable attribution formula that takes account of the Capital Adequacy
Rules and the Eurodollar Rules then in effect, costs of issuing or
maintaining any Eurodollar Rate Advance and amounts received or receivable
under this Agreement or the Note with respect to any Eurodollar Advance.
Return may be calculated for each calendar quarter and for the
-26-
shorter period between the end of a calendar quarter and the date of
termination in whole of this Agreement.
(e) "Rule Change" means any change in any Capital Adequacy Rule or
Eurodollar Rule occurring after the date of this Agreement, but the term
does not include any changes in applicable requirements that at the Closing
Date are scheduled to take place under the existing Capital Adequacy Rules
or Eurodollar Rules or any increases in the capital that any Related Bank
is required to maintain to the extent that the increases are required due
to a regulatory authority's assessment of the financial condition of such
Related Bank or its determination of any failure of such Related Bank to
comply with applicable laws, rules, regulations or guidelines administered
by such regulatory authority.
Each Bank will promptly notify the Borrower of any event of which it has
knowledge, occurring after the date hereof, which will entitle that Bank to
compensation pursuant to this Section 2.27. Certificates of any Related Bank
sent to the Borrower from time to time claiming compensation under this Section
2.27, stating the reason therefor and setting forth in reasonable detail the
calculation of the additional amount or amounts to be paid to the Related Bank
hereunder to restore its Return shall be conclusive absent manifest error. In
determining such amounts, the Related Bank may use any reasonable averaging and
attribution methods.
Section 2.28 Funding Exceptions.
------------------
(a) BASIS FOR DETERMINING INTEREST RATE INADEQUATE OR UNFAIR. If with
respect to any Interest Period:
(i) the Agent determines that deposits in U.S. dollars (in the
applicable amounts) are not being offered in the London
interbank eurodollar market for such Interest Period; or
(ii) the Agent otherwise determines that by reason of circumstances
affecting the London interbank eurodollar market adequate and
reasonable means do not exist for ascertaining the applicable
Eurodollar Rate; or
(iii) the Agent determines that the Eurodollar Rate as determined by
the Agent will not adequately and fairly reflect the cost to the
Banks of maintaining or funding a Eurodollar Rate Advance for
such Interest Period, or that the funding of Eurodollar Rate
Advances has become impracticable as a result of an event
occurring after the date of this Agreement which in the opinion
of the Agent materially affects such Eurodollar Rate Advances;
then the Agent shall promptly notify the Borrower and (A) upon the
occurrence of any event described in the foregoing clause (i) the Borrower
shall enter into good faith negotiations with the Agent in order to
determine an alternate method to determine the Eurodollar Rate for the
Banks, and during the pendency of such negotiations with the Agent, the
Banks shall be under no obligation to make any new Eurodollar Rate
-27-
Advances, and (B) upon the occurrence of any event described in the
foregoing clauses (ii) or (iii), for so long as such circumstances shall
continue, the Banks shall be under no obligation to make any new Eurodollar
Rate Advances.
(b) ILLEGALITY. If any change in (including the adoption of any new)
applicable laws or regulations, or any change in the interpretation of
applicable laws or regulations by any governmental authority, central bank,
comparable agency or any other regulatory body charged with the
interpretation, implementation or administration thereof, or compliance by
the Banks with any request or directive (whether or not having the force of
law) of any such authority, central bank, comparable agency or other
regulatory body, should make it or, in the good faith judgment of the
Agent, shall raise a substantial question as to whether it is unlawful for
the Banks to maintain or fund Eurodollar Rate Advances, then (i) the Agent
shall promptly notify the Borrower, (ii) the obligation of the Agent to
maintain or convert into Eurodollar Rate Advances shall, upon the
effectiveness of such event, be suspended for the duration of such
unlawfulness, and (iii) for the duration of such unlawfulness, any notice
by the Borrower requesting the Agent to convert into Eurodollar Rate
Advances shall be construed as a request to continue making Floating Rate
Advances.
Section 2.29 Liability Records. The Agent may maintain from time to
-----------------
time, at its discretion, liability records as to the Obligations. All entries
made on any such record shall be presumed correct until the Borrower establishes
the contrary. Upon the Agent's demand, the Borrower will admit and certify in
writing the exact balance of the Obligations that the Borrower then asserts to
be outstanding. Any billing statement or accounting rendered by the Agent shall
be conclusive and fully binding on the Borrower unless the Borrower gives the
Agent specific written notice of exception within 30 days after receipt.
ARTICLE III
CONDITIONS PRECEDENT
Section 3.1 Initial Conditions Precedent. The Banks' obligation to
----------------------------
make any Advance and Norwest's obligation to issue any Letter of Credit is
subject to the condition precedent that the Agent shall have received on or
before the day the first Advance is made or Letter of Credit is issued all of
the following, each dated (unless otherwise indicated) as of the date hereof, in
form and substance satisfactory to the Agent:
(a) The Notes, properly executed on behalf of the Borrower.
(b) The Security Agreement, properly executed on behalf of the
Borrower.
(c) The Borrower Pledge Agreement, properly executed on behalf of the
Borrower, together with the original certificates evidencing the stock
covered thereby, blank assignments of that stock duly executed by the
Borrower.
-28-
(d) A financing statement or statements sufficient when filed to
perfect the security interests in personal property other than fixtures
granted under the Security Agreement to the extent such security interests
are capable of being perfected by filing.
(e) Current searches of appropriate filing offices showing that (i) no
state or federal tax liens have been filed and remain in effect against the
Borrower, and (ii) no financing statements have been filed and remain in
effect against the Borrower except financing statements perfecting only
Permitted Liens.
(f) Guarantor Pledge Agreements, duly executed by each Guarantor
holding any stock of any Subsidiary or any option to purchase such stock,
together with the original certificates evidencing the stock covered
thereby, blank assignments of that stock duly executed by such Guarantor,
and, where applicable, the original option agreements giving such Guarantor
a right to purchase common stock of any Subsidiary.
(g) A Guaranty, duly executed by each Guarantor.
(h) A Guarantor Security Agreement, duly executed by each Guarantor.
(i) A certificate of the secretary of each Company (i) certifying that
the execution, delivery and performance of the Loan Documents or Guarantor
Documents, as applicable, and other documents contemplated hereunder have
been duly approved by all necessary action of the Board of Directors of
that Company and attaching true and correct copies of the applicable
resolutions granting such approval, (ii) certifying that attached to such
certificate are true and correct copies of the articles of incorporation
and bylaws of that Company together with such copies, and (iii) certifying
the names of the officers of that Company that are authorized to sign the
Loan Documents or Guarantor Documents, as applicable, and other documents
contemplated hereunder, including requests for Advances and issuance of
Letters of Credit, together with the true signatures of such officers. The
Agent and the Banks may conclusively rely on such certificates until they
shall receive a further certificate of the Secretary or Assistant Secretary
of the applicable Company canceling or amending the prior certificate and
submitting the signatures of the officers named in such further
certificate.
(j) A certificate of good standing of each Company, dated not more
than 30 days before such date.
(k) A signed copy of an opinion of counsel for the Borrower and the
Guarantors, addressed to the Banks.
(l) Such subordination agreements as the Banks may require to evidence
that all of each Company's Debt, other than the Obligations and the
Guaranties, has been subordinated to payment of the Obligations and the
Guaranties on terms satisfactory to the Banks, together with all original
promissory notes or other documents evidencing such Debt.
-29-
(m) Certificates of the insurance required under the Security
Agreement, naming the Agent as lender loss payee.
(n) A Borrowing Base Certificate as of a date not more than 30 days
before that date.
(o) The arrangement fee and Agent's fee described in Sections 2.19(a)
and (c).
Section 3.2 Conditions Precedent to Advances Used for Permitted
---------------------------------------------------
Acquisitions. The obligation of the Banks to make any Advance (including the
- ------------
initial Advance) and Norwest's obligation to issue any Letters of Credit
(including the initial Letter of Credit) in connection with a Permitted
Acquisition shall be subject to the further conditions precedent that on the
date of such Advance or Letter of Credit:
(a) All of the conditions set forth in Schedule 2.26 shall have been
satisfied.
Section 3.3 Conditions Precedent to All Advances. The obligation of
------------------------------------
the Banks to make any Advance (including the initial Advance) and Norwest's
obligation to issue any Letters of Credit (including the initial Letter of
Credit) shall be subject to the further conditions precedent that on the date of
such Advance or Letter of Credit:
(a) the representations and warranties contained in Article IV are
correct on and as of the date of such Advance or Letter of Credit as though
made on and as of such date, except to the extent that such representations
and warranties relate solely to an earlier date; and
(b) no event has occurred and is continuing, or would result from such
Advance or Letter of Credit, which constitutes a Default or an Event of
Default.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
To induce the Banks to enter into this Agreement, the Borrower
represents and warrants to the Banks and the Agent as follows:
Section 4.1 Corporate Existence and Power. Each Company is a
-----------------------------
corporation duly incorporated, validly existing and in good standing under the
laws of its jurisdiction of incorporation, and is duly licensed or qualified to
transact business in all jurisdictions where the character of the property owned
or leased or the nature of the business transacted by it makes such licensing or
qualification necessary except where the failure to be so licensed or qualified
would not have a Material Adverse Effect. Each Company has all requisite power
and authority, corporate or otherwise, to conduct its business, to own its
properties and to execute and deliver, and to perform all of its obligations
under, the Loan Documents and the Guarantor Documents to which it is a party.
-30-
Section 4.2 Authorization of Borrowing; No Conflict as to Law or
----------------------------------------------------
Agreements. The execution, delivery and performance by each Company of the Loan
- ----------
Documents and Guarantor Documents to which it is a party and the borrowings from
time to time hereunder have been duly authorized by all necessary corporate
action and do not and will not (i) require any consent or approval of the
stockholders of any Company, or any authorization, consent or approval by any
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign, (ii) violate any provision of any law, rule or regulation
(including, without limitation, Regulation X of the Board of Governors of the
Federal Reserve System) or of any order, writ, injunction or decree presently in
effect having applicability to any Company or of the Certificate or Articles of
Incorporation or Bylaws of any Company, (iii) 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 any Company is a party or by which
it or its properties may be bound or affected, or (iv) result in, or require,
the creation or imposition of any Lien or other charge or encumbrance of any
nature (other than those in favor of the Agent) upon or with respect to any of
the properties now owned or hereafter acquired by any Company.
Section 4.3 Legal Agreements. Assuming that this Agreement constitutes
----------------
the valid and binding agreements of the Banks, the Loan Documents and Guarantor
Documents constitute, the legal, valid and binding obligations of the Companies
a party thereto, enforceable against such Companies in accordance with their
respective terms, except to the extent that the enforcement of any of the Loan
Documents or the Guarantor Documents may be limited by (i) bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium or other similar
laws now or hereafter in effect relating to creditors rights generally, and (ii)
general principles of equity regardless of whether enforceability is considered
in a proceeding in equity or at law.
Section 4.4 Corporate Structure. Attached hereto as Schedule 4.4 is a
-------------------
correct and complete organizational chart showing the Borrower and all
Subsidiaries.
Section 4.5 Financial Condition. The Borrower has heretofore furnished
-------------------
to the Agent audited financial statements of the Borrower as of December 31,
1997, and unaudited preliminary financial statements of each Company as of
September 30, 1998. Those financial statements fairly present the financial
condition of the Companies on the dates thereof and the results of their
operations and cash flows for the periods then ended, and were prepared in
accordance with GAAP.
Section 4.6 Adverse Change. There has been no change in the business,
--------------
properties or condition (financial or otherwise) of any Company since the date
of the latest financial statement referred to in Section 4.5 or delivered
pursuant to Section 5.1 that would have a Material Adverse Effect.
Section 4.7 Litigation. There are no actions, suits or proceedings
----------
pending or, to the knowledge of the Borrower, threatened against or affecting
any Company or the properties of any Company before any court or governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, which, if determined adversely to that Company, would have a Material
Adverse Effect.
-31-
Section 4.8 Hazardous Substances. To the best of the Borrower's
--------------------
knowledge after reasonable inquiry, (i) no Company nor any other Person has ever
caused or permitted any Hazardous Substance to be disposed of in any manner
which might result in a Material Adverse Effect on, under or at any real
property which is operated by that Company or in which a Company has any
interest; (ii) no such real property has ever been used (either by a Company or
by any other Person) as a dump site or permanent storage site for any Hazardous
Substance; and (iii) no such real property has ever been used as a temporary
storage site for any Hazardous Substance except for (a) supplies for cleaning
and maintenance in commercially reasonable amounts, and (b) supplies and
equipment required for the Companies' ordinary business operations, used, stored
and disposed of, in accordance with all Environmental Laws.
Section 4.9 Investment Company Act. No Company is an "investment
----------------------
company" or a company "controlled" by an "investment company", within the
meaning of the Investment Company Act of 1940, as amended.
Section 4.10 Public Utility Holding Company Act. No Company is a
----------------------------------
"holding company" or a "subsidiary company" of a "holding company", or an
"affiliate" of a "holding company" or of a "subsidiary company" of a "holding
company", within the meaning of the Public Utility Holding Company Act of 1935,
as amended.
Section 4.11 Default. Each Company is in compliance with all
-------
provisions of all agreements, instruments, decrees and orders to which it is a
party or by which it or its property is bound or affected, the breach or default
of which could have a Material Adverse Effect.
Section 4.12 Regulation U. No Company is engaged in the business of
------------
extending credit for the purpose of purchasing or carrying margin stock (within
the meaning of Regulation U of the Board of Governors of the Federal Reserve
System), and no part of the proceeds of any Advance 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.
Section 4.13 Taxes. Each Company has paid or caused to be paid to the
-----
proper authorities when due all federal, state and local taxes required to be
withheld by it. Each Company has filed all federal, state and local tax returns
which to the knowledge of the officers of that Company are required to be filed,
and each Company has paid or caused to be paid to the respective taxing
authorities all taxes as shown on said returns or on any assessment received by
it to the extent such taxes have become due, other than taxes whose amount,
applicability or validity is being contested in good faith by appropriate
proceedings and for which that Company has provided adequate reserves in
accordance with GAAP.
Section 4.14 Titles and Liens. Each Company has good title to each of
----------------
the properties and assets reflected in the latest balance sheet referred to in
Section 4.5 (other than any sold, as permitted by Section 6.7), free and clear
of all Liens and encumbrances, except for Permitted Liens and covenants,
restrictions, rights, easements and minor irregularities in title which do not
materially interfere with the business or operations of that Company as
presently conducted. No financing statement naming any Company as debtor is on
file in any office except to perfect only Permitted Liens.
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Section 4.15 Solvency. Both before and after giving effect to the
--------
transactions contemplated by the Loan Documents, no Company:
(a) was or will be insolvent, as that term is used and defined in
Section 101(32) of the United States Bankruptcy Code and Section 2 of the
Uniform Fraudulent Transfer Act;
(b) has or will have an unreasonably small capital or is engaged or
about to engage in a business or a transaction for which any remaining
assets of that Company are unreasonably small;
(c) by executing, delivering or performing its obligations under the
Loan Documents, Guarantor Documents or other documents to which it is a
party or by taking any action with respect thereto, intends to, or believes
that it will, incur debts beyond its ability to pay them as they mature;
(d) by executing, delivering or performing its obligations under the
Loan Documents, Guarantor Documents or other documents to which it is a
party or by taking any action with respect thereto, intends to hinder,
delay or defraud either its present or future creditors; and
(e) contemplates filing a petition in bankruptcy or for an arrangement
or reorganization or similar proceeding under any law any jurisdiction,
nor, to the best knowledge of the Borrower, is the subject of any actual,
pending or threatened bankruptcy, insolvency or similar proceedings under
any law of any jurisdiction.
Section 4.16 ERISA. To the knowledge of the Borrower after reasonable
-----
inquiry, no Plan established or maintained by any Company or any ERISA Affiliate
that is subject to Part 3 of Subtitle B of Title I of ERISA had an accumulated
funding deficiency (as such term is defined in Section 302 of ERISA) in an
amount which could have a Material Adverse Effect, and no liability to the
Pension Benefit Guaranty Corporation or the Internal Revenue Service in excess
of such amount has been, or is expected by any Company or any ERISA Affiliate to
be, incurred with respect to any Plan of any Company or any ERISA Affiliate. No
Company has any contingent liability with respect to any post-retirement benefit
under a Welfare Plan, other than liability for continuation coverage described
in Part 6 of Subtitle B of Title I of ERISA.
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ARTICLE V
AFFIRMATIVE COVENANTS
So long as the Obligations shall remain unpaid, or any Bank's
Commitment or any Letter of Credit shall be outstanding, the Borrower will
comply with the following requirements, unless the Banks shall otherwise consent
in writing:
Section 5.1 Financial Statements. The Borrower will deliver to the
--------------------
Agent:
(a) As soon as available, and in any event within 90 days after the
end of each fiscal year of each Company, copies of the annual audit reports
of each Company with the unqualified opinions of independent certified
public accountants selected by the Borrower and acceptable to the Agent,
which annual report shall include the balance sheets of the Companies as at
the end of such fiscal year and the related statements of income,
shareholders' equity and cash flows of the Companies for the fiscal year
then ended, all in reasonable detail and all prepared in accordance with
GAAP, on a consolidated and consolidating basis; together with (A) a report
signed by such accountants stating that in making the investigations
necessary for said opinion they obtained no knowledge, except as
specifically stated, of any Default or Event of Default hereunder and all
relevant facts in reasonable detail to evidence, and the computations as
to, whether or not the Borrower is in compliance with the Financial
Covenants; and (B) copies of such accountants' management letters issued to
the Companies for such year.
(b) As soon as available and in any event within 45 days after the end
of each fiscal quarter, balance sheets of the Companies as at the end of
such fiscal quarter and related statements of earnings and cash flows of
the Companies for such fiscal quarter and for the fiscal year to date, in
reasonable detail and stating in comparative form the figures for the
corresponding date and period in the previous year, all prepared in
accordance with GAAP on a consolidated and consolidating basis, and
certified by the chief financial officer of the Borrower or a designee
approved by the Agent as fairly presenting the financial condition and
results of operations of the Companies subject to year-end audit
adjustments.
(c) As soon as available and in any event within 45 days after the end
of each fiscal quarter of the Borrower, a Compliance Certificate, duly
executed by the chief financial officer of the Borrower or a designee
approved by the Agent.
(d) Within 30 days after the end of each calendar month, (i) a
Borrowing Base Certificate as at the end of such calendar month, properly
executed by the chief financial officer of the Borrower or a designee
approved by the Agent, (ii) a summary of agings of accounts payable and
supporting documentation as the Agent may reasonably require, and (iii) a
list of all Persons holding five percent (5%) or more, or the right to
acquire five percent (5%) or more, of the ownership interests of any
Company, showing
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each such Person's name, and the number, percentage and class of shares
held or that may be acquired by such Person.
(e) By the end of each fiscal year of the Borrower, projections for
each Company's financial performance during the following fiscal year,
including projections of income, cash flows and balance sheets, all
presented on a quarter-by-quarter basis in such detail as the Banks may
reasonably request and certified by the chief financial officer of the
Borrower or a designee approved by the Agent as being identical to the
projections used by the Borrower for internal planning purposes as of the
date of such certification.
(f) Promptly upon their distribution, copies of all financial
statements, reports and proxy statements which any Company shall have sent
to its stockholders.
(g) Promptly after the sending or filing thereof, copies of all
regular and periodic financial reports which any Company shall file with
the Securities and Exchange Commission or any national securities exchange.
(h) Immediately after the commencement thereof, notice in writing of
all litigation and of all proceedings before any governmental or regulatory
agency affecting any Company of the type described in Section 4.7 or which
seek a monetary recovery against any Company in excess of $100,000.
(i) As promptly as practicable (but in any event not later than five
business days) after an officer of any Company obtains knowledge of the
occurrence of any Default or Event of Default, notice of such occurrence,
together with a detailed statement by a responsible officer of the Borrower
of the steps being taken to cure the effect of such event.
(j) Promptly upon becoming aware of any Reportable Event or any
prohibited transaction (as defined in Section 4975 of the Internal Revenue
Code or Section 406 of ERISA) in connection with any Plan or any trust
created thereunder, a written notice specifying the nature thereof, what
action the applicable Company has taken, is taking or proposes to take with
respect thereto, and, when known, any action taken or threatened by the
Internal Revenue Service, the Pension Benefit Guaranty Corporation or the
Department of Labor with respect thereto.
(k) Promptly upon their receipt or filing, copies of (i) all notices
received by any Company or any ERISA Affiliate of the Pension Benefit
Guaranty Corporation's intent to terminate any Plan or to have a trustee
appointed to administer any Plan, and (ii) all notices received by any
Company or any ERISA Affiliate from a Multiemployer Plan concerning the
imposition or amount of withdrawal liability pursuant to Section 4202 of
ERISA.
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(l) Upon request of the Bank, copies of the most recent annual report
(Form 5500 Series), including any supporting schedules, filed by any
Company or any ERISA Affiliate with the Internal Revenue Service with
respect to any Plan.
(m) Such other information respecting the financial condition and
results of operations of the Companies as the Agent may from time to time
reasonably request.
Section 5.2 Books and Records; Inspection and Examination. The
---------------------------------------------
Borrower will, and will cause each Company to, keep accurate books of record and
account for itself in which true and complete entries will be made in accordance
with GAAP and, upon request of any Bank, will give any representative of any
Bank access to, and permit such representative to examine, copy or make extracts
from, any and all books, records and documents in its possession, to inspect any
of its properties and to discuss its affairs, finances and accounts with any of
its principal officers, all at such times during normal business hours and as
often as a Bank may reasonably request.
Section 5.3 Compliance with Laws. The Borrower will, and will cause
--------------------
each Company to, comply with the requirements of applicable laws and
regulations, the noncompliance with which would have a Material Adverse Effect.
Section 5.4 Payment of Taxes and Other Claims. The Borrower will, and
---------------------------------
will cause each Company to, pay or discharge, when due, (a) all taxes,
assessments and governmental charges levied or imposed upon it or upon its
income or profits, or upon any properties belonging to it, prior to the date on
which penalties attach thereto, (b) all federal, state and local taxes required
to be withheld by it, and (c) all lawful claims for labor, materials and
supplies which, if unpaid, might by law become a Lien or charge upon any
properties of a Company; provided, that no Company shall be required to pay any
such tax, assessment, charge or claim whose amount, applicability or validity is
being contested in good faith by appropriate proceedings and for which that
Company has provided adequate reserves in accordance with GAAP.
Section 5.5 Maintenance of Properties. The Borrower will, and will
-------------------------
cause each Company to, keep and maintain all of its properties necessary or
useful in its business in good condition, repair and working order; provided,
however, that nothing in this Section shall prevent a Company from discontinuing
the operation and maintenance of any of its properties if such discontinuance
is, in the judgment of that Company, desirable in the conduct of its business
and not disadvantageous in any material respect to the Banks as holder of the
Notes.
Section 5.6 Insurance. The Borrower will, and will cause each Company
---------
to, obtain and maintain insurance with insurers believed by the Borrower to be
responsible and reputable, in such amounts and against such risks as is usually
carried by companies engaged in similar business and owning similar properties
in the same general areas in which that Company operates. All casualty insurance
policies required hereunder shall include a standard Bank's loss payable clause
in favor of the Agent to the extent of the Banks' interests. All liability
policies required hereunder shall name the Agent and the Banks as an additional
insured.
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Section 5.7 Preservation of Corporate Existence. The Borrower will,
-----------------------------------
and will cause each Company to, preserve and maintain its corporate existence
and all of its rights, privileges and franchises; provided, however, that (i) no
Company shall be required to preserve any of its rights, privileges and
franchises if its Board of Directors shall determine that the preservation
thereof is no longer desirable in the conduct of the business of that Company
and that the loss thereof is not disadvantageous in any material respect to the
Banks as holders of the Notes and (ii) any Subsidiary may be merged with any
other Subsidiary or into the Borrower.
Section 5.8 Year 2000. The Borrower will, and will cause each Company
---------
to, proceed with reasonable diligence to evaluate all of the data processing
systems necessary to the conduct of its business (including computer hardware,
software and firmware, and including data processing systems embedded within
equipment) and will implement such hardware and software modifications and
upgrades as may be necessary for such systems to be Year 2000 Compliant, and all
such systems shall be Year 2000 Compliant, by no later than March 31, 1999. For
purposes hereof, "Year 2000 Compliant" means with respect to any data processing
system, (i) that such system accurately records, stores, processes and presents
date data with respect to dates on and after January 1, 2000 in the same manner,
and with substantially the same functionality, as the such system records,
stores, processes and presents date data with respect to dates on and before
December 31, 1999; and (ii) that such system accurately records, stores,
processes and presents date ranges beginning on or before December 31, 1999 and
ending on or after January 1, 2000, or occurring entirely on or after January 1,
2000, in the same manner, and with substantially the same functionality, as such
system records, stores, processes and presents date ranges occurring entirely on
or before December 31, 1999.
Section 5.9 Maximum Consolidated Cash Flow Leverage Ratio. The
---------------------------------------------
Borrower shall maintain its Consolidated Cash Flow Leverage Ratio, determined as
of the end of each fiscal quarter of the Borrower, at not more than 2.50 to
1.00.
Section 5.10 Minimum Consolidated Fixed Charge Coverage Ratio. The
------------------------------------------------
Borrower shall maintain its Consolidated Fixed Charge Coverage Ratio, determined
as of the end of each fiscal quarter of the Borrower, at not less than 1.30 to
1.00.
Section 5.11 Minimum Consolidated Tangible Net Worth. The Borrower
---------------------------------------
shall maintain its Consolidated Tangible Net Worth, determined as of the end of
each fiscal quarter of the Borrower, at not less than the sum of (i) 10,000,000,
(ii) 50% of positive Net Income for fiscal quarters ending after December 1,
1998, and (iii) all Net Equity Proceeds.
-37-
ARTICLE VI
NEGATIVE COVENANTS
So long as the Obligations shall remain unpaid, or any Bank's
Commitment or any Letter of Credit shall be outstanding, the Borrower agrees
that, without the prior written consent of the Banks:
Section 6.1 Liens. The Borrower will not, and will not permit any
-----
Company to, create, incur, assume or suffer to exist any Lien or other charge or
encumbrance of any nature on any of its assets, now owned or hereafter acquired,
or assign or otherwise convey any right to receive income or give its consent to
the subordination of any right or claim of any Company to any right or claim of
any other Person; excluding, however, from the operation of the foregoing the
following (collectively, "Permitted Liens"):
(a) Liens for taxes or assessments or other governmental charges to
the extent not required to be paid by Section 5.4.
(b) Materialmen's, merchants', mechanic's, carriers' worker's,
repairer's, or other like liens arising in the ordinary course of business
to the extent not required to be paid by Section 5.4.
(c) Bonds, pledges or deposits to secure obligations under contracts,
worker's compensation laws, unemployment insurance and social security
laws, or to secure the performance of bids, tenders, contracts (other than
for the repayment of borrowed money) or leases or to secure statutory
obligations or surety or appeal bonds, or to secure indemnity, performance
or other similar bonds in the ordinary course of business.
(d) Zoning restrictions, easements, licenses, rights-of-way,
restrictions on the use of real property or minor irregularities in title
thereto, which do not materially impair the use of such property in the
operation of the business of any Company or the value of such property for
the purpose of such business.
(e) Purchase money Liens (which term for purposes of this subsection
shall include conditional sale agreements or other title retention
agreements and leases in the nature of title retention agreements) upon or
in property acquired after the date hereof, or Liens existing in such
property at the time of acquisition thereof, provided that:
(i) no such Lien extends or shall extend to or cover any property of
any Company other than the property then being acquired and fixed
improvements then or thereafter erected thereon; and
(ii) the aggregate principal amount of all Debt of any Company secured
by all Liens described in this subsection shall not exceed
$1,000,000 at any one time outstanding.
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(f) Liens on any property of any Company (other than those described
in subsection (e)) securing any indebtedness for borrowed money in
existence on the date hereof and listed in Schedule 6.1 hereto, any
extension, renewal or replacement (or successive extension, renewals or
replacements) in whole or in part, of any such indebtedness provided (i)
that the amount of such indebtedness does not increase, and no funds are
readvanced to any Company after payment, and (ii) the Lien shall be limited
to all or part of the property securing the Lien extended, renewed or
replaced plus improvements thereon.
(g) Liens in favor of the Agent.
(h) Liens arising out of a judgment against any Company for the
payment of money not exceeding $250,000 with respect to which an appeal is
being prosecuted and a stay of execution pending such appeal has been
secured, but only so long as all such Liens are subordinate in all respect
to all Liens in favor of the Agent.
Section 6.2 Indebtedness. The Borrower will not, and will not permit
------------
any Company to, incur, create, assume or permit to exist any Debt or liability
on account of deposits or advances or any indebtedness for borrowed money, or
any other indebtedness or liability evidenced by notes, bonds, debentures or
similar obligations, except:
(a) Indebtedness to the Banks.
(b) Indebtedness of the Companies in existence on the date hereof and
listed in Schedule 6.2 hereto, and any extension, renewal or replacement
(or successive extensions, renewals or replacements), in whole or in part,
of any such indebtedness, provided that the amount of such indebtedness is
not increased and no funds are readvanced to any Company after payment.
(c) Subordinated Debt to the extent less than or equal to $5,000,000,
or renewals, extensions or replacements thereof.
(d) Purchase money indebtedness of the Companies secured by Liens
permitted by subsection 6.1(e).
(e) Indebtedness of the Borrower to any Subsidiary or of any
Subsidiary to the Borrower or another Subsidiary so long as no Material
Adverse Effect occurs.
(f) Indebtedness of a Company assumed in connection with a Permitted
Acquisition and approved by the Required Banks if such approval is required
pursuant to Schedule 2.26.
(g) Liens in favor of the United States in connection with progress
payments made on contracts with any branch of the United States government.
-39-
Section 6.3 Guaranties. The Borrower will not, and will not permit any
----------
Company to, assume, guarantee, endorse or otherwise become directly or
contingently liable in connection with any obligations of any other Person,
except:
(a) The endorsement of negotiable instruments by a Company for deposit
or collection or similar transactions in the ordinary course of business.
(b) Guaranties, endorsements and other direct or contingent
liabilities in connection with the obligations of other Persons in
existence on the date hereof and listed in Schedule 6.3 hereto.
(c) Guaranties, subordinated to the Obligations, of any indebtedness
permitted by Sections 6.1 or 6.2.
Section 6.4 Investments. The Borrower will not, and will not permit
-----------
any Company to, purchase or hold beneficially any stock or other securities or
evidence of indebtedness of, make or permit to exist any loans or advances to,
or make any investment or acquire any interest whatsoever in, any other Person,
except:
(a) Investments in direct obligations of the United States of America
or any agency or instrumentality thereof whose obligations constitute full
faith and credit obligations of the United States of America having a
maturity of one year or less, commercial paper issued by U.S. corporations
rated "A-1" or "A-2" by Standard & Poors Corporation or "P-1" or "P-2" by
Moody's Investors Service or certificates of deposit or bankers'
acceptances having a maturity of one year or less issued by members of the
Federal Reserve System having deposits in excess of $100,000,000.
(b) Travel advances to officers and employees of the Companies in the
ordinary course of business.
(c) Advances in the form of progress payments, prepaid rent or
security deposits.
(d) Permitted Acquisitions.
(e) Loans and advances by the Borrower to its Subsidiaries or by any
Subsidiary to another Subsidiary or the Borrower provided such loans and
advances do not cause a Material Adverse Effect
(f) Investments by the Borrower in the stock of any Subsidiary.
Section 6.5 Dividends; Redemptions. Except as set forth in Section 2.3
----------------------
and this Section 6.5, the Borrower will not declare or pay any dividend (other
than dividends payable solely in stock of the Borrower) on any class of its
stock or make any payment on account of the purchase, redemption or other
retirement of any shares of such stock or make any distribution in
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respect thereof, either directly or indirectly. Provided no Default Period
exists and none would exist immediately thereafter, the Borrower may pay
Permitted Preferred Stock Dividends.
Section 6.6 Issuance of Stock. The Borrower will not permit any
-----------------
Company other than the Borrower to issue any shares of its capital stock
(including shares issued as stock dividends or stock splits), options or
warrants to purchase such stock, or other securities convertible to such stock
unless all original certificates and agreements evidencing the same shall be
immediately delivered and pledged to the Agent, under agreements in form and
substance acceptable to the Agent, as collateral for the payment of the
Obligations.
Section 6.7 Sale of Assets. The Borrower will not, and will not permit
--------------
any Company to, sell, lease, assign, transfer or otherwise dispose of all or a
substantial part of its assets (whether in one transaction or in a series of
transactions) to any other Person other than in the ordinary course of business;
except that, provided it does not cause a Material Adverse Effect, (i) any
Subsidiary may sell, lease, assign or otherwise transfer its assets to the
Borrower, and (ii) any Subsidiary may sell, lease, assign or otherwise transfer
its assets to another Subsidiary.
Section 6.8 Consolidation and Merger; Change of Control. The Borrower
-------------------------------------------
will not consolidate with or merge into any Person, or permit any Person to
merge into it, or transfer or sell, (in any transaction analogous in purpose or
effect to a consolidation or merger) all or substantially all of its assets to
any other Person if, as a result thereof the Borrower shall not be the
continuing or surviving corporation. In addition, whether or not occurring as
the result of any such merger or consolidation, the Borrower shall not suffer to
occur or exist a material change in the ownership or control of any Company
except as otherwise permitted in Section 5.7. For purposes hereof, a "material
change" shall mean, before the receipt of net proceeds of at least $30,000,000
from the initial public offering of the Borrower's common stock, (a) any
shareholder who as of the date of this Agreement owns twenty percent (20%) or
more of the Borrower's outstanding common stock (without giving effect to the
exercise of any conversion rights) (a "20% Shareholder") shall dispose of the
beneficial interest of 50% or more of the number of shares of the Borrower's
stock, owned by such 20% Shareholder as of the date of this Agreement or (b)
more than half of the Borrower's Directors shall resign during any six month
period. If a material change occurs, the Borrower shall promptly so notify the
Agent in writing describing the material change. Within 30 days of receipt of
such notice, the Agent may notify the Borrower in writing that, due to the
material change the Required Banks have determined, (i) that the Banks do not
wish to remain parties to the Credit Agreement, (ii) that the Banks' Commitments
shall automatically terminate on the 90th day from the date of such notice by
the Agent and (iii) that the Borrower must retire all Obligations by not later
than the 90th day following receipt of such notice from the Agent; whereupon (A)
each Bank's Commitment shall automatically terminate on the sooner of the 90th
day following delivery of such notice to the Borrower or satisfaction of all
Obligations and (B) all Obligations shall be due and payable in full on the 90th
day following delivery of such notice to the Borrower. Nothing in this Section
6.8 shall limit any other rights of the Agent and the Banks elsewhere in this
Agreement.
-41-
Section 6.9 Sale and Leaseback. The Borrower will not, and will not
------------------
permit any Company to, enter into any arrangement, directly or indirectly, with
any other Person whereby any Company shall sell or transfer any real or personal
property, whether now owned or hereafter acquired, and then or thereafter rent
or lease as lessee such property or any part thereof or any other property which
any Company intends to use for substantially the same purpose or purposes as the
property being sold or transferred.
Section 6.10 Subordinated Debt. The Borrower will not, and will not
-----------------
permit any Company to, (i) make any payment of, or acquire, any Subordinated
Debt except as expressly permitted by the subordination provision thereof; (ii)
give security for all or any part of such Subordinated Debt; (iii) amend or
cancel the subordination provisions of such Subordinated Debt; (iv) take or omit
to take any action whereby the subordination of such Subordinated Debt or any
part thereof to the Obligations might be terminated, impaired or adversely
affected; or (v) omit to give the Agent prompt written notice of any default
under any agreement or instrument relating to such Subordinated Debt by reason
whereof such Subordinated Debt might become or be declared to be immediately due
and payable.
Section 6.11 Capital Expenditures. The Borrower will not, and will not
--------------------
permit any Company to, make any Capital Expenditure (including payments under
capitalized leases) if, after giving effect to such expenditure, the aggregate
amount of Capital Expenditures made by the Companies in any period of 12
consecutive months will exceed one hundred and fifty percent (150%) of the
amount shown as depreciation on the Borrower's audited financial statements for
the previous fiscal year. The restriction contained in this Section is subject
to the further limitations imposed by Section 6.1(e) if any asset is acquired
under a purchase money Lien referred to in that Section.
Section 6.12 Accounts Payable. The Borrower will not, and will not
----------------
permit any Company to, have (i) more than ten (10%) of its accounts payable
outstanding for more than 60 days or (ii) any accounts payable outstanding for
more than 120 days except for accounts payable which are being disputed in good
faith by appropriate proceedings and for which that Company has provided
adequate reserves in accordance with GAAP.
Section 6.13 Hazardous Substances. The Borrower will not, and will not
--------------------
permit any Company to, cause or permit any Hazardous Substance to be disposed
of, in any manner which might result in any material liability to the Borrower,
on, under or at any real property which is operated by the Borrower or in which
the Borrower has any interest.
Section 6.14 Restrictions on Nature of Business. The Borrower will
----------------------------------
not, and will not permit any Company to, engage in any line of business
materially different from that presently engaged in by that Company.
-42-
ARTICLE VII
EVENTS OF DEFAULT, RIGHTS AND REMEDIES
Section 7.1 Events of Default. "Event of Default", wherever used
-----------------
herein, means any one of the following events:
(a) Default in the payment of any interest when it becomes due and
payable and the continuation of such default for two (2) days; or
(b) Default in the payment of principal of any Note when it becomes
due and payable; or
(c) Failure to pay when due any amount specified in Section 2.13
relating to the Borrower's Obligation of Reimbursement, or failure to pay
immediately when due or upon termination of the Commitment any amounts
required to be paid for deposit in the Special Account under Section 2.14
or 2.21; or
(d) Default in the payment of any fees required under Section 2.19(b)
when the same become due and payable and the continuance of such default
for a period of five (5) days.
(e) Default in the performance, or breach, of any covenant or
agreement on the part of the Borrower contained in Section 2.21 or 5.1 or
in any Financial Covenant.
(f) Default in the performance, or breach, of any covenant or
agreement of the Borrower in this Agreement (other than a covenant or
agreement a default in whose performance or whose breach is elsewhere in
this Section specifically dealt with), and the continuance of such default
or breach for a period of 30 days after the Bank has given notice to the
Borrower specifying such default or breach and requiring it to be remedied.
(g) Any representation or warranty made by the Borrower in this
Agreement or by any Company (or any of its officers) in any certificate,
instrument, or statement contemplated by or made or delivered pursuant to
or in connection with this Agreement or any Guarantor Document, delivered
to the Agent or the Banks, shall prove to have been incorrect or misleading
in any material respect when made.
(h) Any Guarantor shall repudiate, purport to revoke or fail to
perform any such Guarantor's obligations under its Guarantor Documents or
any Guarantor shall cease to exist (except in accordance with Section 5.7);
(i) A default under any bond, debenture, note or other evidence of
indebtedness of any Company (other than to the Banks) or under any
indenture or other instrument under which any such evidence of indebtedness
has been issued or by which it is governed and the expiration of the
applicable period of grace, if any, specified in
-43-
such evidence of indebtedness, indenture or other instrument; provided,
however, that if such default shall be cured by the applicable Company, or
waived by the holders of such indebtedness, in each case prior to the
commencement of any action under Section 7.2 and as may be permitted by
such evidence of indebtedness, indenture or other instrument, then the
Event of Default hereunder by reason of such default shall be deemed
likewise to have been thereupon cured or waived.
(j) An event of default shall occur under the Security Agreement, any
Guarantor Document or under any other security agreement, mortgage, deed of
trust, assignment or other instrument or agreement directly or indirectly
securing any Obligations or any guaranty of the Obligations.
(k) Default in the payment of any amount owed by any Company to any
Bank other than hereunder or under a Note.
(l) Any Company shall be adjudicated a bankrupt or insolvent, or admit
in writing its inability to pay its debts as they mature, or make an
assignment for the benefit of creditors; or any Company shall apply for or
consent to the appointment of any receiver, trustee, or similar officer for
it or for all or any substantial part of its property; or such receiver,
trustee or similar officer shall be appointed without the application or
consent of that Company and such appointment shall continue undischarged
for a period of 30 days; or any Company shall institute (by petition,
application, answer, consent or otherwise) any bankruptcy, insolvency,
reorganization, arrangement, readjustment of debt, dissolution, liquidation
or similar proceeding relating to it under the laws of any jurisdiction; or
any such proceeding shall be instituted (by petition, application or
otherwise) against any Company; or any judgment, writ, warrant of
attachment or execution or similar process shall be issued or levied
against a substantial part of the property of any Company and such
judgment, writ, or similar process shall not be released, vacated or fully
bonded within 30 days after its issue or levy.
(m) The rendering against a Company of a final judgment, decree or
order for the payment of money in excess of $250,000 and the continuance of
such judgment, decree or order unsatisfied and in effect for any period of
30 consecutive days without being vacated or a stay of execution or being
bonded pending appeal.
(n) A writ of attachment, garnishment, levy or similar process shall
be issued against or served upon the Agent or any Bank with respect to (i)
any property of any Company in the possession of the Agent or a Bank, or
(ii) any indebtedness of the Agent or a Bank to any Company.
(o) Any Plan shall have been terminated and the Borrower's liability
in connection therewith shall exceed $250,000, or a trustee shall have been
appointed by an appropriate United States District Court to administer any
Plan, or the Pension Benefit Guaranty Corporation shall have instituted
proceedings to terminate any Plan or to appoint a trustee to administer any
Plan, or withdrawal liability exceeding $250,000 shall have been asserted
against any Company or any ERISA Affiliate by a
-44-
Multiemployer Plan; or any Company shall fail to make any contribution with
respect to a Plan or Multiemployer Plan in an amount or at a time which
would permit a Lien to be filed with respect to such Plan; or any
Reportable Event that the Agent may determine in good faith might
constitute grounds for the termination of any Plan, for the appointment by
the appropriate United States District Court of a trustee to administer any
Plan or for the imposition of withdrawal liability exceeding $250,000 with
respect to a Multiemployer Plan, shall have occurred and be continuing 30
days after written notice to such effect shall have been given to the
Borrower by the Agent.
Section 7.2 Rights and Remedies. During any Default Period, the Agent,
-------------------
on behalf of the Banks, may exercise any or all of the following rights and
remedies:
(a) The Agent may, by notice to the Borrower, declare all Obligations
to be forthwith due and payable, whereupon all 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.
(b) Each Bank may, without notice to the Borrower and without further
action, apply any and all money owing by it to the Borrower to the payment
of the Obligations then outstanding.
(c) The Agent may exercise and enforce its rights and remedies under
the Security Agreement.
(d) The Agent may exercise any other rights and remedies available to
it by law or agreement.
Notwithstanding the foregoing, upon the occurrence of an Event of Default
described in Section 7.1(n) hereof, all Obligations shall be immediately due and
payable without presentment, demand, protest or notice of any kind.
ARTICLE VIII
AGENCY
------
Section 8.1 Authorization; Powers; Agent for Collateral Purposes. Each
----------------------------------------------------
Bank irrevocably appoints the Agent as collateral agent for purposes of
perfecting the security interests granted under the Security Documents and the
Guarantor Security Agreements and otherwise appoints and authorizes the Agent to
act on behalf of such Bank to the extent provided herein or in any document or
instrument delivered hereunder or in connection herewith, and to take such other
actions as may be reasonably incidental thereto. The Agent agrees to act as
administrative agent for each Bank upon the express conditions contained in this
Article VIII, but in no event shall the Agent constitute a fiduciary of any
Bank, nor shall it have any fiduciary responsibilities in respect of any Bank.
In furtherance of the foregoing, and not in limitation thereof, each Bank
irrevocably authorizes the Agent to execute and deliver and perform its
obligations under this Agreement and each of the Loan Documents to which the
-45-
Agent is a party, and to exercise all rights, powers, and remedies that the
Agent may have hereunder, including without limitation, the appointment of the
Agent as nominal beneficiary or nominal secured party, as the case may be, under
certain of the Loan Documents and all related financing statements, and
authorization of the Agent to act as agent in the holding and disposition of
Collateral under the Loan Documents. As to any matters not expressly provided
for by this Agreement or the Loan Documents, the Agent shall not be required to
exercise any discretion or take any action, but shall be required to act or to
refrain from acting (and shall be fully protected in so acting or refraining
from acting) upon the instructions of the Required Banks or, if so required
pursuant to Section 9.4, upon the instructions of all Banks; provided, however,
-------- -------
that except for actions expressly required of the Agent hereunder, the Agent
shall in all cases be fully justified in failing or refusing to act hereunder
unless it shall be indemnified to its satisfaction by all Banks in accordance
with their respective Percentages against any and all liability and expense
which may be incurred by it by reason of taking or continuing to take such
action.
Section 8.2 Distribution of Collections; Norwest Advances; Banks'
-----------------------------------------------------
Right to Refuse to Fund Advances During Default Periods; Bank Refuses to Fund.
- -----------------------------------------------------------------------------
(a) DISTRIBUTION OF COLLECTIONS. Each Bank's Percentage of the
Obligations shall be payable solely from Collections received by the Agent;
and the Agent's only liability to the Banks hereunder shall be to account
for each Bank's Percentage of the Collections in accordance with this
Agreement. The Agent shall collect and receive any and all Collections and
shall apply them to the Obligations as follows:
(i) FIRST, to reimburse the Agent for any and all unreimbursed costs
of collection and expenses incurred by the Agent for which it is
entitled to reimbursement pursuant to Section 8.3, and to the
extent a Bank previously paid a portion of any such costs and
expenses, that Bank shall be ratably reimbursed for its portion;
(ii) SECOND, to pay the remaining Obligations, with each Bank
receiving its pro rata share thereof.
(b) OBLIGATION OF REIMBURSEMENT. To the extent that this Agreement
requires the application of any Collections to the reduction of the
Obligation of Reimbursement, such Collections shall be applied to Revolving
Advances before any portion thereof is "applied", as cash collateral, to
the Obligation of Reimbursement, and the Banks authorize the Agent to act
as their collateral agent for purposes of holding any such cash collateral.
(c) PAYMENTS BY AGENT. If the Agent fails to pay the Banks any amount
required to be paid under this Section 8.2 in a timely manner, the Agent
shall pay such amount on demand, together with interest at the Federal
Funds Rate from the date such payment was required to be made under this
Section 8.2 through the date of such payment. If the Agent is ever required
for any reason to refund any Collections, each Bank will refund to the
Agent, upon demand, its Percentage of such Collections,
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together with its Percentage of interest or penalties, if any, payable by
the Agent in connection with such refund. The Agent may, in its sole
discretion, make payment to the Banks in anticipation of receipt of
Collections. If the Agent fails to receive any such anticipated
Collections, each Bank shall promptly refund to the Agent, upon demand, any
such payment made to it in anticipation of payment Collections, together
with interest for each day on such amount until so refunded at a rate equal
to the Federal Funds Rate for each such date.
(d) NORWEST ADVANCES; SETTLEMENT. The Agent may, in its sole
discretion, elect to apply Collections, and to fund Revolving Advances
requested by the Borrower, for Norwest's account only, and the other Banks
shall not participate therein, provided that on each Settlement Date:
(i) The Agent shall first apply any Collections received before the
close of business on the preceding Banking Day and not previously
applied to reduction of the Obligations in accordance with
subsection (a).
(ii) The Agent shall then determine the amount owed by or to each Bank
in order to reconcile each Bank's actual outstanding Advances
with its Percentage of the outstanding principal balance of the
Advances as of such preceding Banking Day and shall send notice
thereof to each Bank by not later than 10:00 a.m. (Minneapolis,
Minnesota time). If the amount owed by a Bank is greater than
$25,000, that Bank, shall send to the Agent by wire transfer the
amount it owes by not later than 1:00 p.m. (Minneapolis,
Minnesota time) on the Settlement Date. If the amount owed to a
Bank is greater than $25,000, the Agent shall send to that Bank
the amount owed by not later than 2:00 p.m. (Minneapolis,
Minnesota time) on the Settlement Date provided the Agent has
received the funds required to be paid to it by the other Banks.
(e) BANK REFUSES TO FUND. Notwithstanding the foregoing, if any Bank
has wrongfully refused to fund its Percentage of Advances or purchase its
Revolving Facility Percentage of the Obligation or Reimbursement as
required hereunder, or if the principal balance of any Bank's Notes is for
any reason less than its Percentage of the aggregate principal balances of
the Notes, the Agent may remit all payments received by it to the other
Banks until such payments have reduced the aggregate amounts owed by the
Borrower to the extent that the aggregate amount owing to such Bank
hereunder is equal to its Percentage of the aggregate amount owing to the
Banks hereunder. The provisions of this subsection (e) are intended only to
set forth certain rules for the application of Collections if a Bank has
breached its obligations hereunder and shall not be deemed to excuse any
Bank from such obligations.
Section 8.3 Expenses. All Collections received or effected by the
--------
Agent may be applied, first, to pay or reimburse the Agent for all costs,
expenses, damages and liabilities at any time incurred by or imposed upon the
Agent in connection with this Agreement or any
-47-
other Loan Document (including but not limited to all reasonable attorney's
fees, foreclosure expenses and advances made to protect the security of any
collateral, but excluding costs, expenses, damages and liabilities to the extent
such costs, expenses, damages and liabilities arise from the Agent's gross
negligence or willful misconduct). If the Agent does not receive Collections
sufficient to cover any such costs, expenses, damages or liabilities within 30
days after their incurrence or imposition, each Bank shall, upon demand, remit
to the Agent its Percentage of the difference between (i) such costs, expenses,
damages and liabilities, and (ii) such Collections.
Section 8.4 Use of the Term "Agent". The term "Agent" is used
-----------------------
herein in reference to the Agent merely as a matter of custom. It is intended to
reflect only an administrative relationship between the Agent and the Banks, as
independent contracting parties. However, the obligations of the Agent shall be
limited to those expressly set forth herein and in no event shall the use of
such term create or imply any fiduciary relationship or any other obligation
arising under the general law of agency.
Section 8.5 Collections Received Directly by Banks. If any Bank shall
--------------------------------------
obtain any Collections other than through distributions made in accordance with
Section 8.2, such Bank shall promptly give notice of such fact to the Agent and
shall purchase from the other Banks such participations in the Notes and the
Obligation of Reimbursement as shall be necessary to cause the purchasing Bank
to share such Collections ratably with each of them; provided, however, that if
all or any portion of such Collections is thereafter recovered from such
purchasing Bank, the purchase shall be rescinded and the purchasing Bank
restored to the extent of such recovery (but without interest thereon).
Section 8.6 Indemnification. Each Bank severally (but not jointly)
---------------
hereby agrees to indemnify and hold harmless the Agent, as well as the Agent's
agents, employees, officers and directors, ratably according to its Percentage
from and against any and all losses, liabilities (including liabilities for
penalties), actions, suits, judgment, demands, damages, costs, disbursements, or
expenses (including attorneys' fees and expenses) of any kind or nature
whatsoever, which are imposed on, incurred by, or asserted against the Agent or
its agents, employees, officers or directors in any way relating to or arising
out of the Loan Documents, or as a result of any action taken or omitted to be
taken by the Agent; provided, however, that no Bank shall be liable for any
-------- -------
portion of any such losses, liabilities (including liabilities for penalties),
actions, suits, judgments, demands, damages, costs disbursements, or expenses
resulting from the gross negligence or willful misconduct of the Agent. The
Agent shall not be required to take any action in connection with any Loan
Document or Guarantor Document unless indemnified to its satisfaction by the
Banks in accordance with their respective Percentages against loss, cost,
liability and expense. If any indemnity furnished to the Agent for any purpose
shall, in the opinion of the Agent, be insufficient or become impaired, the
Agent may call for additional indemnity and not commence or cease to do the acts
indemnified against until such additional indemnity is furnished.
Section 8.7 Priority in Collateral. To the extent the security
----------------------
interests granted to the Agent on behalf of the Banks secure Obligations which
do not arise out of, or are not
-48-
evidenced by, the Loan Documents, such Obligations shall be subordinate to the
prior payment of all Obligations which do arise out of, or are evidenced by, the
Loan Documents. To the extent all Banks have any such subordinate Obligations,
payment of those subordinate Obligations shall be shared by the Banks on a pro
rata basis determined in accordance with the outstanding principal balance of
such subordinate Obligations held by each Bank.
Section 8.8 Exculpation. The Agent shall be entitled to rely upon
-----------
advice of counsel concerning legal matters, and upon any writing which it
believes to be genuine or to have been presented by a proper person. Neither the
Agent nor any of its directors, officers, employees or agents shall (i) be
responsible for any recitals, representations or warranties contained in, or for
the execution, validity, genuineness, effectiveness or enforceability of any
Loan Document, Guarantor Document or any other instrument or document delivered
hereunder or in connection herewith, (ii) be responsible for the validity,
genuineness, perfection, effectiveness, enforceability, existence, value or
enforcement of any collateral security, (iii) be under any duty to inquire into
or pass upon any of the foregoing matters, or to make any inquiry concerning the
performance by the Borrower or any other obligor of its obligations, or (iv) in
any event, be liable as such for any action taken or omitted by it or them,
except for its or their own gross negligence or willful misconduct. The agency
hereby created shall in no way impair or affect any of the rights and powers of,
or impose any duties or obligations upon, the Agent in its individual capacity.
Section 8.9 Agent and Affiliates. The Agent shall have the same
--------------------
rights, powers and obligations hereunder in its individual capacity as any other
Bank, and may exercise or refrain from exercising the same as though it were not
the Agent, and the Agent and its affiliates may accept deposits from and
generally engage in any kind of business with the Borrower as fully as if the
Agent were not the Agent hereunder.
Section 8.10 Credit Investigation. Each Bank acknowledges that it has
--------------------
made such inquiries and taken such care on its own behalf as would have been the
case had its Commitment been granted and the Advances made or Letters of Credit
issued directly by such Bank to or for the benefit of the Borrower without the
intervention of the Agent or any other Bank. Each Bank agrees and acknowledges
that the Agent makes no representations or warranties about the creditworthiness
of the Borrower or any other party to this Agreement or with respect to the
legality, validity, sufficiency or enforceability of this Agreement, any Loan
Document, Guarantor Document or any other instrument or document delivered
hereunder or in connection herewith.
Section 8.11 Defaults. The Agent shall have no duty to inquire into
--------
any performance or failure to perform by the Borrower and shall not be deemed to
have knowledge of the occurrence of a Default or an Event of Default (other than
under Section 7.1(a) or (c) unless the Agent has received notice from a Bank or
the Borrower specifying the occurrence of such Default or Event of Default. If
the Agent receives such a notice of the occurrence of a Default or an Event of
Default, the Agent shall give prompt notice thereof to the Banks. Upon learning
of the occurrence of a Default, the Agent shall (subject to Section 8.6) (a) in
the case of an Event of Default, not take any the actions referred to in Section
7.2(a) unless so directed by
-49-
the Required Banks, and (b) in the case of any Default, take such actions with
respect to such Default as shall be directed by the Required Banks; provided
--------
that, unless and until the Agent shall have received such directions, the Agent
may take any action, or refrain from taking any action, with respect to such
Default as it shall deem advisable in the best interest of the Banks.
Section 8.12 Resignation. The Agent may resign as such at any time
-----------
upon at least 30 days' prior notice to the Borrower and the Banks. If the Agent
resigns, the Required Banks shall as promptly as practicable appoint a successor
Agent. If no such successor Agent shall have been so appointed by the Required
Banks and shall have accepted such appointment within 30 days after the
resigning Agent's giving of notice of resignation, then the resigning Agent may,
on behalf of the Banks, appoint a successor Agent, which shall be a commercial
bank organized under the laws of the United States of America or of any State
thereof. Upon the acceptance of any appointment as Agent hereunder by a
successor Agent, such successor Agent shall thereupon be entitled to receive
from the prior Agent such documents of transfer and assignment as such successor
Agent may reasonably request and the resigning Agent shall be discharged from
its duties and obligations under this Agreement. After any resignation pursuant
to this Section 8.12, the provisions of this Section 8.12 shall inure to the
benefit of the retiring Agent as to any actions taken or omitted to be taken by
it while it was an Agent hereunder.
Section 8.13 Obligations Several. The obligations of each Bank
-------------------
hereunder are the several obligations of such Bank, and no Bank or the Agent
shall be responsible for the obligations of any other Bank hereunder, nor will
the failure by the Agent or any Bank to perform any of its obligations hereunder
relieve the Agent or any other Bank from the performance of its respective
obligations hereunder. Nothing contained in this Agreement, and no action taken
by any Bank or the Agent pursuant hereto or in connection herewith or pursuant
to or in connection with the Loan Documents, shall be deemed to constitute the
Banks, together or with or without the Agent, a partnership, association, joint
venture or other entity.
Section 8.14 Sale or Assignment; Addition of Banks. Except as
-------------------------------------
permitted under the terms and conditions of this Section 8.14 or, with respect
to participations, under Section 8.15, no Bank may sell, assign or transfer its
rights or obligations under this Agreement or its interest in any Note. Any
Bank, at any time upon at least ten (10) Business Days' prior written notice to
the Agent and the Borrower (unless the Agent and the Borrower consent to a
shorter period of time), may assign all of such Bank's Notes, Advances and
Facility Amounts, or a portion thereof (so long as any such portion is not less
then $5,000,000 and is in equal percentages of such assigning Bank's Facility
Amounts), to a domestic or foreign bank or other financial institution having
deposits in excess of $500,000,000 (an "Applicant") on any date (the "Adjustment
Date") selected by such Bank, but only so long as the Borrower and the Agent
shall have provided its prior written approval of such proposed Applicant, which
prior written approval will not be unreasonably withheld. Notwithstanding the
foregoing, (i) assignments may be made by a Bank to another Bank already a party
to this Agreement in an amount not less than $1,000,000 and (ii) no consent of
the Borrower shall be required for the sale of an interest to an affiliate of a
Bank or, in any event, if a Default Period shall exist. Upon receipt of such
approval and to confirm the status of each additional Bank as a party to this
Agreement and to evidence the assignment in accordance herewith:
-50-
(a) the Agent, the Borrower, the assigning Bank and such Applicant
shall, on or before the Adjustment Date, execute and deliver to the Agent
an Assignment Certificate in substantially the form of Exhibit K (an
"Assignment Certificate");
(b) the Borrower will execute and deliver to the Agent, for delivery
by the Agent in accordance with the terms of the Assignment Certificate,
(i) new Notes payable to the order of the Applicant in amounts
corresponding to the applicable Percentages of the Facilities acquired by
such Applicant and (ii), if necessary, new Notes payable to the order of
the assigning Bank in amounts corresponding to the retained Percentages, if
any. Such new Notes shall be in an aggregate principal amount equal to the
aggregate principal amount of the Notes to be replaced by such new Notes,
shall be dated the effective date of such assignment and shall otherwise be
in the form of the Notes to be replaced thereby. Such new Notes shall be
issued in substitution for, but not in satisfaction or payment of, the
Notes being replaced thereby and such new Notes shall be treated as Notes
for purposes of this Agreement; and
(c) the assigning Bank shall pay to the Agent an administrative fee of
$2,500.
Upon the execution and delivery of such Assignment Certificate and such new
Notes, and effective as of the effective date thereof (i) this Agreement shall
be deemed to be amended to the extent, and only to the extent, necessary to
reflect the addition of such additional Bank and the resulting adjustment of the
Percentages arising therefrom, (ii) the assigning Bank shall be relieved of all
obligations hereunder to the extent of the reduction of the assigning Bank's
Percentage, and (iii) the Applicant shall become a party hereto and shall be
entitled to all rights, benefits and privileges accorded to a Bank herein and in
each other Loan Document or other document or instrument executed pursuant
hereto and subject to all obligations of a Bank hereunder, including, without
limitation, the right to approve or disapprove actions which, in accordance with
the terms hereof, require the approval of the Required Banks or all Banks.
Promptly after the execution of any Assignment Certificate, a copy thereof shall
be delivered by the Agent to each Bank and to the Borrower. In order to
facilitate the addition of additional Banks hereto, the Borrower and the Banks
shall cooperate fully with the Agent in connection therewith and shall provide
all reasonable assistance requested by the Agent relating thereto, including,
without limitation, the furnishing of such written materials and financial
information regarding the Borrower as the Agent may reasonably request, the
execution of such documents as the Agent may reasonably request with respect
thereto, and the participation by officers of the Borrower, and the Banks in a
meeting or teleconference call with any Applicant upon the request of the Agent.
Section 8.15 Participation. In addition to the rights granted in
-------------
Section 8.14, provided the Agent and, if no Default Period exists the Borrower,
have consented thereto, each Bank may grant participations in all or a portion
of its Notes, Advances, and Facility Amounts to any domestic bank, insurance
company, financial institution or an affiliate of such Bank. No holder of any
such participation, however, shall be entitled to require any Bank to take or
omit to take any action hereunder except those actions described in Section 9.4
requiring consent of all Banks. The Banks shall not, as among the Borrower, the
Agent and the Banks, be relieved of
-51-
any of their respective obligations hereunder as a result of any such granting
of a participation. The Borrower hereby acknowledges and agrees that any
participation described in this Section 8.15 may rely upon, and possess all
rights under, any opinions, certificates, or other instruments or documents
delivered under or in connection with any Loan Document. Except as set forth in
this Section 8.15, no Bank may grant any participation in the Notes, Advances,
Acceptances or Commitments.
Section 8.16 Borrower not a Beneficiary or Party. Except with respect
-----------------------------------
to the limitation of liability applicable to the Banks under Section 8.13 and
the Borrower's right to approve additional Banks in accordance with Section
8.14, the provisions and agreements in this Article VIII are solely among the
Banks and the Agent and the Borrower shall not be considered a party thereto or
a beneficiary thereof.
ARTICLE IX
Miscellaneous
Section 9.1 No Waiver; Cumulative Remedies. No failure or delay on the
------------------------------
part of the Bank in exercising any right, power or remedy under the Loan
Documents shall operate as a waiver thereof; nor shall the Bank's acceptance of
payments while any Default Period exists operate as a waiver of such Default or
Event of Default, or any right, power or remedy under the Loan Documents; nor
shall any single or partial exercise of any such right, power or remedy preclude
any other or further exercise thereof or the exercise of any other right, power
or remedy under the Loan Documents. The remedies provided in the Loan Documents
are cumulative and not exclusive of any remedies provided by law.
Section 9.2 Amendments, Etc. No amendment, modification, termination
---------------
or waiver of any provision of any Loan Document or consent to any departure by
the Borrower therefrom shall be effective unless the same shall be in writing
and signed by the Bank and then such waiver or consent shall be effective only
in the specific instance and for the specific purpose for which given. No notice
to or demand on the Borrower in any case shall entitle the Borrower to any other
or further notice or demand in similar or other circumstances.
Section 9.3 Notices. Except as otherwise expressly provided herein,
-------
all notices and other communications hereunder shall be in writing and shall be
(i) personally delivered, (ii) transmitted by registered mail, postage prepaid,
(iii) sent by Federal Express or similar expedited delivery service, or (iv)
transmitted by telecopy, in each case addressed to the party to whom notice is
being given at its address as set forth by its signature below, or, if
telecopied, transmitted to that party at its telecopier number set forth by its
signature below; or, as to each party, at such other address or telecopier
number as may hereafter be designated in a notice by that party to the other
party complying with the terms of this Section. All such notices or other
communications shall be deemed to have been given on (i) the date received if
delivered personally or by mail, (ii) the date of receipt, if delivered by
Federal Express or similar expedited delivery service, or (iii) the date of
transmission if delivered by telecopy, except that
-52-
notices or requests to the Bank pursuant to any of the provisions of Article II
shall not be effective until received.
Section 9.4 Consent of Required Banks; Amendments, Requested Waivers,
---------------------------------------------------------
Etc.
- ----
(a) Except as provided in Subsection (b), the Banks' consent as
required by any provision of this Agreement shall be deemed given by the
consent of the Required Banks.
(b) No amendment, modification, termination or waiver of any provision
of any Loan Document or consent to any departure by the Borrower therefrom
or any release of a security interest in collateral securing the
Obligations or the Guaranties shall be effective unless the same shall be
in writing and signed by the Required Banks and, if the rights or duties of
the Agent are affected thereby, by the Agent; provided, however, that
-------- -------
unless in writing and signed by each Bank affected thereby, no amendment,
modification, termination, waiver or consent shall, do any of the
following: (i) increase the amount of any Bank's Facility Amount; (ii)
reduce the amount of any payment of principal of or interest on a Bank's
Advances or the fees payable to such Bank hereunder; (iii) except as
otherwise provided in Section 8.5, postpone any date fixed for any payment
of principal of or interest on such Banks' Advances or the fees payable to
such Bank hereunder; (iv) change the definitions of "Borrowing Base" or
"Required Banks," or any other definitions referred to therein or necessary
to the understanding thereof; (v) release of Collateral in an amount
exceeding $500,000 in the aggregate during any fiscal year; or (vi) amend
this Section 9.4 or any other provision of this Agreement requiring the
consent or other action of all of the Banks. Any waiver or consent given
hereunder shall be effective only in the specific instance and for the
specific purpose for which given. No notice to or demand on the Borrower in
any case shall entitle the Borrower to any other or further notice or
demand in similar or other circumstances; provided, further, that the Agent
-------- -------
may release up to $500,000 in the aggregate of Collateral in any fiscal
year without further consent by any Bank.
Section 9.5 Disclosure of Information. The Borrower authorizes the
-------------------------
Agent to disclose to any participant or assignee (each, a "Transferee") and any
prospective Transferee any and all financial and other information in the
Agent's possession concerning the Borrower which has been delivered to the Agent
by the Borrower pursuant to this Agreement or which has been delivered to the
Agent by the Borrower in connection with the Agent's credit evaluation of the
Borrower before entering into this Agreement.
Section 9.6 Costs and Expenses. The Borrower shall pay on demand all
------------------
costs and expenses incurred by the Agent in connection with the negotiation,
preparation, execution, administration, amendment or enforcement of the Loan
Documents, Guarantor Documents and the other instruments and documents to be
delivered hereunder and thereunder, including the reasonable fees and out-of-
pocket expenses of counsel for the Agent with respect thereto, whether paid to
outside counsel or allocated to the Agent by in-house counsel. The Borrower
shall also pay and reimburse the Agent for all of its out-of-pocket and
allocated costs incurred in
-53-
connection with each audit or examination conducted by the Agent, its employees
or agents, which audits and examinations shall be for the sole benefit of the
Agent. The Borrower shall also pay on demand all costs and expenses incurred by
any Bank in connection with the enforcement of the Loan Documents, Guarantor
Documents and the other instruments and documents to be delivered hereunder and
thereunder, including the reasonable fees and out-of-pocket expenses of counsel
for each Bank with respect thereto, whether paid to outside counsel or allocated
to a Bank by in-house counsel.
Section 9.7 Indemnification by Borrower. The Borrower shall indemnify
---------------------------
each Bank and each officer, director, employee and agent of each Bank (herein
individually each called an "Indemnitee" and collectively called the
"Indemnitees") from and against any and all losses, claims, damages, reasonable
expenses (including, without limitation, reasonable attorneys' fees) and
liabilities (all of the foregoing being herein called the "Indemnified
Liabilities") incurred by an Indemnitee in connection with or arising out of the
execution or delivery of this Agreement or any agreement or instrument
contemplated hereby, the performance by the parties hereto of their respective
obligations hereunder or the use of the proceeds of any Advance (including but
not limited to any such loss, claim, damage, expense or liability arising out of
any claim in which it is alleged that any Environmental Law has been breached
with respect to any activity or property of the Borrower), except for any
portion of such losses, claims, damages, expenses or liabilities incurred solely
as a result of the gross negligence or willful misconduct of the applicable
Indemnitee. If and to the extent that the foregoing indemnity may be
unenforceable for any reason, the Borrower shall make the maximum contribution
to the payment and satisfaction of each of the Indemnified Liabilities which is
permissible under applicable law. All obligations provided for in this Section
shall survive any termination of this Agreement.
Section 9.8 Execution in Counterparts. This Agreement and the other
-------------------------
Loan Documents may be executed in any number of counterparts, each of which when
so executed and delivered shall be deemed to be an original and all of which
counterparts of this Agreement or such other Loan Document, as the case may be,
taken together, shall constitute but one and the same instrument.
Section 9.9 Binding Effect, Assignment. The Loan Documents shall be
--------------------------
binding upon and inure to the benefit of the Borrower, the Agent and the Banks
and their respective successors and assigns, except that the Borrower shall not
have the right to assign its rights thereunder or any interest therein without
the prior written consent of the Agent and all the Banks.
Section 9.10 Governing Law. The Loan Documents shall be governed by,
-------------
and construed in accordance with, the laws of the State of Minnesota.
Section 9.11 Severability of Provisions. Any provision of this
--------------------------
Agreement which is prohibited or unenforceable shall be ineffective to the
extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof.
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Section 9.12 Prior Agreements. This Agreement and the other Loan
----------------
Documents and related documents described herein restate and supersede in their
entirety any and all prior agreements and understandings, oral or written, among
the Agent, the Banks and the Borrower.
Section 9.13 Headings. Article and Section headings in this Agreement
--------
are included herein for convenience of reference only and shall not constitute a
part of this Agreement for any other purpose.
Section 9.14 Consent to Jurisdiction. The Borrower irrevocably (i)
-----------------------
agrees that any suit, action or other legal proceeding arising out of or
relating to this Agreement or any other Loan Document may be brought in a court
of record in Hennepin County in the State of Minnesota or in the Courts of the
United States located in such State, (ii) consents to the jurisdiction of each
such court in any suit, action or proceeding, (iii) waives any objection which
it may have to the laying of venue of any such suit, action or proceeding in any
such courts and any claim that any such suit, action or proceeding has been
brought in an inconvenient forum, and (iv) agrees that a final judgment in any
such suit, action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
SECTION 9.15 WAIVER OF JURY TRIAL. THE BORROWER, THE AGENT AND THE
--------------------
BANKS HEREBY WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY
OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN
ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS AGREEMENT AND THE
NOTE OR THE RELATIONSHIPS ESTABLISHED HEREUNDER.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers thereunto duly authorized as of the
date first above written.
Address: NATIONWIDE ELECTRIC, INC.
2800 Metropolitan Center
333 South Seventh Street
Minneapolis, Minnesota 55402 By /s/ Fredrick C. Green, IV
---------------------------
Attention: Frederick C. Green, IV Frederick C. Green, IV
Telecopier: 612-371-8036 Its President
Tax ID No.: 43-1807205
With a copy of all notices to:
1201 Walnut, 13th Floor
Kansas City, Missouri 64106
Attention: Mr. Frank R. Clark
Telecopier: 816-556-2337
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Address: NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION,
Sixth Street and Marquette Avenue as Agent
Minneapolis, Minnesota 55479-0091
Attention: Ms. Laura Schmaltz Oberst
Telecopier: 612-667-4144
By /s/ Laura Schmaltz Oberst
------------------------------
Laura Schmaltz Oberst
Its Vice President
Address: NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION,
Sixth Street and Marquette Avenue as Bank
Minneapolis, Minnesota 55479-0091
Attention: Ms. Laura Schmaltz Oberst
Telecopier: 612-667-4144
By /s/ Laura Schmaltz Oberst
------------------------------
Revolving Facility Amount: $7,500,000 Laura Schmaltz Oberst
Revolving Facility Percentage: 50% Its Vice President
Term Facility Amount: $7,500,000
Term Facility Percentage: 50%
416 West Jefferson BANK ONE KENTUCKY, N.A.
Louisville, KY 40203
Attention: Earl A. Dorsey, Jr.
Telecopier: 502/566-2367
By /s/ Earl A. Dorsey
------------------------------
Revolving Facility Amount: $7,500,000 Its Senior Vice President
Revolving Facility Percentage: 50% ---------------------------
Term Facility Amount: $7,500,000
Term Facility Percentage: 50%
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